Frustrated by their struggle to learn how two Los Angeles Department of Water and Power nonprofit institutes spent more than $40 million of ratepayers’ money, commissioners of the publicly owned utility voted Tuesday to cut off funding to the organizations and asked the city controller to perform a sweeping audit of the accounts.
The two organizations, the Joint Training Institute and the Joint Safety Institute, are co-run by DWP General Manger Ron Nichols and International Brotherhood of Electrical Workers Local 18 business manager Brian D’Arcy. The institutes were created to improve relations between management and labor after a series of contentious job cuts at the department in the late ‘90s.
The institutes, which have received as much as $4 million a year, came under intense scrutiny after The Times reported in September that the DWP had only scant information on how the money has been spent, and both department managers and labor leaders refused to describe what the institutes have accomplished.
Since then, the DWP’s five-member Board of Commissioners has been demanding answers to no avail. Last month, under the threat of an outside audit, the union promised that the institutes’ own accountants would produce a detailed report of the spending. Commissioners requested the results by Nov. 19.
On Tuesday morning, Nichols told the commissioners the union’s audit was not ready.
“The auditors they’ve hired are their accountants, so it’s not like they even have to walk down the hall, the information should be readily available,” Commissioner Michael Fleming said before the five-member panel voted unanimously to stop sending money to the groups until their past spending is accounted for.
After demanding that the audit be performed by City Controller Ron Galperin instead of the union, Commission President Mel Levine said, “It’s a source of great frustration that this requires this kind of action.... There is no reason why ratepayers shouldn’t have been able to receive this information promptly.”
Commissioner Jill Banks Barad added, “The longer this goes on, the worse it looks for the trusts, the worse it looks for the DWP.”
About $1 million a year has been used to pay the salaries of a few of the nonprofit trusts’ top administrators, according to the limited records the utility provided to The Times after the newspaper submitted a request under the California Public Records Act.
The Joint Training Institute’s administrator was paid $212,236 in 2012, the records show. Jon Pokorski, another top administrator who is also the union president, was paid $171,361 in 2012.
The nonprofits’ federal tax records offer only broad summaries of the organizations’ outlays, including more than $360,000 spent on travel from 2009 to 2011 and nearly $2.4 million spent on “other.”
D’Arcy did not respond to a request for comment Tuesday afternoon.
Asked during an interview last week why he hasn’t made the institutes’ financial records public himself, DWP manager Nichols — who attends the groups’ monthly meetings — said he doesn’t have them. “I see them, they’re presented to me,” Nichols said, but added that he doesn’t take the documents with him when he leaves.
Asked if he could get the documents if he wanted them, Nichols said, “I suppose I could.”
On Tuesday, DWP spokesman Joe Ramallo said that while Nichols can inspect the documents, he does not actually have the authority to “compel” their release.
“They have made this much more difficult than it should be,” Galperin said of the union and DWP managers. “Quite frankly, the games have gone on too long.”
A report from Los Angeles’ chief administrative officer said the two institutes act like consultants, helping managers identify ways to improve safety and training at the department.
The accident rate at the DWP has dropped from 8% to 5% since the inception of the Joint Safety Institute in 2000. But it is difficult to say how much of that reduction is attributable to the organization’s activities, the report noted.
The vast majority of training is still done by the DWP’s regular staff. The department spends about $115 million a year on training, dwarfing the roughly $3 million spent by the nonprofits.