1,000 Protest Bid to Tap DWP Pension Fund

Mayor Richard Riordan’s plan to tap into the Los Angeles Department of Water and Power’s pension funds met a storm of protest Thursday as more than 1,000 workers and retirees flooded a meeting of the utility’s retirement board.

The issue was discussed for several hours but no changes in the pension plan were adopted. The subject will be considered again next Thursday.

Carrying picket signs saying “Stop Riordan’s Bandits,” the workers used emotional pleas and harsh rebukes to attack the mayor’s effort to transfer money earmarked for the pension plan to the city treasury, where it could be used to pay for more police.

“If it walks like a duck, quacks like a duck and looks like a duck then more than likely it’s a duck,” said Brian D’Arcy, business manager of Local 18 of the International Brotherhood of Electrical Workers. “The duck in this case is a corporate-style raid of the pension plan.”

Deputy Mayor Michael Keeley accused the union, which urged workers to attend the meeting, of mounting “a very calculated campaign of disinformation.”

The seven-member retirement board usually toils in obscurity, drawing no more than a handful of community watchdogs to its meetings. But Thursday’s session had to be moved into the department auditorium to accommodate the crowd.

As part of his effort to make government more efficient, Riordan is searching the DWP and all other departments for new revenue sources and cost savings. He argues that the DWP pension plan, a $4.2-billion fund, is managed in such a conservative manner that the utility is contributing hundreds of millions of dollars more than it should.

Tapping into that money would streamline the DWP and provide funding for Riordan’s costly plan to put thousands more police officers on the street, the mayor says.

Riordan is proposing a reduction in the DWP’s future contributions to the plan. A more controversial scheme that has been used by some public agencies involves taking money from the fund to handle immediate needs.

The mayor’s recommendations have caused bitter infighting at the DWP, where the full-time staffers who manage the pension plan are in conflict with the Riordan appointees pushing the changes.

At Thursday’s meeting, Kathleen Thornton, assistant manager of the plan, left the dais and joined the employees in the audience to symbolize her fiduciary responsibility to them.

“I’m putting myself at risk for you,” she told the cheering workers.

The decision on whether to lower the DWP’s contribution to the pension plan rests solely with the retirement board, which has three employee-elected members and four who were either appointed by Riordan or report to him. The employee representatives are opposed to the changes. The other four say the suggestions merit further consideration.

An actuary hired by the DWP, David C. LeSueur of Towers Perrin, recommended against making changes to the plan’s accounting methods, even though they are more conservative than most other public plans. He said the plan, the seventh-largest public fund in the state, has been managed with a long-term view and should not be altered.

“My recommendation is to continue the current methodology,” LeSueur said.

Leading the mayor’s charge has been Dennis Tito, who is president of the Riordan-appointed DWP Board of Commissioners. Tito’s Wilshire Associates is a pension adviser for systems in California and several states. He said he was shocked by the outdated methods used to manage the DWP plan and has hired another actuary to analyze it.

“We have a city that’s in trouble because it’s not properly managed on the whole,” Tito said. “This mayor was elected to turn this city run around. . . . That’s the big picture. That’s what this is all about. This is not a short-term political fix.”

But workers saw Riordan’s interest in the pension fund as political meddling in a plan designed to secure their futures.