DWP says it can’t track millions in ratepayer money
The Los Angeles Department of Water and Power has directed an estimated $40 million in ratepayer money to two nonprofit groups charged with improving relations with the utility’s largest employee union, but the agency claims to have scant information on how the public funds have been spent.
The Joint Training Institute and the Joint Safety Institute, controlled by DWP managers and union leaders, have received up to $4 million per year since their creation more than a decade ago after a contentious round of job cutbacks at one of the nation’s largest municipal utilities.
Nearly all of the nonprofits’ money comes from DWP ratepayers, records show. About $1 million per year has been used to pay the salaries of a handful of administrators, according to the limited records the utility has provided to The Times under the California Public Records Act. Separate federal tax records offer only summaries of the organizations’ outlays, including more than $360,000 spent on travel from 2009 to 2011.
FOR THE RECORD:
DWP ratepayer funds: In the Sept. 20 Section A, an article about nonprofit groups that receive ratepayer funds from the Los Angeles Department of Water and Power said that Deputy City Atty. Mike Dundas acknowledged the existence of memos written by city lawyers that argued that the nonprofits should be bound by open government rules but that the memos were being withheld under attorney-client privilege. Dundas did not discuss specifics of the advice contained in the memos. —
Officials at the nonprofits, the DWP and the employees’ union, Local 18 of the International Brotherhood of Electrical Workers, declined to be interviewed about the institutes’ activities and spending.
Nonprofits’ financial records
After inquiries from The Times, a spokesman for Mayor Eric Garcetti said the mayor plans to meet with DWP managers in coming days to discuss the issue. “This is ratepayer money and they need to account for it,†Jeff Millman said.
The broad purpose of the organizations, city records show, has been to “identify†safety and training as core values at the department, and to promote “communication, mutual trust and respect†between DWP managers and the electrical workers’ union.
Ordinances establishing the nonprofits in 2000 and 2002 don’t specify how the ratepayer money should be spent.
References to the organizations’ work in public records reviewed by The Times give a spotty picture of the groups’ activities. A recent report by the UC Berkeley Center for Labor Research and Education notes that one, the Joint Training Institute, developed an online self-study course, including instruction in basic math and reading comprehension, for prospective DWP employees preparing for Civil Service exams.
Another report posted online in 2004 by a former Joint Safety Institute administrator discussed the need for “ergonomic training†and a “defensive-driving fair†for agency employees. “Probably the most dangerous thing we do every day is drive to and from work,†the administrator wrote.
Three representatives of the DWP, including General Manager Ron Nichols, serve on the boards overseeing the nonprofits. Three additional board members come from the union local, led by Business Manager Brian D’Arcy. Board members are not paid for their service.
DWP managers and union leaders have struggled to agree on uses for the money, apparently contributing to an accumulation of cash in the nonprofits’ accounts, records and interviews show. The two groups had $13.8 million on hand at the end of fiscal 2011-12, the most recent year for which the tax-exempt organizations’ IRS filings are available. The filings do not detail outlays. For example, they don’t indicate who traveled or where they went.
D’Arcy did not respond to requests for comment. An attorney for the union declined a request for records related to the nonprofits, arguing that the union is not subject to the requirements of the state Public Records Act.
The Los Angeles city controller’s office said it hasn’t audited the groups and the city clerk’s office noted that the nonprofits are not required to file financial reports with the city.
The institutes’ offices are located at a DWP facility in Sun Valley. But the utility’s official spokesman, Joe Ramallo, declined a request to help arrange a tour. “I don’t represent either entity,†he said, “Nor do I speak on their behalf.â€
Ramallo directed a reporter to an electrical workers union website, which listed names and phone numbers for administrators at the nonprofits. Dan Scorza, a Joint Training Institute administrator who was paid $212,236 in 2012 according to DWP records, said, “We provide services for the department. I’m not sure what else I can say to you.†He referred questions back to Ramallo at the DWP.
A man who answered a phone listed for another institute employee, Joint Labor Management Administrator Jon Pokorski, who records show was paid $171,361 in 2012, hung up when a reporter identified himself. Voice messages left for two other employees were not returned.
On Thursday afternoon, Ramallo, the DWP spokesman, said the nonprofits play an important role in advising the agency on training and the industry’s best safety practices, but could not provide more specific information about what the organizations have accomplished.
Former DWP General Manager David Freeman helped create the Joint Safety Institute in 2000 after a grueling round of job cuts in the late 1990s. “I think it was a good idea then, it resulted in embedding a safety culture,†Freeman said, adding that he hasn’t kept track of the groups’ spending or activities.
He did recall arguing to the DWP union leader that the institute’s business should be open to the public. “Brian D’Arcy did not agree with me,†Freeman said. “Why? Only God knows.â€
A quiet debate over making the institutes’ meetings and records public has continued within the DWP and the city attorney’s office for years, interviews show.
Deputy City Atty. Mike Dundas acknowledged the existence of memos written by city lawyers that argue the nonprofits should be bound by open government rules that apply to city agencies. But Dundas said he was prevented from releasing those memos because the DWP had invoked attorney-client privilege on the communications.
Dundas did provide a 2004 opinion from former California Atty. Gen. Bill Lockyer that a similar nonprofit created by a local government agency and its union was not subject to the state’s open records law because half the board members were appointed by the union.
Lack of openness in the expenditure of public dollars tends to invite suspicion, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. “It’s entirely possible there’s a legitimate explanation for how the money is being used,†he said. “Until that explanation is provided, though, the logical assumption is that they are hiding huge amounts of ratepayer dollars off the books for no discernible public gain.â€
Questions about DWP spending practices have reverberated through city politics during much of 2013, partly because the electrical workers union became a major player in the mayoral campaign. The union and its affiliates spent millions in an unsuccessful bid to elect Garcetti’s chief rival.
In response, Garcetti campaigned on a promise to rein in the utility’s spending on employee salaries and benefits. Last month, the mayor sought to rally public support for concessions in a new DWP labor contract, with mixed results.
The Times has reported in recent months that DWP workers averaged more than $100,000 in salary, overtime and other payments last year and made roughly 50% more than the average for other city workers.
The DWP has also granted unusually generous paid sick time to employees for decades, the paper found. Department policy allows up to 10 sick days per year, but in practice there had been no limit, records showed. Employees have been paid $35.5 million for extra sick days since 2010, The Times reported.
A separate Times’ analysis showed the department offers unionized employees bonuses — in the form of extra overtime — when outside contractors are hired to help get work done.
Eliminating that policy could save up to $20 million over the next four years, DWP officials said last month.
Four new Garcetti appointees to the DWP Board of Commissioners were confirmed by the City Council last week.
One, Sherman Oaks political consultant Jill Banks Barad, said creating greater transparency at the $4 billion-a-year agency will be a priority.
“We must be able to look inside DWP,†Barad said.
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