Los Angeles City Controller Ron Galperin called Friday for city leaders to institute reforms targeted at a pair of trusts that receive annual $3.8 million payments from the Department of Water and Power employees.
Galperin said an audit he released Thursday found the Joint Safety Institute and the Joint Training Institute "operate in an environment that has lax oversight and inadequate financial controls," conditions that can "create a breeding ground for potential waste and abuse.''
He said that while many of the expenditures made have been legitimate, others are "not properly accounted for" and their use unexplained.
The trusts are governed by boards made up of union and utility officials. They were formed through a collective bargaining agreement with the DWP worker union in 2001 and 2002 to administer training and safety programs for employees.
The results of Galperin's audit and another audit by City Administrative Officer Miguel Santana seemed to show the trusts 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.
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.
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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.
Galperin said details about the expenditures by the trusts gathered through his audit are now posted up on his ControlPanelLA database at controllerdata.lacity.org .
Despite the findings, there were no evidence of wrongdoing uncovered by Galperin's audit, as well as another audit done by the City Administrative Officer Miguel Santana, which means that the city will release $3.8 million that Galperin held back from the trust last July, as part of an agreement between the city and the DWP employee union.
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 also 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 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 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, according to Santana's review.
