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October 23, 2015

Appeals Court Says L.A. Can Audit Union-Linked Nonprofits

Los Angeles officials won long-sought legal authority Thursday to fully comb the books of controversial nonprofits co-run by the city's Department of Water and Power and the union representing much of its workforce, reports the Los Angeles Times. A three-judge panel of the state Court of Appeal ruled that the Los Angeles controller's office has the right to perform unfettered annual audits of the two nonprofits, as it does for any organization that receives city money.

The Joint Training Institute and the Joint Safety Institute were formed in the early 2000s and receive $4 million annually from Angelenos' utility bills but operated for years with little oversight. Since their elections in 2013, Mayor Eric Garcetti and Controller Ron Galperin have sought to open the groups' books, but the International Brotherhood of Electrical Workers Local 18 has fought the move, arguing that the institutes are not public bodies and thus not subject to municipal audit powers.

Under a compromise brokered last year, the union allowed city auditors to review the nonprofits' spending for the last five years, but additional scrutiny of past or future records remained up to the courts. Following the partial audit, the controller's office questioned millions of dollars in expenses and contracts. Mr. Garcetti said Thursday's ruling lifted "any shadow of a doubt" about the public's right to scrutinize the groups' finances.