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DWP says it can't track millions in ratepayer money

DWP ratepayer funds flow to two groups run by agency managers and union leaders, with little accountability.

September 19, 2013|By Jack Dolan
  • General Manager Ron Nichols is one of three DWP representatives on the boards overseeing the nonprofits.
General Manager Ron Nichols is one of three DWP representatives on the boards… (Gina Ferazzi, Los Angeles…)

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.

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."

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.

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