Two organizations that receive a combined $4 million in annual payments from the Department of Water and Power lack formal ways of tracking and controlling their spending on contracts and travel expenses, while also paying eight staffers annual salaries of $222,000 each, according to the findings of a pair of audits released Thursday.
Los Angeles City Controller Ron Galperin and City Administrative Officer Miguel Santana each released reports on separate audits of the Joint Safety Institute and Joint Training Institute, which were formed more than a dozen years ago to smooth relations between the DWP and utility workers and to provide training and safety programs to employees.
Galperin's audit, which covers five years of financial activity, found that Jon Pokorski, president of the International Brotherhood of Electrical Workers, Local 18 -- which represents utility workers -- receives a $222,000 salary, as do seven other "administrators" on the trusts' payrolls.
Galperin said trust employees charged a total of $421,550 on the trusts' credit cards for conference and travel expenses, but spending on those cards decreased in the 2013-14 fiscal year at about the time he began looking into the trusts' finances.
The trusts gave out 19 credit cards over the five years studied by Galperin.
One trust administrator used a trust credit card to buy $30,000 worth of gasoline for a personal car over the past five years, out of a total of $83,764 charged by administrators on trust credit cards for personal auto expenses, the audit said.
Each administrator also receives a $500 per month allowance to pay for vehicle costs, on top of using the credit cards, the audit said.
"For the first time since these trusts were created, we have shed light on their expenditures and inner workings," Galperin said.
Galperin added that he is calling on "DWP General Manager Marcie Edwards, the Board of Water and Power Commissioners, the City Council, and the mayor to reform the trusts, make them completely transparent and, most of all, make them accountable to ratepayers."
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A audit simultaneously conducted by Santana's office was also released Thursday, making 18 recommendations that include ways for the trusts to tighten monitoring of spending by the trusts and to better measure the progress the tasks the trusts were created to perform.
Santana's audit, performed by accounting firm BCA Watson Rice, found that the trusts have no "consistent approach" to planning what they will do each year and suggested they should engage in strategic planning.
Santana's report suggests ideas to improve the trusts' purchasing and travel expense policies, and other methods to improve the trusts' governance structure and the way they operate.
The CAO's review found that only two of 32 travel filings in the past five years showed official prior approval and had written reports on the trips. There were no formal reports or statements of travel expenses in any of the files, according to the report.
The report recommends that the policy call for travel expense forms to be submitted in a timely manner as well as completed and signed, and to require travel to be pre-approved by the entire Board of Trustees.
The report also recommends that the trusts expand their travel expense policy to also include documentation of payments made using the trusts' credit cards and calls for the trusts to create an expense statement form that asks for details about all payments, whether the payments were made using the trust credit cards or if there is a reimbursement request.
The trusts also do not have a formal policy for hiring vendors, even though they have procured $6 million in contracts over the past five years, according to the report, and there is no indication of a competitive bidding process or written documentation of the reasons the contracts were awarded.
The report recommends that a formal procurement policy be created.
The recommendations also include creating a policy that ensures the $500 vehicle per month allowances for the trusts administrators are not spent on personal costs.
The report also recommends merging the two trusts to make them more efficient, and calls for a measurement system and goals be established to monitor how well the trusts are doing their jobs.
Auditors also found that board members do not receive any information about meeting topics, other than the agenda, and recommends that supplemental information be provided a week before.
Intense scrutiny over the financial activity of the two trusts have erupted in legal fights in the past year, with some city leaders calling for a review of how the trusts spent at least $40 million over the past dozen years.
Under an agreement struck between the trusts and city officials, if no illegal activity by the trusts is found, the city would release the $4 million, which Galperin had refused to release amid questions about how the money is spent.
The audits did not find evidence that point to illegal activity by the two trusts.
Mayor Eric Garcetti said the "findings validate our demand for audits" and thanked Galperin, Santana and other city leaders "for working with me to bring reform to the DWP and make sure these trusts answer to the people."
