HomeMy WebLinkAbout2007-02 ADM MINUTES OF THE REGULAR MEETING OF THE
FINANCE AND ADMINISTRATION COMMITTEE
Orange County Sanitation District
WEDNESDAY, February 14,2007,AT 5:00 P.M.
A meeting of the Finance and Administration Committee of the Orange County Sanitation District
was held on February 14, 2007, at 5:00 p.m., in the Sanitation District's Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
FINANCE AND ADMINISTRATION STAFF PRESENT:
COMMITTEE MEMBERS: Jim Ruth, General Manager
DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager
Mark Waldman, Chair Lorenzo Tyner, Director of Finance and
Phil Luebben, Vice Chair Administrative Services
Steven Choi Jeff Reed, Human Resources and Employee
Bill Dalton Relations Manager
Rich Freschi Mike White, Controller
Darryl Miller Lille Kovac, Committee Secretary
Joy Neugebauer Norbert Gaia
Chris Norby Bob Gaggle
Ken Parker Juanita Skillman
Jim Winder
Doug Davert, Board Vice Chair OTHERS PRESENT:
Brad Hogin, General Counsel
Shirish Patel
DIRECTORS ABSENT: Richard Kikuchi
Jon Dumitru Ed Soong
Sal Tinajero Don McLean
Jim Ferryman, Board Chair
(2) APPOINTMENT OF CHAIR PRO TEM 011AN�RAFllN1 DIS'IHICT
No appointment was necessary.
(3) PUBLIC COMMENTS FEB 28 2001
There were no public comments. BY:
(4) REPORT OF THE COMMITTEE CHAIR
Chair Waldman did not give a report.
(5) REPORT OF THE GENERAL MANAGER
Jim Ruth, General Manager, did not give a report.
Minutes of the Finance and Administration Committee
February 14, 2007
Page 2
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administration, did not give a report.
(7) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, did not give a report.
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same,as follows:
a. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the December 13, 2006
and the January 3,2007 meetings of the Administration Committee.
b. ADM07-01 MOVED, SECONDED, AND DULY CARRIED: Approve change order
No. 1 to Purchase Order contract issued to Louis Allen International for
Management and Leadership Training services, authorizing an additional
$106,765, increasing the total contract amount not to exceed $153,015.
END OF CONSENT CALENDAR
(9) ACTION ITEMS
a. ADM07-02 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to:
(1) Direct staff to issue new fixed rate Certificates of Participation (COP)
debt sufficient to refund up to$280 million of COP Series 2003;and,
(2)Authorize the General Manager to negotiate and enter into a sole
source Consultant Services Agreement with Orrick, Herrington &Sutcliffe
to provide bond counsel and disclosure counsel services in an amount not
to exceed $125,000.
b. ADM07-03 MOVED, SECONDED,AND DULY CARRIED: Recommend to the Board
of Directors to approve the selection of Alliant Insurance Services, Inc.,to
serve as Property, Liability, and Workers' Compensation Insurance Broker
of Record for a one-year period commencing on March 1,2007,with the
option to renew for an additional four one-year periods at an average
commission rate per line of insurance of eight(8) percent.
Directors requested a schedule of insurance activities be available prior to
policies are renewed.
'Minutes of the Finance and Administration Committee
February 14,2007
Page 3
C. ADM07-04 MOVED, SECONDED,AND DULY CARRIED: (1)Approve a Purchase
Order Contract with Lance, Soil & Lunghard, Certified Public Accountants,
renewing the first year of a two-year option for internal auditing services
for the period of March 1, 2007 through February 29, 2008 for the amount
not to exceed $58,670;and
(2) Direct Lance, Soll & Lunghard to perform specific internal auditing
assignments as the Finance and Administration Committee deems
necessary.
An oversight subcommittee with Directors Waldman, Luebben, and Parker
will meet with auditors and staff to give direction of focus of audit areas,
and will report to the Administration Committee.
d. ADM07-05 MOVED, SECONDED, AND DULY CARRIED: Recommend to the Board
of Directors to approve the FY 2007-08 budget assumptions and direct
staff to incorporate these parameters in preparing the FY 2007-08 budget
update.
(10) CLOSED SESSION
The Committee convened in Closed Session at 5:35 p.m. pursuant to Government Code Section
54957(b)(1). Confidential Minutes of the Closed Session held by the Finance and Administration
Committee have been prepared in accordance with California Government Code Section
54957.2,and are maintained by the Clerk of the Board in the Official Book of Confidential
Minutes of Board and Committee Closed Meetings.
(11) OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
(12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
(13) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for March 14, 2007, at 5 p.m.
(15)ADJOURNMENT
The Chair declared the meeting adjourned at 5:48 p.m.
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Submitted by: ���N
v Nam-' r -'
Lilia Kovac
Committee Secretary
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STATE OF CALIFORNIA)
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COUNTY OF ORANGE )
Pursuant to California Government Code Section 54954.2, 1 hereby certify that
the Notice and the Agenda for the Finance and Administration Committee meeting to be
held on February 14, 2007, was duly posted for public inspection in the main lobby of
the District's offices on February 7, 2007.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of February,
2007.
Lille Kovac, Assoc. Clerk of the Board
Board of Directors
Orange County Sanitation District
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FINANCE AND ADMINISTRATION COMMITTEE
MEETING DATES
Meetinq Date Board Meeting Dates
February 14, 2007 February 28, 2007
March 14, 2007 March 28, 2007
April 11, 2007 April 25, 2007
May 9, 2007 May 23, 2007
June 13, 2007 June 27, 2007
July 11, 2007 'July 18, 2007
August— Dark August 22, 2007
September 12, 2007 September 26, 2007
October 10, 2007 October 24, 2007
November 14, 2007 November 28, 2007
December 12, 2007 'December 19, 2007
January 2008 — Dark January 23, 2008
February 6, 2007 February 27, 2008
*Meetings being held the third Wednesday of the month.
ROLL CALL
FINANCE AND ADMINISTRATION COMMITTEE
Finance, Human Resources and Information Technology
Meeting Date: February 14, 2006 Time: 6:00 p.m.
Adjourn:
COMMITTEE MEMBERS
Mark Waldman Chair
Phil Luebben ice Chair
Steven Choi
Bill Dalton
Jon Dumtbu
Rich Freschi
Darryl Miller
Joy Neu ebauer
Chris Norb
Ken Parker
Sal Tinajerp
Jim Winder
James M. Ferryman Board Chair
Doug Davert Board Vice Chair
OTHERS
Brad Ho in General Counsel
STAFF
Jim Ruth, General Manager
Nick Arhontes, Director of Operations
Bob Ghirelli,Assistant General Manager
Jim Herberg, Director of Engineering
Ed Torres, Director of Technical Services
Lorenzo Tyner, Director of Finance and
Administrative Services
Penny Kyle, Clerk of the Board
Lilia Kovac, Committee Secretary
c: Lenora Crane
H:Wept\agendMCommitteesMrnh Committee\0201\02.Roll Call.dm
AGENDA
REGULAR MEETING OF THE
FINANCE AND ADMINISTRATION COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
WEDNESDAY, FEBRUARY 14, 2007, AT 5:00 P.M.
ADMINISTRATIVE OFFICE
10844 Ellis Avenue
Fountain Valley, Califomia 92708
wvvw.ocsd.com
(1) DECLARATION OF QUORUM
(2) APPOINTMENT OF CHAIR PRO TEM IF NECESSARY
(3) PUBLIC COMMENTS
(4) REPORT OF COMMITTEE CHAIR
(5) REPORT OF GENERAL MANAGER
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
(7) REPORT OF GENERAL COUNSEL
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. Approve minutes of the December 13, 2006 and the January 3, 2007 meetings of the
Administration Committee.
b. ADM07-01 Approve change order No. 1 to Purchase Order contract issued to Louis
Allen International for Management and Leadership Training services,
authorizing an additional $106,765, increasing the total contract amount not
to exceed $153,015. (Book Page 12)
Book Pagel
February 14, 2007 Page 2
FND OF CONSENT CALENDAR
C. Consideration of items deleted from Consent Calendar, if any.
(9) ACTION ITEMS
a. ADM07-02 Recommend to the Board of Directors to:
(1) Direct staff to issue new fixed rate Certificates of Participation (COP)
debt sufficient to refund up to $280 million of COP Series 2003; and,
(2)Authorize the General Manager to negotiate and enter into a sole source
Consultant Services Agreement with Orrick, Herrington & Sutcliffe to provide
bond counsel and disclosure counsel services in an amount not to exceed
$125,000. (Book Pagel4)
b. ADM07-03 Recommend to the Board of Directors to approve the selection of Alliant
Insurance Services, Inc., to serve as Property, Liability, and Workers'
Compensation Insurance Broker of Record for a one-year period
commencing on March 1, 2007, with the option to renew for an additional
four one-year periods at an average commission rate per line of insurance of
eight(8) percent. (Book Pagel8)
C. ADM07-04 (1)Approve a Purchase Order Contract with Lance, Soil& Lunghard,
Certified Public Accountants, renewing the first year of a two-year option for
internal auditing services for the period of March 1, 2007 through February
29, 2008 for the amount not to exceed $58,670; and
(2) Direct Lance, Soil & Lunghard to perform speck internal auditing
assignments as the F&A Committee deems necessary. (Book Page23)
d. ADM07-05 Recommend to the Board of Directors to approve the FY 2007-08 budget
assumptions and direct staff to incorporate these parameters in preparing
the FY 2007-08 budget update. (Book Page26)
(10) CLOSED SESSION
i During the course of conducting the business set forth on this agenda as a regular meeting of the Committee
i the Chair may convene the Committee in dosed session to consider matters of pending real estate negotiations,
` pending or potential lifigation,or personnel matters, pursuant to Government Code sections 54956.8, 54956.9,
54957 or 54957.6,as noted.
Report relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c)
employee actions or negotiations with employee representatives; or which are exempt from public disclosure
under the California Public Records Act, may be reviewed by the Committee during a permitted dosed session
and are not available for public inspection. At such time as final actions are taken by the Committee on any of
these sWjecls,the minutes will retiecl allle _aired disdosures of information._
H:ldephagendalCommittees1Admin COmmitee102071D3.021407 F&A Agenda.doc
Book Paget
February 14, 2007 Page 3
A. Convene in closed session.
1. Conference with designated representatives Jim Ruth, Interim General Manager;
Lorenzo Tyner, Director of Finance and Administrative Services; Jeff Reed, Human
Resources and Employee Relations Manager; and Paul Loehr, Human Resources
Supervisor, re Meet and Confer Update re contract negotiations for employees
represented by 1). Orange County Employees Association; 2). International Union
of Operating Engineers, Local 501, and 3). Supervisors, Professional Management
Team (part of Peace Officers Council of California) (Government Code Section
54957(b)(1).
B. Reconvene in regular session.
C. Consideration of action, If any, on matters considered in closed session.
(11) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
(12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA
FOR ACTION AND STAFF REPORT
(13) FUTURE MEETING DATES
The next regular Administration Committee meeting is scheduled for March 14, 2007, at
5 p.m.
(14) ADJOURNMENT
H:4kpt\agends\Cpmmittees\Admin Committee\0207\03.021407 F&A Agenda.doc
Book Page3
February 14, 2007 Page 4
Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda
has been posted in the main lobby of the District's Administrative offices not less than 72 hours prior to the meeting
date and time above. All written materials relating to each agenda item are available for public inspection in the office
of the Clerk of the Board.
Items Not Posted: In the event any matter not listed on this agenda is proposed to be submitted to the Committee for
discussion and/or action, it will be done in compliance with Section 54954.2(b) as an emergency item or because
there is a need to take Immediate action, which need came to the attention of the Committee subsequent to the
posting of agenda, or as set forth on a supplemental agenda posted in the manner as above, not less than 72 hours
prior to the meeting date.
Public Comments: Any member of the public may address the Administration Committee on specific agenda items or
matters of general interest. As determined by the Chair, speakers may be deferred until the specific hem is taken for
discussion and remarks may be limited to three minutes.
Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by
the Committee except as authorized by Section 54954.2(b).
Consent Calendar: All matters placed on the consent calendar are considered as not requiring discussion or further
explanation, and unless a particular Rem is requested to be removed from the consent calendar by a Director of staff
member, there will be no separate discussion of these items. Al items on the consent calendar will be enacted by
one action approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar.
All items removed from the consent calendar shall be considered in the regular order of business.
The Committee Chair will determine if any items are to be deleted from the consent calendar.
Items Continued: Items may be continued from this meeting without further notice to a Committee meeting held
within five(5)days of this meeting per Government Code Section 54954.2(b)(3).
Meeting Adiournmem: This meeting may be adjourned to a later time and items of business from this agenda may be
considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section
54955(posted within 24 hours).
Accommodations for the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require
any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the
Board's office at(714) 593.7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature
of the disability and the type of accommodation requested.
Notice to Committee Members:
For any questions on the agenda or to place any items on the agenda, Committee members should contact the Committee Chair
or Clerk of the Board ten days in advance of the Committee meeting.
Committee Chair: Mark Waldman (714)527-1959
Committee Secretary: Lille Kovac (714)593-7124 Ikovac(docsd.com
General Manager: Jim Ruth (714)593-7110 iruthV.)ocsd.con
Assistant General Manager Bob Ghirelli (714)593-7400 bahirelliitocsd.com
Director of Finance and Lorenzo Tyner (714)593-7550 Iwneritiliocsd.com
Administrative Services
Humen Resources and Employee Jeff Reed (714)593-7144 ireed0ocsd.com
Relations Manager
H:\depPagenda\CommitteesVAdmin Committee\0207\03.021407 F&A Agenda.doc
Book Psge4
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February 14, 2006
ADMINISTRATION COMMITTEE
AGENDA CALENDAR
Item Action
March Employee Benefits Renewals Informational
March Budget Development Informational
March Sewer Service Rates Informational
Book Page5
MINUTES OF THE REGULAR JOINT MEETING OF THE
FINANCE, ADMINISTRATION AND
HUMAN RESOURCES COMMITTEE & STEERING COMMITTEE
Orange County Sanitation District
WEDNESDAY, DECEMBER 13,2006,AT 5:00 P.M.
A joint meeting of the Finance,Administration and Human Resources Committee and the
Steering Committee of the Orange County Sanitation District was held on December 13, 2006,
at 5:00 p.m., in the Sanitation District's Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
FAHR COMMITTEE MEMBERS: STAFF PRESENT:
DIRECTORS PRESENT: Jim Ruth, Interim General Manager
Bill Dalton Bob Ghirelli, Assistant General Manager
Rich Freschi Lorenzo Tyner, Director of Finance and
Phil Luebben Administrative Services
Joy Neugebauer Jeff Reed, Human Resources and Employee Relations
Mark Waldman Manager
Doug Davert, Board Vice Chair Mike White, Controller
Jim Ferryman, Board Chair Lilia Kovac, Committee Secretary
Paul Loehr, Human Resources Supervisor
Jim Matte, Safety and Health Supervisor
DIRECTORS ABSENT:
OTHERS PRESENT:
Darryl Miller, Chair Brad Hogin, General Counsel
Mike Duvall, Vice Chair Norbert Gaia
James W. Silva Bob Geggie
Ryal Wheeler
(2) APPOINTMENT OF CHAIR PRO TEM
Due to the absence of Committee Chair Miller, Chair Ferryman conducted the meeting.
(3) PUBLIC COMMENTS
There were no public comments.
(4) REPORT OF THE COMMITTEE CHAIR
Chair Ferryman announced that the December Board of Directors meeting had been rescheduled to
start at 6:30 p.m., followed by a social event at Chair Ferryman's home.
(5) REPORT OF THE GENERAL MANAGER
Jim Ruth, Interim General Manager, did not give a report
Book Pages
Minutes of the Regular Joint meeting of the Finance,Administration and Human
Resources Committee and Steering Committee Meeting
December 13, 2006
Page 2
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance and Administration, did not give a report.
(7) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, reported that he has drafted a memo to the committee members
regarding the July and August legal fees.
(8) CONSENT CALENDAR ITEMS
Consideration of motion to approve all agenda items appearing on the Consent Calendar not
specifically removed from same, as follows:
a. Approve minutes of the November 8, 2006 joint meeting of the Finance, Administration and
Human Resources Committee and Steering Committee meeting.
b. FAHR08-83 Receive and file Employment Status Report as of November 16, 2006.
c. FAHR06-84 Receive and file OSHA Incidence Rates and Workers' Compensation
Claims and Costs Report.
d. FAHR0"5 Receive and file report of General Manager approved purchases in
amounts exceeding $50,000 in accordance with Board purchasing
policies.
e. FAHRO6-86 Recommend to the Board of Directors to approve the Indemnification
Agreement with Water Emergency Response Organization of Orange
County(WEROC)for mutual aid for member agencies of WEROC during
emergencies, in a form approved by General Counsel.
f. FAHR06-87 Recommend to the Board of Directors to adopt the Orange County
Regional Water and Wastewater Multi-Hazard Mitigation Plan, subject to
incorporation of comments, if any, by the State Office of Emergency
Services and the Federal Emergency Management Agency upon
completion of their review.
Motion: It was moved, seconded, and duly can to approve the recommended action
for the items specified as 8(a)through 8(f).
END OF CONSENT CALENDAR
Book Pagel
Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
December 13, 20D6
Page 3
(9) ACTION ITEMS
a. FAHRO6-88 Direct staff to research and collect Capital Facilities Connection Charges
for the current and prior four years from School Districts and Community
Colleges.
Motion: It was moved, seconded, and duly carried to approve the recommended
action.
Chair Ferryman and Director Neugebauer opposed.
(10) INFORMATIONAL ITEMS
a. FAHRO6-89 Commissions Earned by the Sanitation District's Insurance Broker of
Record.
Mike White, Controller, presented a report on the Sanitation District's
insurance brokers various commissions earned as set by the insurance
centers by category.
(11) CLOSEDSESSION
The Committee convened in Closed Session at 5:25 p.m. pursuant to Government Code Section
54957(b)(1)and Subdivision (a)of Section 54956.9. Confidential Minutes of the Closed
Session held by the Finance,Administration and Human Resources Committee have been
prepared in accordance with Callfomia Government Code Section 54957.2, and are maintained
by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee
Closed Meetings.
(12) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
(13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
(14) FUTURE MEETING DATES
The next regular Finance and Administration (F&A) Committee meeting is scheduled for January 3,
2006, at 5 p.m.
Book PageB
Minutes of the Regular Joint meeting of the Finance,Administration and Human
Resources Committee and Steering Committee Meeting
December 13,2006
Page 4
(15) ADJOURNMENT
The Chair declared the meeting adjourned at 6:40 p.m.
Submitted by:: ,,• -
Lilia Kovac
Committee Secretary
H:Wep8agendaTAHRIFAHR2006\110W 10806 @aft FAHR Mlnutes.doc
Book Pageg
MINUTES OF THE SPECIAL MEETING OF THE
FINANCE AND ADMINISTRATION COMMITTEE
Orange County Sanitation District
WEDNESDAY, JANUARY 3, 2007, AT 5:00 P.M.
A meeting of the Finance and, Administration Committee of the Orange County Sanitation
District was held on January 3, 2007, at 5:00 p.m., in the Sanitation District's Administrative
Office.
(1) The roll was called and a quorum declared present, as follows:
FAHR COMMITTEE MEMBERS: STAFF PRESENT:
DIRECTORS PRESENT: Jim Ruth, General Manager
Jim Ferryman, Board Chair Bob Ghirelli, Assistant General Manager
Doug Davert, Board Vice Chair Lorenzo Tyner, Director of Finance and
Rich Freschi Administrative Services
Phil Luebben Jeff Reed, Human Resources and Employee Relations
Darryl Miller Manager
Joy Neugebauer Lilia Kovac, Committee Secretary
Mark Rosen Rich Spencer, Human Resources Supervisor
Mark Waldman Paul Loehr, Human Resources Supervisor
OTHERS PRESENT:
Brad Hogin, General Counsel
DIRECTORS ABSENT:
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no public comments.
(4) CLOSED SESION
a. The Committee convened in Closed Session at 5:05 p.m. pursuant to
Government Code Section 54957.6 Confidential Minutes of the Closed Session
held by the Finance,Administration and Human Resources Committee have
been prepared in accordance with California Government Code Section 54957.6,
and are maintained by the Clerk of the Board in the Official Book of Confidential
Minutes of Board and Committee Closed Meetings.
b. The Committee reconvened in regular session at 5:46 p.m.
Book PagetO
Minutes of the Finance and Administration Meeting
January 3, 2007
Page 2
(5) ADJOURNMENT
The Chair declared the meeting adjourned at 5:47 p.m.
Submitted by:
Lilia Kovac
Committee Secretary
H:WepMgenda%Commiaees1F&A101071010307 FAHR Mlnu a .doe
Book Page11
FINANCE AND ADMINISTRATION COMMITTEE MeeUNDate To Bd.of Dlr.
02/14/07
AGENDA REPORT mo'�ineer Lan NTr
ADM07-01
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance &Administrative Services
SUBJECT: Management and Leadership Training/Change Order Agreement
GENERAL MANAGER'S RECOMMENDATION
Approve Change Order No. 1 to Management and Leadership Training purchase
agreement with Louis Allen International for Management and Leadership Training
services, authorizing an additional $106,765, increasing the total contract amount not
to exceed $153,015.
SUMMARY
The General Manager requests an increase in the contract with Louis Allen Worldwide
for OCSD's Extraordinary Leadership and Profession of Management (POM) training
programs. The Extraordinary Leadership project will further develop the leadership
skills of the Executive Management Team through competency gap analysis.
Implementation of OCSD's management principles and competencies will continue with
Profession of Management, reaching all levels of OCSD's management to ensure
consistency at all management levels.
PRIOR COMMITTEEIBOARD ACTIONS
None.
ADDITIONAL INFORMATION
This request complies with authority levels of the Sanitation District's Delegation of
Authority. This item has been budgeted.
During 2006, OCSD's Managers participated in Louis Alien's Profession of Management
program. The objective of the requested additional program is to provide the
organization's Supervisors with the same skills that the Managers learned, thereby
creating a common knowledge base across OCSD management.
Louis Allen is an industry leader in customized management development programs.
Since 1964, Louis Allen has served over 5000 organizations in a variety of industries,
including government agencies.
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pvpt.t51 PerieoE-.01.7
Page 1
Book Page12
When the General Manager originally sought to model OCSD's program after the City of
Anaheim's successful management training, OCSD selected Louis Allen based on the
outstanding program the vendor had developed and implemented for Anaheim.
The anticipated costs for the two programs are as follows:
$73,120 Profession of Management- Program & Delivery (64 participants)
$ 6,000 Coordination with OCSD's POM Faculty Group&HR staff
$ 7,636 EMT Extraordinary Leadership (6 participants)
$86,756 Total Estimated Program Costs
Procuring Louis Allen Worldwide's services will ensure that OCSD continues to
implement a high-quality customized management training program that meet the needs
of the organization.
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Page 2
Book Page13
FINANCE & ADMINISTRATION COMMITTEE ^+�^some ro Bit or pr.
AGENDA REPORT mb °
]Oem Numbar item Number
Orange County SanitaUon Di,n t
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative
Services
SUBJECT: REFUND CERTIFICATES OF PARTICIPATION SERIES 2003 UP TO
THE TOTAL $280 MILLION OUTSTANDING
GENERAL MANAGER'S RECOMMENDATION
1. Direct staff to issue new fixed rate Certificates of Participation (COP) debt sufficient
to refund up to $280 million of COP Series 2003; and,
2. Authorize the General Manager to negotiate and enter into a sole source Consultant
Services Agreement with Orrick, Herrington & Sutcliffe to provide bond counsel and
disclosure counsel services in an amount not to exceed $125,000.
SUMMARY
Current long-term tax-exempt interest rates continue to hover around historic lows,
providing the Sanitation District with potential refinancing opportunities to reduce
interest cost. One opportunity is the economic refunding of the Sanitation District's
outstanding COP Series 2003. According to the District's financial advisor, Public
Resources Advisory Group (PRAG), many maturities of this issue may be advance
refunded for significant economic savings under current market conditions in excess of
three (3) percent as the minimum present value savings as required by the Sanitation
District's debt policy. Approval of the recommended actions above will direct staff to
begin the advanced refunding of part, or all, of the Series 2003 $280 million outstanding
fixed-rate debt and retain the bond counsel firm of Orrick, Herrington & Sutcliffe to assist
in the debt issuance. Staff will continue to work with the financial advisory firm of
PRAG.
PRIOR COMMITTEEIBOARD ACTIONS
In October of 2006, the Board renewed the financial advisory service contract with
PRAG for an additional five-year period beginning with fiscal year 2006-07.
ADDITIONAL INFORMATION
The District currently has five series of COPS outstanding comprising a total par amount
of$791.0 million. The following table describes each COP in detail.
Fom Noo IWt npcao°apon-FM
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Page 1
Book Page14
EXISTING COP FINANCING PROGRAM
g d.
Series 2006 $200,000,000 Daily Variable Rate
series 2003 280,000,000 Fixed Rate
Series 2000 197,400,000 Daily Variable Rate
Refunding(1)
Series 1993 32,200,000 Synthetic Fixed Rate o)
Refunding rs)
Series 1992 85,505,000 Synthetic Fixed Rate(3)
Refunding txl
Total $795,105,000
'As of January 31,2007.
(1)Series 2000 COPS refunded the Sedes A,B,and C issued between 1990 and 1992,
(2)Series 1992 and 1993 COPs refunded the Series 1986 and a portion of the Sedes,B'COPs.
(3)Variable rate debt swapped to a fixed rate through maturity.
The Series 2000 refunded the $179.7 million outstanding principal balance of the
1990-92 Series "A," "B" and "C" COPS, and reimbursed the District for improvements
made to the wastewater treatment system. The 1993 Refunding COPs were issued to
refund $39.7 million of the Series "B" COPS. The Series 1992 Refunding COPs
refunded the 1986 COPs ($107 million) issued on behalf of District Nos. 1, 2, and 3.
The 1992 Refunding COPS also refunded approximately $38.4 million of the Series "B"
COPS, issued in 1991.
The following table displays the combined gross debt service cash flows for the
District's five COPS through final maturity in FY 2035-36. The spikes indicate the final
payments for various issues and will be paid from the debt service reserves.
DEBT SERVICE STRUCTURE
90
80 ■principal Olnterlrot
70 ...... ....
60
@ 50 _..,_.. ..
g 40
30
zo
10
0 q tVr.� Y1 G
CpC` l�OO'�o"e oN_IOD I�WWQtVN NN l tP.00 000 000 00
N �NN NNN NNN NNN bN NN NNN NNN NNN NNN NN
Fiscal Year End
Form Na om,O
e"FL 1S1 M"NF aePm-FM
RFWmI:mNe9]
Page 2
Book Page15
Strategy
The most recent Strategic Plan capital improvement program requires approximately
$2.2 billion over the next 10 years, of which approximately$1.2 billion is to be financed
through long-tens borrowings in accordance with the District's long-term debt fiscal
policy and cash flow projections
The next new debt issuance of$300 million of COP debt is not scheduled until fiscal
year 2007-08. A total of up to$1.2 billion in COP debt issuance is being proposed over
the next ten years with a new issuance scheduled approximately every year for at least
the next six years. These financings are needed early in the 10-year capital
improvement program because the bulk of the construction is scheduled during the next
seven years.
Due to the current low interest rate environment, staff is proposing to refund at least
$84.0 million of COP Series 2003 maturing in years 2027 through 2030 with annual
coupon rates of 5.25 percent, as shown in the chart below. Additional bond maturities
may be proposed to be refunded depending on the existing market rates at the time of
issuance.
COP Series 2003
Maturity Bond Type Principal Amount Coupon Call Date Call Price
02/01/21 Serial $ 4,495,000 5.25% 08/01/13 100.000
0210122 Serial 15100000 5.00% 08/01/13 100.000
02/0123 Serial 15,805,000 5.00% 08/01/13 100.000
02/0124 Serial 16,640,000 5.00% 08/01/13 100.DDD
02/0125 Serial 17,425,000 5.00% 00/01/13 100.000
02/0126 Serial 18,350,000 5.00% 08/01/13 100.0D0
'DW127 Serial 19265D00, :`5.25%'� 1113 —, 0Dii100,r
�'02/0128 Serial 20Z DDD:; ;,5:31Wb u�,08I0TJ1S ;wg100:R100M=
02101/3D Term44 :000'- . "SY596 Q$08f0 A 009D00`;:
02/01/33 Tenn 108,180,000 5.00% 08/01/13 100.000
Total $280 000 000
Finance Team and Timeline
Financial advisory services were obtained in October 2006, for a five-year period. Staff
is now proposing that bond counsel services be retained for this refinancing immediately
to take advantage of this low interest rate environment. It is requested that the Finance
and Administrative Committee authorize staff to engage Orrick, Herrington & Sutcliffe
for this project. Orrick, Herrington & Sutcliffe has provided legal services on various
matters related to the District's existing COP financing program, and is therefore,
intimately familiar with the legal documents and structures of the District's COP issues.
Most recently, they have assisted staff efforts related to the issuance of the COP Series
2006 and COP Series 2003. Costs for legal services would be reimbursed from the
proceeds of the new COP upon successful completion of the issuance. Orrick,
FOM No.0w10a3 apona Re -rv.
oep.tst Penxa.o1.M7
Page 3
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Herrington & Sutcliffe has also developed a working knowledge of the industry through
the completion of similar financings.
Given the knowledge and experience that both firms can contribute to the proposed
issuance, it is estimated that it can be accomplished in approximately 100 days, as
illustrated by the timeline below. Staff would negotiate a professional services
agreement Orrick, Herrington & Sutcliffe, for execution by the General Manager.
Due to the fad that this is a fixed-rate debt issuance, staff is proposing to issue this debt
through a competitive sale because it is the most expeditious way to access the market
and d is expected to provide the lowest interest cost for this given structure.
D Negotiate professional services agreement with bond counsel
D Issue Bank, Printer and Verification Agent Request for
February Proposals
D
March D Select Bank,Printer and Verification Agent
D Develop legal documents
D Develop disclosure documents(Official Statement)
D Develop rating agency presentation
April D Conduct rating agency presentations
➢ Finalize debt service and cash flow modeling
D Finalize legal and disclosure documents
D Conduct Competitive Sale of Fixed Rate COP 2007
May D Execute COP 2007 Refunding issue
D Investment of Bond Proceeds
D Debt Administration
All costs involved in the COP issuance, including costs for Orrick and for PRAG will be
paid from the proceeds of the new issue.
JR:LT:MW:Ic
Fon No.O iU4 ppp,pa gprq,_pgp
Pord 151 Ran. 01.7
Page 4
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FINANCE AND ADMINISTRATION COMMITTEE left Do* To W.of M.
01/14/07 02128M
AGENDA REPORT ID°a &MM MemHung"
ADW-03
Orange County Santation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative
Services
SUBJECT: SELECTION OF INSURANCE BROKER(S) OF RECORD FOR THE
ORANGE COUNTY SANITATION DISTRICT'S PROPERTY, LIABILITY,
AND WORKERS' COMPENSATION PROGRAMS AND OTHER
COVERAGE SERVICES
GENERAL MANAGER'S RECOMMENDATION
Approve the selection of Alliant Insurance Services, Inc., to serve as Property, Liability,
and Workers' Compensation Insurance Broker of Record for a one year period
commencing on March 1, 2007, with the option to renew for an additional four one-year
periods at an average commission rate per line of insurance of eight (8) percent.
SUMMARY
Staff has completed a competitive proposal process to ensure that the Sanitation
District receives a high, timely level of property, liability, workers' compensation, and
other coverage broker services, at competitive prices. A request for proposal was sent
to nineteen (19) large and regional insurance brokerage firms. A total of four (4) firms
submitted a proposal. Following the initial review of the proposals, three (3) proposals
were deemed responsive and were included in the interview process. Following the
interviews of these three (3) firms, the Proposal Review Team determined that Alliant
Insurance Services, Inc., the Sanitation District's current broker of record, was the firm
that could best demonstrate a high and timely level of services at the best value. Staff
is recommending that Alliant Insurance Services be retained as the District's broker of
record at an average commission rate per line of insurance of approximately eight (8)
percent. This is the same average that was paid during FY 2006-07.
PRIOR COMMITTEE/BOARD ACTIONS
In December 1996, following a competitive Request for Proposal (RFP) process
involving large insurance brokerage firms, the Board selected Robert F. Driver
Associates of Newport Beach (now known as Alliant Insurance Services, Inc.) to serve
as the Broker of Record for the Sanitation District's insurance coverage needs.
In December 2006, the Finance, Administration and Human Resources Committee
authorized staff to conduct a new RFP for Insurance Broker of Record services, to make
certain that the District continues to receive competitive professional services on a
timely basis.
Form No.DW 102] ApenEa N�1-iM
pgM1 151 fleneN.o1l�W
Page 1
Book Page18
ADDITIONAL INFORMATION
RFP PROCESS
Staff prepared a comprehensive RFP covering property, liability, and workers'
compensation programs and other coverage services. The RFP provided all firms with
an equal opportunity to submit proposals for these services that were to include quotes
for compensation based on a commission based structure and a fee-based structure.
On December 22, 2006, the RFP was sent to nineteen (19) large and regional
insurance brokerage firms. On January 23, 2007, the Sanitation District received four
(4) proposals from the following firms:
• Alliant Insurance Services
• Aon Risk Services Inc. of Southern California
• Arthur J. Gallagher Risk Management Services
• Willis Insurance Services of Orange County
One of the two largest insurance brokerage firms in the United States, Marsh &
McLennan Companies, declined to propose and stated in a letter to the Sanitation
District that the insurance programs that the Sanitation District participates in, has
consistently been less expensive than what is available in the open commercial market
and that pricing realities would likely preclude them from being competitive.
RESULTS OF PROPOSAL EVALUATION
A Proposal Review Team, consisting of the District's Director of Finance and
Administrative Services, Controller, Principal Risk and Insurance Analyst, Principal
Accountant, and the Administrative Assistant over Insurance Contracts evaluated the
four (4) written proposals. Following the initial review of the proposals, the Proposal
Review Team determined that three (3) of these firms, Alliant Insurance Services, Aon
Risk Services, Inc., and Arthur J. Gallagher Risk Management Services, were
responsive as to services provided, experience in servicing public agencies, and
demonstrated a willingness to meet the Sanitation District's time lines, and were
scheduled for interviews.
Following the interviews, Alliant Insurance Services stood apart from the other firms in
convincing the Proposal Review Team that, because of their broad base in the public
agencies insurance market, they could save the Sanitation District 20 to 25 percent on
insurance premiums on each line of insurance at the same coverage amounts and self-
insured retentions. Even the other two firms interviewed acknowledged Alliant
Insurance Services' purchasing power advantage, and focused instead on other Risk
Management services their firms had to offer.
Alliant Insurance Services was also committed to keeping the Board of Directors
apprised on the current insurance market conditions and providing insurance renewal
proposals within the stated deadlines.
FOM NO,D 103J Agm%ReOaO-F"
Dom.is+ rwe.e.OIRWO7
Page 2
Book Pager9
CONCLUSIONS
Alliant Insurance Services serves more than 1,500 special districts, 56 of the 58
California Counties, over 600 cities, numerous joint power authorities, in excess of 150
school districts, the California State University System, several large transit districts,
and the State of Califomia. In addition, they have several unique proprietary programs,
such as the Public Entity Property Insurance (PEPIP) and the Alliant National Municipal
Liability (ANIMAL). PEPIP has over $170 billion in insured values in more than thirty
states, is the largest property insurance program in the world, and offers members
leveraged buying power with the additional benefits of flexibility, broader coverage
provisions, and lower premium rates of group program purchasing power.
Similar to its PEPIP counterpart, ANIMAL was designed to capitalize on the flexibility,
broader coverage provisions, and lower premium rates of group program purchasing
power. With member premiums approximating $14 million, public agency clients
maintain the capability of designing excess liability coverage limits and deductibles
specific to individual needs without the necessity of formal membership requirements.
The most significant program development in recent years, the California Public Entity
Insurance Authority (now CSAC) was formed in 2001 to afford all public agencies in
California access to CSAC Enrolled Insurance Authority's insured and self-insured
workers' compensation program. Given the disintegration of the 2002 and 2003
workers' compensation marketplace and the ongoing restrictive excess workers
compensation insurance environment, Alliant Insurance Services has been able to offer
the only meaningful ahemative to hundreds of California public agencies.
Based on the results of the public bid process, staff recommends retaining Driver Alliant
as the District's broker of record.
This complies with the authority levels of the Sanitation District's Delegation of
Authority. This Rem has been budgeted.
ATTACHMENTS
1. Insurance Schedule
JDR:LT:MW:lc
FOM No.W 101.] %9ertla PCV+I-F6A
Cepl.151 flfnwE'.01Ndb1
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ORANGE COUNTY SANITATION DISTRICT
INSURANCE SCHEDULE
FY 2006.07
POLICY POLICY ANNUAL SIRIDEDUCTIBLE
COVERAGE LIMITS PREMIUM RETENTION
Excess Workers'Compenation $200 mil. Each acc./employee $201,746 eat. $500,000
Property Insurance $1 Billion $777,833 $25.000 peroccur.,$100.000 Flood peroccur.,No EO
Boiler&Machinery $100 mil. per occur. $25,837 $25,000 per occur.
Excess General Liability $25 mil. Blanket Loss $391,233 $250,000 per occurrence and annual aggregate.
Pollution Liability $10 mil per occur. $12,968 $100,000 per occur.
Wateroraft protection&Indemnity $10 mil per occur. $18,7D8 $15,000
to Commercial Crime $5 mllion per loss $4,444 $2.500
Travel and Accident $500,00D per occur. $2,500 None
3
N
N
FINANCE & ADMINISTRATION COMMITTEE Mee Date To ea.of Oil
07/14 07
AGENDA REPORT =n Number Ran Number
AOM07-M
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance and Administrative
Services
SUBJECT: Renewal of the Internal Auditing Contract
GENERAL MANAGER'S RECOMMENDATION
(1) Approve a Purchase Order Contract with Lance, Soil & Lunghard, Certified Public
Accountants:
• renewing the first year of a two-year option for internal auditing services;
• covering the period of March 1, 2007 through February 28, 2008;
• in the same not to exceed amount of$58,670 that was approved in the prior
year; and
(2) Direct Lance, Soil & Lunghard to perform specific internal auditing assignments
as the F&A Committee deems necessary.
SUMMARY
At the direction of the Committee in FY 2005-06, staff solicited a request for proposal
(RFP) to provide 600 hours of Internal Auditing Services, with the option of auditing the
following two years at the Committee's discretion. The RFP was submitted to eight
firms specializing in providing auditing services for local governments.
An Evaluation Team comprised of the Director of Finance, Controller, and Accounting
Manager determined that Lance, Soil & Lunghard (LSL) was the best qualified firm to
serve as the District's internal auditors based on the following observations:
1. The firm has provided auditing services to local governments for over 75 years
and has consistently been named one of the"Top Accounting Firms" in Orange
County by the Orange County Business Journal.
2. They provided extensive examples on internal auditing services provided to other
governmental clients.
3. They described in detail their thoroughness in conducting internal auditing
services.
Farts No 10t 3 Agondanopon—Fan
Dnpt.l5f Rwl 01/ 7
Page 1
Book Page23
Based on the Evaluation Team's recommendation, the Committee approved the
selection of LSL to serve as the District's internal auditors.
During FY 2005-06, LSL completed an internal review of the District's capital
improvement program's procurement procedures and related internal controls, and
issued their independent accountant's report to the Committee in October 2006. A total
of 605 audit hours, totaling $51,348.50, was placed on this effort.
Based on the high level of work performed by LSL, and their willingness to conform to
the Committee's reporting timelines, staff is recommending that their contract be
renewed for an additional year in the same not to exceed amount of$58,670.
Recommended Areas to Be Considered in Future Internal Audits
Although staff has no knowledge of any improprieties or irregularities within the
accounting or operational activities of the District, following are typical areas the
Committee may want to consider in future internal audits:
1. Comprehensive review of all key Accounting policies, procedures, and
processes to ensure that all related internal controls are well designed, properly
implemented, and adequately maintained.
2. Contract Management.
3. Groundwater Replenishment System billings from the Orange County Water
District.
4. Proper billings to end users, including permittees.
5. Expenditures conform to District Ordinances, Resolutions, policies and
procedures.
6. Employee Expense Reports conform to Board Ordinances and Resolutions.
7. Employee Salaries and Benefits conform to Board Ordinances and Resolutions.
8. Credit Card purchases conform to policies and procedures.
9. District Contributions are Board approved.
10. District memberships conform to policies and procedures.
Staff recommends that the Committee direct the District's contracted internal auditors to
perform a preliminary analysis on the first item listed above and report back to the
committee in March 2006. Staff believes that the contracted internal auditors should
first focus on item one, because strong accounting policies and procedures and internal
controls are the foundation to safeguarding assets and ensuring public trust. All of the
following listed areas of potential concern are in essence compliance testing against the
established accounting policies, procedures, and practices. If their preliminary analysis
indicates the potential of audit findings, request that they also bring back to the
Committee in March the appropriate audit scope and an estimate on the total number of
audit hours required for this assignment.
Form No,Dw.1024
Mpl.ls, raenm nwo+-FBq
nan.sa:oimam2
Page 2
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PRIOR COMMITTEE/BOARD ACTIONS
In February 2007, the Committee approved a Purchase Order Contract with Lance, Soll
& Lunghard, Certified Public Accountants, as the District's contracted internal auditors
for fiscal year 2005-06, for the period of March 1, 2006 through February 28, 2007, for
an amount not to exceed $58,670, and with an option to renew the contract for two one-
year periods based on approval by the Committee.
ADDITIONAL INFORMATION
This proposed purchase order contract complies with authority levels of the Sanitation
District's Delegation of Authority. This item has been budgeted.
JR:LT:MW:lc
F.rt WWitO]J Pp.,Gaft.-FM
Oep:.151 Rm 01N 7
Page 3
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FINANCE & ADMINISTRATION COMMITTEE "�"'Vr T-0 a°
ox/iVo� oulelo7
AGENDA REPORT 1heni Nioi°' Den Number
nDW-W
Orange County Sanitation District
FROM: James D. Ruth, General Manager
Originator: Lorenzo Tyner, Director of Finance & Administrative Services
SUBJECT: Consideration of Budget Assumptions and Budget Calendar for
Preparation of the FY 2007-08 Budget Update.
GENERAL MANAGER'S RECOMMENDATION
Approve the FY 2007-08 budget assumptions and direct staff to incorporate these
parameters in preparing the FY 2007-08 budget update.
SUMMARY
For the budget update process, the F&A Committee establishes the Budget
Assumptions and approves the Budget Calendar.
Staff will make a brief presentation at the Committee meeting.
PRIOR COMMITTEEIBOARD ACTIONS
None.
ADDITIONAL INFORMATION
Currently, there are no proposed changes to the District Fiscal Policy. The Fiscal Policy
is published in the FY 2006-07 and 2007-08 Budget document (Section 3, Pages 1-14),
and is available on the District's website.
ATTACHMENTS
1. Preliminary Budget Assumptions Highlights (Page 2)
2. Preliminary Budget Assumptions (Pages 3— 5)
3. Budget Update Calendar (Pages 6-9)
JR:LT:MW:lc
Forth No.p IWI 1�g,7
ky:1N
Page 1
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FY 2007-08 Preliminary Budget Assumptions Highlights
Economic Assumptions
• Four percent inflation was used for the FY 2007-08 budget. This approximates the updated
inflation of three point three percent'that is projected for 2007.
`(Chapman University December 2006 Ecorxxnic and Business Review)
Revenue Assumptions
• The District rate for a single-family residence(SFR)will increase 9.8%to$182.05.
• Rate adjustment notification is not required as the rates will not exceed the maximum
amount possible for the fifth year of the five year rate schedule per the last notification.
• Any change in Board direction regarding the SFR rate assumption will be included in the
final budget.
Note: Each $1 increase in SFR rate will generate approximately$900,000 per year.
• Property taxes will be budgeted to increase five percent over last year, an approximate
increase of$2.7 million.
• Interest income will be budgeted at four percent of the projected average cash and
investment balance for FY 2007-08.
Operating Assumptions
• Average daily flow for FY 2007-08 is estimated to be the same as the FY 2006-07 projection
of 250 million gallons per day (mgd). The FY 2005-06 final flow was 234 mgd.
• All existing secondary treatment facilities will be operated and maintained at full capacity.
• Interim disinfection facilities will be operated and maintained at existing levels and cost.
• Operating expenses are expected to approximate the adopted FY 2007-08 budget.
Staffing Assumptions
• Authorized staffing will be no higher than the current authorization of 644.0 FTEs.
• A 5%vacancy factor has been budgeted for FY 2007-08 for authorized positions.
• MOUs for OCIA, Local 501, and SPMT are being negotiated for FY 2007-08. No salary or
benefit adjustments will be included in the budget.
Reserve Assumptions
• The current reserve policy was reviewed by the District's financial adviser, Public Resources
Advisory Group, and the Board during FY 2003-04 with no changes.
Debt Financing Assumptions—Certificates of Participates (COP)
• The District will continue to use COPS as the primary method of financing its capital
program. COP funds will only be used for capital expenses.
• The District will issue COPS of$300 million in FY 2007-08.
Capital Improvement Program (CIP) Assumptions
• The FY 2007-08 CIP Cash flow is based on the current Validated CIP.
• The baseline CIP for FY 2007-08 is$338.8 million.
F..No.Uwtpld
eep1151 �•^•^W�-F6P
a-l—0110fl�07
Page 2
Book Page27
FY 2007-08 Preliminary Budget Assumptions
Economic Assumptions
• 4% inflation projection was used for the FY 2007-08 budget. This approximates the updated
inflation of 3.3%that is projected for 2007 by the Chapman University December 2006
Economic Forecast Report.
Revenue Assumptions
• Board ratification of Year 5 of the 5 year sewer service user fee rate schedule.
• Anticipate the Single Family Residence (SFR) rate will increase 9.8% to $182.05.
• Each $1 increase in SFR rate will generate approximately$900,000 per year.
• No notification is required for the rate increase as the rates will not exceed 20%, the
maximum amount possible for the fifth year of the five year schedule per the last notification.
• Capital Facilities Capacity Charge (CFCC) only captures"additional growth" infrastructure
costs. Existing facility, improved treatment, RRR, and support CIP will be captured through
user fees.
• The rate study completed in May of 2006 adjusted CFCC Fees as a result of escalation of
the CIP to mid-point of construction and the lowering of flow projections out to 2020.
• The rate study and resulting CFCC fee considers the impact from the change in flow
projections for SAWPA and IRWD.
• Permit user rates for flow, BOD, and SS will follow the most recent Rate Study.
• Use 4,000 EDU connections for each year as that is the average for the past 10 years.
• Annexation Fees capture both net current assets and equivalent property tax allocations
totaling $4,235 per acre.
• No annexation fees are budgeted for FY 2007-08. Two annexations are anticipated to occur
in FY 2007-08, but the Board will be asked to defer the annexation fees until the properties
conned to the sewer(approximately 220 total properties).
• Property taxes will be budgeted to increase 5% over last year. A 5% increase in total
assessed value (AV)will generate approximately $2.7 million over the prior year's estimated
taxes.
• The 5% increase is comprised of a 2%AV increase (authorized by the State Constitution)
with the remaining increase resulting from AV increases up to market value which are
authorized when property is sold at a higher value.
• Interest income will be budgeted at 4% of the projected average cash and investment
balance for FY 2007-08.
• $300 million COP Debt Issuance is scheduled in order to assist in the funding of the $338.8
million CIP outlay scheduled for FY 2007-08.
gppygqvl-FM
Fam No.ow,ma 01m 7
oqs
Page 3
Book Page28
FY 2007-08 Preliminary Budget Assumptions
Operating Assumptions
• The District will continue to treat dry weather urban run off up to 4 mgd for free with a 10
mgd maximum.
• All existing secondary treatment facilities will be operated and maintained at full capacity.
• Interim short-tern disinfection facitt ies will continue to be operated and maintained at
existing levels and cost.
• Operating expenses are expected to approximate the adopted FY 2007-0B budget
• Average daily flow for FY 2007-08 is projected to be the same as the FY 2006-07 projection
of 250 mgd. This is 1 mgd above the Interim Strategic Plan Update projection of 249 mgd
for FY 2007-09. The FY 2007-08 projection is 17 mgd higher than the first 6 months this
year. FY The 2005-06 final flow was 234 mgd.
• Authorized Staffing will be no higher than the current authorization of 644.0 FTEs.
• Minimal additional staffing requests are anticipated for FY 2007-08 and will be approved
only to the extent that total FTEs do not exceed 644.0-
• Vacant positions at 12/31/05 have been projected at 100%of step 4 for FY 2007-08. New
positions for FY 2006-07 have been projected at 100%of step 3 for FY 2007-08.
• A 5% vacancy factor has been budgeted for FY 2007-08 for authorized positions. The
actual vacancy factor for FY 2005-W was approximately 7%.
• MOUs for OCFA, Local 501, and SPMT are being negotiated for FY 2007-08.
• No salary adjustments (neither for COLA nor for step increases)will be included in the
budget.
• Benefits will be assumed to be provided at the current level.
• Employer required OCERS contribution is estimated at a net 19.259/4(20.159/6was included
in the adopted FY 2007-08 budget). The OCSD pickup of 3.5% of the employee's required
contribution is budgeted to continue (current level of benefit).
• Other employee benefits are assumed to increase 10% over the FY 2006-07 projections.
• Training will continue to be budgeted at 2% of the regular salary budget and will be
centralized in Human Resources.
• The General Manager Contingency will be budgeted at 1% of the total budget for materials
and Reappropriations will be budgeted at%_%of the total budget for materials.
• Resources for Strategic Initiatives will be included in the budget.
• The operating budget will include all costs related to collection,treatment, and disposal.
Form No.p 11-1 p•g, _FM
wµ is, a«ma:aimrmr
Page 4
Book Page29
FY 2007-08 Preliminary Budget Assumptions
Reserve Assumptions
• Year 5 of the 5-year rate plan, currently in Year 4, will be included.
• The current reserve policy was reviewed by the District's financial adviser, Public Resources
Advisory Group, and the Board during FY 2003-04 with no changes.
• Continue to maintain reserve levels adequate to hedge variable rate COPs.
Capital Improvement Program Assumptions
• The FY 2007-08 CIP Cash flow Budget based on the Validated CIP is still the target. The
baseline CIP for FY 2007-08 is $338.8 million.
• The FY 2007-08 CIP budget will only increase for critical projects which were not previously
identified in the Strategic Plan Update.
• For the first half of FY 2006-07, $118.1 million of the $266.1 million CIP was expended,
about 44.4%.
Debt Financing
• Continuation of COP issuances as needed to fund CIP and to maintain necessary reserves.
• CON will only be used for the CIP and capital expenses, not for operating expenses.
• Capital financing plans including fewer borrowings and higher user fees will be considered.
• Borrowing is proposed only for facilities that are funded by all users (replacement, rehab,
improved treatment).
Form No.DW-102 /pTW POGv1—F•P
D ,l 151 I1MepL o1/CB01
Page 5
Book Page30
FY 2007-08 Budget Update Calendar
Tasks Responsibility Event/Due Date
PHASE I-BUDGET PREPARATION
CIP— Call for Projects Issued Engineering 08/29/06
CIP—Project Description/Justification and CLR Forms CIP Budget 0925/06
Submitted to Engineering Coordinators
CIP—Training for FY 2007-08 CIP Business Case Jim Bunor Weeks of 925/06
Preparation and 10/02/06
CIP—Business Cases Submitted to Engineering CIP Budget 11/06/06
Coordinators
CIP—Database, Forms& Instruction Manual Developed CIP Process Team 01/03/07
Preliminary Budget Assumptions identified. Financial Planning 01/15/07
Preliminary Budget Assumptions Presented to EMT Financial Planning 0122/07
Draft Budget Calendar Presented to EMT Financial Planning 0122/07
Preparation for Budget Kickoff/rmining Session: Financial Planning 0126107
• Develop line item worksheets with the adopted
07/08 budget
• Prepare/update budget instruction manual
CIP - Budget Preparation Training (CIP Database) Financial Planning As Needed
CIP— Review Project Submittals& Make"Go/No Go' Supervisors/ 01/29/07
Recommendations Managers
Budget Kickoff/rraining Session: Financial Planning 01/31/07
• Distribute budget manual update
• Conduct budget training session
• Distribute budget worksheets for each division
CIP—CIP Database Opened for Input Financial Planning 02/05/07
CIP— Review Project Submittals& Recommendation EMT 02/06/07
CIP—New Project"Go/No Go" Decisions EMT 02/14/07
Budget Assumptions Presented to F&A Finance Department 02/14/07
Mid-Year Financial Report to F&A Finance Department 02/14/07
Operating Divisional Budgets: New Position/Additional Divisional Budget 02/16/07
Employee Decision Packages Due to Financial Planning Coordinators
(Julie Matsumoto, Ext. 7564)
Operating Divisional Budgets: Equity Adjustment& Divisional Budget 02/16/07
Position Reclassification Decision Packages Due to Coordinators
Human Resources (Ann Sullivan, Ext. 7143)
F.ft.0 1=4 ymaa neµn-FBA
pq.151 flwoeO:01N 7
Page 6
Book Page31
FY 2007-08 Budget Update Calendar
Tasks Responsibility Event/Due Date
Capital Equipment Budget: Vehicle Capital Equipment Divisional Budget 02/16/07
Decision Packages Due to Fleet Services (Chuck Coordinators
Forman, Ext. 7647)
Computer Equipment Decision Packages Due to Divisional Budget 02/16/07
Information Technology (Rich Castillon, Ext. 7283) Coordinators
Division Budget Update Packages Due to Finance: Divisional Budget 02/23/07
• Proposed operating costs for 2006-07 Coordinators
• Operating Budget Expense Detail
• Preliminary Contractual Material & Services Form
• Capital equipment decision Packages (other than
computer and vehicle decision packages which were
due on 02/16/07)
• New program decision packages
Mid-Year Financial Report to Board Finance Department 02/28/07
Complete the Compilation of the Preliminary Division Financial Planning 02/28/07
Budget Update Packages
CIP— Project Request with Project Information Entered CIP Budget 03/01/07
in CIP Database Completed Coordinators
CIP— Request Review—On-Line Supervisors/ 03/01/07—03/08/07
Managers&
Department Heads
CIP—Request Finalization and Division Manager Division Managers 03/09/07
Review Completed
CIP—Request Finalization and Department Approval Department Heads 03/12/07
CIP— New Project Numbers Assigned Planning Division 03/12/07
CIP—Completed CIP Budget Delivered to Finance CIP Budget 03/13/07
Coordinators
Update to Strategic Initiatives Finalized MT& EMT 3/16/07
• Department Budgets—Update the department text Department Budget 03/16/07
from the Executive Summary: Coordinator
o General Manager, pages 19-20
o Finance &Administrative Services, pages
21-26 (consolidate into a 2-page summary)
o O&M, pages 27-28 & 33-34 (consolidate into
a 2-page summary)
o Technical Services, pages 29-30
o Engineering, pages 31-32
Form No.Dw1Ms Pppvl-FM
Dept 15t PaNM'.MN6tl1
Page 7
Book Page32
FY 2007-08 Budget Update Calendar
TASKS Responsibility Event/Due Date
PHASE II-BUDGET REVIEW
CIP- Resource Availability Review Engineering & O&M 02/06/07
CIP-Review Workshop Financial Planning & 02/14/07
Department Heads
Divisional Budgets- Distribution of Preliminary Line Financial Planning 03/02/07
Item Requested Budget Updates to Department Heads
Operating Budget- Budget Review Meetings with Financial Planning & 03/05/07-03/09107
Finance and Department Representatives Dept Representatives
CIP—Committee Review E & O Committee 03/07/07
Operating Budget— Information on Position Upgrades& Human Resources 03/16/07
Reclassifications Submitted to the General Manager
Operating Budget—General Manager Review of Budget Financial Planning & 03/19/07—
Updale Recommendations General Manager 0323107
Operating Budget— Presentation of Preliminary Budget Financial Planning 0326/07
Update by Division/Department to EMT
CIP—General Manager and Designee(s)Approval General Manager 0329/07
CIP—E& O Committee Review of FY 2007-08 Budget Engineering 04/07/07
Operating Budget Update—Overview to F&A Financial Planning 04/11/07
Committee
CIP Schedules Through 2020 Completed Financial Planning 04/12/07
CIP-Final CIP Budget Document Preparation and Financial Planning 0422107
Incorporation into Final Budget Document
Board Holds First Reading of Sewer Service User Fee Board of Directors 04/25/07
Schedule for 2007-06
Operating Budget Update—Overview to Steering Financial Planning 0425/07
Committee
Initial-Proposed Budget Update Finalized Financial Planning tYt/26/07
Initial—Proposed 2007-06 Budget Update Presented to CIP—Engineering E&O—05M=7
Committees Operating—Finance F&A—05/09/07
General Manager's Budget Message Completed General Manager/ 05/02/07
Financial Planning
Approval of General Manager's Budget Message General Manager 05/07/07
Final- Proposed Budget Update to Printer Financial Planning 05/09/07
Board Holds Rate Schedule Ordinance Public Hearing Board of Directors 0523107
Board Adopts Sewer User Fee Schedule for 2007-06 Board of Directors 0523/07
F W OY 11 PpmLPa —FM
DW 151 Mtep'plgbp)
Page 6
Book Page33
FY 2007-08 Budget Update Calendar
Tasks Responsibility EVent/DUe Date
PHASE IV-BUDGET DELIBERATIONS
Final Draft-Proposed 2007-08 Budget Update Financial Planning E &O—06/06/07
Presented to Committees F &A—06/13/07
Public Hearing & Board Adoption Board of Directors 06/27/07
PHASE V—DISTRIBUTION OF BUDGET
Final line item budget and equipment budgets Financial Planning 07l09/07
distributed to Departments
PHASE VI-BUDGET DEBRIEFING
Budget Debriefing Financial Planning 07/19/07
• Global changes that occurred in this year's budget.
• Changes since the Departmenfs original submittal.
• Changes that occurred as a result of Board action.
• Results of Budget Survey.
• Overview of Budget Monitoring with PeopleSoft
Enterprise One Software and review of Budget
Coordinator's Responsibility.
• Overview of CIP Budget Monitoring.
• Suggestions for Budget Process Improvements.
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Page 9
Book Page34
ORANGE COUNTY SANITATION DISTRICT
Finance Department
(714) 962-2411
www.ocsd.com
Mailing Address:
P.O. Box 8127
Fountain Valley, California
92728-8127
Street Address:
10844 Ellis Avenue
Fountain Valley, California
92708-7018