How real are the ‘cost savings’ in generous DWP union contract? We run the numbers

For nearly two decades, ratepayers of the Los Angeles Department of Water and Power have pumped nearly $4 million a year into a pair of nonprofits created to improve employee training and safety at the city-owned utility.

The nonprofits paid top utility managers and union leaders six-figure salaries and provided plush expense accounts but never demonstrated they had much impact on either training or safety. When city leaders demanded financial records after a Times investigation of the nonprofits in 2013, union leaders went to court in a bid to keep the information secret.

L.A. City Council poised to approve raises of up to 22% for DWP workers »

Mayor Eric Garcetti, who campaigned on a promise to rein in costs and improve customer service at the DWP, is pointing to the elimination of the nonprofits as a key win for ratepayers in the new five-year contract he has negotiated with the DWP’s largest union.

But the annual savings from disbanding the nonprofits is more than offset by the estimated $56 million in raises and other perks union members would receive each year under the proposed contract, leading critics to question whether it’s such a good deal.

A good deal or ‘ransom’?

“What the mayor won is a $4 million face-saving gesture in exchange for a $56-million ransom paid by the city,” said Jamie Court, president of advocacy organization Consumer Watchdog. “He has never explained why he wasn’t more aggressive from the start in shutting those nonprofits down and demanding real accountability.”

The City Council is set to vote on the generous deal Wednesday. The vote was fast-tracked without holding committee hearings on the matter.

The new contract also provides for six raises over the next five years, lifting pay from 13.2% to 22.3% by 2021, depending on inflation. A key rationale offered by city officials is the need to prevent skilled workers from abandoning the DWP for higher-paying jobs in the private sector.

But fewer than 100 DWP employees have resigned from the department and left city service in each of the last four years, city records show. That’s a fraction of the more than 9,000 full-time workers at the nation’s largest publicly owned utility, who on top of their salaries and pensions make no contribution to their employee health insurance premiums.

Last year, the average wage for DWP employees was $102,997 with the department paying an additional $16,312 for retirement and health benefits, according to the California state controller.

Garcetti spokesman Alex Comisar declined to comment on the low number of employees leaving the DWP each year, or the fact that the cost of new raises far surpasses the saving from eliminating the nonprofits, known as the Joint Training Institute and the Joint Safety Institute. But eliminating the nonprofits, he said, is “a substantial win for LADWP ratepayers — not just because it saves millions of dollars every year, but because it makes our utility more transparent and accountable to our customers.”

In addition to those who resigned, 500 more DWP employees retired last year. City officials said some of them took their pensions and went to work for other employers, but could not say how many.

Mayor Eric Garcetti, right, gives a friendly shoulder bump to Council President Herb Wesson in 2016. The mayor promised to rein in costs at the DWP when he came to office in 2013.

(Al Seib / Los Angeles Times)

The cost of retaining talent

A recent audit by City Controller Ron Galperin showed the DWP pays roughly half a million dollars to train apprentices, including new linemen, only to have some lured away by high salaries and signing bonuses offered by other utilities.

The audit noted that the DWP lacks any real requirement that the apprentices stay and work for the department after they finish training.

On Wednesday, Galperin, who has no role in the contract negotiations, argued that carefully targeted raises are one way to address the problem.

“Compensation increases should be based on skills that are highly valued in the competitive job market, as well as longevity, rather than granted extensively,” Galperin said.

Brian D’Arcy, who leads the International Brotherhood of Electrical Workers Local 18, the DWP union, did not respond to a request for comment Wednesday.

Supporters of the contract said union members are due generous pay increases because their last contract, which was negotiated by Garcetti after his election in 2013, offered no raises for three years, followed by a single 2% increase that went into effect last fall.

Base salaries at DWP saw little growth from 2013 to 2015, the last year of data available from Transparent California, a website devoted to publishing salary and benefit information for the state’s public employees. But overtime pay grew by 28% over the same period, data show.

More than a hundred DWP employees made more than $100,000 in overtime in 2015, data show. At least three dozen of those were linemen and their supervisors.

The average pay for linemen, including overtime, was $146,854, data show. Their supervisors averaged $204,174.

The new contract offers them 4% base salary increases in addition to the raises all other employees would receive. It also promises to pay them twice their base pay when they work certain types of overtime, instead of the 1.5 times their salary they get now.

Long battle over nonprofit records

Under the proposed contract, the nonprofits will be eliminated and replaced by a separate entity financed with contributions from DWP employees’ paychecks, not directly by the city.

In 2015, after a long court battle, Galperin won the right to do a limited audit of the nonprofits’ records.

He found the groups had paid millions to vendors without competitive bids, overpaid top managers and let them charge personal travel, gasoline and other items without filing expense reports.

In five years, a handful of trust employees had charged more than $660,000 to their publicly financed credit cards for items such as steak dinners and trips to Las Vegas, Hawaii and New Orleans.

A separate report by the City Administrative Office said the nonprofits failed to provide any “real information on the outcomes or effectiveness” of their programs.

Times staff writer Dakota Smith contributed to this report.

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