Union chief Brian D’Arcy: ‘It’s time to clear the air’ on DWP trusts

As the elected business manager of IBEW Local 18, a job I’ve held for more than 20 years, I represent more than 8,500 women and men who work at the Department of Water and Power. I am proud of the many things we have accomplished, including fair wages, high safety and training standards, and responsible workplace rules. I have at times been unfairly attacked by the media and by politicians who do not share my views and values, but that is part of a democratic process that ensures free speech. My aim has always been to protect the interests and improve the welfare of the women and men I serve.

Over the last several months, some have questioned the administration of two trust funds formed by the DWP and Local 18. I have been reluctant to speak out previously about the Joint Safety Institute and the Joint Training Institute because of respect for the rules provided in the trust agreements. As a trustee of the funds, I have a duty to preserve the funds’ independence from the very kind of political meddling we have seen in recent months.

That said, I recognize that institutions like these trusts must have the public’s faith and confidence. It is time to clear the air. To help move toward that goal, I am taking a number of steps.

First, I have decided to release online, to the beneficiaries of the trusts, a new and comprehensive audit report prepared by Miller Kaplan Arase LLP, an independent certified public accounting firm. This audit should dispel any doubt about how the trusts are spending their money. Among other things, it shows that 75% of the trusts’ expenditures go to fund safety and training programs provided to employees, while 25% is spent on administration of the trusts.

Second, I have asked John Van de Kamp, a former state attorney general and L.A. County district attorney, to serve as a neutral party to work with the district attorney’s office to facilitate a full examination of the administration of the trusts’ funds. I fully expect this will confirm that there has been no wrongdoing whatsoever, and the district attorney’s office will have our full cooperation in this process.

The trusts in question were established during collective bargaining between the DWP and Local 18 in 2000 and 2002, with the approval of the City Council and the mayor. As then-DWP General Manager David Freeman advised the City Council in recommending approval: “The trust structure establishes an entity separate and apart from the department under a board of trustees … with exclusive authority and discretion to control and manage the assets, operations and administration.” The City Council resolution approving the Joint Safety Institute declared it “an irrevocable trust … acting for the benefit and in the fiduciary interest of those DWP employees represented by Local 18.” The reason I filed a lawsuit seeking to invalidate subpoenas issued by the city controller was to uphold the principle that these trusts are in fact independent entities and not a part of city government.

Some critics have tried to portray the trusts as “slush funds,” sitting in a secret account, that are used for improper purposes. This is absolutely false. The department agreed to fund the trusts by an annual disbursement to the trusts, according to a cents-per-hour formula, after hard-fought negotiations in which the parties mutually reached agreement on a staff reduction plan and early retirement incentives, and dealt with the resultant safety and training problems by establishing these programs. Both funds are overseen by bonded trustees from both management and labor, who have a fiduciary duty to act solely in the interests of the trusts’ employee beneficiaries. The trusts are audited annually by an independent CPA firm, the most recent of which covers fiscal year 2012-13.

Prior to the creation of the two trusts, the DWP had numerous, disparate training and safety programs and initiatives, many of them of questionable effectiveness. These efforts were often inefficient, expensive and failed to achieve their goals. To begin to address these challenges, the City Council and the mayor approved amendments to the union contract creating the Safety Institute in 2000 and the Training Institute in 2002. In 2007, the City Council, including then-President Eric Garcetti, unanimously amended the memorandum of understanding under which the trusts operate to include every bargaining unit represented by Local 18 in the work of the trusts.

Both trusts have a solid record of accomplishing their missions. On our website, we have provided programmatic audit reports of the activities of their training programs as well as information showing a substantial reduction in workplace injuries since the two trusts began their work.

In recent months the controller, spurred on by cries from the media, has “demanded” that the trusts release their information so that there can be greater scrutiny of their activities. I have opposed this, not because there is anything to hide but because these trusts are independent of city government. If the controller were to demand to audit the books of Kaiser Permanente, because the DWP pays ratepayer money to Kaiser to provide healthcare benefits to its employees, the controller would receive the same response I have given him.

Like all Angelenos, I welcome healthy scrutiny of the DWP and believe there are additional questions that must be asked. Do the utility’s commissioners have sufficient utility and financial experience? Does the multibillion-dollar agency have sufficiently rigorous standards for its leadership? In an era when every dollar matters, why has the agency been unable to swiftly correct a malfunctioning billing system that has failed to collect hundreds of millions of dollars in revenues?

It’s my job to make decisions that are in the best interest of the hardworking women and men of the DWP, many of whom put their lives on the line each and every day, facing downed power lines, investigating transformer explosions and responding in the dead of night, in awful weather, to ensure that city residents receive, safe, reliable and affordable water and power. I believe that releasing a comprehensive audit and enlisting a respected, principled and independent leader like John Van de Kamp to work with the district attorney in reviewing the activities and expenditures of these trusts will help resolve the current impasse. It is the right thing to do.

Brian D’Arcy is the business manager of the International Brotherhood of Electrical Workers Local 18.