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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. ` Submitted by: ���N v Nam-' r -' Lilia Kovac Committee Secretary H:WepOsger4aIFAHMFAHR2006\11061110806 draft FFHR Mlnu sAoc STATE OF CALIFORNIA) ) SS. 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 WDEMGMO\160\151\SS\FORMS\AGENDA CERTIFICATION-F&A COMMITTEE DOC b ORANGE COUNTY SANITATION DISTRICT m m 962-2411 m: [1167 9628356 ww.vmd.apm 127 9 Pa Bm t 2l P.6 °°��12 NOTICE OF MEETING W� ;B,W CA FINANCE AND ADMINISTRATION COMMITTEE 92T 7018 a ORANGE COUNTY SANITATION DISTRICT • MI. An.neim WEDNESDAY, FEBRUARY 14, 2007 - 5:00 P.M. Buerr. Perk DISTRICTS ADMINISTRATIVE OFFICES nF ullermn 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 Wnnpran eeea, Irvine YYW W.00SD.COM Le Hobs La Pelme t,m aemrms NewyaY aeerh @sops Ple..nc. A regular meeting of the Finance and Administration Committee 9 of the Orange County Sanitation District will be held at the above s>e�e.pcn tY Smmm� location, date and time. Tu>an lRlle Perk lbrda Lille mlM1y of Onnps ikpry Olpprlppe ml Mete Midway Gry Ilevr DI.Hn. Irvin.R h a i bE r 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 Es Cp �� 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. F0.No,DW-U0 /gema depot-faq 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. JR:LT:lc Form No.Dwiuz rye.r+epon-Fu Wpt 151 Fev'ee�'.oil w 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 o ,51 KmW 01N 7 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 Book PageN 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 Book Page17 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 Page 3 Book Page20 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 Book Page24 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 Book Page25 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 Book Page26 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. F• No.o 1n new nepon-Fen p�tet PmieeE.eLONe] 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