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County of Los Angeles Los Angeles 3rd Regional Investors Conference Playa Vista Silicon Beach

March 31, 2016

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Los Angeles County is the most populous county in the nation and has an economy larger than 44 states

─ With approximately 10 million people, represents over 26% of the State’s population

─ Includes the City of Los Angeles with approximately 4 million people and 87 other cities and unincorporated areas

─ 2015 gross product of $644.2 billion

─ County's unemployment rate declined to 5.6% in February, the lowest rate in over 8 years

County is governed by a 5-member Board of Supervisors

In California, counties combine local, State and Federal revenues to administer a broad scope of programs at the local level

County has strong financial management and budgeting practices which foster fiscal prudence and long term strategic planning

— Budget is based on realistic revenue assumptions

— County does not backfill State or Federal funding cuts to County administered programs

— A reserve for Rainy Day funds is established at 10% of ongoing locally generated revenue

County Overview

Overview

Public Protection Culture and Recreation

General Government Healthcare

Social Services

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FY 2015-16 Final Adopted Budget

Total General County Budget is $21.729 billion for FY 2015-16

Total General County Budget accounts for approximately 77.1% of the FY 2015-16 Budget

Special Funds represent approximately 22.9% of the FY 2015-16 Budget

Total General Fund Requirements ($ thousands) Total General Fund Revenue ($ thousands)

Source: County of Los Angeles

Fund ($ billions)

FY 2014-15 Final Adopted

Budget FY 2015-16 Final Adopted Budget Difference

Total General County Budget $20.948 $21.729 $0.781

Special Funds/Districts $6.193 $6.466 $0.273

Total Budget $27.141 $28.195 $1.054

Budgeted Positions 105,503 108,093 2,590

General $2,548,069

12%

Health $6,590,413

30%

Public Assistance $6,446,374

30%

Public Protection $5,674,407

26%

Other $469,434

2%

GeneralHealthPublic AssistancePublic ProtectionOther

Property Taxes $4,765,596

22%

State Assistance $5,542,998

26% Federal Assistance $4,236,481

19%

Charges for Services

$4,260,878 20%

Other $2,922,744

13% Property Taxes

State Assistance

Federal Assistance

Charges for Services

Other

County Budget

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County Budget Goals and Update

County Budget Goals

Provide a strong foundation for the future

Improve county jails and reform criminal justice system

Improve safety in the child welfare system

Enhance patient care in conjunction with the Affordable Care Act

Continue to build financial reserves

Implement funding plan to address OPEB liability

Net County Cost Budget Gap ($ millions)

County Budget Update

Current 2015-16 results indicate that the County is operating within budget

Budgetary fund balance is trending approximately 3.0% higher year-over-year

2016-17 Recommended Budget expected to fund ongoing expenditures with ongoing revenues

Source: County of Los Angeles

0.0 0.0 0.0

103.6 185.3

491.6 360.5

33.0

$0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0

2015-162014-152013-142012-132011-122010-112009-102008-09

County Budget

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GAAP Fund Balance in Excess of $3.1 Billion

Fiscal Year-End Fund Balance History1

1 Beginning in Fiscal Year 2010–11, the County displays final GAAP fund balances as "non-spendable," "restricted," "committed," "assigned", and "unassigned.". Fund balance formerly referred to as "unreserved-undesignated" is now classified as "unassigned."

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$401 $422 $478 $597 $540 $784

$1,017

$1,522 $1,235

$1,153 $972 $619

$909

$794 $1,367 $1,624

$1,655 $1,592

$259 $260 $254 $272 $272 $35 $55 $60 $41 $55

$332 $529 $483 $334

$763 $405

$376 $538 $492

$1,665 $1,590

$1,661 $1,769 $2,035

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Nonspendable Balance Restricted Balance Committed Balance Assigned Balance Unassigned Balance

Reserved Balance Unreserved-Designated Balance Unreserved-Undesignated Balance

$2,327

$2,738

$3,080

$3,374

$3,166 $2,995

$2,722 $2,642

$2,879

$3,103 $3,188

Fund Balance & Cash Flow Analysis

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Locally Generated Revenue Trends

Key Locally Generated Revenues Have Increased In Excess of 15% Over the Last Several Years ($ millions)

1 Does not include property tax revenue associated with redevelopment dissolution 2 Does not include any VLF revenue received as a result of service caseload. Includes only those amounts that vary in direct proportion to actual VLF collections. 3Estimate for 2015 locally generated revenues based on historical quarterly revenue growth Source: Bureau of Economic Analysis

2007-08 Actual

2008-09 Actual

2009-10 Actual

2010-11 Actual

2011-12 Actual

2012-13 Actual

2013-14 Actual

2014-15 Actual

2015-16 Final Budget

Property Tax1 $ 3,667.1 $ 3,816.3 $ 3,732.5 $ 3,711.4 $ 3,747.5 $ 3,848.7 $ 4,083.4 $ 4,284.1 $ 4,526.5

VLF Realignment2 18.5 17.0 15.8 15.8 14.7 17.2 17.2 17.0 17.0

Deed Transfer 56.4 36.5 44.5 45.1 48.3 66.0 71.8 79.9 78.0

Local Sales Tax 43.0 38.9 33.3 34.2 38.8 46.7 43.6 47.8 45.0

Prop 172 Sales Tax 623.0 547.9 533.1 556.6 607.5 644.6 676.6 691.6 722.2

Total $ 4,408.0 $ 4,456.6 $ 4,359.2 $ 4,363.1 $ 4,456.8 $ 4,623.2 $ 4,892.6 $ 5,117.4 $ 5,388.7

Locally Generated Revenues3, GDP & Inflation

-3%-2%-1%0%1%2%3%4%5%6%7%

2008 2009 2010 2011 2012 2013 2014

Locally Generated Revenue Growth US GDP Growth US Inflation

2015

County Revenue Analysis

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Gross Property Tax Collections Exceed 100% of Levy

LA COUNTY 1% AD VALOREM LEVY (NET OF RDA ADJUSTMENTS)

Year Total Tax Levy CollectionsCollections as % of Original Levy

Delinquent Collections Total Collections

Total Collections as % of Original Levy

2010-11 2,423,866,266.73$ 2,369,935,055.04$ 97.77% 92,937,882.87$ 2,462,872,937.91$ 101.61%2011-12 2,471,700,692.63 2,423,125,701.11 98.03% 61,087,898.21 2,484,213,599.32 100.51%2012-13 2,534,711,362.81 2,495,317,018.61 98.45% 58,015,848.79 2,553,332,867.40 100.73%2013-14 2,662,244,197.49 2,623,480,895.39 98.54% 48,308,441.63 2,671,789,337.02 100.36%2014-15 2,813,474,388.97 2,773,124,192.62 98.57% 45,708,965.93 2,818,833,158.55 100.19%

Over the prior five years, total tax collections for the County General Fund have exceeded the annual tax levy

Collection percentages for the current-year tax levy have ranged from 97.77% to 98.57%

Delinquent collections include payments from prior year tax rolls plus the following penalties:

— 10% delinquency penalty on gross amount of original levy

— 1.5% monthly interest rate penalty

Including delinquent payments, County General Fund has collected between 100.19% and 101.61% of the annual levy since 2010-11

Property Tax Collection

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Assessed Value Is Well Above Pre-Recession Levels

Net Assessed Valuation, AV Per Capita and YOY Growth Rates

$824

$914

$998

$1,068 $1,062 $1,042 $1,056 $1,080 $1,130

$1,192

$1,265

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ions

Net Assessed Valuation AV Per Capita

Source: County of Los Angeles

10.90% 9.22% 7.00% (0.51)% (1.87)% 1.36% 2.20% 4.66% 5.47% 6.13%

After the economic downturn, the County has experienced five consecutive years of accelerating AV growth

Assessed Property Valuation

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Residential Real Estate Market Outlook Remains Positive

The residential real estate market experienced strong growth in 2015

— New and existing home sales increased 6.7% from 2014 to 2015

— Average median new and existing home price increased by 6.9% from 2014 to 2015

Significant "stored value" as a result of Proposition 13 cushioned the impact of declining home values during the economic downturn

─ Although average median home prices decreased by 41% from 2007-2011, assessed valuation increased by 1% over the corresponding valuation period (FY 2008-09 to FY 2012-13)

Proposition 13 will continue to provide future stability for the County's primary source of discretionary revenue

Source: Real Estate Research Council of Southern California – 4rd Quarter 2015

Residential real estate sector continues to improve throughout the County

Historical Combined New and Existing Home Sales and Median Price (2004-2015*)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

# Sales $ Sales Price Median Home Price Homes Sales

Real Estate Market

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0%

20%

40%

60%

80%

100%

FY 12-13 FY 14-15 Est FY 12-13 FY 14-15 Est

Medi-CalUninsuredOther

Inpatient Outpatient

Department of Health Services (DHS) Will Deliver Budgetary Surplus in 2015-16

Recent DHS Performance DHS is becoming less reliant on County support

— Net County Cost to DHS is down more than 23% since its peak in FY 2007-08

Historic low in FY 2014-15 driven by strong Waiver receipts and initial inflow of ACA revenues

Higher-than-anticipated revenues continued in FY 2015-16 and will result in an operating surplus of approximately $223 million for DHS

— June 30, 2016 fund balance is projected to be in excess of $350 million

DHS Patient Payer Mix: Pre vs. Post Reform*

% of County Contributions – DHS

¹ Other category primarily represents patients with Medicare and private insurance coverage. *The County projects the FY 2015-16 DHS Patient Payer Mix to be similar to FY 2014-15

18.2%

16.3% 16.3%

16.2% 15.9%

14.4% 14.0%

12.6%

15.4%

10%

12%

14%

16%

18%

20%

2008 2009 2010 2011 2012 2013 2014 2015 2016

NC

C a

s %

of T

otal

DH

S B

udge

t

Department of Health Services

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Martin Luther King, Jr. Community Hospital

MLK Hospital reopened in July 2015 after undergoing several years of renovations

MLK Hospital is County-owned, but operated by the nonprofit MLK-LA Healthcare Corporation and services residents from all over South Los Angeles including Compton, Inglewood, Watts, Willowbrook and Lynwood

MLK Hospital is a state-of-the-art hospital providing inpatient primary care, emergency services, health education and outreach services — 131 beds providing general acute care — 21-bed emergency department — A critical care unit — Labor and delivery services — Radiology and imaging

Opening of facility will create more than 1,800 jobs in the area with approximately 900 jobs at the hospital

Department of Health Services

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Retirement System – Overview

LACERA provides retirement benefits to all general and safety (sheriff, fire and lifeguard) members

LACERA membership totaled 167,409 as of June 30, 2015, including 60,606 retirees

Using the market value of assets (no smoothing), the funded ratio would have been 85.0% as of June 30, 2015

— $980 million on deferred investment gains were still to be recognized as of June 30, 2015

Retirement System has been well managed, as evidenced by funding ratios in excess of state and national medians

Source: Milliman Actuarial Valuation (of LACERA) for June 30, 2014; Appendix A

FYE 6/30

Total Investment Portfolio Market Value

Total Fund Return

Unrecognized Gains / (Losses) Due to 5-Year Smoothing

Actuarial Assumed Rate of Return Funded Ratio

2010 $ 33,433,888 11.6% $ (6,210,553) 7.75% 83.3%

2011 39,452,011 20.4 (606,846) 7.70 80.6

2012 38,306,756 0.3 (1,586,386) 7.60 76.8

2013 41,773,519 12.1 1,401,477 7.50 75.0

2014 47,722,277 16.8 3,568,701 7.50 79.5

2015 48,818,350 4.3 980,000 7.50 83.3

Fair Value, Rates of Return and Funded Ratio ($000)

Los Angeles County Employees Retirement Association (LACERA) Overview

Retirement System

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July 1, 2014 OPEB Actuarial Valuation reported a $27.288 billion OPEB liability

County is implementing an annual pre-funding mechanism to manage its OPEB liability

— Current value of OPEB Trust is approximately $530 million as of January 31, 2016

— $24 million budgetary deposit to OPEB Trust in FY 2015-16

— $50 million transfer from excess retiree health premium reserve in January 2016

Recent elimination of spousal and dependent coverage and mandatory enrollment in Medicare for new employees is expected to save more than $840 million in OPEB pay-as-you-go costs over the next 30 years

OPEB Liability and Expenditures

1 Preliminary estimates, subject to change. Source: Milliman Actuarial Valuation (of LACERA) for June 30, 2014, Los Angeles County CAFRs and County of Los Angeles Chief Executive Office.

FYE 6/30

Pension Payment to LACERA

OPEB Payment to LACERA

Pension Obligation Bonds Debt Service

Total Pension and OPEB Related

Payments Percent of Total County Budget

2011 $ 898,803 $ 406,937 $ 372,130 $ 1,677,870 9.1%

2012 1,026,867 424,030 – 1,450,897 7.8

2013 1,118,514 441,062 – 1,559,577 8.1

2014 1,262,754 446,979 – 1,709,733 8.5

2015 1,430,426 450,202 -- 1,880,664 9.0

20161 1,376,490 507,192 -- 1,883,682 8.7

County Pension and OPEB Related Payments ($000)

OPEB

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County General Fund Debt Profile

County Debt Profile

County has financed its capital needs through a combination of pay-go expenditures and lease obligations

As of December 31, 2015, all of the County’s $1.540 billion long-term general fund lease revenue bonds and certificates of participation are fixed rate obligations

Commercial Paper Program provides cost-effective interim financing

Fitch upgraded the County’s appropriation-backed debt (e.g., lease revenue bonds) to AA- and its Issuer Credit Rating to AA in February 2016

Implied GO Ratings Aa2 (Positive) / AA+ (Stable) / AA (Stable)

Modest Debt Burden

Debt Service as a % of County Expenditures 1.30%

Principal as a % of total Assessed Valuation 0.13%

Debt per Capita $162

Lease Revenue Bond Ratings A1 (Positive) / AA (Stable) / AA- (Stable)

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County Debt Overview

All of the County’s long-term debt is fixed rate and typically structured with level debt service

Debt ratios improve further if debt service is viewed net of outside funding sources (California Courthouse Construction Fund and Federal Subsidies)

The County maintains a low debt burden and has significant flexibility and capacity to issue additional debt

1 Does not include operating leases. 2Net Debt Service includes long-term lease obligations but nets from the total contributions those payments that are received from external sources such as the courthouse

construction fund, federal subvention, and subsidies for Build America Bonds and Recovery Zone Economic Development Bonds.

Annual General Fund Net Debt Service1, 2 ($ millions)

0

20

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60

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100

120

140

160

180

200

FY 2

016

FY 2

017

FY 2

018

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025

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042

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043

FY 2

044

FY 2

045

Deb

t Ser

vice

($ m

illio

ns)

General Fund 2016D Proposed Debt Service Net Debt Service

County Debt Profile

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2016-17 TRANs

2016 Financing Calendar

County expects to issue approximately $800 million of 2016-17 Tax and Revenue Anticipation Notes

─ Pricing is currently scheduled for early June 2016

Structure will include a single bullet maturity which will mature on June 30, 2017

County TRANs are supported by a strong cash position and access to substantial alternative liquidity sources

─ June 30, 2016 ending cash balance is estimated at over $900 million

─ Including borrowable resources available to the General Fund, June 30, 2016 cash balance should comfortably exceed $2.3 billion

County ratings on current 2015-16 TRANs are as follows:

─ Standard & Poor’s: SP-1+

─ Moody’s: MIG 1

─ Fitch: F1+

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Lease Revenue Bonds

2016 Financing Calendar

$255,855,000 Public Works Financing Authority Lease Revenue Bonds, 2016 Series D

─ Closed on March 17, 2016

─ Proceeds used to redeem outstanding commercial paper notes issued to finance the new Martin Luther King Jr. Community Hospital

Future County Lease Revenue Bond Financings Include:

─ Public Works Financing Authority - $80 million Par (Q3 2016)

─ Los Angeles County Capital Asset Leasing Corporation (LACCAL) - $30 million Par (Q2 2017)

─ Consolidated Correctional Treatment Facility (Jail Replacement Project) - $1.5 to 2 billion Par (Timing TBD)

Current lease revenue bond ratings are as follows:

─ Standard & Poor’s: AA

─ Moody’s A1

─ Fitch AA-

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2016 County Redevelopment Bond Refunding Program

2016 Financing Calendar

Established in January 2013, the County Redevelopment Bond Refunding Program seeks to refinance outstanding tax allocation bonds issued by the 71 former redevelopment agencies in the County

Refunding revenue bonds are issued by a County JPA and include structural enhancements that make the credit superior to stand-alone transactions:

─ County intercept of all debt service payments

─ County management of continuing disclosure and other post-issuance tasks

In June 2015, $156 million of refunding bonds were issued on behalf of the Successor Agency to the Redevelopment Agency of the City of Long Beach

─ Generated gross debt service savings in excess of $60 million

─ All savings benefit local taxing entities, including the County, cities, and school districts

County anticipates issuing more than $250 million in tax allocation refunding revenue bonds in late 2016

In 2015, the County’s Redevelopment Bond Refunding Program won the National Association of Counties (NACo) Achievement Award - Best in Category (Financial Management)

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Closing Remarks

Conservative fiscal policies and prudent financial management have eliminated the County’s structural budget deficit

Strong property tax base (with significant stored value) provides revenue stability

Department of Health Services is considerably less reliant on County support

Significant steps taken to pre-fund the OPEB liability

Low debt burden with substantial debt capacity

Closing Remarks

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Contact Information

County of Los Angeles

Contact Information

Keith Knox Chief Deputy

Phone: 213-974-0703 Email: kknox@ttc.lacounty.gov

John Patterson Senior Finance Analyst Phone: 213-974-2310

Email: jpatterson@ttc.lacounty.gov

Joseph Kelly Treasurer and Tax Collector

Investor Information

http://ttc.lacounty.gov