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HomeMy WebLinkAbout02-11-2009 Administration Committee AgendaAGENDA REGULAR MEETING OF THE ADMINISTRATION COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, FEBRUARY 11, 2009, AT 5:00 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 www.ocsd.com PLEDGE OF ALLEGIANCE DECLARATION OF QUORUM PUBLIC COMMENTS REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES CONSENT CALENDAR ITEMS (1) 1. Approve minutes of the December 10, 2008, meeting of the Administration Committee. ACTION ITEMS (2 - 3) 2. a) Approve an additional one-year renewal period to the Purchase Order Contract with Lance, Soll & Lunghard, Certified Public Accountants for internal auditing services for the period of March 1, 2009 through February 28, 2010, in an amount not to exceed $58,670; and, b) Direct Lance, Soll & Lunghard to perform specific internal auditing assignments as the Administration Committee deems necessary. February 11, 2009 Page 2 3. Recommend to the Board of Directors to approve the FY 2009-10 budget assumptions and direct staff to incorporate these parameters in preparing the FY 2009-10 budget update. INFORMATIONAL ITEMS (4) 4. Change in telephone company service provider. CLOSED SESSION During the course of conducting the business set forth on this agenda as a regular meeting of the 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, pursuant 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) employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. Convene in closed session. 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 regular Administration Committee meeting is scheduled for Wednesday, March 11, 2009, at 5 p.m. February 11, 2009 Page 3 H:\dept\agenda\Admin Committee\2009\0209\03.021109 Admin Agenda.docx Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the District’s Administrative offices not less than 72 hours prior to the meeting date and time above. All 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 Administration Committee on specific agenda items or matters of general interest. As determined by the Chair, speakers may be deferred until 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 Adjournment: This meeting may be adjourned to a later time and items of business from this agenda may be considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section 54955 (posted within 24 hours). Accommodations for the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board‘s office at (714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Notice to Committee Members: For any questions on the agenda or to place any items on the agenda, Committee members should contact the Committee Chair or Clerk of the Board ten days in advance of the Committee meeting. Committee Chair: Mark Waldman (714) 827-1969 Committee Secretary: Lilia Kovac (714) 593-7124 lkovac@ocsd.com General Manager: Jim Ruth (714) 593-7110 jruth@ocsd.com Assistant General Manager Bob Ghirelli (714) 593-7400 rghirelli@ocsd.com Director of Finance and Lorenzo Tyner (714) 593-7550 ltyner@ocsd.com Administrative Services Human Resources and Employee Jeff Reed (714) 593-7144 jreed@ocsd.com Relations Manager Page 1 ADMINISTRATION COMMITTEE Meeting Date 02/11/09 To Bd. of Dir. AGENDA REPORT Item Number 2 Item Number Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: RENEWAL OF THE INTERNAL AUDITING CONTRACT GENERAL MANAGER'S RECOMMENDATION (1) Approve an additional one-year renewal period to the Purchase Order Contract with Lance, Soll & Lunghard, Certified Public Accountants for internal auditing services for the period of March 1, 2009 through February 28, 2010, in an amount not to exceed $58,670; and, (2) Direct Lance, Soll & Lunghard to perform specific internal auditing assignments as the Administration Committee deems necessary. SUMMARY At the direction of the Committee in FY 2005-06, staff solicited a Request For Proposal (RFP) to provide 600 hours of Internal Auditing Services, with the option of auditing the following two years at the Committee’s discretion. The RFP was submitted to eight firms specializing in providing auditing services for local governments. After completion of the RFP process, Lance, Soll & Lunghard’s (LSL) proposal was deemed to be the most qualified, and responsive to the Sanitation District’s needs, and LSL was selected to serve as the District’s internal auditors. Based on the high level of work performed by LSL, and their willingness to conform to the Committee’s reporting timelines, the Administration Committee renewed their contract in February 2007, and again in February 2008. LSL is currently completing an audit on the collection and remittance of capital facilities capacity charge fees by member agencies on behalf of the Sanitation District that is not expected to be completed until March 2009. At this time, staff is again recommending that their contract be renewed for an additional year beyond the original three-year agreement at the same not-to-exceed amount of $58,670 proposed during the initial contact year, and the following two option renewal years. Recommended Areas to Be Considered in Future Internal Audits Although staff has no knowledge of any improprieties or irregularities within the accounting or operational activities of the Sanitation District, following are typical areas the Committee may want to consider in future internal audits: 1. Audit large contractor’s progress payments for accuracy and appropriateness. This would mean auditing their books and records to the progress payments. 2. Contract Management. 3. Proper billings to end-users, including permittees. 4. Expenditures conform to District Ordinances, Resolutions, policies and procedures. 5. Employee Expense Reports conform to Board Ordinances and Resolutions. Page 2 6. Employee Salaries and Benefits conform to Board Ordinances and Resolutions. 7. Credit Card purchases conform to policies and procedures. 8. District Contributions are Board approved. 9. District memberships conform to policies and procedures. 10. Comprehensive review of all key Accounting policies, procedures, and processes to ensure that all related internal controls are well designed, properly implemented, and adequately maintained. Staff recommends that the Committee direct the Sanitation District’s contracted internal auditors to perform an internal audit review of the first item listed above. Staff believes that auditing large contractors for appropriate billings could generate the largest possible return on funds spent on contracted internal auditing services. PRIOR COMMITTEE/BOARD ACTIONS February 2008 - Administration Committee approved the second year of the two-year renewal option on the Purchase Order Contract with Lance, Soll & Lunghard, Certified Public Accounts, to serve as the District’s contracted internal auditors for fiscal year 2006-07, for the period of March 1, 2008 through February 28, 2009, for an amount not to exceed $58,670. February 2007 - Administration Committee approved the first year renewal of the two-year renewal option on the Purchase Order Contract with Lance, Soll & Lunghard, Certified Public Accounts, to serve as the District’s contracted internal auditors for fiscal year 2006-07, for the period of March 1, 2007 through February 28, 2008, for an amount not to exceed $58,670. February 2006 - Board approved a Purchase Order Contract with Lance, Soll & Lunghard, Certified Public Accountants, to serve as the Sanitation District’s contracted internal auditors for fiscal year 2005-06, for the period of March 1, 2006 through February 28, 2007, for an amount not to exceed $58,670, and with an option to renew the contract for two one-year periods based on approval by the Administration Committee. ADDITIONAL INFORMATION An Evaluation Team comprised of the Director of Finance, Controller, and Accounting Manager determined that Lance, Soll & Lunghard (LSL) was the best qualified firm to serve as the Sanitation District’s internal auditors based on the following observations: 1. The firm has provided auditing services to local governments for over 75 years, and has consistently been named one of the “Top Accounting Firms” in Orange County by the Orange County Business Journal. 2. They provided extensive examples on internal auditing services provided to other governmental clients. 3. They described in detail their thoroughness in conducting internal auditing services. Based on the Evaluation Team’s recommendation, the Committee approved the selection of LSL to serve as the Sanitation District’s internal auditors. Page 3 During FY 2005-06, LSL completed an internal review of the Sanitation District’s capital improvement program’s procurement procedures and related internal controls, and issued their independent account’s report to the Committee in October 2006. During FY 2006-07, LSL completed an internal review of the Sanitation District’s agreement with the Orange County Water District (OCWD) regarding the construction of the Groundwater Replenishment System, and audited the subsequent billings from OCWD to ensure conformity with the agreement. This proposed purchase order contract complies with authority levels of the Sanitation District’s Delegation of Authority. This item has been budgeted. JDR:LT:MW Page 1 ADMINISTRATION COMMITTEE Meeting Date 02/11/09 To Bd. of Dir. 02/25/09 AGENDA REPORT Item Number 3 Item Number Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance & Administrative Services SUBJECT: CONSIDERATION OF BUDGET ASSUMPTIONS AND BUDGET CALENDAR FOR PREPARATION OF THE FY 2009-10 BUDGET UPDATE GENERAL MANAGER'S RECOMMENDATION Approve the FY 2009-10 budget assumptions and direct staff to incorporate these parameters in preparing the FY 2009-10 budget update. SUMMARY For the budget update process, the Administration Committee establishes the Budget Assumptions and approves the Budget Calendar. Staff will make a brief presentation at the Committee meeting. PRIOR COMMITTEE/BOARD ACTIONS None. ADDITIONAL INFORMATION Currently, there are no proposed changes to the District Fiscal Policy. The Fiscal Policy is published in the FY 2008-09 and 2009-10 Budget document (Section 3, Pages 1-8), and is available on the District’s website. ATTACHMENTS 1. Preliminary Budget Assumptions (Page 2-5) 2. Budget Update Calendar (Pages 6-8) JR:LT:MW FY 2009-10 Preliminary Budget Assumptions Page 2 Economic Assumptions · Inflation for Orange County in FY 2009-10 is projected to be 2.9 percent based on the 2009 projected percentage change in consumer price index obtained from the December 2008 Economic and Business Review report prepared by Chapman University. This approximates the 2.4 percent inflation factor that was used in the FY 2009-10 budget. Revenue Assumptions · Year two of the five-year Sewer Service Fee Rate Schedule has been ratified by the Board. · For FY 2009-10 the District-wide rate for a single-family residence (SFR) will increase 10.0% to $221.00. · Note that each $1 increase in the SFR rate generates approximately $900,000 per year. · Notification of a rate increase is not required as the rate increase will not exceed 10%; the maximum amount possible for the second year of the five-year schedule that was included in the last notification. · The capital facilities capacity charge (CFCC) fee captures only those infrastructure costs that relate to additional capacity. Other infrastructure costs such as improved treatment, rehabilitation, refurbishment, and replacement will be supported through user fees. The rate study that was completed in April 2008 validated the CFCC fee methodology as equitable and confirmed that an appropriate share of system costs would be recovered from new development. Revenues will be budgeted to reflect 4,000 Equivalent Dwelling Unit (EDU) connections, the average of the past ten years. · Permit user rates for flow, BOD, and SS will follow the most recent Rate Study. · Annexation fees capture both the net current assets and the equivalent property tax allocations totaling $4,235 per acre. · Annexable property in the District’s service area sphere is minimal; consequently, no FY 2009-10 income from annexation fees is anticipated. · Property tax revenues in FY 2009-10 are proposed to increase 3.5% over FY 2008-09. A 3.5% increase in total assessed value (AV) will generate approximately $2.3 million over the prior year’s estimated taxes. A 2% annual increase in Assessed Value is authorized by the state constitution and is included in the increases noted above. The additional increase in assessed value is from authorized increases to market value when property is sold at a higher value. · Earnings on the investment of the District’s operating cash and reserves will be budgeted at 1.50% of the average cash and investment balance projected for the fiscal year. FY 2009-10 Preliminary Budget Assumptions Page 3 · A $120 million COP debt issuance is scheduled for FY 2009-10 in order to assist in the funding of the $228.9 million CIP outlay scheduled for FY 2009-10. Operating Assumptions · Dry weather urban run-off will continue to be treated for free up to 4 mgd with a 10 mgd maximum. · All existing secondary treatment facilities will be operated and maintained at full capacity during FY 2009-10. · Interim short-term disinfection facilities will be operated at optimal performance levels that will allow the reduction of $2 million in operating costs below 2008 levels. · Operating expenses are expected to approximate the adopted FY 2009-10 budget. · Average daily flow for FY 2009-10 is projected to be the same as the FY 2008-09 projected flow of 230 mgd. This is 6 mgd below the Draft FY 2009-10 Capital Facilities Master Plan projection, but is 15 mgd above the actual for the first 5 months of the current year. The final actual flow for FY 2007-08 was 221 mgd. · Staffing requests, not to exceed 1% growth, are anticipated for FY 2009-10 and will be approved only to the extent that total FTEs do not exceed the FY 2009-10 authorization level of 648.0 FTEs. · Vacant positions as of 12/31/07 have been projected and expensed at step 3 for FY 2009-10. New positions for FY 2008-09 have been projected at 100% of step 2 for FY 2009-10. · A 3% vacancy factor has been budgeted for FY 2009-10 for authorized positions to account for time spent for recruitment and turnover. The actual vacancy factor for 2007-08 was approximately 5%. · MOUs for OCEA, Local 501, and SPMT were completed in FY 2006-07 and will be considered in the FY 2009-10 budget. Salary adjustments based on the MOUs include a range adjustment of 4% that will be effective for all employees as of the first pay period beginning in July each year. Additionally, all employees not already at the top step will be budgeted to receive a 5.0% step/range increase. · The Employer required OCERS contribution is estimated at 25.45% (24.84% was included in the adopted FY 2008-09 budget). This includes the OCSD pickup of 3.5% of the employee’s required contribution (current level of benefit). · Other employee benefits and insurances are assumed to increase 10% over the FY 2008-09 projections. · An amount equal to half of one percent of the Operating materials and supplies budget will be a contingency for prior year re-appropriations. Since the current year’s budget lapses on June 30, a contingency is needed in the succeeding budget year for goods or services ordered at the end of one budget year but not delivered until the following year. FY 2009-10 Preliminary Budget Assumptions Page 4 · An amount equal to one-half of one percent of the Operating materials and supplies budget will be the General Manager’s contingency budget. These funds will be allocated to appropriate line items during the year after requests and justifications for unanticipated needs are approved by the General Manager. Use of monies from the General Manager’s contingency budget requires an approved Operating Budget Transfer Form. · Resource needs for strategic initiatives will be included in the budget. Capital Improvement Program Assumptions · The FY 2009-10 cash flow budget based on the Validated Capital Improvement Program (CIP) is the target. · The baseline CIP cash flow for FY 2009-10 is $228.9 million compared to $373.7 million in FY 2008-09. · The FY 2009-10 CIP budget will only increase for critical projects which were not previously identified in the Strategic Plan Update. · For the first half of FY 2008-09, $126.5 million of the $373.7 million CIP budget, approximately 33.9%, was expended. Debt Financing · The District will issue new debt in the form of Certificates of Participation as needed to fund the CIP and to maintain reserves. · A $120 million COP debt issuance is scheduled for FY 2009-10 in order to assist in the funding of the $228.9 million CIP outlay scheduled for FY 2009-10. · Debt will only be used for CIP and capital expenses, not for operating expenses. · Capital financing plans which include fewer future borrowings and higher user fees after FY 2009-10 will be considered. · Borrowing is proposed only for facilities which do not add capacity and that are funded by all users for replacement, rehabilitation, and improved treatment. Reserve Assumptions · The current reserve policy was reviewed by Public Resources Advisory Group and the Board during FY 2003-04. No changes were proposed and direction was given to continue to maintain reserve levels at a level that is adequate to offset exposure to variable rate COPs due to interest rate increases. · The current reserve policy is summarized as follows: ► A cash flow reserve will be established to fund operations, maintenance and certificates of participation expenses for the first half of the fiscal year, prior to receipt of the first installment of the property tax allocation and sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve will be established as the sum of an amount equal to FY 2009-10 Preliminary Budget Assumptions Page 5 six months operations and maintenance expenses and the total of the annual debt (COP) service payments due in August each year. ► An operating contingency reserve will be established to provide for non- recurring expenditures that were not anticipated when the annual budget and sewer service fees were considered and adopted. The level of this reserve will be established at an amount equal to ten percent of the annual operating budget. ► A capital improvement reserve will be maintained to fund annual increments of the capital improvement program. The long-term target is for one half of the capital improvement program to be funded from borrowing and for one half to be funded from current revenues and reserves. With this program in mind, the target level of this reserve has been established at one-half of the average annual capital improvement program through the year 2020. ► Catastrophic loss, or self-insurance, reserves will be maintained for property damage including fire, flood and earthquake, for general liability and for workers' compensation. These reserves are intended to work with purchased insurance policies, FEMA disaster reimbursements and State disaster reimbursements. The potential infrastructure loss from a major earthquake, of which the District currently has no outside insurance coverage, has been estimated to be as high as $1.3 billion. The level of this reserve has been set at $57 million should such a catastrophic event occur. This reserve amount will assist the District with any short-term funding needs until Federal and State assistance becomes available. ► Accumulated capital funds will be set aside for certain specific, short-term capital improvements as the need and availability arise. ► A capital replacement/renewal reserve policy has been established to provide thirty percent of the funding to replace or refurbish the current collection, treatment and disposal facilities at the end of their useful economic lives. The current replacement value of these facilities as of 2006 is estimated to be $3.05 billion for the collection facilities and $2.51 billion for the treatment and disposal facilities. The initial reserve level has been established at $50 million, which will be augmented by interest earnings and a small portion of the annual sewer user fee, in order to meet projected needs through the year 2030. ► Provisions of the various certificate of participation (COP) issues require debt service reserves to be under the control of the Trustee for that issue. These reserve funds are not available for the general needs of the District and must be maintained at specified levels. The current level of required COP service reserves is projected to be $96.0 million. ► Accumulated funds exceeding the levels specified by District policy will be maintained in a rate stabilization fund. These funds will be applied to future years' needs in order to maintain rates or to moderate annual fluctuations. There is no established target for this reserve. FY 2009-10 Budget Update Calendar Page 6 Tasks Responsibility Event/Due Date PHASE I – BUDGET PREPARATION CIP – Call for Projects Issued Engineering 09/30/08 CIP – Project Description/Justification and CLR Forms Submitted to Engineering Planning CIP Budget Coordinators 10/17/08 CIP – Training for FY 2009-10 CIP Business Case Preparation (as needed) Jim Burror Weeks of 10/20/08 and 10/27/08 CIP – Business Cases Submitted to Engineering Planning CIP Budget Coordinators 10/31/08 CIP – New Project Presentations to Managers CIP Budget Coordinators Week of 11/10/08 CIP – New Project Recommendations to EMT Managers Week of 12/08/08 CIP – Database, Forms & Instruction Manual Developed CIP Process Team 12/15/08 CIP – New Project Presentations to EMT CIP Budget Coordinators Week of 12/15/08 CIP – CIP Database Opened for Input Financial Planning 01/12/09 CIP - Budget Preparation Training (CIP Database) Financial Planning As Needed CIP – New Project “Go/No Go” Decisions EMT Week of 01/12/09 Preliminary Budget Assumptions Identified. Financial Planning 01/19/09 Preliminary Budget Assumptions Presented to EMT Financial Planning 01/26/09 Draft Budget Calendar Presented to EMT Financial Planning 01/26/09 Preparation for Budget Kickoff / Training Session: · Develop line item worksheets with the adopted 09/10 budget · Prepare/update budget instruction manual Financial Planning 01/23/09 Budget Kickoff / Training Session: · Distribute budget manual update · Conduct budget training session · Distribute budget worksheets for each division Financial Planning 01/27/09 Budget Assumptions Presented to Admin Committee Admin Services Dept. 02/11/09 Mid-Year Financial Report to Admin Committee Admin Services Dept. 02/11/09 Operating Divisional Budgets: New Position/Additional Employee Decision Packages Due to Financial Planning (Edith Smith, Ext. 7568) Divisional Budget Coordinators 02/13/09 Operating Divisional Budgets: Equity Adjustment & Position Reclassification Decision Packages Due to Human Resources (Ann Sullivan, Ext. 7143) Divisional Budget Coordinators 02/13/09 FY 2009-10 Budget Update Calendar Page 7 Tasks Responsibility Event/Due Date Capital Equipment Budget: Vehicle Capital Equipment Decision Packages Due to Fleet Services (Chuck Forman, Ext. 7647) Divisional Budget Coordinators 02/13/09 Computer Equipment Decision Packages Due to Information Technology (Rich Castillon, Ext. 7283) Divisional Budget Coordinators 02/13/09 Division Budget Update Packages Due to Finance: · Update 2008-09 projected costs · Proposed operating costs for 2009-10 · Operating Budget Expense Detail · Preliminary Contractual Material & Services Form · Capital equipment decision Packages (other than computer and vehicle decision packages which were due on 02/13/09) · New program decision packages (Financial Planning will compile this information into packages for use during the budget review process.) Divisional Budget Coordinators 02/20/09 Mid-Year Financial Report to Board Administrative Svcs. 02/25/09 Complete the Compilation of the Preliminary Division Budget Update Packages Financial Planning 02/25/09 CIP – Project Request with Project Information Entered in CIP Database Completed CIP Budget Coordinators 02/27/09 CIP – New Project Numbers Assigned Eng. Planning Division 03/06/09 CIP – Completed CIP Budget Delivered to Finance CIP Budget Coordinators 03/13/09 · Department Budgets – Update the department text from the Executive Summary: o General Manager, pages 20 – 21 o Administrative Services, pages 22-23 o Technical Services, pages 24-25 o Engineering, pages 26-27 o O&M, pages 28-30 Department Budget Coordinator 03/13/09 PHASE II - BUDGET REVIEW CIP - Review Workshop Financial Planning & Department Heads 01/12/09 CIP - Resource Availability Review Engineering & O&M 02/03/09 Divisional Budgets - Distribution of Preliminary Line Item Requested Budget Updates to Department Heads and Managers along with Analysis/Questions for Review Financial Planning 03/04/09 FY 2009-10 Budget Update Calendar Page 8 TASKS Responsibility Event/Due Date CIP – Committee Review Operations Committee 03/04/09 Operating Budget - Budget Review Meetings with Finance and Department Representatives Financial Planning & Department Representatives 03/05/09-03/11/09 Operating Budget – Information on Position Upgrades & Reclassifications Submitted to the General Manager Human Resources 03/13/09 Operating Budget – Recommendations to General Manager Financial Planning 03/16/09 Final Operating Budget – General Manager Review of Budget Update Recommendations Financial Planning, GM, & Department Heads 03/19/09-03/25/09 CIP – General Manager and Designee(s) Approval General Manager 03/26/09 CIP Schedules Through 2020 Completed Financial Planning 04/09/09 PHASE III - BUDGET PRESENTATION Operating Budget – Presentation of Preliminary Budget Update by Division/Department to EMT Financial Planning 04/13/09 CIP – Operations Committee Review of FY 2009-10 Budget Engineering 04/01/09 Operating Budget Update – Overview to Administration Committee Financial Planning 04/08/09 CIP - Final CIP Budget Document Preparation and Incorporation into Final Budget Document Financial Planning 04/19/09 Initial - Proposed Budget Update Finalized Financial Planning 04/27/09 Initial – Proposed 2009-10 Budget Update Presented to Committees CIP – Engineering Operating – Finance Ops – 05/06/09 Admin – 05/13/09 General Manager’s Budget Message Completed GM / Financial Planning 05/06/09 Approval of General Manager’s Budget Message General Manager 05/11/09 Final - Proposed Budget Update to Printer Financial Planning 05/13/09 PHASE IV - BUDGET DELIBERATIONS Final Draft - Proposed 2009-10 Budget Update Presented to Committees Financial Planning Ops – 06/03/09 Admin – 06/10/09 Public Hearing & Board Adoption Board of Directors 06/24/09 PHASE V – DISTRIBUTION OF BUDGET Final line item budget and equipment budgets distributed to Departments Financial Planning 07/06/09 Form No. DW-102.3 Revised: 03/01/07 Page 1 ADMINISTRATION COMMITTEE Meeting Date 02/11/09 To Bd. of Dir. AGENDA REPORT Item Number 4 Item Number Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CHANGE IN TELEPHONE COMPANY SERVICE PROVIDER GENERAL MANAGER'S RECOMMENDATION Information only. SUMMARY The Sanitation District’s current voice and data agreement under the State of California negotiated CALNET contract with AT&T has expired. Staff has determined that it is more beneficial for the Sanitation District to use the County of Orange agreement with TW Telcom, Inc., rather than renew the CALNET agreement for the minimum two-year commitment. The County of Orange Agreement expires in one year. Based on our satisfaction with the services provided, we will have the option to renew or seek other competitive bids. This change is anticipated to take place at the end of March 2009. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The County of Orange has negotiated a very favorable contract with TW Telcom, Inc., that will offer the Sanitation District a savings of up to 50% ($55,000) of our current expenditures with AT&T. The contract also includes a service level component by offering "service credits" for downtime exceeding pre-negotiated Service Level Agreements. Staff reference checks have 100% positive responses from current TW Telcom customers. JDR:LT:RC:PB