LA WATCHDOG - You know that the City Council is up to no good when Council President Herb Wesson calls for a closed session (* See below) just before the beginning of the four day July 4th weekend, especially when it involves bargaining instructions in relation to labor negotiations involving campaign funding Union Bo$$ Brian d’Arcy, the public be damned business manager of the IBEW, our Department of Water and Power’s domineering union.
This behind closed doors meeting was so secretive that council staffers were excluded, a sure sign of nefarious dealings involving Bo$$ d’Arcy and the contentious litigation (Romero v. City of Los Angeles) initiated by Javier Romero and other current and former members of the Board of Administration of the Water and Power Employees’ Retirement Plan (the “Plan”). The purpose of the lawsuit is to “affirm and protect the Board of Administration’s plenary authority to administer the assets of the Plan in the best interests of its members and beneficiaries without interference from the Los Angeles City Council or any other body of the City of Los Angeles.”
The Romero lawsuit in Superior Court involves the Board’s resolution to suspend the Reciprocity Agreement between the Plan and the Los Angeles City Employees’ Retirement System (“LACERS”) because the City’ systematic dumping of 1,600 surplus employees on DWP increased the unfunded pension liability by $183 million. This will require the Ratepayers to fork over an additional $25 to $30 million a year ($500 million over the next 20 to 30 years) to fund an obligation that is the responsibility of LACERS and the City.
In exercising their fiduciary duty, the members of the Board of Administration have to be concerned about the $7.4 billion Plan that is underfunded by over $2.3 billion, implying a funded ratio of only 76%. Furthermore, if a more realistic investment rate assumption was used, the unfunded pension liability would exceed $4 billion, implying a funded ratio of 65%.
During the profligate Villaraigosa era, the funded ratio of the DWP pension plan has decreased from 94% to 76%, the unfunded liability is now 5.3 times its level in 2005, and the Annual Required Contribution by DWP (and Ratepayers) has increased over five times, from $81 million to $408 million, or 46% of payroll.
At the same time, pursuant to Mayor Villaraigosa’s final budget, our cash strapped City has called for no pay raises for all 32,000 City workers over the next four years and has demanded that civilian workers contribute 10% of the cost of their generous health care benefit.
Of course, this financial regimen does not bode well for Union Bo$$ d’Arcy who is anticipating future wage increases once the current IBEW contract with DWP expires in October 2014. Nor is he considering any increased contributions by his members to their very generous health care and pension plans.
Nor is Bo$$ d’Arcy anxious to enter into detailed negotiations with the new Garcetti administration because of the high likelihood that it would shed even more light on the $250 million IBEW Labor Premium, the very generous health care and pension benefits, DWP’s seriously underfunded pension plan and the ever escalating contributions, the overly restrictive work rules that result in significant levels of overstaffing, and inefficiencies that result in utility built renewables costing 50% more when compared to independent providers of renewable power.
But not to be deterred, the Bo$$ has developed a scheme where the IBEW would extend its contract for another two years with generous cost of living allowances requiring no additional contributions to the health care and pension plans. In return, tossing any fiduciary responsibility to the wind, Bo$$ d’Arcy would arrange to settle the litigation where the DWP pension plan would absorb the $183 million of unfunded pension liability and would agree to extend the Reciprocity Agreement.
How this scam ever made its way to the City Council without any prior review by the super secretive Executive Employee Relations Committee and the Energy and Environment Committee is hardly a mystery, but a testament to power of campaign funding Union Bo$$ d’Arcy.
However, it appears that this plan is DOA (dead on arrival) as the light bulbs on the City Council determined that the “zeroed out” City unions would go absolutely ballistic if the IBEW were to once again be given preferential treatment.
Furthermore, it is highly unlikely that our new mayor, Eric Garcetti, would endorse this hare brained deal because it would erode his negotiating leverage and destroy any chance of eliminating the Structural Deficit where salaries, benefits, and pension contributions increase more than revenues.
And this does not even take into consideration Bo$$ d’Arcy’s multimillion $$$$ support of The Pixie during the mayoral race where he financed mudslinging ads directed at the victorious Prince. Of course, Bo$$ d’Arcy’s attempt to buy the election backfired as Valley voters and other moderates supported Eric in droves because of their intense dislike for Bo$$ d’Arcy and his thuggish ways.
Hopefully, the Herb Wesson and the rest of the City Council understand that voters and Ratepayers will not tolerate anything less than open and transparent labor negotiations that respect their wallets and their sense of fairness.
Herb, enough games! No more kissing Bo$$ d’Arcy’s ring. You need to earn the trust and confidence of the Ratepayers and voters.
*July 3, 2013 / Item No. 33 on the City Council’s agenda: The City Council shall recess to Closed Session pursuant to Government Code Section 54956.9(d)(1), to concur with its legal counsel relative to the case entitled Romero v. City of Los Angeles, Los Angeles Superior Court Case No. BC449834 This lawsuit challenges the City Council’s veto of the Board of Water & Power Commissioners’ approval of a proposed retirement plan amendment to suspend reciprocity between the Water and Power Employees’ Retirement Plan (WPERP) and the Los Angeles City Employees’ Retirement System [LACERS]; and/or pursuant to Government Code Section 54957.6 to confer with its labor negotiator the City Administrative Officer regarding bargaining instructions in relation to labor negotiations with the IBEW.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)
-cw
CityWatch
Vol 11 Issue 56
Pub: July 12, 2013
