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HomeMy WebLinkAbout06-10-2009 Administration Committee Agenda AGENDA REGULAR MEETING OF THE ADMINISTRATION COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, JUNE 10, 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 - 6) 1. Approve minutes of the May 13, 2009, meeting of the Administration Committee. 2. Recommend to the Board of Directors to Adopt Resolution No. OCSD 09-XX, Adopting the Records Management Program Policy and Procedures, Retention Schedule and Record Series Definitions, Authorizing Destruction of Obsolete Records, and Repealing Resolution No. OCSD 08-06. 3. Recommend to the Board of Directors to: a) Authorize the General Manager to enter into contracts for Temporary Employment Services (Specification No.CS-2009-421 BD) with temporary service firms for a total amount not to exceed $450,000 per year, for a one- year period (July 1, 2009 through June 30, 2010), with a one-year renewal option; b) Approve an annual contingency of$50,000 (11%); and, June 10, 2009 Page 2 c) Authorize the General Manager to add or delete such firms as necessary to meet work requirements as identified by the Human Resources Division. 4. Recommend to the Board of Directors to adopt Resolution No. OCSD 09-XX, Establishing Use Charges for the 2009-10 Fiscal Year Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. 5. Recommend to the Board of Directors to adopt Resolution OCSD 09-XX, Authorizing Certain District Officers to Execute Documents Necessary to Obtain Purchasing Card Accounts with Commerce Bank, N.A. 6. Recommend to the Board of Directors to approve an amended Memorandum of Understanding to the California State Association of Counties Excess Workers' Compensation Program effective March 6, 2009, in a form approved by General Counsel. ACTION ITEMS (7 - 8) 7. Recommend to the Board of Directors to: a) Renew the District's Excess General Liability Insurance for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $370,498; b) Renew the District's Excess Workers' Compensation Insurance for the period July 1, 2009 through June 30, 2010, at a rate not to exceed .0028 (estimated premium of$180,687 based on estimated 2009-10 payroll); c) Renew the District's All-Risk Property and Flood Insurance for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $468,394; and, d) Renew the District's Boiler & Machinery Insurance Program for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $19,000. 8. Recommend to the Board of Directors to approve the proposed revisions to the Operating, Capital, Debt/COP Service and Self-Insurance Budgets for FY 2009-10, as follows: Originally Proposed Adopted Budget Revised Budget FY 2009-10 FY 2009-10 Operations, Maintenance &Working Capital $154,038,030 $156,116,920 Worker's Compensation Self Insurance 535,000 718,000 General Liability and Property Self-Insurance 1,606,200 2,106,200 Capital Improvement Program 228,907,000 259,068,000 Debt/COP Service 84,297,030 77,076,280 TOTAL $469,383,260 $495,085,400 June 1O. 2008 Page INFORMATIONAL ITEMS `-' 9. Internal Audit Report— Review of the Collection and Remittance of Capital Facilities Capacity Charges bv Member Agencies. CLOSED SESSION 66ring 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 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 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 oonnnnuniooUonn or supplemental agenda items, if any. Admournment: The next regular Administration Committee meeting is scheduled for Wednesday, July 8. 2009. at p.m. June 10, 2009 Page 4 Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the District's Administrative offices not less than 72 hours prior to the meeting date and time above. All 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 Ikovac(cDocsd.com General Manager: Jim Ruth (714)593-7110 jruth(a�ocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rghirelliC@ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Ityner(cDocsd.com Administrative Services Human Resources and Employee Jeff Reed (714)593-7144 I reed(aDocsd.corn Relations Manager H:\dept\agenda\Admin Committee\2009\0609\03_061009 Admin Agenda.docx ADMINISTRATION COMMITTEE Meeting Date ToBd.of Dir 06/10/09 06/26/24/09 AGENDA REPORT Item Number Item Number 2 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: UPDATE OF THE DISTRICT'S RECORDS MANAGEMENT POLICIES AND PROCEDURES GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 09-XX, Adopting the Records Management Program Policy and Procedures, Retention Schedule and Record Series Definitions, Authorizing Destruction of Obsolete Records, and Repealing Resolution No. OCSD 08-06. SUMMARY The District's Records Management Program is updated annually to meet new statutory regulations and better serve the operational needs of the District. The Retention Schedule Review Committee, comprised of the Assistant General Manager, Clerk of the Board, Risk Management, General Counsel's Office, and the Records Management Specialist, has reviewed and accepted all the proposed changes. PRIOR COMMITTEE/BOARD ACTIONS The Board of Directors approved the last annual update for the Records Management Program in May 2008. ADDITIONAL INFORMATION The District's Records Management Program documents how long various types of information are to be kept, as dictated by the legal, fiscal, audit or operational needs of the District. As a public agency, there is an obligation to effectively manage and maintain the District's information, most of which is classified as public information. Proposed changes for this update focus on the following: Addition of two New Record Series: • Employee Relations Files — Files involving employee rights, PIP, and Disciplinary Actions. Retention period to be Terminated + 7 years. • Labor Relations Files — Labor/Union relations information, meet and confer notes, Memorandums of Understanding with bargaining units and Page 1 MOU Administration — Retention period to be Life of the Organization and will be combined with the existing record series, Grievance/Employee Complaints. Delete two Record Series: • Meeting Minutes, Board — combined with Meeting Minutes, Board Committees. Both have the same retention period of Life of the Organization. • E-mail Backup Tapes — combined with Computer Backup Tapes and CD Masters, no need for separate record series. Retention period 90 days. A change was approved increasing the retention period for the Record Series, IT Help Desk Tickets from 5 to 7 years, and Record Series, Video Surveillance Files from 30 days to 45 days. Changes were approved to decrease the retention period on Bids, Unsuccessful and Bids, Unsuccessful - Board Review Required from Closed + 6 years to 2 years, in accordance with CA GC 60201 (d) (6 & 11). Various changes were approved for existing Record Series, such as updating the Office of Record or making minor changes to the definition as requested by the business/operational unit. If a copy of the Records Retention Schedule or Record Series Definitions is desired, please contact Juanita Skillman, Records Management Specialist at (714) 593-7129. JDR:LT:RC:JS:lc Page 2 ADMINISTRATION COMMITTEE Meeting Date To Bd.of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 3 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: TEMPORARY EMPLOYMENT SERVICES GENERAL MANAGER'S RECOMMENDATION 1) Authorize the General Manager to enter into contracts for Temporary Employment Services (Specification No.CS-2009-421 BD) with temporary service firms for a total amount not to exceed $450,000 per year, for a one-year period (July 1, 2009 through June 30, 2010), with a one-year renewal option; 2) Approve an annual contingency of$50,000 (11%); and, 3) Authorize the General Manager to add or delete such firms as necessary to meet work requirements as identified by the Human Resources Division. SUMMARY • Orange County Sanitation District's (OCSD) strategic staffing plan includes utilizing full-time and part-time regular employees, contract employees, and temporary employees. This report specifically focuses on temporary services employees who are utilized as a supplement to the regular workforce for accommodating workload demands and workflow fluctuations. • The key advantage associated with temporary staffing is flexibility, since temporary employees are used for adjusting staffing levels quickly and for a limited timeframe. Temporary services are utilized for filling approved budgeted positions due to illness, vacations, leaves of absence, and vacant open positions; in addition, temporary services are also used for approved special projects and budgeted capital improvement projects (CIP) that are non-engineering related. • In June 2004, the Board of Directors awarded contracts for Temporary Employment Services for a period of one year, renewable for a period of four years. The Board of Directors authorized staff to utilize a combination of several firms to supply temporary services to OCSD in order to provide staffing flexibility and to comply with the OCSD Purchasing Resolution. These contracts expire on June 30, 2009. Revised: 06/04/03 Page 1 PRIOR COMMITTEE/BOARD ACTIONS • May 26, 2004 Board Meeting - Temporary Employment Services : (1) Authorize staff to establish contracts for Temporary Employment Services, Specification No. S-2004-181 BD, with temporary service firms for a one year period, July 1, 2004 through June 30, 2005, for a total amount not to exceed $1,700,000 per year; (2)Authorize staff the option of four additional one year contract renewals, cancelable at any time, for a total amount not to exceed $1,700,000 per year; and, (3) Authorize staff to enter into these contracts with temporary service firms, as identified by the Human Resources Department, with the authorization to add or delete such firms as necessary to meet District work requirements. ADDITIONAL INFORMATION The proposed FY09/10 Operating budget for temporary services is $325,000. Based upon staffing needs inputs from all departments, an additional $125,000 is projected for CIP temporary services. The Operating budget and CIP budget account for projected temporary services expenditures of$450,000. A$50,000 increase has been added to the projected budget as a contingency fund for unplanned staffing needs that adversely impact OCSD staffing resources such as Leaves of Absences (LOA's), promotions, and separations of employment. The contingency fund is being requested based on prior committee actions mentioned above where staff had to request periodic increases for the use of temporary services for CIP projects. This was due to CIP projects being initiated and approved by the Board during the fiscal year; however, appropriate staffing was not pre-planned during the initial budget process. There are approximately 17 temporary employees currently assigned to OCSD working predominantly on Information Technology, Engineering and Contracts assignments. Information Technology utilizes temporary staffing to support streamlining and automating of processes throughout the agency so that budgeted headcount does not need to be increased; in addition, the appropriate technical specialists can be utilized to augment existing skill sets as needed and for a limited time. The Contracts division is utilizing temporary staffing to help support the full time staff due to the high amount of CIP projects that OCSD currently has underway. OCSD currently utilizes 11 temporary services agencies to provide temporary workers on an as-needed basis to accomplish OCSD work requirements. The cost of a temporary employee includes the temporary's hourly rate. A mark-up rate is the "payment" to the temporary agency to cover the benefits provided to the temporary worker and overhead costs of the temporary agency. The mark-up rates for the current temporary agencies utilized by OCSD range from 30% to 70%. Temporary staffing utilization has remained consistent over the past five years due to CIP related temporary employment services, which are charged directly to an approved CIP project identified in the budget. These services are included in the individual project budgets. At the May 2004 meeting, the Board Approved the FY04/05 authorization at $1,700,000 because of costs and projections due to capital improvement projects. Due to the ongoing nature of CIP related work, these costs are projected to remain constant over the next few years. OCSD anticipates utilizing additional technical agencies in the future to meet departmental needs; therefore, staff is requesting authorization to enter into similar temporary services agreements with other providers without having to return to the Board to approve each additional staffing agency. Human Resources staff interviews each temporary agency prior to entering into a contract for services to ensure administrative requirements are met for doing business with OCSD. Temporary agencies work with Purchasing to sign applicable forms and agree to the proper insurance and employment practices prior to entering into a contract with Revised: 06/04/03 Page 2 OCSD. The contract includes specific information related to work hours, billing rates, invoicing and payment, confidentiality, etc. The following is a list of current Temporary Employment Agencies under contract with OCSD: Accounting Options: (General, Accounting) Aerotek Inc.: (General, Engineering, Laboratory) AppleOne Employment Services: (General) Hill International, Inc.: (Contract Services) Material and Contract Services - Procurement Services Associates: (Contract Services) On Assignment- Lab Support: (Laboratory) SpeakTECH: (Technical) TekSystems: (Technical) VI-Systems: (Technical) Xyon Business Solutions:(Technical) Award Date: 06/24/09 Contract Amount: $450,000/year Contingency: $50,000/year(11%) JDR:LT:JR:RS:lc Revised: 06/04/03 Page 3 ADMINISTRATION COMMITTEE Meeting Date To Bd. of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 4 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: WASTEWATER RATES FOR SAWPA DISCHARGE GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 09-XX, Establishing Use Charges for the 2009-10 Fiscal Year Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. SUMMARY Currently, OCSD invoices Santa Ana Watershed Project Authority ("SAWPA") on a quarterly basis for the wastewater discharge we receive from the SARI line. Annually, the rates for flow, biochemical oxygen demand (BOD), and total suspended solids (TSS) are calculated based upon the fiscal year budget for treatment and disposal costs and the 1996 Wastewater Treatment and Disposal agreement. The rates calculated for each constituent for Fiscal Year 2009-10 for wastewater discharge are: FLOW $168.27 BOD $258.11 TSS $383.12 The 2009-10 rates are a 3.45% increase over the FY 2008-09 rates due to a 3.45% increase in the treatment and disposal costs in the proposed FY 2009-10 Budget. These rates are separate from the rates charged for additional capacity purchases by SAWPA. PRIOR COMMITTEE/BOARD ACTIONS • June 25, 2008 - Board Adopted Resolution No. OCSD 08-09, Establishing Use Charges for the Fiscal Year 2008-09 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. • July 24, 1996 - Board Approved Wastewater Treatment and Disposal Agreement between the Orange County Sanitation District and the Santa Ana Watershed Project Authority. JDR:LT:MW:AB:lc Page 1 ADMINISTRATION COMMITTEE Meeting Date To Bd. of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 5 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ESTABLISHMENT OF A PURCHASING CARD PROGRAM THROUGH COMMERCE BANK GENERAL MANAGER'S RECOMMENDATION Adopt Resolution OCSD 09-XX, Authorizing Certain District Officers to Execute Documents Necessary to Obtain Purchasing Card Accounts with Commerce Bank, N.A. SUMMARY Commerce Bank, N.A. (Missouri) ("Commerce Bank") proposes to provide Visa or MasterCard purchasing cards for the use of Orange County Sanitation District ("OCSD") staff members, to be used under the direction of those delegated by OCSD Board of Directors, and in conformity with OCSD's existing purchasing resolution, Resolution No. OCSD 07-04. The use of purchasing cards is a well-established procedure for local government purchases. Below are some of the benefits of this program: • Automate Payments — The Commerce Bank Purchasing Card Program allows the District to perform a "commercial card accounts payable run" that allows the payment to suppliers on a per invoice basis, truly automating the AP process. • Reduce Check Usage — The use of the Commerce Bank Purchasing Card Program will reduce processing up to half the number of accounts payable checks thereby reducing check processing costs. • Monthly Revenue Share — Commerce Bank has agreed to rebate the District approximately 120 basis points of the total payment value of all purchases made utilizing their purchasing card program, depending on the actual volume of payments. Commerce Bank has reviewed $112.8 million of vendor payments made by the District over the past year and has determined that of the larger payments made; at least $30 million of these payments were to vendors who accept MasterCard or Visa for payment. Based on this analysis, they estimate the District would be rebated approximately $360,000 to $480,000 on an annual basis. PRIOR COMMITTEE/BOARD ACTIONS None. JDR:LT:MW:lc Page 1 ADMINISTRATION COMMITTEE Meeting Date To Bd. of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 6 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: AMENDMENT TO EXCESS WORKERS COMPENSATION PROGRAM GENERAL MANAGER'S RECOMMENDATION Approve an amended Memorandum of Understanding to the California State Association of Counties Excess Workers' Compensation Program effective March 6, 2009, in a form approved by General Counsel. SUMMARY The Sanitation District is a member of the California State Association of Counties Excess Insurance Authority's ("CSAC EIA") Excess Workers' Compensation Program, which is guided by a Memorandum of Understanding ("MOU"). In March 2009, the EIA's Board approved an amendment to the MOU which (1) somewhat modifies when certain automatic dividends may be paid to members (80% confidence level); and, (2) somewhat modifies a time-period requirement (three consecutive policy periods) before a member can participate in a dividend or be assessed. If the amended MOU is not signed, CSAC EIA will consider the failure to sign as withdrawal from the Program. This MOU pertains to dividends or insurance premium rebates paid back to the District and has no additional cost impact to the District. PRIOR COMMITTEE/BOARD ACTIONS • March 28, 2007 - The Board approved a previous amendment to the Excess Workers Compensation MOU. • June 25, 2003 - The Board originally approved the Sanitation District's entry into the CSAC EIA Excess Workers Compensation program. ATTACHMENT 1. Memo from CSAC EIA Chief Operating Officer JDR:LT:MW:RK:lc Page 1 C SAC EXCESS � Jofrir Pbwercpu4ioiit�rs INSURANCE AUTHORITYAk },areeaee atw,44cue,e A Public Agency March 30, 2009 ACTION REQUIRED BY AUGUST 1, 2009 To: Members, Excess Workers' Compensation (EWC) Program From: Gina Dean, Chief Operating Officer Subject: Amendment to Excess Workers' Compensation Program MOU At the meeting on March 6, 2009, the EIA Board of Directors approved amendments to the EWC Program Memorandum of Understanding (MOU). The amendments were to: 1) eliminate the provision for automatic dividends to be declared on amounts over 90% confidence level upon closure of a policy period, and 2) require a member to be in the EWC Program for a period of time to participate in a dividend or an assessment. For more details and the background on these amendments, please refer to the memorandum circulated to the members regarding the proposed amendments dated October 15, 2008 (also posted on the ETA's website under latest news at www.csac- eia.orq). The amendments to the MOU were circulated to all members of the Program and the County Counsels for review and comment prior to the Board's action. One additional change was made by the Board following a suggestion received through that process. The suggestion was to modify Section 5(c) to include assessments in the provision which says that new members shall become eligible for a dividend upon participation for three consecutive policy periods (not less than 24 months). Enclosed is a clean version of the amended MOU along with two signature pages, for execution by the members. From the ETA's standpoint, the designated representative to the EIA has authority to sign the amended MOU on behalf of the member. However, you may have internal procedures which require approval by your governing board even though the amendments approved by the Board are non-controversial in nature. Members must execute the amended MOU by August 1, 2009. Failure to execute the amended MOU by August 1st will be tantamount to withdrawal from the Program at the next renewal, which is July 1, 2010. Upon execution of the amended MOU, please return one of the signed original signature pages to our office. Please let us know if you have any questions or need additional assistance. Enclosures 3017 Gold Canal Drive, Rancho Cordova,CA 96670•(916)631-7363•FAX(916)631-7112•www.csac-eia.org EXECUTIVE COMMITTEE: Peter W.Huebner Lance,Sposito Peggy Scroggine Ron Harvey Larry Mesa Ran Grassi Scott Schimke Jamea Brown RobartMeacher Jim Sessions David L.Dolenar President Vice President Coluse Contra Costs East Bay Regional El Dorado Golden State Risk Merced Plumes Riverside Stanisious Sierra County Santa Clare County County County Park District County Mgmt.Authority County County County County Chlof Executive Officer:Michael Fleming Legal Counsel Stephen Underwood,Santa Barbara County Chief Operating Officer:Gina Dean Adopted: March 5, 1993 Amended: October 4, 1996 Amended: October 6,2006 Amended: March 6, 2009 MEMORANDUM OF UNDERSTANDING EXCESS WORKERS' COMPENSATION PROGRAM This Memorandum of Understanding is entered into by and between the CSAC Excess Insurance Authority (hereinafter referred to as the "Authority") and the participating members who are signatories to this Memorandum. 1. Joint Powers Agreement. Except as otherwise provided herein, all terms used herein shall be as defined in Article 1 of the Joint Powers Agreement Creating the CSAC Excess Insurance Authority (hereinafter referred to as "Agreement"), and all other provisions of the Agreement not in conflict with this Memorandum shall be applicable. 2. Annual Premium. The participating members, in accordance with the provisions of Article 14(b)(2) of the Agreement, shall be assessed an annual premium for the purpose of funding the Excess Workers' Compensation Program (hereinafter referred to as the "Program"). Annual premiums shall include expected losses for the policy period, including incurred but not reported losses (IBNR), as well as a margin for contingencies based upon a confidence level as determined by the Board of Directors of the Authority (hereinafter Board), and adjustments, if any, for a surplus or deficit from all program policy periods. In addition, the premium shall include program reinsurance costs and program administrative costs, plus the Authority's general expense allocated to the Program by the Board for the next policy period. 3. Cost Allocation. Each participating member's share of annual premium shall be determined pursuant to a cost allocation plan as described in Article 14(b)(2) of the Agreement. The Board approved cost allocation plan is attached hereto as Exhibit A and may be amended from time to time by an affirmative vote of the majority of the Board representing the members participating in the Program. 4. Dividends and Assessments. The Program shall be funded in accordance with paragraph 2 above. In general, the annual premium, as determined by the Board, will be established at a level which will provide adequate overall funding without the need for adjustments to past policy period(s) in the form of dividends and assessments. However, should the Program for any reason not be adequately funded, except as otherwise provided herein, pro-rata assessments to the participating members may be utilized to ensure the approved funding level for those policy periods individually or for a block of policy periods, in accordance with the provisions of Article 14(b)(3) of the Agreement. Pro- Page 1 of 4 CSAC Excess Insurance Authority Amended: March 6, 2009 Excess Workers' Compensation Program MOU rata dividends will be declared as provided herein. Dividends may also be declared as deemed appropriate by the Board. 5. Closure of Policy Periods. Notwithstanding any other provision of this Memorandum, the following provisions are applicable: (a) Upon reaching ten (10) years of maturity after the end of a program period, that period shall be "closed" and there shall be no further dividends declared or assessments made with respect to those program periods except as set forth in paragraph 6(a), below; (b) Notwithstanding sub-paragraph (a) above, the Board may take action to leave a policy period "open" even though it may otherwise qualify for closure. In addition, the last ten (10) policy periods shall always remain "open" unless the Board takes specific action to declare any of the last ten (10) policy periods closed. (c) Dividends and assessments (other than as outlined in paragraph 6(a), below) shall be administered to the participating members based upon the proportion of premiums paid to the Program in "open" periods only. For purposes of administering dividends and assessments pursuant to this sub- paragraph, all "open" policy periods shall be considered as one block. New members to the Program shall become eligible for dividends and assessments upon participating in the Program for three consecutive policy periods (not less than 24 months). Participating members who withdraw from the Program prior to the three year policy period restriction are still eligible for any assessments that arose out of the policy years they participated in the Program. 6. Declaration of Dividends. Dividends shall be payable from the Program to a participating member in accordance with its proportionate funding to the Program during all "open" policy periods except as follows: (a) A dividend shall be declared at the time a program period is closed on all amounts which represent premium surcharge amounts assessed pursuant to Article 14(b)(3) of the Agreement where the funding exceeds the 80% confidence level. This dividend shall be distributed based upon each member's proportionate share of assessment paid and accrued to the policy period being closed. Page 2 of 4 CSAC Excess Insurance Authority Amended: March 6, 2009 Excess Workers' Compensation Program MOU 7. Memorandum of Coverage. A Memorandum of Coverage will be issued by the Authority evidencing membership in the Program and setting forth terms and conditions of coverage. 8. Claims Administration. Each participating member is required to comply with the Authority's Underwriting and Claims Administration Standards (including Addendum A - W.C. Claims Administration Guidelines) as amended from time to time, and which are attached hereto as Exhibit B and incorporated herein. 9. Late Payments. Notwithstanding any other provision to the contrary regarding late payment of invoices or cancellation from a Program, at the discretion of the Executive Committee, any member that fails to pay an invoice when due may be given a ten (10) day written notice of cancellation. 10. Disputes. Any question or dispute with respect to the rights and obligations of the parties to this Memorandum regarding coverage shall be determined in accordance with the Joint Powers Agreement Article 31, Dispute Resolution. 11. Amendment. This Memorandum may be amended by two-thirds of the CSAC Excess Insurance Authority's Board of Directors and signature on the Memorandum by the member's designated representative who shall have authority to execute this Memorandum. Should a member of the Program fail to execute any amendment to this Memorandum within the time provided by the Board, the member will be deemed to have withdrawn as of the end of the policy period. 12. Complete Agreement. Except as otherwise provided herein, this Memorandum constitutes the full and complete agreement of the members. 13. Severability. Should any provision of this Memorandum be judicially determined to be void or unenforceable, such determination shall not affect any remaining provision. 14. Effective Date. This Memorandum shall become effective on the effective date of coverage for the member and upon approval by the Board of any amendment, whichever is later. 15. Execution in Counterparts. This Memorandum may be executed in several counterparts, each of which shall be an original, all of which shall constitute but one and the same instrument. Page 3 of 4 CSAC Excess Insurance Authority Amended: March 6, 2009 Excess Workers' Compensation Program MOU IN WITNESS WHEREOF, the undersigned have executed this Memorandum as of the date set forth below. Dated: _ 3/6/2009 CSAC Excess Insur ce Au rity Dated: Member Entity: Page 4 of 4 ADMINISTRATION COMMITTEE Meeting Date To Bd.of Dir. 6/10/09 6/24/08 AGENDA REPORT Item Number Item Number Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ANNUAL RENEWAL OF THE DISTRICT'S MAJOR OPERATIONAL INSURANCE PROGRAMS FOR FY 2009-10 GENERAL MANAGER'S RECOMMENDATION 1) Renew the District's Excess General Liability for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $ 370,498. 2) Renew the District's Excess Workers' Compensation Insurance for the period July 1, 2009 through June 30, 2010 at a rate not to exceed .0028 (estimated premium of$180,687 based on estimated 2009-10 payroll). 3) Renew the District's All-Risk Property and Flood Insurance for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $468,394. 4) Renew the District's Boiler & Machinery Insurance Program for the period July 1, 2009 through June 30, 2010, in an amount not to exceed $19,000. SUMMARY The District budget provides funds for the renewal of the following four major insurances for the District's operations: 1) Excess General Liability Insurance 2) Excess Workers' Compensation 3) All-Risk Property and Flood insurance 4) Boiler & Machinery insurance Our broker will be present at the Committee meeting to give us the latest pricing, with the recommendations above based on "not to exceed" numbers which may be improved upon by the time of the meeting. The insurance industry describes the current environment as "hardening." Property and boiler rates are up 12%, so staff is recommending higher deductibles to the extent feasible to keep costs at the 2008 level. Workers Compensation rates are roughly stable but actual costs will go up somewhat because premiums are based on payroll. Excess Liability rates are stable. Earthquake coverage is still too expensive to be cost-effective. PRIOR COMMITTEE/BOARD ACTIONS • June 2008 Board Meeting - The Board approved renewal of the above four policies for the period July 1, 2008 through June 30, 2009. Revised: 06/04/03 Page 1 ADDITIONAL INFORMATION 1) Excess General Liability Insurance Program The District's Excess General Liability Insurance Program is currently provided through the California Municipal Excess Liability Program ("CAMEL") and its new sister program, the Alliant National Municipal Liability Program ("ANMAL"). The District has participated in the CAMEL program since FY 1996-97. This program currently provides the District with a $30 million policy of comprehensive coverage for municipal liability, bodily injury and property damage, and personal injury. The program was structured to also include Employment Practices, and Public Officials Errors & Omissions coverage. The $30 million coverage is per occurrence, with a self-insured deductible of $250,000 per occurrence and $500,000 deductible for employment practices claims. Since 1997, the Employment Practices portion of coverage was enhanced from a $2 million sub-limit, to the full $30 million policy limit. The actual insurance coverage currently consists of two separate layers. The first layer is the "Basic" $10 million program with self-insured retention of$250,000. The second layer consists of$20 million of coverage in excess of the first layer of$10 million. The "not to exceed" recommendation above is for an amount that is the same as approved by the Board in 2008. 2) Excess Workers' Compensation Insurance The District's Excess Workers' Compensation insurance coverage is with the California State Association of Counties Excess Insurance Authority ("CSAC EIA"). This is the sixth year the District has participated in this program or its predecessor. The coverage expires on June 30, 2009. The District's Excess Workers' Compensation Program currently provides so-called "Statutory" (unlimited) coverage with a self-insured retention (SIR), or deductible of$500,000. The "not to exceed" rate is .0028, very close to last year's rate of 0.002748, for an increase of less than 2%. Since the premium itself is based on final payroll, the District will not know the exact final premium until the year is over. The District's use of Excess Workers' Compensation insurance dates back to 1989-90. At that time, the Fiscal Policy Committee approved a self-insured retention (SIR), or deductible, of $250,000, for such coverage. Due to the hardening of the workers' compensation market, this deductible was raised to $500,000 beginning in FY 2002-03 through a policy with Employers Reinsurance Corporation (ERC) that provided coverage to $25 million with a self-insured retention (SIR), or deductible of $500,000. Some additional risk may be associated with the CSAC EIA joint powers authority in that a premium surcharge can be assessed to individual members if an unusually large number of losses were to occur outside of the actuarial evaluation estimates. However, historically the CSAC EIA premiums for excess workers compensation have been so much less than competing quotes available to the District that if even there were a surcharge, the cost might still continue to be cheaper. Revised: 06/04/03 Page 2 3) All-Risk Property and Flood Insurance The District's All-Risk Property and Flood Insurance Program ("Property Insurance") expires June 30, 2009. The All-Risk insurance program provides for comprehensive coverage for most of the District's real and personal property regarding virtually all perils including fire, flood, and business interruption. The District previously carried earthquake insurance as part of its Property Insurance, but in the last few years earthquake insurance has been impossible to obtain or not cost-effective. Currently, the District has earthquake insurance only in connection with some of its buildings under construction. The District's current Property Insurance limits are $1 billion for most perils other than flood and earthquakes, and $175 million for flood, with many sub-limits for various situations. In order to reach $1 billion in limits, the District's broker had to arrange for nearly a dozen different layers of insurers. The Self-Insured Retention ("SIR") is $25,000 per occurrence for most types of losses. For eleven consecutive years, the District's Property Insurance has been with a nationwide joint purchase property insurance program called Public Entity Property Insurance Program (PEPIP), one of the world's largest property programs. It is important to note that this joint purchase property insurance program offers the purchasing power of numerous large public entities without the pooling or sharing of coverages or losses. The "not to exceed" recommendation is for an amount that is the same as the Board approved in 2008. Staff plans to purchase a higher deductible to keep the cost stable. 4) Boiler & Machinery Insurance Staff recommends the annual renewal of Boiler& Machinery insurance coverage for the District covering the period from July 1, 2009 through June 30, 2010. The Boiler& Machinery insurance program provides comprehensive coverage for loss caused by machinery breakdown and explosion of steam boilers or other covered process equipment, including damage to the equipment itself and damage to other property caused by covered accident. The District's current Boiler & Machinery insurance program provides coverage ($100 million per occurrence/with deductibles ranging from $25,000 to $350,000)for losses caused by covered machinery breakdown (e.g., motors, steam turbines, digesters, co-gen engines). Damages to the equipment, as well as damages to other property and improvements caused by the machinery breakdown, are covered by the boiler& machinery insurance. This program augments the District's all-risk property insurance that covers perils such as fire and flood. The "not to exceed" premium is 12% higher than last year, although staff will attempt to purchase a higher deductible, if that is possible, to keep the cost stable. Although the "not to exceed" premium is 12% higher than last year, costs have come down over the years to the extent that the "not to exceed" 2009 premium is still 33% lower than the Sanitation District paid in 2006. JDR:LT:MW:RK:lc Revised: 06/04/03 Page 3 ADMINISTRATION COMMITTEE Meeting Date To Bd. of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 8 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSED REVISIONS TO FY 2009-10 OPERATING, CAPITAL, DEBT/COP SERVICE, AND SELF-INSURANCE BUDGETS GENERAL MANAGER'S RECOMMENDATION Approve the proposed revisions to the Operating, Capital, Debt/COP Service and Self-Insurance Budgets for FY 2009-10, as follows: Originally Proposed Adopted Budget Revised Budget FY 2009-10 FY 2009-10 Operations, Maintenance &Working Capital $154,038,030 $156,116,920 Worker's Compensation Self Insurance 535,000 718,000 General Liability and Property Self-Insurance 1,606,200 2,106,200 Capital Improvement Program 228,907,000 259,068,000 Debt/COP Service 84,297,030 77,076,280 TOTAL $469,383,260 $495,085,400 SUMMARY Developing a two-year budget increases efficiencies and provides a longer planning horizon. This update represents known revisions to the second year of the two-year budget. The FY 2009-10 Proposed Revised Budget is enclosed for the Committee's consideration. The Budget has been presented to the Operations Committee at the regular June meeting in order to allow each Standing Committee an opportunity to review the proposal prior to the June Board meeting. Although each Committee has had an opportunity to review the proposal, it remains the responsibility of the Administration Committee to recommend approval. The Administration Committee is requested to recommend that the Board of Directors approve this budget. PRIOR COMMITTEE/BOARD ACTIONS The Board approved the FY 2008-09 and FY 2009-10 Two-Year Budget for the period July 1, 2008 through June 30, 2010, in June 2008. Budget overviews were presented to the Administration and Operations Committees in June 2009. ADDITIONAL INFORMATION None. ATTACHMENTS 1. Proposed FY 2009-10 Revised Budget JDR:LT:MW:lc C:\Users\garcia\Documents\POSTING FOLDER\11Budget Revision 09-10.docx Revised: 06/04/03 Page 2 ADMINISTRATION COMMITTEE Meeting Date To Bd. of Dir. 06/10/09 06/24/09 AGENDA REPORT Item Number Item Number 9 Orange County Sanitation District FROM: James D. Ruth, General Manager Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: INTERNAL AUDIT REPORT — REVIEW OF THE COLLECTION AND REMITTANCE OF CAPITAL FACILITIES CAPACITY CHARGES BY MEMBER AGENCIES GENERAL MANAGER'S RECOMMENDATION Informational item. SUMMARY At the direction of the Administration Committee's Audit Oversight Subcommittee, Lance, Soll & Lunghard, LLP ("LSL"), Certified Public Accounts was engaged to apply agreed upon procedures for the collection and remittance of capital facilities capacity charges (CFCC) by member agencies for FY 2007-08. Based on LSL's review of the collection and remittance of CFCC fees from member agencies, it is their conclusion that many member agencies are encountering problems in calculating the CFCC fees, which is impacting the revenues received by the Sanitation District. Their review uncovered a total net amount of uncollected and unremitted CFCC fees owed to the Sanitation District of$95,053, of which at least $76,634 was remitted to the Sanitation District prior to the conclusion of their review. LSL will provide a more detailed explanation of the audit scope, methodology, and their findings at the June Administration Committee meeting. PRIOR COMMITTEE/BOARD ACTIONS • February 2009 - Admin Comm. approved selection of LSL to perform internal auditing services for the period of March 1, 2009 through February 28, 2010, in an amount not to exceed $58,670. • February 2008 - Admin Comm. approved the second year of the two-year renewal option on the Purchase Order Contract with LSL, to serve as 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 2007 - Admin Comm. approved the first year renewal of the two-year renewal option on the Purchase Order Contract with LSL, to serve as 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 LSL, to serve as internal auditors for fiscal year 2005-06, for the period of March 1, 2006 through February 28, 2007, Page 1 for an amount not to exceed $58,670, and with an option to renew contract for two one-year periods. ADDITIONAL INFORMATION At the direction of the Administration Committee's Audit Oversight Subcommittee, Lance, Soll & Lunghard, LLP (LSL), Certified Public Accounts was engaged to apply agreed upon procedures for the collection and remittance of capital facilities capacity charges (CFCC) by member agencies for FY 2007-08. Except for CFCC fees for sewer connections within unincorporated areas of the Sanitation District's service area, all CFCC fees are collected and remitted by member agencies at the time building permits are issued. The Sanitation District has an agreement with each member agency that allows them to retain five percent of the total CFCC fees collected to offset their costs in collecting and remitting these fees on behalf of the Sanitation District. The total annual amount of CFCC revenues vary according to the existing economic climate, but $15.3 million of CFCC fees were generated in FY 2007-08. The agreed upon procedures performed by LSL included: • Verification of the mathematical accuracy of the monthly CFCC fee summaries remitted by each member agency to the Sanitation District; • Agreed the CFCC fees as reported on the summaries to the detail listings provided by each member agency; • Verification of the mathematical accuracy of the detail lists of CFCC fees used to prepare the monthly CFCC fee summaries provided by each member agency; • On a test basis, agreed CFCC fees collected per the detail lists to the member agencies accounting records; • On a test basis, recalculated the CFCC fee for permits issued based on the information (type of structure, square footage, etc.) on the building permit or in the member agencies files; • Recalculated the five percent administrative fee withheld by the member agencies as reported on the summaries remitted by each member agency to the Sanitation District; • On a test basis, verified that CFCC fees collected by member agencies were remitted to the Sanitation District within 30 days after the month in which they were collected; and • On a test basis, reviewed additional permits from each member agency's permit files to determine if CFCC fees were properly assessed. Based on LSL's review of the collection and remittance of CFCC fees from member agencies, it is their conclusion that many member agencies are encountering problems in calculating the CFCC fees, which is impacting the revenues received by the Sanitation District. Their review uncovered a total net amount of uncollected and unremitted CFCC fees owed to the Sanitation District of$95,053, of which at least $76,634 was remitted to the Sanitation District prior to the conclusion of their review. The cause of many of the calculation errors were clerical issues, errors in assessing the proper number of bedrooms in residential remodels and a delay in implementing the new rates effective July 1 of each year. They also found instances where the member agency was not aware that Page 2 fees should be assessed on bedroom additions for residential remodels and that a minimum of $4,517 should be assessed on new commercial construction in FY 2007-08. LSL provided two overall recommendations that staff is in agreement with. The first was for the Sanitation District to implement procedures to ensure new rates are being used and minimum charges are being assessed. Each year in June, staff sends an update of the new CFCC billing rates to each member agency. This year in June, staff will invite each member agency to participate in a training session on the proper procedures for collecting and remitting CFCC fees. The second was for the Sanitation District to implement additional random reviews of the member agencies to ensure that the proper amount of CFCC fees were being collected and remitted. The Administration Committee's Audit Oversight Subcommittee has instructed staff to complete reviews of all member agencies at least every five years. ATTACHMENT 1. Independent Accountants' Report from Lance Soll & Lunghard, LLP Page 3 ORANGE COUNTY SANITATION DISTRICT Independent Accountants' Report on Agreed-Upon Procedures for Collection and Remittance of Capital Facilities Capacity Charge Fees For Year Ended June 30, 2008 LS •000 •000 •• CERTIFIED PUBLIC ACCOUNTANTS • Brandon W.Burrows,C.P.A • Donald L.Parker,C.P.A • Michael K.Chu,C.P.A • David E.Hale,C.P.A,C.F.P. A Professional Corporation Donald G.Slater,C.P.A Richard K.Kikuchi,C.P.A Susan F.Matz,C.P.A. March 4, 2009 Administration Committee Orange County Sanitation District Fountain Valley, California INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES We have performed the procedures enumerated below which were agreed to by the management of the Orange County Sanitation District, Fountain Valley, California (Sanitation District), solely to assist the Sanitation District in evaluating the collection and remittance of capital facilities capacity charge (CFCC) fees by the twenty-one (21) member agencies for the year ended June 30, 2008. This engagement to apply agreed-upon procedures was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the Sanitation District. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested, or for any other purpose. The procedures performed and the results obtained from the performance thereof were as follows: 1. Procedure Performed: We verified the mathematical accuracy of the monthly CFCC fee summaries remitted by each member agency to the Sanitation District. Findings: a) The City of Anaheim did not properly recalculate the total net CFCC fees that were remitted to Sanitation District for various months. During our inquiry, we determined that the improper fiscal year rates were used for certain calculations. These findings are listed under procedure 5. b) The City of Garden Grove did not submit a monthly CFCC summary for December 2007, Area 2. Based on our review of the City's records, there were no CFCC fees charged for the period; however, the City is still required to file a monthly summary indicating the fees are zero. c) The City of Stanton did not implement the rates effective July 1, 2007 until June 2008 which resulted in the summaries not recalculating properly and customers not being charged the proper amounts. These findings relating to the customer charges are listed under procedure 5. Lance,Sall&Lunghard,LLP 203 North Brea Boulevard Suite 203 Brea, CA 92821 TEL: 714.672.0022 Fax: 714.672.0331 www.lslcpas.com 41185 Golden Gate Circle Suite 103 Murrieta, CA 92562 TEL: 951.304.2728 Fax: 951.304.3940 LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 2 2. Procedure Performed: We agreed the CFCC fees as reported on the summaries to the detail listing provided by each member agency. Findings: a) The City of Garden Grove's detail listing for August 2007 did not agree with the summary sheet used to calculate the payment to the Sanitation District. Due to a transposition error in the detail worksheet, the City reported $35,920; however, they should have reported $36,190 which resulted in an underpayment of$270. b) The Midway City Sanitation District was unable to locate the detail worksheet for the month of July 2007 in which $6,575 was remitted to the Sanitation District; therefore, this procedure could not be performed. c) The City of Los Alamitos did not complete the detail worksheet for the month of September 2007 in which $9,861 was remitted to the Sanitation District; therefore, this procedure could not be performed. 3. Procedure Performed: We verified the mathematical accuracy of the detail lists of CFCC fees used to prepare the monthly CFCC fee summaries provided by each member agency. Findings: a) The Midway City Sanitation District was unable to locate the detail worksheet for the month of July 2007; therefore, this procedure could not be performed. b) The City of Los Alamitos did not complete the detail worksheet for the month of September 2007; therefore, this procedure could not be performed. 4. Procedure Performed: On a test basis, we agreed CFCC fees collected per the detail lists to inclusion in the member agency's accounting records. Findings: No findings were noted as a result of the procedures performed. 5. Procedure Performed: On a test basis, we recalculated the CFCC fee for permits issued based on the information (type of structure, square footage, etc.) on the building permit or in the City's file. Findings: a) The City of Anaheim issued a single family residential permit during July 2007 and charged the customer $960, however based on the rates effective July 1, 2007, the customer should have been charged $860. Upon further review of the summary for that month, we noted that 6 additional customers had been charged $960 instead of $860. The total overcharges amount to $700. In addition, the effect of the finding noted in procedure 1 resulted in the following findings: i. In July 2007, a commercial customer with average demand was charged $1,572 using the rates effective July 1, 2005, but should have been charged $1,628 based on the rates effective July 1, 2007. This resulted in an undercharge of $56. LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 3 ii. In July 2007, a new commercial customer with low demand was charged $5,233; however the City was unable to recalculate the charge. Based on our calculations, the City should have charged $4,517. This resulted in an overcharge of$716. iii. In October 2007 and January 2008, the City charged a new commercial customer with low demand $4,360 based on the rates effective July 1, 2006, instead of $4,517 based on the rates effective July 1, 2007. This resulted in an undercharge of$157 for each month totaling $314. iv. In October 2007, a commercial customer was charged $2,481 using the rates effective July 1, 2006. The customer should have been charged $2,570 using the rates effective July 1, 2007. This resulted in an undercharge of$89. b) The City of Brea issued a new commercial low demand permit in October 2007 and failed to access the minimum commercial charge of $4,517. The customer was charged $3,201 which resulted in an undercharge of $1,316. The City also failed to assess the minimum commercial charge of$4,517 for a commercial permit issued in May 2008. The customer was charged $3,930 which resulted in an undercharge of$587. c) The City of Buena Park issued a new commercial average demand permit during February 2008 and charged the customer $860. Based on our review, the customer should not have been charged a CFCC fee. This was due to a calculation error in the amount of credits for a previous building on the property. This resulted in an overcharge of$860. d) The Costa Mesa Sanitary District charged the rates effective July 1, 2005 and July 1, 2006, for various permits selected due to the timing difference from when the customer submits the application with the City of Costa Mesa and when the fee is assessed by the Costa Mesa Sanitary District. e) The City of Cypress was unable to find the support for one of the permits selected; therefore we could not determine if the charge was calculated correctly. The total amount of this permit was $2,570. f) The City of Fountain Valley issued a single family residential permit during December 2007 and charged the customer $901. Based on our calculations, the customer should not have been charged a CFCC fee. This resulted in an overcharge of$901. g) The City of Garden Grove issued a commercial high demand remodel permit in October 2007 and charged the customer $2,367. The customer should have been charged $2,539 resulting in an undercharge of$172. h) The City of La Habra issued a new commercial permit in August 2007 and failed to assess the minimum charge of$4,517 which resulted in an undercharge of$1,776. Also, in January 2008, the City issued a single family residential permit and charged the customer $1,720; however the customer should have been charged $1,761 resulting in an undercharge of$41. i) The City of La Palma issued a commercial average demand remodel permit in December 2007 and charged the customer $10,610. The customer should have been charged $10,746 resulting in an undercharge of$136. j) The City of Newport Beach had the following findings: LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 4 i. The City failed to charge four new commercial customers the minimum charge of $4,517. This resulted in an undercharge per customer of $1,627 for a total of $6,508. ii. For two commercial average demand remodel permits the City charged $2,890 each. The customers should have been charged $1,812 and $2,035 resulting in an overcharge of$1,078 and $855 respectively for a total of$1,933. iii. In September 2007, the City charged a customer $2,803 for a new detached building on an existing property and only charged them for the additional sq. ft. rather than the minimum charge for new construction of$4,517. This resulted in an undercharge of$1,714. iv. In January 2008, the City charged a customer$6,547 for a mixed use (residential and commercial) new construction permit. The customer was charged the incorrect amount for the commercial portion resulting in an undercharge of $1,627. k) The City of Placentia issued a single family residential permit during July 2007 and charged the customer $770; however the charge should have been $860 resulting in an undercharge of $90. In April 2008 the City issued two new multi-family residential building permits using the rates effective July 1, 2006. The customers were charged $3,050 each but should have charged $3,160 using the rates effective July 1, 2007. This resulted in an undercharge of$110 each for a total of$220. 1) The City of Seal Beach used the rates effective July 1, 2006, for a single family residential permit during August 2007. This resulted in an undercharge of$30. m) The City of Stanton had the following findings: i. The City issued a single family residential new construction permit during March 2008 and charged the customer $5,190. The customer should have been charged $3,657 which resulted in an overcharge of$1,533. ii. The City issued a single family residential permit during March 2008 and charged the customer $4,360. The customer should have been charged $5,377 resulting in an undercharge of$1,017. iii. The effect of the City using the prior year rate schedule as noted in procedure 1 resulted in undercharges to the customers of the following amounts: July 2007 -$30 January 2008 -$471 February 2008 - $30 March 2008—$889 May 2008 - $60 n) The City of Villa Park issued a single family residential permit during July 2007 and charged the customer $5,377; however the charge should have been $1,716 resulting in an overcharge of$3,661. 6. Procedure Performed: We recalculated the 5% administrative fee withheld by the member agencies as reported on the summaries remitted by each member agency to the Sanitation District. LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 5 Findings: a) The City of Buena Park did not properly calculate the administrative fee the City retains on the November 2007 summary. The City calculated $355, but the amount should have been $365. This resulted in a variance of $10, which the City overpaid to Sanitation District. 7. Procedure Performed: On a test basis, we reviewed CFCC fees remitted to Sanitation District to verify that CFCC fees collected during the month were remitted to Sanitation District promptly (within 30 days after the month in which they are collected). Findings: a) The City of Buena Park had many permits which were collected through the year and not remitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 07/02/07 10/17/07 01/18/08 06/26/08 07/30/07 10/17/07 01/23/08 06/26/08 08/14/07 10/17/07 02/27/08 06/26/08 08/01/07 10/17/07 02/27/08 06/26/08 09/12/07 01/24/08 03/03/08 06/26/08 09/27/07 01/24/08 03/28/08 06/26/08 10/30/07 01/24/08 04/14/08 06/26/08 11/29/07 02/07/09 04/24/08 06/26/08 11/08/07 02/07/09 06/23/08 11/25/08 12/17/07 02/07/09 b) The City of Brea had two permits which were collected on September 6, 2007 and September 17, 2007 and remitted November 9, 2007 and December 14, 2007 respectively. c) The City of Cypress had many permits which were collected through the year and not remitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 07/16/07 11/16/07 10/31/07 01/25/08 07/31/07 09/07/07 12/19/07 04/04/08 07/31/07 09/08/07 01/23/08 04/04/08 09/06/07 11/16/07 02/12/08 04/04/08 09/11/07 11/16/07 02/27/08 04/04/08 09/12/07 11/16/07 02/27/08 07/11/08 09/18/07 11/16/07 05/16/08 08/22/08 d) The City of Garden Grove did not remit the fees for August 2007 and April 2008 in a timely manner. The fees collected in August 2007 were remitted to the Sanitation District in October 2007 and the fees collected in April 2008 were remitted to the Sanitation District in June 2008. LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 6 e) The City of La Palma had two permits which were collected on July 24, 2007 and June 9, 2008 and remitted October 2, 2007 and August 5, 2008, respectively. f) The Midway City Sanitation District had many permits which were collected through the year and not submitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 09/24/07 11/06/07 02/20/08 04/01/08 09/13/07 11/06/07 03/13/08 06/03/08 09/10/07 11/06/07 03/03/08 06/03/08 10/31/07 12/18/07 03/05/08 06/03/08 10/09/07 12/18/07 04/15/08 08/19/08 12/07/07 03/18/08 04/14/08 08/19/08 12/27/07 03/18/08 04/28/08 08/19/08 01/29/08 03/18/08 04/15/08 08/19/08 01/09/08 03/18/08 04/07/08 08/19/08 01/31/08 03/18/08 g) The City of Newport Beach had many permits which were collected through the year and not submitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 08/16/07 10/12/07 03/24/08 05/23/08 12/14/07 02/15/08 03/27/08 05/23/08 12/27/07 02/15/08 03/31/08 05/23/08 01/07/08 03/24/08 06/10/08 08/01/08 01/18/08 03/24/08 06/20/08 08/01/08 03/18/08 05/23/08 h) The City of Orange had many permits which were collected through the year and not submitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 09/19/07 11/08/07 12/12/07 02/01/08 09/24/07 11/08/07 12/12/07 02/01/08 11/06/07 01/03/08 03/12/08 05/01/08 11/08/07 01/03/08 i) The City of Placentia had many permits which were collected through the year and not remitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 7 Permit Date Date Remitted Permit Date Date Remitted 07/25/07 09/18/07 03/27/08 05/06/08 07/12/07 09/18/07 04/10/08 11/18/08 08/27/07 02/19/08 04/10/08 11/18/08 08/27/07 02/19/08 05/12/08 02/05/09 09/18/07 02/19/08 05/12/08 02/05/09 10/16/07 02/19/08 05/23/08 02/05/09 10/16/07 02/19/08 05/01/08 02/05/09 10/16/07 02/19/08 06/04/08 11/18/08 10/03/07 02/19/08 06/04/08 11/18/08 02/12/08 05/06/08 j) The City of Santa Ana had many permits which were collected through the year and not submitted on a timely basis. The following table is a list of fees that were tested which were not remitted in a timely manner: Permit Date Date Remitted Permit Date Date Remitted 07/05/07 03/21/08 01/31/08 06/27/08 07/18/07 03/21/08 02/28/08 07/25/08 08/07/07 03/28/08 03/10/08 10/17/08 08/27/07 03/28/08 03/24/08 10/17/08 07/15/07 06/13/08 04/10/08 06/27/08 10/30/07 06/13/08 04/22/08 06/27/08 10/23/07 06/13/08 05/22/08 08/22/08 11/15/07 07/25/08 05/05/08 08/22/08 01/23/08 06/27/08 06/03/08 10/03/08 01/03/08 06/27/08 06/16/08 08/22/08 k) The City of Stanton had not properly remitted the CFCC fees collected during the months of July 2007, March 2008, and May 2008 prior to the time of our agreed upon procedure. According to the monthly summaries, the City still needed to remit $789, $74,268, and $1,577 for the months of July 2007, March 2008, and May 2008, respectively. In addition, all other months that have been paid to Sanitation District were not paid in a timely manner. Subsequent to our testwork, the City of Stanton remitted $76,634 to the Sanitation District on February 10, 2009 to pay the amounts not previously remitted for July 2007, March 2008 and May 2008. 1) The City of Los Alamitos collected fees on September 13, 2007, and remitted them to the Sanitation District on November 11, 2007, which was not in a timely manner. 8. Procedure Performed: On a test basis, we reviewed additional permits from each member agency's permit files to determine if CFCC fees were properly assessed. Findings: a) The City of Villa Park had a customer submit a permit in May 2008 for a single family residential remodel and the customer was not assessed a CFCC fee. This resulted in an undercharge of$901. Also, in February 2008, a customer submitted a permit for a single family residential remodel and was not assessed a CFCC fee. This resulted in an undercharge of $901. This was identified by the City's staff and brought to our attention during this review. LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 8 b) The City of Los Alamitos did not assess CFCC fees for various residential remodels for the year under review. The total undercharge for all CFCC fees that were not assessed was $10,444. Summary of Results Based on our review of the collection and remittance of CFCC fees, we feel that many member agencies are encountering problems in calculating the CFCC fees which is impacting the revenues received by the Sanitation District. We estimate that the total net amount of uncollected and unremitted CFCC fees owed to the Sanitation District is$95,053. This amount represents the total net undercharge by the member agencies of $19,115 less $956 representing 5% administrative fees, plus the net amount unpaid to the Sanitation District of$76,894 which has already been reduced by the 5% administrative fees. Below is a summary of the fees that were over/(under) charged to customers and over/(under) paid to the Sanitation District by member agency. Amount Amount Over/(Under) Over/(Under) Paid Charged to Sanitation Customers District (Procedures (All Other Member Agency 5 and 8) Procedures) City of Anaheim $ 957 $ - City of Brea (1,903) - City of Buena Park 860 10 Costa Mesa Sanitary District - - City of Cypress - - City of Fountain Valley 901 - City of Fullerton - - City of Garden Grove (172) (270) City of Huntington Beach - - City of La Habra (1,817) - City of Los Alamitos (10,444) - City of La Palma (136) - Midway City Sanitation District - - City of Newport Beach (7,916) - City of Orange - - City of Placentia (310) - City of Santa Ana - - City of Seal Beach (30) - City of Stanton (964) (76,634) City of Villa Park 1,859 - City of Yorba Linda - - Total $ (19,115) $ (76,894) *This amount was remitted to the Sanitation District on February 10, 2009. LSE 0:0 CERTIFIED PUBLIC ACCO N NTANTS Administration Committee Orange County Sanitation District Fountain Valley, California Page 9 The cause of many calculation errors were clerical issues, errors in assessing the proper number of bedrooms in residential remodels and a delay in implementing the new rates effective July 1 of each year. We also found instances where the member agency was not aware that fees should be assessed on bedroom additions for residential remodels and that a minimum fee of $4,517 should be assessed on new commercial construction. We recommend that the Sanitation District implement procedures to ensure new rates are being used and minimum charges are being assessed. We also recommend implementing additional random reviews of the member agencies CFCC fees on a rotation basis. Conclusion We were not engaged to, and did not conduct an audit, the objective of which would be the expression of an opinion on the collection and remittance of CFCC fees by the twenty-one (21) member agencies for the year ended June 30, 2008. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to the Sanitation District. This report is intended solely for the use of the specified users listed above and is not intended to be, and should not be, used by anyone other than those specified parties.