Los Angeles City Controller Ron Galperin disclosed Wednesday that he will refuse to pay nearly $4 million the city owes two controversial nonprofits affiliated with the Department of Water and Power, saying he can't write the checks in "good conscience" because the groups have refused to show what they've done with more than $40 million in previous payments.
“As the City Controller, I have a duty to protect the public's money and to ensure that City funds are spent appropriately," Galperin wrote in an email to The Times. The city charter requires him to withhold a payment “if there is any question that they may be improper.”
Galperin's move comes days after Mayor Eric Garcetti conceded that the city would have to make the annual payments, which have been enshrined in the fine print of DWP union contracts for years, including the one Garcetti approved last fall.
The nonprofits, the Joint Training Institute and the Joint Safety Institute, were created in the early 2000s after a grueling round of job cuts at the city-owned utility. Since then they have been receiving annual payments from the city of up to $4 million, with no public oversight of how the money is spent.
The groups are co-administered by trustees appointed by the International Brotherhood of Electrical Workers Local 18, the DWP's largest union, and DWP management. Each side appoints the same number of trustees.
In September, The Times reported that DWP management had only scant information on how the money has been spent. Since then, Brian D'Arcy, business manager for the union, has blocked attempts by the mayor, Galperin and City Atty. Mike Feuer to get detailed financial records.
In January, Galperin subpoenaed D'Arcy for the records and to sit for an interview under oath with city auditors. D'Arcy sued to quash the subpoenas, but a Los Angeles Superior Court judge ordered him to comply. D'Arcy filed an appeal and was granted a stay by the district court while the case is pending.
D'Arcy could not be reached for comment Wednesday morning.
On Tuesday, Garcetti spokesman Jeff Millman said while the annual $4 million would have to be paid, the nonprofits' bank accounts were "effectively frozen" because the DWP management trustees had not -- and would not -- authorize spending for the current fiscal year, which began July 1.
But the DWP would still pay the nonprofits' employees salaries, Millman said. The groups are staffed by a handful of well-paid workers, including the union president, who are free from their previous duties at the utility.
The broad purpose of the nonprofits, city records show, was 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.
Late last year, former DWP general manager Ron Nichols said he could not provide a list of what, specifically, the nonprofits had accomplished. He also pointed out that the roughly $4 million that goes to the nonprofits each year is dwarfed by the $117 million the DWP spends on its own training and safety programs.
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