After a year and a half of political fights, lawsuits and protests, City Controller Ron Galperin was finally able to open the books of two nonprofit trusts associated with the Los Angeles Department of Water and Power and reveal, at least partially, how managers spent millions of dollars in ratepayer funds. His audit, along with a report from City Administrative Officer Miguel Santana, found that the Joint Training Institute and the Joint Safety Institute did not have proper oversight or financial controls, and that they provided no real information to taxpayers or policymakers on their effectiveness or outcomes.
From the beginning, this was a fight over transparency and the basic principle that the public has the right to know how public dollars are spent. There were no smoking guns or criminal misdeeds discovered during the audits. But it's clear that the institutes, which received $40 million over a decade to advise the utility on safety and training issues, were allowed to operate with little accountability.
The trusts are co-run by managers of the DWP and leaders of the International Brotherhood of Electrical Workers Local 18, the union that represents most of the utility's workforce. Employees of the trusts are paid $222,000 each and were allowed to use trust-issued credit cards to charge business-related dining and travel without pre-authorization, receipts or limits. In one case, an employee charged $30,000 over five years on gasoline, which was on top of a $500 monthly car allowance. In addition, the institutes spent $6 million on outside contracts over five years, without competitive bidding.
Whether or not you think steak dinners, free gas and no-bid contracts are an outrage, the fact is that the trusts were allowed to operate unchecked and unmonitored for years because city leaders, including Mayor Eric Garcetti and his predecessors, along with the City Council, failed to asked basic questions or provide even minimal oversight. Watchdogs and journalists raised questions about the institutes a decade ago, yet city leaders repeatedly signed off on labor contracts that guaranteed funding for the trusts, with no accountability or transparency.
This cannot continue. The $40 million spent over the last 10 years on the trusts is nothing compared to the billions that the utility will be spending over the next 10 years to develop more renewable energy, upgrade aging infrastructure and meet energy efficiency goals. Garcetti and the City Council must provide real, critical oversight on how ratepayer dollars are spent.
Likewise, DWP General Manager Marcie Edwards must explain more clearly why she signed a letter criticizing Galperin's audit as "littered with accusatory innuendo and peppered with contradictory statements." Edwards is expected to propose raising utility rates this summer, but she will not inspire confidence in ratepayers by pooh-poohing financial audits; if she has meaningful criticisms, she should make them public.