This section discusses the evolution of the Los Angeles Zoo and Botanical Gardens (Zoo), its management by the City’s Zoo Department, and the evolving role of GLAZA in supporting the Zoo through its significant financial contributions and expanded roles. Understanding the relationship between the Zoo Department and GLAZA lends important context to understanding the Zoo’s current governance arrangement and the issues noted by this review.
History of the City’s Zoo
The City’s first Eastlake Zoo dates back to 1885 in East Los Angeles Park. In 1912, the City’s Griffith Park Zoo opened near the site of the current Zoo grounds. By 1956, it became apparent that the City had outgrown the small Griffith Park Zoo, and voters approved a $6.6 million bond measure to help build a new, expanded Zoo. The Los Angeles Zoo and Botanical Gardens opened at its current location in 1966; until 1997 the Zoo was operated by the City’s Department of Recreation and Parks.
In 1997, City policymakers added Los Angeles Administrative Code (LAAC) §22.700 by ordinance, which created a separate Council-controlled Zoo Department. This code section prescribes that the Zoo Department “shall operate, manage, maintain and control” of the Zoo. A Board of Zoo Commissioners, appointed by the Mayor, advises the Zoo Director. The Zoo Commission meets on a monthly basis with Zoo Department and GLAZA management, often including presentations on GLAZA’s fundraising efforts and significant events occurring at the Zoo.
Today, the Zoo is home to more than 1,100 mammals, birds, amphibians, and reptiles representing more than 250 different species, including 29 endangered species. In addition, the Zoo’s botanical collection comprises several planted gardens and 800+ different plant species with more than 7,400 individual plants. As previously mentioned, the Zoo is accredited by the AZA, an organization that requires the “highest standards of animal management and husbandry, while also focusing on animal management for conservation, education, scientific inquiries, and guest services” and it has continuously accredited the Zoo for more than 25 years.3
Mission and Vision Statements
The following is the Zoo’s mission statement: To serve the community, the Los Angeles Zoo will create an environment for recreation and discovery; inspire an appreciation of wildlife through exhibitry and education; ensure the highest level of animal welfare; and support programs that preserve biodiversity and conserve natural habitat.
The following is the Zoo’s vision statement: We will leverage the diverse resources of Los Angeles to be an innovator of the global zoo community, creating dynamic experiences to connect people with animals.
Zoo Department’s Relationship with GLAZA
In 1963 GLAZA incorporated as a not-for-profit organization to assist the City in establishing, developing, and improving the Zoo through fundraising. In 1997, when the City created the separate Zoo Department, the City entered into an Operating Agreement with GLAZA that officially defined its relationship with the Zoo Department.4 According to this agreement, the “Zoo Director shall be exclusively responsible for the administration and management of the Zoo within the policy guidelines set forth by the Mayor and City Council.” GLAZA’s primary responsibility is “to seek and provide financial support to the Zoo and to fund the Zoo’s capital improvements.” Further, “GLAZA shall be responsible, under the terms of the [Operating Agreement], to raise an amount, negotiated yearly, of the Zoo’s annual operating budget and funding needs for capital improvements.”
Appendix I delineates GLAZA’s contributions toward Zoo capital improvements completed between 2000 and 2014.
The organization chart, below, depicts the Zoo Department and GLAZA’s placement within the City’s governance structure.
4 This Operating Agreement will expire in 2022.
The Operating Agreement allows the Zoo Director to contract with GLAZA to perform additional responsibilities for the Zoo through separate MOUs.5 As of October 2017, under the Operating Agreement, Concession Agreement (distinct from the Concessions MOU), and four separate MOUs, GLAZA supports the Zoo Department by managing the following programs:
As of October 2017, GLAZA has 40 full time and 26 part time employees. The number of part time employees fluctuates seasonally. See Appendix II for a fuller description of GLAZA’s responsibilities per the referenced MOUs.
5 The Operating Agreement specifies that the City may contract through a separate MOU for GLAZA to perform the Zoo Department’s responsibilities for publications, special events, and the rental, construction, operation and maintenance of Zoo facilities. It also specifies that all separate MOUs entered into between GLAZA and the Zoo Department will operate as “sub-agreements” to the Operating Agreement.
The Zoo Department manages the remaining programs as part of its regular operations: 6
As of October 2017, the Zoo Department has 219 full-time employees and it has the ability to use 133 part-time positions, as needed. For City budgetary purposes, the Zoo Department has position authority for 246 full time positions (233 regular authority and 13 resolution authority). See Appendix III for a fuller description of the Zoo Department’s programs and activities.
6 GLAZA public relations staff work with Zoo Department public relations staff to ensure consistent messaging in Zoo communications.
Zoo Department Funding
As a Council-controlled City Department, the Zoo Department is subject to annual budget appropriations to fund operations. For FY 2017, the City budget allocated $33.4 million for the Zoo Department.
$20.4 million (61% of the Departmental budget) represents direct operating costs (staff salaries, animal food, maintenance materials and supplies, contractual services, veterinary supplies, office supplies, uniforms, field equipment, etc.). All direct costs are covered by the Zoo Enterprise Trust Fund (ZETF), a City Special Revenue Fund that receives and allocates funds that are restricted for Zoo purposes. The remaining $13 million represents the City’s budgetary allocation of indirect and related costs (pension and human resource benefits, workers compensation, liability claims, and other City overheads) associated with the Zoo Department, which is covered by the General Fund.
Funds available in the ZETF are generated from Zoo Department receipts (primarily admission fees) and a portion of revenues generated by GLAZA for their managed programs, as transferred to the City. For FY 2017, the Zoo Department’s adopted budget indicated 77% of ZETF revenues would come from the Zoo Department programs; while 23% would come from GLAZA, as an allocation of shared revenues under terms of the Operating Agreement, Concession Agreement, and MOUs. See the Table below.
7 Prior to February 2017, GLAZA operated the carousel.
8 GLAZA reimburses the Zoo Department when its employees work overtime at night-time ticketed events.
In addition to the City budget, the Zoo Department has access to funds held in two accounts maintained by GLAZA: the Zoo Assistance Fund (ZAF) and the Zoo Surplus Development Fund (ZSDF). These accounts, specifically mentioned in two MOUs, are held by GLAZA for the direct benefit of the Zoo Department, i.e., operating costs not funded through the City budget.9 Specifically, the Financial Assistance, Special Events, and Community Affairs MOU specifies that GLAZA is to transfer a “gift” of unrestricted fundraising revenues into the ZAF each year. And while the Concessions MOU specifies that GLAZA is to transfer any excess commissions revenue into the ZSDF, based upon a suggestion by the CAO, since FY 2015 the Zoo Department annually transfers $600,000 (a majority of ZSDF monies) to the City’s ZETF.
See Appendix IV for a schedule delineating revenues collected per MOU and distributions to the ZETF, ZAF, and ZSDF.10
As the official support organization for the Los Angeles Zoo & Botanical Gardens, GLAZA is an independent not-for-profit corporation organized for the purpose of establishing, developing, beautifying and improving the Zoo. While GLAZA is exempt from income taxes, it files an annual informational return per IRS requirements, and provides an Independent Audit of its annual financial statements to its Trustees and began posting its audited financial statements to its website in April 2017.
Based on GLAZA’s audited financial statements for FYs 2014, 2015 and 2016, GLAZA generated an average of $15.9 million per year in support and revenues. Sources are attributable to membership program revenue (37%), contributions and grants (30%), and visitor amenities (19%), with some additional revenues from special events net of direct donor benefits, and investment income.
During this same period, GLAZA expended an average of $15.0 million each FY. On average, 35% represented transfers to the ZETF or expenditures Zoo Department management requested GLAZA to make on their behalf from two funds (the ZAF and ZSDF mentioned above) maintained by GLAZA for the Zoo Department. The remainder were expenditures incurred for Zoo program services delivered or performed by GLAZA on behalf of the Zoo (43%), general and administrative (13%), and fundraising (9%) activities.
9 According to Zoo Department management, the ZAF and ZSDF are used for operating costs that are not funded through the City budget, and the monies in these accounts are typically spent by the end of each FY. The ZAF primarily funds conservation and research programs. ZSDF monies not transferred to the ZETF are primarily used for animal care equipment and supplies, training, travel, visitors’ surveys, etc. While both the ZAF and ZSDF amounts are held by GLAZA, Zoo Department management indicated that they control the use of the monies in these accounts by requiring approval signatures from the Zoo Department’s Chief Management Analyst and Assistant General Manager and/or General Manager.
10 The Operating Agreement and Concession Agreement also specify how GLAZA apportions shared revenues with the Zoo Department. As mentioned in the Consolidation and Clarity of Agreements section, certain Operating Agreement and Concession Agreement specifications conflict with MOU specifications and certain MOU specifications conflict amongst each other.
As of June 30, 2017, GLAZA’s assets included $29.5 million in combined cash, cash equivalents and investments; $4 million in receivables; and $763,000 in other assets. GLAZA’s net assets totaled $31.3 million, of which $21.5 million (69%) was unrestricted11, $7.7 million (25%) was temporarily restricted; and $2.1 million (7%) was permanently restricted.
Prior Audits & Reports
Concerns regarding the City’s administration of agreements with GLAZA stretch back for decades, even before the City created the Zoo Department in 1997. In fact, in 1990 when the Los Angeles County Grand Jury evaluated the City’s relationship with GLAZA, the Grand Jury reported multiple findings but two remain relevant to our current review. Specifically, the Grand Jury found: 1) the prior Operating Agreement and current Concession Agreement had been poorly written; and, 2) the City did not exercise its authority to audit and monitor concession operations, nor did it independently audit concession receipts. The Grand Jury concluded that “weak management” and certain provisions in the agreements with GLAZA hampered the City’s ability to “fulfill its duty to manage the Zoo.”
In December 2002, the Controller’s Office issued its “Report on the Greater Los Angeles Zoo Association” that identified subpar fundraising performance by GLAZA and a potential over- retention of millions in revenues due to the City from the Membership Program and Concessions Program. At the time, both GLAZA and the new interim Zoo Director disagreed with the audit’s finding regarding the shared revenues.
Subsequent audits by the Controller’s Office in 2005 and 2009 noted that recommendations relating to the City Attorney providing a legal opinion on the possible over-retention of shared revenues remained outstanding, and noted the Zoo Department and GLAZA had been operating from expired MOUs. The 2009 audit also recommended the Zoo Department complete a cost- benefit analysis on the feasibility of directly contracting for concession services. However, due to reported staffing shortages, the Zoo Department did not conduct this cost-benefit analysis.
11 However, $19.2 million was Board-designated for endowment and certain projects.