Politics, government and public life for Southern California

FAQ: What you need to know about the proposed DWP deal

Eric Garcetti DWP City Hall

Mae Ryan/KPCC

Eric Garcetti discusses a new deal the city reached with Department of Water and Power workers at Los Angeles City Hall.

Los Angeles Mayor Eric Garcetti on Thursday said the city has reached a tentative agreement on a new contract with the powerful labor union that represents 8,200 Department of Water and Power workers. He said it would create “a pathway to comprehensive DWP reform.”

Does the deal include a raise for DWP workers (some of the best-paid city employees in Los Angeles whose average salary is nearly $100,000)?

The deal provides no raise until October 1, 2016. The International Brotherhood of Electrical Workers (IBEW), which represents DWP workers, has agreed to delay a cost-of-living increase that was scheduled for October 1 of this year. Significantly, the 2016 increase is tied to this year’s consumer price index, which is a relatively low two percent. In addition, starting salaries for new employees in 34 job classifications would be reduced.

  • 4-year savings estimate: $400 million
  • 30-year saving estimate: $4.118 billion (based on lower future salaries and pension obligations).

Will DWP workers start paying for their healthcare? Currently, most of them pay nothing at all.

Mayor Garcetti said the DWP would use the deferred pay raise to help pay for workers’ healthcare. This results in no cost savings. But the mayor and the city's Chief Administrative Officer, Miguel Santana, said it sets a precedent for DWP workers to start contributing two percent of their salaries to their healthcare plans and four percent of their salaries to their retiree healthcare plans in the next contract.

Will DWP workers contribute more to their pension plans?

No. But newly-hired workers would receive less generous pensions.  For example, the maximum annual pension will be 80 percent of an employee's highest salary, instead of the current 100 percent.  And new employees will contribute 10 percent of their salaries to pensions and retiree healthcare. Current employees pay six percent.

  • 4-year savings estimate: $41 million
  • 30-year savings estimate: $1.875 billion

What is the lawsuit that would be settled as part of the contract?

Some members of the DWP pension board had sued the city for transferring hundreds of workers from other departments  and saddling the agency with more pension obligations. The proposed contract would settle the lawsuit by requiring the DWP pension system to only contribute to an employee’s pension while he or she is a DWP employee. The city’s general fund would owe nothing to the DWP pension fund for employees who’ve already transferred to the DWP.

  • Estimated cost savings: $180-$210 million

How would the proposed contract change work rules at the DWP?

Unlike in previous contracts, the union has agreed to negotiate work rules on an ongoing basis during the life of the four-year deal. The contract sets up a formal process that includes the mayor and city council. Garcetti and the DWP’s Ratepayer Advocate, Fred Pickel, have said myriad work rules are costly and inefficient. For example, when the DWP hires outside contractors, the agency must offer overtime to its employees who otherwise would have performed the work.

How much credit does Mayor Garcetti deserve for reaching the deal with the union?

City negotiators worked out many of the details before Garcetti became mayor, including the deferred pay raise, new pension tier, and settlement of the lawsuit. But Garcetti pushed lowering more starting salaries and making it easier to change work rules. He also lobbied to tie the 2016 cost-of-living increase to this year's inflation rate.

“I think we had a good deal a month ago,” said City Council President Herb Wesson. “But we have a better deal today because of the hard line the mayor took.”

How will the new deal affect water and power rates in the city of Los Angeles?

The Chief Legislative Analyst said water and electricity rate increases will be marginally lower as a result of the salary and pension cost reductions. DWP spokesman Joe Ramallo said ratepayers can still expect a “double digit” increase in their rates over the next four years as the agency updates aging infrastructure, meets new regulatory requirements, and shifts to more renewable energy sources.

What has IBEW union chief Brian D’Arcy said about the proposed agreement? He and Garcetti clashed during the election when D’Arcy backed his opponent, Wendy Greuel.

The low profile D’Arcy, who is one of the most powerful people at City Hall, said in a statement that he is committed to creating “real savings for taxpayers.” His rank-and-file members must approve the agreement by majority vote for it to become effective.

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