When achieving local hiring mandates goes bad

L.A. City Controller Calls on City to Incorporate Audit Recommendations in New Labor Agreement

Download the audit here.

Los Angeles – The Los Angeles Department of Water and Power spends about $40 million a year on apprenticeship programs to train new workers, even though three of the department’s four programs graduated 51 percent or fewer of their apprentices over five years, City Controller Ron Galperin found in an audit.

The LADWP’s apprenticeships for electrical workers are the largest single item in the utility’s training budget, costing between $440,000 and $665,000 per graduate, according to the audit. Yet due to low graduation rates in programs for line workers, electric station operators and steam plant assistants, the DWP hired only about 300 graduates of its apprenticeship programs between 2010 and 2015.

The low graduation rates are contributing to large increases in overtime pay and anticipated staffing shortfalls for positions, Galperin’s audit found. Overall, the utility plans to replace the 1,200 to 1,700 of its 9,100 employees who are expected to retire in the next seven years. For example, the LADWP identified a need to hire 125 electric distribution mechanics in 2014, but its apprenticeship program for the classification had targeted only 110 enrollees, and had a graduation rate of just 43 percent, the audit showed.

The audit noted that the LADWP has not outlined goals and strategies for its training programs, nor has it done enough to facilitate comparing actual results to goals. The audit further found that the LADWP does not adequately analyze results of its four apprenticeship programs to conclude why one — a program for electrical mechanic trainees — graduates more than 80 percent of students while the others fell short. Galperin called on the LADWP to better monitor its apprenticeship programs and to expand pre-apprenticeship feeder programs in partnership with trade and tech schools.

“The LADWP spends hundreds of thousands of dollars of ratepayer money on each graduate of its apprenticeship programs, yet far too many people who enroll in those programs never graduate, and others take the skills we’ve taught them to private utilities,” Controller Galperin said. “The LADWP should set goals for training, use data to determine whether it’s meeting those goals, and review its apprenticeship programs to ensure that they are giving us the most value for our money.”

The department has no single manager responsible for overseeing training costs and benefits, or holding divisions accountable to their training goals, according to the audit. Galperin called on the LADWP to name a senior manager to oversee training programs. He also urged the municipal utility to devise a better strategy to retain newly graduated apprentices by revising its compensation structure to discourage workers from leaving after receiving city-paid training, and by rewarding longevity for successful trainees.

In the period audited, training costs grew from $105.3 million in Fiscal Year 2011 to $154.4 million in Fiscal Year 2015. Less than 1 percent of training costs went toward outside vendors and conference fees.

To compensate for the lack of new employees hired through apprenticeships, the LADWP paid more overtime to power system employees. Overtime costs for electric distribution mechanics — whose apprenticeship program had a 43 percent graduation rate — increased to 41 percent of payroll costs from 23 percent between 2013 and 2015, the audit found.

The LADWP lacks any requirement that graduates of its apprenticeship programs continue to work for the municipal utility, resulting in other utilities recruiting DWP’s best graduates. In a program for electric distribution mechanic trainees, for example, 17 of 32 graduating apprentices left for other utilities in the past 22 months. Galperin’s auditors were unable to confirm the total number of graduates who were recruited by private companies because the LADWP does not maintain a complete and reliable record of the attrition rates of its apprenticeship program graduates.

Galperin’s office issued its review of the municipal utility’s training programs two years after scrutinizing two nonprofit trusts funded through the DWP and jointly managed by DWP management and labor: The Joint Safety Institute and the Joint Training Institute. The Controller’s April 2015 audit of the LADWP trusts, which was issued after Galperin went to court to compel the trusts to release detailed financial records, found that the trusts had failed to competitively bid contracts and that they issued credit cards to administrators without adequate controls over their use.

The current audit of overall DWP training grew out of the Controller’s continued interest in improving the LADWP’s programs for employee safety and professional development while ensuring that funds are spent wisely and with accountability to ratepayers. In a cover letter accompanying the audit and addressed to the Mayor and City Council, the Controller detailed findings and recommendations. Highlights include:

• The LADWP is more generous with covering the cost of college tuition for employees than other utilities surveyed. It reimburses all tuition expenses and requires employees whose costs have been covered to remain employed by the utility for just one year. There is no lifetime limit on tuition reimbursements.

• About 99 percent of reported training costs were related to wages and benefits paid to trainees and trainers while employees were being trained. The $154 million in training-related costs in fiscal year 2015 represent a steep increase of 60 percent over the $96 million spent in fiscal year 2012.

• The apprenticeship programs are overwhelmingly male, with women accounting for only 5 percent of enrollees in all four apprenticeship programs in 2014-15. The LADWP recently initiated a program to recruit women for non-traditional jobs.

• Mandatory trainings on Equal Employment Opportunity and safety have been expanded and have reduced discrimination and workers’ compensation claims. EEO claims decreased to 47 in 2014 from 102 a decade earlier. New workers’ compensation claims decreased to 957 for the 2014-15 fiscal year from 1,094 in 2010-11.

• The LADWP has failed to design systems and interfaces to report on both the cost and the content of training, nor has it developed adequate goals and strategies.
  
  

Galperin has worked to bring transparency and accountability to the nation’s largest municipal utility through audits and by publishing open data on payroll, water main breaks, call wait times and other categories of information. The Controller’s DWP Utility Panel can be found at: https://controllerdata.lacity.org/dwp.

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