L.A. city controller issuing subpoenas as standoff over two DWP non-profits heats up

L.A. city controller issuing subpoenas as standoff over DWP heats up
City Controller Ron Galperin aims to compel Brian D'Arcy, leader of the utility's largest employee union, to show where $40 million has gone.
By Jack Dolan
Los Angeles Times
January 08, 2014

Brian D'Arcy, business manager for Local 18 of the International Brotherhood of Electrical Workers, has blocked attempts by Mayor Eric Garcetti and the DWP Board of Commissioners to inspect the financial records of two DWP-affiliated nonprofits he co-manages.

More than $40 million spent over the last decade to improve labor relations at the Los Angeles Department of Water and Power has, instead, sparked an increasingly tense standoff between a union boss and the city's most powerful elected officials.

City Controller Ron Galperin announced Wednesday afternoon that he was issuing subpoenas to compel Brian D'Arcy, leader of the DWP's largest employee union, to show where the millions went.

The rare legal maneuver came hours after D'Arcy failed to appear in Galperin's office to begin an audit of two DWP affiliated nonprofits D'Arcy co-manages — the Joint Training Institute and the Joint Safety Institute.

City officials began trying to track the nonprofits' spending after a Times report in September showed the city-owned utility had only scant information on how the money has been used.

Since then, D'Arcy — business manager of International Brotherhood of Electrical Workers Local 18 — has successfully blocked attempts by Mayor Eric Garcetti and the DWP Board of Commissioners to inspect the nonprofits' financial records.

Garcetti and City Atty. Mike Feuer appeared with Galperin at a Wednesday afternoon news conference to demand that D'Arcy comply with the subpoenas and cooperate with their attempt to follow the money.

"I think all three of us believe in safety and training and those are important functions," Garcetti said. "If there's nothing to hide with those things let's move on, but we can't move on until we see the information."

The nonprofits were created to improve relations between the city-owned utility's managers and unionized workers following a series of contentious job cuts in the late 1990s. They are run by D'Arcy and DWP General Manager Ron Nichols, and funded with proceeds from ratepayers' electricity and water bills.

There has been no public accounting of the nonprofits' spending since their creation more than a decade ago. Nichols says he supports transparency, but turning over the nonprofits' records requires the consent of both management and labor.

D'Arcy did not return a telephone call requesting comment Wednesday afternoon. The union's lawyer sent a letter to Galperin on Wednesday morning that said the nonprofits were not subject to Galperin's demands for information because they were not "public agencies."

That's the same argument the union made in August when The Times initially requested the nonprofits' financial records under the California Public Records Act. Managers at the DWP, which is a public agency, said they had only limited information about how the money had been spent. Both sides refused to describe the nonprofits' day-to-day activities.

Limited records provided by the DWP show the nonprofits have spent about $1 million a year to pay the salaries of a few of the trusts' top executives: The Joint Training Institute's administrator was paid $212,236 in 2012, the records show. Jon Pokorski, another top administrator and the union president, was paid $171,361 in 2012.

Federal tax forms filed by the nonprofits offer only broad summaries of the organizations' outlays, including more than $360,000 spent on travel from 2009 to 2011 and nearly $2.4 million spent on "other."

It turns out I made a mistake by signing up at the YMCA

The San Diego YMCA pays $544,172 to President and CEO Baron Herdelin-Doherty.

The organization is a bit secretive: it doesn't put its
Form 990 (tax form) on its website. Perhaps one of these
years Herdelin-Doherty will pull in over $1 million like
his predecessor (see San Diego Union-Tribune article below--
the SDUT managed to get a look at the 2009 Form 990).

My experience

I was delighted last July with my clever decision to take exercise classes at the YMCA.

But it didn't work out well. I wasn't able to make it to the classes I wanted to take. I had scheduling conflicts, an injury and I was out of the state for six weeks.

This wasn't the fault of the YMCA, but I'm wondering about their policy of taking $38 out of my checking account every month without regard to whether I am receiving any benefit.

I am thinking in particular about older members who may become incapacitated physically or mentally and who aren't able to make it to the Y to cancel their membership. Some of them might not have email, which is what I used to cancel my membership today. How long will that money keep flowing to the YMCA?

I called to express my concerns about this, but the membership director at the McGrath Family YMCA wasn't available--she was out of the office and wouldn't be available to talk to me for an hour or two. At least, that was the story I was given. But the minute I asked to talk to the executive director, what do you know? The membership director suddenly happened to walk into the office and got on the phone with me!

I said that was serendipitous, and she claimed that she didn't understand what I was talking about and that I should talk to someone else. So I am writing this as I wait for a call from Jennifer Pillsbury.

While waiting, I Googled the San Diego YMCA and discovered that their Form 990 (tax form) is not on their website!

Charity Navigator, however, has collected some information:

Compensation of Leaders (FYE 06/2012)

$544,172 Baron Herdelin-Doherty President, CEO
$187,500 Richard A. Collato Former President, CEO [The former president is still pulling in all this money? No wonder it cost me so much for classes. See below for San Diego Union-Tribune story about Collato.]

Now get this. Here's the mission of the YMCA:

Character development is an important part of the YMCA Mission and through all its programs the YMCA works at teaching young people to accept and demonstrate the four core values of Caring, Honesty, Respect and Responsibility in their daily lives.

Doesn't "responsibility" include putting your form 990 on your website? Doesn't "caring, honesty and respect" include not taking money from people when giving them nothing in return?


YMCA chief was paid nearly $1 million
The nonprofit says it was a one-year anomaly based on a retention package for the successful leader
By Jeff McDonald
SDUT
Dec. 9, 2010


Richard Collato

Tax form for the YMCA of San Diego County Pay compared

YMCA of San Diego County

President/CEO Richard Collato [Retired Sept. 30}
Compensation: $954,441
Gross receipts: $151.8 million
Employees: 4,178*
Endowment: $14.9 million

*Number provided by YMCA of San Diego County; 2008 tax records state 5,967; YMCA staff declined to explain the discrepancy

YMCA of Metropolitan Los Angeles

President/CEO Larry Rosen Compensation: $432,417 Gross receipts: $143 million Employees: 3,511 Endowment: $29.3 million

YMCA of Greater New York

President/CEO John Lund Compensation: $563,947 Gross receipts: $166 million Employees: 6,040 Endowment: $33.1 million

YMCA of Metropolitan Chicago

President/CEO Stephen Cole Compensation: $409,526 Gross receipts: $153.7 million Employees: 4,053 Endowment: $162.3 million

YMCA of San Antonio

President/CEO Baron Hardelin-Doherty [*Became YMCA of San Diego County president/CEO Oct. 4.] Compensation: $318,032 Gross receipts: $20.5 million Employees: 1,200 Endowment: $1.7 million

National Council of YMCAs of the USA

President/CEO Neil Nicoll Compensation: $457,570 Gross receipts: $82.3 million Number of Employees: 347 Endowment: None reported

SOURCES: Most recent publicly available Internal Revenue Service Form 990s

The new president and chief executive of the nonprofit YMCA of San Diego County will be paid $400,000 a year, with the opportunity to add an additional $120,000 in incentive pay.

That’s a reduction from what his predecessor made.

Baron Herdelin-Doherty, the former head of the San Antonio YMCA, took over in October. He replaced Richard Collato, who was paid $954,441 in the fiscal year that ended in June 2009.

That was the most recent compensation reported on nonprofit tax forms. The information is available for public review because the organization benefits from tax-exempt status.

YMCA officials say Collato’s pay that year was an anomaly including a special retention package designed to extend his nearly three-decade run at the community organization, which has almost 300,000 members and participants in its programs.

They declined to disclose his salary for the year that ended this past June. In the tax year that ended in 2008, the agency paid Collato $625,000 and in 2007 he collected $566,000, tax records show.

Even that lowest-paid year for Collato exceeds the most recent compensation reported for his counterparts at YMCAs in Los Angeles, New York, Chicago and even the head of the National Council of YMCAs of the USA, who was paid $457,570.

Collato’s bosses say he was worth it. They defended Collato’s salary and benefits as a justified expense befitting a gifted and visionary leader.

“Richard Collato spent 43 years at YMCAs around the country and was brought to San Diego 29 years ago,” YMCA board Chairman Robert Buell said. “He took the YMCA here basically from being an insolvent institution at that time to being the second-largest in the country.”

Collato did not return a call seeking comment.

Buell said a significant portion of the salary paid to Collato in the most recent year reported was due to a bonus he was awarded for serving out his three-year contract.

That extra pay came to about $360,000 paid in a lump sum, Buell said. Collato also received the maximum bonus from the performance incentives written into his agreement, the chairman said.

“He had risen to such a stature that we had to come up with something called a retention concept,” Buell said. “We also have some incentive compensation based on actual performance.”

The Y reported $121 million of expenses overall in the most recent tax year. Of that, $1.8 million went to fundraising and $6.8 million went to management and general expenses. The remaining 93 percent went to program service expenses, according to the tax form, well within accepted nonprofit best-practices.

Still, Cassandra Uphaus, a single parent and graduate student from Mission Hills was not pleased at the thought that her fees support such compensation, even though she pays discounted membership as a student and single mother.

“I’m definitely surprised,” she said. “I don’t know if it makes me think any less of the organization because of the situation I’m in. I’m definitely at an advantage.”

But “some of the programs beyond those included in the membership fees are a little pricey,” she said.

Pat Libby, who runs the Institute for Nonprofit Education and Research at the University of San Diego, said lawmakers are starting to take a closer look at salaries paid to charity officials.

“It goes to the question of public tax dollars,” she said. “Should people receive a tax deduction for contributing to organizations where executives are so highly compensated?”

In addition to his pay from the Y, Collato was paid income from service on corporate boards. He received more than $380,000 for serving on the boards of Sempra Energy and the WD-40 Co. in the last year, U.S. Securities and Exchange Commission records show.

Libby said Collato’s service on corporate boards was likely an asset to the nonprofit, especially when it comes to fundraising.

UPDATE:

Phone call from Jennifer Pillsbury March 24, 2014

Jennifer ignored my request for a call-back until my blog post about the YMCA apparently got enough attention to earn me a small amount of regard from the higher-ups at her organization.

I told Jennifer that the YMCA should have a drop-in rate like Weight Watchers. She said, "We are a membership organization." (She repeated that several times before her surprise statement at the end.)

I said yes, I know, but you could be more responsive to people's financial needs. You're kind of smug, with your non-profit status. You don't have to be as responsive as Weight Watchers because you have donors that are getting a subsidy from Uncle Sam for the money they give to you. I asked for a written response. She said she'd send it.

Then she started explaining to me about how virtuous the YMCA is. I agreed that they are better than non-profits like Comic-Con and the National Football League, but that they do exist in part to make their president wealthy while paying very little to other employees.

She started in again talking about how they give scholarships.

I said I'd just like a response to my suggestion.

Then, suddenly, she said, "We have a drop-in rate."

I said, "Why didn't I ever hear about that?"

She said, "It's on our website and in our literature. And if you ask about our drop-in fee, we'll tell you about it."

It's like a Catch 22. They only talk to you about it if you already know about it.

[I'd been paying membership dues of $38 a month since last July, and attending very few classes due to injuries, scheduling conflicts, and a 6-week trip. If I'd let my dues lapse, I'd have to pay a whole new fee to rejoin. They sort of get you hooked. You can't take a break or they punish you. It seems to me that I paid a bit over $50 to join, but apparently the fee has been raised. Here's what the website says today:

Joining Fee Monthly Fee
Adult $100 $53
Single Parent Family
$100 $59
Family $100 $84]

I called the YMCA and learned that the drop-in rate is $10. I sure could have saved a lot of money (hundreds of dollars!) if I'd known that!