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HomeMy WebLinkAbout2009-08 MINUTES OF STEERING COMMITTEE MEETING Orange County Sanitation District Wednesday, August 26, 2009, at 5:30 p.m. A meeting of the Steering Committee of the Orange County Sanitation District was held on Wednesday, August 26, 2009, at 5:30 p.m., in the District's Administrative Office. A quorum was declared present, as follows: STEERING COMMITTEE MEMBERS: STAFF PRESENT: DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager Doug Davert, Chair Nick Arhontes, Director of Operations and Larry Crandall, Vice Chair Maintenance Mark Waldman, Administration Committee Jim Herberg, Director of Engineering Chair Ed Torres, Director of Technical Services Bill Dalton, Operations Committee Chair Lorenzo Tyner, Director of Finance Jim Ferryman and Administrative Services Phil Luebben Michael Gold, Legislative Affairs Liaison David Shawver Penny Kyle, Clerk of the Board Tod Haynes DIRECTORS ABSENT: None OTHERS PRESENT: Brad Hogin, General Counsel Ryal Wheeler Drew Kolosky p • • THEELCLLERK HppF TTHE BOARD DRAM NEINTY.. ANITATI N!pISTRIC` PUBLIC COMMENTS _ ���y°�f�,1'2 SEP 2 3 2009 There were none �w,T- `J T �{ COMMITTEE CHAIR REPORT Chair Doug Davert reported a strategic planning workshop has been scheduled for October 21" at 5:00 p.m. Vice Chair Crandall provided a brief report on the CASA conference he recently attended in San Diego. GENERAL MANAGER REPORT Bob Ghirelli, Assistant General Manager, advised a brief presentation on asset management would be given by Simon Watson, O&M Manager, at the Board of Directors' meeting that evening. It was also noted that the Honor Walk bricks had been installed and an update on the Honor Walk nomination process would be provided under the Public Affairs report. . Minutes of the Steering Committee August 26, 2009 Page 2 GENERAL COUNSEL REPORT General Counsel, Brad Hogin, reported that the motion to dismiss filed in November 2008 on behalf of the South Coast Air Quality Management District regarding emission offsets had been granted. ACTION ITEMS 1. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the July 22, 2009 Steering Committee meeting. 2. MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to: a)Adopt Resolution No. OCSD 09-12, Approving an Amended and Restated Orange County Council of Governments(OCCOG) Joint Powers Agreement, in a form approved by General Counsel; and, b)Approve annual membership dues to OCCOG in an amount not to exceed $5,000 per year. INFORMATION ITEMS 3. Public Affairs Monthly Update Michael Gold, Public Affairs Manager, discussed the nomination process for Board Members and staff for the Honor Walk. He also advised that a plaque will be installed at the Honor Walk explaining what it is at the same time the first round of brick(s) are engraved. Mr. Gold also provided a brief update on the state budget status, as well as the CASA conference held earlier that month. CLOSED SESSION CONVENE IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54956.9(c)AND 54957(b)(1): The Steering Committee convened in closed session at 5:50 p.m. to discuss two matters. Confidential Minutes of the Closed Session held by the Steering Committee have been prepared in accordance with 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. The Steering Committee reconvened at 6:15 p.m. in regular session. w - -- Distributed at the ae�/ �/�I Meeting Steering Committee g Water districts have big loss on derivatives,OC treasurer warns Posted by Teri Sforza, Register staff writer—September 18th,2009 Those who remember the name "Bob Citron"and the phrase"It's only a paper lossl"might have a strange sense of deja vu. Orange County Treasurer Chriss Street-who,for whatever other considerable troubles he's having lately,sounded an early alarm about Citron's doomed investments in 1993(culminating in Orange County's historic bankruptcy,and a loss of$1.6 billion,in 1994)-is ringing his warning bell anew. Danger lurks in the more than$1 billion worth of interest rate swaps held by the mighty Metropolitan Water District of Southern California,and the$82 million worth of swaps held by the Orange County Water District,Street says. These swaps are down some 35.5 percent,says Street-which translates into a$150 million-or-so hit to Met,and a$12 million-or-so hit to OCWD.He believes new accounting rules will soon require them to publicly disclose these losses next year-and that could mean lower credit ratings. Who cares?Well,you might:Lower credit ratings could translate Into higher borrowing costs,and higher borrowing costs could translate into more money being shelled out by you,the taxpayer,to repay debt. But Met and OCWD say that Street is dead wrong.They don't agree with his numbers-the swaps aren't down as much as he asserts,they say.They don't agree that the losses will have to be recorded as Street says they will.And they are certain that none of this will impact their credit ratings,or borrowing costs, or your water rates. WE'LL WEATHER IT,AND IT'S NOT EVEN A STORM "Our ratings are so good right now-we are the only water district west of the Mississippi River that has a triple-A credit rating from Fitch,"said Randy Flck,chief financial officer for OCWD."All the rating agencies know that we have a swap.They like it.It eases our exposure to the variable rate debt." In August,OCWD sold bonds to convert$120 million of variable-rate debt to fixed-rate debt."It was extremely successful," Fick said. Met also boasts"one of the premier credits in the government sector."It has long-term debt ratings of AAA from Standard and Poor's,AA+from Fitch,and Aa2 from Moody's."Each of these rating agencies looks at Metropolitan's interest rate swap portfolio when they evaluate our creditworthiness,"said aid Brian Thomas, Met's chief financial officer."As an example,Standard and Poor's rates our interest rate swap portfolio as a 1.5 on a scale of 1 to 4,with 1 being the least risky."In its most recent review of Met, S&P said,The overall risk of'1.5'reflects Standard&Poor's view that MWD's Interest rate swap portfolio represents a very low credit risk at this time." Met,meantime,has about$4.9 billion of long-term bonds outstanding.The average interest rate to pay for that debt is about 3.9 percent."Part of the reason that the cost of debt is low is because Metropolitan has a diversified debt portfolio that Includes a mix of fixed rate debt,variable rate debt and interest rate swaps,"said Thomas. 1 a UM,WHAT'S A SWAP? Interest rate swaps are derivatives.The point is to trade one type of cash flow for another.So the party who pays a fixed interest rate each month swaps with another party who pays a variable rate each month. Each is betting it will pay less cash by entering the swap;each may be right from time to time. (Thanks to our colleague Ronald Campbell for that English translation.) MUCH ADO ABOUT NOTHING,SAYS MET Metropolitan has about$1.3 billion of interest rate swaps with a current market value that's down$117 million,or about 8.3 percent,said Thomas-not the 15.5 percent that Street calculates. "Since these swaps are fixed payer swaps,the mark-to-market value moves inversely to interest rates," he said."If interest rates rise over the next year-the mark-to-market value of the interest rate swap portfolio will improve. Interest rates are difficult to predict, but many think that interest rates will rise over the next several years. If that happens,the value of these interest rate swaps will increase. If interest rates sink even lower,the mark-to-market will be lower. In either case, Metropolitan will continue to receive the cash flow benefits envisioned when the contracts were executed." And,furthermore,the new accounting rules won't require the overwhelming majority of Met's swaps to be recorded on Met's income statement,Thomas said.That's because$1.1 billion of these swaps are "qualified hedges"-which is to say,they're designed to reduce financial risk,by offsetting changes in the cash flows of the outstanding debt. "More importantly-much more importantly-is that the mark-to-market value of the gain or loss in a given year on our interest rate swaps has no impact on our water rates," he said."We set water rates based on actual receipts and disbursements in a given year." Unless Met actually terminates one of the swaps before its time,there's no real loss,he said.It'sjust a book loss. McYs swaps refund outstanding capital debt that was at a higher interest rate.Since 2001,these interest rates swaps have reduced the amount of debt service that Met's rate payers have had to pay by over$61 million,Thomas said. What's going to happen is that some of these swaps will"roll off'in the next year to 10 years,"and they'll roll off at par.A lot of people are talking about interest rates rising. It will start to go positive,and then we have an opportunity to realize a gain,"Thomas said. 2 OTHERS GOT OUT The Orange County Sanitation District ditched its interest rate swaps last year. "OCSD had two previous variable-to fixed- rate debt swaps that we terminated,"spokesman Michael Gold told us in an email. "Overall,the result of these terminations was a net savings, not a cost to OCSD. "Last year, in September 2008,we terminated one debt series and there was a swap termination fee of$3.1 million. However, using the Interest rate swap agreement as opposed to issuing pure fixed debt saved us a net of$6.3 million, including the termination fees. "In May 2008,we terminated another debt series and the swap termination fee was$S.7 million.Again, had we realized net savings versus financing at a fixed rate. Net savings to the District,including the termination fee,was$5.S million. "Overall,the District saved$11.8 million using this approach versus financing with fixed rate debt." Supervisor John Moorlach-former county treasurer,and the other guy who rang the alarm bell about Citron's investments before the bankruptcy- is thankful that officials managed to"stop that train"when the toll road agencies were talking merger back in 2004.The Transportation Corridor Agencies wanted to consolidate all the debt-and use interest rate swaps as a hedge. "We saved the TCA from bankruptcy protection,"said Moorlach, who figures the savings could have been$1 billion over the life of debt. "That's a good story for Orange County. In hindsight,isn't it great we did that." Interest rate swaps have a place,and they work, Moorlach said-when all the conditions are right."But if you have a liquidity crisis-cops." ONLY A PAPER LOSS.... Street,for his part,applauds the Sanitation District for ditching its swaps, but cringes at the explanations he hears from the other agencies. "I guess when Bob Citron made his bad investments and had losses,it was just paper losses,"Street said. "When I disclosed Bob Citron's bad investments in September of 1993,the'paper loss'was$300- something million. Fifteen months later it was$1.6 billion. Real losses. "They've got losses,"Street said of Met and OCWD. "Mark-to-market is required on next years balance sheet, I believe it's a material change. I ask them to have public hearings to publicly disclose the mark- to-market losses. It continues to go up. It has more than doubled since October of last year." 3 It's worth noting that a lack of liquidity is a huge part of what went wrong when Citron made heavily- leveraged,wrong-way bets on interest rates,and that's not an issue here.Citron had borrowed so much money to pump up his returns that,when his bets went south and creditors started calling for cash, he didn't have any on hand to weather the storm. In contrast, both Met and OCWD have access to hundreds of millions in cash. But that's not the whole story,at least not for Met,Street says. If Met's board approves a sweetened pension formula for employees next month,the new accounting rules will require Met to record the benefit's entire$70 million price tag on its books next year. "They are doing the pension spike without making prior public disclosure of more than$100 million of derivative losses they must take next year,"Street said. "Furthermore,there is no guarantee that the counter parties that are on the other side of the interest swap will not default if interest rates go up. Add in another$100 million loss from the pension spike and you have real trouble." Again, Met disagrees.The matters are unrelated,Thomas said,but if Met's board does approve the pension hike next month,accounting rules require it to disclose the new$70 million pension liability in its annual report,and in the footnotes to its financial statements.It would cost some$9 million per year, beginning in next fiscal year,and would show up on the books as an annual expense. Well now.Who said municipal finance isn't fun? 4 Distributed at the QXloh Steering committee Meefind Interest Rate Swap An interest rate swap is a derivative in which one parry exchanges a stream of interest payments for another parry's stream of cash flows. Interest rote swaps can be used by hedgers to manage their fixed or floating assets and liabilities.They can also be used by speculators to replicate unfunded bond exposures to profit from changes in interest rates. Interest rate swaps are very popular and highly liquid instruments. Structure In an interest rate swap,each counterparty,agrees to pay either a fixed or floating rate denominated in a particular currency to the other wunterparty.The fixed or floating rate is multiplied by a notional principal amount(say,USD 1 million).This notional amount is generally not exchanged between counterparties,but is used only for calculating the size of cash flows to be exchanged. The most common interest rate swap is one where one munterparry A pays a fixed rate(the swap rate) to counterparty B,while receiving a floating rate(usually pegged to a reference rate such as LIBOR). A is currently paying"floating", but wants to pay"fixed". B is paying"fixed",buts wants to pay"floating". By entering into an interest rate swap,the net result is that each parry can"swap"their existing obligation for their desired obligation. Now,A pays fixed rate to B(A receives variable rate) B pays variable rate to A(B receives fixed rate). Consider the following swap in which Party A agrees to pay Parry B periodic fixed interest rate payments of 5.20%,in exchange for periodic variable interest rate payments of LIBOR+70 bps(0.70%).Note that there is no exchange of the principal amounts and that the interest rates are on a"notional"(i.e. imaginary)principal amount.Also note that the interest payments are settled in net(e.g.Parry A pays (LIBOR+1.50%)+5.20%-(LIBOR+0.70%)=S.RD%net.The fixed rate 15.20%in this example)is referred to as the swap rate. At the point of initiation of the swap,the swap is priced so that it has a net present value of zero.If one party wants to pay 50 basis points(bps)above the par swap rate,the other party has to pay approximately 50 bps over LIBOR to compensate for this. 5.2% A B LIBOR+0.70% - LIBOR+1.50% 5.1% FLOATING i I FIXED I Net:5.80% NET:LIBOR + 0.60% 5 7 Performance Annual yTp ■ Orange County 6 Sanitation District Liquid Operating Portfolio 5 Citigroup 3-Month Treasury Bill Index 0 °� 4 w c No L 3 0 3 2 33 x � m m 1 U U 98 99 00 01 02 03 04 05 06 07 08 09 10 Performance Annual yTp 9 ■ Orange County Sanitation District Long-Term Portfolio 8 - Merrill Lynch Corp / Govt 1-5 7 year Bond Index 6 - 5 - 4 - 3 - 2 - 1 0 98 99 00 01 02 03 04 05 06 07 08 09 Distributed at the Steering Committee Meeting held on D d ORANGE COUNTY SANITATION DISTRICT HONOR WALK NOMINEE FORM Please complete this form and remm it to the OCSD Public Affairs Office. Name of nominee Relationship to OCSD On a separate sheet,please describe: • The length and nature of the nominee's relationship to OCSD; • I low he or she has enhanced the quality of operations and/or leadership;and • 1-low the nominee has made an exceptional contribution to the District or people served by the District. Please use the attached leadership competencies and resolution adopted by the Board of Directors establishing the program,as reference. Nominees should be past Board Members or retired employees. Name of requestor Phone/email address Department head approval* Date General manager approval Date Steering Committee approval Yes No Date 'Rcquhcd for a nployce n,.inatloas only. Nominees may not be current Board Nlembers or employees of OCSD. RESOLUTION NO. OCSD 08-08 A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING A POLICY FOR NAMING FACILTIES AND THE PLACEMENT OF MONUMENTS AND OTHER MEMORIALS WHEREAS,the Orange County Sanitation District wishes to recognize individuals that have provided meaningful and important service to the Sanitation District; WHEREAS,the District recognizes the need for guidance in the naming of facilities and placing of monuments and other memorials; NOW THEREFORE, the Board of Directors of the Ora nge County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: The naming of District facilities or the placement of monuments and other memorials will be a rare event designed to honor an individual w ho has made distinct and significant contributions to the District. Section 2:To be recognized by the Di strict,the individual must have demonstrated or performed the following: • Have a long standing affiliation with and made an exceptional contribution to,the Orange County Sanitation District • Significantly enhanced the quality of operations and/or leadership directly contributing to the well-being of the District and the people served by OCSD Section 3: By a majority vote of the Steering Committee, an individual may be recognized by the nam ing of a component, building, support facility,or through the placement of a plaque, marker, or other memorial. Section 4: Only new or unnam ad facilities will be named in honor of an ind ividual. PASSED AND ADOPTED at a regular meeting held June 25, 2008. Board Chair ATTEST: Clerk of the Board Document version! Fabmery 2007 OCSD Leadership Competencies COMPETENCY DESCRIPTION Ability to communicate ideas,thoughts,and facts Oral Communication orally.Speaking using correct grammar,appropriate body language,proper tone and inflection, recognizing non-verbal cues,and respecting the audience to effectively communicate ideas. Listening Attuning to a vocal or auditory message including non-verbal cues. Body language/positioning and eye contact of listener is considered. Degree to which an individual can be trusted. Operates in an ethical manner. Degree of Integrity/Honesty trustworthiness and ethical behavior of an individual with consideration for the knowledge one has of the impact and consequences when making a decision or taking action. Interpersonal Skills(Working with Others) Extent to which an individual gets along and interacts positively with co-workers. Degree and style of understanding and relating to others. Ability to effectively resolve disputes among others. Conflict Management Manages disagreements. Methods and style of dealing with disagreements. Requires the ability to remain impartial and unbiased. Team Leadership Ability to effectively manage and guide group efforts. Includes providing appropriate level of feedback concerning group process. Teaching Others Overall concern for the developmental level of an individual or group.Takes steps to explain and provide guidance. Degree to which an individual successfully Decisiveness determines,follows,and persists with a timely course of action. Requires the consideration of multiple factors and influences in making decisions. The concurrent management of projects,time,self, and other resources including prioritizing,planning, Planning and Evaluation goal setting,and coordinating with respect to goals and objectives.Ability to create and follow a set path in order to achieve a goal.Ability to determine the effectiveness of a given plan. The identification of various types of problems along Problem Solving with the creating of workable solutions. Requires the identification and analysis of problems,evaluation of alternatives,and provision of solutions. Vision Understanding of how an organization must change in light of internal and external trends and influences. Organizational Awareness Understanding of the formal and informal structures within an organization,and the ability to operate effectively within them. Extent to which an individual possesses and applies Career Specific Expertise job-related knowledge in the completion of work tasks and activities. Includes knowledge gained through formal and informal education or training. 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 Steering Committee to be held on August 26, 2009, was duly posted for public inspection in the main lobby of the District's offices on August 20, 2009. IN WITNESS WHEREOF, I have hereunto set my hand this 2& day of August 2009. Lilia Kovac Associate Clerk of the Board Orange County Sanitation District RUEPT AGENDAZTEERING COMMITTEEV009COMMITTEE POSTING CERTIFICATION FORM.DOCX " •M,T ORANGE COUNTY SANITATION DISTRICT W Tx[ Exo Penny Kyle Clerk of the Board tf1944 EMcu nue 927 a� MIS August 19. 2009 M N AdM1me P0.euv 9127 F .0 va" CA e272&9127 vnw.4ndmm Pinre 1714)9522411 NOTICE OF MEETING F. D14]96P03S5 STEERING COMMITTEE > a,aPeM:; t>� ORANGE COUNTY SANITATION DISTRICT 1w�s WEDNESDAY, AUGUST 26, 2009 — 5:30 P.M. Genfe::Gnre ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE temn,a FOUNTAIN VALLEY, CALIFORNIA92708 to PeAne W W W.00SI).COM Lg Af4mau rMeMm'1 eraln lkerge w,,.E1L1 A regular meeting of the Steering Committee of the Orange san<A- County Sanitation District will be held at the above location, date s»4feg.:n and time. Sra:wlr. naon ✓ltl Pm wbe LMWa 6xm Alga Sm':rary D�mr AMNveV UN H9nday lMort .Erne Rand, lM1'areT Osc+ct Cd:My M LYanye M prRtt P.Wx nealm end me ennronmen:N'P�'e(iea.»vrasewarer rnl ec'o:!,beepnan4 and�Jin,P. STEERING COMMITTEE AND BOARD MEETING DATES September 23, 2009 October 28, 2009 "November 18, 2009 'December 16, 2009 January 27, 2010 February 24, 2010 March 24, 2010 April 26, 2010 May 26, 2010 June 23, 2010 July 28, 2010 August 25, 2010 *Meetings being held the third Wednesday of the month. STEERING COMMITTEE (1) Roll Call: Meeting Date: August 22, 2009 Meeting Time: 5:30 p.m. Committee Members Doug Davert, Board Chair................................................... ........... _ Larry Crandall, Vice Chair................................................... ........... _ Mark Waldman,Administration Committee Chair................ ........... Bill Dalton, Operations Committee Chair............................. ........... JimFerryman...................................................................... ..........._ PhilLuebben....................................................................... ..........._ DavidShamer.................................................................... ..........._ Others Brad Hogin, General Counsel............................................. ........... Staff Jim Ruth, General Manager...................................................._ Bob Ghirelli,Assistant General Manager.................................. ._ Nick Arhontes, Director of Operations& Maintenance................. ._ Jim Herberg, Director of Engineering....................................... ._ Ed Torres, Director of Technical Services..................................— Lorenzo Tyner, Director of Finance&Administrative Services........_ Michael Gold, Public Affairs Manager....................................... Penny Kyle, Clerk of the Board........................................... ._ Other Staff Present AGENDA REGULAR MEETING OF THE STEERING COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, AUGUST 26, 2009 AT 5:30 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California www.ocsd.com DECLARATION OF QUORUM PUBLIC COMMENTS REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF GENERAL COUNSEL ACTION ITEMS 1. Approve minutes of the July 22, 2009 Steering Committee meeting. 2. Recommend to the Board of Directors to: a) Adopt Resolution No. OCSD 09-12, Approving an Amended and Restated Orange County Council of Governments (OCCOG) Joint Powers Agreement, in a form approved by General Counsel; and, b)Approve annual membership dues to OCCOG in an amount not to exceed $5,000 per year. (Book Page 6) INFORMATION ITEMS 3. Public Affairs Monthly Update(Gold)(Book Page 24) Book Pace I August 26, 2009 CLOSED SESSION During the wurse of conducting the business set forth on this agenda as a regular meeting of the Steering Committee,the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations,pending or potential litigation,or personnel matters,pursuam to Government Code - Sections 54956.8,54956.9. 54957 or 54957.6, as noted. Reports relating to(a)purchase and sale of real property; (b)matters of pending or potential litigation;(c) employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act,may be reviewed by the Directors during a permitted closed session and are not available for public inspection. At such time as final actions am taken by the Board on any of these subjects,the minutes will reflect all required disclosures of information. Convene in closed session, if necessary. 4. CONFERENCE WITH LEGAL COUNSEL RE.ANTICIPATED LITIGATION Significant exposure to litigation pursuant to subdivision (b)of Section 54956.9: One case resulting from Project P1-102 5. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Government Code Section 54957(b)(1)) Title: General Manager Reconvene in regular session. Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY ADJOURNMENT The next Steering Committee meeting is scheduled for September 23, 2009 at 5:30 p.m. Book Page 2 August 26, 2009 Agenda Postmg: 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 public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of all, of the members of District's Board,are available for public inspection in the office of the Clerk of the Board,located at 10844 Ellis Avenue, Fountain Valley, California. 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 Steering Committee on specific agenda items or matters of general interest. As determined by the Chair, speakers may be deferred unfit the specific item 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 item is requested to be removed from the consent calendar by a Director of staff member, there will be no separate discussion of these items. All 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 Adioumment: 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: Doug Davert (714)318-9550 General Manager: James D. Ruth (714)593-7110 General Counsel: Brad Hogin (714)415-1006 Clerk of the Board: Penny Kyle (714)593-7130 E-mail: Rkvle@ocsd.com Book Page 3 MINUTES OF STEERING COMMITTEE MEETING Orange County Sanitation District Wednesday, July 22, 2009, at 5:30 p.m. A meeting of the Steering Committee of the Orange County Sanitation District was held on Wednesday, July 22, 2009, at 5:30 p.m., in the District's Administrative Office. A quorum was declared present, as follows: STEERING COMMITTEE MEMBERS: STAFF PRESENT: DIRECTORS PRESENT: Jim Ruth, General Manager Doug Davert, Chair Bob Ghirelli,Assistant General Manager Larry Crandall, Vice Chair Nick Arhontes, Director of Operations and Mark Waldman,Administration Committee Maintenance Chair Jim Herberg, Director of Engineering Jim Ferryman Ed Torres, Director of Technical Services Phil Luebben Lorenzo Tyner, Director of Finance David Shawver and Administrative Services Michael Gold, Legislative Affairs Liaison DIRECTORS ABSENT: Lilia Kovac, Associate Clerk of the Board Bill Dalton, Operations Committee Chair Juanita Skillman OTHERS PRESENT: Brad Hogin, General Counsel Kristine Thalman Bryan Starr PUBLIC COMMENTS Kristine Thalman of the Builders Industry Association spoke in support of continued payment deferral of connection fees through June 30, 2010 to builders of large housing development projects. COMMITTEE CHAIR REPORT Chair Doug Davert briefly reported that he and Vice Chair Crandall attended the NACWA Conference in Milwaukee, Wisconsin to receive an achievement award for the GWRS project. GENERAL MANAGER REPORT Jim Ruth, General Manager, reported on the internal reorganization of the Public Information and Legislative Affairs offices; the offsite planning meeting; and the final insurance prices. Book Page 4 Minutes of the Steering Committee July 22, 2009 Page 2 GENERAL COUNSEL REPORT General Counsel, Brad Hogin, reported that the insurance company has settled on the Andino lawsuit for$750,000 on the Bushard trunk sewer project. ACTION ITEMS 1. MOVED, SECONDED AND DULY CARRIED:Approve minutes of the June 24, 2009 Steering Committee meeting. INFORMATION ITEMS 2. Public Affairs Monthly Update Michael Gold, Public Affairs Manager, briefly reported on the status of the lobby display upgrades and the honor walk. Mr. Gold also provided a brief update on the state budget status. CLOSED SESSION There was no closed session. ADJOURNMENT The next Steering Committee meeting is scheduled for Wednesday, August 26, 2009, at 5:30 p.m. The Chair declared the meeting adjourned at 5:55 p.m. Submitted by: Lilia I ovac Associate Clerk of the Board Book Page 5 STEERING COMMITTEE Meeting Date To ad,of Dir. 08/26/09 08/26/09 AGENDA REPORT nem Number Iem Number z Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Michael Gold, Public Affairs Manager SUBJECT: Approval of the Amended Joint Powers Agreement for the Orange County Council of Governments GENERAL MANAGER'S RECOMMENDATION (1) Adopt Resolution No. OCSD 09-12, Approving an Amended and Restated Orange County Council of Governments (OCCOG) Joint Powers Agreement, in a form approved by General Counsel; and, (2) Approve annual membership dues to OCCOG in an amount not to exceed $5,000 per year. SUMMARY The Orange County Council of Governments completed a comprehensive review of the 1996 Joint Powers Agreement that governed the organization. As a result of the review, the document was revised and now includes a provision for member agencies to pay dues. PRIOR COMMITTEE/BOARD ACTIONS July 1996 —Approval of Joint Powers Agreement establishing OCCOG. ADDITIONAL INFORMATION As a 40-member joint powers authority, OCCOG serves as an official subregion of the Southern California Association of Governments (SCAG). OCCOG —through its Board of Directors of elected Orange County representatives, its representatives on SCAG's Governing Board and policy committees, and its Technical Advisory Committee— provides a coordinated mechanism for Orange County technical and policy recommendations to be issued on SCAG plans and programs and on behalf of its member agencies. Forty agencies are currently members of OCCOG, including all Orange County cities, the County of Orange, Orange County Transportation Authority, the Transportation Corridor Agencies, the Orange County Sanitation District and the Independent Special Districts of Orange County. Hook Page 6 OCCOG's Request In 2009, the OCCOG Board of Directors completed an overdue and comprehensive revision to the original 1996 OCCOG joint powers agreement provisions. The Board recognized the need to amend and restate the original joint powers agreement to: • Update its references to OCCOG's administration; • Establish an executive director; • Streamline and make consistent provisions relating to the joint powers agreement and OCCOG bylaws; and • Update the references to the member agencies and their voting on the OCCOG Board. Key provisions of the amended and restated OCCOG joint powers agreement include: • Establishing annual membership dues to assist in financing its operation. Previously, these costs were absorbed by certain volunteers and • Broadening the powers of OCCOG to hire and retain staff and consultants to conduct its responsibilities as a SCAG subregion. On June 25, the OCCOG Board of Directors unanimously adopted the amended and restated joint powers agreement. According to its bylaws, this agreement must now be approved by all member agencies. Currently, Mark Waldman serves as OCSD's representative to OCCOG with Jim Ferryman as his alternate. In order for OCSD to retain its seat on the Board, we must be a dues paying member. Financial Impacts Currently, OCCOG's dues would be capped at $5,000 per agency. In the past, OCCOG did not charge dues but to hire and retain staff and recover costs, the new JPA allows for dues. OCSD would pay the maximum $5,000. There are funds in the budget to cover this cost. Attachment: Book Page 7 AMENDED AND RESTATED JOINT POWERS AGREEMENT ESTABLISHING THE ORANGE COUNTY COUNCIL OF GOVERNMENTS This presentation reflects the Amended and Restated Agreement made between the Member Agencies (listed in Exhibit 1) hereinafter collectively or individually referred to as "Member Agencies." RECITALS A. Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code authorizes two (2) or more public agencies to jointly exercise any power common to them. B. Each Member Agency and party to this Agreement is a governmental entity established by law with full powers of government in legislative, administrative, financial and other related fields. C. Member Agencies realize the urgent need for amawide planning and coordination in order to provide advice to public entities on a range of issues that affect multiple interests. D. Member Agencies believe that the joint exercise of their powers will provide an organization capable of conducting studies and projects designed to improve and coordinate common governmental responsibilities and services on an areawide and regional basis through the establishment of a council of governments. E. Member Agencies wish to create a unified subregional organization which will improve Orange County's abilities to be represented in the southern California region, the State of California and the nation on issues and matters that affect collective Orange County interests. Book Page 8 F. Member Agencies believe that an Orange County Council of Governments ("OCCOG") is best suited to accomplish the preparation of subregional plan components mandated by state and federal law to conduct studies and projects designed to improve and coordinate the common governmental responsibilities and services on an areawide and regional basis through the establishment of a council of governments, and explore areas of intergovernmental cooperation and coordination of government programs and provide recommendations and solutions to problems of common and general concern. G. Between approximately April 1996 and January 1998, thirty (30) Member Agencies adopted the original Joint Powers Agreement ("Original JPA' for the OCCOG. Since that date, twelve (12) additional Orange County agencies have signed the Original JPA to become Member Agencies. H. The Member Agencies believe the OCCOG has been operating effectively at accomplishing its purposes, as outlined in the Original JPA, and seeks to have the Original JPA amended by this Amended and Restated JPA to better comport with the present and anticipated future needs of the OCCOG. NOW, THEREFORE, in consideration of the recitals and the mutual obligations of the parties as herein expressed,Member Agencies agree as follows: SECTION 1 ESTABLISHMENT This Agreement amends and supersedes the Original JPA in its entirety. There is hereby created an organization known and denominated as the Orange County Council of Governments (OCCOG) which shall be a public entity, separate and apart from any member city or county. The Orange County Council of Governments shall be governed by the terms of this Joint Powers Agreement and the Rules,duly passed and adopted by the Board. 2 Book Page 9 SECTION 2 PURPOSE AND FUNCTIONS 2.1 Functions OCCOG established hereunder shall perform all necessary functions to fulfill the purposes of this Agreement.The OCCOG sha1L a. Serve as a fonun for consideration, study and recommendation on area-wide and regional problems; b. Assemble information helpful in the consideration of problems peculiar to Orange County; C. Explore practical avenues for intergovernmental cooperation, coordination,and action in the interest of its members; d. Seek economies of scale whenever practical in the administration of governmental services; C. Exercise jointly the common powers of its members to manage and administer any implementation agreement or program; f. Make and enter into contracts; g. Contract for the services of engineers, attorneys, planners, financial consultants and others and employ such other persons,as it deems necessary. h. Adopt Hiles, regulations, policies, bylaws and procedures governing the operation of OCCOG; i. Apply for grants under any federal, state, regional or local programs as needed to achieve member objectives; j. Seek the adoption or defeat of any federal, state or local legislation or regulation necessary or desirable to accomplish the stated purposes and objectives of the OCCOG; k Incur debts,liabilities or obligations; 1. Acquire,hold or dispose of property, M. Receive gifts,contributions and donations of property, funds, services and other forms of financial assistance from persons, firms,corporations and any governmental entity; 3 Book Page 10 n. To the extent not specifically provided in this Agreement, to exercise any powers authorized by the member agencies to achieve the OCCOG's objectives and such further powers not specifically mentioned herein, but common to Member Agencies, and authorized by California Government Code Section 6508. 2.2 Limitation of Powers The manner in which the OCCOG may exercise its powers shall be subject to any statutory limitations applicable to the Orange County Transportation Authority. SECTION 3 ORGANIZATION 3.1 Membership The parties to OCCOG shall be each public entity which has executed or hereafter executes this agreement, or any addenda, amendment, or supplement thereto, and which has not, pursuant to provisions hereof, withdrawn from the OCCOG. Other entities within Orange County may petition to become a member of the OCCOG by submitting to the Board of Directors ("Board") a resolution adopted by its governing body. The Board shall review the petition for membership and shall vote to approve or disapprove the petition. If the petition is approved by a majority of the Board the petitioning entity shall become a member of the OCCOG. The names of the member parties at any time shall be shown on Exhibit 1,attached,as amended or supplemented from time to time. 3.2 Withdrawal from Membership Any member of OCCOG may, at any time, withdraw from the OCCOG. The withdrawal of a member agency shall become effective ninety (90) days after a resolution adopted by its governing body which authorizes withdrawal is received by the OCCOG. 4 Book Page I I 33 Successor Agency The Orange County Council of Governments is hereby designated the successor in interest to the Orange County Regional Advisory and Planning Council (RAPC)- SECTION 4 BOARD OF DIRECTORS 4.1 Board of Directors and Voting All functions of the OCCOG shall be exercised by the Board. Recognizing the provisions for formation in Section 9.1 of this agreement, the Board would be composed of elected officials and exof6cio (non voting) representatives of the following entities,as further provided in the OCCOG's Bylaws: Ennro No, of Members Voting County of Orange 1 Orange County Transportation Authority I Orange County Transportation Corridor Agencies 1 Orange County Sanitation District 1 Orange County ISDOC/Water Agencies Representative 1 Orange County Representative to SCAQMD 1 Orange County Delegates to SCAG 12 Orange County SCAG representative 1 At-large Orange County Cities Member I Total Members 20 voting Additionally, there shall be one Orange County Division, League of California Cities Representative (non-voting Ex-Officio), one Private Sector Representative (non-voting Ex-Of&io) and one University Representative (non- voting Ex-Officio) on the OCCOG Board, but more may be established based on needs and in accordance with the OCCOG's Bylaws. 3 Book Page 12 4.2 Terms/Removal Board members serve at the pleasure of the appointing entity and Board, as further set forth in the OCCOG Bylaws. 43 Vacancies/Alternates If a person who has been appointed as a director ceases to serve as a member of the appointing entity or no longer qualifies to serve as a member of the appointing entity,he/she shall no longer serve on the OCCOG Board. The appointing entity is encouraged to fill vacancies as expeditiously as possible to ensure representation on the voting Board. Each Board member can designate one or two alternates, provided that said alternates serve in a similar capacity in the entity as the Board member (i.e., elected officials for voting members). Alternate directors shall receive all meeting notices and written material sent to directors and shall have the right to participate and vote at meetings of the Board in the absence of the director for whom the alternate director serves. All provisions of law relating to conflicts of interest that apply to a Board member shall apply to alternate board members. 4.4 Ex-O(6cio Representatives Such representatives shall receive all meeting notices, shall have the right to participate in Board discussions, and shall have the right to place matters on the agenda, but shall not be counted towards a quorum of the Board and shall have no vote. 4.5 No Dual Representation It is recognized that elected officials often represent various agencies by serving on various boards, committees, etc. In instances where elected officials represent more than one OCCOG member agency, the official will choose one agency to represent. When an elected official is the sole representative of an agency, the elected official shall represent that agency on the OCCOG Board. Procedures 6 Book Page 13 for filling open OCCOG member positions will follow those described in the OCCOG's Bylaws. 4.6 06cers Chair. The Chair of the Board shall be elected annually as further provided in the OCCOG bylaws. Any Board member may be authorized to represent the Board upon approval by the Chairman. Vice Chair. The Vice Chair of the Board shall be elected annually,as further provided in the OCCOG bylaws,and have all the powers to act in the place of the Chair in the Chair's absence. 4.7 Quonrm A majority of appointed voting directors shall constitute a quorum for acting on the business of the Board. If such number of Board members is an even number, a majority shall be one more than half the number of appointed directors to the Board. 4.8 Meetings Regular Meetings: Regular meetings of the Board shall be held every month according to a schedule approved by the Board at its first meeting each calendar year. Special Meetings: Special meetings may be called by the Chairman or a quorum of Board members. Brown Act: All meetings shall be called and conducted in accordance with the Ralph M.Brown Act. 4.9 Bylaws Bylaws providing additional details pertaining to the conduct of OCCOG and its support structure will be established and approved by the OCCOG Board. 7 Book Page 14 SECTION 5 STAFFING. FUNDING AND ADDITIONAL RESPONSIBILITIES 5.1 Staffing,Consultants and Agents The Board shall have the power to appoint, by employment or on a contractual basis, and remove an administrative officer to serve as the Executive Director of the Board. Such Executive Director shall have full authority and responsibility to implement the purposes and objectives of the OCCOG, subject to the general authority of the Board and specific definition of duties, responsibilities and compensation by contract or employment terms as approved by the Board and as provided by the OCCOG Bylaws. The duties of the Executive Director may be delegated by the Executive Director to subordinate employees or performed through contractual services. The Board may appoint any additional staff,consultants or agents,as deemed necessary or desirable by approval of the Board. Such additional officers may be officers or employees of a Member Agency or the Board may approve entering into a contractual agreement for services for any function necessary for the Board to carry out its purpose, which additional officers or employees shall not be deemed employees of the OCCOG. Additional support to OCCOG may be provided through committees, as established in the Bylaws. 5.2 Funding Dues: Each Member of the OCCOG shall pay annual membership dues to recover costs for staffing, legal services, equipment, materials, contract services, office space and other capital and operational costs as stipulated by OCCOG's annual adopted budget, which dues shall initially be set at the amount provided as Exhibit "2" attached hereto and, thereafter, adjusted pursuant to OCCOG's annual adopted budget. Said does structure shall be established by resolution of the Board and shall be updated annually. 8 Book Page 15 Additional funding for the OCCOG's operation may be provided by monies provided to Orange County from the Southern California Association of Governments, member and/or non-member agency financial contributions, grants, and other sources authorized and approved by the OCCOG Board. 53 Assignment of Additional Responsibilities Additional responsibilities will be undertaken by OCCOG in accordance with the following procedures. Requests to Examine Issues and Provide Input/Recommendations: Requests from non-member and member agencies may be made to OCCOG to examine activities and provide recommendations. the OCCOG shall assign the Executive Director or an OCCOG committee the task of examining staffing needs and funding issues to undertake additional responsibilities, including the need to establish a special assessment to fund any additional responsibility, and providing recommendations to OCCOG on how and whether it might choose to pursue the request. In addition to considering potential staffing/funding constraints, the Executive Director or OCCOG committee will also base its recommendations,and the OCCOG shall consider,on whether the request/issue has strong countywide support among OCCOG members and can reduce or eliminate duplication, improve efficiencies and otherwise achieve countywide consensus and OCCOG objectives. Assignment of Responsibilities to OCCOG: Should requests from member and/or non-member agencies be made for the OCCOG to assume responsibility for delivery of services, development of plans, programss or similar activities, the OCCOG would assume said responsibilities upon approval of its Board, with concurrence of the affected agency(ies). 9 Book Page 16 SECTION 6 FINANCES 6.1 Budget Prior to July 1 at of each fiscal year,the Board shall adopt a budget. 62 Designation of Treasurer and Auditor/Controller The Board shall,in accordance with applicable law,designate a Treasurer and Auditor/Controller for the OCCOG. The Treasurer shall have charge of the depositing and custody of all funds held by the OCCOG. The Treasurer shall perform such other duties as may be imposed by provisions of applicable law, including those duties described in Section 6505 and 6505.5 of the Government Code and such duties as may be required by the Board. The Auditor/Controller shall maintain the financial records of the OCCOG, and shall perform such functions as may be required by previsions of applicable law, this Agreement and any OCCOG bylaws and the direction of the Board. 6.3 Obligations of the OCCOG As authorized by California Government Code Section 6508.1, the debts, liabilities and obligations of the OCCOG shall be the debts, liabilities or obligations of the OCCOG alone. No member of the OCCOG shall be responsible,directly or indirectly, for any obligation, debt or liability of the OCCOG, whatsoever. The debts,liabilities and obligations of the OCCOG shall be the debts,liabilities and obligations of the OCCOG alone,and not of the Members. 6.4 Control and Investment of OCCOG Funds The Board shall adopt a policy for the control and investment of its funds and shall require strict compliance with such policy. The policy shall comply, in all respects,with all provisions of applicable law. 10 Book Page 17 6.5 Funds and Properties The Board shall appoint an entity to receive and have the custody of, and disburse OCCOG funds and property and make disbursements as agreed to by its members. The appointed entity shall invest OCCOG funds in accordance with the general law. All interest collected on OCCOG funds shall be accounted for and posted to the account of said funds. 6.6 Accoants and Reports The OCCOG shall establish and maintain such records and accounts which are deemed necessary to account for and report on the vatious sources of funds, expenditures, grants, programs and projects and, as may be required by good accounting practice, the State Controller or the United States Govemmera. The books and records of the OCCOG shall be open to inspection by representatives of the member agencies at all reasonable times. SECTION 7 INDEMNITY Each party hereto agrees to indemnify and hold the other parties harmless from all liability for damage, actual or alleged, to persons or property arising out of or resulting from negligent acts or omissions of the indemnifying party of its employees. The member agencies, and their employees, officers, members and directors will not be liable to OCCOG (or anyone who may claim any right because of a relationship with OCCOG) for any acts or omissions related to the service to OCCOG. OCCOG and its members will indemnify and hold the members harmless from any obligations,costs,claims,judgments,attorney's fees, and/or attachments in any way connected with the services provided to OCCOG under this agreement. 11 Book Page 18 SECTION 8 TERMINATION AND)_DISSOLUTION 8.1 Termination The OCCOG shall continue to exercise the joint powers herein until the termination of this Agreement and any extension thereof or until the parties shall have mutually rescinded this Agreement providing, however, that the OCCOG and this agreement shall continue to exist for the purposes of disposing of all claims, distribution of assets and all other functions necessary to conclude the affairs of the OCCOG.Termination shall be accomplished by a majority action of the Board. 8.2 Distribution of property and Funds In the event of the temrination of this Agreement, any property interest remaining in OCCOG following the discharge of all obligations shall be disposed in accordance with Government Code Section 6512. SECTION 9 MISCELLANEOUS 9.1 Effective Date This Agreement shall be effective and the Orange County Council of Governments shall exist from and after such date as this Agreement has been executed by 50 percent plus one of the cities or the County of Orange in Orange County representing over 50 percent of the County's population. 12 Book Page 19 IN WITNESS WHEREOF,the parties hereto have executed this Agteement as evidenced by the signatures below. MEMBERAGENCY By: Date: Tide: ATTEST: By. APPROVED AS TO FORM: By. Book Page 20 EXHIBIT 1 1 MEMBER AGENCIES LISTING City of Aliso Viejo City of Anaheim City of Brea City of Buena Park City of Costa Mesa City of Cypress City of Dam Point City of Fountain Valley 1 City of Fullerton City of Garden Grove City of Huntington Beach City of Irvine City of La Habra City of La Palma City of Laguna Beach City of Laguna Hills City of Laguna Niguel City of Laguna Woods City of Lake Forest City of Los Alamitos City of Mission Viejo City of Newport Beach City of Orange City of Placentia City of Rancho Santa Margarita City of San Clemente City of San Juan Capistrano City of Santa Ana City of Seal Beach City of Stanton City of Tustin City of Villa Park City of Westminster Book Page 21 City of Yorba Linda County of Orange Orange County Independent Special Districts/Water Agencies Orange County Transportation Authority Foothill/Eastern Transportation Condor Agency San Joaquin Hills Transportation Corridor Agency Orange County Sanitation District South Coast Air Quality Management District Book Page 22 { - i 4 EXHIBIT 2 i PY2009 10 OCCOG M�IP DUES ` i i I. 1 Bonk Page 23 STEERING COMMITTEE Meeting Date To ad.ofob. OB/26/2009 08/26/2009 AGENDA REPORT Item Numbe Item Number 3 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Michael Gold, Public Affairs Manager SUBJECT: Public Affairs Monthly Update GENERAL MANAGER'S RECOMMENDATION Information Only SUMMARY This report is the monthly Public Affairs Division update that includes legislative and political information from Washington, D.C. and Sacramento, lobbyists' activities, and outreach education and communication programs to member cities, employees and the public. PRIOR COMMITTEEIBOARD ACTIONS None ADDITIONAL INFORMATION Federal Legislative Report Eric Sapirstein, ENS Resources Federal political update Congress adjourned for the summer in August and its activities leading up to the recess focused on health care reform and the confirmation of Judge Sotomayor. There are some remaining issues Congress will consider before the end of the year, while others will carry into next year. The House passed its version of the State Revolving Loan Fund program that includes provisions related to water quality testing and sewer spills. There are differences between the House and Senate versions and the outstanding matters remain funding allocation to the States (ensuring California gets a greater proportion), BEACH act monitoring and water quality tests and the Buy America mandate. Senator Boxer is chair of the committee considering the SRF program and she is committed to increasing the amount of SRF funding coming to California. Other issues of concern are the pending climate change bill, with the most controversial portion being cap and trade of emission credits. As a result of these provisions, it is unlikely that a climate change bill will pass this year. CASA and others continue to press the case that wastewater treatment facilities should be exempt from the cap and trade provisions. Of most concern, is including adaptation assistance(funding)for wastewater treatment plants in the bill. Book Page 24 State Legislative Report Christopher Townsend, Heather Dion and Casey Elliott, Townsend Public Affairs State political highlights After several weeks and numerous meetings, the Assembly and Senate finally passed a State Budget on July 24. Some of main sticking points causing delay were local government taking and borrowing, education funding and offshore oil drilling. Ultimately, a deal was struck in which the gas tax taking/borrowing was removed from the budget package, as was a redevelopment proposal that offered an alternative to Proposition to borrowing. Finally, the offshore oil drilling proposal failed to gather enough votes on the Assembly floor and was not included in the final package. As a result of these actions, the budget package is $1.1 billion less than expected for the FY 2009-10 and $1 billion less for FY 2010-11 and will have to be closed by reducing the State's reserve. There is already widespread discussion that the Legislature will have to reconvene to discuss further budget actions before the end of the calendar year. The Governor signed the package of budget bills on July 28 and used his line-item veto to cut $656 million and retain a State reserve of$500 million. The bulk of the Governor's line- item vetoes came in the area of health and human services. Additional cuts included: • Funding reduction for the State Parks system • The elimination of funding for the Williamson Act subventions • Reductions in funding available for State employee compensation augmentation • Elimination of funding for the Office of AIDS • Reduction in funding for the Healthy Families Program • Reduction in funding for the In-Home Support Services program As has been reported, the State budget will shift 8 percent in property taxes from cities, counties and special districts. OCSD will lose about $5 million. These shifts will occur in late 2009 with half shifted in December-January and the other half shifted in early 2010. The Legislature included a hardship provision for agencies on the verge of bankruptcy but they also included a program allowing borrowing against their Proposition 1A shift. As a result of the borrowing program, the hardship exemption will only be allowed in the most extreme of circumstances. The State Department of Finance will make the determinations for the hardship exemption. The Legislature will be in session until September 11, 2009 and will have hundreds of bills to consider in the final weeks. Specific Activities for the Month: • TPA worked with OCSD staff on a regular basis during July to provide budget updates and detailed information on the provisions of the State Budget and Prop 1A Book Page 25 borrowing. Specifically, we fought such a move but we also were working to ensure that any borrowing provisions were spread equally among cities, counties and special districts. • TPA continues to monitor SB 565 (Pavley) legislation that would have mandated stringent water recycling rules. The Planning and Conservation League and CASA have offered amendments that the author is currently considering. Because the bill did not meet one of its deadlines, it is now a two-year bill. • TPA continues to hold regular conference calls with OCSD staff. Outreach, Education and Communication Activities Take a Kid to Work Day On August 19 we held the bi-annual Take a Kid to Work Day where staff brought kids of all ages to tour the plant and learn about wastewater treatment and the environment. New this year will be a tour of GWRS so the kids will have the opportunity to learn about water recycling. We are very pleased to report that 150 kids will attend the event. Parts of the day's activities include contests and games(all educational)with prizes. Townsend Public Affairs assisted this year by securing tickets to the Discovery Science Center. Honor Walk Installed The new Honor Walk bricks have been installed with blanks and a plaque commemorating and describing the walk is in the works. The Honor Walk is at the entrance to the administration building and once honorees have been selected, the blank bricks will be replaced by engraved ones. Staff has developed a nomination form to track nominees. Both staff and board members are eligible to be nominated and the criterion developed on the form is based on the action taken by the Steering Committee. The form will be distributed at the meeting. Public Affairs Strategic Plan The newly formed Public Affairs Division has completed a strategic plan for the fiscal year to guide our activities. The new plan focuses staff on outreach and educational activities as well as honing in on key messages for the year. As a result of the current economic climate, materials coming out of Public Affairs will include messages discussing how OCSD is doing more with less and being always mindful of spending public dollars. Book Page 26 2009 Legislative Tracking Bill Number Summary Position* Status AS 815 (Mal This bill requires a public agency to provide full, complete and accurate plans and specifications Oppose In Senate Local to bidders and that the agency assumes responsibility for the accuracy of those plans. A redo of Government AS 983(Me)from 2008, which OCSD opposed. AS 969 (Calderon) This bill modifies the Recycled Water Act of 1991 to establish goals for recycling an unspecified Watch Held in committee percentage of water by 2020 AS 1100(Duvall) This bill allows the bottling of potable demonstration water for educational purposes and to Support Failed passage in promote water recycling. (Note: this bill is aimed at allowing the bottling of GWRS water for committee/granted demonstration and educational purposes only). OCWD is sponsor reconsideration AS 1366 (Feuer) This bill allows a local agency that maintains a community sewer system,to control salinity from Support Passed first residential water softeners, if the regional water quality control board makes findings that committee now in reducing salinity would achieve water quality objectives. Senate Appr. m 0 x SB 26(Slmitian) This bill would require the California State Board of Pharmacy to coordinate with local agencies Support Being held in v and drug manufacturers to develop programs managing pharmaceutical wastes and disposal. Senate Authorizes pharmacies to accept home-generated prescription drugs. appropriations N J SB 261(Dutton) This bill requires an urban water supplier to develop a conservation plan or achieve high Watch In Assembly efficiency water use and provide financial incentives to support water use efficiency and local Appropriations water resources management measures. SB 413 (Duchene) This bill imposes fees on wastewater dischargers for the purpose of preparing regional water Oppose Being held in quality control plans. Senate appropriations SB 565 (Pavlev) Requires the State Water Resources Control Board to develop a plan ensuring that 50% of Watch/Reouestine In Assembly Parks wastewater discharged into the ocean would be recycled and put to beneficial use. Requires the Amendments and Wildlife State Board to impose a fee on ocean discharges to implement the program. 58 7111Leno1 Requires the disclosure of written communications prior to entering into closed session Oppose Held in committee regarding labor negotiations. ORANGE COUNTY SANITATION DISTRICT (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 r r r .r GENERAL MANAGER'S PROGRESS REPORTS TO THE STEERING r COMMITTEE AND r PROPOSED 2009-2010 WORK PLAN .r .r 1. Fiscal Year 2009-2010 Proposed Work Plan 2. Fiscal Year 2008-2009 Year-End Review of Accomplishments r 3. 2009 Executive Management Team Strategic Planning Session r 4. 2009-2010 Budget Update r .d r r r August 26,2009 r� ORANGE COUNTY SANITATION DISTRICT Memorandum nn r r DATE: July 22, 2009 TO: Chairman�and Members of the Steering Committee FROM: JamesRYRuth, General Manager SUBJECT: Fiscal Year 2009-2010 Proposed Work Plan r The enclosed reports cover the District's progress and accomplishments for FY 2008-09, r provide an overview of the July 9 Executive Management Team strategic planning session, and present the proposed work plan for 2009-10 Fiscal Year. 1. Fiscal Year 2008-09 Overview The 2008-09 fiscal year presented many challenges to our staff as we addressed our Board-approved work plan, setting forth our service levels incorporated in our Strategic Plan, implementing an aggressive Capital Improvement Program (CIP) covering 73 projects valued at$280 million, and dealing with the fiscal uncertainty in a volatile economic climate. " Staff met or exceeded all of our proposed goals, managed the operating budget at 97% of our authorized resource allocation plan, implemented operational efficiencies resulting in a $2 million savings, reallocated personnel resources to areas of greater, need actually reducing the number of authorized personnel from 644 to 641, while assuming increased operating responsibilities. r Continued assessment of our organizational structure resulted in the merging of our Public Information Office and Government Affairs into a Public Affairs division under the leadership of Michael Gold. r The Safety and Health division has been permanently assigned to the Human Resources division. r Staff will continue to explore other possible mergers to create greater efficiencies in our operations. .w r r r Chairman and Members of the Steering Committee Page 2 July 22, 2009 r It. Executive Management Team Strategic Planning Meeting The meeting focused on operational issues covering strategic goals, financial planning, new regulatory requirements, risk assessment, labor relations, training, alternative energy sources, hiring practices, succession management, public education and r outreach, and our contractual agreements with outside agencies. An overview of that meeting is enclosed. r Ill. New Work Plan for Fiscal Year 2009-2010 1) Fiscal Management—Maintain our current AAA bond rating. Protect our reserves maintaining at current levels, form an internal business analysis function to assist departments in implementing greater efficiencies in our operations. Explore options to reduce dependency on property tax revenues. Operate within r the Board approved budget. Analyze cost-saving measures identified in the EMT strategic planning session and seek board direction on those involving changes in our approved level of service, for example, disinfection levels, chemical usage for odor control, and environmental monitoring. 2) Capital Improvement Plan—Manage 82 projects at an estimated cost of$259 r million within budget at a change order rate of 5%. 3) Complete negotiations and seek Board approval of new contractual agreements r with SAWPA and IRWD. 4) Develop a new operating agreement with OCWD relative to their proposed Phase II Expansion Program. 5) SARI Line Relocation—Continue to work with the County of Orange, Army Corps r of Engineers, and SAWPA to achieve approval of the EIR, EIS, prepare final plans and bid documents, bid the project within the approved time schedule and achieve completion by April 2012. Work with our Congressional delegation to secure reimbursement funding for the project. 6) Labor Relations—The 2009-2010 Fiscal Year will begin our labor negotiations process with two of our six bargaining units. Our focus will be on cost containment, with emphasis on our benefits package. The remaining four labor r agreements will not expire until June 30, 2011. r r r Chairman and Members of the Steering Committee Page 3 July 22, 2009 r 7) Strategic Plan Update—Staff will bring forward our proposed update of our 5- year Strategic Plan in November 2009. The proposed new plan will address all r service levels approved by the Board, consider new regulatory requirements, evaluate our fiscal plan, review our risk register and identify possible mitigation measures, and review our performance measures against our agreed upon work r plan. 8) Transfer of local sewer assets to local agencies. Staff will continue to work with r local cities and sanitation districts to transfer any non-regional assets over to those agencies so that we can continue to focus on regional services and reducing our operating costs. r 9) North County Maintenance Yard—Staff has worked with an architectural firm to determine the most economical and functional approach to utilizing this property at 7311 Doig Drive, in Garden Grove. The property was acquired in 2006 to `t provide badly needed workspace for approximately 50 staff, and to free up workspace at Plant 2 needed because of facilities growth. A staff recommendation will be presented to the Board by November 1, 2009. r 10) Design Build—As a result of our aggressive legislative efforts, two projects have now been approved for Design Build. The Magnolia Trunk Sewer Project ($19.5 million) and the Inter-Plant Natural Gas Pipeline Rehabilitation Project($2.5— $3.5 million)should be bid and constructed during this fiscal year. r 11) Safety—Staff will focus on achieving 100% compliance with OSHA training requirements with the objective of further reducing our number of work related accidents and lost work hours. During the past two years, we have achieved a 53% reduction in the work related accident rate. 12) Public Outreach—The focus of our outreach activities this year will be on undertaking a branding initiative to provide continuity and a consistent message in our public education efforts. In addition, we will be updating our collateral materials and other media. 13) Training—We will focus on continuing to develop leadership skills, build our bench, and prepare for the future. We will complete the final two sessions of our Leadership Academy and lay out a program for the next generation of leadership r development training for the organization. d JDR:gg Attachments H:Wepllpnw1110\I10 MmvNtUTH"ES.Status Reports to BoardQ009 GM Status repoRsUCH 07 22 FY 2009-2010 Proposed WON Plan dou r r 1 1 1 7 7 1 �] n n 9g � s � � � �. e e o � � 'di O � N Y n o � n n n n n ORAKGE COUNTY SANITATION DISTRICT Memorandum DATE: June 24, 2009 TO: Chair and Members of the Board Orange County Sanitation District FROM: James D. Ruth General Manager, Orange County Sanitation District SUBJECT: Fiscal Year 2008-2009 Year-End Review of Accomplishments The 2008-09 fiscal year brought many challenges to our organization; however, through the strong leadership of our Board and the standing committees, we achieved substantial progress. While we achieved much progress during this past year, the Orange County Sanitation District faces many new challenges as we address the state fiscal crisis, critical operational and capital needs and potential new regulatory requirements. Once again, we demonstrated our resolve to achieving optimal operating efficiencies while continuing to implement a very aggressive Capital Improvement Program as part of our adopted $2.5 billion plan to protect the health and safety of the 2.5 million residents in our service area. The OCSD team manages assets with an estimated replacement value of over $6.25 billion. Our work plan for FY 2008-09 incorporated an aggressive program of continued fiscal prudence while meeting our consent decree obligations, implementing our $280 million capital program and carrying out our Board approved strategic plan. Under the Board of Directors strong leadership, OCSD actually improved its bond rating with Standard & Poor's from AA to AAA, with Fitch and Moody's holding our rate at AA. The Board's approval of our five-year rates in 2008 contributed significantly to this excellent rating. We are making great strides to become more results-oriented. In addition to the accomplishments described below, I have attached a listing of other staff achievements and awards received this past year that reflect the high degree of professionalism and excellence within our organization. Board of Directors Page 2 June 24, 2009 r The following report reviews our organization's progress this past fiscal year against our approved work plan presented to the Steering Committee at our July 2008 meeting. I am pleased to report the status of the following work plan items: 1. Strategic Plan Update —With the adoption of our Strategic Plan in November 2008, the Board of Directors gave specific policy direction to staff for implementation. Goals and objectives and performance measures were developed to monitor progress against our agreed upon work plan. Status—Staff completed 15 of 37 (40%) strategic goals contained in the strategic plan. We are also meeting or exceeding nearly all of the level of service targets approved by the Board in the plan. Significant achievements during this fiscal year include completion of the Steve Anderson Lift Station, significant progress on the relocation of the SARI line and a newly updated strategic plan. Please refer to pages 10-16 of the OCSD Fiscal Year 2009-10 Budget Update for a comprehensive listing of the strategic plan accomplishments. Staff created a computer-based performance dashboard to monitor and track progress on each of the strategic plan elements. 2. SAWPA Agreement— Our staff continues to meet with SAWPA management to consolidate five existing agreements into one document and to clarify existing language as well as addressing several operational issues. Staff will present final documents to our Board early in the 2008 fiscal year for your review, consideration and action. Status—OCSD staff presented a draft agreement in November 2008 to SAWPA staff for their review. We continue to meet to resolve outstanding .. issues and it is my hope that we can present a revised agreement to the Board for consideration by the end of calendar year 2009. 3. IRWD — Staff held numerous meetings with IRWD executive and operational staff to address operational and financial issues between our respective agencies. We exchanged considerable information and we are nearing agreement on all outstanding issues. Cooperation has been excellent in our collective efforts to complete this project. Status: We reached agreement on all issues and we are now in the process of working up a revised agreement for consideration by our respective boards of directors. We expect to present a draft agreement to the Board in summer 2009. r Board of Directors a Page 3 June 24, 2009 r 4. Budget— Staff continues to follow the state financial crisis in an effort to minimize any fiscal impacts it might have on local government and specifically special districts. We are working closely with CASA, CSDA and the League of r Cities as well as our own Sacramento lobbyist to protect our interests. Status: Staff is aggressively working to prevent a shift in local property taxes. We are also looking for every opportunity to reduce costs within our agency. .. This year we were able to achieve $2 million in cost savings through the concerted efforts of our staff. A description of these cost savings is contained ✓ in a separate memorandum to the Board of Directors accompanying the r budget document. 5. SARI Line—With the certification of the EIR in July and the completion of design work in early 2010, the bidding, award, and construction of the $100 million SARI relocation project should take place in February 2010. Estimated construction completion is February 2012. A financing agreement is in place with the County of Orange, OCSD, and SAWPA. OCSD will continue to pursue federal and state funding to reimburse our agencies for this project. Status: The SARI relocation project is on schedule to go out to bid for construction in March 2010. The Army Corps of Engineers received $27 million in the President's FY 2010 budget to expedite completion of work on the Santa Ana Mainstem Project including Prado Dam and the SARI line. Moreover, the Army Corps of Engineers made the significant decision to tie the relocation of the SARI line to Mainstem improvements and increased storage behind Prado Dam. This decision should help expedite federal funding to the project. Board leadership and staff, working with our r Washington, D.C. lobbyist, played an important role in raising Congressional awareness of the importance of relocating the SARI line. r 6. Capital Improvement Plan 2008-2009— During the 2008-2009 fiscal year staff will manage seventy-three (73) projects with an annual expenditure of 360 million dollars. Our goal is to meet all schedules, stay within Board approved budget, and to manage change orders at 5% or less. Status: We are on track to spend $280 million (80%) of the $360 million r budgeted for this year. The change order rate for projects completed since 2004 dropped to 7.4% and will further drop to 5% as current construction projects are completed. 7. Training —The third session of our Leadership Academy training program completed in May 2009, Nearly 60 EMT, managers and supervisors have r completed the program. The program will develop leadership skills, build our bench and prepare for the future. r Board of Directors Page 4 June 24, 2009 Status: The fourth Leadership Academy session will start in July 2009. A fifth and final session will occur later in the year. 8. Internal Audit—At the direction of the Administration Committee's Audit Oversight Subcommittee, the auditing firm of Lance Soil and Lunghard reviewed the collection and remittance of capital facilities capacity charges (CFCC) by member agencies during FY 2007-08. LSL found that while there were problems calculating CFCC fees owed to the Sanitation District, the amount was less than $20,000. Status: The audit was completed and results presented to the Administration �+ Committee in June 2009. 9. Biosolids— In accordance with our Strategic Plan, staff will prepare an RFP to explore long-term alternatives for the remaining one third of our biosolids production that is not committed to long-term contracts. Through this process, staff will also look at new markets and new technologies to deal with our long- term needs. Status: Staff is monitoring the availability of sustainable cost-effective alternatives for the remaining one third of our biosolids that is currently not committed to a long-tens contract. With the downturn in the economy, the impetus for private sector vendors to bring new technologies into the marketplace has slowed considerably. In addition, there has been no opposition to land application of biosolids in Arizona. Therefore, staff is holding off on the RFP for the time being and is managing the remaining one third through the lowest-cost alternative—land application in Arizona— consistent with Board policy and our Lang Range Biosolids Master Plan. 10, Safety and Security— Final design of our facility security and alert systems is in progress with project completion estimated to take twelve (12) to eighteen (18) months. Staff is pursuing federal funding to help in this endeavor. Staff will work with OCWD to develop a comprehensive, coordinated security plan between our respective agencies. Status: Design of a new security Fence along the North perimeter of Plant No. 1 is currently underway with Phase 1 of the project scheduled to begin r construction later this year. We are in the process of upgrading plant emergency alarm and PA systems to insure 100% coverage of our facilities. The Department of Homeland Security conducted a vulnerability assessment of Plant 1 and offered a $194,000 grant to OCSD to help pay for upgrades to our security systems. Board of Directors Page 5 June 24, 2009 11. Design Build —With the approval of SB645 in 2008, staff selected rehabilitation of the Magnolia trunk sewer line as our first design build project. With the assistance of an outside consultant, documents are being prepared to solicit proposals for the project. Status: Draft design-build documents were completed and solicitation of Statements of Qualifications for Design-Build teams is on track for June 2009. Staff submitted to the State of California under legislation passed in 2009 a .. request to pursue a second design-build project to rehabilitate the interplant digester gas line. r_� 12. GWRS—The Joint Steering Committee comprised of OCWD and OCSD Board members reduced the number of meetings during the fiscal year. OCSD is committed to meeting our contractual obligations and is investigating ways in which our respective agencies could possibly reduce operating costs through cooperative purchasing, training, security, and maintenance agreements. The Steve Anderson Lift Station (SALS) is on line and ., completing startup testing. SALS provides additional flow to the GWRS system, increasing the volume of reclaimed water by up to 20 mgd. Status: OCSD O&M staff work daily with OCWD staff on routine coordination issues and the management teams meet monthly. We made enhancements to increase the level of security around the GWRS facility and our security staffs meet regularly to ensure a safe and secure work environment throughout our joint campus. 13. Employee Recognition Program — Our Human Resources division is working with our management team to develop a comprehensive employee recognition program designed to recognize exceptional performance and create a positive work environment. Status: We made significant progress during the past year including creation of a staff advisory committee to guide the development of the program. The first recognitions are occurring in June 2009 as we honor with "Safety Performer" awards six divisions that achieved perfect safety records during the past year. EMT approved a revitalized IDEA (Incentives for District Employee Achievements) Program to recognize employees who suggest cost-effective r ideas for improving and enhancing employee safety, working conditions and work methods. 14. Air Quality— Staff is evaluating alternatives for meeting new stringent air emission standards established by the SCAQMD. Staff will identify a Board of Directors Page 6 June 24, 2009 technology, start the planning, and design process to demonstrate its feasibility in order to meet a July 2010 regulatory deadline. Status: Staff completed an evaluation of potentially feasible alternatives for meeting new stringent air emission standards established by the SCAQMD. Planning and design for demonstration testing of the most promising .. technology—a dual catalyst system—is underway in order to meet a July 2010 regulatory deadline. d+ 15. Odor Control — Since 2002, OCSD has expended $36,558,000 on odor control improvements, with an additional $1,220,000 budgeted for the next two years. We are planning an additional $52,35B4O00 of odor control projects over the next eight years in accordance with our strategic plan and Board policy direction. Status: In June 2009, the Board of Directors will consider awarding an interim construction project to modify existing odor control scrubbers at Plant No. 1. 16. Cost Savings — Staff will continue to look for cost savings in all areas of our operations, with a focus on cost containment in our health benefits programs. Status: Despite a projected $13 million decrease in FY 2009-10 anticipated revenues, we are able to present a balanced budget for consideration by the Board of Directors. Deferrals in our capital construction program and lower debt financing costs offset the revenue shortfall. With the state poised to take away a portion of local government property taxes, staff proposes additional budget adjustments of$3 million in FY 2009-10 to help close the budget gap, including the elimination of vacant positions and the reduction of various professional and contractual services. Additionally, staff identified $2 million in operational cost saving measures during FY 2008-09. Details regarding these measures are contained in a separate memorandum accompanying the budget document. 17. Public Outreach — Staff will continue to expand our public outreach efforts and ways to inform a variety of audiences about the critical services we provide. Status: To upgrade OCSD's outreach efforts, in the past year, our Public Information Office produced an eight-minute "Making Every Day Possible" overview video and a series of public service announcements for airing on local cable channels, launched a formal Speakers Bureau and directed more resources to community events and tours. As a result, in FY 2008-09, we hosted or participated in more than 190 tours, speaking engagements, and r d r Board of Directors Page 7 June 24, 2009 r community events, resulting in face-to-face contact with almost 10,000 people. The number of tours and tour guests doubled from two years ago and volunteer hours by employees rose by 50 percent from the preceding year as r well. Work is underway on a "Wastewater 101" video that will help educate the public and tour groups about the processes involved in the wastewater treatment process. r In conclusion, I am pleased with the progress we achieved this past year and I look forward to working with the Board of Directors in the coming year as we take on new r challenges facing this agency. With the continuing strong leadership of the Steering Committee and our Board of Directors, and the dedicated support of our strong executive management team and staff, we are ready to meet the challenge. r JDR:gg r H'Mepllgmo11101110 Admin%RUTH JAME=tatus Repots to Beard=09 OM Sletus raporls12000Q009 Year-End Review of Aecomplishmenla.doc r r r r r r r r r N I I 1 1 I i I i I 1 I I 1 I 1 1 1 1 1 Accomplishments FY2008-09 Operational • Strategic Planning At a workshop in July 2008, the Executive Management Team began the Strategic Plan update process. After revising the Levels of Service and updating strategic goals, the EMT presented the Strategic Plan to the Board on October 15. The Strategic Plan was updated with Board recommendations and the board of directors unanimously adopted the 5-year strategic plan update in November 2008 • Legislative Advocacy Staff worked with state and federal legislative consultants on a number of key legislative issues and aggressively advocated seven bills. . On the three highest priority issues, staff was successful in either passing the bill or securing a veto. The Legislative Advocacy consulting contracts were renewed at a reduced cost for an annual savings of $36,000. • EnerTec Operations The EnerTech synthetic coal production facility began accepting OCSD biosolids November 2008 and is operating in test mode. The dedication to officially open the site was held on Junel1, 2009. • Reclaim SARI flows When the GWRS Independent Panel met in October, there were several concerns about bringing the SARI Line to Plant 1 to increase water production for GWRS, primarily because of Stringfellow. Based on discussions with OCWD, our partner on this project, it was decided to discontinue the project in light of adverse comments from the GWRS technical advisory committee. • Ocean Discharge Permit Application The application for the five year renewal of our Ocean Discharge Process (NPDES) Permit was submitted to the Regional Water Quality Control Board and EPA on April 1, 2009. The current permit will expire October 30, 2009. A public hearing will be held in our Board Room on Friday, July 10, 2009. Page 1 of 9 Accomplishments FY2008-09 • GWRS operation OCSD has sent approximately 63 MGD to the GWRS during FY2008-09 and the flow will increase after the Steve Anderson Lift Station is operating. OCSD plans to send 104 MGD specification water to GWRS, the Level of Service contained in the Strategic Plan. • Effluent Disinfection Staff investigated opportunities to optimize the disinfection system, which has included field tests and development of options and testing plans. The NWRI Blue Ribbon Panel will meet again this July and after receiving input from OCSD staff will make recommendations on our proposals. • Secondary Treatment and Final Effluent August/September 2008, P1 moved to 100% secondary treatment. In Quality October 2008, the District averaged final effluent with the lowest TSS and BOD in its history, 25 mg/I and 33 mg/I respectively. • Countywide Pollution Prevention C413 is one of the Enhanced Source Control Programs designed to Partnership Program (C4P) protect the drinking water resources of Orange County by reducing the discharge of emerging pollutants of concern from residential and commercial sources through public outreach. OCSD partnered with our 25 member agencies and held a kick off meeting in June 2009. The program includes dissemination of outreach materials through the cities' existing media outlets, such as bill stutters, public service announcements, and newsletters. In comparison with direct mailing of outreach materials to residences, the use of the cities' existing media outlets will save OCSD approximately a million dollars a year. • Public Information Office (PIO) To upgrade OCSD's outreach efforts, in the past year, PIO produced an eight minute "Making Every Day Possible" overview video and a series of public service announcements, launched a formal Speakers Bureau and directed more resources to community events and tours. As a result, in FY 2008-09, we hosted or participated in more than 190 tours, speaking engagements, and community events, resulting in face-to-face Page 2 of 9 Accomplishments FY2008-09 contact with almost 10,000 people. The number of tours and tour guests has doubled from two years ago and volunteer hours by employees has also risen by 50 percent from the preceding year as well. Work is underway on a "Wastewater 101" video for the coming year that will help educate the public about the processes involved in the wastewater treatment process. • OCWD security Staff is working with Orange County Water District staff on the level of security for our joint campus and treatment facilities. The agencies reached agreement on access controls throughout the campus. • Management System for Environmental Compliance obligations have been populated and a dashboard created. Compliance ECAP Hazardous waste and auditing have been added to the site now totaling nine compliance areas. • Enterprise Information Technology Developed and published a three year Information Technology Strategic Strategic Plan Plan based on the master OCSD strategic plan to guide acquisition and management of hardware and software. • IT Equipment Consolidation Information Technology consolidated over 50% of the server hardware resulting in substantial hardware and energy savings and faster disaster recovery times. • Engine Emission Compliance Completed a study to evaluate alternatives for complying with lower emission limits in the South Coast Air Quality Management's Rule 1110.2. • Records Management In FY0809, Records Management handled 183 Public Records Act Requests and 5 Subpoenas for Records. E-mail Management Training was given to employees in each Division and workgroup. Records Management Compliance Audits were completed for the General Managers and Administrative Services Departments. Page 3 of 9 1 1 1 I l l l 1 t 1 1 I 1 1 1 1 I I t Accomplishments FY2008-09 • Performance Dashboard The Performance Dashboard was automated by Information Technology, and the responsible managers receive notifications through a work-flow process every quarter to update the Levels of Service and Goals from the Strategic Plan. • Succession Management Succession Plan - Implement the succession management plan including management training and the creation of a Leadership Academy which has successfully trained 56 staff. • Employee Recognition Program Human Resources is developing a recognition program that will include all current and future programs, such as the Incentives (for) District Employees Achievements (IDEA) Program, the Volunteer Incentive Program (VIP), and the safety Incentive Program. • Human Resources and Safety and Health The Human Resources and Safety and Health Divisions Strategic Plans Divisions Strategic Plans are in draft form and will be completed in FY2008-09. • Deferred compensation A focus group of staff and a consulting firm evaluated deferred compensation programs and several financial advisory firths, and selected ING Life Insurance Annuity Company as the new deferred compensation provider. All deferred compensation accounts will migrate to ING. Capital • CIP Program Number and value of In FY 2008-09, we completed roughly $280 Million in capital projects expenditures which is 80% of the CIP budget for the Fiscal Year. The District managed a total of 80 large and small active CIP projects during the Fiscal Year. • Other completed projects on-line Six large CIP projects were successfully completed and closed-out during the Fiscal Year, with a combined value of over$150 Million. These projects include: Effluent Pump Station Annex, Activated Sludge Plant Rehabilitation at Plant No. 1, Bushard Trunk Sewer Rehabilitation, Page 4 of 9 Accomplishments FY2008-09 Rehabilitation of District Siphons by Adding Air Jumpers, Fire Suppression for Servers and Equipment, and Santa Ana River Interceptor Protection/Repairs. In addition, nineteen small projects were either completed or in construction during the Fiscal Year. • Santa Ana River Interceptor(SARI) Line A$400,000 emergency repair to protect the SARI Line with rock was performed in November 2008. In January 2009, TetraTech was awarded the design contract for relocating the line for a project managed by the Army Corps of Engineers, the County of Orange Flood Control Division. The preliminary design is proceeding and the Environmental Certification work is nearing completion. The relocation will be complete in 2012. • SALS completion and dedication The Steve Anderson Lift Station is in the commissioning process. The station was dedicated on April 17, 2009 in honor of our former Board Chair and long-term Board member. • Space Planning Study Recommendations O&M Staff moved out of Administration second floor area into the newly constructed office area in the Control Center and into the Laboratory Building. IT moved into the Administration second floor area in May. ADA required work in the Control Center and walk areas around the Laboratory are in progress. • Facilities Master Plan update Engineering and Operations and Maintenance completed several modules of the Facilities Master Plan. It is in draft form and is scheduled for Board Approval in December 2009. • CIP Exchange Program with Korea In June 2008, two engineers from OCSD participated in the International Wastewater Symposium organized by Environmental Management Corporation (EMC), a Korean government agency, held in Seoul, Korea. In August, two engineers from EMC were at OCSD for two months observing OCSD's organization and practices. Page 5 of 9 Accomplishments FY2008-09 • Fuel Cell Demonstration Project An agreement has been executed to participate in mufti-agency/private Partnership to provide a test that will use Digester Gas to create electricity for the facility and Hydrogen as an automobile fuel from a clean source. This fuel cell is scheduled to be installed by December 2009. • Security and Safety Improvements A new security wall along Ellis Street will be installed as part of Project J-108, Temporary Upgrades to Plant Security Barriers. This project is in design and is scheduled to be completed by the end of 2010. Financial • Debt issue and refinancing Despite the economy, Financial Management issued $200 Million of .new money" debt at a true interest cost of 4.72 percent, 28 basis points below target generating savings of$7 million. In addition, $196.6 million of previously issued debt was refinanced at a lower rate generating first year savings of$6.9 million. • Bushard Street Construction mediation The project work is complete and final settlement of pipe related claims settlement was finalized in March of 2009. • Grant funding/appropriations— The District received $300,000 in funding for the secondary treatment CIP bringing the total amount received to just over$2 million. All funds will be spent in 2009. An additional $5 million has been appropriated for secondary treatment through the office of Senator Barbara Boxer. • Interagency agreements The Irvine Ranch Water District is working with District staff on several outstanding issues with financial impacts: solids costs; reserves; flume adjustment calculations; and cash balances. The Santa Ana Water Watershed Project Agency staff and District staff have been working for over a year to negotiate the terms of a new agreement. A user rate study was performed to provide financial data. Page 6 of 9 Accomplishments FY2008-09 • Sell 1,808 acres in Kings Country The property has been listed and several inquiries have been fielded by OCSD staff. No offer to purchase has been made. Efforts to sell the property are still on-going. • Sale of Excess Air Quality Emission Last year, the Board authorized staff to sell air quality emission Reduction Credits reduction credits (ERC) that the District has maintained for several years. To date, the District has sold -$4.2M worth of ERCs. • Research Strategic Plan A five year Research Strategic Plan was completed which included the input of an outside expert panel. Work has begun on the highest priority projects identified in the Plan. Groundwater Replenishment System Awards • Stockholm Industry Water Award International award presented by the Stockholm International Water Institute that honors and encourages business sector contributions to sustainable development in the water sector. • Coastal Preservation Award Presented by Orange County Coastkeeper • Board President of the Year Presented by California Special Districts Association • Toshiba Green Innovation Award Presented at the Innovation and Globalization Conference 2009 ASCE Outstanding Civil Engineering One of six finalists of the ASCE Outstanding Projects and Leader Award (OPAL) Awards, GWRS won the prestigious Outstanding Civil Engineering Award (OCEA). This is the highest honor that ASCE bestows on a project. 2009 ACEC Grand Conceptor Award Consultant CDM was awarded the 2009 ACEC Grand Conceptor Award signifying the year's best engineering achievement for GWRS among the 168 projects honored at the Engineering Excellence Awards Gala. Page 7 of 9 I l l I t It 1 1 l / I 1 1 a 1 1 Accomplishments FY2008-09 Awards • NACWA(National Association of Clean Presented to Source Control Division by NACWA along with Las Water Agencies) Award Angeles County Sanitation District and City of Los Angeles"2008 National Environmental Achievement Award"for their collaborative and innovative work on the "No Drugs Down the Drain Program" • The 2008 Achievement of Excellence in The national award recognizes organizational excellence in government Procurement (AEP) award procurement and contracting in the United States against a set of nationally recognized professional standards that define procurement excellence. • Distinguished Budget Presentation Award Presented to Financial Management for exceptional budget by the Government Financial Officers Association • Certificate of Achievement for Excellence Presented to Financial Management for the Comprehensive Annual in Financial Reporting Financial Report(CAFR) by the Government Finance Officers Association • Gold Peak Performance Award For treatment plants' 100% permit compliance by the National Association of Clean Water Agencies • Excellence in Information Technology Presented to Information Technology by the Municipal Information Practices Award Systems Association of California (MISAC) • The Best Vibration Analysis Program of Presented to Simon Watson, Manager of Mechanical and Reliability the Year Maintenance (Division 850) by Uptime Magazine • Government Engineer of Merit Presented to Nick Arhontes, Director of Operations and Maintenance, by the American Society of Civil Engineers Page 8 of 9 1 1 1 1 1 1 1 1 ! 1 I I 1 1 1 1 1 1 1 Accomplishments FY2008-09 • Construction Engineering Distinguished Presented to Engineering Supervisor Chris Cervellone by the Owner Honoree Construction Management Association of America (CMAA), Southern California Chapter • Operator of the Year Presented to Doug Hauser, P2 Senior Plant Operator, by the California Water Environment Federation (Santa Ana River Basin Section). M Wepllpmo\110\110AEminUiUTH JMIEW s Re t W Bmn�006 GM SUN.te,, M1 Acm fth..nh In T.N.FY200808 June 17 FIRM.d. Page 9 of 9 o ��, dd R � � � d� II � g� n NY `-.-_'� �^ ✓ \ \ �\^, \`� \�{ �, 1 { \ h ORANGE COUNTY SANITATION DISTRICT Memorandum b b r b r DATE: July 22, 2009 TO: Chairman and Members of the Steering Committee r FROM: James D. Ruth, General Manager SUBJECT: 2009 Executive Management Team Strategic Planning Session r Summary r� On July 9, 2009 the Executive Management Team (EMT) held a strategic planning session to discuss goals for the coming year. Against the backdrop of a state budget crisis threatening to raid OCSD's property taxes and ongoing anxiety about the economy, the day focused on dealing with these uncertainties to not only keep OCSD functioning smoothly but also support the diverse staff that helps make every day possible in Orange County. This report provides a summary of the discussion and the follow-up items that will lead to the 2010 Strategic Plan and the 2009-2010 budget. Attendance The EMT retreat was held offsite at the Irvine Ranch Water District and was attend by the following staff: r Jim Ruth General Manager Bob Ghirelli Assistant General Manager •+ Jim Herberg Director of Engineering Lorenzo Tyner Director of Finance and Administrative Services Nick Arhontes Director of Operations and Maintenance r Ed Torres Director of Technical Services Jeff Reed Human Resources Manager Michael Gold Public Affairs Manager r Agenda The agenda for the day covered a wide range of issues but focused on internal operations and r staff support. This report will provide a summary of each agenda item: . Implementing the fiscal year 2009-2010 budget . 150 low cost ways to boost employee morale . 2010 Strategic Plan update . Succession management . General management and organizational issues r r r 2009 Executive Management Team Strategic Planning Session Page 2 July 22, 2009 r Implementing the fiscal year 2009-2010 budget State budget uncerfainty The EMT discussed the uncertainty of the state budget crisis and the possibility that OCSD's property taxes could be borrowed by Sacramento to cover the $26 billion deficit. At the time, the possibility of a property tax shift was still unknown, as was the amount. In recognition of the r uncertainty, the group decided to focus on items they could control but be prepared for a range of possibilities from Sacramento. r Staffing reductions and consolidations Despite a decrease in staffing from 644 FTE several years ago to 641 FTE today staff has done a good job managing the$2.6 billion CIP and operating the treatment plants and collection system. A focus of the next year will be on employee training and development and building the bench for the future. r Risk register recommendations Lorenzo Tyner distributed the near final version of the risk register prepared by his staff. Tyner explained that the register highlights perceived risks to OCSD and because of global financial uncertainty along with other events there are more disparate risks than the same time last year. The group discussed the risk register and concluded: . The risk register presents an opportunity for OCSD to put a stronger focus on its core mission; . The recommendations in the register should be incorporated into the 2010 strategic plan and •" . The EMT and Board of Directors should be briefed by the District's Risk Manager. Proposals for cost-saving measures r The group discussed several ideas for cutting costs in the near-term and how these proposals could impact levels of services. After discussing a number of ideas, the group narrowed the list and identified an EMT member to follow-up: r . Biosolids—outsource a company to dewater biosolids onsite. (Ed Torres). . Disinfection— improve the mixing of effluent to reduce chemical usage. (Nick Arhontes). r • Secondary treatment—reduce mix of primary and secondary treated effluent sent to the ocean to minimum permitted levels. (Nick Arhontes). . Chemical usage—An in house team (headed by Mark Dubois) will study options to ,+ reduce, eliminate or replace current chemicals. . Corrosion/Odor control—hire outside consultant to study cost and impacts of reducing chemical dosing. (Nick Arhontes). r . Effluent pumping—Shut off Ocean Ouffall Booster Station effluent pumping during low flow periods. (Nick Arhontes). . CIP—defer capital projects not yet under contract or construction. (Jim Herberg). r . Environmental management—as part of budget process, reduce regulatory monitoring and transfer associated staff to higher priority activities. (Ed Torres). r r r 2009 Executive Management Team Strategic Planning Session a Page 3 July 22, 2009 r Safety—reevaluate level of safety training and equipment needed to meet OSHA requirements. (Jeff Reed). Long-term strategy to move OCSD off Property taxes Recognizing the annual vulnerability OCSD faces with the $60 million collected in property taxes because of the state's budget problems, the group discussed the concept of moving the District r off property taxes. • The EMT discussed a revenue neutral concept that for every dollar reduction in property r tax collection there would be a dollar increase in sewer fee collection; thus removing the funds vulnerable to the state. • Jim Ruth agreed to discuss the concept with the county assessor and Lorenzo Tyner will look more closely at the details. Looking ahead to the upcoming two-year budget(2010-2012) ,r With a new two-year budget cycle beginning in one year,the group discussed preparing for the new budget and how the process could be improved. The 2009-2010 budget update introduced a new element—using budget analysts to assist each department. The suggested changes for the coming year are: • Training for the budget analysts and involving them in the process throughout the year, not just during budget preparation time, so they area resource for each department. Set forth our expectations for what we want the budget analysts to do. • Creating an overall model of how the process will work then rolling it out to the agency so there is better understanding of the analysts' role and the overall budget process. • Utilizing existing staff or hiring business analysts to increase efficiencies throughout the organization (change agents). • Better management of the legal budget in the coming year by refreshing the procedures for requesting legal advice and better tracking, possibly through a gatekeeper to log all requests. �+ 150 low cost ways to boost employee morale Human resource and public affairs staff generated 150 low cost suggestions to boost employee morale. These suggestions were further refined by HR staff and discussed by the EMT. Jeff r Reed identified the top six items that could be implemented quickly: • Staff BBOs with the managers cooking; r • Birthday cards or calls from the general manager; • Employee of the month or a spotlight on an employee; • Lunch or coffee with the general manager; r • Creating "onboard buddies' with newly hired staff. The onboard buddy is an existing staff person who will assist the new person become more familiar with OCSD and • Staff wellness programs. r 2009 Executive Management Team Strategic Planning Session Page 4 July 22, 2009 In addition to these suggestions, the group discussed additional ideas such as incorporating some elements into the upcoming employee recognition program. Finally, the group discussed additional morale boosting suggestions: . The EMT discussed creating an OCSD shop with logo shirts, mugs, etc. that could be purchased by employees; . Creating an OCSD calendar with monthly themes and pictures of staff; • Bring back an employee activity committee (or similar) and seek connections to the employee recognition program; . Hiring a space planning consultant to identify workplace upgrades (restrooms, cubicles, etc.) and . Looking into a gate or opening on the river levee so employees can take walks on the bike path. 2010 strategic plan update The group reviewed the status of current goals and levels of service and identified the elements as either being completed or on track for completion by the target date. Two items the group noted: • The goal of"reclaiming the SARI line flows" will be put on hold (as opposed to canceling) pending state review of water recycling policy. . The level of service identifying odor complaints at P2 was off significantly and the group discussed whether the target number should be higher when the plan is updated in November. Suggestions for new strategic coals Looking ahead to the 2010 strategic plan update, the EMT brain stormed on ideas for new goals and identified the division or person responsible. Goal Lead Division or Person RebrandingsQg§D, , ,.,, Public Affairs Replacing ro tax revenue with rates Lorenzo Tyner Rc5lugin Safety Achieving C®IOSHA Voluntary Protection Program eligibility Safety in three years Mark Dub_qp, Staff procedures Human Resources • Succession management • Core values • Leadershi develo ment _ �.. Human R sowces s 2009 Executive Management Team Strategic Planning Session Page 5 July 22, 2009 Opportunlitisslooltimoocurrent ues Lorw=T r • '��dmple r actiifres�;,.gins p �1 .. Gears iiiiii in W'W I ffl Chaim d • Asset management realignment •:.::_Pq?SiO4, afrbg.139��LtS3t�.bl=b'U=.�PtgGent. Opportunities for greater efficiency Mark Dubois • Being more competitive with the private sector (simulated bids to understand costs) • As identified in the budget process, seeking opportunities to increase business efficiency (industrial engineering) Risk mitigatpn, Lorenzo Tyner Strategic approach to labor relations and negotiations Lorenzo Tyner • Dealing with the big issues: health care and retirement costs • Getting comparison data from other agencies • Understanding the political and economic environment Process and timeline for the 2010 strategic Plan update The 2010 strategic plan update will require a new set of goal statements and issue papers as well as a draft plan and workshop materials for the Board of Directors and Steering Committee. The EMT proposed the following schedule for the plan update: Jul —August Review issues and goals with EMT managers and supervisors. September Present proposed goals to steerirm commNtee. November Board consideration of the 2010 strategic plan update Succession management Jeff Reed provided an update on the succession management program and the group discussed the 13 leadership competencies. Following the discussion, the EMT decided to make the following changes to the list of competencies: r 2009 Executive Management Team Strategic Planning Session Page 6 r July 22, 2009 • Collapsing oral communication and listening into one category; • Adding to organizational awareness, working within organizational structure; • Ability to perform under pressure and stressful situations and r • Degree that an individual is a self-started, motivator and is a risk-taker. Management and organizational issues The EMT discussed a number of organizational issues, with a focus on human resources. The HR related issues were: r Personnel investigations—creating a step for HR to facilitate discussions between the employee and their supervisor prior to a formal complaint investigation and reinforcing the message with manager and supervisors that it is their responsibility to deal with the issues and not just send to HR. If the supervisor cannot deal with the issue, HR will intervene. • Outreach —HR will play a more visible role in the organization with involvement in events r (volunteers), staff meetings and bereavements. The overall goal is for HR to be more transparent and humanistic. Also HR will also look into: o Do a customer service satisfaction survey; o Convene an employee advisory committee and o Create service levels and a suggestion box. Management compensation philosophv r The EMT discussed the new management compensation philosophy: • Compensation will be based on the market and tied to leadership, performance, core values and strategic goals; • Compensation is competitive: comparisons based on market median including base pay, non-base pay, and benefits (total compensation package); • There will be differentiations in compensation between the manager, supervisor and their subordinates. The general manager committed to at least 5 percent distance between the two. r Improving hiring practices Jeff Reed explained that improvements to the District's hiring practices are an element of the r new human resources strategic plan. In addition, with some good ideas coming from one of the leadership academy project teams, HR committed to meeting with them to follow-up on their suggestions for improving hiring practices. Reed also reemphasized HR's new onboard buddy program (identified early). Labor negotiations r The EMT discussed upcoming labor negotiations and their approach. Some key points from the discussion were: • Overall goal is to have greater EMT involvement in the process; • Inform the bargaining units that they need to provide specifics, not just a laundry list of their wants; r 2009 Executive Management Team Strategic Planning Session r Page 7 July 22, 2009 r • As mentioned earlier, negotiations should be more strategic, in the context of the current political and economic climate and • Managers need to be strategic as well thinking about the issues that need to be r addressed in the upcoming SPMT negotiations. Other issues Finally, the EMT discussed a number of miscellaneous matters: • Jim Herberg discussed a District-wide project management office (PMO)for all projects. Herberg will assemble a team to identify the best way to make this happen and bring the issue to a future EMT meeting for discussion. • Ed Torres discussed the need to be prepared for possible Federal funding of a large- scale fuel cell power generator. The group decided to ask staff or hire a consultant (not to exceed $50,000)to prepare a conceptual plan demonstrating OCSD's ability to deploy fuel cell power generation onsite. r • Jim Herberg presenting information on growth and demographic changes in Orange County and how it will impact capacity. Herberg explained that based on flow projections, it appears OCSD has adequate capacity through 2030, with or without SAWPA and IRWD • Ed Torres raised the issue of treating urban runoff and how the county may request that we remove the 4 mgd threshold. The group decided that this topic merits more r discussion so Torres will bring forward an agenda report to a future EMT meeting. JDR:RPG:gg Wkepllgmu1110\110Mmin1RUTH JAMES1 alus RepMsIa BC6nAEe1T Planning session RepOA July 09.d= r r r r r r r r r � ~__. n ORANGE COUNTY SANITATION DISTRICT Memorandum DATE: June 17, 2009 TO: Chair and Members of the Board of Directors Orange County Sanitation District FROM: James D. Ruth, General Manager Orange County Sanitation District SUBJECT: 2009-10 Budget Update I am pleased to submit this update to the Orange County Sanitation District (OCSD) 2009-10 approved operating budget and capital improvement program. This document provides a framework for OCSD activities during the second year of the adopted two-year budget for fiscal years 2008-09 and 2009-10 and serves as a source of information for the OCSD's Board of Directors, and our employees and ratepayers. At the May and June Administration and Operation Committee meetings, staff presented budget information that described the OCSD's overall budget, including its revenues, expenditures as well as opportunities for significant re-budgeting and operational efficiencies. In addition to providing resources to support the processing of nearly 230 million gallons of wastewater each day from 2.5 million residents and businesses, the Strategic Plan focused on four distinct program areas: Biosolids, Air Quality, Odor Control, Groundwater Replenishment (GWR) System. This budget update also addresses rising treatment and chemical costs, aging infrastructure and increased regulatory requirements. As a result, the operating budget is increased by 5.9 percent above what was approved last year as the second year of the adopted two-year budget. Although the printed budget document was provided to the Board Members in June, at the Committee meetings, I expressed my desire to include additional budget adjustments. I believe that these adjustments prudently address the OCSD's lower than anticipated revenues, specifically from capital capacity facilities charges, property tax revenues and interest income. r Board of Directors Page 2 June 17, 2009 r In this memorandum, I will summarize three levels of budget adjustments I propose to include in the budget update: r 1) Re-budgeting efforts currently included in the printed budget update 2) Operational efficiencies included in the printed budget update 3) Additional proactive measures to further address declining revenues 1) Re-budgeting —$6.0million After completing the budget process, staff identified areas where expenditures are less than the budgeted amount. Although these expenditures have fluctuated in the past, we now feel that there has been sufficient experience that allows us to reduce the budget without significant risk to operations. These areas include: a) Digester Cleaning —$1.6 million r b) Chemical Purchases— $1.4 million c) Solids Disposal—$1.4million d) Utilities— $1.1 million e) Repairs and Maintenance—$0.3 million f) Professional Services and Administrative Expenses—$0.2 million r 2) Operational Efficiencies —$2.0 million As part of the annual budget process, staff is tasked with reviewing its existing activities for opportunities to realize operational savings by changing existing processes. Staff identified five major areas where operational efficiencies can be implemented: a) Professional/Contractual Services—$700,000 b) Staffing Efficiencies —$500,000 c) Training —$300,000 d) Computer Equipment and Service Agreements—$200,000 e) Other Expenditures—$200,000 3) Proactive Measures —$3.0 million To ensure that the decline in revenue has been adequately addressed, I propose additional reductions beyond those initially included in the budget presented to the Board. These reductions include: a) Reduction in Temporary Staffing —$1.0 million .+ The budget is reduced from $1.5 million to 0.5 million. Departments will be required to prioritize and absorb the existing workload. b) Reduction in Vacancies—$1.0 million The initial budget included an increase of seven full-time equivalent positions. r r r Board of Directors r Page 3 June 17, 2009 r I propose to keep the current authorized staffing level flat by reallocating existing vacancies to address new operation and maintenance workload. r c) Reduction in Professional Services—$0.7 million The OCSD spends approximately $3.5 million in this area. I propose a 20% reduction by eliminating various discretionary efforts. d) Reduction in Other Expenditures— $0.3 million Various supplies, materials and conferences will be reduced. I believe that the budget, with these proposed adjustments, sets out a financial and operational plan that provides efficiency and stability for OCSD. r JDR:gg H Wry IIMIIO�IT,JN.ffblMwme]W910oBW nBOOn3WFf010 B,tlpe,UpWUEx r r r r r r r r