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Home My WebLink About1995-07-12.. II FlLED . In the Office of the S~cre v.7 ~ County Sanitat~n District(. ~ // ) County Sanitation Districts No(s)./~ ;;; % .)> 14,. i .Lt,, 7 of Orange County, California JUL 2 61995 P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 /J Y Telephone: (714) 962-2411 By C/M DRAFT MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday, July 12. 1995. 5:30 P.M. A meeting of the Finance, Administration and Human Resources Committee of the County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California was held on July 12, 1995 at 5:30 p.m., at the Districts' Administrative Offices. (1) ROLL CALL The roll was called and a quorum declared present, as follows: Committee Directors Present: John C. Cox, Jr., Joint Chairman George Brown, Chairman Burnie Dunlap James Flora John M. Gullixson Wally Linn Thomas Saltarelli Roger R. Stanton, Vice Chairman William G. Steiner Peer Swan Committee Directors Absent: Jan Debay Staff Present: Don Mcintyre, General Manager Blake Anderson, Assistant General Manager Gary Streed, Director of Finance Ed Hodges, Director of Maintenance Bob Ooten, Director of Operations Mike White, Controller Steve Kozak, Financial Manager Others Present Tom Woodruff, General Counsel Rich Brown, Orange County Employees Assn. (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS No comments were made. (4) REPORTS OF THE COMMITTEE CHAIR. GENERAL MANAGER. ASSISTANT GENERAL MANAGER($}, DIRECTOR OF FINANCE/TREASURER. DIRECTOR OF HUMAN RESOURCES AND GENERAL COUNSEL (a) Report of the Committee Chair George Brown, Chairman, had no report. Minutes of Finance, Adrr: ·-~nd Human Resources Committer ·1 Page2 July 12, 1995 (b) Report of the General Manager General Manager Don Mcintyre reported on the status of pending recruitments for Laboratory Manager, Director of Engineering and Assistant General Manager for Administration. He requested that the proposed salary level of the Assistant General Manager be added to the agenda in order to have a Committee recommendation to the Boards. The Committee voted to add an emergency agenda item. (c) Report of Assistant General Manager Assistant General Manager Blake Anderson updated the Committee on recent events regarding the County bankruptcy, including the OCIP Pool Committee meeting of earlier in the day. He reported on the interest allocation expected next week, the litigation strategy against Merrill Lynch et. al, the hearing before Judge Ryan scheduled for July 14, 1995, the reasons the OCIP Pool Committee opposed the "roll-over" agreement, pending bankruptcy related items in Sacramento and continuing discussions regarding the landfills. (d) Report of the Finance Director/Treasurer Finance DirectorfTreasurer Gary Streed reviewed the reports included with the agenda package updating the Committee on the status of the Districts' cash and investments. He further advised the Committee that the Districts' agreements with Pacific Investment Management Company, "PIMCo,· to serve as Investment Manager, and Mellon Trust Company, to serve as Custodial Bank are being finalized, and that funds are expected to be transferred before month-end. Mr. Streed also reviewed the remarketing activities for the Series "A," Series "C," and Series "1993 Refunding" COPs, and the interest rate history for the past month. (e) Report of the Director of Human Resources Gary Hasenstab, Director of Human Resources, reported that the Orange · County District Attorney had recently notified the Districts that the case had been closed regarding any criminal negligence in the February 1994 fire at Plant 2 and that no negligence had been found. (f) Report of General Counsel Thomas L. Woodruff, General Counsel, reviewed a report contained in the agenda package and requested that the Committee approve an adjustment in the fee schedule of his firm's Professional Services Agreement with the Districts. The Committee recommendation is reported as FAHR95-34 below. ,, . , Minutes of Finance, Ar' . and Human Resources Committ- Page 3 1 July 12, 1995 (5) FINAL DRAFT REPORT OF THE ERNST & YOUNG FINANCE FUNCTIONAL REVIEW OF PURCHASING AND WAREHOUSING. ACCOUNTING AND FINANCE. AND INFORMATION SYSTEMS. This report will be presented to the Executive Committee at their meeting of. July 19, 1995. There was no discussion regarding this item at the meeting. (6) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the June 14, 1995, meeting of the Finance, Administration and Human Resources Committee. (7) OLD BUSINESS FAHR95-25 Classification. Compensation. and Other Terms. Conditions, Rules and Regulations of Employment Gary Hasenstab, Director of Human Resources, reviewed the Employee Benefit Program Summary. The Committee had requested an expanded summary which included examples and amounts. It was moved, seconded and duly carried to ) receive and file this report which is intended to be filed with the original report. (8) NEW BUSINESS FAHR95-31 Consideration of Motion to Adopt Investment Performance Review Guidelines for the Districts' Investment Program After discussion on this matter, it was moved, seconded and duly carried to recommend that the Executive Committee approve the following actions: 1. Adopt the investment performance benchmarks for the Liquid Operating Monies fund, the 3-month T-Bill rate and the Callan Active Cash Fixed-Income Style Group; and the Long-Term Operating Fund, the Merrill Lynch Government and Corporate 1 to 5-year Maturity Index and the Callan Defensive Fixed-Income Style Group, as recommended by staff. 2. Adopt the contents and frequency of routine investment performance reports to be reviewed by the Committee each month or quarter as recommended by staff. Minutes of Finance, Adrr·---and Human Resources Committ~~ Page4 July 12, 1995 FAHR95-32 Consideration of Proposed Changes to the IRS-Approved Section 457 Deferred Compensation Plan as follows: (a) Consideration of Resolution No. 95-Approving First Amendment to Deferred Compensation Plan for Officers and Emplovees in Order to Permit Greater Flexibility in Plan Distribution Elections. Clarify Certain Provisions of the Plan. and Comply with Certain Recent Internal Revenue Service Interpretations. (b) Consideration of Resolution No. 95-Approving Amended Deferred Compensation Program for Management. Professional and Supervisorv Employees. After discussion on this matter, it was moved, seconded and duly carried to recommend that the Executive Committee approve (a) the First Amendment to the CSDOC Deferred Compensation Plan which clarifies the Plan and incorporates I.RS. changes at no cost to the Districts, and; (b) modifications to the Management, Professional and Supervisory Employees Deferred Compensation Program only to add those positions to the program that were approved as a part of the resolution of the former Confidential Unit last month. FAHR95-33 Consideration of Orange County Employees Association <OCEA) Grievance Concerning Side Letter Agreement After discussion on this matter, it was moved, seconded and duly carried to recommend that the grievance be denied on the basis that no group of employees did in fact receive a general increase in salary during the period of November 26, 1993, through November 23, 1996, higher than the negotiated increase received by the OCEA unit. FAHR95-34 Consideration of Amendment No.13 re Agreement for Employment of General Counsel The Committee reported their high regard for the services rendered by Rourke, Woodruff & Spradlin over the past several years. After discussion of alternative methods to obtain legal services including the current privatizing, developing an in- house team and a mix of the two, the Committee recommended approval of Amendment No. 13 re Agreement for Employment of General Counsel, including an increase in hourly rates for Mr. Woodruff, Principals and Senior Associate, Associates and Paralegals; and future annual increases based upon the changes in an index. The Committee also directed staff and General Counsel to return to a future meeting with a report regarding alternative methods to obtain legal services. Minutes of Finance, Ar .. 1. and Human Resources Cammi~, ~ Page 5 ) July 12, 1995 (9) CLOSED SESSION There was no closed session required. (10) OTHER BUSINESS. IF ANY None. (11) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING The Committee requested two items be considered at future meetings: A) A review of alternative methods of obtaining legal services, B) A review of total compensation for exempt employees. (12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND A STAFF REPORT None. (13) CONSIDERATION OF UPCOMING MEETING DATES AND ITEMS TO BE DISCUSSED AT THOSE MEETINGS The Committee will not meet in August, November and December 1995, as no Executive Committee meetings are scheduled, and no FAHR Committee recommendation could be carried to the respective Joint Board meetings. The next Committee meeting is scheduled for Wednesday, September 13, 1995. (15) ADJOURNMENT The meeting was adjourned at 7:30 p.m. /gs J:\WPDOC\FIN\CRANE\FPCMTG\FPC95'MNllTESIMFAHR7A.95 STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, I hereby certify that the Notice and the Agenda for the Finance, Administration and Human Resources meeting held on July 12, 1995, was duly posted for public inspection in the main lobby of the Districts' offices on July 6, 1995. IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of July, 1995. Penny Kyle, Secreta eac Sanitation Districts Nos. 1, County, California the Boards of Directors of County 5, 6, 7, 11, 13 & 14 of Orange Posted: ~ 6 , , 1995, tf: / D P.M. I By:~~~ J:\WPDOC\FINICRANEIFPC.MTGIFPC95\CERTOF.POS\CERTPOS7.95 11 July 6, 1995 /~ ,,..---\ I ) ', j COUNTY SANIT A Tl ON D ISTRICTS OF ORANGE COUNTY, CALIFORNIA P.O. BOX 8127, FOUNTAIN VALLEY, CALIFORNIA 92728-8127 10844 ELLIS, FOUNTAIN VALLEY, CALIFORNIA 92708-7018 (714) 962-2411 NOTICE OF MEETING FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTEE COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA WEDNESDAY. JULY 12. 1995 -5:30 P.M. DISTRICTS' ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 A regular meeting of the Finance, Administration and Human Resources Committee of the Joint Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, will be held at the above location, time and date. J:IWPOOC\FIN\CRANE\FPC.MTGIFPC95\NOTICEINOTICE7.95 June 8, 1995 COUNTY SANITATION DISTRICTS of ORANGE COUNTY, CALIFORNIA 10844 ELLIS AVENUE P.O. BOX 8127 FOUNTAIN VALLEY, CALIFORNIA 927 1714) 962-2411 FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING DATES Finance, Administration and Action Items to Human Resources Executive Committee Action Items to Joint Committee Meetings Meeting Board Meeting July July 12, 1995 July 19, 1995 July 26, 1995 August None Scheduled None Scheduled August23, 1995 September September 13, 1995 September 20, 1995 September 27, 1995 October October 11, 1995 October 18, 1995 October 25, 1995 November None Scheduled None Scheduled November 22, 1995 December None Scheduled None Scheduled December 27, 1995 January January 10, 1996 January 17, 1996 January 24, 1996 February February 14, 1996 February 21, 1996 February 28, 1996 March March 13, 1996 March 20, 1996 March 27, 1996 April April 10, 1996 April 17, 1996 April 24, 1996 May May 8, 1996 May 15, 1996 May 22, 1996 June June 12, 1996 June 19, 1995 June 26, 1996 July July 10, 1996 July17, 1996 July 24, 1996 J:IWPOOCIFINICRANEIFPC.MTG\FPC95\NOTICE\NOllCE7.95 FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE 7 -12-95 COMMITTEE MEMBERS GEORGE BROWN (Chair) •••••••••••••••••••••. ROGER R. STANTON (Vice Chair) ••••••••••••••• JAN DEBAY ................................. . BURNIE DUNLAP •••••••••••••••••••••••••••••• JAMES H. FLORA •••••••••••••••••••••••••••••• JOHN M. GULLIXSON .••••••.•••••••••••••••••• WALLY LINN •••••••••••.•••••••••••••••••••••• THOMAS SALTARELLI ••••••••••.•••.•••••••••• WILLIAM G. STEINER ••••.•.•••••••••••.••••.•. PEER A. SWAN (VJC) ••.••••••••.•.•••••••••••• JOHN C. COX, JR. (JC) ...•••••••••••••••••••.• OTHER DIRECTORS --------······················ --------······················ STAFF PRESENT DON MCINTYRE, GENERAL MANAGER .••••.••••••••••••••.... BLAKE ANDERSON, ASST. GENERAL MANAGER ..••••••.•••••• GARY STREED, DIRECTOR OF FINANCE •••••••••.•••••••••••• GARY HASENSTAB, DIRECTOR OF PERSONNEL ••••.•..••••••• ED HODGES, DIRECTOR OF MAINTENANCE •••...••.••.••••••• BOB OOTEN, DIRECTOR OF OPERATIONS ..••••••••.•••...•.• JOHN UNDER, DIRECTOR OF ENGINEERING ••••••••.••••.•••. ED TORRES, DIRECTOR OF TECH. SERVICES •••••.••••••••••• STEVE KOZAK, FINANCIAL MANAGER •••.••••.•.•••.•...••••• MIKE WHITE, CONTROLLER .•••••••••••..•••••••.•••••.••••. OTHERS TOM WOODRUFF, GEN'L. COUNSEL ••••••••.•.••••••••.•••••. -------................................. ,., .. . ROLL1.95 TIME 5:30 P .M. ADJOURN ___ _ ABSENT PRESENT July 12, 1995 AGENDA FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTE-E COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA DISTRICTS' ADMINISTRATIVE OFFICES 10844 ELLIS AVENUE FOUNTAIN VALLEY, CALIFORNIA 92708 REGULAR MEETING WEDNESDAY. JULY 12. 199'5 -5:30 P.M. In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the Districts' Administrative Offices not less than 72 hours prior to the meeting date and time above. All written materials relating to each agenda item are available for public inspection in the Office of the Board Secretary. 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 that there is a need to take immediate action which need came to the attention of the Committee subsequent to the posting of the 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 . .. ·······~··········-· .... _ .............................. " .............................. ····-··· ···-· ............................................................. ,.--............ _ ... ._ .... .-. ._ ..... , ....... _ .... _. ___ ,. ___ .......... '"""-·---·-···-· ··-·--·····- ( 1 ) Roll Call (2) Appointment of Chairman pro tern, if necessary. (3) PubOe Comments: All persons wishing to address the Committee on specific agenda items or matters of general interest should do so at this time. As determined by the Chairman, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five 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 ). July 12, 1995 (4) The Committee Chairman, General Manager, Assistant General Manager(s), Director of FinanceITreasurer, Director of Human Resources and General Counsel may present verbal and/or written reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee Members. (a) Report of Committee Chairman (b) Report of General Manager (c) Report of Assistant General Manager(s) (d) Report of Director of FinanceITreasurer ( e) Report of Director of Human Resources (f) Report of General Counsel (5) Final Draft of the Ernst & Young Finance Function Review of Purchasing and Warehousing, Accounting and Finance, and Information Systems for Committee's information. (6) Approval of draft Finance, Administration and Human Resources Committee Minutes for Meeting of June 14, 1995. (7) Old Business. EAHR95-25 (8) New Business. FAHR95-31 FAHR95-32 Classification, Compensation, and Other Terms, Conditions, Rules and Regulations of Employment Consideration of Motion to Adopt Investment Performance Review Guidelines for the Districts' Investment Program Consideration of Proposed Changes to the IRS- Approved Section 457 Deferred Compensation Plan as follows: (a) Consideration of Resolution No. 95-_ Approving Amendment to Deferred Compensation Plan for Officers and Employees in Order to Permit Greater Flexibility in Plan Distribution Elections, Clarify Certain Provisions of the Plan, and Comply with Certain Recent Internal Revenue Service Interpretations. -2- /~ I '\ July 12, 1995 , (Cont'd) FAHR95-32 FAHR95~33 (b) Consideration of Resolution No. 95-_ Approving Amended Deferred Compensation Program for General Manager, Assistant Generar Manager and Department Heads and Resolution No. 95-_ Approving Amended Deferred Compensation Program for Assistant Department Heads, Professional and Supervisory Employees, and Executive Assistants, Both in Order to Include Modifications to the Vesting Periods for Districts' Contributions. Consideration of Orange County Employees Association (OCEA) Grievance Concerning Side Letter Agreement (9) Closed Session . ....................... ,. ..... , .... _ ....... _ .................... _. ................... -._·~-·············"'···················-........................................... _. ___ ..... --....... -............. . Closed Session: During the course of conducting the business set forth on this agenda as a regular meeting of the Committee, the Chairman may convene the Committee in closed session to consider matters of pending or potential litigation, or personnel matters, : pursuant to Government Code Sections 54956.9, 54957 or 54957.6. ! • ::::::::::!::· 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 reliiewed 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. ! ..... .._ •• __________ _. •. _ .... _., ....•.• -.......... :.. ............................... _ .......................... ,. ... _. ______ ......................... -...................................... _ ...................... _ ..• _ ..... i" .......... ! (a) Convene in closed session, if necessary (b) Reconvene in regular session. (c) Consideration of action, if any, on matters considered in closed session. ( d Report on discussion taken in closed session, as required. (10) Other business, if any. (11) Matters which a Diredor would like staff to report on at a subsequent meeting. (12) Matters which a Diredor may wish to place on a future agenda for action and a staff report. (13) Consideration of upcoming meeting dates and items to be discussed at those meetings. -3- July 12, 1995 (14) Adjourn. r····-·-···--·-··-·················-···················-·····························--··-··;..··-····-···········-.. -·······························-·1 ; ::::::. Notice to Committee Members: If you have any questions regarding the Agenda, or wish to place items on the Finance, Administration and Human Resources Agenda, Committee members should contact the Committee Chair or Secretary ten days in advance of the Committee meeting. Committee Chair: Secretary: George Brown Lenora Crane (310) 431-2185 (714) 962-2411, Ext. 2501 (714) 962-3954 (FAX) ....................................... -·-··-······-··-·····-·········-···············----·-·-········--····-········-···········-·--·········-·-··--·········-·········· J:\WPDOC\FINICRANEIFPC.MTGV'PCll5\AGENDA.FPC\AGENDA7.115 -4- (4)(d) Summary FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 Treasurer's Report During June, the Committee and the Board selected Pacific Investment Management Company, "PIMCO," to serve as the Districts' Investment Manager, and Mellon Trust Company to serve as Custodial Bank. As of month-end, these agreements were being finalized in preparation for a transfer of funds and function in July. The 3% "Good as Gold" notes were funded on June 19, 1995, and $20,086,771.47 was deposited. Interest earnings from the OCIP for the period from December 7, 1994 through May 19, 1994, are still being resolved by the County, Arthur Anderson, and Price Waterhouse. The Pool Committee has demanded the undisputed amounts, but no funds have been released. Balances Estimated CS DOC June 30, 1995 Yield State of Calif. LAIF $ 24,896,672 6.01% Bank of America 265,566 4.50% U.S. Treasury Bills Due 712.0 306,382,859 5.09% Debt Service Reserves at Trustees 20,565,652 6.41% $352,110,749 5.23% Garden Grove San District 1,072,063 6.01% Orange Co. Investment Pool 163,747 5.92% $3531346.559 5.23% -- J:IWPOOCV'1NICRANEIFPC.MTGIFPC95\ITEMS.AGCMGOITM4.795 .• TOTAL CASH & INVESTMENT Dec6 Dec31 Jan31 Feb28 Mar31 Apr30 May31 June30 Staff Recommendation Information only item. -2- J:IWPDOC\FIN\CRANE\FPC.MTGIFPC95VTEMS.AGD\AGDITM4.7ll5 <'I FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE (4)(d) Summarv: AGENDA FOR JULY 12, 1995 Director of Finance Report During the month of June, the daily rate program remarketing agents were changed from Merrill Lynch to PaineWebber for the Series A and the 1993 Refunding COPs and to J.P. Morgan for the Series C COPs. (Series B COPs have been refunded and the 1992 Refunding COPs are remarketed by Paine Webber in a weekly mode.) The attached graphs show the interest rates on each of the daily rate COPs for the past month. A separate graph was prepared for each because of the different remarketing agent change dates, which are noted on each graph. In future months, the information will be presented on one graph. Staff will maintain its continuous rate monitoring and ongoing dialog with the remarketing agents to keep the Committee fully informed about developments in the program as they occur and at each meeting. Staff Recommendation Information only. J:IWPOOC\FINICRANEIFPC.MTGIFPC95\AGENDA.FPCIDOF.795 CSDOC DAILY COP RATES, SERIES "A" 5.00 4.50 -------·------------------------------------------------------------~----------------------- -"#. -w ~ a: 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 30- May- 95 05/0719502:41 PM PaineWebber begins remarketing. 31- May- 95 05- Jun- 95 07- Jun- 95 12- Jun- 95 14- Jun- 95 DATE 19- Jun- 95 21- Jun- 95 26- Jun- 95 28- Jun- 95 03- Jul- 95 05- Jul- 95 J ) 5.00 4.50 4.00 3.50 3.00 -'#. -w I-2.50 <( a: 2.00 1.50 1.00 0.50 0.00 - CSDOC DAILY COP RATES, SERIES "C" ·-------· -.... ... \ ____ :~~-~------------------------------=;•~~~~---------------:/~~-----------~\----------~----\ --.. ________ ,,,. ' ; ' ' ; ----------·~--------------------11----------------------------------------------~,------------ ' I 111111...._ \ I "" I I \ ' I \ ---------------,-----~--------~~----------------------------------------------~---~---------· I I I ' ------------------'-....--------,.! _ --------- ' I ---------------------------------------------~' ----. ' I ', I ' \ I ------------------------·--------------- 30-31 -05-07-12- May-May-Jun-Jun-Jun- 95 95 95 95 95 ' ' ' ' ' --------------------------------------------------'• J. P. Morgan begins remarketing. 14-19-21-26-28-03-05- Jun-Jun-Jun-Jun-Jun-Jul-Jul- 95 95 95 95 95 95 95 DATE 05/07/9502:50 PM • J CSDOC DAILY COP RATES, SERIES "1993 REF" 5.00 4.50 -------------------------------' ----------------~ ------: -------------------- -'#. -w I-c:t a: 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 30- May- 95 05/07 /9503:03 PM 31- May- 95 05- Jun- 95 07- Jun- 95 12- Jun- 95 14- Jun- 95 PaineWebber begins remarketing. DATE 19- Jun- 95 21- Jun- 95 26- Jun- 95 28- Jun- 95 03- Jul- 95 05- Jul- 95 (4)(f) Summary FINANCE, ADMrNISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 General Counsel's Report The attached report was received from General Counsel. Tom Woodruff will review the report for the Committee's consideration at the meeting. ) Staff Recommendation \ _ _) N/A J:\WPOOC\FIN\CRANE\FPC.MTG\FPC95\ITEMS.AGDICOUNSEL.795 LAW OFFICE S O F' ROURKE. WOODRUFF & SPRADLIN A PROFESSIONAL C O RPORATION TO: -FROM: DATE: RE: MEMORANDU M Joint Chairman and Members of Boards of Directors County Sanitation Districts General Counsel July 3, 1995 Professional Services Agreement Fee Schedule Adjustment Rourke, Woodruff & Spradlin is requesting your approval of an adjustment in the fee schedule of our Professional Services Agreement. Our rates have not been adjusted for more than three years, as we have withheld any request for adjustments during this period in response to the uncertainty of finances for the Districts' operations. During the same period of time, we have experienced substantial increases in the costs we incur in providing our legal services for the Districts. Our Firm is proud of the legal services we have provided to the Districts. We believe we provide the highest quality legal services while, at the same time, constantly strive to efficiently control the costs to the Districts. Rourke, Woodruff & Spradlin is unique in its policy of not passing through charges for overhead expenses, such as mileage, overtime, telephone, faxes and routine photocopying, which are commonly-accepted billing practices in the legal industry. Our proposed rates, which we believe are appropriate and reasonable, are set forth below. The premium for Mr. Woodruff's time represents his being recognized, both nationally and statewide, as an expert in wastewater law. The proposed rates represent an increase of less than 4% per year total, which is less than the change in the cost of living for the same period of time. Thomas L. Woodruff Principals and Senior Associates Associates Paralegals Present Rate $160.00 $160.00 $135.00 $ 70.00 Proposed Rate $185.00 $175.00 $150.00 $ 80.00 Joint Chairman and Members of Boards of Directors County Sanitation Districts July 3, 1995 Page 2 In recognition of comments and suggestions by some Board Members that service agreements be adjusted regularly, but nominally, rather than large increases after a longer time period, we have added a new provision to the Agreement to allow for the rates to be adjusted annually in an amount equal to the Consumer Price Index for all wage earners in the Los Angeles-Orange County metropolitan area. We would again reaffirm to the Boards our pleasure and satisfaction in being able to provide services to you and to the Staff and other Consultants of the Districts. It is very rewarding to work with committed individuals in every regard, who constantly exercise their skills in producing the highest quality of work product. TLW:pj ~c!rA~. THOMASL.WOODRUFF GENERAL COUNSEL AMENDMENT NO. 13 RE AGREEMENT FOR EMPLOYMENT OF GENERAL COUNSEL THIS AMENDMENT to that certain Agreement dated May 1, 1975, is made and entered into this __ day of _______ , 1995, by and between THOMAS L. WOODRUFF, hereinafter referred to as "COUNSEL", who is an owner/member of the Law Firm of Rourke, Woodruff & Spradlin, a Professional Corporation, hereinafter referred to as "FIRM"; and COUNTY SANITATION DISTRICT NO. 1 OF ORANGE COUNTY, CALIFORNIA, on behalf of itself and as agent for County Sanitation Districts Nos. 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, hereinafter referred to as "DISTRICT'. WHEREAS, the parties hereto have previously entered into an Agreement, whereby DISTRICT employed COUNSEL to serve in the capacity as General Legal Counsel to DISTRICT; and WHEREAS, the parties hereto wish to amend said Agreement, as more particularly set forth herein. NOW, THEREFORE, in consideration of the foregoing, it is agreed between the parties hereto as follows: 1. Paragraph 4 of said Agreement is hereby amended to read: "4. Compensation for legal services by COUNSEL shall be as follows: (a) There shall be no minimum retainer paid to COUNSEL. (b) For all work attendant to those services set forth in Paragraph 3 above, DISTRICT shall pay FIRM at a rate of One Hundred 1 Eighty-Five ($185.00) Dollars per hour. For legal services rendered by other Principals or Senior Associates of FIRM, DISTRICT shall pay to FIRM at a rate of One Hundred Seventy-Five ($175.00) Dollars per hour. For those services rendered by Associate Attorneys of COUNSEL, who are members of COUNSEL'S FIRM, DISTRICT shall pay to FIRM at a rate of One Hundred Fifty ($150.00) Dollars per hour. For those services rendered by Paralegals of COUNSEL, who are employees of COUNSEL'S FIRM, DISTRICT shall pay to FIRM at a rate of Eighty ($80.00) Dollars per hour. (c) Effective July 1 of each year, the hourly labor rates shall be adjusted in an amount equal to the percentage increase in the Consumer Price Index for the Los Angeles-Orange County Metropolitan Area, all wage earners, for the period between June 1 through May 30 of the prior year. Each hourly labor rate shall be rounded to the nearest $1.00 increment. All of the rates listed shall include FIRM'S direct labor costs, indirect costs, overhead and profit. (d) For appearances by COUNSEL at conferences, symposiums or seminars on behalf of DISTRICT, DISTRICT shall pay FIRM at the rate of Four Hundred ($400.00) Dollars per day, or at the rate of One Hundred Eighty-Five ($185.00) Dollars per hour, whichever is less. (e) DISTRICT shall be responsible for and shall pay or reimburse FIRM for all costs and expenditures required or advanced by 2000-00028 15253_1 2 COUNSEL or FIRM in the preparation for, prosecution or defense of litigation, including court costs, jury fees, witness fees, reporter's fees, title reports, photographs, diagrams, maps and similarly-related items. (f) DISTRICT shall be responsible for and shall pay or reimburse COUNSEL or FIRM for the actual expenses of travel, food and lodging outside the County of Orange on the business of DISTRICT, and shall pay or reimburse COUNSEL or FIRM for all other necessary expenditures on the business of DISTRICT in the actual amounts so expended." 2. This Amendment shall take effect August 1, 1995. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed on the day and year first above written. TLW:pj 2000-00028 15253_1 COUNTY SANITATION DISTRICT NO. 1 OF ORANGE COUNTY, CALIFORNIA, on behalf of itself and as agent for County Sanitation Districts Nos. 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California Chairman, Board of Directors Secretary, Board of Directors ROURKE, WOODRUFF & SPRADLIN, P.C. By __________________________________ ~ Thomas L. Woodruff 3 ~ I FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 (5) Final Draft of the Ernst & Young Finance Function Review of Purchasing and Warehousing, Accounting and Finance, and Information Systems Summary: The final draft of the Ernst & Young Finance Function Review of Purchasing and Warehousing, Accounting and Finance, and Information Systems is scheduled to be presented to the Executive Committee on July 19, 1995. Copies of the report will be available at the Finance, Administration and Human Resources Committee meeting for any Directors who would like a copy. Staff Recommendation Information only. J:\WPOOC\FINICRANE\FPC.MTGIFPC85\ITEMS.AGDIFAHR5.795 ~\ I FINANCE, ADMINISTRATION A.ND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 ( 6} Consideration of Motion to Approve the Draft Finance, Administration and Human Resources Committee Meeting Minutes of June 14, 1995 Summary Attached is a draft of the Finance, Administration and Human Resources Committee meeting Minutes of June 14, 1995, for approval by the Committee. Staff Recommendation It is recommended that the minutes of the June 14, 1995, Finance, Administration and Human Resources Committee meeting be approved. These minutes were submitted to the Executive Committee at their June 21, 1995 meeting, and no further action is required. J:IWPDOCIFINICRANEIFPC.MTGIFPC95\llEMS.AGOIMFPC7.95 n DRAFT County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesdav. June 14. 1995. 5:30 P.M. A meeting of the Finance, Administration and Human Resources Committee of the County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California was held on June 14, 1995 at 5:30 p.m., at the Districts' Administrative offices. (1) ROLL CALL The roll was called and a quorum declared present, as follows: Committee Directors Present: John C. Cox, Jr., Joint Chairman George Brown, Chairman Jan Debay Burnie Dunlap John M. Gullixson Wally Linn Thomas Saltarelli Roger R. Stanton, Vice Chairman William G. Steiner Peer Swan Committee Directors Absent: James H. Flora Staff Present: Don Mcintyre, General Manager Blake Anderson, Assistant General Manager Gary Streed, Director of Finance Ed Hodges, Director of Maintenance Bob Ooten, Director of Operations Ed Torres, Director of Technical Services John Linder, Director of Engineering Mike White, Controller Steve Kozak, Financial Manager Others Present Tom Woodruff, General Counsel (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS No comments were made. (4) REPORTS OF THE COMMITTEE CHAIR. GENERAL MANAGER. ASSISTANT GENERAL MANAGER(Sl. DIRECTOR OF FINANCE/TREASURER. DIRECTOR OF HUMAN RESOURCES AND GENERAL COUNSEL (a) Report of the Committee Chair George Brown, Chairman, reported that a change to current remarketing Minutes of Finance, Adr ~~and Human Resources Committr --'\ Page 2 ) · 1 June 14, 1995 agreements was requested by one of the parties to the previously authorized reassignments. A vote was taken to add consideration of this change to the agenda, and to take action as a part of the Report of General Counsel. (b) Report of the General Manager General Manager Don Mcintyre, reminded the Committee of the Directors' orientation and tour to be conducted Saturday, June 17, 1995. (c) Report of Assistant General Manager(s) Assistant General Manager Blake Anderson updated the Committee on recent events regarding the resolution of the County bankruptcy and the potential impact on the Districts and a quick settlement. (d) Report of the Finance DirectorlTreasurer Finance DirectorfTreasurer Gary G. Streed reviewed the report included with the agenda package and updated the Committee on the status of the Orange County Investment Pool and the Districts' self-managed bank and investment accounts. The December 6, 1994 reserves receivable from the County will be reported as a long-term receivable and not as an investment in the future. (e) Report of the Director of Human Resources None. (f) Report of General Counsel Thomas L. Woodruff, General Counsel, gave a status report on previous action taken by the FAHR Committee and Joint Boards relative to changing the Remarketing Agents on all three of our current outstanding financing programs. He advised that the Series A and C have been fully completed, with all documents executed. The Agreements and documents relating to 1993 Series Refunding are complete and approved by all parties, however Societe Generale would like clarification on a provision relating to obligation to pay the 1993 Series Refunding Remarketing Agreement. It was moved, seconded and duly carried to accept the requested amendment of Societe Generale to the 1993 Series Refunding Remarketing Agreement that provides that if the Certificates are converted to a fixed mode "at the direction of the Bank, the Bank will pay the reasonable fee." I I I Minutes of Finance, f-~. and Human Resources Com~ Page 3 · · ; June 14, 1995 (5) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the May 10, 1995, meeting of the Finance, Administration and Human Resources Committee. (6) Consideration of motion recommending approval of the proposed 1995-96 Joint Works Budgets and forwarding them to the Executive Committee as follows: Joint Works Operating/Working Capital Workers' Compensation Self-Insurance Public Liability Self-Insurance Dental Health Plan Trust Self-Insurance Joint Works Capital Outlav Revolving $54.380,00'0 307,000 272.000 437.000 33,530,000 After discussion on this item, it was moved, seconded and duly carried to recommend that the Executive Committee approve the proposed Joint Works Operating, Joint Works Capital and Self-Insurance Fund Budgets for 1995-96. (7) Consideration of Planning. Design and Construction Committee recommendation PDCC6Udl: and Operations. Maintenance and Technical Services Committee recommendation OMTS95-027 Re: Consideration of Motion to Authorize the General Manager to Approve Expenditure of Funds up to $50,000 for Contracts. Services and Purchase Orders. Excluding Public Works Contracts Governed by State Law and Professional Services Agreements Governed by Board Resolution 95-9 After discussion on this item, it was moved, seconded and duly carried to recommend that the Executive Committee recommend the Boards of Directors: Authorize the General Manager to approve expenditures of funds up to $50,000 for contracts, services and purchase orders, excluding public works contracts governed by State law; and professional services agreement governed by Board Resolution 95-9. (8) OLD BUSINESS FAHR95-25 Classification. Compensation. and Other Terms. Conditions, Rules and Regulations of Employment After discussion on this matter, staff was directed to return this item, including examples and amounts, for future consideration. Minutes of Finance, Act -""'- 1 and Human Resources CommitV --'-, Page 4 · , June 14, 1995 FAHR95-26 Consideration of Motion for Renewal of All-Risk Insurance (including Fire. Flood and Earthquake Coverage) for FY 1995-96 After discussion on this matter, it was moved, seconded and duly carried to recommend the Executive Committee approve renewal of the Districts' All-Risk insurance program including earthquake, flood, personal property and business interruption, in the amounts of $200 million All-Risk, and $30 million earthquake with deductibles of $25,000 for all perils except earthquake and 5% per unit ($250,000 min.) for earthquake, for a total premium not to exceed $1.4 million. FAHR95-29 Consideration of Motions to Select External Money Manager and Custodial Services Bank for the Districts' Investment Program After discussion on this matter, it was moved, seconded and duly carried to recommend the Executive Committee: 1. Select the firm of Pacific Management Investment Company to serve as the Districts' external money manager, and authorize staff to negotiate a professional services agreement. 2. Select Mellon Trust Company as master custodial services bank, and authorize staff to 'negotiate a professional services agreement. (9) NEW BUSINESS FAHR95-30 Consideration of Motion to Make Revisions to MPRP (Management Perfonnance Review Plan) Perfonnance Incentive Values After discussion on this matter, it was moved, seconded and duly carried to recommend that the Executive Committee approve the following multi-phased approach, in order to realize the initial objectives of the MPRP program to provide an incentive for consistent meritorious performance: 1. Effective in July 1995, authorize funds totaling $173,000 beyond the 3.0 percent of payroll Merit Pool Fund approved last year sufficient to address the more critical range position issues now occurring. Payments will be made in 1995-96. 2. Establish a Target Merit Pool Fund of 5.0 percent of payroll (totaling $453,000) for implementation in July 1996 sufficient to incentivize performance as recommended by Ernst & Young. This fund would be distributed based on performance (see Attachment 1) as in the past, and would be in addition to the already authorized 3.0 percent fund which would Minutes of Finance, f~n. and Human Resources Comm,_..,, Page 5 1 J ' J June 14, 1995 be used to provide a cost-of-living adjustment to those employees whose performance at least met expectations. Payments would be made in 1996-97. 3. Provide extensive training to all supervisors and managers in proper administration of the program, and particularly the review process as recommended by Ernst & Young. (10) CLOSED SESSION The Chairman reported to the Committee the need for a Closed Session as authorized by Government Code Section 54957 .6 to discuss and consider the item that is specified as Item 10 on the published Agenda. The Committee convened in closed session at 7:45 p.m. At 8:00 p.m., the Committee reconvened in regular session. It was moved, seconded and duly carried to approve the recommendations of the Management Staff contained in the report of June 14, 1995, relating to changes in job titles for certain confidential employees, the dissolution of the confidential employees bargaining unit, and the designation of certain job classifications as confidential employees. Confidential Minutes of the Closed Session held by the Committee have been prepared in accordance with California Government Code Section 54957.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. (11) OTHER BUSINESS. IF ANY None. (12) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING None. (13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND A STAFF REPORT None. Minutes of Finance, Adr ---·and Human Resources Committf Page 6 · 1 ' June 14, 1995 (14) CONSIDERATION OF UPCOMING MEETING DATES AND ITEMS TO BE DISCUSSED AT THOSE MEETINGS Committee Chairman George Brown requested the Committee refer to the calendar of future meetings on the back of the Notice of Meeting and reminded the Directors that the next Committee meeting is scheduled for Wednesday, July 12, 1995. He recommended the Committee also review the list of future meeting topics. The Committee will not meet in August, November and December 1995, as no Executive Committee meetings are scheduled, and no FAHR Committee recommendation could be carried to the respective Joint Board meetings. (15) ADJOURNMENT The meeting was adjourned at 8:00 p.m. GGS:lc J:\WPOOC\FIN\CRANE\MTG\FPC951MNUTES'MFAHR6.95 ~ I I ~ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR95-25: Summary AGENDA FOR JULY 12, 1995 Classification, Compensation, and Other Terms, Conditions, Rules and Regulations of Employment At the May meeting, the Committee reviewed and approved an omnibus resolution containing in one place all of the terms, conditions, rules and regulations of employment. This was the first time that all of the current information had been available in one place. During the discussion, the Committee asked for a matrix that indicated which provisions were applicable to which employee groups. That matrix has been expanded in accordance with the Directors' June discussion, and is enclosed for the Directors to add to their previous packages. Staff Recommendation Information only. J:\WPDOC\FINICRANE\FPC.MTG\FPC95\ITEMS.AGD\FAHR95.258 July 12, 1995 COUNTY SANITATION DISTRICTS of ORANGE COUNTY, CALIFORNIA 10844 ELLIS AVENUE P.O. BOX 8127 FOUNTAIN VALLEY, CALIFORNIA 92728·8127 (714) 962·2411 EMPLOYEE BENEFIT PROGRAM SUMMARY The Districts' Employee Benefit Program is designed to provide eligible staff members with important professional services, time away from work, recognition for continued successful contribution to the Districts' mission and rewards for special efforts. The benefit program is an important component of total compensation, and represents a value in excess of one-third of an employee's salary. All benefit programs are subject to the meet and confer process. The following summary description of benefits enjoyed by employees is excerpted from Districts' Policies and appropriate memoranda of understanding, which may be consulted for a more complete description. INSURANCE Medical. Districts' monthly contribution towards each of the medical plans are as follow: Plan Districts' Contribution Employees' Contribution NORTHWESTERN Employee only $338.62 $ -0- Employee & 1 dependent $477.92 $ 90.00 Full Family $653.96 $160.00 FHP Employee only $134.65 $ 2.69 Employee & 1 dependent $215.00 $ 54.82 Full Family $275.00 $145.35 KAISER Employee only $136.62 $ 1.19 Employee & 1 dependent $215.00 $ 60.62 Full Family $275.00 $115.00 Dental. The Districts provide a Self Funded Dental Plan at no cost for employee only coverage, and at $9.00 per month for full family coverage. The balance of the premium, currently $26.50 for employee only and $65.25 for full family, is paid by the Districts. Life. Non-exempt employees receive $15,000 of term life insurance; exempt employees (Professional level and above) receive $50,000 of term life insurance coverage. Short Term Disability. The Districts provide a non-work related, short-term disability indemnity plan that pays two-thirds of an employee's salary up to $336 per week for up to 26 weeks following a fourteen calendar day waiting period. -2 - Long Term Disability. Upon completion of 5 years of service, the Districts provide a non- work related, long-term disability indemnity plan that pays two-thirds of the employee's rate of pay, not to exceed $5,000 per month, for up to two years, following a 90-day waiting period. Employees who have less than 5 years of service may purchase the LTD coverage. Retiring Employees. The Districts pay, for employees hired prior to July 1, 1988, two and one-half months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the Districts' medical plans. The Districts also provide a retiree medical health premium offset program established by the County of Orange wherein the cost of health premiums are offset by $10 per month for every year of service up to a maximum of $250 per month. REIMBURSEMENT ACCOUNT Employees may participate in both a Medical and Dependent Care Reimbursement Account under IRC provisions. Participation in these programs do not affect the Districts' contribution to the Orange County Employees Retirement System. EMPLOYEE ASSISTANCE PROGRAM The Districts provide confidential professional consultation and referral services to employees and their dependents who may be experiencing problems which affect the employee's job performance. DEFERRED COMPENSATION The Districts' Deferred Compensation Plan provides an opportunity for employees to defer income tax liability on a portion of their wages until such time as those funds are withdrawn from the fund because of death, disability, retirement, hardship or termination of employment. Districts' Contribution Employee Level Non-Exempt Employees Professional and Supervisory Executive Management Matching -0-% 1.0% 1.0% 2.0% 3.0% 3.0% Asst. Department Head Department Head Assistant General Manager General Manager TIME AWAY FROM WORK Holidays. The following days are observed as holidays: New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veterans Day Thanksgiving Day Day After Thanksgiving Day Before Christmas Christmas Day Floating Holiday Non-Matching -0-% 2.0% 2.0% 2.5% 3.0% 3.0% $7500 annual Personal Leave. Employees covered by the Operations and Maintenance Memorandum of Understanding only receive Personal Leave in lieu of Vacation and Sick Leave. Personal -3 - "'-Leave is accrued at the rate of 80 hours in the first year, 140 hours in the second through fourth years, and 180 hours per year in the fifth through tenth years. An additional 8 hours per year is then added up to a maximum of 220 hours. Employees may only accrue up to 400 hours of Personal Leave as of the last day of the final pay period in December of each year. Employees are paid in full for all hours accumulated in excess of 400 each January. Sick Leave. Employees hired prior to November 27, 1981, accrue 91 hours per year; employees hired on or after November 27, 1981, accrue 78 hours per year, beginning with the first day of employment. Employees may elect annually to be paid for any unused sick leave hours accrued through the end of December at their current hourly rate according to the following payoff schedule: Accrued Sick Leave Hours 0-100 101-240 241-560 Over 560 (Mandatory) Rate of Payoff 0% 25% 35% 50% Sick Leave Incentive Plan. If the average sick leave usage of employees in the Professional, Supervisory and Executive Management Groups is under 40 hours per year, the annual payoff for unused sick leave is as follows: Accrued Sick Leave Hours 0 -100 101 -240 241 -560 Over 560 (mandatory) Rate of Payoff 10% 40% 50% 60% Vacation. Full-time employees not covered by Personal Leave provisions accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service At the end of 1st Year In Years 2 through 4 In Years 5 through 10 In Year 11 In Year 12 In Year 13 In Year 14 In Year 15 and over Hours -Biweekly 3.08 4.62 4.93 5.24 5.54 5.85 6.16 Hours -Annual 80 80 120 128 136 144 152 160 Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status, up to a maximum of 200 hours. Vacation leave in excess of 200 hours must be scheduled off or compensated for in January of each year, unless special arrangements are made in advance with the employee's supervisor. Bereavement Leave. An employee who is compelled to be absent from work because of the death or imminent death of certain specified individuals is entitled to a maximum of 3 paid working days leave. -4 - Jury Duty. Employees called for jury· duty will be granted a leave of absence with pay for the actual time spent on jury service, less the amount of any jury duty pay received, exclusive of mileage. Military Leave of Absence. Employees who are recalled to active service in the Armed Forces of the United States, the National Guard or who are required to fulfill obligations as members of a Military Reserve Unit are provided leave in accordance with the provisions of the Military and Veterans Code. Witness Leave. Employees will be granted leaves of absence to serve as witnesses in accordance with the provisions of California Government Code Sections 1230 and 1230.1 . Leave of Absence Without Pay. Employees may request a Leave of Absence Without Pay for up to one year to pursue a formal course of study or for other acceptable personal reasons. Under the provisions of the federal Family and Medical Leave Act, employees are entitled to 12 weeks of unpaid family or medical leave in a 12 month period for the birth or adoption of a child, to provide care during a serious health condition of their child, parent or spouse, or because of their own health condition. RETIREMENT The Districts offer participation in the Orange County Employees Retirement System, wherein all full-time employees are considered members. The Districts contribute 4.5% of an eligible employee's base salary towards the employee's contribution to the system in addition to the Districts' share of the regular contribution. BENEFIT OPTIONS PLANS Professional, Supervisory and Executive Management employees who have successfully completed their initial probationary period are entitled to participate in an Benefits Option Plan. Under the provisions of the three plans, employees will be reimbursed to cover expenses for job related professional membership dues, licenses or certificates, subscriptions and journals, as follows: Professional -$ 500; Supervisory -$1000; Executive Management - $1250. Professional employees are also entitled to tuition reimbursement of up to $250 annually for job related courses. TRADITIONAL 5-STEP MERIT PAY PROGRAM Employees in this program, who are generally non-exempt and represented by either OCEA or IUOE Local 501, receive a step advance upon completion of probation and upon completion of a successful annual review. These employees typically reach the top of their range in 3.5 years. Salary ranges in this group are established with the fifth step equal to the market rate. MANAGEMENT PERFORMANCE REVIEW PLAN Professional, Supervisory and Management Group employees in the MPRP Program are eligible for performance based salary adjustments effective the first pay period following the beginning of each fiscal year. The actual amount of the adjustment is determined by guidelines established annually by the Districts' Boards of Directors and General Manager in conformance with provisions of the MPRP Program and Compensation Policy. Employees in this program do not receive step advances or other salary adjustment except upon promotion. Salary ranges in this group are set with the midpoint equal to the market rate. 6-23-95 REF:GH COMPENSATION PROGRAM COMPARISON OCEA UNITS 0 AND M UNIT PROF & SUPV EXEC MGMT 5 Step Plan ( Step 5 Set at Market t/ t/ 5.5% Anniversary Merit Increase t/ t/ 5.5% at Completion of Probation t/ t/ 5.5% for Promotion t/ t/ Negotiated Range Adjustment Increase t/ t/ MPRP Expanded Range Plan Midpoint Set at Market t/ t/ Annual Adjustment in July Based on Performance Rating t/ t/ Limit of 20% in Top Quartile t/ t/ Overtime Pay Time-and-One-Half t/ Straight-Time t/ Other Bonuses Shift Differential t/ t/ Standby Pay t/ t/ Call Back Pay t/ t/ EMPLOYEE BENEFIT PROGRAM COMPARISON OCEA UNITS 0 AND M UNIT PROF & SUPV EXEC MGMT Time Away From Work Vacation t/ t/ t/ Sick Leave t/ t/ t/ Personal Leave t/ Holidays t/ t/ t/ t/ Deferred Compensation No Match -No Non-Match 1 % Match -2% Non-Match t/ 2% Match -2.5% Non-Match t/1 3% Match -3% Non-Match t/2 Insurance Medical t/ t/ t/ t/ Dental t/ t/ t/ t/ $15,000 Life t/ t/ $50,000 Life t/ t/ Short/Long Term Disability t/ t/ t/ t/ Benefit Option Plan $750 ($250 Tuition Reimburse) t/ $1000 t/ $1250 1 Assistant Department Head Only 2 Department Head Only FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR95-31: Summary: AGENDA FOR JULY 12, 1995 Consideration of Motion to Adopt Investment Performance Review Guidelines for the Districts' Investment Program On May 24, 1995, the Board of Directors approved the Investment Program Policy Statement recommended by the Finance, Administration and Human Resources Committee. On June 28, 1995, the Board of Directors selected Pacific Investment Management Company (PIMCO) as External Money Manager, and Mellon Trust/Boston Safe Deposit & Trust Company (Mellon) as Custodial Bank, as recommended by the FAHR Committee. This agenda item presents recommendations for the ongoing monitoring, review, and reporting of investment program performance to the FAHR Committee and the Boards of Directors. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee approve the following actions: 1. Adopt the investment performance benchmarks for the Liquid Operating Monies fund and for the Long-Term Operating Fund as described in the attached staff report. 2. Adopt the contents and frequency of investment performance reports as described in the attached staff report. J:IWPDOCIFINICRANEIFPC.MTGIFPC95VTEMS.AG~AHR95.31 .. ~\ July 12, 1995 FAHR95-31 Background STAFF REPORT COUNTY SANITATION DISTRICTS of ORANGE COUNTY, CALIFORNIA 10844 ELLIS AVENUE P.O, BOX 8127 FOUNTAIN VALLEY. CALIFORNIA 92728-8127 (7141962-2411 Consideration of Performance Review Guidelines For the Districts' Investment Program On May 24, 1995, the Boards of Directors approved the Investment Program Policy Statement recommended by the Finance, Administration & Human Resources Committee (the "Committee"). On June 28, 1995, the Boards of Directors selected Pacific Investment Management Company (PIMCO) as External Money Manager, and Mellon TrusUBoston Safe Deposit & Trust Company (Mellon) as Custodial Services Bank, and authorized staff to negotiate professional service agreements, as recommended by the Committee. ) The Districts' Investment Policy designates the Committee as the oversight committee for the Districts' Investment Policy and Program, and states that the Committee shall adopt guidelines for the ongoing review of duration, quality, and liquidity of the Districts' portfolio. Also, the Committee shall review the Districts' Investment Policy on an annual basis, and recommend revisions to the Boards of Directors, as appropriate. Monitoring & Review Program Active monitoring and periodic reporting are essential to an effective, ongoing review process for the Districts' Investment Program. The agreements with the Money Manager, PIMCO, and the Custodial Bank, Mellon Trust, will require each firm to submit periodic reports to the Districts that will track individual investment transactions, as well as overall portfolio performance. The value of the Districts' portfolios will be marked to market each month. In addition, the Districts' Investment Advisor, Callan Associates, will measure the performance of the portfolios and the Money Manager against recommended benchmarks and report their findings to the Districts each quarter. The Districts' Money Manager, PIMCO, and Investment Advisor, Callan, will both meet with the Committee each quarter to review investment performance, proposed strategies, and compliance with the Investment Policy (Section 14.2). Districts' staff will coordinate these efforts and will provide additional monitoring and analysis using the Bloomberg financial information system. FAHR95-31 Page2 July 12, 1995 Performance Benchmarks and Objectives The overall investment objective described in the Districts' Investment Policy is to obtain a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and cash flow needs (Section 13.0). The cash flow needs will be based on a five-year cash flow forecast, which will be updated quarterly, as required by the Investment Policy (Section 7.1 ). To ensure that the Districts' investment objectives are being met on an ongoing basis, the performance of the portfolio, and that of the Investment Manager, will be measured each quarter. The Districts' Investment Advisor recommends that the benchmarks described below be used to measure the investment performance of the Liquid Operating Monies Fund and the Long-Term Operating Monies Fund in achieving the objectives of the Investment Policy. Callan Associates recommends the use of two benchmarks for each portfolio. The first is a Market Index Benchmark which reflects the rate-of-return for investments with similar maturities. The second is a Peer Group Benchmark which reflects the returns achieved by other active money managers with similar objectives. The attached Callan report (Attachment "A") presents their analysis and rationale for the benchmark recommendations. The benchmarks are summarized as follows: Liquid Operating Monies o The 3-month T-bill rate will be the Market Index Benchmark for the short-term operating fund. o The Callan Active Cash Fixed-Income Style Group will be the Peer Group Benchmark for the short-term operating fund. Long-Term Operating Monies o The Merrill Lynch Government and Corporate 1 to 5-year Maturity Index will be the Market Index Benchmark for the long-term fund. o The Callan Defensive Fixed-Income Style Group will be the Peer Group Benchmark for the long-term fund. Ongoing Reporting The basic requirements for monthly reports about the Investment Program to the Committee are described in Investment Policy (Section 14.0). These reports, together with quarterly reports and the annual review, will provide the Committee with the information needed to evaluate risk, duration, quality, and liquidity characteristics of the Districts' Investment Program. ) FAHR95-31 Page3 July 12, 1995 The attached matrix (Attachment "B") presents a reference list to the recommended contents of the monthly and quarterly reports that will be submitted to the Committee and to the Boards of Directors. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee approve the following actions: 1. Adopt the investment performance benchmarks for the Liquid Operating Monies fund and for the Long-Term Operating Fund as described in this report. 2. Adopt the contents and frequency of investment performance reports as described in this report. SK:lc J:\WPDOC'FIN\CRANEV'PC.MTG'FPC95\STAFFRPT.FPC\FAHR95.31 Attachments JUL 03 '95 11:35 FR ~~~N H~SLJ(.;lt4TE:i JI0.5 c~d dd.j:::J I u ::.HN l I LJ l ~ I -ul": ,_ I I"" • t:)~ 0 ' I June 29, 1995 SUBJECT: Guidelines for the Perfonnauce Review of the Districts' Investment Program Background Pursuant to Section 15.2 of the Investment St.atement, the Districts shall adopt guidelines for the ongoing review of the investment program. The Districts are aware that the ongoing review and analysis of the inves1ment manager is just as important as the due diligence during the manager selection process. Accordingly, the Districts will evaluate the investment manager's performance to detennine that the objectives of the investment program arc being met, and the guidelines contained in the Investment Statement are still appropriate for achieving the objectives. Quarterly performance will be evaluated for evidence of progress toward the attainment oflong- tenn targets. In particular, the Committee will meet regularly to review: • the manager's adherence to the Investment Statement, including the guidelines for duration, credit quality t and liquidity; • any material changes in the manager's organization. investment philosophy, or personnel; and • comparison of the manager's investment retums to appropriat.e benehmarkst as de.fined below. Benclnnarks The returns for each portfolio will be compared to at least two benchmarks: a market index and a peer group. The market index reflects the return available from a passive approach, while the peer group reflects the retu.ms achieved by other active managers with similar objectives, operating in the same marketplace. Liquid Qperatinr: Monies The shorH.erm operating fund will be compared to the 3-month T-bill rate and the Callan Active cash Fued-Income Style Group. The Callan Active QWi Fixed Income Style Group represents a peer group of managers who operate with a muimwn maturity of one year. Lop:g Term Qpe@ting Monies The long-term operating fund will be compared to the Merrill Lynch Government & Corporate 1 to 5 Year Maturity Index and to the Callan JUL 03 '95 11:3s FR CALLRN HS50CiHTES 303 8~2 8230 10 ~~JI Ui~l-u~ ~1 ~.~~ Defensive Fixed-Income Style Group. The Merrill Lynch Government & Corporate 1 to 5 Year Maturity Index represents the broadest measure of government and corporate fixed income securities with maturities ranging from one year to five years. The Callan Defensive Fixed-Income Style Group represents a peer group of active managers that generate risk and return results com.parable to that of the Menill Lynch 1 to 3 Year Treasury lnde.x, which is slightly shorter in duration than the 1 to 5 Year Maturity Index. The risk associated with each fund, as me8Sl..ired by the variability of quarterly returns (standard deviation). must not exceed that of the benchmark index and the peer group without a corresponding increase in perfonnance above the benchmark or peer group. Quarterly performance will be evaluated for evidence of progress toward the attainment of long- t.erm targets. It is understood that there may be short-term periods during which performance deviates from maI:ket indices. Over trailing three year and longer periods, each fund is expected to peiform in the upper SO percentile of the manager's style group, and to exceed the benchmark index with appropriate risk. In addition to re.gTJlar quarterly reviews, the investment manager would merit immediate review in the event of major organizational changes, including: change in ownership, change in professional staff, significant account loss, etc.· JUL 05 '95 15:05 FR CAL.l.fiN RSSOCIHTES FAHR95~31 rA I CALLAN ASSOCIATES INC. \..01 San Fronci.sco, New· York. Chicago, Atlanta. Denver July 5, 1995 Mr. Steve Kozak County Sanitation Districts of Orange County 10844 Ellis A venue P.O. Box 8127 Fountain Valley, CA 92728-8127 Dear Steve; 303 832 8230 T~lT DlSl-U~ l.I t-'.~.::: ( ATTACHMENT A RUTHANN C MOOMV Vice President SUBJECT: Guidelines for the Performance Review of the Districts' Investment Program Tue purpose of my letter is co establish the benchmarks to use in evaluating the returns achieved by the investment manager. The recommended guidelines and benchmarks are provided in Attachment I. If the Board approves the recommendations, the Attachment is in a form.at suitable for handing off to the investment manager. This letter provides additional background information and rationale f o~ the recommendations. Benchmarks The perlonnance evaluation of the investment manager will be based on the total returns earned on the fund, and by the degree of risk undertaken to achieve those returns. By total return we mean the return from income earned, realized gains or losses, and the change in unrealized gain or loss, based on market values. The need to account for unrealized gains or losses makes it necessary to mark·to-market the portfolio. Once the return has been calculat.ed, it should be compared to a relevant benchmark.. Given the short term volatility of financial markets, the pattern of returns earned on the fund is likely to be volatile. Thus, an absolute return expectation is not very useful for evaluating performance. Instead, an investment manager should be evaluated relative to returns in the f"inancial markets over the relevant time period. In our view, each investment manager should be compared to at least two benchmarks: a market index and a peer group. The market index represents the universe of securities that the manager could buy -it reflects the retu...tn available from a passive approach of holding all eligible securities. The peer group reflects the returns achie,ved by other active managers with similar objectives1 operating in the same marketplace. Callan Associates has developed appropriate peer groups. referred to as Style Groups, t1'Jough extensive research and the development of a comprehensive database. 550 East 8th Avenue. Denvi:.r. '2() 80203 • 30:3 I g32-8~28 ·FOY 303 I 832-8230 JUL 05 '% 15:07 FR CRLL8t-l HSSOCIRTES 3~3 832 8230 TO 5f:jt!J1 Dl~1-U~ ~1 ~-~~ Mr. St.eve Kozak Page2 Julys. 1995 An exa."Ilple of a 11".arket index is the Merrill Lynch Government & Corporat.e 1 to 5 Year Maturity Index. Since this index is a broad measure of the government and corporate fixed income securities with marurities from one to five years, it represents the universe of securities available to your investment manager. All example of a peer group is the Callan Defensive Fixed- lncorne Style Group. This style group most closely represents a peer group of active managers that generate risk and return results comparable to that of the Merrill Lynch I to 3 Year Treasury Index, which is slightly shorter in duration than ·me 1 to S Year Maturity Index. The specific benchmarks proposed for the Districts' two funds are: Liquid Operating Monies The short-term operating fund will be compared to the 3-month T-bill rate and the Callan Active Cash Fixed-Income Style Group. The Callan Active Cash Fixed Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. Long Term Operating Monie~ The long-term operating fund will be compared to the Menill Lynch Govemment & Corporate 1 to 5 Year Maturity Index and to the cailan Defensive Fixed-Income Style Group. The investment manager chosen by the Committee is expected to add value through modest duration shifts. sector selection and individual security selection. It would be inappropriate for the manager to seek higher returns by subjecting the funds to higher risks. Therefore. tbe risk associated with each fund, as measu..'"ed by the variability of quarterly returns (st.andard deviation), \\'ill also be monitored. The standard deviation of returns for each fund should not exceed that of the benchmark index and the peer group by more than 20 percent. JUL 05 ,; 95 15: 07 FR ~~N RSSOC IRTES I Mr. Steve Kozak Page3 July 5.1995 Over the Longer Tenn 303 832 8230 T~~ll Dl~l-U~ ~I ~.~4 ( ' The focus of the Committee will be on achieving long term objectives. It is our observation that fiduciaries who keep a focus on the long term objectives achieve a higher degree of success in their investment programs. Quarterly performance will be evaluated for evidence of progress toward the attainment of long-term targets. It is understood that there may be short-tenn periods during which performance deviates from market indices. Over trailing three year and longer periods, each fund is expected to perform in the upper 50 percentile of the manager's style group, and to exceed the benchmark index with appropriate risk. Duration A rule-of-thumb for estimating the duration of a fixed income security of less than one year maturity is to equate the duration to the maturity. For example, a 90 day Treasury bill has a duration of 90 days (0.25); and a one year Treasury has a duration slightly less than l. Thus, the maximum duration of 90 days specified for the Liquid Operating account in section 7 .2.1.2. is fairly conservative, and is equivalent to a weighted average matUrity of 90 days. The account could still hold a security with a one year maturity, but the account would need to counter the effect of the one year security by shortening the remainder of the portfolio. If the Districts also maintain some operating cash, the duration of the Liquid Operating account could be extended to 6 months, which is still conservative but would add a bit of additional return. The duration target of the Long Term Operating Monies account should be set equal to that of the benchmark. The duration of the Merrill Lynch Government & Corporate 1 to 5 Year Index is approximately 2.5. The duration changes slightly as interest rates change, and has varied from 2.43 to 2.53 over the last three years. The investment guidelines would permit the manager to vary duration by plus or minus 20 percent from that of the benclunark, which results in a range of 2.0 to 3.0. This guideline appears consistent with the amount of risk that the Districts are willing to assume. while still providing the manager with a useful tool for adding value. Yours truly, ~rn , C.M~ Vice President attachment ·. JUL 05 '95 15:08 FR o::ll AN RSSOCIATES 303 832 8230 TO SAN IT DIST-uk Cl ~-~~ Attachment I July 5, 1995 SUBJECT: Guidelines for the Performance Review of the Distrids' Investment Program Backgrognd Pursuant to Section 15..2 of the Investment Statement, the Districts shall adopt guidelines for the ongoing review of the investment program. The Districts are aware that the ongoing review and analysis of the investment manager is just as important as the due diligence during the manager selection process. Accordingly. the Districts will evaluate the investment manager's perf onnance to determine that the objectives of the investment program are being met, and the guidelines contained in the Investment Statement are still appropriate for achieving the objectives. Quarterly perfonnance will be evaluated for evidence of progress toward the attainment of long- term targets. In particular, the Committee will meet regularly to review: • the manager's adherence to the Investment Statement. including the guidelines for duration, credit quality, and liquidity; • any material changes in the manager• s organization, investment philosophy, or personnel; and • comparison of the manager; s investtnent returns to appropriate benchmarks, as defined below. Benchmarks The perfonnance evaluation of the investment manager will be based on the overall returns earned en the funcL and by the degree of risk tmdertaken to achieve those returns. Overall return. also called total return, is the sum of income earned, realized return, and the change in unrealized gain or loss, based on market values. Given the short tenn volatility of financial markets, the pattern of returns earned on the fund is likely to be volatile. The investment manager for each fund should be compared to two benchmarlcs: a market index and a peer group. The market index represents the universe of securities that the manager could buy --it reflects the return available from a passive approach of holding all eligible securities. The peer group reflects the returns achieved by other active managers with similar objectives, operating in the same marketplace. Callan Associates Inc. l JUL 05 '35 1s:0s FR CALLB.N R5SOC1Hl~S The specific benchmarks for the Districts· two funds are! Liquid Operating Monies The short-term operating fund will be compared to the 3-month T-bill rate and the Callan Active Cssh Fixed-Income Style Group. The Callan Active Cash Fixed Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. Long Term Operating Monies The long-tenn operating fund will be compared to the MeITill Lynch Government & Corporate l to S Year Maturity Index and to the Callan Defensive F'ixed-Income Style Group. The risk associated with each fund, as measUted by the variability of quarterly returns (standard deviation)t will also be monitored. The standard deviation of returns for each fund should not exceed that of the benchmark index and the peer group by more than 20 percent. Over tbe Longer Tenn The focus of the Committee will be on achieving long term objectives. Quarterly performance will be evaluated for eviden~ of progress toward the attainment of long-term targets. It is understood that there may be 'short-term periods during which performance deviates from market indices. Over trailing three year and longer periods, each fund is expected to perform in the upper SO percentile of the manager's style group, and to exceed the benchmalk index with appropriate risk. Callan Associates Inc. 2 FAHR95-31 POLICY REFERENCE 14.1.1 14.1.2 14.1.3 14.1.4 14.1.5 14.1.6 14.1.7 14.1.8 14.1.9 ADDL** ADDL** ADDL** ADDL** Notes *M =Monthly a = Quarterly COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE MONITORING & REPORTING FOR THE DISTRICTS' INVESTMENT PROGRAM PERFORMANCE CHARACTERISTIC Cost and market value of the portfolio (monthly mark-to-market). Modified duration of the portfolio compared to benchmark. Dollar change in value of the portfolio for a 1 % change in interest rate. Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. Average portfolio credit quality. Percent of portfolio with credit ratings below ·A" by any rating agency, and a description of such securities. Listing of any transactions or holdings which do not comply with this policy or with the California Government Code. Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year- to-date, and since Inception compared to the benchmark returns for the same periods. Comparison of portfolio performance to market index benchmark. Comparison of Manager's performance to peer group benchmark. Monitoring of organizational and structural changes of investment management firm. Audit portfolios for compliance with investment policy guidelines. .. ADDL = Monitoring of Additional Performance Characteristics ... ,. -... . ... ATTACHMENT "B" REPORTING PARTY" PIMCO MELLON CALLAN ) M,Q M,Q a M,Q a M,Q a M,Q a M,Q M,Q a M,Q M,Q a M,Q M,Q a M,Q a ) M,Q a M,Q a a a a .•, L FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 FAHR95-32: Consideration of Proposed Changes to the IRS-Approved Section 457 Deferred Compensation Plan as follows: Summary: (a) Consideration of Resolution No. 95-_ Approving Amendment to Deferred Compensation Plan for Officers and Employees in Order to Permit Greater Flexibility in Plan Distribution Elections, Clarify ... Certain Provisions of the Plan, and Comply with Certain Recent Internal Revenue Service Interpretations. (b) Consideration of Resolution No. 95-_ Approving Amended Deferred Compensation Program for General Manager, Assistant General Manager and Department Heads and Resolution No. 95-_ Approving Amended Deferred Compensation Program for Assistant Department Heads, Professional and Supervisory Employees, and Executive Assistants, Both in Order to Include Modifications to the Vesting Periods for Districts' Contributions. The Committee is being asked to consider three Resolutions. The first is to adopt an Amendment to the Plan in order to permit greater flexibility in plan distribution elections, clarify certain plan provisions and comply with certain IRS interpretations; the second is to approve an Amended Plan for General Manager, Assistant General Managers and Department Heads; and the third is to approve an Amended Plan for Assistant Department Heads and Professional and Supervisory Employees and Executive Assistants. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee recommend approval of (a) the First Amendment to the CSDOC Deferred Compensation Plan and; (b) modifications to the vesting requirements for Districts' contributions to the Management Deferred Compensation Program. J:\WPOOC\FIN\CRAN8FPC.MTG\FPC95\ITEMS.AGOIFAHRllS.32 July 12, 1995 FAHR95-32 STAFF REPORT COUNTY SANITATION DISTRICTS of ORANGE COUNTY. CALIFORNIA 10844 ELLIS AVENUE P.O. BOX 8127 FOUNTAIN VALLEY. CALIFORNIA 92728-8127 17141962-2411 Consideration of Proposed Changes to the IRS-Approved Section 457 Deferred Compensation Plan as follows: (a) Consideration of Resolution No. 95-_ Approving Amendment to Deferred Compensation Plan for Officers and Employees in Order to Permit Greater Flexibility in Plan Distribution Elections, Clarify Certain Provisions of the Plan, and Comply with Certain Recent Internal Revenue Service Interpretations. (b) Consideration of Resolution No. 95-_Approving Amended Deferred Compensation Program for General Manager, Assistant General Manager and Department Heads and Resolution No. 95-_ Approving Amended Deferred Compensation Program for Assistant Department Heads, Professional and Supervisory Employees, and Executive Assistants, Both in Order to Include Modifications to the Vesting Periods for Districts' Contributions. In 1975, the Districts adopted our first Deferred Compensation Plan for the benefit of management employees. During the intervening twenty years, there have been four amendments to the Plan, principally to comply with changes in the Internal Revenue Service regulations, but also to expand the Plan to allow participation by all other employees and by the Directors. The Committee is being asked to consider three Resolutions. The first is to adopt an Amendment to the Plan in order to permit greater flexibility in Plan distribution elections, to clarify certain provisions of the Plan, and to comply with certain recent Internal Revenue Service interpretations; the second is to approve an Amended Plan for General Manager, Assistant General Managers and Department Heads; and the third is to approve an Amended Plan for Assistant Department Heads and Professional and Supervisory Employees. The IRS has expressed certain opinions regarding {1) the ability of Plan participants to delay making a decision on the desired form of benefits until shortly before benefit payments are to begin, and (2) the requirement that combination benefits (lump-sum plus distributions over time) cannot be paid in increasing amounts, with the result that any lump sum must be paid on the same date as the first distribution over time is made. Also, general counsel has suggested revising the plan-to-plan transfer provisions to make clear that transfers can be made either to or from another employer's Section 457 plan. FAHR95-32 Page 2 July 12, 1995 Staff is proposing modifying the vesting requirements for Districts' contributions to the Deferred Comp accounts for General Manager, Assistant General Managers, Department Heads, Professional and Supervisory Employees and Executive Assistants. These changes will make the vesting requirements the same for so-called "matching" and "non-matching" contributions, at one year of participation. This simplification will reduce staff time required to administer and monitor the program and will allow the use of the third-party administrator in accordance with an Ernest & Young recommendation. Recommended Action Staff recommends that the Finance, Administration and Human Resources Committee recommend approval of (a) the First Amendment to the CSDOC Deferred Compensation Plan and; (b) modifications to the vesting requirements for Districts' contributions to the Management Deferred Compensation Plan. GGS:lc J:\WPDOCv=tN'CRANE'f'PC.MTG'f'PC95\STAFFRPT.FPC'f'AHR95.32 RESOLUTION NO. 95---- APPROVING AMENDED DEFERRED COMPENSATION PROGRAM FOR GENERAL MANAGER. ASSISTANT GENERAL MANAGERS AND DEPARTMENT HEADS A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, APPROVING REVISIONS TO THE' DEFERRED COMPENSATION PROGRAM FOR THE GENERAL MANAGER, ASSISTANT GENERAL MANAGERS AND DEPARTMENT HEADS OF THE DISTRICTS AND REPEALING RESOLUTION NO. 87-113 * * * * * * * * * REDLINE WHEREAS, in conjunction with the Districts• Deferred Compensation P.lan, the Districts, by Resolution No. 87-113, adopted ~y the Boards of Directors on August 8, 1987, have previously approved specified Districts contriputions to the individual deferred compensation accounts of the General Manager, Assistant General Managers, and Department Heads of the Districts; and, WHEREAS, by Resolution No. 95-54, adopted by the Boards of Directors on May 24, 1995, the Districts have reaffirmed the amount of the Districts contributions to the individual deferred compensation accounts of the General Manager, Assistant General Manag~rs, and Department Heads; and, WHEREAS, the Boards of Directors desire to revise the program of Districts contributions for such employees in order to change the vesting period with respect to such Districts contributions. NOW, THEREFORE, the Boards of Directors of County Sanitation Districts Nos. l, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, DO HEREBY DETERMINE, RESOLVE AND ORDER: Section 1. That the Districts hereby approve a contribution of Districts funds, in an annual sum equal to $7500.00, to the respective individual deferred compensation accounts of each of the General Manager and the Assistant General Managers (the 11 Districts Bon-llatchinq Fun4s contribution for General/Assistant General Manaqers11 ). That the Districts hereby approve a contribution of Districts funds, to the respective individual deferred compensation accounts of the Department Heads, in an annual sum equal to a maximum of three percent (3%) of the gross annual salary of each of the respective Department Heads (the "Districts llatchinq Fun4s contribution for Department Heads"), provided that each such employee voluntarily withholds from his/her salary, and contributes an equal sum, to his/her individual deferred compensation account. That the Districts hereby approve an additional contribution (the 11 Districts Bon-llatchinq Funds contribution for Department Heads11 ), to the respective individual deferred compensation accounts of the Department Heads, in an annual sum equal to three percent (3%) of the gross annual salary of each of the respective Department Heads, exclusive of the Districts Hatchinq Funds Contribution for Department Heads as hereinabove described, 2000-00019 15297_1 2 without the requirement of any matching contribution by the individual employees. That in the event the total sum contributed to the individual deferred compensation accounts of the Department Heads, comprised of the three percent (3%) Districts Bon-Hatchinq FUD4s contributions for Department Heads, the three percent (3%) Districts Matchinq Funds contributions for Department Heads_, and the three percent (3%) matching funds contributions from the employee, exceeds the maximum permissible dollar amount of deferred compensation, as prescribed by the Internal Revenue Code or U.S. Treasury Department Regulations, the Districts shall continue to provide three percent (3%) Districts Bon-llatchinq Fun4s Contributions for Department Heads and three percent (3%) Districts Hatchinq Fun4s contributions for Department Heads to the extent that such total Districts contributions do not exceed the maximum allowed by law, and the individual employee shall only be required to contribute such matching funds contributions as will provide a total of all contributions that will equal the maximum allowed by law. That upon the completion of one year of employment with the Districts and one year of participation in the Def erred Compensation Plan, all Districts llatchinq Fun4s Contributions for Department Heads then on deposit in the individual employee's deferred compensation account shall be deemed vested, and, thereafter, all Districts Matchinq FUDds contributions for Department Heads deposited into the individual employee's 2000-00019 15297_1 3 def erred compensation account shall be deemed vested upon deposit. Notwithstanding the preceding sentence, however, upon the death, or upon the Normal or Late Retirement (as those terms are defined in the Deferred Compensation Plan}, of the employee, irrespective of the length of his/her employment with the District~ ~nd of his/her participation in the Deferred Compensation Plan, all Districts Hatching Fun4s contributions for Department Beads then on deposit in the individual employee's deferred compensation account shall be deemed vested. Once Districts Hatching Fun4s Contributions for Department Beads have vested as described in this paragraph, they may thereafter be withdrawn to the extent otherwise permitted under the Deferred Compensation Plan. That Districts Bon-Hatching Pun4s Contributions (for General/ Assistant General Managers and for Department Heads) shall vest and shall be subject to withdrawal under the same conditions as Districts Hatching Funds Contributions for Department Beads., with two exceptions: (1) an employee who terminates service with the Distriets for a reason other than due to }1ormal or Late Retirement or death shall have :Ao vested interest i:A, a:Ad shall not be entitled to withdraw, any Districts Non Matching .Funds Contributions deposited into the employee's def erred eompe:Asation account during the one year ilftlftediately preceding such termination of service, afid (2) in no event may an employee withdraw, in eon:Aection with an emcrgeney withdrawal, any Districts llon Hatching Funds Contributions deposited into the 2000-00019 15297_1 4 . • cmpleyee•s deferred eempensatien aeeeunt durin~ the one year ilft:lfteaiately preeeain~ a request for emer~eney withdrawal. Section 2. This program shall be for the benefit of the General Manager, the Assistant General Managers and the Department Heads, which classifications are set forth on Attachment "1," which is incorporated herein by reference, and shall be terminated only by action of the Boards of Directors. In the event other classifications are added to the category of Department Heads by action of the General Manager or Boards of Directors of Districts, said classes shall be deemed to be governed by this Resolution concurrently therewith. Section 3. The General Manager and the Director of Finance are hereby authorized to execute individual Deferred Compensation Participation Agreements with each eligible employee, and are further authorized to execute any and all documents relating to investment and payment transactions relating to the Def erred Compensation Plan, provided that such documents are approved as to form by the Districts• General Counsel. Section 4. Resolution No. 87-113 is hereby repealed, and the provisions herein shall become effective, upon adoption of this Resolution; the provisions herein shall remain in effect until amended or terminated by resolution of the Boards of Directors. 2000-00019 15297_1 5 PASSED AND ADOPTED at a regular meeting held 2000-00019 15297_1 6 ) ATTACHMENT "1" 1. General Manager 2. Assistant General Manager -Administration 3. Assistant General Manager -Operations 4 • "Department Heads" : 2000-00019 15297_1 A. B. c. D. E. F. Director Director Director Director Director Director of Engineering of Finance of Human Resources of Ma·intenance of Operations of Technical Services 7 RESOLUTION NO. 95- APPROVING AMENDMENT TO DEFERRED COMPENSATION PLAN FOR OFFICERS AND EMPLOYEES A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13, AND 14 OF ORANGE COUNTY, CALIFORNIA, APPROVING AN AMENDMENT TO DEFERRED COMPENSATION PLAN FOR THE OFFICERS AND EMPLOYEES OF THE DISTRICTS *********************************** WHEREAS, by Resolution No. 94 .. 39, adopted by the Boards of Directors on April 13, 1994, the Districts approved and adopted the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994 (hereinafter referred to as the "Plan"); and, WHEREAS, the Boards of Directors desire to amend the Plan to permit greater flexibility in plan distribution elections, to clarify certain provisions of the Plan, and to comply with certain recent Internal Revenue Service interpretations. NOW; THEREFORE, the Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13, and 14 of Orange County, California, DO HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. That the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994 is hereby amended as set forth in Exhibit "A," attached hereto and incorporated herein by reference as though set forth herein at length, and as so amended shall remain in effect until further amended or 2000-00019 14643_1 terminated by Resolution of the Boards of Directors. PASSED AND ADOPTED at a regular meeting of the Boards of Directors held this __ day of ____ _, 1995. 2000-00019 14643_1 I ' I ~ FIRST AMENDMENT TO COUNTY SANITATION DISTRICTS OF ORANGE COUNTY, CALIFORNIA DEFERRED COMPENSATION PLAN AS AMENDED 1994 WHEREAS, by Resolution No. 94-39, adopted by the Boards of Directors on April 13, 1994, the Districts approved and adopted a revised deferred compensation plan, i.e., the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994 (the "Plan"); WHEREAS, the Boards of Directors desire to amend the Plan to permit greater flexibility in plan distribution elections and to clarify certain provisions of the Plan; THEREFORE, pursuant to Resolution No. 95-_, adopted by the Boards of Directors on , 1995 the County Sanitation Districts of Orange County, California do hereby amend the Plan as follows: 1. Section 3. 16 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: "'Required Beginning Date' shall mean the latest date that distributions are permitted to commence under Section 10.3." 2. Section 10.1 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: "10.1 Termination of Employment by Retirement. The Participant is eligible to receive distributions of benefits, with respect to retirement, after the Participant has met the requirements for Normal Retirement and has retired from service with the Employer. The Participant may submit to the Employer an application for distribution of benefits under the Plan as early as the date he notifies the Employer of his intended retirement and as late as thirty (30) days following the actual date of termination of employment due to retirement. Pursuant to such application, the Participant shall elect one of the benefits payment options described below. Such election shall become irrevocable upon the lapse of the thirtieth (30th) day following termination of employment with the Employer due to retirement. Following the Participant's termination of employment due to retirement and the receipt of such application, the Employer shall pay to the Participant one of the following benefits (expressed in terms of both payment option and commencement date) as elected by the Participant: PAYMENT OPTION - (a) Consecutive equal monthly payments over a period of 36 1 EXHIBIT "A" 2000-00019 14831_1 months to 180 months, as determined by the Participant; provided, however, that any such period may not extend beyond the lite expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's Category A Beneficiary. (This payment option may be satisfied through annuity distributions.) (b) Consecutive equal monthly payments for the life of the Participant or for the lives of the Participant and his Category A Beneficiary. (This payment option may be satisfied through annuity distributions.) (c) A single payment equal to the balance of the Participant's Investment Account. (d) A single lump-sum payment in an amount to be determined by the Participant, with the remainder of the Participant's Investment Account to be paid under either payment option (a) or payment option (b) above. COMMENCEMENT DATE OPTION - (a) The first day of the third calendar month following the month in which termination of employment occurs, or (b) The first day of a later month as designated by the Participant. In the case of payment option (d) above, the lump sum must be paid on the same date that the first payment over time is paid. DELAYED PAYMENT ELECTION OPTION - The irrevocable election which must be submitted to the Employer no later than thirty (30) days following termination of employment with the Employer due to retirement may specify the elected commencement date option only, deferring the election as to the particular payment option. In such case, the Participant must later submit an election as to the payment option. Such later election must be submitted no later than thirty (30) days before the previously elected commencement date and shall become irrevocable on the date thirty (30) days before such previously elected commencement date. Should the Participant fail to timely submit a separate payment option election hereunder, the 2 Employer shall pay the sum in the Participant's Investment Account to the Participant according to payment option (c) above, on the previously elected commencement date. The foregoing options are limited by, and these payments shall be made subject to, the provisions of Sections 10.3, 10.5, 10.6 and 10. 7 hereof. The total amount of any benefits paid pursuant to payment options (a) through ( d) above shall not exceed the sum of the amounts deferred by the Participant, as adjusted for any earnings or losses thereon. Should the Participant fail to elect one of the benefits hereunder by way of an application for retirement benefits filed with the Employer within thirty (30) days after retirement, the Employer shall pay the sum in the Participant's Investment Account according to the "Benefit A" election previously made pursuant to either the Participation Agreement or a modification thereof. However, if there is no such previous election, then the Employer shall pay the sum in the Participant's Investment Account according to payment option (c) above on the Required Beginning Date." 3. Subsection 10.6.2 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: "10.6.2 2000-00019 14831_1 When Participant Dies either before the Required Beginning Date or before Distributions Have Begun. If a Participant dies either before the Required Beginning Date or before distribution of his Investment Account has begun, and, if any portion of the Investment Account is payable to (or for the benefit of) a Category A or B Beneficiary, then the Employer shall pay such portion as follows - CATEGORY A BENEFICIARIES (1) if the Category A Beneficiary is other than the surviving spouse, the portion of the Investment Account payable to such beneficiary shall be distributed according to one of the following options: (a) (b) Consecutive equal monthly payments over a period of 36 months to 60 months (but not exceeding the life expectancy of the Category A Beneficiary); A single lump-sum payment; or 3 2000-00019 14831_1 (c) A single lump-sum payment in an amount to be determined by the Participant, with the remainder of the Participant's Investment Account to be paid under payment option (a). Such distributions shall begin on the date designated by either the Participant or, if permitted by the Participant, the Category A Beneficiary, but in no event later than December 31 of the calendar year immediately following the calendar year in which the Participant dies. If payment is made under payment option (c) above, the lump sum must be paid on the same date that the first payment over time is paid. (2) if the Category A Beneficiary is the surviving spouse of the Participant, the portion of the Investment Account payable to the surviving spouse shall be distributed according to one of the following options: (a) Consecutive equal monthly payments over a period not to extend beyond the life expectancy of the surviving spouse; (b) A single lump-sum payment; or (c) A single lump-sum payment in an amount to be determined by the Participant, with the remainder of the Participant's Investment Account to be paid under payment option (a). Such distributions shall begin on the date designated by either the Participant or, if permitted by the Participant, the surviving spouse, but in no event later than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant dies, and (ii) December 31 of the calendar year in which the Participant would have attained age 701h. Notwithstanding the foregoing, however, if as of the date of the Participant's death, both the surviving spouse and another are Category A Beneficiaries, then distributions shall begin on or before December 31 of the calendar year immediately following the calendar year in which the Participant dies. If payment is made under payment option (c) above, the 4 2000-00019 14831_1 lump sum must be paid on the same date that the first payment over time is paid. CATEGORY B BENEFICIARIES (3) if the beneficiary is a Category B Beneficiary, which is a validly existing legal entity (such as a charitable foundation or the estate of the Participant), the portion of the Investment Account payable to such beneficiary shall be distributed as a lump sum on the first day of the third calendar month following the month in which the death of the Participant occurs. All elections (as to both payment option and commencement date) to be made under this Subsection 10.6.2(1 )(2) shall be made by the Participant pursuant to either the "Benefit C" provisions of the Participation Agreement or a later written election delivered to the Employer before the death of the Participant. Notwithstanding the foregoing, however, the Participant, in the Participation Agreement or such later written election, may specify that, following the death of the Participant, the Category A Beneficiary may elect, subject to the foregoing limitations, the form of payments and the commencement date of distributions. Any such beneficiary election, however, must be in the form of an irrevocable written election filed with the Employer no later than ninety (90) days following the date of death of the Participant. In the absence of any such timely election, the portion of the Investment Account payable to such Category A Beneficiary shall be distributed to him in a lump sum on the first day of the fifth calendar month following the month in which the death of the Participant occurs. If a Category A Beneficiary dies within six months of the date of the Participant's death and before the entire portion of the Investment Account allocated to him has been paid pursuant to this Subsection 10.6.2, then the remainder of such portion shall be paid to the contingent beneficiary, if any, designated by the Participant in either the Participation Agreement or a later written election delivered to the Employer before the Participant's death. If there is no such contingent beneficiary, or if the Category A Beneficiary dies more than six months after the date of the Participant's death and before the entire portion of the Investment Account allocated to him has been paid pursuant to this Subsection 10.6.2, then the remainder of such portion shall be paid to the estate of the deceased Category A Beneficiary. Any payment under this paragraph shall be made in a 5 lump sum on the first day of the third calendar month following the month in which the death of the Category A Beneficiary occurs. The Participant may designate a trust as his beneficiary under the Plan. However, in that case, any beneficiary of the trust, who is eligible to receive trust distributions on account of payments from the Plan, shall be deemed to be a Category A Beneficiary under the Plan. (For example, if the Participant designates as his beneficiary a trust of which his surviving spouse is the life beneficiary, and elects lifetime payments under option (2)(a) above, then for the purpose of this Subsection 10.6.2, the surviving spouse shall be deemed to bf? the Category A Beneficiary, and the terms of this subsection shall be applied by basing distributions on the life expectancy of the surviving spouse.) Notwithstanding the foregoing, however, a trust may only be designated as a beneficiary (and the beneficiary of the trust will only be deemed to be a Category A Beneficiary) if, as of the later of the date that the Participant submits to the Employer the election in which the trust is named as a beneficiary or the Required Beginning Date, and as of all subsequent periods during which the trust is named as a beneficiary of the Plan, all of the following conditions are met: ( 1 ) the trust is a valid trust under state law, (2) the trust is irrevocable, (3) the beneficiaries of the trust can be identified from the trust instrument, and (4) a copy of the trust instrument has been provided to the Employer." 4. Section 12 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: "SECTION 12: Assignments and Transfers. 12.1. Consistent with Section 8 above, no one, including the Participant, his beneficiary or designee, or any other person, shall have any right to commute, sell, assign, transfer, or otherwise convey the right to receive any payments hereunder, which payments and right thereto are expressly declared to be non-assignable and non-transferable. The Employer shall have no liability to either the Participant or a purported assignee or transferee, on account of any attempted assignment or transfer. In addition, except to the extent otherwise provided by law, no interest of the Participant in the Plan shall be subject to attachment, garnishment or execution, or be transferrable by operation of law, whether due to bankruptcy, insolvency, liquidation for the benefit of creditors, or any other cause . 2000-00019 14831_ 1 6 .f ) 12.2 Notwithstanding the foregoing, however, the amounts deferred by a former Participant may be transferred to another Internal Revenue Code section 457 eligible deferred compensation plan of which the former Participant has become a participant, if the following conditions are met: (1) the plan to which the former Participant wishes to transfer amounts deferred is located within the State of California; (2) the plan receiving such amounts provides for the acceptance of such amounts; (3) the employer accepting the transfer funds gives written notice of its agreement to accept such transfer and assumes liability therefor; and (4) the Participant provides a written release to the Employer releasing the Employer from any claim or liability under the Plan after the date such transfer of funds occurs. If a Participant separates from service in order to accept employment with another entity which permits the Participant to participate in a section 457 eligible deferred compensation plan, and if the four conditions enumerated above are met, payout of benefits will not commence upon separation from service, notwithstanding any other provision of the Plan, and amounts previously deferred will automatically be transferred to that other entity's section 457 eligible deferred compensation plan, to be credited to the Participant's account. 12.3 A Participant, who was formerly employed by another public agency located within the State of California, may transfer, to the Plan, funds from an Internal Revenue Code section 457 eligible deferred compensation plan maintained by that former employer, if that eligible deferred compensation plan permits transfers to other section 457 eligible deferred compensation plans and if the Participant complies with all applicable terms and conditions of the transferring plan in effectuating the transfer." 5. The Plan shall continue in full force and effect except as expressly amended herein. 2000-00019 14831_1 7 : RESOLUTION NO. 95-REDLINE APPROVING AMENDED DEFERRED COMPENSATION PROGRAM FOR ASSISTANT DEPARTMENT HEADS~,. .. JBOC®CWfillr'lE .Ass:12smAN"lPS AND PROFESSIONAL AND SUPERVlSbRY .. EMPLOYEEs·· ·.· ····.· A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, APPROVING REVISIONS TO THE DEFERRED COMPENSATION PROGRAM FOR THE ASSISTANT DEPARTMENT HEADS/ E:m.@B}f~ Ass11s:m~s AND PROFEssioNAL ·Jili·o ··'su'P:ERvisoRY ':E:'fJ{p£'dYE'ifs'' OF THE DISTRICTS AND REPEALING RESOLUTION NO. 86-29 * * * * * * * * * WHEREAS, in conjunction with the Districts' Deferred Compensation Plan, the Districts, by Resolution No. 86-29, adopted by the Boards of Directors on February 13, 1986, have previously approved specified Districts contributions to the individual deferred compensation accounts of certain employees; and WHEREAS, by Resolution No. 95-54, adopted by the Boards of Directors on May 24, 1995, the Districts have reaffirmed the amount of the Districts contributions to the individual deferred compensation accounts of the Assistant Department Heads, and the Professional and Supervisory employees of the Districts; and WHEREAS, the Boards of Directors desire to revise the program of Districts contributions for such employees in order to change the vesting period with respect to such Districts contributions b::q::nq :.-: .... ....,,. ~~: 1 llB·rB~~e~i:g2::~ii,B:~;~g;f.'.'~·ff:P:§,lfs9~:~i~~F.:~;pt;r~.:::,:;:2t•·· 9~J;t ai~.: E?C~.qµt;.iv~ ~!!t!tli§&~iti!~~!~t~i~!. NOW, THEREFORE, the Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California, DO HEREBY DETERMINE, RESOLVE AND ORDER: Section 1. That the Districts hereby approve a contribution of Districts funds, in an annual sum equal to a maximum of two percent (2%) of the gross annual salary of the respective Assistant Department Heads and an annual sum equal to a maximum of one percent (1%) of the gross annual salary of the respective (collectively, the •Districts Matching Funds Contribution(s)•), to the respective individual deferred compensation accounts of such employees, provided each such employee voluntarily withholds from his/her salary, and contributes an equal sum, to his/her individual deferred compensation account. That the Districts hereby approve an additional contribution (the •Districts Non-Matching Funds Contribution•) to the respective individual deferred compensation accounts of the Assistant Department Heads, in an annual sum equal to two and one-half percent (2-1/2%) of the gross annual salary of each of the respective Assistant Department Head employees described herein, exclusive of the Districts Matching Funds Contribution amount hereinabove described, without the requirement of any matching contribution by the individual employees. 2000-00019 14605_1 2 That the Districts hereby approve an additional Districts Non-Matching Funds Contribution, to the respective individual deferred compensation accounts of the ~*'F.rc:µ~*v:i~(As$i=i?tan.ts ?::P:O. Professional and Supervisory employees, in an annual sum equal to two (2%) of the gross annual salary of the respective Professional and Supervisory employees described herein, exclusive of the Districts Matching Funds Contribution amount hereinabove described, without the requirement of any matching contribution by the individual employees. That upon the completion of one year of employment with the Districts and one year of participation in the Def erred Compensation Plan, all Districts Matching Funds Contributions then on deposit in the individual deferred compensation accounts of the Assistant Department Heads~j[~\~i!~P.'i~#l!~i~~~'.~ff,§·~~§iti$!!}and Professional and Supervisory employees shall be deemed vested, and, thereafter, all Districts Matching Funds Contributions deposited into such individual deferred compensation accounts shall be deemed vested upon deposit. Notwithstanding the preceding sentence, however, upon the death, or upon the Normal or Late Retirement (as those terms are defined in the Def erred Compensation Plan), of the employee, irrespective of the length of his/her employment with the Districts and of his/her participation in the Deferred Compensation Plan, all Districts Matching Funds Contributions then on deposit in the individual employee's deferred compensation account shall be deemed vested. Once Districts Matching Funds Contributions have vested as 2000-00019 14605_1 3 de scribed in this paragr aph, t hey may thereafter be withdrawn t o the extent otherwise permitted under the Deferr ed Compensation Plan. That Districts Non-Matching Funds Contributions shal l vest and shall be subject to wi thdrawa l under the same conditions as Districts Matching Funds Contributions , with two exceptions . (l ) an cffiPloyee who tcrffiinatcs service with the Districts for a reason other than due to Hormal or Late Retirement or death shall have no vested interest in, and shall not be entitled to withdraw , any Districts Hon Matching Funds Contribut ions deposited into the employee 's deferred compensation account during the one year immediately preceding such termination of service, and (2) in no event may an employee 'tv'ithdraw, in connection with an emergency ·,;ithdrawal, a ny Districts Uon Mat c hing Funds Contributions deposited into the employee's def erred compensation account during the one year imme diately preceding a reque"st for emergency withdrawal. Section 2. This program shall be for the benefit of the Assistant Department HeadJ.'::=':'.='$?feC8R:ffiV-~·.·~*M-~,~~~§B '.":=and Professional and Supervisory employees, which classifications are set forth on Attachment "1, 11 which is incorporated herein by reference, and shall be terminated only by action of the Boards of Directors. In the event other classifications are added to the category of Assistant Department Heads) :Exe.o\lt:lv~ :::As$.::l.§:1~$1'J:~:$.1 or Professional or Supervisory employees by action of the General Manager or 2000-00019 14605_1 4 Boards of Directors of Districts, said classes shall be deemed to be governed by this Resolution concurrently therewith. Section 3. The General Manager and the Director of Finance are hereby authorized to execute individual Deferred Compensation Participation Agreements with each eligible employee, and are further authorized to execute any and all documents relating to investment and payment transactions relating to the Def erred Compensation Plan, provided that such documents are approved as to form by the Districts' General Counsel. Section 4. Resolution No. 86-29 is hereby repealed, and the provisions herein shall become effective, upon adoption of this Resolution; the provisions herein shall remain in effect until amended or terminated by resolution of the Boards of Directors. PASSED AND ADOPTED at a regular meeting held 2000-00019 14605_1 5 ATTACHMENT "1" Executive Management General Manager Assistant General Manager Administration Assistant General Manager Operations Director of Finance Director of Engineering Director of Technical Services Director of Operations Director of Maintenance Director of Human Resources Director of Information Technology Management Financial Manager Controller Accounting Manager Purchasing Manager Secty. To The Board of Directors Engineering Manager Construction Manager Lab Manager Source Control Manager Chief Operator Maintenance Manager Personnel Supervisor Sr. Personnel Analyst Safety & Erner. Resp. Manager Senior Regulatory Specialist Environmental Management Manager Chief Scientist Training Manager Operations Manager Human Resources Assistant Executive Assistant II Executive Assistant I PAGE 2 -ATTACHMENT "1" Professional Senior Accountant Accountant Principal Information Services Tech. Information Services Analyst Programmer Analyst Programmer Sr. Buyer Buyer Principal Administrative Assistant Sr. Administrative Assistant Engineer Associate Engineer Ill Associate Engineer 11 Associate Engineer I Principal Engineer Associate Principal Env. Specialist Project Specialist Principal Lab & Res. Analyst Scientist Personnel Analyst Safety & Erner. Resp. Sepec Regulatory Specialist Contract Administrator Safety Representative Senior Financial Analyst Financial Analyst Analyst Senior Maintenance Planner Planner PAGE 3 -ATTACHMENT "1" Supervisory Principal Accountant Information Services Specialist Software Specialist Supervising Buyer Warehouse Supervisor Engineering Supervisor Senior Engineer Chief Const. Inspector Supv. Constr. Inspector Compliance Supervisor Lab Supervisor Senior Scientist Source Control Superv. Supv. Source Ctrl. lnsp. Sr. Operations Supv. Operations Supervisor Training Supervisor Field Supervisor Foreman Security Supervisor Environmental Management Supvr. Safety Supervisor Principal Financial Analyst J:\WPDOC\FIN\CRANE\FPC.MTG\FPC95\DEFCOM.GPS FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 FAHR95-33: Consideration of Orange County Employees Association (OCEA) Grievance Concerning Side Letter Agreement Summarv: On October 28, 1994, the Orange County Employees Association submitted a grievance on behalf of the Administrative and Clerical, Engineering and Technical Services bargaining units alleging that the Districts were in violation of a Side Letter entered into on March 21, 1994. The alleged violations concerns the following Wage Article negotiated by the Professional and Supervisory Groups subsequent to the Side Letter agreement: •A Management Performance Review Plan Merit Pool will be funded in an amount equivalent to 3.8 percent of the payroll of employees in this group effective July 9, 1993, and 3.0 percent of the payroll of employees in this group effective July 6, 1995, and July 4, 1996. The MPRP Merit Pool shall be distributed in its entirety in accordance with provisions of the MPRP. Salary ranges will also be adjusted 3.0 percent effective July 6, 1995, and July 4, 1996, as shown on Exhibit A. There is no Merit Pool established for July 1994.• The OCEA grievance contends that the 3.8 percent represents an increase in salary for employees in the Professional and Supervisory Groups during the period November 26, 1993 through November 23, 1996, and should therefore be granted to the OCEA units. The creation of the MPRP Merit Pool fund in an amount equivalent to 3.8 percent of payroll represents the third year increase of a three-year agreement which was deferred by the Boards of Directors for consideration until 1994. TABLE 1. Six Year History of Salary lncraaau OCEA AND OPERA TING ENGINEERS Eff. Date Nov. '90 Nov. '91 Nov. '92 Nov. '93 Nov. '94 Nov. '95 TOTAL AV Inc.% 5.0 5.5 5.5 -0-3.0 3.0 22.0 3.67 PROFESSIONAL AND SUPERVISORY Eff. Date Jul. '91 Jul. '92 Jul. '93 Jul. '94 Jul. '95 Jul. '96 TOTAL AV Inc.% 6.2 6.0 3.8 -0-3.0 3.0 22.0 3.67 J:IWPOOCIFINICRANE\FPC.MTGIFPC95\ITEMS.AGD\FAHR95.33 Staff Recommendation The total increase negotiated by OCEA and the Professional and Supervisory Groups is the same (22 percent) over the period in question. For these reasons, staff would recommend that the grievance be denied on the basis that no group of employees did in fact receive a general increase in salary during the period of November 26, 1993, through November 23, 1996, higher than the negotiated increase received by the OCEA unit. -2- J:\WPOOCIFIMCRANE\FPC.MTGIFPC95VTEMS.AGO\FAHR95.33 ~, /-------. ------------------------...; .----,.. .. """JOHN H. SAWYER, GENERAL MANAGER C: ORANGE COUNTY EMPLOYEES ASSOCIATION JOHN H. SAWYER BUILDING 830 N. ROSS ST., SANTA ANA, CA 92701 (714) 835·3355 April 12, 1995 FAX (714) 543-6424 Secretary of the Boards of Directors County Sar:iita~ion Districts of Orange County 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Ref: OCEA Grievance Appeal -Step 5 Dear Sir: Pursuant to the OCEA represented units Memorandum of Understandings (Districts Administrative and Clerical Employees, Technical Services, Engineering units) Article II (Grievance Procedure) Step 5, OCEA is appealing this grievance to the Districts Board of Directors. The Districts has refused to implement the side letter to the Memorandum of Understanding, dated March 21, 1994. OCEA's resolution to this grievance is all employees in the Administrative/Clerical, Engineering and Technical Services units to be made whole from November 26, 1993 through November 24, 1994, per the side letter to the Memorandum of Understanding. Please contact me at 835-3355, to arrange a mutually convenient time to schedule a grievance meeting. Sincerely, Orange County Employees Association a~~alfk/Jry~ · RiChard A. Brown Employee Relations Administration _______ ___..A HALF CENTURY OF ACHIEVEMENT FOR PUBLIC EMPLOYEES...__ ______ _ ATTACHMENT 1 SIDE LETTER TO THE MEMORANDUM OF UNDE.RSTANDING BETWEEN THE COUNTY SANITATION DISTRICTS AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ADMINISTRATIVE AND CLERICAL EMPLOYEE UNIT The Districts and OCEA agree that if any group of employees receives a general increase in salaries and/or benefits during the period of November 26, 1993 through November 23, 1996, which is higher than the negotiated increase received by the OCEA unit, the Districts shall grant the increase in salaries and/or benefits to the OCEA unit. Signed at Fountain Valley, California this 21 u day ofMarch, 1994. °'s~ a~~ Richard Brown Director of Personnel OCEA-Chief Negotiator September 8, 1993 MEMORANDUM TO : ATTACHMENT 2 COUNTY SANITATION DISTRICTS of ORANGE COUNTY. CALIFORNIA 10844 ELLIS AVENUE P.O. BOX 8127 FOUNTAIN VALLEY, CALIFORNIA 92728-8127 (714) 962-2411 As we enter the third consecutive year of declining economic conditions in Orange County, the State and throughout the nation, it becomes increasingly difficult to represent the best interests of the communities and residents that we serve, and at the same time address many of the issues of interest to our employees. Programs, services and trends that have become an integral part of our existence must be revisited because of an erosion of the tax base and funding sources, and the general state of the economy. As I believe you know, last year the Governor and State Legislature took away $3.5 million of our Districts' annual property tax revenues and shifted them to fund their obligation for financing schools. That amount continues to be diverted yearly, and the State is continuing in their attempt to confiscate even more taxes historically belonging to the Districts. In fact, three times in the last month, and as recently as September 3rd, the State Legislature considered a proposal to take additional property tax monies from all enterprise special districts, including ours. Prudent, frugal and now austere fiscal constraints have become the norm as our resources have continued to diminish. Many of the Districts' member agencies have found it necessary to layoff staff for the second year in a row. Many have frozen employee salaries and benefits and even had to cut them back . The Districts are more fortunate, however, as management practices have been carried out in recent years with foresight such that even though the Boards have been forced to cut the budget by $44.5 million, staff or major employee or wastewater program reductions have not been required this year as they have been in other agencies . More than ever, each of us, staff and Board members, must rise to the challenge of managing resources that are shrinking. State and local government now face an uncertain fiscal situation at best, and there is no indication that it will improve in the foreseeable future with employers leaving California and our jobless rate languishing 34% above the national average. However, September 8, 1993 Page 2 we believe that with continued prudent management, we will be able to avoid the types of cutbacks that other agencies have faced. Fortunately, over the years we have been able to accumulate a very good total compensation package for you that compares favorably in the marketplace. Unfortunately, given all of the aforementioned considerations and the mandate of judicious resource management, I must regretfully inform you that at this time, the Boards have determined that the Districts must forego establishing a salary merit pool fund for July 1993 MPRP adjustments. This has been an extremely difficult decision for the Directors, one that we did not take lightly. But we trust that you and your Management, Supervisory and Professional colleagues will understand the extenuating circumstances. We all look forward to an improved economy, when our spending resources are increasing instead of decreasing, and the overall economic health and stability of our community and nation offers a more optimistic future. Our actions today to restore that balance will have a major impact on the swiftness of achieving full recovery. You and your co-workers play a major role in the Districts' efforts to manage our resources in an optimum manner through your personal contribution to your departments' and the Districts' mission and success. Our record certainly speaks for itself. On behalf of every Board Member, I commend you for your achievements thus far and look forward to your ongoing contribution. In closing I would like to leave you with a bit of good news. One of the considerations the Boards had to struggle with was whether to implement the 1993 adjustment in the salary ranges for MPRP positions. I am pleased to inform you that the salary ranges were changed, and the range for your position of increased to per month. Clearly, this will provide opportunities for the future as we all look forward to economic and local government recovery. Once again, thank you for your continued individual efforts and achievements. They have not gone unnoticed or unappreciated. Sincerely, rtJ! William D. Mahoney Joint Chairman FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JULY 12, 1995 (13) Consideration of upcoming meetings and items to be discussed at those meeting. Summary The calendar of future meetings is on the back of the Notice of Meeting each month. The next Finance, Administration and Human Resources Committee meeting is scheduled for Wednesday, September 13, 1995. Some of the potential major non-routine items the Committee will be reviewing, considering and acting on over the next few months follow. Some items will carry forward to future months, but are listed only once at the start of a process. MONTH ITEM AUGUST As there is no Executive Committee meeting scheduled in August, the Committee is likewise not scheduled. SEPTEMBER Fourth Quarter Training & Travel Report Employee Handbook Financial Information System OCTOBER Independent Financial Audit for 1994-95 1994-95 Management Letter NOVEMBER As there is no Executive Committee meeting scheduled in November, the Committee is likewise not scheduled. Staff Recommendation Information only item. J:\WPOOC\FINICRANE\FPC.MTGIFPC85VTEMS.AGOV.GDITM12.795