DWP Reform 2016

Want Real Reform at DWP?  Make DWP a Part of the City!

“If the broad light of day could be let in upon men’s actions, it would purify them as the sun disinfects.” — Former Supreme Court Justice Lewis D. Brandeis, 1913.

February 16, 2016 – This week an important committee of the Los Angeles City Council gets to weigh in on reforms proposed for the City’s Department of Water and Power.On January 22, 2016, Councilmember Felipe Fuentes introduced a motion, seconded by Council President Herb Wesson and supported by several others, instructing the City Attorney and CAO to draft all necessary charter changes to get the decision to the voters on the November 2016 ballot.

From the motion:

In its 1999 study of governance options, RAND Corporation called the utility’s existing system “overly complex, cumbersome, and bureaucratic.” 

A decade later, PA Consulting found that DWP’s governance framework “does not facilitate efficient decision-making and clouds accountability for key decisions.”

The Los Angeles 2020 Commission recommended in 2014 that the City establish a full-time, paid independent rate commission of experts to “take the politics out of DWP.”

Most recently, the 2015 Industrial, Economic and Administrative Survey noted that unless DWP becomes more transparent “it will be difficult for LADWP to earn back the public trust and carry out its agenda” and recommended that the City consider alternative governance structures for the utility.

Mel Levine, LADWP Commission President, former member of Congress and former State legislator has said, “The bottom line is, there are too many cooks in the kitchen. It makes governance extremely difficult. Everybody can get their oar in — and everybody can blame everybody else.” (LA Times, December 10, 2015.)

The specific changes proposed are these:

  1. Cap the amount of money transferred from DWP to the rest of the City at “pre-Prop 26 level,” taking the amount of funds DWP contributes to the overall municipality (keep in mind that as a public utility, the LADWP pays no taxes) back to 2009 and fixing it there forever;
  1. To reduce reported political interference, replace the appointed board with one made up of seven full-time “professional” (paid, dearly) members to run the utility including hiring the general manager and controlling all programs, costs, and revenues;
  1.  Remove DWP from the civil service system and set up a DWP-specific Personnel Department.

This past weekend’s op-ed from Mickey Cantor and Austin Beutner of the 2020 Commission (LA Times,  February 15, 2016) includes a fourth proposed change: subsidies for LA’s “neediest families who sometimes can’t afford to keep their lights on.” This provision is not in the Fuentes motion.

Jack Humphreville responded in CityWatch to the proposed ballot measure quickly and decidedly:

“While these proposals are long overdue, they are not ready for prime time. Rather, these proposals are ‘a great place to start the conversation’ as there needs to be a ‘robust public discussion and debate before any charter proposal gets put on the ballot.’ 

“While the idea of a more autonomous, full time, professional Board of Commissioners is appealing, it is not a silver bullet.  Rather, it may add a layer of bureaucracy that may be counter-productive if the proper ground rules are not established and followed by the politically appointed commissioners who may want to micro manage the Department.  

“There are numerous other questions, including how the Commissioners are selected or removed, their qualifications, and how to prevent the Board from going “rogue” by raising our rates to astronomical levels.

“Ratepayers must be given a significant role in this committee as they are not only the people paying the bills, but whose votes will be required to approve any ballot measures, including the new Transfer Tax.  This will be an opportunity for the City to earn the confidence of the Ratepayers, who, at this point in time, do not trust City Hall when it involves DWP and their wallets.”

Retired Transportation Engineer, human rights and labor activist and veteran of the 1999 Charter Reform experience, City Charter expert Yadi Hashemi offers an alternative approach: “Mend it, don’t end it:”

“The establishment of the DWP as a publicly-owned municipal utility and the creation of the civil service system are among the biggest achievements of 20th Century Progressives. They’re both worth protection and preservation and you can’t preserve the first without the second. 

“As in the past, critics point the finger at the civil service system instead of recognizing management failures and inefficiencies of a bureaucracy that has nothing to do with the civil service system. How in the world did the civil service system prevent DWP from hiring more people? If anything, adhering to the civil service system would result in having a list at hand so that you would be ready when the need arises. 

“Now, it has been a long time and I would have to go back and review the rules. I can imagine people arguing about the need for flexibility in hiring because of special needs, and the fast changing needs of the work place because of technological innovations. However, there is nothing that prevents management from proposing changes to the civil service rules or increasing the number of exempt positions,” Hashemi adds thoughtfully.

How important is it that the City get the governance and operations of the United States’ largest municipal utility right?

Is this a privatization proposal?

What concrete benefits enure to the communities of Los Angeles as a result of owning the largest public utility in the nation?

Precisely what does it mean to limit political interference?

Can we all gain from deep, vibrant, aggressive public oversight of our City’s power and water?

Every time a politician or pundit, a rich guy, or a former newspaper editor talks about limiting interference from “City Hall,” he or she means to restrict actual public oversight, to shade the sanitizing light of day.

Rather than further isolate DWP with an insulated, professional board, its own rules, all the money in the world, no pesky “political interference,” its very own Personnel Department, everything it’s ever wanted except perhaps a completely corporate structure, maybe it’s time to consider bringing the DWP into the rest of the City family.

Let the City help address and resolve the problems that have persisted at the LAWP for decades.

  1. Hiring problem solved. Given the wide wage disparity between DWP and every other City department and considering that the City defines a promotion as a job that pays more, treat every opening at DWP as promotional. The Department can quickly and easily hire the best it can find with minimal personnel work.

If employees moved more readily between DWP and the other city departments, many of its perceived problems would be resolved.

Besides solving the reported hiring problem in fair and simple fashion, this could dramatically improve the DWP’s workforce diversity making it a bit less white and male.

  1. Integrate the DWP into the City’s purchasing, procurement, contracting processes to maximize operational efficiency and reap potentially dramatic cost savings.
  1. Consider freeing DWP up to concentrate on the delivery of power by moving all water functions into the Department of Sanitation’s water division. Many cities have one water department. LA does an outstanding job in its collection, processing, and treatment of wastewater.
  1. Explore savings and efficiencies achievable by the integration of common services such as technology, security, tree trimming, street paving, printing, and more. In 2012, thirteen separate city departments trimmed trees. DWP’s trees were among the costliest to trim. This exploration should include employee benefits. Thousands of city workers receive great, cost-effective family benefits at the lowest cost-per-employee of any of the City’s benefit plans through the City’s Joint Labor-Management Benefits Trust. DWP workers could be covered in a city-wide plan, saving millions.
  1. Listen to the Advocates, Neighborhood Councils, council and local political offices, customers, and your own workers. Add a young person to the Board. Broadcast the board meetings on cable TV. Encourage local media to cover them.

In 1988, I had my first argument with a manager at DWP. I said, “the City” and George Pengaman said, “the Company.” We did that for a while. The City. The Company. It was foretelling.

Truck drivers in the City wave or nod to each other when they pass each other driving, like motorcycles or new moms (my lovely daughter-in-law Lidia tells me!) But not the DWP trucks.

It is time for the DWP to venture down the hill into the rest of the City, to allow other city departments to help, to embrace the LA in its name and act like a big part of a vital City. And finally…to fulfill the promise of water and power owned by the people.



LADWP Reform:  Why the Rush?

…[T]he people of Los Angeles desired the size but not the character of a modern metropolis … to combine the spirit of the good community with the substance of the great metropolis.”

~ Robert Fogelson, “The Fragmented Metropolis: Los Angeles, 1850-1930,”1967.

February 25, 2016 – “Los Angeles has always been a different kind of city. It is the prototypical western metropolis, built by bold entrepreneurs even though it lacked the natural advantages of traditional cities. It lacked water, transportation and the rudiments of the natural urban economy. But Los Angeles has always had the drive, energy and imagination to succeed, from its early settlers in the 1780s to the youngster today who comes to Los Angeles to carve out a new career and a new life,” writes Raphael Sonenshein in “Los Angeles: Structure of a City Government, 2006.”“The framework for 20th century Progressive-era Los Angeles government was the 1925 charter,” he continues, “…the charter distilled the Los Angeles political culture, including its fear of corruption by elected officials.”

Key and fundamental to Los Angeles’ first City Charter were the public control of utilities and the civil service protections for workers that stood in contrast to the spoils system of New York City and Chicago. Dr. Sonenshein reminds us this was the centerpiece of the 1925 Charter for avowed socialist and influential civic leader Dr. John Randolph Haynes.

An amendment to the charter in 1937 extended civil service protections to city department heads after the recall Mayor Frank Shaw (the recall provision was an added linchpin of that first charter.) In 1951, Mayor Fletcher Bowron maneuvered to add a City Administrative Officer (CAO) to centralize budget authority. Mayor Sam Yorty’s Reining Commission rewrote the entire charter in 1966. In response, the City Council then rewrote the rewrite, affirming that the CAO would be responsive to both the Mayor and the City Council; it also added elected Neighborhood Councils. That deal blew up because the DWP feared the City would “take” more money; charter changes were defeated in 1970 and 1971.

For the next 30 years, LA periodically voted on small and large charter amendments. In 1992, Prop F was passed, dramatically changing the way the Chief of Police is hired, employed, and fired.

Late in his first term as Mayor, frustrated by his inability to corporatize and privatize the City, Richard Riordan decided to rewrite the city charter. Council President John Ferraro and a super-majority on the Council out-organized the Mayor and somehow, two charter reform commissions emerged, one appointed and one elected.

For 22 tedious months, commissions, commissioners, and committees met, outreached, held countless public hearings in every part of 15 council districts; they polled, cajoled, lobbied, organized, threatened, debated, dialogued, compromised, and, sadly, died.

It was a big deal. It took a really long time. There was a lot of bad pizza.

Ultimately, the folks who were most passionate and engaged back then were those advocating for increased community and neighborhood involvement and empowerment.

They still are. And now they (claim to) understand the city budget.

“We’re paying for the sins of the past,” Jack Humphreville told the LA Times (“L.A., pushing big water rate increases, seeks 18% more from typical users,” July 8, 2015). “In the past, the City Council didn’t give DWP the rate increases they should have had to maintain the system.”

In the February 8 issue of CityWatchHumphreville states, “The DWP Oversight Committee recommends that there be a robust and transparent discussion and debate before any measure is placed on the ballot for voter approval or rejection.”

And on February 22, he predicts in CityWatch, “…[W]ithout real reform, Angelenos will vote NO on this tax increase, just like we did in 2013 when we rejected Proposition A, the permanent half cent increase in our sales tax.”

Retired writer and esteemed former Daily News editor Ron Kaye calls it as he sees it: “It’s the typical shell game, bait-and-switch, starts out being something you’re (I) am skeptical about and then they weaken it so they still have total control, because that’s the only way they can operate, co-opt the elections, pander to the bourgeoisie and then screw them. The Kantor-Beutner plan is B.S. They would still control the system; experts are as easily managed as everyone else on the DWP commission (except for Nick Patsaouras, who got sacked for his trouble.)

Kaye continues, “I don’t support the neighborhood [integrity] initiative either for many of the same reasons; they can get around it a hundred ways. Both miss the point, in my mind, because the system is totally rigged, 100 percent, all city offices, with a partial exemption for Galperin, who’s too sweet to make big row or confront the system.)

“As my man Bernie says, it’s going to take a revolution — and that applies to LA more than anywhere,” Kaye concluded.

Exactly what are the problems at the LADWP that would be best solved by a professional, independent commission? Are details available explaining the new DWP Personnel Department and the employment scheme proposed to replace the civil service system? Is the City expected to benefit as a result of capping and limiting income available from its utility?

Recent reports and summaries of less recent reports all include most of the following problems at the Los Angeles Department of Water and Power:

  • Hiring
  • Contracting and procurement
  • Customer service
  • Cyber security
  • Security

(In my experience and based on direct knowledge, as it’s neither water nor power, no one at DWP is responsible for security. Rather, it is decentralized out to the myriad operations, plants, facilities, reservoirs. Some do a good job. Some not so much. (Snide aside: Poor Pat Finley, taking the fall for poor planning and bad management?)

  • Emergency Preparedness & Disaster Recovery
  • IT issues & Technology Infrastructure
  • Implementation of infrastructure plans
  • Economic development and community outreach (in recommendations of Frederick Pickel, LADWP Ratepayer Advocate, January 15, 2016)

“On balance, this report shows us a department that delivers water and power dependably to the people of Los Angeles,” said Controller Ron Galperin on December 10, 2015, announcing the latest 600-page “survey” by Navigant Consulting, Inc. “However, insufficient accountability, lack of transparency, and politicization jeopardize the department’s ability to meet the challenges of the future.”

“The goal of the survey was to provide targeted recommendations for improvement,” continues the Controller’s December 2015 release.

“For example, in assessing how the department operates within the larger structure of Los Angeles City government, the consultants identified a series of organizational and management challenges. The consultants wrote that the DWP is handicapped because ‘there is no single outside entity or coordinated group to set policy, provide specific goals and metrics, monitor performance, and hold LADWP accountable.’

“To enable the department to better accomplish its goals, consultants called in the near-term for increased transparency through reporting and for tying future rate increases to financial and performance metrics specified by ordinance.…

“The report identified several alternative governance structures and recommended an honest and public debate about the most effective way forward.

“Galperin called upon the City Council to begin that process by establish a working group to craft a solution for voters.”

Yadi Hashemi, engineer, retired LA city worker, human rights and labor activist and charter expert, reevaluates parts of the proposal again: “I have no problem advocating for paid commissioners at the DWP if that emerges as a feasible solution to an actual problem. I don’t remember now why that didn’t happen during charter reform.”

“Additionally,” Hashemi adds, “the Public Works Commission is long-term functional. Maybe they could help.”

What about the workers? Do DWP employees want to give up a merit-based hiring and promotional system?

The County of Los Angeles allows each of its departments to establish and operate their own Personnel Departments; in Los Angeles, the LAPD is itching for the City to turn all that personnel work – hiring, background checks, administrative processing – back over to sworn officers in a newly-constituted, independent LAPD Personnel Department.

“There needs to be deep and honest analysis of the problems these reforms are meant to solve,” argues Cheryl Parisi, Chair of the Coalition of LA City Unions, which represents six international unions and 25,000 city workers. “So far all we’ve seen is a Motion and a speech. The City’s strong civil service system has resulted in a work force that is highly competent and committed to the highest levels of service. These are important policy considerations that will significantly impact current and future workers, at the DWP and across the City, and we’re standing strong to protect all of LA’s workers.”

 DWP ‘Reform’:  Screwing the Workers Won’t Solve the Problem

March 7, 2016 – Everyone’s got an opinion about what needs to be reformed at the LA Department of Water and Power.

“…[T]he culture, work ethic, and training of the DWP is so isolated and backward…The culture of DWP will kill DWP!” commented William Foster about a recent CityWatch piece.The City’s CAO and CLA prepared two joint PowerPoints on the topic just this year. This summary is on page six of their February 19, 2016 presentation to the City Council’s Rules, Elections, Intergovernmental Relations, and Neighborhoods Committee. It briefs years of varied, some contradictory analyses and criticisms of the utility:

  • Rand Study (1999) – Current structure cumbersome; options to modify: a) create a city‐owned corporation with centralized authority; b) create an independent city agency with a strong board.
  • IEA Survey (2009) – Structure impedes efficient decision making, accountability, lacks independent analysis.
  • Council motions (2010) – Created Office of the Rate Payer Advocate.
  • 2020 Commission (2014) – Instability due to political interference and high leadership turnover; recommended a LA Utility Commission (sic).
  • IEA Survey (2015) – Challenges include decentralized City authority, hiring process, lack of transparency and ambiguous role of the OPA.

Closer to home, I get comments from family, friends, and city workers, like…”Why all this attention to DWP reform? I mean, they’re still delivering water and power to their customers at lower rates than other utilities, right? I know the whole ‘what did D’Arcy do with the money’ left a bad taste in everyone’s mouth, but what else is at stake here?”

In response to my suggestion that the water portion of the DWP should be moved into a unified city water department ,as is done in many cities, I heard, “No, that would not work! LOL! I think it would be a PR nightmare to say, ‘Your fresh water, brought to you by the Bureau of Sanitation’!”

From the same friend: “From a city worker point of view, I would like to see the pay inequity and benefit difference resolved with the classifications that exist in the city and DWP. It seems funny to write that, because both are the city, but somehow treated differently. DWP doesn’t need to have its own set of Gardeners, Tree Surgeons, Custodians, etc.

“But in a kind of defense of the DWP, we can’t forget that they are still charging better rates than their counterparts, like Edison and PG&E.”

“The biggest problem is that DWP tries to act independent from the city. Or is it a problem? Do we really want a DWP that a CAO like Santana can get his mitts around, the way he has with the city?”

City workers know what’s up. “DWP must remain a public utility. It is top heavy. Breaking it up may be the way to go,” comments one veteran City Haller.

The LA Weekly emphatically concludes that the current DWP “reform” proposal will lead to higher rates and here’s the logic:

“Under [Fuentes’] plan, the DWP Commission would be replaced by a full-time board. The members would be experts in the field, and would serve staggered terms, insulating them from City Hall. The most critical provision — which has gotten zero attention so far — relates to rates: 

‘Board actions — including ratemaking — would no longer require City Council approval unless the City Council asserts jurisdiction.’ (Emphasis kept from the original article.)

“It’s hard to overstate the importance of this provision. Under the current system — the product of more than 100 years of governance reform — the City Council must approve any rate increases. This exerts a downward pressure on rates. No politician wants to approve an increase and face the wrath of voters.”

City labor has responded strongly to the proposal to eliminate civil service at DWP. The Jewish Labor Committee writes in its March 1 letter: “It serves to remember: Civil Service is a merit-based system of personnel management that has effectively prevented City Hall corruption and cronyism for decades. Because this system also levels the playing field in hiring, it was used by Mayor Tom Bradley to bring underrepresented people of color in the City workforce. These are proud pillars of Los Angeles’ democratic tradition. It is because of civil service rules, too, that the City has retained such a competent and diverse workforce.”

“Good Dems don’t eliminate civil service,” exclaimed a union staff friend regarding City Controller Ron Galperin: “More transparency, not less! He had to sue to get simple info, for crying out loud!”

At a Special Meeting of the Rules, Elections, Intergovernmental Relations, and Neighborhoods Committee, held in the San Fernando Valley last Thursday, SEIU 721 Political Director James Johnson used his one-minute comment period to express puzzlement and outrage:

“Frankly, I’m puzzled that we’re here talking about this. First, the union that represents DWP’s Security Officers is hearing about this all in the LA Times. And at a time we should all be focused on doing everything we can to save this country, if nothing changes and if the proposal going forward includes the deletion of civil service anyplace in the City, it’s something we can’t support, won’t support.” 

“And instead of figuring out how to send members to battleground states for the November election, we’ll have to focus on defeating this. 

“There may be a need for some reforms at the DWP, but this is taking a meat cleaver to a problem best addressed with a surgical scalpel. 

“The elimination of civil service is something we cannot support, will not support,’ Johnson ended.” 

Food and Water Watch’s Southern California organizer Walker Foley read from a strongly-worded letter of opposition submitted by the group: “This motion would make LADWP less accountable and would undermine efforts to improve the ways in which LADWP sources and provides water and power.” 

“…The motion could further entrench policies that must be reformed, such as the utility’s dangerous dependence on imported natural gas and imported water, which come at great expense to LADWP customers and the environment.”

In testimony at the hearing, Foley added: “Anytime a politician says we need less politics in the process, what that really means is we’re trying to remove ballot-box accountability from the governance of the utility.”

“We urge you to oppose this motion which would undermine democratic governance and public oversight.” 

The City Firefighters’ Union has weighed in. From UFLAC’s letter dated February 19, 2016: “In the same week that the City Council is considering a proposal to ‘cap’ the annual DWP transfer to the General Fund, it must be pointed out that just a few days ago in the City Council’s Public Safety Committee, LAPD Chief Charlie Beck told the Committee that he needs 2,500 additional LAPD officers to effectively police our streets. Like Firefighters, more Police Officers will require more revenue to the General Fund.”

City labor leaders, referencing the Coalition of LA City Unions’ legal brief, submitted correspondence and testimony to the committee specifically opposing “the inclusion in the Motion of amendments to remove DWP from the Civil Service system.”

“It’s a bad idea. It’s just wrong,” testified AFSCME Local 3090 leader Carmen Hayes-Walker. “You would literally be putting holes in the careers of dedicated city workers who’ve been promised a system of fairness and opportunity.”

Teresa Sánchez, AFSCME staff member, proposed solutions that have worked before. “If there’s a problem hiring, recruiting, training, or moving people up, let’s fix the problems….This year the City reached an historic agreement with the Coalition to hire 5000 new workers and we are committed to working with the City to do this in an innovative way. We’re working to modernize the hiring process to be responsive to all city departments, partnering with community organizations, focusing on apprenticeship programs, on-the-job training, and focused local hiring in Los Angeles….We would welcome the DWP to be part of this.”

Charter Commissioners Bennett Kayser and Charley Mims recalled the deliberative process of both the elected and appointed charter commissions.

“We looked at civil service and employment matters very seriously,” said Bennett Kayser. “Then Mayor Riordan wanted to get rid of civil service for many groups of city workers. We got lots of input from Riordan’s office and from labor and it became clear to us that civil service is a benefit to the City. That’s why we decided to retain civil service protections in the charter.”

Labor and neighborhood activist Charley Mims reminded the committee members of the same history: “I was appointed by John Ferraro to the ‘other’ charter commission and we also looked closely at civil service…..Civil Service started in 1883 to move beyond a patronage system that had led to graft and corruption and to the employment of federal workers who didn’t have the qualifications to do the job. It’s a merit system. That means people have to have the ability to do the work and demonstrate that through objective testing both for initial hiring and for promotion.

“As for the billing system, when I was on the LACERS board and we instituted a new data system, we ran both systems simultaneously for months and months until we knew for certain that the new system worked. Second, the department could have foreseen the need for additional workers.”

“It’s not an employment problem – this is a management problem,” Mims concluded.

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