Mayor Seeks Money From DWP Pension Fund : Spending: Riordan says program can spare $40 million for plan to boost LAPD’s ranks. But agency workers and retirees say it is a raid.

To beef up the Police Department, Los Angeles Mayor Richard Riordan intends to dip into the Department of Water and Power pension fund, which he says is so conservatively run that more than $40 million can be spared immediately.

But angry DWP employees and retirees see the issue differently. They are calling Riordan’s plan a raid and intend to lobby the DWP Retirement Board, which is charged with managing the fund.

“What Riordan is doing . . . is raiding the plan,” said Brian D’Arcy, who represents 6,500 DWP workers in Local 18 of the International Brotherhood of Electrical Workers. “He’s playing politics with our futures.”

The seven-member board will take up the matter this morning, and D’Arcy acknowledges that Riordan has the edge.

Three of the members, Vincent Foley, Ron Valdez and Marciene Hunter, are elected by employees. The other four either work for Riordan or were appointed by him. They are DWP General Manager Dan Waters, Financial Officer Phyllis Currie and Commissioners Jose de Jesus Legaspi and Constance Rice.

The dispute revolves around the accounting methods used to manage the $2.4 billion in the state’s seventh-largest public pension fund.

Riordan, eager to make money available for his police plan, contends that the administrators of the DWP fund are too cautious and that tens of millions of dollars is available for next year’s budget. The pension fund may be overfunded by as much as $500 million, the mayor’s aides say.

“The term raiding has the implication that money is being taken out and that’s not true,” said Commission President Dennis Tito, a consultant to the pension systems in California and several other states. “It isn’t a matter of taking money away from the pension fund. It’s a matter of how much is appropriate to contribute each year.”

The attempt to squeeze money from the DWP is part of the mayor’s wider effort to get all city departments, including the semiautonomous Water and Power, Harbor and Airport departments, to contribute more to city operations.

Led by Tito, Riordan’s aides want to change the accounting methods so that the DWP fund is measured by its current market value, which constantly fluctuates, and not the lower real cost. The pension fund’s stock is valued at its purchase price, not an approximation of market value, which is used by most other retirement funds.

Aides to the mayor also want to change the current assumption that all new employees will be retiring from the DWP. In actuality, about one in four people who start working at the DWP retire from the utility, they say. The theory is that by only funding the plan when an employee approaches retirement age, the DWP would have more money available.

The third proposed change would spread out the fund’s payments for its unfunded liability, freeing up more money in the short term but ultimately resulting in higher interest payments. The plan is currently in its 20th year of a 30-year amortization period. Riordan aides want to extend the payments beyond 10 years.

In a report issued last month, the DWP’s actuary, Towers Perrin, analyzed the costs of each of the proposed changes but did not recommend changes in the current methods.

Some of those who manage the retirement money argue that Riordan is following in the footsteps of many governments and corporations that have looked to pension funds to get out of budget jams. They say that taking a long-term view--and not using the fund to pay for current political crises--is the wisest course.

“I was elected to protect the fund from political raids,” said Foley, the president of the board. “Mayor Riordan was elected to put more police on the street. We have a conflict.”

Hunter, another employee representative, maintains that approving the changes would be illegal.

But Riordan sees the pension fund as an example of the inefficient practices plaguing city government. To continue to do things the old way, he said in an interview Wednesday, “doesn’t make much sense.”