The DWP Contract is a Good Deal for the Public and the Union, Here’s Why

LOS ANGELES

EASTSIDER-I rarely write directly about what I do for a living, but as a neutral person with some 25 years experience in California public sector labor relations, I feel compelled to write about the merits of the DWP/IBEW settlement itself, especially after the recent flood of articles casting the contract in unflattering terms. 

 

I mean, what’s with all the electronic ink recently spilled by our own Jack Humphreville and Bob Gelfand, as well as the LA Times?  And then just a couple of days ago, Paul Hatfield, Julie Butcher,  and Jack Humphreville weighed in again. Believe me, I am in no way supporting the Mayor or the Council in their actions. But that doesn’t mean that the contract itself is a bad deal. 

To try to bring all this Sturm und Drang back down to earth, I thought someone should analyze the new labor agreement in light of what’s generally happening in public sector negotiations and with the public/private utilities that form the market-basket for the IBEW/DWP negotiations. 

The New IBEW/DWP Contract and Its History 

I think most people have forgotten (or didn’t know) that in their prior multi-year agreement, the IBEW settled for a flat, or in some cases reduced, set of wages and benefits. The first three years of the four year deal provided for a 0% increase each year, with a 2% increase in the final year. That same agreement provided for a Tier2 Pension Plan for new hires, with 10-year vesting, and marginal portability. Not to mention (hat tip, OPA) that a number of classifications had their entry level salary actually reduced

As further background context for the current negotiations, in 2015, power-related costs represented 39% of revenue and 58% of controllable cash outlays by the utility. On the water side, the figures were 55% of revenue, and 52% of controllable cash outlay. 

This new 5-year agreement calls for a 3% COLA (cost of living adjustment) raise in September of this year, and an additional 1.5% increase in December. Thereafter, in October of 2018, 2019, 2020, and 2021, employees will receive raises based on the Consumer Price Index (CPI), with a minimum of 2% and a maximum of 4% for each year, using a standard set of CPI measurements. And, oh yes, there is the possibility of reducing the 10-year vesting period for the Tier 2 Pension Plan down to the public sector standard of 5 years. 

That’s it, except for a very few inequity adjustments, such as for the Line Workers, as I have previously written about.  For this group, even City Controller Ron Galperin has admitted in his audit that there are significant training and retention problems. 

While much has been made of the fully paid medical (H&W) benefits for employees under this agreement, it needs to be analyzed in the context of the Tier 2 Pension Plan, which is significantly less than that enjoyed by LA City Employees covered by their separate pension plans. If you look at medical and pension benefits together (as they are usually bundled) it is clear that the DWP has made the decision that putting large dollars (about $22,000/yr per employee) into medical will buy them a lot more with their workforce than improving the current Tier 2 Pension Plan which currently costs around $86/yr on the employer cost side. Who can say if they’re wrong? 

Recently, the Ratepayer Advocate weighed in with analysis similar to what I have used, coming to the same conclusion, albeit more understated than in this column. Its analysis was provided to the Neighborhood Council DWP Committee on July 1 and can be found on their website.  

How Bargaining for DWP Really Works 

For some reason I don’t understand, his Honor the Mayor and the Council seem unwilling or unable to explain how bargaining works for the DWP. So here’s the reality of contract negotiations between the DWP and (mostly) IBEW Local 18, representing about 90% of the employees in a number of bargaining units. 

First, the City is not the employer for bargaining purposes, although it ultimately gets to vote an agreement up or down. The employer is the DWP itself, represented by the General Manager’s bargaining team. This weird relationship between the DWP and the City is addressed in a Rand Report you can find here.  

Second, under California law (the Meyers-Milias-Brown Act, or MMBA), the collective bargaining process is private. In other words, the public has no statutory right to know what’s going on in the negotiations process between management and the union, or to be present. When the system works well, this process is designed to lead to a tentative agreement between the Union and the Employer. 

Before the tentative agreement is voted on by the employer, the agreement is sent out for a ratification vote by the union membership. Assuming the agreement is ratified by the union, it then goes before the employer for ratification as well. If the union membership rejects the agreement, all bets are off. 

Only after ratification by the union does the employer calendar the matter for approval. In the case of the DWP, this is a two-step process because the DWP is a “Proprietary Department.” First, the DWP Board (all appointed by the Mayor) gets to vote on the agreement; then and only then does it go to the full City Council for ratification. 

You will notice that nowhere in this description is there any mention of the type of openness and transparency the public and the DWP Committee have been calling for ever since the formation of the Neighborhood Council System. That’s because there isn’t any…during the actual negotiations process. 

What isn’t in the New Labor Agreement 

Looking at the total compensation of the DWP as compared to the rest of the utility industry, we can now measure the DWP’s standing on a factual basis. Fortunately for all of us, the Office of Public Accountability (Ratepayers Advocate to you and me) had the foresight to commission a study of total compensation for the DWP, paid for out of their own budget, so that it would be neutral. The results were completed before bargaining -- it’s called Ratepayer Advocate’s Joint Report on LADWP Total Compensation, which you can find here. It also includes a Supplemental Information Addendum. 

It seems clear to me that this Report provided a useful tool in the negotiation process, especially since it included benefits as well as salary. 

With all this information as background, the new DWP/IBEW agreement is essentially about cost of living adjustments, e.g., money. Period. All the other issues talked about in the news media aren’t addressed. 

As mentioned often during the Pat Brown Institute Forum on DWP Charter Reform, as well as in my follow-up analysis, a critical problem linked to the IBEW contract has to do with the Department’s ability to hire and promote quickly to meet staffing problems. 

But it is not addressed in this agreement. 

Another key issue is the utility’s ability to attract and retain managers and to begin changing their upside-down bottom heavy pay structure to look more like a normal business – one in which the key managers are paid very well in relation to the base bargaining unit. This is not addressed in the agreement, although this is how it works in almost every other corporate structure from LA City itself to other public and private utilities to the entire financial services industry. 

On the recruitment front, I should note for context that a lot of employees (about 40%) are currently eligible for retirement, including key managers. The inability to hire quickly in the face of increasing retirements, was partly responsible for delays in cleaning up the recent billing system problems. This is also not addressed in this agreement. 

Other work rule issues in the labor agreement were also left alone, notwithstanding cries from the public for reform. Unfortunately, too much of the outcry has had to do with trying to subcontract bargaining unit work to non-union (read, cheap) contractors. Given the City Council’s restrictions on the General Manager’s ability to let contracts, as well as the desire to achieve an agreement, this, too, was not addressed.  

As a labor relations professional for many years, I suspect that finessing and leaving these issues out of the bargaining process became part of the tradeoffs in obtaining a new contract. 

And let’s be clear. There is no question of the union’s ability to engage in a truly crippling DWP strike if it feels sufficiently threatened. 

The Takeaway 

If you look at the new labor agreement in context, recognizing that there is less than a 5% unemployment rate in California, and that the current core inflation rate for Los Angeles is running over 3%, it seems to me this contract is a good deal for the taxpayers as well for as the union. Factor into this a general labor shortage in the Southern California region, and the agreement makes even more sense. 

To summarize, the contract is essentially a cost-of-living contract for a group of employees in a niche industry limited to public and private utilities. It is designed to try and halt some of the poaching that other utilities engage in to steal trained workers from DWP. 

Was there any openness and transparency, as promised by Mayor Garcetti and the LA City Council?  Of course not. It is consistent with the Mayor’s happy face pronouncements that in the end mean nothing on a whole range of subjects. If you don’t believe me, just pick an article by our own Jack Humphreville. And as to the temerity or cowardice of the LA City Council, given their failure to stand up and defend the new DWP contract as am now doing, well shame on them. A quick vote and a quicker adjournment is an abdication of their duties as elected officials. Not to mention the bad optics. 

Of course, I’m not sure that either the Mayor or the Council actually understand the new DWP contract. Either way, they should be honest about how the collective bargaining process works, and should provide ample outreach and input well before any bargaining takes place. It’s their job. 

What the public needs is openness, transparency, and a back and forth dialogue with our public officials well in advance of any contract negotiations. That is where the public can have an impact on management’s proposals for any successor collective bargaining agreement. Still, process flaws or not, I believe the bottom line is that the DWP/IBEW contract is a reasonable agreement. 

And just for the record, I don’t think it is a coincidence that Mayor Garcetti will be termed out at the end of this new IBEW/DWP agreement. That’s exactly the kind of math he’s really good at.

 

(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.

-cw

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