Audit of DWP nonprofits’ financial records to resume

L.A. Department of Water and Power union boss Brian D'Arcy at a rally in June protesting the withholding of payments to two utility-related nonprofits until a city audit of the groups is completed.
L.A. Department of Water and Power union boss Brian D’Arcy at a rally in June protesting the withholding of payments to two utility-related nonprofits until a city audit of the groups is completed.
(Christina House / For The Times)

An on-again, off-again audit of two controversial Los Angeles Department of Water and Power nonprofit trusts is set to resume, City Controller Ron Galperin announced Friday.

At issue is how the two nonprofits, run jointly by DWP managers and leaders of the utility’s largest union, have spent more than $40 million in ratepayer money they’ve received since the early 2000s.

After the Los Angeles Times reported in September 2013 that DWP officials had scant information on how the money had been used, the city’s top elected leaders, including Galperin and Mayor Eric Garcetti, began a legal and political battle with union leaders over access to the nonprofits’ financial records.


Union boss Brian D’Arcy agreed to open the books to city auditors beginning in December, but the effort quickly stalled when auditors were accused of taking too many notes.

The agreement, brokered by City Council President Herb Wesson, contained an unusual provision that allowed auditors to review records at the nonprofits’ offices, but prohibited them from photocopying or removing any documents.

Instead, auditors would be permitted to “transcribe the relevant content of any documents reviewed,” according to the agreement.

Two weeks after the review began, the nonprofits’ administrators said the auditors were transcribing too much information, according to City Hall sources familiar with the dispute.

On Friday, announcing the audit would resume next week, Galperin said his staff was promised “unfettered access to the documents and other materials that are needed to complete their work.”

Galperin and his office declined to say how the impasse was resolved.

“We don’t discuss the details of audits in progress,” said Galperin spokesman Lowell Goodman. “That’s our office’s policy.” Union officials declined to comment.

In July, Galperin refused to make the annual city payment — $3.8 million for 2014 — to the nonprofits until his office could finish its examination. The money remains on hold until the audit is complete, which Goodman said will be in “late spring.”

D’Arcy, who heads the International Brotherhood of Electrical Workers Local 18, has argued that the nonprofits are not public entities and are not subject to open-records laws or the auditing authority of the city controller.

The nonprofits — the Joint Training Institute and the Joint Safety Institute — were created in the early 2000s following a difficult round of job cuts at the DWP, with the stated mission of improving labor-management relations. Union officials and a city analyst have said the groups contributed to worthwhile safety programs.

But former DWP General Manger Ron Nichols struggled to recall their biggest achievements when questioned by lawmakers in 2013. He noted the nonprofits’ combined annual budget of about $4 million is dwarfed by the $117 million the DWP spends on safety programs each year.

Galperin also made available on Friday a new website, called the DWP Utility Panel, with data on DWP spending and performance, including how long callers wait for customer service, how many water main breaks the agency has suffered annually and per capita water use among Angelenos.