Politics

How did DWP nonprofits spend $20 million? Under agreement, LA will soon find out

Under a settlement approved Wednesday, it appears Controller Ron Galperin has finally gained the authority to audit two nonprofits entirely funded by the DWP.
Under a settlement approved Wednesday, it appears Controller Ron Galperin has finally gained the authority to audit two nonprofits entirely funded by the DWP.
Alice Walton/KPCC

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Lingering questions over how millions of dollars in Department of Water and Power funds were spent by two nonprofits may finally be answered under a settlement approved Wednesday by the Los Angeles City Council.

It's been more than a year since Los Angeles city controller Ron Galperin attempted to audit the books for the Joint Safety Institute and Joint Training Institute, which together receive about $4 million a year from the DWP under a labor agreement. The nonprofits are jointly operated by the DWP and its union, IBEW Local 18, and tasked with providing safety and training programs for utility employees. 

"Everyone wants to know how these funds have been spent, what have they produced, and now we will be able to have that," said City Administrative Officer Miguel Santana. He said audits will start right away.

Union officials had objected to the controller's efforts to audit the books. In response, Galperin refused to pay the nonprofits this year.

A lengthy legal battle ensued - and the settlement approved Wednesday doesn't completely put an end to that lawsuit. 

"This is somewhat of a peace treaty, if you will," Santana said. 

Under the terms of the deal, the nonprofits will allow the controller and city administrative officer to audit financial records for the past five years. Once that OK is given, the city will have 120 days to pay $4 million owed to the groups. 

But if auditors find wrongdoing, Santana said the city won't pay that $4 million.

He also said the question of whether the Controller's Office has the power to audit groups that receive city funds will be left to the judge in the case. He said the city wants to erase any doubt it has that power.

The L.A. City Attorney's Office's confirmed the case is continuing in the Court of Appeal - though just how long that court process may take was unclear. 

"Today’s action ensures that the collective bargaining agreement ratified last year is not jeopardized and that the trusts will continue to operate to protect and train the work force at DWP," Brian D'Arcy, business manager for IBEW Local 18, said in a statement.  

Mayor Eric Garcetti issued his own statement: "I was elected with a mandate to reform the DWP, and for the past year, we've worked to bring transparency to these trusts and accountability for ratepayers.  With this agreement, the city can open the books and follow the money, which is what DWP customers deserve."