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HomeMy WebLinkAbout1996-01-10\ i ~~-. J •1•: ~~~-:· ,e,' ~?;::~'.~s.ti.1i-1 D:~:1 I✓, ~. 3 ..:i~ &, 7, .i.l./~ ,'/ y .J_!:\[,] 2 41996 /?K. 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 Wednesday. January 10, 1996, 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 January 10, 1996 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: George Brown, Chair Jan Debay Burnie Dunlap James Flora John M. Gullixson Wally Lynn Thomas Saltarelli Roger R. Stanton, Vice Chair William G. Steiner Peer Swan Committee Directors Absent: John C. Cox, Jr., Joint Chair Other Directors Present John Collins Sal Sapien Staff Present: Donald F. McIntyre, General Manager Blake P. Anderson, Assistant General Manager Judith A Wilson, Assistant General Manager Gary Hasenstab, Director of Human Resources Ed Hodges, Director of Maintenance Steve Hovey, Director of Information Technology Bob Ooten, Director of Operations David Ludwin, Director of Engineering Gary Streed, Director of Finance Nancy Wheatley, Director of Technical Services Michelle Tuchman, Director of Communications Michael D. White, Controller Stephen V. Kozak, Financial Manager Mike Peterman, Human Resources Mike Herrera, Software Systems Manager Greg Mathews, Principal Administrative Analyst Terri Josway, Safety & Emergency Response Mgr. Lenora Crane, Committee Secretary Others Present: Thomas L. Woodruff, General Counsel (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. Minutes of Finance, Ac n. and Human Resources Committ Page2 January 10, 1996 (3) PUBLIC COMMENTS No comments were made. (4) REPORTS OF THE COMMITTEE CHAIR, GENERAL MANAGER. ASSISTANT GENERAL MANAGER(S), DIRECTOR OF FINANCEfTREASURER. DIRECTOR OF HUMAN RESOURCES. DIRECTOR OF INFORMATION TECHNOLOGY AND GENERAL COUNSEL (a) Report of the Committee Chair Committee Chair George Brown announced the order of the new business items has been changed to allow items of more importance to be presented. He indicated a Landfill Committee meeting, scheduled for 7:00 p.m., may result in some items on the FAHR Agenda being deferred to another meeting. (b) Report of the General Manager Don McIntyre advised the Committee a report was placed before them from the PDC Committee, item PDC96-05. This item was presented to the PDC Committee on January 4, 1996, and deals with a recommendation from the Ad Hoc Committee on Space Utilization to rehabilitate the old laboratory building in order to house Human Resources and Engineering employees. About 90% of the space will be used by the Human Resources Department and there will be two to three offices for the Engineering Department. Mr. McIntyre indicated the PDC Committee reacted positively to this recommendation, since this will be a better use of existing assets, though it may be slightly more expensive than the cost of new trailers. Mr. McIntyre indicated this report was being made for the Committee's information only. Mr. McIntyre reminded the Committee that there will be a Workshop held on January 27, 1996 in the morning and he will be sending a letter out to solicit interest and participation. (c) Report of Assistant General Manager -Operations Blake Anderson stated he would update the Committee on the status of the bankruptcy later in the meeting. He advised there will be a Landfill meeting following the FAHR Committee meeting where discussion will center on Due Diligence. He indicated there was a meeting held earlier in the day with Orange County City Managers regarding the landfill issues, and a meeting is scheduled for Thursday evening, January 11 with the League of Cities, at the Red Lion in Costa Mesa, to discuss the acquisition issues. Mr. Anderson advised he will continue to refine the numbers and is reporting to the Landfill Committee tonight about where we are. Minutes of Finance, Adr-,. and Human Resources Committ'} Page3 January 10, 1996 Report of Assistant General Manager -Administration Judy Wilson, Assistant General Manager, Administration, had no report. (d) Report of the Director of Finance/Treasurer (1) Finance Director/Treasurer Gary Streed updated the Committee on the status of the Districts' COP program, referring to a graph contained in the agenda package which shows the CSDOC COP Rate History. Mr. Streed noted that the rates rise at the end of the graph. Mr. Streed stated that the average daily rate paid in the first two quarters of FY 1995-96 has been approximately 3. 76%, however, as of today, the rates have dropped to 2.9% and 3.0% which is right where we were in July and is very good news. (2) Districts' Treasurer Gary Streed reviewed the Monthly Report from PIMCO. Mr. Streed advised that next month PIMCO will have representatives at the FAHR Committee meeting to go over the 1st Quarter Report and to answer any questions the Committee may have. The 1st Quarter Report will focus on the Liquid Operating Monies and Long-Term Monies. The report indicates both funds are performing a little better than the Index and the Districts are in complete compliance with the Investment Policy. (e) Report of the Director of Human Resources The Director of Human Resources had no report. (f) Report of the Director of Information Technology The Director of Information Technology had no report. (g) Report of General Counsel General Counsel had no report. (5) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the November 8, 1995, meeting of the Finance, Administration and Human Resources Committee and forward them to the Executive Committee for their consideration and filed. The minutes were submitted to the Joint Boards at their November 15, 1995 meeting. Minutes of Finance, Ac' 'fl. and Human Resources Committ-"; Page4 January 10, 1996 (6) OLD BUSINESS (7) FAHR95-37 Consideration of motion to receive and file Quarterly Status Matrix from Ernst & Young Administrative Function Review. Gary Streed briefly reviewed the items enumerated in the Status Matrix pertaining to the Finance, Human Resources and Information Technology Departments and informed the Committee this report reflects positive progress for the departments in meeting their recommended goals. Mr. Streed advised the Committee that they will be updated of staff's progress on a quarterly basis. After discussion on this item, it was moved, seconded and duly carried to approve staff's recommendation to receive and file the Status Matrix. FAHR95-45 Consideration of motion to review and file revised Joint Works Budget Reviews prepared by staff for the quarter ended September 30, 1995. Gary Streed stated the Committee reviewed the preliminary reports at their November meeting. The revised summary statements of the Joint Works Operating Costs for the three months of fiscal year 1995-96, some comparative graphics, and graphs of the Measurement Tracking and Activity Trends from the 1995-96 budgets, which were included in the agenda package, were also reviewed by Mr. Streed. Mr. Streed advised this report will be brought before the Committee on a quarterly basis and will be bound in a book for easy reference. After some discussion on this item, it was moved, seconded and duly carried to approve staff's recommendation to approve and file these revised reports and approve the format for future quarterly reports. NEW BUSINESS (Please Note: Though the following items were acted on in another sequence, the minutes will reflect them in numerical order for tracking purposes.) FAHR96-01 Consideration of the following actions recommended by AIG Financial Products Corp .• for replacement of Letter of Credit, Refunding Certificates of Participation. Series 1992 as follows: (a) Consideration of motion authorizing staff to take all necessary actions to expedite replacement of the Standby Letter of Credit Agreement with The Industrial Bank of Japan, with a Substitute Standby Certificate Purchase Agreement with Barclays Bank. Minutes of Finance, Adrr,. and Human Resources Committ') Page 5 January 10, 1996 (b) Consideration of motion authorizing staff to retain the· services of a bond counsel firm for this transaction as recommended by General Counsel, in an amount not to exceed $25,000. to be entirely reimbursed to the Districts by AIG. (c) Consideration of motion directing staff to submit all necessary documents for this transaction to the Joint Boards of Directors at their January 24, 1996 meeting. for execution. Steve Kozak, Financial Manager, advised the AIG Financial Products Corp. (AIG), is the swap provider for the Series 1992 Series 1992 Refunding COPs. AIG has served the Districts with a demand letter directing termination of the existing Standby Letter of Credit Agreement with The Industrial Bank of Japan, in accordance with the Liquidity Guarantee Agreement. AIG has designated Barclays Bank to provide the replacement Facility, in the form of a Standby Certificate Purchase Agreement. The LOC substitution for the 1992 Series Refunding COPs is in the mutual best interest of the Districts and AIG. After discussion on this matter, it was moved, seconded and duly carried to recommend approval of AIG's recommended actions (a), (b) and (c) above to the Executive Committee. FAHR96-02 Consideration of a motion to purchase four (4) Compaq server-class computers for use as Districts-wide network servers from AmeriData (Specification No. E-262R-2) for a total cost of $135,875 not including tax and 1% CMAS fees. Information Technology Director Steve Hovey advised the Committee of the need for an enterprise-wide network operating system and appropriate hardware to support the system. He reviewed the specifications needed for such a system, advising the existing Novell servers would not scale up in order to support present and future computer related services and connectivity requirements. After discussion on this matter, it was moved, seconded and duly carried to recommend that the Executive Committee approve staff's recommendation to award a purchase order to AmeriData {Specification No. E-262R-2) for $135,875 (not including tax and 1 % CMSA fees) to purchase four (4) Compaq server-class computers for use as Districts-wide local area network servers. FAHR96-03 Consideration of motion to provide standby and callback pay provisions for Programmers. Human Resources Director Gary Hasenstab advised that Standby and Callback pay is provided to the Operations and Maintenance employees that Programmers work with, and is appropriate compensation for being required to return to work once the regular workday has ended and the employee has left the plant, and for Minutes of Finance, Ac ·11. and Human Resources Committ' ---- Page 6 January 10, 1996 being available for immediate return to work. Programmers who are placed on standby status or who are called back to work should also be entitled to these pay bonuses. Mr. Hasenstab indicated the total annual cost of implementing Callback and Standby pay for Programmers is $11,950. After discussion on this matter, it was moved, seconded and duly carried to recommend the Executive Committee approve staff's recommendation to extend the Standby Pay and Callback pay provisions in other Memoranda of Understanding t.9 the classification of Programmer in the Professional Group. FAHR96-04 Consideration of motion to approve benefit coverage for regular employees working a reduced work week. Gary Hasenstab reported that the Districts' current Employee Benefit Program is specifically limited to full-time employees by Resolution 95-105. Mr. Hasenstab advised that extending employee benefits on a prorated basis to employees who would like to work a reduced work week would enhance the Districts' organizational flexibility through job sharing, more accurately match workload requirements with work schedules, potentially reduce overtime costs and offer a greater measure of equity to regular employees who do not work a 40-hour week. After discussion on this item, it was moved, seconded and duly carried to table this item until the February FAHR Committee meeting. The Committee indicated an interest in receiving a copy of the Districts' Tuition Reimbursement Policy. Further information on job sharing and part-time benefits was also requested, before making a decision on this item. FAHR96-05 Consideration of motion to approve revision of Resolution 95-105 to reflect agreement with bargaining units to rescind provisions granting a one-percent salary increase to all employees. Gary Hasenstab reported that the Districts and a majority of represented employees have agreed to rescind provisions of their respective MOUs granting a one-percent salary increase to all employees to offset the employees' one- percent cost to fund the retiree health premium subsidy. A Side Letter of Agreement has been entered into to document that understanding. The revised understanding is in the best interest of the employees and the Districts. It was moved, seconded and duly carried to recommend the Executive Committee approve staff's recommendation to amend Resolution 95-105 to rescind a one-percent salary increase to fund the Retiree Medical Health Premium since sufficient funds are available from an already existing Additional Retiree Benefit Account (ARBA). Minutes of Finance, Adrr,. and Human Resources CommittfY) Page 7 January 10, 1996 FAHR96-06 Consideration of motion to receive and file staff reports updating benchmarking and performance measurement programs. Judy Wilson, Assistant General Manager, Administration; Greg Mathews, Principal Administrative Analyst; and Bob Ooten, Director of Operations each reported on this item. The Districts will use benchmarking practices as a systemic approach to optimizing operating efficiencies, identifying areas for short and long-term cost containment, assuring environmental Compliance, and as a tool for strategic planning. Recently, the departments have undertaken significant actions to develop benchmarking and performance measurement strategies. Activity Trends, as reflected in the FY 1995-96 Budget, are a first step in the development of our benchmarking and performance measurement programs. Other projects are underway, including tracking performance externally against other wastewater agencies, increased utilization of automation, development of more comprehensive benchmark and performance standards, and an evaluation of privatization. Bob Ooten's visit to the privatized Indianapolis treatment plant was also reviewed. It was moved, seconded and duly carried to receive and file this report. FAHR96-07 Consideration of status report on Legal Services Committee Activities. Judy Wilson reported that on December 13, 1995, the Steering Committee reviewed a report (included in the agenda package) on the work of the Ad Hoc Committee on Legal Services comprised of Directors John Gullixson, Tom Saltarelli and former Joint Chair Bill Mahoney, and recommended this matter be directed to the Finance, Administration and Human Resources Committee. In addition, Ms. Wilson advised that staff has concluded its analysis of the proposed Contracts Administrator position to ascertain its appropriate role and function in the organization, and the extent to which outside legal counsel could be relieved of routine review of contractual issues, were the position to be established. It was concluded that approximately $68,000 in legal fees can be saved, and $71,500 in salary savings can be realized, if this position is consolidated with the Purchasing Manager position. A "white paper" outlining the various options on the provision of legal services is expected to be submitted to the Committee in February. After discussion on this item, it was moved, seconded and duly carried to accept staff's recommendation to continue with recruitment for a Contracts Administrator/Purchasing Manager, and Human Resources was directed to conduct a class survey of that position. The Committee requested that this item be brought back if a problem should arise which will require further action. Minutes of Finance, A~ ·TI. and Human Resources Committ' · •. Page 8 January 10, 1996 FAHR96-08 Consideration of a motion adopting Districts' position on SCAG's Regional Comprehensive Plan and Guide -Finance Chapter and authorizing staff to report to SCAG. Judy Wilson, Asst. General Manager Administration, reported that SCAG's Regional Comprehensive Plan and Guide is to raise the economic performance of the region to a higher level, while ensuring that environmental needs are met and the quality of life for the region is enhanced. The Regional Comprehensive Plan frequently provides the basis for new legislative efforts and mandates, therefore, staff has been following this process and reviewing any recommendations which could potentially impact the Districts' revenue base. SCAG has established a February 1, 1996 deadline for comments or concerns. Ms. Wilson reviewed the Finance Chapter language directed at special district property taxes, and reported that the County Sanitation Districts currently receive $31,162,000 a year in property taxes, representing 6. 7% of its total funding sources including reserves. Property taxes have been primarily used for COP debt service. Debt service on the COPs is approximately $34.6 million. If property tax were not available for this purpose, user fees would need to be increased by an average of $34.32 or 48%. Average user fees are currently $71.31. There would be no change in user fees in Districts 13 and 14 since they were formed subsequent to the passage of Proposition 13 and do not receive property taxes. After discussion on this item, it was moved, seconded and duly carried to approve staffs recommendation to adopt a Districts' position on SCAG's Regional Comprehensive Plan and Guide -Finance Chapter; sending formal comments to SCAG emphasizing the importance of wastewater treatment to the environment and public health, and that the use of property taxes to retire debt on priority infrastructure is a reasonable and appropriate use of these funds and contributes to enhanced property values. Director Jan Debay requested that staff provide her with a copy of the Districts' comments when they are formalized. FAHR96-09 Consideration of motion to receive and file Staff Report dated January 4, 1996 re the Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant: and consideration of Resolution No. 96-approving said Agreement. Blake Anderson, Assistant General Manager, Operations, reported that on January 3, 1996, the Orange County Investment Pool (OCIP) Committee reached final agreement with the County on all of the details of the "Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant" for the resolution of claims against the County of Orange dated December 18, 1995. The Joint Agreement has been conveyed to Minutes of Finance, Ad~ and Human Resources Committ~ Page 9 January 10, 1996 all Option A participants (the 190 schools, cities, special districts and other public entities that signed the Option A version of the Comprehensive Settlement Agreement that was approved in May 1995) for their individual consideration and approval. After discussion on this item the Committee moved, seconded and duly carried to table this item until the February FAHR Committee meeting, since the County has not yet filed a Financial Disclosure Statement. (8) CLOSED SESSION There was no closed session required. (9) OTHER BUSINESS. IF ANY None. (10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING No reports were requested. (11) 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 next Committee meeting is scheduled for Wednesday, February 14, 1996. (14) ADJOURNMENT The meeting was adjourned at 7:05 p.m. ~~ Lenora Crane Finance, Administration and Human Resources Committee Secretary J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\1996.MINIMFAHR1.96 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 January 10, 1996, was duly posted for public inspection in the main lobby of the Districts' offices on January 3, 1996. IN WITNESS WHEREOF, I have hereunto set my hand this 1oth day of January, 1996. Penny Kyle, Secretary each f he Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, , 6, 7, 11, 13 & 14 of Orange County, California Posted b, 1 By: ot-~~ ~ I I 1996, 3 • 17 J:\WPDOC\FIN\CRANEIFPC.MTGIFAHR.96\CERT.POS\CERTP01.96 January 3, 1996 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE COMPLETE PACKAGES 41 Full Packages Committee 11 Press 1 Tom Woodruff 1 Terry Andrus 1 Donald F. McIntyre 1 Blake P. Anderson 1 Judith A. Wilson 1 Jean Tappan 1 Corina Chaudhry 1 Gregg Mathews 1 Gary Hasenstab 1 Ed Hodges 1 Steve Hovey 1 Penny Kyle · 2 David Ludwin 1 Bob Ooten 1 Gary Streed 1 Nancy Wheatley 1 Dan Dillon 1 Jeff Esber 1 Steve Kozak 1 Mike White 1 Michelle Tuckman 1 Pat McNelly 1 Dan Tunnicliff (Bldg. 6) 1 Extras 5 Notice and Agenda Only: (11) Posting 1 Gail Ca~ 1 Angela Holden 1 Clarice Marcin 1 Frankie Woodside 1 Patty Steeves 1 Fawn Elizondo 1 Guard Shack (Mark Esquer) 1 Extras 3 Treasurer's Report: Ron Zenk, Dist. 14 phone: (714) 962-2411 mailing address: P.O. Box 8127 Fountain Valley, CA 92728-8127 street address: 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Member Agencies • Cities Anaheim Brea Buena Park Cypress Fountain Valley Fullerton Huntington Beach Irvine La Habra La Palma Las Alamitos Newport Beach Orange Placentia Santa Ana Seal Beach Stanton Tustin Villa Park Yorba Linda County of Orange Sanitary Districts Costa Mesa Garden Grove Midway City Water Districts Irvine Ranch COUNTY 81--\1\JITATION DISTRICTS OF •RANGE COUNTY, CALIFORNIA January 3, 1996 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, JANUARY 10, 1996 -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. A Public Wastewater and Environmental Management Agency Committed to Protecting the Environment Since 1954 January 3, 1996 FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING DATES Finance, Administration and Human Resources Executive Committee Committee Meetings Meetings Joint Board Meetings 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, 1996 June 26, 1996 July July 10, 1996 July 17, 1996 July 24, 1996 August None Scheduled None Scheduled August 28, 1996 September September 11, 1996 September 18, 1996 September 25, 1996 October October 9, 1996 October 16, 1996 October 23, 1996 November None Scheduled None Scheduled November 20, 1996 December None Scheduled None Scheduled None Scheduled CS DOC D P .0. Box 8127 D Fountain Valley, CA 92728-8127 D Tel. (714) 962-2411 0 FAX (714) 962-3954 Ron Distribution After Meeting Penny Kyle __ Lenora Crane ,, ROLL CALL SHEET FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DAT: January 10. 1996 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 •••..•...•••••• JUDITH WILSON, ASST. GENERAL MANAGER •••••••••..••••••• NANCY WHEATLEY, DIRECTOR OF TECHNICAL SERVICES •••••• GARY STREED, DIRECTOR OF FINANCE ....•••••••••••••••••• GARY HASENSTAB, DIRECTOR OF PERSONNEL ••••••..•••..•• ED HODGES, DIRECTOR OF MAINTENANCE ..••........••••••• BOB OOTEN, DIRECTOR OF OPERATIONS •.•••••••••••.....•• DAVID LUDWIN, DIRECTOR OF ENGINEERING •••••••••••••.••• STEVE HOVEY, DIRECTOR OF INFORMATION SERVICES ••.••••• MICHELLE TUCHMAN, DIRECTOR OF COMMUNICATIONS ••.•••• STEVE KOZAK, FINANCIAL MANAGER ..•..•••••.•..•..•••••.. MIKE WHITE, CONTROLLER ••••........•••••••.........•••.. OTHERS TOM WOODRUFF, GEN'L. COUNSEL •••••••••••••••••••••••••• --------............•........................ ROLL1.96 TIME: 5:30 P .M. ADJOURN ___ _ ABSENT PRESENT .. I , January 10, 1996 AGENDA FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE 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. JANUARY 10, 1996 -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•·····"···•!"•• ............................................................... , ............................................. .__.................................................... .-......................... ,. (1) Roll Call (2) Appointment of Chairman pro tern, if necessary. (3) Public 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 ). January 1 O, 1996 (4) The Committee Chairman, General Manager, Assistant General Manager(s), Director of Finance/Treasurer, Director of Human Resources, Director of Information Technology, 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 Chair (b) Report of General Manager (c) (1) Report of Assistant General Manager -Administration (2) Report of Assistant General Manager -Operations (d) (1) Report of Director of Finance (2) Report of Treasurer ( e) Report of Director of Human Resources (f) Report of Director of Information Technology (g) Report of General Counsel (5) Approval of draft Finance, Administration and Human Resources Committee Minutes for Meeting of November 8, 1995. (6) Old Business. FAHR.95-37 Consideration of motion to receive and file Quarterly Status Matrix from Ernst & Young Administrative Function Review. (Gary Streed, Steve Hovey, Gary Hasenstab) FAHR95--45 Consideration of motion to review and file Joint Works Budget Reviews prepared by staff for the quarter ended September 30, 1995. (Gary Streed) (7) New Business. FAHR96-01 Consideration of the following actions recommended by AIG Financial Products Corp., for replacement of Letter of Credit, Refunding Certificates of Participation, Series 1992 as follows: (a) Consideration of motion authorizing staff to take all necessary actions to expedite replacement of the Standby Letter of Credit Agreement with The Industrial Bank of Japan, with a Substitute Standby Certificate Purchase Agreement with Barclays Bank. -2- January 10, 1996 (b) Consideration of motion authorizing staff to retain the servrces of a bond counsel firm for this transaction as recommended by General Counsel, in an amount not to exceed $25,000, to be entirely reimbursed to the Districts by AIG. (c) Consideration of motion directing staff to submit all necessary documents for this transaction to the Joint Boards of Directors at their January 24, 1996 meeting, for execution. (Steve Kozak) FAHR96-02 Consideration of a motion to purchase four (4) Compaq server- class computers for use as Districts-wide network servers from AmeriData (Specification No. E-262R-2) for a total cost of $135,875 not including tax and 1% CMAS fees. (Steve Hovey) FAHR96-03 Consideration of motion to provide standby and callback pay for Programmers. (Gary Hasenstab) FAHR96-04 Consideration of motion to approve benefit coverage for regular employees working a reduced work week. (Gary Hasenstab) FAHR96-05 Consideration of motion to approve revision of Resolution 95-105 to reflect agreement with bargaining units to rescind provisions granting a one-percent salary increase to all employees. ( Gary Hasenstab) FAHR96-06 Consideration of motion to receive and file staff reports updating benchmarking and performance measurement programs. (Gary Streed) FAHR96-07 Consideration of status report on Legal Services Committee Activities. (Gary Streed) FAHR96-08 Consideration of motion adopting Districts' position on SCAG's Regional Comprehensive Plan and Guide -Finance Chapter and authorizing staff to report to SCAG. (Judy Wilson) FAHR96-09 Consideration of motion to receive and file staff report dated January 4, 1996, re the Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant; and consideration of Resolution No. 96-_ approving said Agreement. (Blake Anderson) -3- January 10, 1996 (8) Closed Session. -··=~~=~0:~~~:~~~~:.•c°:~~~i.i~;;~~·~~;~~:Ei::~=~·:······1:::., 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 r which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. . ' ' .................................................................................................. , ......................................................... .. ....................................................................... ,_. ·-•--·•··-··· (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. (9) Other business, if any. (10) Matters which a Director would like staff to report on at a subsequent meeting. ( 11) Matters which a Director may wish to place on a future agenda for action and a staff report. (12) Consideration of upcoming meeting dates and items to be discussed at those meetings. (13) Adjourn. ............. ....................................... ...................... , .................................................................................... -............................................................................................. . 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) \ •................................... , ............. , ........................................ -................................................................................................ . -4- _______________ -"b..._ ,;,-,•Jl:"-M·£',M'"O£'-,,•,c,---.-.,u-,w•U:,,, ..... •u:,,,........:--,,,,-.~,U:-,,r,~0£'-~. ,,-..,u:--w,.,,---& V-,,0--U-• (4}(d)(1) Director of Finance Report Format • Written Report •overheads •Slldes • Flip Charts Gary Streed Anticipated Time 5 min. FINANCE, ADMINJSTRATION AND HUMAN RESOURCES COMMITTEE (4}(d)(1 ): Summary: AGENDA FOR JANUARY 10, 1996 Director of Finance Report Since June 1995, the daily rate COP program remarketing agents have been PaineWebber for the Series "A" and the 1993 Refunding COPs, and J.P. Morgan for the Series "C" COPs. Most fixed rate Series "B" COPs have been refunded and the 1992 Refunding COPs have always been remarketed by PaineWebber in a weekly mode. The attached graphs show the variable interest rates on each of the daily rate COPs since the last report, and the effective fixed rate for the two refunding issues which are covered by an interest rate exchange agreement commonly called a "swap." Variable rates historically rise at the end of each calendar quarter, and especially at year-end, because of business taxes and statements. The rates decline to prior levels immediately in the following month. The average daily rate paid in the first two quarters of FY1995-96 has been approximately 3.76%. Staff will maintain our continuous rate monitoring and ongoing dialog with the remarketing agents and rating agencies to keep the Committee fully informed about developments in the program as they occur and at each meeting. Staff Recommendation Information only. J:\WPDOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.96\00F1.96 c<i Q 0 Q) 0 C: Ill C: u: ~ "C e! Ill C. e! a. .... a:: 0 n. w a:: ~ 0 .... (/) -:::c w .... ~ n. 0 (.) (.) 0 C (/) (.) 0 0 0 0 (0 in I I I d \ { I J I :___-- ....--1 0 0 0 0 -<i l"'i (%) 3.L'1H 0 0 N I 95-:iaa-LZ ' I ' I 95-:iaa-oz I I 95-:ia•-£~ 95-:iaa-90 96-II0N-6Z 96-II0N-ZZ 95-II0N-g~ 95-II0N-80 96-II0N-~0 a. Ill s: Cl) 95-1:io-sz C: Q) Cl 0 0 95-J:>Q-8~ Cl) 95-po-~ ~ ' 95-J:>Q-t,0 a. Ill s: Cl) 95-das-LZ Cl <( 95-das-oz + 95-das-£~ C: Ill e> 95-das-go 0 ~ 0.: -; g5-6nv-0£ + 95-Bnv-e:z ... Q) g5-6nv-9~ ..c ..c ~ Q) g5-6nv-60 C: "iij a. g5-6nv-zo + g5-1nr-9z a. g5-1nr-6~ 0 (.) .,_: Cl) g5-1nr-z~ :i: w I-<( 0:: 0 ~ g5-1nr-so 0 ::::; 0 w 0 (.) X w w I-S2 cc > C ~ ij -~ --Q. --I\) - Format • Written Report •OVerhead& •Slides •Fllp Charts Originator __ _ Department Head Sign Off~ Garystreed Anticipated Time 5 min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE (4)(d)(2): Summary AGENDA FOR JANUARY 10, 1996 Treasurer"s Report As previously reported, both PIMCO and Mellon signed their final contracts and began managing our funds in September 1995. Month-end reports are available from PIMCO on the sixth day after calendar month-end. Thus, they are not available for the regular FAHR Committee mailing, but are distributed at the meeting. Because there was no meeting in December, the November report is attached. The PIMCO reports mirror our Investment Policy. The Investment Policy adopted by the Joint Boards on May 24, 1995, includes reporting requirements as listed down the PIMCO Monthly Report for the "Liquid Operating Monies" and for the "Long-Term Operating Monies. n All of the Investment Policy requirements are being complied with and performance to date exceeds the index rates. State of Calif. LAIF Bank of America PIMCO -Short-term Portfolio PIMCO -Long-term Portfolio District 11 GO Bond Fund Debt Service Reserves @ Trustees Staff Recommendation $1-1 ,443,353 241,095 60,356,395 234,421,057 11,886 33,883,435 $340,357,221 Staff recommends the Committee receive this report and the supplemental information which will be available at the meeting, approve and forward the reports to the Executive Committee and the Joint Boards. J:IWPOOCIFINICRANEIFPC.MTGIFAHR.96\COVERS.96\TREAS1.96 January 10, 1996 S500 $400 ! 1$300 '! Js200 I $100 Dee 6 Dec 31 CSDOC TOTAL CASH & INVESTMENTS Jan 31 Feb 28 Mar 31 Apr 30 May 31 June 30 July 31 Aug, 31 Sept 30 Oct 30 Nov. 30 J:IWPDOCIFINICRANEIFPC.MTG\FAHR.96\COVERS.96\TREAS1.96 .._ MONTHLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT MANAGEMENT PROGRAM PIMCO'S PERFORMANCE MONITORING & REPORTING (for the month ending November 30, 1995) Liquid Operating Monies 14.1.1 PORTFOLIO COST AND MARKET VALUE Current Market Value: Historical Cost: 14.1.2 MODIFIED DURATION Of Portfolio: Of Index: 14.1.3 1 % INTEREST RATE CHANGE Dollar Impact (gain/loss) of 1 % Change: 14.1.4 REVERSE REPOS % of Portfolio in Reverse Repos: (see attached schedule) 14.1.5 PORTFOLIO MATURITY % of Portfolio Maturing within 90 days: 14.1.6 PORTFOLIO QUALITY Average Portfolio Credit Quality: 14.1. 7 SECURITIES BELOW "A" RATING % of Portfolio Below "A": 14.1.8 INVESTMENT POLICY COMPLIANCE "In Compliance" 14.1.9 PORTFOLIO PERFORMANCE Portfolio Total Rate of Return: 1 Month: 3 Months: 12 Months: Year-to-Date: Index Total Rate of Return: 1 Month: r:\markos \seymour\ocmoldom203.1 l 95 $60,814,921 $60,826,896 .15 .25 J_ $91,222 (.15%) 0% 88% AA 0% .49 ----) ----- -- .44 MONTHLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT MANAGEMENT PROGRAM Pll\fCO'S PERFORMANCE MONITORING & REPORTING (for the month ending November 30, 1995) Long Term Operating Monies 14.1.1 PORTFOLIO COST AND MARKET VALUE Current Market Value: Historical Cost: 14.1.2 MODIFIED DURATION Of Portfolio: Of Index: 14.1.3 1 % INTEREST RATE CHANGE Dollar Impact (gain/loss) of 1 % Change: 14.1.4 REVERSE REPOS % of Portfolio in Reverse Repos: (see attached schedule) 14.1.5 PORTFOLIO MATURITY % of Portfolio Maturing within 90 days: 14.1.6 PORTFOLIO QUALITY Average Portfolio Credit Quality: 14.1.7 SECURITIES BELOW "A" RATING % of Portfolio Below II A 11 : 14.1.8 INVESTMENT POLICY COMPLIANCE "In Compliance" 14.1.9 PORTFOLIO PERFORMANCE Portfolio Total Rate of Return: 1 Month: 3 Months: 12 Months: Year-to-Date: Index Total Rate of Return: 1 Month: r:\markos \seymour\ocmoltom203 .1195 ~ $239,502,487 $237,004,461 2.15 2.40 -$5,149,303 (2.15%) 0% NA AA 0% 1.24 -- --.) ----- 1.07 • "'C "'C -, 0 < Q) -0 ...... 3: :::s C: .... C'D C/J -c.n - FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 (5): Consideration of motion to approve the draft Finance, Administration and Human Resources Committee Meeting Minutes of November 8, 1995 Summary Attached is a draft of the Finance, Administration and Human Resources Committee meeting Minutes of November 8, 1995, for approval by the Committee. Staff Recommendation It is recommended that the minutes of the November 8, 1995, Finance, Administration and Human Resources Committee meeting be approved. These minutes were submitted to the Joint Boards at their November 15, 1995 meeting, and will be forwarded to the Executive Committee for their consideration and filed. J:IWPDOC\FIN\CRANE\FPC.MTGIFAHR.9611996.MINICVRMIN1.96 County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 DRAFT MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday, November 8, 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 November 8, 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 Chair George Brown, Chair Jan Debay James Flora Wally Lynn Thomas Saltarelli William G. Steiner Peer Swan Committee Directors Absent: Burnie Dunlap John M. Gullixson Roger R. Stanton, Vice Chair Other Directors Present: John Collins Don Griffin Pat McGuigan Staff Present: Donald F. McIntyre, General Manager Blake P. Anderson, Assistant General Manager Judith A Wilson, Assistant General Manager Gary Hasenstab, Director of Human Resources Ed Hodges, Director of Maintenance Steve Hovey, Director of Information Technology Bob Ooten, Director of Operations David Ludwin, Director of Engineering Gary Streed, Director of Finance Nancy Wheatley, Director of Technical Services Michael D. White, Controller Stephen V. Kozak, Financial Manager Mike Peterman, Human Resources Supervisor Others Present: Thomas L. Woodruff, General Counsel Terry Andrus, General Counsel Dennis Vlasich, Keery Consulting Group Michael Moreland, Moreland & Associates Charles Acocella, Moreland & Associates Julie Pritchard, Moreland & Associates (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. Minutes of Finance, A in. and Human Resources Commi" ~ Page2 November 8, 1995 (3) PUBLIC COMMENTS No comments were made. (4) REPORTS OF THE COMMITTEE CHAIR. GENERAL MANAGER, ASSISTANT GENERAL MANAGER(S), DIRECTOR OF FINANCE/TREASURER. DIRECTOR OF HUMAN RESOURCES, DIRECTOR OF INFORMATION TECHNOLOGY AND GENERAL COUNSEL (a) Report of the Committee Chair Committee Chair George Brown announced there would be an Executive Committee meeting starting at 7:00 p.m., immediately after this meeting. (b) Report of the General Manager The General Manager, Donald F. McIntyre, reported that the staff recommendation for a consultant to assist with the new Financial Information System (FAHR95-38) had been distributed as advised in the agenda. He also reminded the Directors of the Plant No. 2 tour scheduled for Saturday, November 18. The General Manager and the Director of Technical Services will be meeting with Directors to prepare for "Red Team" meetings regarding excess capacity charges. (c) Report of Assistant General Manager -Operations Blake Anderson reported on the status of the staff and consultant work with the County of Orange regarding the potential purchase of landfills. A more detailed report was scheduled for the Executive Committee meeting later in the evening. A County Board of Supervisors meeting on the topic is scheduled for November 14, the day prior to our next Board meeting. Report of Assistant General Manager -Administration Judy Wilson introduced Mike Peterman whose employment as Personnel Supervisor started this month. (d) Report of the Director of Finance/Treasurer (1) Finance Director/Treasurer Gary Streed updated the Committee on the status of the Districts' COP program which he illustrated by showing a graph of the variable interest rate history on each of the daily rate COPs, and the effective fixed rate for the two refunding issues. The two refunding issues are covered by an interest rate exchange agreement commonly called a "swap." Mr. Streed noted Minutes of Finance, Adrr,., and Human Resources Committe') Page 3 November 8, 1995 that variable rates historically rise at the end of each quarter, because of business taxes and statements, and usually decline to prior levels immediately in the following month. Staff will continue to keep the Committee fully informed about developments in the program as they occur each month. (2) Mr. Streed noted that October is the first full month of external money management by Pacific Investment Management Company, "PIMCO," the Districts' Investment Manager, and Mellon Trust Company, Custodial Bank. A monthly report prepared by PIMCO and Mellon was handed out at the beginning of the meeting. The Committee reviewed the Monthly Report and the Portfolio Detail By Sector and Portfolio Summary By Sector reports. In conclusion, Mr. Streed advised that the total CSDOC cash and investments amount to $337,832,649 as of October 31, 1995. The Committee moved, seconded and duly carried a motion to receive, approve and forward this report to the Executive Committee and Joint Boards. (e) Report of the Director of Human Resources Gary Hasenstab had no report. (f) Report of the Director of Information Technology The Director of Information Technology, Steve Hovey, reported that the 60 personal computer purchases authorized last month had been completed for a final cost approximately $11,000 less than that authorized. (g) Report of General Counsel General Counsel had no report. (5) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the October 11, 1995, meeting of the Finance, Administration and Human Resources Committee. Minutes of Fiflance, A ,in. and Human Resources Cammi' '9 Page4 November 8, 1995 (6) Consideration of PDC95-36 -Consideration of motion to solicit proposals for Professional Planning. Design and Construction services for three projects as follows: ~roject No. 1 : Project No. 2: Project No. 3: Engineering Services for Investigation and Repair of Ocean Outfalls Management of Peak Hydraulic Discharge Determination of Financial Charges Dave Ludwin, Director of Engineering, and Tom Dawes of his staff gave a brief presentation detailing three separate, but related projects which staff is requesting authorization to solicit RFPs. Most of the proposed work is Master- Plan related, and the land use data necessary for the Management of Peak Hydraulic Discharge and Determination of Financial Charges is nearly identical. Several different Professional Services Agreements will be required to complete the projects. After discussion on this item, it was moved, seconded and duly carried to recommend the Executive Committee authorize staff to request proposals on the three projects as noted above. (7) OLD BUSINESS FAHR95-24 Consideration of motion extending early retirement incentive program provisions for all eligible employees: (a) Consideration of motion to recommend a Board Ordinance adopting the provisions of Government Code Section 31641.04 authorizing all eligible Districts' employees to receive two years additional service credit for retirement purposes. (b) Consideration that the Ordinance should specify that provisions of the Early Retirement Incentive Program would be effective January 1 through March 30, 1996, and that the total cost-savings of positions filled at a lower level or held vacant for a period of time shall exceed the total actuarial cost of the additional service credit granted and associated paid leave payoff costs. .. Minutes of Finance, Adrr------1 and Human Resources Committe~ Pages November 8, 1995 (c) Consideration that, for a period of five years, or until such time as the full actuarially determined cost is paid to OCERS. the Districts' Controller will conduct an annual post-audit to verify that the savings exceed the actuarial and associated costs attributable to the additional service credit, and report the findings of that audit to the Finance, Administration and Human Resources Committee. The first report will be presented during the fourth quarter of fiscal year 1996. Gary Hasenstab reported that the cost of the 1995 program has already been exceeded by avoided payroll costs for the first four months, and that the program has been very successful. After discussion on this matter, it was moved, seconded and duly carried to recommend approval of the extension of the early retirement incentive program, as indicated above, to the Executive Committee. FAHR95-38 Consideration of motion authorizing selection of a consultant and a professional services agreement for a New Financial Information System. Phase Ill, Selection Process for Hardware and Software: and Phase IV, Implementation and Acceptance of the Selected Hardware and Software Solutions. Mike White, Controller, advised that the firm of Deloitte &Touche has been selected to complete Phases I and II for the selection, acquisition and installation of a new financial information system within the Districts' Finance Department. In October 1995, the FAHR Committee approved the F.I.S. Request for Proposals and authorized staff to solicit proposals for professional consulting services to complete the project. Mr. White reported that four (4) proposals were received on Friday, October 28, 1995, from Ernst & Young LLP, A.E.F. Consulting Systems, Intelligent Directions Consulting, and Kerry Consulting Group. Interviews were conducted on November 2 and 3, 1995. After interviewing and evaluating each of these consulting firms, Kerry Consulting Group was found to offer the best services consistent with the requirements of the project, and their bid was found to be . within the amount budgeted for the project. Mr. Dennis Vlasich was introduced and he described his experience, knowledge and approach to projects of this type. Minutes of Finance, A ~in. and Human Resources Comm;· ~ Page6 November 8, 1995 After discussion on this matter, it was moved, seconded and duly carried to approve staff's recommendation to enter into a professional services agreement with Kerry Consulting Group for a New Financial Information System, Phase II, Selection Process for Hardware and Software; and Phase IV, Implementation and Acceptance of the Selected Hardware and Software Solutions; for a sum not to exceed $58,263. 8. NEW BUSINESS FAHR95-44 Consideration of Resolution No. 95-, Revising Districts' Procedure for Settlement of Claims Made Against the Districts; Settlement of Claims Made by the Districts; Collection of Delinquent Accounts Owing to the Districts; Settlement of Civil or Administrative Actions; and Settlement of Worker's Compensation Actions: and repealing Resolution Nos. 93-13 and 90-89. Gary Streed reported that the Directors approved Resolutions in 1990 and 1993 which established staff's authority to settle different types of claims by and against the Districts. The purposes of this proposed Resolution are to combine the existing authorities into one Resolution and to revise the dollar thresholds of the authority levels. The authority levels proposed will parallel those recently approved for purchases and other authority delegations in Resolution No. 95-62. Mr. Streed summarized the proposed changes to be included in the proposed resolution. After discussion on this item, it was moved, seconded and duly carried to recommend the Executive Committee approve a resolution amending claim settlement procedures, and to direct staff to report annually on settlement activities and results. FAHR95-45 Consideration of motion to review, approve and file Joint Works Budget Reviews prepared by staff for the quarter ended September 30, 1995. Gary G. Streed presented the Joint Works Budget reviews for the quarter ended September 30, 1995. He reviewed the summary statements of the Joint Works Operating Costs, the Joint Works Capital Improvement Program, and the costs of the workers' compensation, public liability and health plan self-insurance funds for the three months of fiscal year 1995-96, as well as some comparative graphics. After discussion on this item, it was moved, seconded and duly carried to review, approve and file these reports. Staff will report in January on labor charges outside of the Treatment Plants. Minutes of Finance, Adrr-~and Human Resources Committe~ Page 7 November 8, 1995 Summary reports for the Joint Works and the individual Districts will be considered by the full Boards of Directors at their next meeting. FAHR95-46 Consideration of motion to receive, approve and file the Annual Audit Report submitted by Moreland & Associates, Certified Public Accountants, and staff: the annual Management Letter, the Auditor's Report to the Finance, Administration and Human Resources Committee, and the Appropriations Limit Report; and forward the Comprehensive Annual Financial Report to the Executive Committee. Mike White announced that the Districts' independent auditors, Moreland & Associates, have completed their examination for 1994-95. Each year, the FAHR Committee reviews the results of the audit and the corresponding management letter. He advised that this year, the Comprehensive Annual Financial Report (CAFR) has been completely prepared in-house, for the first time. The CAFR will be submitted to the Government Finance Officers' Association (GFOA) for their review. Michael Moreland, Partner and Charles Acocella, Senior Manager, and Julie Pritchard, were in attendance and answered some of the Directors' questions regarding the audit and the CAFR. After some discussion, it was moved, seconded and duly carried to receive and approve the: Annual Audit Report submitted by Moreland & Associates, Certified Public Accountants, and staff; the annual Management Letter; the Auditor's Report to the Finance, Administration and Human Resources Committee; and the Appropriations Limit Report; and forward the Comprehensive Annual Financial Report with an editorially revised transmittal letter to the Joint Boards. (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 No reports were requested. (12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND A STAFF REPORT None. Minutes of Finance, Ar· ·in. and Human Resources Commit· l Pages November 8, 1995 (13) CONSIDERATION OF UPCOMING MEETING DATES AND ITEMS TO BE DISCUSSED AT THOSE MEETINGS The next Committee meeting is scheduled for Wednesday, January 10, 1996. (14) ADJOURNMENT The meeting was adjourned at 7:00 p.m. GGS:lc J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.95\FAHR.MIN\MFAHR11.95 !:!ill!!!!! 0 Written Report •Ovemeads •Slides 0 Flip Charts OriginaloT"""'-IJ-=-;;::.. G. Streed, Stew, Hovey, Gary H Department Head Sign Off~~=-- Gary Streed Anticipated Time 5 Min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR95-37: Summary: AGENDA FOR JANUARY 10, 1996 Consideration of Motion to receive and file Quarterly Status Matrix from Ernst & Young Administrative Function Review The Ernst & Young reviews of the Human Resources and Finance Departments were presented to the Executive Committee in February and July 1995. The Human Resources Department includes divisions for Administration, Human Resources and Training, and Safety and Emergency Response. The Finance Department is currently made up of functional divisions for Administration and Finance, Accounting, and Purchasing and Warehousing. The Information Technology Department was formed in 1995-96 and separated from the Finance Department while the Ernst & Young report was being completed. The Information Technology Department includes divisions for Administration, Hardware Support and Software and Plant Automation Support. The Ernst & Young recommendations for all three departments, which are the bulk of the Administrative organization, have been combined into one Status Matrix for the FAHR Committee to review and monitor progress. Staff will update and submit this report on a quarterly basis. Staff Recommendation Receive and file Status Matrix. J:\WPDOCIFINICRANE\FPC.MTGIFAHR,98\COVERS.98\FAHR95.37A FINANCE, ADMINISTRATION & HUMAN RESOURCES COMMITTEE STATUS MATRIX ERNST & YOUNG ADMINISTRATIVE FUNCTION REVIEW INFORMATION TECHNOLOGY January 1 O, 1996 ~ 'b-, --~ __ fo,;-1,\:-_.,.•1::;::I.:c': .. ~i~~~ ~:[!~~tihJ1,". ~~~~m01-;od,t1i~-.::·:. ··••:·;::: I(,/::, j?;i::::::: iittadat:uit. ::::;:::::::::ttJ:il?.ic;:•••-·•i·;ii::i1:1::::J1!11:::::::::::11::§~i~Jr.~t;,g~1mtif:?i",;0itii!:::1:!:1::::::::11:r:;:•·:::::.~;:: __ '.]: ··:::::-:-·-·.-.•.•::.·-·.·.-,-: •. --:.-:-:-·:··.:::-·;-· 1. Develop a Charter, Mission and Vision for Information Completed Systems. 2. Finalize the RFP for the Strategic System Information Plan 12/31/95 A preliminary draft has been prepared. The final draft will (SISP). be reviewed by outside experts. 3. Perform the SISP study. 3/96 Start study when RFP approved. 4. Review staffing and organization needs based on charter and This will begin when SISP is completed. SISP. 5. Develop standards for all PC's and software products. Ongoing PC purchases are limited to the Gartner group "Tier 1 and 2" suppliers. 6. Develop a plan to and introduce the standards over a period of Alternative procurement methods including leases, and a time to minimize disruption, maximize investment, and allow help desk service are being evaluated. Present methods of training. procurement utilize state contracts for volume pricing. 7. Survey users to determine the need for and costs and benefits 1/1/96 Will be completed in conjunction with new training staff in of information technology training. Human Resources. 8. Study impact of NT File Server. Completed 9. Implement NT File Server. 3/1/96 Implementation will be phased. Purchase of new servers to be submitted to Joint Boards via Committee in January. -1- January 10, 1996 FINANCE, ADMINISTRATION & HUMAN RESOURCES COMMITTEE STATUS MATRIX ERNST & YOUNG ADMINISTRATIVE FUNCTION REVIEW FINANCE & ACCOUNTING 1. Select and Implement New Financial Information System. 2. Develop and Maintain Standard Financial Policies and Procedures. 3. Improve Monthly Accounting Close Cycle Times. 4. Improve Budget Process and Organizational Focus. 5. Improve Payroll Process. 6. Outsource Deferred Compensation Plan (457). 7. Update Cost Allocation Plan . 8. Develop Internal Audit Program. 9. Improve Fixed Assets Process. 10. Eliminate Large Petty Cash Fund . 11. Improve User Billing Process. -2- 9/30/97 I Kerry Consulting Group retained. RFP mailed. Bidder conference 12/14/95. Proposals due 1/18/96. 1 /31 /96 I Assembled copies of current policies & procedures. Revisions are underway where appropriate. 11/30/95 I Determining critical path accounting items. Should get to within 5 working days when new F.I.S. is in place. 5/31 /96 I New Analyst positions filled 12/95. Budget manual being prepared. 6/30/96 I Coordinate along with selection and implementation of F.I.S. Payroll moved to Accounting July 95. 1 /31 /96 I Administration moving to Lincoln National. 6/30/96 I Preparing to use external consultant to prepare a plan. 6/30/96 I May outsource. Function should report to G.M. 2/28/96 I Identifying specific fixed asset problems, road blocks and solutions. 9/30/95 I Developing new procedures for emergency cash disbursements to replace petty cash checks. 3/31/96 I Have begun to move several commercial accounts to actual billing. Additional changes being evaluated. FINANCE, ADMINISTRATION & HUMAN RESOURCES COMMITTEE STATUS MATRIX ERNST & YOUNG ADMINISTRATIVE FUNCTION REVIEW PURCHASING & WAREHOUSING January 10, 1996 ~ . _____ -,f i , ·,;::::::--•, .,· ;::::ir1•1:~.r"-!~~1iyJt:~_Q:R~~§rll'6ie.n~~~r~:1.:~:!ii1irliM'.=w;i ,,;r<-~--: {!}]!::}~('.~/. -'.·-< ·. • :;i11I:ii::·,,•:;:ii1:1 ;•·1 ::'1' 1•!;:•;,,_:•i: -•: -::;i1f,l~,J~iJ>r~~m~l;iji:1:i1::i:~ litt!:iliJ}.~it1I:11::iitiiilI11:::i:11II{ ... ,,,Goal , ... , • ' ,;,:,• ~•' ··_c._~-•: 1. Implement and Maintain a Formal Supplier Rating Program. 12/95 In process to analyze off-the-shelf PC software package. 2. Align Buyers with Inventory Classes. Completed 3. Utilize Blanket Purchase Orders for Inventoried Items. 7/96 Current F.I.S. does not support this. 4. Increase Formal Bid Threshold. Completed Board action threshold raised to $50,000 5. Implement and Report Key Purchasing Performance Metrics. 3/96 Purchasing team and management developing metrics and methods. 6. Contract with Suppliers of Low Cost Stock Items to Maintain 2/96 In process of eliminating low cost general hardware from Bins at Point of Usage. inventory. 7. Categorize Inventory by ABC Classes. 12/95 Collecting historical inventory data needed. 8. Initiate a Cycle Counting Program to Measure/Maintain 1/96 This will be applied after ABC items are identified. 100% Inventory Accuracy. count completed 12/95. 9. Review Requirement for Expanded Plant 2 Warehouse. Completed PDC recommended rehab of existing. 10. Aggressively Pursue Reduction of Excess and Obsolete Ongoing Need cooperation with other departments to record Inventory. expenses. Method established not to increase cost/mg. 11. Develop and Implement a Data Retention/Maintenance Completed Changes made to current F.I.S. Procedure. 12. Generate ABC, Excess Inventory and Obsolete Inventory Ongoing Accumulating ABC data, nonmovlng inventory reports Management Reports. issued. Working with consultant programmer. 13. Implement and Report Key Warehousing Performance 12/96 Warehousing team and management developing metrics Metrics. and methods. 14. Select and Implement New Finance System (Inventory and 6/96 See Accounting Division, item 1. Purchasing). -3- _) ;J:::],)ti .. 1. 2. 3. 4. 5. 6. 7. 8. 9. FINANCE, ADMINISTRATION & HUMAN RESOURCES COMMITTEE STATUS MATRIX ERNST & YOUNG ADMINISTRATIVE FUNCTION REVIEW HUMAN RESOURCES & TRAINING J:;~:::.;;:;::i::ilrfI:tefh~fl&:'.v~u'~~:/~ec~~:metj~~ti;~,;J!:[[[::1:::[,,:Jfi::frt:l)i;';i:'.!.,}[tit~W:: ·,:tljf'~'a~f~\::,:):!; ::::!:::;l~i:r -~-t!iliiliL}::,11':itlfili:l :Jr:iiffll:ift.;J:!!1~!:[iiii11il!i;li1llill1:ill:iii:ifliiii!:iiiti!itii:!1:iil' Develop integrated Human Resource policies and procedures 12/31/95 Completed. and maintain on an annual basis in accordance with resolution amendments. Revise all Districts' Classification Specifications and review on 1/1/96 Completed. With the exception of Technical Services. a three-year basis. Improve the effectiveness of the Management Performance 3/31/96 Ongoing meetings with MPRP group. On schedule. Review Program (MPRP) in managing and rewarding performance, and providing performance review training to managers and supervisors during the 3rd quarter. Evaluate alternative base pay administration systems 6/30/96 Researching literature on broadbanding. On schedule. including broadbanding and alternative reward strategies such as variable pay in a staff report; present final report to Finance Administration and Human Resources Committee. Implement a quality program of comprehensive training in 3/31/96 Training Manager hired. Implementation of quality management, supervisory, technical, safety and other areas. training programs will be ongoing. Training Supervisor will start on 1/8. On schedule. Maintain recruitment turnaround of 30 days for outside non-12/31/95 Metrics completed. Non-exempt recruitments currently exempt and 65 days for outside exempt positions, and 30 take 134 days, exempt recruitments 94 days. Study days for all promotional positions. underway to identify ways to address this problem. Major effort will be taken to shorten these turnaround times. Conduct the welcome and tour day activity of the new hire Ongoing Completed. Ongoing. orientation program bi-monthly. Provide sexual harassment training by an outside source; 6/30/96 Completed. evaluate the effectiveness of the training by monitoring formal and informal complaints in a quarterly report. Complete a revised Employee Handbook. 12/31/95 Delays in photo shoot will project us to mid-January. Two weeks off schedule. -4- FINANCE, ADMINISTRATION & HUMAN RESOURCES COMMITTEE STATUS MATRIX ERNST & YOUNG ADMINISTRATIVE FUNCTION REVIEW HUMAN RESOURCES & TRAINING 1 o. Develop and implement meaningful Human Resources performance metrics and reporting criteria. 11 . Conduct a customer satisfaction survey of all Human Resource customers and provide appropriate customer service training to all Human Resources staff. 12. Ensure that all employee performance reviews and MPRP reviews are completed in a timely manner. 13. Develop a new hire orientation video which includes new hire information, safety info., and sexual harassment clip. 14. Evaluate the advisability of an employee services program to address issues regarding wellness, child care, cafeteria, and/or ATM's. J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT .96\STATSMTX.96 -5- 12/31/95 I Completed 12/31/95 I Completed. Results to be communicated by 12/20. 12/31 /95 I All reviews are in with the exception of about 3 MPRPs from Tech. Services which were committed 12/8. May be two weeks off schedule. 3/31/96 I Outline format no later than 1/15/96. Video consultant to be identified no later than 1/31/96. On schedule. 3/31/96 I CosUBenefrt analysis being conducted. On schedule. .. .. ., Format D Written Report •Overheads •Slides •Flip Charts Department Head Sign Anticipated Time 10 Min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR95-45: Summary: AGENDA FOR JANUARY 10, 1996 Consideration of motion to review and file revised Joint Works Budget Reviews prepared by staff for the quarter ended September 30, 1995. The Committee reviewed preliminary reports at their November meeting. Attached are revised summary statements of the Joint Works Operating Costs for the three months of fiscal year 1995-96, some comparative graphics, and graphs of the Measurement Tracking and Activity Trends from the 1995-96 budgets. With one quarter of the year gone, 20% of the net joint operating budget has been expended. Net costs are down $54,855 or .49% compared with the same period last year. At the same time, flows have increased less than 1 %, resulting in a $3.20 per million gallons decrease in the unit cost to treat and dispose of sewage, to $508.98 per million gallons, $118.32 below the approved budget. The graphical pages headed "Measurement Tracking" were included with the November Agenda. These represent progress to date on the various projects that each of the Divisions budgeted for the year. A new graphical section headed "Activity Trends" is also included. Generally, these measurable performance activities are the same as those proposed in the Budget. In a few instances, however, the activities have been revised to better match the goals and functions of the Divisions. Changes are expected throughout the year as our experience and knowledge with performance measurements increases. Staff Recommendation Staff recommends that the Committee review, approve and file these revised reports, and approve the format for future quarterly reports. J:\WPDOC\FIN\CRANEIFPC.MTG\FAHR.96\COVERS.96\FAHR95.45A January 10, 1996 FAHR95-45: STAFF REPORT Summary Financial Report for Three Months Ended September 30, 1995 Transmitted herewith is the Summary Financial Report for three months ended September 30, 1995. The statements summarize the fiscal activities of the joint operations. JOINT OPERATING The Joint Operating fund accounts for operations, maintenance, and administrative activities relative to the Districts' jointly-owned treatment and disposal facilities. The JO expenditures along with the self-funded insurance program costs are monitored by the Finance, Administration and Human Resources Committee and if some unexpected expenditures are experienced, they are reviewed by the Committee. Salaries and Wages -Approximately 12% of authorized positions were unfilled during the quarter and, thus, some minor payroll savings have been realized to date as total salary expenses are 21. 79% of the budget. These positions will not be filled until necessary, but the vacancy rate is expected to decline in the balance of the year. Employees' Benefits -Includes Retirement, Workers' Compensation, Unemployment Insurance, Group Medical Insurance and Uniforms. The OCERS rate was increased for 1995-96. Charqebacks to Districts and CORF -Payroll expenses are charged back to CORF through the cost accounting system for work on the treatment plants' capital expansion program, and to individual Districts for work on Districts' collection facilities capital expansion projects as well as maintenance and repair of said systems. Source Control Division charges to respective Districts are also included in these chargebacks. The decrease in this category reflects our reduced capital improvement program for 1995-96. Gasoline, Oil & Fuel -Includes all fuel for motor pool. A large portion is recovered through our equipment billing system and included in revenue below. Insurance -Budget amount includes Board and staff out-of-county travel policy, employee fidelity, boiler, fire, earthquake and all risk insurance policies, and pro-rata cost of the self- funded liability insurance program. Expense is in line with increased annual budget. CS DOC [l P O Box 8127 [l Fountain Valley, CA 92728-8127 0 Tel. (714) 962-2411 0 FAX (714) 962-3954 FAHR95-45 Page2 January 10, 1996 Memberships -Includes the cost of membership in CASA, AMSA, SARFPA, WateReuse and other organizations. Annual membership costs are recorded when paid. Office Expense -This account includes various types of office supplies, postage, stationery, computer supplies and related items. Odor Control Chemicals -Primarily for influent and sludge odor control at treatment plant sites. The main chemicals used to control odors are hydrogen peroxide and ferrous chloride. Ferric chloride is used as a supplemental odor control chemical, and caustic soda is also used in air scrubbers throughout the plants to reduce hydrogen sulfide emissions. Use of chlorine has essentially been eliminated at the plants. Chemical Coagulants -Expenditures for this item are required to dewater our biosolids prior to disposal to comply with Regional Water Quality Control Board requirements. Other Operating Supplies -Miscellaneous items such as solvents, cleaners, janitorial, tools, lab chemicals, etc., purchased throughout the year. Contractual Services -The major elements in this line item are payment for grit removal and disposal and payment for removal and off-site beneficial reuse of biosolids or sludge. These expenses which are a significant part of our total costs are right at the budget projections. Professional Services -Primarily consists of General Counsel's fees, other legal services, audit fees, and miscellaneous consulting services. The decrease from 1994-95 reflects the Ernst & Young costs of that year. Printing and Publications -Includes all reproduction activities in-house, including copier rental, and with outside services and recruitment advertising. Equipment Rental Outside Equipment Rental -Primarily for the rental of large cranes and equipment necessary for removing and replacing major pumps, engines and other large equipment during the course of maintenance and repair operations. CSDOC Equipment Rental -Reflects the charges for District-owned equipment used for overhead type activities. All equipment use is charged to the appropriate work order and fund through the cost accounting system. Repairs and Maintenance -This item includes parts and supplies for repair of plant facilities. Escalating costs continue to have an impact on this item. Generally, this account runs close to budget by year-end due to the unpredictability of major equipment failures. FAHR95-45 Page3 January 10, 1996 Research and Monitoring -Budget includes funds for the ocean monitoring contract required by our NPDES pennit. Other projects include operational research and evaluation of processes to develop optimum operating parameters, and also include the Districts' annual share of participation in the Southern California Coastal Water Research Project. Travel, Meetings & Training -Major items are authorized by specific Board actions. Expanding activities of regulatory agencies and the Clean Water Act reauthorization have required additional staff and Board travel. Increased training is a focal point of this year's budget and our annual goals. Training costs will increase in the second half of the year as our program is implemented. These costs are reviewed separately by the Finance, Administration and Human Resources Committee. Utilities -The major item in the Utilities Expense Account is for natural gas purchased for central power generation. Some power is still purchased for parts of the plants not served by central generation. Total utilities expenses are in line with the budget, and are down $150,833 from last year. Other Expenses -For items not chargeable elsewhere such as freight, safety supplies, grounds maintenance supplies, etc. Prior Year's Expense -This account is required by the Unifonn Accounting System and represents adjustments to an operating or non-operating account balance from the previous year or payment of charges which could not be accrued at year end. Generally, all expenses to this account are recorded in the first quarter. Allocation to Districts and CORF -This is an account established in connection with the cost accounting system and represents materials, supplies and services, overhead chargebacks to the individual Districts and CORF. GGS:lc J:\WPDOCIFIN\CRANEIFPC.MTG\FAHR.95\STAFF.RPnSRFAHR95.45 12/18/95 1 . Net Salaries, Wages & Benefits 2. Odor Control & Chemical Coagulants 3. Contractual Services 4. Professional Services 5. Equipment Charges. 6. Repair & Maintenance Materials & Services. 7. Research & Monitoring. 8. Utilities. 9. Other Materials, Supplies & Outside Services. 10. Total Joint Operating Expenses 11. Revenues & Offsets. 12. NET JOINT OPERA TING EXPENSE 13. Gallonage Flow (MG) 14. Gallonage Flow (MGD) 15. Gallonage Charge ($'s/MG) FPCR1294.XLS 4:11 PM JOINT OPERATING FUND BUDGET REVIEW & SUMMARY COMPARISON OF BUDGETED & ACTUAL EXPENDITURES FISCAL YEAR TO DATE 1995-96 (A) (B) (Cl (D) (E) Budget Expenditures Expenditures Increase % Increase 1995-96 through through or (Decrease) 9/30/95 9/30/94 (Decrease) $28,667,000 $6,737,552 $5,930,738 $806,814 13.60 % 5,363,500 733,664 938,818 (205,154) (21.851% 7,269,500 1,631,781 1,706,920 (75,139) (4.40)% 1,512,600 321,803 473,831 (152,028) (32.08)% 235,700 56,936 83,605 (26,669) (31.90)% 4,209,900 841,028 959,624 (118,596) (12.36)% 3,095,000 338,480 619,117 (280,637) (45.33)% 3,375,500 567,467 718,300 (150,833) (21.00)% 4,451,300 825,912 772,459 53,453 6.92 % $58, 180,000 $12,054,623 $12,203,412 ($148,789) (1.22)% (3 ,800,000) (947,039) (1,040,973) (93,934) (9.02)% $54,380,000 $11,107,584 $11,162,439 ($54,855) (0.49)% 86,688.61 21,807.71 21,794.23 13.48 0.06 % 236.85 237.04 236.89 0.15 0.06 % $627.30 $509.34 $512.17 ($2.83) (0.55)% (F) (G) % Budget Remaining Realized Budget 23.50 % $21,929,448 13.68 % 4,629,836 22.45 % 5,637,719 21.27 % 1,190,797 24.16 % 178,764 19.98 % 3,368,872 10.94 % 2,756,520 16.81 % 2,808,033 18.55 % 3,625,388 20.72 % $46, 125,377 24.92 % (2,852,961) 20.43 % $43,272,416 I 25.16 % 12/18/95 JOINT OPERATING FUND & WORKING CAPITAL FUND SUMMARY BUDGET REVIEW -REVISED 3 MONTHS ENDED 9-30-95 DESCRIPrION SALARIES, WAGES, & BENEFITS 1 SALARIES & WAGES 2 EMPLOYEE BENEFITS: 3 RIITIREMENT 4 WORKERS COMP 5 UNEMPLOYMENT INS 6 GROUP INSURANCE 7 UNIFORM RENT AL 8 TOT AL BENEFITS 9 SALARIES, WAGES, & BENEFITS 10 W.0. SALARIES & BEN. ALLOC.: 11 DIRECT CHARGES-CORF/DIST 12 COST ALLOC-CORF/DIST 13 W.O. SALARIES & BENEFITS 14 NET J.O. PAYROLL MATERIALS, SUPPLIES, & SERVIC 15 GASOLINE, DIESEL & OIL 16 INSURANCE 17 MEMBERSHIPS 18 OFFICE EXPENSE -SUPPLIES 19 OFFICE AUTOMATION 20 OFFICE EXPENSE -OTHER 21 OPERATING SUPPLIES: 22 ODOR CONTROL CHEMICALS 23 SULFIDE CONTROL CHEMICALS 24 CHEMICAL COAGULENTS 25 LAB CHEMICALS & SUPPLIES 26 TOOLS 27 SOLV, PAINTS, &JAN. SUPPLIES 28 OTHER OPERATING SUPPLIES 29 CONTRACTUAL SERVICES: 30 GROUNDSKEEPING & JANITOR! 31 OUTSIDE LAB SERVICES 32 SOLIDS REMOVAL 33 OTHER WASTE DISPOSAL 34 OXYGEN PLANT OPER & MTCE 35 OTHER CONTRACTUAL SERVIC 36 PROFESSIONAL SERVICES: 37 LEGAL SERVICES 38 AUDIT & ACCOUNTING 39 ENGINEERING A B ·--EXP BUDGET THRU 1995-96 9-30-95 32,283,000 7,035,264 3,077,000 678,844 225,000 51,931 75,000 4,064 4,207,000 899,980 100,000 12,718 7,684,000 1,647,537 39,967,000 8,682,801 (6,875,000) (1,419,990) (4,425,000) (525,259) (11,300,000) (1,945,249) 28,667 ,000 6,737.552 F.S 175,000 29,353 1,250,000 363,707 58,000 28,400 203,100 28,286 157 ,500 30,347 102,300 18,000 2,103,500 245,769 1,715,000 246,097 1,545,000 241,798 509,000 85,109 125,400 24,439 146,000 27,842 207,500 51,780 213,000 21,705 150,000 9,364 5,425,000 1,373,753 140,000 13,009 510,000 127,764 831,500 86,186 600,000 187,414 70,000 15,844 289,000 27,797 40 OTHER PROFESSIONAL SERVICE 553,600 90,748 C D --%EXP THRU REMAINING 9-30-95 BUDGET 21.79 25,247,736 22.06 2,398,156 23.08 173,069 5.42 70,936 21 .39 3,307,020 12.72 87,282 21.44 6,036,463 21.72 31 284,199 20.65 (5,455,010) 11 .87 (3,899,741) 17.21 (9,354,751) 23 .50 21.929,448 16.77 145,647 29.10 886,293 48.97 29,600 13 .93 174,814 19.27 127,153 17.60 84,300 11.68 1,857,731 14.35 1,468,903 15.65 1,303,202 16.72 423,891 19.49 100,961 19.07 118,158 24.95 155,720 10.19 191,295 6.24 140,636 25.32 4,051,247 9.29 126,991 25.05 382,236 10.37 745,314 31.24 412,586 22.63 54,156 9.62 261,203 16.39 462,852 FPC I 294A.XLS-12/l 8/95-5 :31 PM PAGEi E F G ---EXP INCR INCR THRU (DECR) (DECR) 9-30-94 $ % 6,905,566 129,698 1.88 559,465 119,379 21.34 60,579 (8,648) (14.28) 9,827 (5,763) (58.64) 885,414 14,566 1.65 16,776 (<1,058) (24. 19) 1,532,061 115,476 7.54 8,437,627 245,174 2.91 (1,519,341) (99,351) (6.54) (987,548) (462,2&9) (46.8]) (2,506.889) (561,640) (22.40) 5,930,738 806 ,814 13.60 46,620 (17,267) (37.04) 302,091 61,616 20.40 25,811 2,589 10.03 25,564 2,722 10.65 28,197 2,150 7.62 13,752 4,248 30.89 256,293 (10,524) (4. 11) 384,182 (138,085) (35.94) 298,343 (56,545) (18.95) 70,760 14,349 20.28 17,723 6,716 37.89 33,252 (5,410) (16.27) 43,212 8,568 19.83 29,354 (7,649) (26.06) 14,812 (5,448) (36.78) 1,429,411 (55,658) (3 .89) 16,839 (3,830) (22.74) 138,362 (10,598) (7.66) 78,142 8,044 10.29 195,805 (8,391) (4.29) 22,398 (6,554) (29.26) 0 27,797 100.00 255,628 (164,880) (64 .50) 12/18/95 PAGE2 JOINT OPERATING FUND & WORKING CAPITAL FUND SUMMARY BUDGET REVIEW -REVISED 3 MONTHS ENDED 9-30-95 !!:. !! £ ~ & E Q EXP %EXP EXP INCR INCR BUDGET THRU THRU REMAINING THRU (DECR) (DECR) DESCRIPTION .1995-96 9-30-95 9-30-95 BUDGET 9-30-94 $ 'K, 41 PRINTING & PUBLICATION: 42 REPRODUCTION-IN-HOUSE 219,100 22,367 10.21 196,733 19,161 3,206 16.73 43 PRINTING-OUTSIDE 60,500 3,664 6.06 56,836 1,888 1,776 94.07 44 PHOTO PROCESSING 32,700 5,834 17.84 26,866 6,406 (572) (8.93) 45 NOTICES & ADS 29,500 10,847 36.77 18,653 4,734 6,113 129.13 46 RENTS & LEASES: 47 OUTSIDE EQUIPMENT RENTAL 109,000 33,712 30.93 75,288 60,295 (26,583) (44.09) 48 DISTRICT EQUIPMENT RENTAL 126,700 23,224 18.33 103,476 23,310 (86) (0.37) 49 REPAIRS & MAINTENANCE: 50 MATERIALS 3,375,900 625,349 18.52 2,750,551 758,986 (133,637) (17.61) 51 SERVICE CONTRACTS 834,000 215,679 25.86 618,321 200,638 15,041 7.50 52 RESEARCH & MONITORING: 53 ENVIRONMENT AL MONITORING 2,375,000 288,335 12.14 2,086,665 425,019 (136,684) (32.16) 54 AIR QUALITY MONITORING 155,000 0 0.00 155,000 75,000 (75,000) (100.00) 55 RESEARCH 565,000 50,145 8.88 514,855 119,098 (68,953) (57.90) 56 TRAINING,TRAVEL & MEETINGS 647,500 90,253 13.94 557,247 22,453 67,800 301.96 57 UNCOLLECTABLEACCOUNTS 15,000 131 0.87 14,869 0 131 100.00 58 UTILITIES: 59 DIESEL FOR EMERG GENERATO 25,000 0 0.00 25,000 5,964 (5,964) (100.00) 60 POWER 1,075,000 204,998 19.07 870,002 220,298 (15,300) (6.95) 61 NATURAL GAS 1,400,000 245,545 17.54 1,154,455 302,810 (57,265) (18.91) 62 TELEPHONE 125,500 26,512 21.13 98,988 32,770 (6,258) (19.10) 63 WATER 750,000 90,412 12.05 659,588 156,458 (66,046) (42.21) 64 OTHER EXPENSES: 65 FREIGHT 79,700 10,317 12.94 69,383 9,061 1,256 13.86 66 GENERAL 539,000 72,451 13.44 466,549 132,976 (60,525) (45.52) 67 AQMD OPERATING FEES 250,000 36,078 14.43 213,922 58,893 (22,815) (38.74) 68 PRIOR YEARS EXPENSE 20,000 0 0.00 20,000 0 0 0.00 69 OTHER NON-OPER EXPENSE 94,500 14,837 15.70 79 ,663 18,948 (4,111) (21.70) 70 TOTAL MATLS, SUPP, & SERV 29,983,000 5,445,201 18.16 24,537,799 6,381,717 (936,516) (14.67) 71 COST ALLOC-CORF & OTHER (470,000) (128.130) 27.26 (341 ,870) (109,043) 19.087 17.50 72 NET J.O.-MATLS, SUPP, & SERV. 29,513 ,000 5,317,071 18.02 24,195,929 6,272,674 (955 ,603) (15 .23) 73 TOTALJ. 0. REQUIREMENTS 58,180,000 12,054,623 20.72 46,125,377 12,203,412 (148,789) (J .22) 74 NET REVENUES (3,800,000) (947,039) 24.92 (2,852,961 ) (1,040,973) (93,934) (9.02) 75 NET J.O. EXPENDITURES 54.380,000 11 ,107,584 20.43 43,272.416 11,162,439 (54,855) (0.49) FPC1294A.XLS-\2/\8/95-5:3J PM JOINT OPERATING FUND & WORKING CAPITAL FUND BUDGET REVIEW 3 MONTHS ENDED 9/30/95 SUMMARY OF REVENUES % REV REV REV INCR INCR BUDGET THRU THAU REMAINING THRU (DECAi (DECR) DESCRIPTION 1995-96 9-30-95 9-30-95 BUDGET 9-30-94 s % INTER DIST SEWER USE 1,450,000 411,692 28.39 1,038.308 427,391 (15,699) (3 .67) WASTEHAULER 500,000 78,193 15.64 421,807 117,438 (39,245) (33.42) IRWD SLUDGE DISPOSAL 650,000 206,000 31.69 444,000 209,393 (3,393) (1.52). WASTE HAULER PENALTIES 0 0 0.00 0 0 (0) 0.00 SCRAP SALES 10,000 12,739 127.39 (2,739) 31,961 (19,222) (60. 14) OTHER SALES 5,000 446 8.92 4,554 358 88 24.58 BIOSOLIDS REUSE 10,000 0 0.00 10,000 6,722 (6,722) (100.00) RENTS & LEASES 70,000 1,000 1.43 69,000 750 250 33.33 INVESTMENT INTEREST 0 0 0.00 0 0 0 0.00 CONTRIBUTION IN AID 0 0 0.00 0 0 (0) 0.00 GENERAL NON-OPERATING 100,000 90,593 90.59 9,407 60,089 30,504 50.76 VEHICLE & EQUIP 200,000 48,152 24.08 151,848 51,560 (3,408) (6.61 l MAILING FEE 5,000 0 0.00 5,000 0 (0) 0.00 SAMPLING CHARGES 250,000 51,170 20.47 198,830 75,632 (24,462) (32.34) PRIOR YEAR INCOME 50,000 0 0.00 50,000 529 (529) (100.00) POWER SALES 500,000 47,426 9.49 452,574 60,202 (12,776) (21.22) TOT AL REVENUES 3,800,000 947,411 24.93 2,852,589 1,042.025 (94,614) {9.08) Joint Works Operating Fund 1995-96 Summary Budget Review Comparisons by Department 199-5-96 Department and Division 1993-94 1994-95 1994-95 Adopted Year to Date Budget% Actual Budaet Actual Budaet 9/30/95 Realized General Managers Department Executive Management 569,751 1,009,300 1,410,640 763,700 295,258 38.66% Board Secretary 70,207 208,000 58,560 143,600 25,785 17.96% Management Support 54,700 0 0.00% Communications 238,966 441,600 218,598 676 400 122,142 18.06% Total 878,924 1,658.900 1,687,798 1,638,400 443,185 27.05% Human Resources Department Human Resources Administration 758,055 1,126,500 1,042,149 299,000 109,049 36.47% Human Resources & Training 512,800 64,383 12.56% Safety & Emergency Response 611 ,200 125,335 20.51% Total 758,055 1,126,500 1,042,149 1,423,000 298,767 21 .00% Finance Department Finance Administration 1,420,950 1,413,800 1,510,739 1,549,000 453,775 29.29% Accounting 555,449 815,600 817,506 1,042,800 252,183 24.18% Purchasing & Warehousing 506,788 647,400 546,640 760 500 185,411 24.38% Total 2,483,187 2,876,800 2,874,885 3,352,300 891 ,369 26.59% Information Technology Department Info Tech Administration 1,146,921 1,699,300 1,251,701 266,100 60,430 22.71% Hardware Support 643,250 91,444 14.22% Software & Plant Automation Support 642,250 293,195 45.65% Total 1,146,921 1.699,300 1,251,701 1,551,600 445,069 28.68% Maintenance Department Maintenance Administration 832,102 1,107,100 1,083,020 265,000 77,135 29.11% Maintenance Scheduling 496,400 110,258 22.21% Plant Maintenance 3,290,595 3,458,100 3,197,821 3,261,300 835,150 25.61% Collection Facilities Maintenance 299,426 365,900 249,469 342,300 110,628 32.32% Mechanical Maintenance 4,898,622 5,574,700 5,192,640 5,816,600 1,091,580 18.77% Electrical Maintenance 1,767,675 1,902,300 1,856,601 1,964,000 384,815 19.59% Instrumentation Maintenance 2,346,636 2,713,800 2,581 ,127 2,975,100 591,200 19.87% Total 13,435,056 15,121 ,900 14,160,678 15,120,700 3,200,766 21.17% Operations Department Operations Administration 1,241,700 282,269 22.73% Plant Operations 15,601 ,211 15,840,800 14,862,879 22,957,600 4,449,635 19.38% Total 15,601,211 15,840,800 14,862,879 24,199,300 4,731 ,904 19.55% Technical Services Department Technical Services Administration 243,052 256,200 193,053 833,100 154,417 18.54% Environmental Management 9,057,047 10,533,300 10,163,150 4,921,400 599,983 12.19% Environmental Sciences Lab 3,715,233 3,471,950 3,241,725 3,581,600 858,610 23.97% Source Control 991 ,029 276,750 839,942 773,700 168,023 21.72% Total 14,006.361 14,5381200 14,437,870 10,109,800 1,78\033 17.62% Engineering Department Engineering Administration 46,212 56,000 78,229 125,400 43,381 34.59% Design Engineering 148,366 221,000 281,346 243,800 117,578 48.23% Engineering Planning 54,200 57,986 106.99% Construction Management 296.125 102,600 268,956 361,500 43,584 12.06% Total 490,703 379,600 628,531 784,900 262,529 33-45% Less Joint Operating Revenues {3,620,154) {3.700,000) {4,649,515) {3,800,000) {947,038) 24.92% Net Joint Operating Expenses 45,180,264 49,542,000 46,296,976 54,380,000 11,107,584 20.43% GALCHGTL.XLS 1/3/96 1/3/96 Joint Works Operating Fund Divisional Contributions to Gallonage Charge 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1995-96 1995-96 Actual Actual Actual Actual Actual Budget Target Yrto Date Annual Flow in Million Gallons 98,046.36 82,938.27 84,999.62 84,321.90 88,489.60 86,688.61 86,688.61 21,807.71 2150 General Manager 12.02 9.03 8.45 6.76 15.94 8.81 8.33 13.54 2160 Board Secretary 0.34 2.12 0.77 0.83 0.66 1.66 1.46 1.18 2170 Management Support 1.50 3.70 2.69 2.83 2.47 0.63 0.43 0.00 2190 Communications 0.00 0.00 0.00 0.00 0.00 7.80 7.04 5.60 Total Management 13.87 14.85 11.90 10.42 19.07 18.90 17.26 20.32 2180 Personnel & Security 5.46 13.25 8.98 8.99 11.78 0.00 0.00 0.00 2510 HR Administration 0.00 0.00 0.00 0.00 0.00 3.45 3.45 5.00 2520 HR & Training 0.00 0.00 0.00 0.00 0.00 5.92 5.25 2.95 2530 Safety & Emerg Response 0.00 0.00 0.00 0.00 0.00 7.05 6.51 5.75 Total Human Resources 5.46 13.25 8.98 8.99 11.78 16.42 15.20 13.70 2210 Dir of Finance 7.57 10.94 13.79 16.85 17.07 17.87 18.80 20.81 2220 Accounting 5.50 7.63 6.57 6.59 9.24 12.03 11.35 11.56 2230 Purchasing & Warehousing 5.39 6.66 6.25 6.01 6.18 8.77 8.22 8.50 Total Finance 18.46 25.23 26.61 29.45 32.49 38.67 38.37 40.87 2240 Information Services 6.29 10.13 11.79 13.60 14.15 0.00 0.00 0.00 2410 Info Tech Administration 0.00 0.00 0.00 0.00 0.00 3.07 2.87 2.77 2420 Hardware Support 0.00 0.00 0.00 0.00 0.00 7.42 6.27 4.19 2430 Software Support 0.00 0.00 0.00 0.00 0.00 7.41 6.58 13.44 Total Information Serv/Tech 6.29 10.13 11.79 13.60 14.15 17.90 15.72 20.41 3310 Director of O & M 11 .05 9.25 9,56 9.87 12.24 0.00 0.00 0.00 Total Dir of O & M 11.05 9.25 9.56 9.87 12.24 0.00 0.00 0.00 3310 Director of Maintenance 0.00 0.00 0.00 0.00 0.00 3.06 2.88 3.54 3320 Mice Scheduling 0.00 0.00 0.00 0.00 0.00 5.73 5.36 5.06 3330 Plant Mtce 34.10 39.27 42.21 39.02 36.14 37.62 37.28 38.30 3340 Collections 4.08 7.72 3.52 3.55 2.82 3.95 3.04 5.07 3350 Mechanical 50.90 55.40 59,80 58.09 58.68 67.10 63.84 50.05 3360 Electrical 13.94 17.79 17.66 20.96 20.98 22.66 22.05 17.65 3370 Instrumentation 14.66 19.21 22.51 27.83 29.17 34.32 32.68 27.11 Total Maintenance 117.67 139.39 145.71 149.46 147.79 174.43 167.13 146.77 3410 Dir of Operations 0.00 0.00 0.00 0.00 0.00 14.32 13.82 12.94 33/3480 Plant Operations 146.42 162.76 192.77 185.02 167.96 264.83 258.96 204.04 Total Operations 146.42 162.76 192.77 185.02 167.96 279.15 272.78 216.98 3510 Dir of Tech Sevices 3.59 3.92 4.13 2.88 2.18 9.61 6.55 7.08 3520 Compliance 29.58 34.44 31 .89 30.82 40.30 0.00 0.00 0.00 3530 Cons, Reel, Reuse 51.87 74.98 71.35 68.29 68.03 0.00 0.00 0.00 3540 Air Quality 0.00 5.09 5.65 8.30 6.51 0.00 0.00 0.00 3550 Environmental Mgmt 0.00 0.00 0.00 0.00 0.00 56.77 55.26 27.51 3580 Laboratory 21.78 33.13 38.07 44.06 36.63 41.32 40.36 39.37 3590 Source Control 9.01 14.82 8.17 11 .75 9.49 8.93 8.70 7.70 Total Tech Services 115.83 166.38 159.26 166.11 163.16 116.62 110.87 81.67 3710 Dir of Engr 1.45 4.54 0.72 0.55 0.88 1.45 1.09 1.99 3720 Planning & Design (Design @ 95-96) 5.01 7.89 2.64 1.76 3.18 2.81 1.10 5.39 3730 Engineering Planning 0.00 0.00 0.00 0.00 0.00 0.63 0.00 2.66 3750 Instr & Controls 0.00 1.97 0.00 0.00 0.00 0.00 0.00 0.00 3790 Constr Mgmt 5.59 6.86 2.89 3.51 3.04 4.17 3.43 2.00 Total Engineering 12.04 21.26 6.24 5.82 7.10 9.05 5.62 12.04 Total Expenses 447.10 562.49 572.83 578.74 575.73 671 .14 642.96 552.77 Less Revenues (21.91) (43.03) (34.51) (42.93) (52.54) (43.84) (43.84) (43.43) Net JO Expenses 425.19 519.46 538.31 535.81 523.19 627.30 599.13 509.34 GALCHGSM XLS 5:01 PM 1990-91 1991-92 ~ 7\ '_ ..-1 \ \ \ I 95-96 YTD Total Revenues Total Management Total Human Resources Total Finance Total Information Servffech Total Engineering Total Tech Services Total Maintenance Total Operations '-'C..-· 0 0 o .9 ~ ..... ~ g Dollars per Million Gallons ~ N 0 0 o 0 ~ N (J1 0 o 0 ~ c..> 0 0 0 0 -w (0 O> 0 m "'O )> ~ 3: m z ~ r- cn :I: )> :::0 m 0 "Tl G') )> r-r-0 z )> G') m 0 ::J: )> :::0 G') m en 12/16/95 Ill II) II) >, 0 C. E w II) E i= = ::I LL County Sanitation Districts Staffing Trends 750 .---------------------------------r-------------.------------------, I I I I I 730 -.. ------------------------, --------------------· -----r --------------------------,.--------------------.---:--- 710 + - 690 I I I ----------------~--------------------------, -----------------------7 -. I I I I ·----•---------------,--------------------------r-------------------------,--------------------------1 I I I 670 t --------~ .. -. --------~ ----------------~ ---------------T 650 ,- 630 610. ------·------·--• --- 590 570 ~ 550 6/30/92 I ~-,-- 6/30/93 I I ---.-------------------------~-------------------------- r - I I ··r-------------------- 1 ,-------------------------- 1 I -,------------------ -,---- I ---------------------------,----------------... --------... -" 6/30/94 6/30/95 9/30/95 I -+-Authorized ---Actual I *FAHR_met1 Chart 1 12:24 PM 12/16/95 County Sanitation Districts Joint Operating Costs Per Million Gallons $800 I ' $750 ,_ -----------------------~---------~-------------- $700 -1------• ------------------------~-----------------------1-------------- $650 ----------------~--------------------- 1/) C .2 $600 ra Cl C ~ $550 E -Cl) ... $500 .!! --------------------.... --"'1 -... ----~ --------------·--- 0 C I I $450 '·-----------------------J _______________________ _ $400 , __ ---------------------' I --------·-----·-···----1 -' 1 .. : -.., I I $350 I -----------------------~---------------------· -,------------------------ $300 1991-92 1992-93 1993-94 1994-95 1995-96 I ~ 9/30 Cost/mg ---6/30 Cost/mg [ *FAHR_met2 Chart 1 12:23 PM 12/16/95 22,000 21,800 21,600 21,400 21,200 U) C ..2 21,000 ,_ fll (!) C ,2 20,800 i 20,600 20,400 20,200 20,000 19,800 Sep-91 *FAHR_met2 Chart 2 I County Sanitation Districts Total Flows Year to Date I I ----------------•---------·-------------~-----------------------~-----------------~ I J I I I I ---------------,4 --.. --------------------,---. ---1 ----------------------- I ---·-, I --------------------1 ------.. -------.... ~ -----~ -.... ----------------------- I I I I -.. -. --·-------..... '--:------------/ ----------: ---------.-------------- 1 ---------------r .. •---•----------L- ;--:/ ----------·------------: ----.. ---------,_ --------- I I I -----• ------------------------•--------... ----_. -----~ ~ ---~ ---..... ------------. -------·- I --------------~,-- Sep-92 ------·--------------a ---I -----------------~------------------------c-----------------------, ·I I Sep-93 Quarter Ended Sep-94 Sep-95 12:21 PM ) Measurement Tracking 100 90 80 70 J!l 0 5; 60 ._ E a, a, 50 .c ... E :::i ::, Ill z :g 40 :lii 30 20 10 0 Ahead Districts-Wide Measurement Tracking 102 Measurement Projects On Track Done Behind Not Started On Hold Canceled As part of the fiscal year 1995-96 budget process, performance measurement projects were established for all departments/divisions within the organization. The chart above shows a status summary, as of the end of the first quarter, of all the performance measurement projects approved in the 1995-96 budget document. Below is a tabular summary of this chart: Ahead 13 On Track 60 Done 5 Behind 8 Not Started 8 On Hold 8 Canceled 0 The following pages present a status of each departments/divisions performance measures as of the end of the first quarter. Page 1 Measurement Tracking Executive Management 9 Measurement Projects 9 8 7 6 J!I .... C: 0 a, 5 ._ E il f! E :::i 4 :::i t/1 z Ill G) :e 3 2 Ahead On Track Done Measurement Title % Complete Complete Consolidation Study. (1) 10% Improve management skills of managers and supervisors. 20% Support Boards consideration of committee structure change. (2) 0% Represent Districts' interests in Orange County bankruptcy. 75% Improve agency communication. (3) 25% Direct work on Districts' Strategic Plan. 5% Create climate that promotes change. 10% Establish clear goals for the departments and all subordinate units. 100% Renew NPDES ocean discharge permit. 20% Behind On Hold Status Start On Track 7/1/95 On Track 7/1/95 On Hold 7/1/95 On Track 7/1/95 On Track 7/1/95 On Track 7/1/95 On Track 7/1/95 Done 7/1/95 On Track 7/1/95 (1 )-Feasibility analysis for Consolidation is underway and will be presented to the Executive Committee in February, 1996. (2)-Board consideration of Committee structure is scheduled for December meeting. (3)-Communications manager has been hired and will begin work November 13. Page2 End 12/31/95 Measurement Tracking J!l -C: 0 cu .. E 1l f E :, :, en z i :e Ahead Measurement Title Board Secretary 2 Measurement Projects On Track Done Behind Not Started % Complete Status On Hold Streamline procedures for preparing agenda and minutes. 25% On Track Provide regular updates of Director info. to mgmt. and Committee seer. 25% On Track Communications 4 Measurement Projects Start 7/1/95 7/1/95 Canceled End 12/31/95 12/31/95 4 ~--------------------------------------- -'E3 +----------------------------------------0 cu .. E ilf2 ~-----------------------------E :, :, en z i :e Ahead Measurement Title On Track Establish and organize Communications Office. Done Define Communications Office Mission & develop work plan. Prepare Communications Office Procedures Manual. Behind Develop a biannual publication for public officials and comm. leaders. Page 3 Not Started On Hold % Complete Status 95% On Track 100% On Track 0% On Hold 0% On Hold Start 7/1/95 7/1/95 7/1/95 12/31/09 Canceled End 9/1/95 12/31/95 2/1/96 12/31/95 Measurement Tracking Finance Administration 4 Measurement Projects 4-,---------------------------------------- ... ~3 +-------------0 GI ._ E ~2!2 +-------------E::, ::, (II z::: ~ Ahead Measurement Title On Track Done Replace variable rate borrowing remarketing agent to reduce costs. Complete implementation of treasury management functions. Provide safe, liquid and productive cash and investment program. Improve comprehensive budget process started in 1994-95. Behind Not Started On Hold % Complete Status 100% Done 100% Done 100% Done 5% Behind Accounting 3 Measurement Projects Ahead On Track Done Measurement Title Oversee installation of a new integrated Financial Info. System. Develop Districts'-wide Finance policy & procedure manual. Develop Districts'-wide comprehensive budget manual. Page4 Behind Not Started On Hold % Complete Status 15% On Track 15% On Track 5% On Track Start 7/1/95 7/1/95 1/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 Canceled End 12/31/95 12/31/95 9/30/95 6/30/96 Canceled End 12/31/96 4/30/96 12/31/95 Measurement Tracking 4 !I 3 -C: 0 QI ... E QI QI 2 .Cl ... E ::::i ::I Ill z m :!: 0 Ahead Measurement Title On Track Purchasing & Warehousing 4 Measurement Projects Done Behind Not Started % Complete Status On Hold Compete revision of bidders list applic. to tie to commodity code listing. Establish annual contracts to reduce need for in-house inventory. Establish ABC analysis for classifying and analyzing inventory. Develop policy on removal of misc. low cost hardware from inventory. 60% On Track 10% On Track 15% On Track 75% Ahead Information Technology Administration 4 Measurement Projects Start 7/1/95 7/1/95 1/1/95 7/1/95 Canceled End 1/31/96 3/31/96 3/31/96 12/31/95 4~------------------------------------- -~3 ~-------------------------------------0 QI i~2 ~----------------------E ::::i ::, Ill z m :!: Ahead Measurement Title On Track Develop Information Systems Master Plan Done Behind Develop Performance Measurement survey for IT Department users. Obtain adequate working space for IT Department staff. Create formal Policies and Procedures Manual for IT Department. Page 5 Not Started On Hold % Complete Status 0% On Hold 0% Not Started 5% On Track 0% Not Started Start 7/1/95 7/1 /95 7/1/95 7/1/95 Canceled End Measurement Tracking Hardware Support 3 Measurement Projects 3 J!I -C 0 GI 2 ._ E -8 2! E ::i ::i en z ca GI :E 0 Ahead On Track Done Behind Measurement Title Install auxiliary PBX for Plant 2 to provide added telephone capabilities. Establish annual contracts to reduce need for in-house inventory. Establish ABC analysis for classifying and analyzing inventory. Not Started On Hold % Complete Status 10% On Track 5% On Track 0% Not Started Software & Plant Automation 4 Measurement Projects 4 -J!I 3 C 0 GI ._ E -8 2! 2 E ::i ::i en 2 ca GI :E 0 Ahead On Track Done Behind Measurement Title Extend CMMS application to include data for Warehouse & Auto Shop. Provide software support for installation of new FIS. Replace Plant Automation System at Plant 2 with new technology. Install Districts-wide integrated network. Page6 Not Started On Hold % Complete Status 0% On Hold 0% Not Started 33% On Track 0% Not Started Start 7/1/95 7/1/95 1/1/95 Start 7/1/95 7/1/95 7/1/95 7/1/95 Canceled End 12/31/95 1/31/96 6/30/96 Canceled End 1996-97 3/31/96 6/30/96 Measurement Tracking Human Resources Administration 3 Measurement Projects Ahead On Track Done Behind Not Started On Hold Measurement Title Develop and implement a Districts-wide training program. Develop and publish an Employee Handbook. Improve the quality of the Management Performance Review Program. % Complete 5% 95% 5% Status On Track On Track On Track Human Resources & Training 3 Measurement Projects J!! 0 C: .. e 2 +-------1: l!! E ::i ::, Ill z :g :E O -+------>-- Ahead Measurement Title On Track Done Develop and implement training opportunities and programs. Improve and refine management and professional staff evaluations. Conduct Districts-wide attitude survey. Behind Not Started On Hold % Complete Status 25% On Track 5% On Track 0% On Track Safety & Emergency Response 3 Measurement Projects J!! ~ C: 0 G) 2 +-------~ ~ E ::i ::, Ill z :g :E O +------~ Ahead Measurement Title On Track Done Develop safety training programs based on needs assessment. Develop and implement an integrated Emergency Response Plan. Conduct industrial hygiene evaluations to determine hazards. Page 7 Behind Not Started On Hold % Complete Status 100% Done 5% On Track 1% On Track Start 7/1/95 7/1/95 7/2/95 Start 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1 /95 7/1/95 Canceled End Canceled End Canceled End Measurement Tracking Maintenance Administration 3 Measurement Projects Ahead On Track Done Measurement Title Emphasize preventive maintenance tasks to reduce life cycle costs. Implement remaining Emst & Young O&M recommendations . Continue building the computer database for the CMMS. Behind Not Started On Hold % Complete 80% 80% 80% Status On Track Ahead On Track Maintenance Scheduling 2 Measurement Projects J!! -C: 0 Q) ... E 1l ~ E :::i ::I (II z ill == Ahead Measurement Title On Track Done Identify optimum preventive maintenance rates to reduce costs. Benchmark equipment down time and establish acceptable targets. Page 8 Behind Not Started On Hold % Complete Status 3% Behind 10% On Track Start 7/1/95 7/1/95 1/1/95 Start 7/1/95 7/1/95 Canceled End 12/31/95 Canceled End Measurement Tracking Plant Maintenance 4 Measurement Projects Ahead On Track Done Behind Measurement Title Develop a valve exercising plant maintenance program. Develop a valve change plant maintenance program for critical areas. Investigate applicable certification programs for the various crafts. Develop an area assignment sys. to leverage field crew resources. Not Started On Hold % Complete Status 5% On Track 8% On Track 10% On Track 12% On Track Collection Facilities Maintenance 4 Measurement Projects 4 .l!l 3 0 C: Cl) ... E Cl) Cl) 2 .c ... E ::3 ::3 (II z :3 :E 0 Ahead On Track Done Behind Measurement Title Develop a CMMS data base for pump stations & a plant maint. listing. Continue to investigate alternate chemicals for cheaper order control. Contract for line cleaning in some of the Districts' Assmt. Districts. Expand a root control program for District No. 7 sewer system. Page 9 Not Started On Hold % Complete Status 60% Ahead 50% On Track 60% On Track 40% On Track Start 7/1/95 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 7/1/95 Canceled End 6/30/96 6/30/96 6/30/96 6/30/96 Canceled End 6/30/96 6/30/96 1/31/96 Measurement Tracking Mechanical Maintenance 3 Measurement Projects Ahead On Track Done Behind Measurement Title Initiate tracking program for repetitive breakdowns of digester pumps. Reduce costs by expanding central generation engines maintenance. Start cross training of personnel between plants. Not Started On Hold % Complete 100% 50% 75% Status Ahead On Track Ahead Electrical Maintenance 4 Measurement Projects ... ~ 3 0 Cl) .. E 1l I!! 2 E::, ::, Ill z :g . :I!: 0 Ahead Measurement Title On Track Done Complete CMMS database with regard to NC systems. Develop a predictive maint. program for electric equipment. Develop a 12-Kilovolt meter and relay database. Privatize Central Generation Generator Maintenace to reduce costs. Page 10 Behind Not Started On Hold % Complete Status 90% Ahead 25% On Track 70% Ahead 90% Ahead Start 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 7/1/95 Canceled End 6/30/96 Canceled End 2/28/96 3/31/96 6/30/96 11/30/95 Measurement Tracking .!I -r:: 0 GI 2 ._ E 1l I!! E :::i ::I Ill z :g == 0 Instrumentation Maintenance 3 Measurement Projects Ahead On Track Done Behind Not Started On Hold Measurement Title Develop activity code within CMMS to track staff efforts. Privatize maintenance services for the 13 influent flow meters. Develop a charting process for recording preventative maint. backlog. % Complete Status 10% On Track 90% Ahead 75% Ahead Technical Services Administration 4 Measurement Projects 4 .l!l 3 -r:: 0 GI ... E 1l I!! 2 E :::i ::I Ill z :g == 0 Ahead On Track Done Behind Measurement Title Improve coverage of legislation & improve assmt. of compliance regs. Develop imprvmnt. teams & begin implementing EY recommendations. Develop compliance assmt. on discharges from treatment plants. Standardize biosolids inspection protocals & optimize staff usage. Page 11 Not Started On Hold % Complete Status 50% On Track 75% On Track 15% On Track 5% Behind Start 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 7/1/95 Canceled End 6/30/96 3/31/96 1/31/96 Canceled End 12/31/95 6/30/96 6/30/96 3/31/96 Measurement Tracking Ahead On Track Measurement Title Environmental Management 3 Measurement Projects Done Behind Not Started % Complete Status On Hold Devel.op a 10-year synthesis of ocean monitoring program findings. Conduct a study of biotrickling filters for the removal of pollutants. Prepare a 1995 Air Toxics Emssion Inventory Plan and Report. 5% On Track 80% Ahead 60% Ahead Environmental Sciences Laboratory 3 Measurement Projects Ahead On Track Done Measurement Title Develop expanded air analysis capabilities Reduce labor costs for metals analyses of wastewater. Reduce labor costs for organic analyses of wastewater. Behind Page 12 Not Started On Hold % Complete Status 20% Behind 0% Not Started 0% Not Started Start 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 Canceled End 2/28/96 2/28/96 2/28/96 Canceled End Measurement Tracking Source Control 3 Measurement Projects Ahead On Track Done Behind Not Started On Hold Measurement Title Evaluate the EPA Effluent Guidelines for regulating industrial users. Finalize the results of the non-industrial source sampling. Develop a program to regulate small-quantity dischargers. % Complete Status 40% On Track 20% On Track 20% On Hold Operations Administration 3 Measurement Projects Ahead Measurement Title Reduced natural gas cost. Increase staff training. On Track Improve employee communications. Done Page 13 Behind Not Started On Hold % Complete Status 20% On Track 30% Ahead 20% On Track Start 7/1/95 7/1/95 7/1/95 Start 7/1/95 7/1/95 7/1/95 Canceled End 6/30/96 6/30/96 6/30/96 Canceled End 6/30/96 6/30/96 6/30/96 Measurement Tracking Plant Operations 4 Measurement Projects Ahead On Track Done Behind Not Started On Hold Measurement Title Study staffing produdivity per Ernst & Young review. Reduce overtime. Run Treatment plant cost-effedively. Reduce biosolids disposal cost. % Complete 0% 25% 25% 10% Engineering Administration 2 Measurement Projects Status Not Started On Track On Track Behind Ahead On Track Done Behind Not Started On Hold Measurement Title Modify Planning & Design organization for E & Y recommendations Implement all 14 recommendations in CIP Report Page 14 % Complete 50% 30% Status Behind Behind Start 7/1/95 7/1/95 7/1/95 7/2/95 Start 7/1/95 7/1/95 Canceled End Canceled End 6/30/96 Measurement Tracking Design Engineering 5 Measurement Projects 5 .!I 4 -C: 0 GI ... E 3 GI GI ~ ... E ::s 2 ::s en z m == 0 Ahead On Track Done Measurement Title Complete 75% of conn permits in 1day, 90% in 3 days, 100% in 5 Design facilities which satisfy customer Track and manage $33.5 million CORF project budget Comply with adopted Master Plan Improve submittal process on all new design projects Behind Not Started On Hold % Complete Status NIA On Track NIA On Track NIA On Track NIA Behind NIA On Track Engineering Planning 3 Measurement Projects Ahead On Track Measurement Title Comply with adopted Master Plan Track and manage budget and schedule Update "as-built" information Done Page 15 Behind Not Started On Hold % Complete Status NIA On Track NIA On Track 5% On Track Start 711/95 711195 711195 711195 711/95 Start 711195 711195 711195 Canceled End 6130196 6/30196 6/30196 6130196 6/30196 Canceled End 6130196 6130196 6130196 Measurement Tracking Construction Management 3 Measurement Projects Ahead On Track Done Measurement Title Revise record drawing process on all new construction projects Improve shop drawing and submittal process on new projects Construction personnel to keep current on codes and standards Page 16 Behind Not Started On Hold % Complete Status 50% On Hold 50% On Hold 25% On Track Start 7/1/95 7/1/95 7/1/95 Canceled End 6/30/96 6/30/96 6/30/96 Activity Trends-Executive Management Joint Operating expenses are 22% of budget through the first quarter. Budget savings have been realized on chemicals as new contract prices have declined. Green acres project water prices have also declined as a result of the renegotiated agreement for 1995-96. Natural gas use is decreasing as we gain experience with the Central Generation Facilitites. Overall, salaries have increased by only 1.88% as a result of last year's early retirement program and approximately 12% vacancy rate in authorized positions. Labor charge outs to CORF capital improvements have decreased as the program has been scaled back for 1995-96. 700 600 500 400 a 95-96 Budget •95-96 Target • 1st Qtr. Actual 300 200 100 0 Treatment Cost, $ per MG Page 1 236.85 236.85 237.04 Average Daily Flow, MGD Activity Trends-Executive Management Board Secretary: The initial preparation times submitted for Joint Board agenda packages and minutes as reflected in the 95-96 Budget were estimates made without baseline data. Beginning in July, 1995, the Board Secretary's Office has tracked actual time spent on these tasks. The first quarter reflects actual hours spent on the Joint Board agenda package and minutes. The differentiation between estimates and actuals was unanticipated. However, during the course of this three month period, the agenda and minute process has been streamlined. Examples include: 1) Alternate Directors do not receive the entire agenda package and, 2) the elimination of three-hole punched paper. It is expected future actual time spent will be somewhat reduced as a result of the change. 45.0 40.0 35.0 30.0 25.0 a 95-96 Budget 20.0 • 1st Qtr. Actual 15.0 10.0 5.0 0.0 Communications: 41 .5 20.0 Agenda Prep. Time, Hrs. 17.5 4.0 Completion of Minutes, Hrs. The number of tours during the first quarter of any fiscal year are typically low as schools, the largest segment of our tour audience, are not in session during July and August. The number of people contacted was extraordinarily high during the first quarter as it includes those individuals who visited the County Sanitation Districts of Orange County booth at the Orange County Fair. The number of people contacted during the remainder of fiscal 1995-96 will average approximately 600 per quarter. The number of informational materials provided is also extraordinarily high due to our participation in the Orange County Fair. The division was on target for the number of newsletters published. While these statistics reflect the activities of the Communications Division during the first quarter, we are currently developing new activity trends that better reflect the attainment of our goals and objectives. 350 300 250 200 a 95-96 Budget •1st Qtr. Actual 150 100 100 50 20 0 No. of Tours & Presentations 90 No. of People Contacted X 100 Page2 320 200 n orma 1ona Materials Provided X 100 25 No. of Employee Newsletters Published Activity Trends-Finance Finance Administration: The required coverage ratio for senior lien debt, the ratio of certain revenues to the debt service costs, is 1.25. Because property taxes and user fees are received after the first quarter of the fiscal year, and principal payments are made in August, the ratio will improve during the remainder of the year. Investment interest earnings are running slightly ahead of the budgeted yield as the economy improves. Performance should improve even more as PIMCO manages our portfolio. Variable interest rates required to remarket the COP issues have been favorable during the first quarter, as the "Orange County" penalty has declined and investors are more comfortable with our credit. The number of COP issues outstanding is not expected to change this year as no new debt was budgeted. 7.00 6.00 5.00 4.00 a 95-96 Budget • 1st Qtr. Actual 3.00 2.00 1.00 0.00 Accounting: 2.28 Sr. Debt Svc. Coverage Ratio 6.31% 6.00% Yield% on Invested Reserves 4.75 Avg. COP Interest Rate % (Variable) 6 Outstanding COP Issues 6 Accounts payable warrants, payroll warrants and industrial user bills issued per full time equivalent (FTE) are all running ahead of the budgeted numbers. This means each FTE is processing more than anticipated. Journal entries processed per FTE are running slightly below the number anticipated in the budget, reflecting a need to make fewer adjustments. 6,000 5,000 4,000 3,000 a 95-96 Budget • 1st Qtr. Actual 2,000 1,000 0 3,750 962 Accounts Payable Warrants Issued Per FTE 5,900 1,528 Payroll Warrants Processed PerFTE Page 3 4,100 1,134 Industrial User Bills Processed Per FTE 952 Journal Entries Processed PerFTE Activity Trends-Finance Purchasing & Warehousing: Purchase orders issued per Full-time Equivalent (FTE) is slightly below an expected quarterly trend as procedural changes impacted purchase order issuance. Historically, capital budget purchases have been very heavy at the beginning of the fiscal year as equipment required to meet goals, replace outdated tools, and improve efficiency is requisitioned. However, due to changes in signature authority guidelines, budgetary changes, and Districts' reorganization, most divisions began requesting purchases late in the quarter. The number of bids per FTE has greatly exceeded initial quarterly estimates as several RFPs were added for maintenance and professional services formerly handled in-house including security service and the servicing of generators, cranes, and hoists; etc.. Warehouse issues per FTE are lower than this year's estimations, but in line with last year's actual. This is partially attributable to the Districts-wide commitments to reduce the Joint Operating Expense budget by 10% and to reduce the number of items kept in the warehouses. 20.000 18.670 15.000 095-96 Budget 10.000 • 1st Qtr. Actual 5.000 0.000 +,---'---- P. O.'s Issued Per FTEX 10 4.225 15 Written Bids PerFTE Page4 7 11.429 2.274 Warehouse Issues Per FTE X 100 Activity Trends-Information Technology Information Technology Administration: Computer Users Supported per Full-Time Equivalent (FTE) is based on the number of staff members in Information Technology Department (ITD) tasked with providing direct support. The initial benchmark of 13 FTE Users per staff member is too low, and based on our experience should approximate 25. The current 38 FTE Users/staff reflects what we believe to be an understaffing issue that has a direct impact on our ability to adequately support the Districts' computer users. This figure will be lowered when a contract is approved for outsourcing some of the hardware and software support, thereby allowing in-house staff to conduct tasks not easily contracted. Hardware Work Orders per FTE represent the number of Work Orders completed divided by the number of ITD staff assigned to such requests. The original benchmark of 17 was based solely on estimates as opposed to actual data. The current figure of 26 represents an accurate figure that will continue to be monitored closely. Nevertheless, work orders are more the 50% greater than projections and also represent a potential staffing issue deserving further analyses. 40 38 30 20 a 95-96 Budget • 1st Qtr. Actual 10 0 +----'-- Hardware Support: Computer Users Supported per FTE 26 Hardware Work Orders per FTE 30 13 12 2 Plant Automallon Programable Logic Additional Data Controllers Installed Points Installed The phone directory numbers maintained per FTE indicates the number of PBX or telephone lines serviced. Unexpected expansion in this system has resulted in more numbers maintained than those reflected in the Activity Trend estimates for FY 1995-96. Similarly, due to the increasing use of technology, we have more personal computers than initially estimated. This case is also reflected in the Card Readers graphic. Hardware work orders per FTE also reflect an unanticipated increase. Because of the additions of the aforementioned devices, work orders to install and maintain them have also increased. It • should be noted that existing staff have absorbed these heretofore unpredicted duties and responsibilities. 100.0 94 90.0 80.0 70.0 60.0 50 50.0 a 95-96 Budget 40.0 •1st Qtr. Actual 25 30.0 20.0 13.0 15.9 12 8 10.0 0.0 Personal Hardware Work Card Readers Directory Numbers Computer Orders/FTE Maintained/FTE Maintained/FTE Maintained/FTE X 10 Page 5 Activity Trends-Information Technology Software & Plant Automation: Software work orders per FTE is above FY 1995-96 Activity Trend estimates and will likely continue to increase. Prior to this fiscal year, lnfoITTiation Technology (IT) utilized manual work orders. This process as been networked and automated via a Maintenance Management System (MMS) that allows other divisions to direct work orders to IT electronically. The ease of directing work orders to IT coupled with additional internal controls requiring staff to be more stringent in documenting requests for service (e.g. quick service call) accounts for the increase. The number of network users supported per FTE results from additional computer purchases and implementation. The vast majority of desktop computers are networked to one of several servers and thus require on-going network troubleshooting, maintenance, repair and upgrade. 60 57 50 40 38 O 95-96 Budget 30 • 1st Qtr. Actual 20 7 9 10 0 Software Work Network Orders/FTE Users Supported/FTE Page6 Activity Trends-Human Resource Human Resources Administration: After further research, the Activity Trends in the FY 1995-96 Budget required refinement to more accurately portray the performance of the Human Resources Department. Employees supported by each HR position is slightly below the goal. Increased cross- training and decreased regulation should foster goal attainment within the next 12-24 months. However, Human Resources training as a percentage of operating expense generally reflects National benchmari<s. 9.0 8.0 7.0 6.0 5.0 a 95-96 Budget 4.0 • 1st Qtr. Actual 3.0 2.0 1.0 0.0 Human Resources & Training: 8.3 Employees Supported Per Human Resource Employee X 10 2.6% 2.3% HR/Training as a % of Operating Expense The Districts recruitment time or "time to fill" numbers for new positions exceeds the National average by two to four times. This is partially due to the proportionally significant number of new hires (some within new classifications) occurring relatively simultaneously over the course of the last several months. Additional internal process controls should cut these numbers in half prior to July, 1996. Posting periods, physical exams, supervisory delays, and notices to previous employers all play a part in the notably high numbers. Turnover compares favorably to the benchmark for utility agencies and falls below the expected turnover ratio of 10% nationally for private organizations. The Districts' cost per hire is better than other utility districts and private organizations both in non-exempt and exempt recruitment. Exempt employee hours are significantly lower primarily since in-house staff are used instead of executive search firms. a 95-96 Budget •1st Qtr. Actual 140 134 120 100 94 80 60 40 20 0 +---- No. of Recruitment No. of Recruitment Days For Exempt Days For Non-Exempt Employees Employees Page 7 Employee Turnover Cost Per Exempt Cost per Non-Exempt Employee Hired Employee Hired X 100 X 100 Activity Trends-Human Resource Safety & Emergency Response: During the 1st Quarter, workers' compensation claims where below the quarterly projection of eleven (11 ), and there were no lost work day cases. Additionally, the Total Injury Rate was 6.1 as opposed to last year's 8.7-a 30% decrease. The Districts' accident experience is even more significant when compared to the 16.3 industry average for Total Injury Rate, and is notably lower than the two previous years. We believe this can be attributed to the successful implementation of new safety programs and improvement in existing programs during the last several quarters. The job hazard analysis is a process designed to inform contractors and District personnel of potential hazards which may be encountered during a job. Job site safety compliance audits and regulatory compliance audits are on target based on annual projections. 45 40 35 30 25 20 15 10 5 45 0 _ _.___ No. of Workers' •95-96 Budget Comp. Claims •1st Qtr. Actual 30 14 Job Site Safety Compliance Audits Regulatory Compliance Audits PageB Lost Work Day Rate 0.0 8.7 Total Injury Rate 20 Job Hazard Analysis X 10 Activity Trends-Maintenance Maintenance Administration: As stipulated in the following maintenance sections, one of the primary focuses of the Maintenance Department in Fiscal Year 1995- 96 is to develop a solid database for our Computerized Maintenance Management System (CMMS), thereby devoting more time to a total Planned Maintenance philosophy. The trends we develop this fiscal year will be utilized to project future expectations. The graph portrays the impact of CMMS implementation and resource allocation on the Maintenance Department, as well as the temporary freezing of authorized positions (both discussed in further detail in the respective maintenance divisions). We still anticipate achieving a 2:1 ratio of preventive maintenance (pm) tasks versus corrective maintenance (cm) tasks. This ratio is widely accepted and considered progressive based on many maintenance industry benchmarks/standards. 60.0 50.0 40.0 30.0 20.0 10.0 a 95-96 Budget • 1st Qtr. Actual Preventive Maintenance Tasks Completed X 1000 Maintenance Scheduling: Corrective Maint. Tasks Completed X 1000 Preventive Maintenance Backlog X 100 Corrective Maintenance Backlog X 100 Corrective Maintenance Suspended X 10 Equipment Records Entered into Computer X 1000 The Planning & Scheduling Division is a new unit this fiscal year, and as such, did not have reliable baseline data to develop accurate Activity Trend benchmarks. The goals stipulated in the FY 1995-96 budget are only reasonable estimates of new job duties to establish future parameters. Development of new PM SOP's has been transferred to the respective disciplines who indicate they will solicit our help if needed. Reduction of obsolete inventory is less than what would be expected in a first quarter trend as this Is a pilot project under on-going development. Disciplines have been reluctant to remove "unneeded" stock because they believed the item costs would be deducted from their budgets. Nevertheless, recommended reductions from existing stock should exceed $150,000 for the 2nd/3rd quarter period. As a result of benchmarking preventive maintenance on major facility accouterments, our scheduled PM program for Primary/Secondary basins and digesters meets or exceeds our initial estimates. The disciplines should be implementing such PM programs commencing January, 1996. Pump Station maintenance scheduling is currently undergoing revision/review. a 95-96 Budget • 1st Qtr. Actual 30 25 20 15 10 5 10 0 0 -+-_.__.___--I_...__ Develop New Preventive Maintenance S.O.P.'s x 10 Reduce Obsolete Inventory, $ X 10,000 29 Perform Preventive Maintenance on: Primary Digester Secondary Basins Cleaning Basins Page 9 5 0 Pump Stations Activity Trends-Maintenance Plant Maintenance: During the first quarter of FY 1995-96, emphasis was placed on the continued development of the Computerized Maintenance Management System (CMMS) database and its requisite inventory items. Approximately 77% and 66% respectively of the annual target for "Pieces of Equipment-Computerized" and "Preventive Maintenance Instructions" have been achieved the first quarter. Preventive and corrective tasks completed are well within targeted parameters. It should be noted that accurate metrics from previous years are not available for comparative purposes and FY 1995-96 Activity Trends were best estimates only. Trends developed this fiscal year will be utilized for future projections. 600.0 500.0 400.0 300.0 200.0 ·- 100.0 0.0 _.......__ Preventive Maintenance Tasks Completed a 95-96 Budget x 1 o • 1st Qtr. Actual Corrective Maintenance Tasks Completed x 10 Collection Facilities Maintenance: Preventive Maintenance Backlog Corrective Maintenance Backlog 550.0 Pieces of Equipment in Computer Database X 10 Computerized Preventive Maintenance Instructions Similar to other maintenance divisions, Collection Facilities is implementing the CMMS system. Preventive and corrective maintenance figures are much higher than annual estimates as the CMMS system came on-line for this Division sooner than expected. Computerized pieces of equipment are 83% complete, while PM instructions are 86% finished. Manhole inspections per staff is also higher than expected. Finally, spills reported are below projections and represent a positive trend that will hopefully continue. 50 45 a 95-96 Budget 40 • 1st Qtr. Actual 35 30 25 25 20 15 10 5 0 Manhole Preventive Inspections Tasks Per Employee Completed X 100 X 100 Corrective Tasks Completed X 10 50 30 0 Preventive Corrective Maintenance Maintenance Backlog Backlog Page 10 21.519.7 Pieces of Equip. Computerized X1,000 35 Active Preventive Spills Maintenance Reported Instruction x 10 Activity Trends -Maintenance Mechanical Maintenance During the first quarter of FY 1995-96, emphasis was placed on the continued development of the Computerized Maintenance Management System (CMMS) database and its requisite inventory items. Approximately 83% of the annual target for "Pieces of Equipment-Computerized" has been achieved this quarter. It should be noted we have also incorporated the Auto Shop into the CMMS. The rapid expansion of this database has resulted in a higher than anticipated preventive maintenance backlog. Furthermore, efforts to complete the Inventory database required a shift in resources. Preventive maintenance and corrective tasks completed are well within targeted parameters and we have considerably improved our corrective maintenance backlog when compared against estimated annual Activity Trend projections. The Division has maintained a 11 % vacancy rate in order to meet the 10% reduction in the Joint Operating Expense budget. 80.0 095-96 Budget 75.0 70.0 • 1st Qtr. Actual 60.0 50.0 40.0 35.0 27.0 29.9 30.0 20.0 10.0 0.0 Preventive Corrective Preventive Corrective Pieces of Computerized Maintenance Tasks Maintenance Maintenance Maintenance Equipment Preventive Completed Tasks Backlog Backlog in Computer Maintenance X 100 Completed X 10 X 10 Database Instructions X 100 X 100 X 100 Electrical Maintenance: During the first quarter of FY 1995-96, emphasis was placed on the continued development of the Computerized Maintenance Management System (CMMS) database and its requisite inventory items. Approximately 94% of the annual target for "Pieces of Equipment-Computerized" has been achieved this quarter. The rapid expansion of this database has resulted in a higher than anticipated preventive maintenance backlog. Furthermore, efforts to complete the inventory database required a shift in resources resulting in lower production in the Preventive Tasks Completed category. Conversely, corrective tasks completed are well within targeted parameters and we have considerably improved our corrective maintenance backlog when compared against estimated annual Activity Trend projections. The Division has maintained a 15% vacancy rate in order to meet the 10% reduction in the Joint Operating Expense budget. Some positions will be filled in the third quarter and allow us to focus on improving the preventive maintenance tasks completed and PM backlog. 80 80 74.7 75 70 65 60 0 95-96 Budget 50 •1st Otr. Actual 40 33 32.5 29.5 30 20.0 20 10.3 10 0 Preventative Corrective Preventative Pieces of Preventative Maintenance Tasks Maintenance Corrective Equip. Maintenance Maintenance Maintenance Completed Tasks Completed Computerized Instructions Backlog Backlog X 100 X 100 X 10 X100 Computerized X 100 Page 11 Activity Trends-Maintenance Instrumentation Maintenance: During the first quarter of FY 1995-96, emphasis was placed on the continued development of the Computerized Maintenance Management System (CMMS) database and its requisite inventory items. Approximately 102% of the annual target for "Pieces of Equipment-Computerized" has been achieved this quarter. Because of the development of new facilities, our inventory has increased and thus exceeded initial Activity Trend estimates in this category. Furthermore, efforts to complete the inventory database required a shift in resources. The rapid expansion of this database has resulted in a higher than anticipated preventive maintenance backlog. Preventive maintenance and corrective tasks completed are well within targeted parameters. The Division has maintained a 22% vacancy rate in order to meet the 10% reduction in the Joint Operating Expense budget. Many positions will be filled in the third quarter and allow us to focus on improving the preventive maintenance backlog as well as provide supporting, comprehensive documentation to the CMMS database. 100.0 80.0 60.0 40.0 20.0 095-96 Budget • 1st Qtr. Actual 60.0 0.0 +-......... - Preventive Maintenance Tasks Completed X 100 Corrective Maintenance Tasks Completed X 100 Preventive Maintenance Backlog X 10 Page 12 Corrective Maintenance Backlog 95.0 97.1 Pieces of Equipment in Computer Database X 100 Computerized Preventive Maintenance Instructions X 100 Activity Trends-Technical Services Environmental Management: The Ocean Monitoring Baseline Program is a fixed-price contract worth $1.48 million that extends into FY 1996-97 and will not be fully expended until that time. No charges were invoiced during the first quarter as a contract was not signed. The target number of field samples collected during the year for the baseline Ocean Monitoring Program (OMP) is 1284 samples of which 903 (70%) were collected in July. Typically, the bulk of collection is accomplished in mid-Summer, with remaining samples collected throughout the year. Fully 95% of the expected July samples were collected with the remaining five percent due to the lack of target species for bioaccumulation and histopathology testing. Each year the Districts contribute funds to the Southern California Coastal Water Research Project (SCCWRP) under a joint-powers agreement and expend additional funds for OMP special studies. Program expenditures as reflected are below a standard quarterly trend, however this trend will more closely approximate budget as the we progress into the year. One of the special studies conducted by Environmental Management is the characterization of water quality within our study area utilizing a fixed grid of 32 stations. The target number of samples each quarter is 96 of which 100% were collected in the first quarter of FY 1995-96. It should be noted that the Activity Trends for Air Quality are not appropriate for quarterly reporting. This includes the tracking of the annual air pollution and emission fee and the amount of criteria pollutant emissions generated by the Districts. The figures are calculated once annually as required by the SCAQMD, and requires significant resources that are not expended until year's end. 400.0 350.0 300.0 250.0 200.0 150.0 100.0 50.0 • 95-96 Budget • 1st Qtr. Actual $148.6 $0.0 Ocean Monitoring Baseline Program X 10,000 128.4 Monitoring Samples X 10,000 $310.0 oint Powers Agreement Contribution X 1,000 Page 13 $245.0 $1.4 'Ocean omtonng Special Studies Cost X 1,000 384 96 Water Quality Samples Taken Activity Trends-Technical Services Environmental Sciences Laboratory: The Activity Trends noted in the FY 1995-96 Budget do not adequately quantify the duties and responsibilities of the Environmental Sciences Laboratory (ESL). These are under review by the new Lab Manager. However, the following graph summarizes, in modified format, those activities identified as FY 95-96 benchmarks. As noted in the analysis of sample type by month, the first quarter data generally reflects the annual average experienced with the exception of August. The August "spike" is due to the larger number of marine monitoring and NPDE$ samples tested in this month. Quality assurance efforts represent a significant portion of laboratory sample analysis, and approximate 22% of this workload. 9000 8000 7000 S:6000 a. ~5000 0 ti;4000 .c E ~ 3000 2000 1000 Nov-94 Source Control: It) It) CIO CIO Jan-95 Analysis of Sample Type by Month in the ESL Mar-95 May-95 Month Jul-95 ... ... N CIO Sep-95 N ... r, ... 7192 avg. ~Source Control -Air -Special Projects -Marine Monitoring c:::J NPDES c:::J Process Control --Average Work Load The new and renewed permit issuance activity is 74% of the annual budgeted item due to the scheduling of the permit renewals. Permit issuance is typically lower during the first quarter of every fiscal year. The routine sampling and inspection of facilities are 91 % of the benchmark and are well within the expected trend. The downstream surveillance and Strike Force activities exceed the estimate by nearly 25% due to the increased need for further investigation of illegal dischargers. Enforcement actions are 90% of the activity trend benchmark due to fewer violations during the first quarter. Remaining activity trends portrayed are within the expected range of variability. In summary, the overall performance of the Source Control activities relative to the FY 1995-96 Activity Trend estimates are 97%, ranging from 7 4% to 127%. 300.0 250.0 192.0 200.0 163.6 150.0 100.0 50.0 0.0 Routine Sampling and Downstream Newand Inspection of Surveillances, Renewed Permitted and Non-Strike Force Permits Issued permitted Dischargers X 10 X 10 a 95-96 Budget • 1st Qtr. Actual 76.0 Enforcement Actions & Administrative Orders Page 14 Pretreatment Program Reports 266.8 116 Permittee, Regulation Enforcement of Small &General Quantity Correspondence Dischargers X 10 Activity Trends-Operations Plant Operations: Activity trends for the first quarter FY 1995-96 are tracking as expected when compared against 1995-96 annual estimates. Actual expenditures for chemicals ran approximately seven percent below annual estimates. Lower per unit costs for caustic soda and hydrogen peroxide were achieved by price negotiations with vendors. Actual plant operation division cost of $216 per million gallons is approximately 19% below the annual estimate of $265 per million gallons. Budget savings have been realized through the aforementioned unit costs on chemicals and staff vacancies which resulted in labor savings. 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 23.7 23.7 0.0 +-_.._ __ Influent Flow in Tens of Millions of Gallons Per Day Biosolids Production in Pounds per Million Gallons X 100 84.0 Energy Usage in kW x 100 Plant One Plant Two Page 15 $54.3 Chemical Costs X 100,000 a 95-96 Budget •1st Qtr. Actual Plant Operation Division Cost Per Million Gallons X 10 Activity Trends-Engineering Engineering Administration: Further review of the FY 1995-96 Budget Activity trends resulted in additional quantification of activities. The original Capital Outlay Revolving Fund (CORF) forecast was $33.5 million of which $27 .4 million was the direct responsibiltiy of the Engineering Department. This $27.4 million budget has now been revised to $19 million through June 30, 1996 due to several factors. The primary factor is that several projects have been delayed including the primary rehabilitation projects and the Plant 2 Maintenance Building. These project delays have also impacted first quarter results. The Plant 2 Warehouse has been delayed indefinitely, and budgets for some projects have been revised downward to more accurately reflect estimates of construction costs. • 95-96 Budget • 95-96 Projected • 1st Qtr. Actual Design Engineering: 30 25 20 15 10 5 0 $27.4 $19.1 C.O.R.F. Expenditures (in millions) Further review of the Design Engineering functions is resulting in modification of the FY 1995-96 Activity Trend information as reflected below. The number of connection permits issued a well as number of design submittals reviewed represents fluctuating workload that may not hold to predictable quarterly patterns. Both trends are "ahead" of schedule yet annual projections are still anticipated. Most Capital Outlay Revolving Fund (CORF) projects will be bid late this fiscal year because budget uncertainties delayed establishing priorities and finalization of bid documents. Similarly, Collection Projects (by individual District) were delayed as well. 40 40 35 30 25 20 16 15 10 5 0 No. of Connection Permits Issued 35.0 8.5 No. of Submittals Reviewed X 10 Page 16 16 2 Budgeted CORF Projects Bid • 95-96 Budget •1st Qtr. Actual 2 0 Budgeted Collection Projects Bid Activity Trends-Engineering Engineering Planning Further review of the FY 1995-96 Budget Activity trends resulted in additional quantification of activities. The development of the Strategic Plan was assigned to the Engineering Planning Division in July, 1995. In the first quarter, the components of the plan were developed and the ground work laid for phase implementation. Phase I includes three projects: the rehabilitation of our existing ocean outfall, a study on ways to manage peak discharges, and a review of financial charges. A detailed work scope for these projects was prepared in the first quarter and later submitted to the Boards through the committee structure. The Board of Directors authorized issuance of Requests for Proposals and it is expected that a Professional Services Agreement will be approved in the third quarter. STRA_TEGIC PLAN 1995-1998 1996 1996 1997 1998 MAY JW,, JUL AOO C AN PROJECT NO.. 2:,, PREPARE Rl!PORT OH MA.HAGEIIENT OF P£AIC FLOW PA:0.JECT. N0.1. FINANCIAL CKARD.Eft AND FEE IICHEDUI...E Construction Management The amount budgeted for CORF engineering construction projects in the first quarter is low compared to the remaining quarters in FY 1995-96. This was due to the uncertainty surrounding the County bankruptcy and the ultimate delay of projects. These estimated budget expenditures are based on the original CORF of $33.5 million and will be re-calculated for next fiscal quarter. Actual amounts expended are slightly less than estimated budget expenditures for the first three months. It should be noted one of the construction contracts has been delayed due to the contractor's less than adequate scheduling and performance, and has somewhat impacted estimated expenditures. Our change orders are below annual estimates due to aforementioned project delays as well as improved project planning. $20.0 $15.0 $10.0 $5.0 $.0 $18.9 $1.1 CORF Construction Projects Page 17 a 95-96 Budget • 1st Qtr. Actu 5.0% 1.2% Dollar Amount of Change Orders as a % of Construction Contract al ) .E!m!!fil • Written Report •Overheads •Slides • Flip Charts Originator ~ /'ev~a~l'lr Department Head Sign Off~ Gary Streed Anticipated Time 5 Min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 FAH R96""'01 : Consideration of the following actions recommended by AIG Financial Products Corp., for replacement of Letter of Credit, Refunding Certificates of Participation, Series 1992 as follows: (a) Consideration of motion authorizing staff to take all necessary actions to expedite replacement of the Standby Letter of Credit Agreement with The Industrial Bank of Japan, with a Substitute Standby Certificate Purchase Agreement with Barclays Bank. (b) Consideration of motion authorizing staff to retain the services of a bond counsel firm for this transaction as recommended by General Counsel, in an amount not to exceed $25,000, to be entirely reimbursed to the Districts by AIG. (c) Consideration of motion directing staff to submit all necessary documents for this transaction to the Joint Boards of Directors at their January 24, 1996 meeting, for execution. Summary: AIG Financial Products Corp. (AIG), is the swap provider for the Series 1992 Refunding COPs, wherein AIG pays the Districts a floating interest rate equal to the interest rate on the COPs, and the Districts pays AIG a fixed interest rate. AIG has served the Districts with a demand letter directing termination of the existing Standby Letter of Credit Agreement of The Industrial Bank of Japan, in accordance with the Liquidity Guarantee Agreement. AIG has designated Barclays Bank to provide the replacement Facility, in the form of a Standby Certificate Purchase Agreement. The Liquidity Guarantee Agreement between AIG and the Districts permits AIG to demand the termination and replacement of the Letter of Credit (LOC) when the short-term rating of the LOC provider falls below "A-1+" (S&P) or "VMIG-1" (Moody's), which is the case with the rating of the Industrial Bank of Japan. AIG is directing this LOC replacement because securities such as the Districts' 1992 Series Refunding COPs, supported by the LOC from The Industrial Bank of Japan, have been pricing at a premium, whereas securities supported by liquidity facilities provided by non-Japanese banks are pricing without the same premium. AIG is in the process of replacing the Japanese LOCs which support a number of securities issued by other public agencies in California. The LOC substitution for the 1992 Series Refunding COPs is in the mutual best interest of the Districts and AIG. Staff Recommendation Staff recommends the FAHR Committee approve AIG Financial Products Corporation's recommended actions above. J:IWPOOC\FIN\CRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.01 AlG Financial Products Corp. 1 oc Nyala Fa,m. WestpOrt. CT 06880 (203) 222-4700 (800l 248-SWA? Fax: 12031 222-4780 Telex: 910-2409432 AIG FPC Danie 1. Spence, Esq. Rourke, Woodruff & Spradlin 701 South Parker Street Orange, CaJjfornia 92668 December 5. 1995 County Sanitation Districts Nos. 1,2.3.5,6,7 and 11 of Orclllge County, California Refunding Certificates cf Participation, 1992 Series Dear Ms. Spence: Reference is made to your le.teer of December 4th to me requesting a written staterncnl of Lhe grounds on which AIG Financial Products Corp. directs termination of the existing Standby Agreement of The Industrial Bank of Japan, Limited. Please note that while under the Liquidity Guarnnty Agreement by and among the Districts and us no such statement of grounds is required in order for us to direct termination of .he existing Standby Agreement., please note that we are directing this replacement because sccuritie.s, such a~ the Cenificates, supported by liquidity facililies as provided by the Industrial Bank of Japan. Limited have, parrJcularly d1L"1.Ilg 1995, been priced at a premium which is not ret1ected in the pricing of similar securities supported by liquidity facilities of Mn-Japanese banks. Since the Bank wrote the initial facility in December of 1992, the long-term debt ratings of The Industrial Bank of Japfill, Limited have been reduced to th.e A category from each of Moody's and Standard & Poor's and the shorHem1 rating of Standard & Poor's of IBJ and of the Certificates has been reduced from A-1+ to A-1. I would submit tlnt this substitution is in the mutual best interest of the Di.strict~ and of AlG Fmancial Products. Corp_ I hope the foregoing is helpful for your purposes. As I discussed with you today, keeping on the agenda for the Joint Board meeting of December 13 is crucial for the substicution of Barclays to OC<.'1ir by year-end. Very truly yours, ~ cc: Thomas L. Woodruff, Esq. Francis J. Coughlin, Jr. Steven Kozak ----~/~'J' ______ _ •':I-. • -,_.1 _ -,µ..---~ '1--h IT../ =• T\...., r _jT .... , =-i.1 .E2!ml!! •Written Report •Overheads •Slides •Flip Charts ~,;~ Department Head Sign Off Steven J. Hovey Anticipated Time 5 Min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 FAHR96-02: Consideration of a motion to purchase four (4) Compaq server-class computers for use as Districts-wide network servers from AmeriData (Specification No. E-262R-2) for a total cost of $135,875 not including tax and 1 % CMAS fees. Summary The Districts presently support office automation applications (word processing, spreadsheets, etc.) from six Novell 3.12 file servers. Each department has its own server with the following exceptions; Administration shares Engineering's server and Purchasing shares Human Resources' server. Sharing of data, applications, printers and other resources across the Districts' network has worked adequately in the past but has become very cumbersome with the Novell servers. This is due to the fact that Novell 3.12 is designed as a "departmental" server rather than an "enterprise" server. The Districts need an enterprise-wide network operating system and the appropriate hardware platform to support it. Staff recognized that the existing Novell servers would not scale up in order to support present and future computer-related services and connectivity requirements. These future services include E-mail, modem pool sharing, group scheduling, desktop faxing, document tracking and automatic document archival. Besides hosting standard office applications, the new network must also allow any desktop computer to connect to a variety of dedicated server computers. These servers include the Plant Automation, Maintenance Management, Laboratory Information and the new Financial Information systems being selected. Based on journal reviews, GartnerGroup projections and technical specifications staff has determined that the Microsoft NT Server software package meets all present and foreseeable requirements. ) ) In conjunction with consultants from Quickstart of Newport Beach, staff did a review of existing and future applications in order to size the hardware. Based on this review, four server-class PCs will be adequate to support the Districts' needs. Details concerning these PCs may be found in the appendices. Staff Recommendation An October 25, 1995, Board resolution authorized the Districts to purchase computers through the California Multiple Awards Schedule (CMAS). In accordance with CMAS regulations, it is not necessary to go through the bid process if purchases are being made through the CMAS. Staff recommends that the purchase be awarded to AmeriData. AmeriData was selected since it is an authorized Compaq CMAS distributer with whom the Districts has had some business experience. In addition, AmeriData has an Orange County office. The brand of computer selected was Compaq. It was selected based on it being a GartnerGroup recommended Tier 1 fTier 2 vendor and the only major manufacturer with a rack-mounted configuration with the features required by the NT Server implementation planned. Staff recommends award of a purchase order to AmeriData for $135,875 (not including tax). Payment of a one percent (1 %) State of California CMAS fee of $1,464.05 is also required. Staff is also requesting authorization to execute/approve said purchase order. J:\WPDOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR96.02 January 10, 1996 FAHR96-02: Summary STAFF REPORT Consideration of a motion to purchase four (4) Compaq server- class computers for use as Districts-wide network servers from AmeriData (Specification No. E-262R-2) for a total cost of $135,875 not including tax and 1 % CMAS fees. The Districts presently support office automation applications (word processing, spreadsheets, etc.) from six Novell 3.12 file servers. Each department has its own server with the following exceptions; Administration shares Engineering's server and Purchasing shares Human Resources' server. Sharing of data, applications, printers and other resources across the Districts' network has worked adequately in the past but has become very cumbersome with the Novell servers. This is due to the fact that Novell 3.12 is designed as a "departmental" server rather than an "enterprise" server. The Districts needs an enterprise-wide network operating system and the appropriate hardware platform to support it. Staff recognized that the existing Novell servers would not scale up in order to support present and future computer-related services and connectivity requirements. These future services include E-mail, modem pool sharing, group scheduling, desktop faxing, document tracking and automatic document archival. Besides hosting standard office applications, the new network must also allow any desktop computer to connect to a variety of dedicated server computers. These servers include the Plant Automation, Maintenance Management, Laboratory Information and the new Financial Information systems being selected. Based on journal reviews, GartnerGroup projections and technical specifications staff has determined that the Microsoft NT Server software package meets all present and foreseeable requirements. In conjunction with consultants from Quickstart of Newport Beach, staff did a review of existing and future applications in order to size the hardware. Based on this review, four server-class PCs will be adequate to support the Districts' needs. Details concerning these PCs may be found in the appendices. CSDOC O P.O.Box8127 0 FountainValley,CA92728-8127 •Tel. (714)962-2411 0FAX(714)962-3954 FAHR96-02 Page2 January 10, 1996 Budget Considerations The Districts have budgeted $340,000 for Network System Integration in the 1995-1996 Capital Outlay Revolving Fund. Technical Criteria The four Microsoft NT servers are Compaq 133Mhz Pentium computers. They are identical to each other except for the amounts of Random Access Memory (RAM) and disk drive space. The amount of RAM and disk drive space depends on the intended function of the particular server. Compaq .was selected as a computer vendor for the following reasons: 1. Compaq is a GartnerGroup Tier 1 /Tier 2 vendor and builds a high-quality, reliable product. 2. Compaq is the only Tier 1 /Tier 2 vendor manufacturing rack-mount computers. This is important since floor space is at a premium in the computer room. 3. Compaq has the majority of the Intel-based server market. In order to minimize downtime, a number of fail-safe/redundant features are incorporated into the servers. These features are: 1. Error Correcting RAM -This hardware allows the detection and correction of errors in RAM on the fly. 2. Disk Mirroring -Each of the server's system disk will be protected by a technique called "mirroring." Mirroring provides an active duplicate of the system disk. If the system drive crashes control is transferred immediately to the standby disk without interrupting services. 3. RAID-5 Drives -RAID stands for "Redundant Array of Inexpensive Disks." This technology allows a series of disks to be treated as a single large disk. If one of the component drives fails, the other disks in the array take over its function and service continues without interruption. 4. Dual Power Supplies -This option allows the servers to be powered from two sources. FAHR96-02 Page3 January 10, 1996 Staff Recommendation An October 25th Board resolution authorized the Districts to purchase computers through the California Multiple Awards Schedule (CMAS). In accordance with CMAS regulations, it is not necessary to go through the bid process if purchases are being made through the CMAS. Staff recommends that the purchase be awarded to AmeriData. AmeriData was selected since it is an authorized Compaq CMAS distributer with whom the Districts has had some business experience. In addition, AmeriData has an Orange County office. Staff recommends award of a purchase order to AmeriData for $135,875 (not including tax). Payment of a one percent (1 %) State of California CMAS fee of $1,464.05 is also required. Staff is also requesting authorization to execute/approve said purchase order. J:\WPDOC\FIN\CRANE\FPCMTG\FAHR.96\STAFFRPT.96\SRFAHR96.02 Originator: M. Herrera; Dept. Hd. S. Hovey 1 .Es!!!!m! D Written Report •Overheads •Slides D Flip Charts Originator ~ Garymstab Department Head Sign~ Gary Hasenstab Anticipated Time 5 Min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 FAHR96-03: Consideration of motion to provide standby and callback pay provisions for Programmers. Summary As automation of the treatment plants has progressed, demands upon the Plant Automation Group in the Information Technology Department have increased substantially during off-hours. At the present time, staff Programmers work an average of 18 hours of overtime per week, and are called back to work after having left the plant an average of five to seven times a month. Callback situations typically involve assisting the Maintenance Department in solving problems related to plant automation instrumentation. With few exceptions, this overtime occurs during system modification or installation. Such instances are expected to generally decrease beginning twelve to twenty-four months from now. While the Programmer classification is in the Professional Employees Group, employees in that class are non-exempt according to Fair Labor Standards Act (FLSA) guidelines. The Professional Employees Memorandum of Understanding does not have a Standby or Callback pay provision to provide authority for properly compensating Programmers who are called back to work in accordance with the callback provisions of the FLSA. Employees entitled to Standby pay typically volunteer for such duty and are on standby for a period of one week. Both Standby and Callback pay is provided to the Operations and Maintenance employees that Programmers work with, and is appropriate compensation for being required to return to work once the regular workday has ended and the employee has left the plant and for being available for immediate return to work. Programmers who are placed on standby status or who are called back to work should also be entitled to these pay bonuses. Budget Information The total annual cost of implementing Callback and Standby pay for Programmers is $11,950. Staff Recommendation Extend the Standby Pay and Callback Pay provisions in other Memoranda of Understanding to the classification of Programmer in the Professional Group. J:\WPDOC\FIN\CRANE\FPCMTG\FAHR.96\COVERS.96\FAHR96.03 January 10, 1996 STAFF REPORT FAHR96-03: Standby and Callback Pay for Programmers BACKGROUND As automation of the treatment plants has progressed, demands upon the Plant Automation Group in the Information Technology Department have increased substantially during off-hours. At the present time, staff Programmers work an average of 18 hours of overtime per week, and are called back to work after having left the plant an average of five to seven times a month. Callback situations typically involve assisting the Maintenance Department in solving problems related to plant automation instrumentation. With few exceptions, this overtime occurs during system modification or installation. Such instances are expected to generally decrease beginning twelve to twenty-four months from now. While the Programmer classification is in the Professional Employees Group, employees in that class are non-exempt according to Fair Labor Standards Act (FLSA) guidelines. The Professional Employees Memorandum of Understanding does not have a Standby or Callback pay provision to provide authority for properly compensating Programmers who are called back to work in accordance with the callback provisions of the FLSA. Employees entitled to standby pay typically volunteer for such duty and are on standby for a period of one week. Callback pay is currently provided to the Operations and Maintenance employees that Programmers work with, and is appropriate compensation for being required to return to work once the regular workday has ended and the employee has left the plant. Operations and Maintenance employees are also entitled to standby pay when required to be available for immediate return to work. Since Programmers who are assigned standby duty are also required to carefully manage their time away from work, entitlement to standby pay is appropriate and equitable. RECOMMENDATION In order to provide employees classified as Programmer appropriate compensation for being assigned to standby status on a regular basis, and to comply with the callback provisions of the FLSA, it is recommended that the following provisions be added to the Professional Memorandum of Understanding through a Side Letter of Agreement. Callback Pay. When an employee is called back to work by Districts' management without prior notice, and the employee has completed their normal work shift and left the work station, or when prior notice is given but the work begins on the same day CS DOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 • Tel. (714) 962-2411 0 FAX (714) 962-3954 FAHR96-03 Page2 January 10, 1996 at least three hours after completion of the regular shift, the employee shall receive a minimum of three hours of call back pay. The three hours minimum, whether or not actually worked, shall be paid at the rate of one and one half times the regular hourly rate. Employees who are called back a second time within a normal shift period are considered to be working for the duration of that shift. Standby Pay. Standby is time during which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. Standby assignments shall first be made on a voluntary basis. A volunteer standby list shall be established by classification and job location. Standby assignments shall be made from the list of employees who are competent and experienced, in alphabetical order, on a rotating basis. In the event that no one volunteers, the Districts shall assign standby by job classification and work location from employees who are competent and experienced on a rotational basis. An employee placed on standby shall be compensated at the rate of one hundred dollars per week, and will receive Callback pay when they are actually called to work. The total cost for providing Callback pay, assuming five instances of callback per month at an average hourly rate of $25.00, is $6,750 annually. This amount is in addition to the present overtime cost, since the majority of callback situations are resolved within an hour. The total maximum cost to place one programmer on standby status is $100 per week for 52 weeks, or $5,000 annually. The total annual cost of implementing both Callback and Standby pay for Programmers is $11,950. This amount is in addition to the amount currently paid for overtime. GH:ps J:\WPOOC\FIN\CRANE\FPC.MTGIFAHR.96\STAFFRPT.96\SRFAHR96.03 fQm!fil D Written Report DOVerheads •Slides •Flip Charts OriginatN- Gary~slab Department Head Sign Off~ Gary Hasenstab Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 FAHR96-04: Consideration of motion to approve benefit coverage for regular employees working a reduced work week. Summary The Districts' current Employee Benefit Program is specifically limited to full-time employees by Resolution 95-105. That Resolution specifies in the Definitions Article that regular full-time employees are entitled to benefits as set forth in the resolution, and in Section 38 that ''The Districts shall provide health insurance coverage ... for the benefit of regular full-time employees." A similar provision will be found in each of the Memoranda of Understanding with the various employee groups. Extending employee benefits on a prorated basis to employees who would like to work a reduced work week would enhance the Districts' organizational flexibility through job sharing, more accurately match workload requirements with work schedules, potentially reduce overtime costs and offer a greater measure of equity to employees who do not work a 40-hour week. The current budget has a total of thirteen part-time positions, including one Storeskeeper Assistant in Finance, seven Part-time Assistants in Technical Services, and five Part-time Construction Inspectors in Engineering. The Districts' Employee Benefit Program could be extended to part-time employees on a prorated basis as follows. Budget Considerations The annual cost of prorating benefits to part-time employees, based on all thirteen positions working between 30 and 40 hours per week, and using the figure of 19 percent of payroll as the cost of non-time off benefits, is $54,000. That amount would drop to $36,000 if the average number of hours worked was between 20 and 30 per week, which is a more probable number. J:\WPDOC\FIN\CRANBFPC.MTGIFAHR.96\COVERS.96\FAHR96.04 ., Recommendation Provide part-time employees with entitlement to employee benefits prorated on the basis of 75 percent if the employee works on average between 30 and 40 hours per week on average, and 50 percent if the employee works between 20 and 30 hours per week. Amend the provisions of Resolution 95-105 to allow the proration of benefits to part-time employees, and authorize Staff to amend MOU's, health plan Summary Plan Documents and other administrative policy and procedure manuals as necessary. J:IWPDOC\FIN\CRANBFPC.MTGIFAHR.96\COVERS.96\FAHR96.04 January 10, 1996 FAHR96-04: BACKGROUND STAFF REPORT Consideration of Motion to Approve Benefit Coverage for Regular Employees Working a Reduced Work Week The Districts' current Employee Benefit Program, including all insurance and paid time off provisions, is specifically limited to full-time employees by Resolution 95-105 Providing for Classification, Compensation, and Other Terms and Conditions of Employment. That Resolution specifies in the Definitions Article that regular full-time employees are entitled to benefits as set forth in the resolution, and in Section 38 that ''The Districts shall provide health insurance coverage ... for the benefit of regular full- time employees." A similar provision will be found in each of the Memoranda of Understanding with the various employee groups. The Definition Article also states that "Part-time employees are not entitled to benefits." Extending employee benefits on a prorated basis to employees who would like to work a reduced work week would enhance the Districts' organizational flexibility through job sharing, more accurately match workload requirements with work schedules, potentially reduce overtime costs and offer a greater measure of equity to employees who do not work a 40-hour week. In the last fiscal year eight employees who returned from maternity leave requested a reduced work week. Employees returning from a disability leave have been allowed to work a reduced work week pursuant to doctors' orders to facilitate frequent visits to a doctor or otherwise ease the transition back to a full schedule. The current budget has a total of thirteen part-time positions, including one Storeskeeper Assistant in Finance, seven Part-time Assistants in Technical Services, and five Part-time Construction Inspectors in Engineering. The Districts' Employee Benefit Program could be extended to part-time employees on a prorated basis as follows. The specific means of prorating each benefit is shown on Attachment 1. The annual cost of prorating benefits to part-time employees, based on all thirteen positions working between 30 and 40 hours per week, and using the figure of 19 percent of payroll as the cost of non-time off benefits, is $54,000. That amount would drop to $36,000 if the average number of hours worked was between 20 and 30 per week, which is a more probable number. CS DOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 Tel. (714) 962-2411 0 FAX (714) 962-3954 FAHR96-04 Page2 January 10, 1996 RECOMMENDATION Amend the provisions of Resolution 95-105 as follows: 1. Amend Article I, "Definitions", to provide part-time employees with the benefits set forth in Section 19, ''Vacations", Section 20, "Sick Leave", Section 23, "Personal Leave", Section 37, "Holidays", Section 39, "Insurance", and Section 60, "Severance Pay, on a prorated basis as follows: Hours of work per week Percent Benefit Subsidy 0-under 20 20-under 30 30-40 None 50 percent 75 percent 2. Authorize Staff to amend MOU's, health plan Summary Plan Documents and other administrative policy and procedure manuals as necessary to be consistent with recommendation 1. FAHR96-04 ATTACHMENT 1 PRORATION OF PART-TIME BENEFITS Benefit Vacation and Personal Leave Sick Leave Holidays Leaves of Absence Personal Medical and Family Military Jury Duty Witness Bereavement Insurance Medical Dental Life Short Term Disability Long Term Disability Workers' Compensation Tuition Assistance Program Retirement Proration Accrued at 50% and 75% of the full-time rate II Paid as 4 hours (50%) or 6 hours (75%) Covered by accrued time off as requested II II It It Paid as 4 hours (50%) or 6 hours (75%) Districts' contribution reduced by 25% or 50% II II II II Compensation would be based on average earnings Reimbursement reduced by 75% or 50% Retirement benefit is based on actual hours worked GH:ps J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.04 Formal D Written Report •Overheads •Slides 0 Flip Charts Originator L Gary 'j'JJJstab Department Head Sign Off._~....;....;;_- Gary Hasenstab Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-05: Summary AGENDA FOR JANUARY 10, 1996 Consideration of motion to approve revision of Resolution 95-105 to reflect agreement with bargaining units to rescind provisions granting a one-percent salary increase to all employees. During the 1993-94 negotiations with the Districts' bargaining units, an agreement with the Orange County Employees Retirement System was made to implement the retiree medical health premium offset program. Since negotiations, provisions of the original program altered circumstances to the extent that a revised understanding is in the best interests of the employees and the Districts. The Districts and a majority of represented employees have agreed to rescind provisions of their respective MOUs granting a one-percent salary increase to all employees to offset the employees' one-percent cost to fund the retiree health premium subsidy. A Side Letter of Agreement has been entered into to document that understanding. Staff Recommendation Amend Resolution 95-105 to rescind a one-percent salary increase to fund the Retiree Medical Health Premium since sufficient funds are available from an already existing Additional Retiree Benefit Account (ARBA). J:\WPOOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR96.05 '· • January 10, 1996 FAHR96-05: BACKGROUND STAFF REPORT Revision of Resolution 95-105 to Reflect Agreement with Bargaining Units to Rescind Provisions Granting a One-Percent Salary Increase to All Employees In the course of 1993-94 negotiations with each of the Districts' bargaining units, an understanding was reached to enter into an agreement with the Orange County Employees Retirement System (OCERS) to implement the retiree medical health premium offset program as established by the County of Orange. Agreement with OCERS has been reached. However, since the 1993-94 negotiations, provisions of the original program and other circumstances have altered to the extent that a revised understanding is in the best interests of the employees and the Districts. Under the program originally proposed by the County of Orange, and as discussed at length at each of the bargaining tables, employees were to contribute one percent of their salary into an Additional Retiree Benefit Account (ARBA) that was also to be funded by "excess" monies in the OCERS Unallocated Fund Balance and an initial contribution by the County equal to one percent of payroll. The County also agreed to a one percent salary increase to offset the employees' cost. As the program actually evolved, OCERS determined they would not manage ARBA funds beyond those generated by the Unallocated Fund Balance excess. The one percent employee contribution was therefore retained by the County in a special fund, and is treated as taxable earnings. This results in a net loss to the employee not contemplated in the original program. The Districts' ARBA fund balance is currently in excess of $2 million, which is more than adequate to fund the retiree health premium subsidy of $1 O per month for every year of service up to a maximum of $250 into the foreseeable future without the need for additional funding. Because of this, it is not necessary for the Districts to establish a special fund with the one percent employee contribution, nor to contribute an initial amount equal to one percent of payroll, for our program to remain viable. The Districts and a majority of represented employees have therefore agreed to rescind provisions of their respective MOU's granting a one percent Salary increase CSDOC • P.O. Box 8127 • Fountain Valley, CA 92728-8127 • Tel. (714) 962-2411 • FAX (714) 962-3954 FAHR 96-05 Page2 January 10, 1996 to all employees to offset the employees' one percent cost to fund the retiree health premium subsidy. A Side Letter of Agreement has been entered into to document that understanding. Cost Avoidance -$260,000 a year to the Districts. RECOMMENDATION It is therefore recommended that the following provisions of Resolution 95-105 be amended as indicated. 1. Section 2. Upon the effective date of the agreement with the Orange County Employee Retirement System to implement the retiree medical health premium offset prograi'fl, salary ranges for all employee olassifications shall be increased one peroent in aooordanoe with the pro11isions of Seotion 46 of this resolution. In addition, salary ranges Yt1ill be Jurther adjusted in aooordanoe with the :follo\·t'ing schedule: 2. Section 47. The Districts have entered into an agreement with the Orange County Employee Retirement System (OCERS) to implement the retiree medical health premium offset program established by the County of Orange wherein the cost of health premiums are offset by $1 O per month for every year of service up to a maximum of 25 years or $250 per month. Upon the effooti1.«e date of the agreement, each employee will pa'.,' one peroent of his or her salaf)1 to OGERS to fund the abo¥e program. GH:ps J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.05 ' Efil!!!fil • Written Report •Overheeds •Slides • Flip Charts Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 F AH R96-06: Consideration of motion to receive and file staff reports updating benchmarking and performance measurement programs. Summary The Districts will use benchmarking practices as a systemic approach to optimizing operating efficiencies, identifying areas for short and long-term cost containment, assuring environmental compliance, and as a tool for strategic planning. Recently, the departments have undertaken significant actions to develop benchmarking and performance measurement strategies. Activity Trends, as reflected in the FY 1995-96 Budget, are a first step in the development of our benchmarking and performance measurement programs. Other projects are underway, including tracking performance externslly against other wastewater agencies, increased utilization of automation, development of more comprehensive benchmark and performance standards, and an evaluation of privatization. As we progress with these programs, critical performance indicators will ultimately be devised at the unit/process level, and will allow us to provide comprehensive operational data that measure unit cost, efficiency and effectiveness. Staff Recommendation Information item only. J:\WPOOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR96.06 ' January 10, 1996 STAFF REPORT FAHR96-06: Benchmarking and Performance Measurement Update Background Benchmarking and performance measurement have always been conducted to some degree at the Districts since inception; however, the formal incorporation of these processes into our organizational culture, and the inclusion of a performance-based philosophy into day-to-day operations, has not occurred until recently. The organizational restructuring beginning in FY 1994-95, and the Performance Measurements Assessment Report completed mid-year by Ernst & Young, resulted in significant revision to the Districts' Budget document. Beginning in fiscal year 1995-96, Activity Trends and Performance Measures were included in the adopted annual budget documentation in an effort to identify levels of service provided, productivity, and the funding necessary to achieve service delivery objectives. The FY 1995-96 Budget represented an important first step in developing our benchmarking and performance measurement programs. I. ACTIONS UNDERWAY Projects are currently underway to further develop our benchmarking and performance measurement programs and to provide the most cost-effective services while maintaining our commitment to excellence in wastewater and environmental management. • Quarterly Reporting Quarterly reporting of current division-level Activity Trends, and a comparison of actuals versus estimated annual performance (as reflected in the FY 95-96 Budget) has begun 1. This information provides managers and policy-makers an overview of operations and performance trends, and ultimately translates into the "cost of doing business" as reflected in the department cost allocation graphic shown in the attached Exhibit 1. It should be noted that the first quarter cost per million gallons treated is 19% below FY 95/96 projections and 15% below the revised annual target of $599 per million gallons treated. 1First Quarter Report is provided under separate cover. CS DOC O P .0. Box 8127 0 Fountain Valley, CA 92728-8127 0 Tel. (714) 962-2411 0 FAX (714) 962-3954 FAHR96-06 Page2 January 10, 1996 • Cooperative Study with EBMUD & Sacramento Regional Tracking performance externally against other wastewater agencies and the benchmark "industry best practice," will be critical to establishing meaningful metrics. The benchmarking process at the Districts will coincide with a cooperative study between three facilities: CSDOC, Sacramento Regional County Sanitation District (Sacramento Regional) and East Bay Municipal Utilities District (EBMUD). This joint agency benchmarking study has been through the RFP approval process and will commence early next fiscal year. The project will provide unit-specific operating costs and operation and maintenance performance measures, and will compare these three wastewater treatment organizations on a cost-per-million-gallons basis. This study will be an extension of the EBMUD Benchmarking Study completed in April 1995 which was used to compare unit costs for chemicals, labor, and energy for five treatment processes at seven participating facilities, including the Districts. Performance Measurement/Benchmarking The Operations Department has begun to integrate performance expectations into their work plan and is an example of a department using benchmarking practices as a systemic approach to optimizing plant operating efficiencies, identifying areas for short and long-term cost reduction, assuring full compliance with environmental regulations, and as a tool for strategic planning. A critical component of benchmarking will be implementing a concise set of performance measurements at the division level, unit process level, and ultimately the task level. Measuring, evaluating and managing Operations' performance to meet or exceed optimal efficiency targets will be a critical goal in the forthcoming fiscal year. Computerized Maintenance Management System (CMMS) Maintenance staff have been consistently working toward completion of the Computerized Maintenance Management System database and are approximately 80% complete with the inventory input. This automated system will provide more thorough performance-based information thereby allowing us to examine in further detail those factors that impact the delivery of plant and infrastructure maintenance services. Financial Information System Operational and financial information (i.e., flows, budget vs actual, division contribution to cost, etc.), that provide a framework for performance measurement are available in a number of separate reports currently generated FAHR96-06 Page3 January 10, 1996 • within the Districts; however, organization of this data into useful information requires manual manipulation, calculation, and report generation. An integrated Financial Information System (FIS) will be the backbone of technology needed to support more timely information retrieval and automatic generation of progress reports. Currently proposals are being sought for a vendor to implement the FIS over the next twelve months. Privatized Service Delivery Ultimately, benchmarks and performance must be measured against agencies performing similar responsibilities in the private sector. Privatization of various services represents a viable alternative (as reflected in our recent contracting of Security) and potentially provides additional opportunities to improve the cost- effectiveness of operations. The Director of Operations, Bob Ooten, recently traveled to the Indianapolis wastewater treatment plants and the AMSA Conference on Privatization. He has prepared a report on this trip which highlighted the importance of technology, scheduling, cross-training, preventive and predictive maintenance, performance monitoring and communications. These visits provided an important framework to further understand contract services as recipient and provider. II. FUTURE WORK PROGRAMS Although significant strides have been made in developing benchmarking and performance measurement strategies, the complexity and scope of such programs require an on-going and multi-year commitment. The following items are examples of approaches that will be utilized over the course of the next twelve to eighteen months to further identify means to improve the efficiency and effectiveness of the Districts' operations. Refinement of Activity Trends Additional refinement of the existing budgetary Activity Trends is needed. As more comprehensive operational information is requested and gathered, it is becoming increasingly apparent that more appropriate performance measurements are available. Exhibit 2 is an example of various indicators for measuring performance, identifying costs, etc., particularly for activities encompassing wastewater maintenance and operations tasks. Although we have currently incorporated several of these indices in the present budget, many have not been included. For the FY 1996-97 Budget, indicators such as those reflected in the attached exhibit will be used to provide better and more comprehensive information. Furthermore, "administrative" indices of similar FAHR96-06 Page4 January 10, 1996 • • scope will be developed for departments such as Human Resources, Engineering, Communications and Information Technology. It is intended that for FY 96-97, three to five refined Activity Trends will be included in each division's budget documentation. Team Building An important component in the re-engineering or "re-inventing" of an organization or process is employee participation and buy-in. Without such support, implementation of benchmarks and performance-based programs becomes difficult, thus risking opportunities for the greatest success. A number of division level employee-based committees will assist with the creation of performance measures and appropriate benchmarks. Currently, the Operations Department has assembled a Cost Reduction Team to identify processes which can be improved for operational efficiency and effectiveness. These committees, meeting periodically with the administrative and financial analysts and/or department heads, will be an important resource, and will help ensure the timely integration of performance standards and benchmarks into day-to-day Districts operations. Efficiency, Effectiveness & Cost Reduction Studies As shown in Exhibit 3, there have been significant expenditure increases in Personnel, Maintenance and Other categories within the Joint Operating budget over the last ten years. Annual percentage changes have averaged +5.6% adjusted for the CPI. One component of this increase is the 70% growth in staff since Fiscal Year 1985/86. The data portrayed in the exhibit raise potential issues and concerns relative to the growth of the Districts. As such, the information will be used to help identify and prioritize programmatic areas for thorough uniUcost studies. Comprehensive operational analysis at the division and/or unit level (dependent upon scope) will be performed by in-house staff to understand the underlying factors contributing to growth, develop appropriate performance measures and benchmarks, as well as to determine means to improve efficiency and effectiveness. It is expected that one such study will be completed per quarter, with implementation of agreed upon recommendations occurring within the following twelve month period. The sequence of division/department studies has yet to be determined; however, those divisions with adequate existing information for thorough analysis and with comparatively large budgetary increases will be the initial focus of effort. FAHR96-06 Page 5 January 10, 1996 Miscellaneous In addition to the previous items, other performance enhancement and benchmarking opportunities will be pursued as time is available. In brief, special projects will be periodically undertaken organization-wide in an effort to improve the efficiency and effectiveness of operations while simultaneously accomplishing our primary mission. Financial Impact It is difficult to estimate the financial impact of this long-term program as it is in the initial stages of development. Nevertheless, various organization development specialists indicate that implementation of comprehensive performance-based programs, benchmarking and productivity improvements can result in a cost savings of 6%-11 % of the operational budget. Based on Fiscal Year 1995/96, such savings would equate to $3.49-$6.40 million annually. Staff Recommendation This is an information item only. GRM/LAA:gm J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.06 EXHIBIT 1 Department Contrib·utions to Gallonage Charge (First Quarter FY 95/96) I I I Human Management Resources Finance $20/mg $13/mg $41/mg * Adjusted for $43/mg Revenues LAA/GM:dk p:\home\opsec\realwrld\fahr2_95.ppt Districts Net Joint Operating Expenses *$509/mg I I I Information Operations Technology ,_ --§!~Sjrr,9 --- $20/mg Solids Disposal $63/mg ~ I Technical Maintenance Services $147/mg $81/mg I Engineering $12/mg CSDOC Revision 12/27/95 Exhibit 2 Inputs: Total cost of operations Cost per capita of wastewater treated Number and treatment capacity of plants and level of treatment provided by each Miles of infrastructure (pipeline) Number of employee hours or Full-time Equivalents (FTE) Outputs: Miles of sewer pipe maintained, repaired and inspected (by geographic area) Percentage of miles maintained requiring repair Percentage of above repaired this year Miles of new sewer constructed Square footage of facilities constructed/acreage improved Number of service calls completed (by District) Number/types of maintenance work orders performed Amount of wastewater treated (by treatment type): Primary treatment Secondary treatment Dry tons of sludge produced To allow comparison of costs to other departments and other wastewater entities To provide a picture of the size of operations for which the entity is responsible To indicate time spent on providing the service To indicate amount of infrastructure maintained, repaired, and inspected To indicate the increase in the infrastructure to meet the needs of industry and the community in general To indicate the level of work performed on existing system beyond general maintenance To indicate the flow through the system and the relative volumes requiring various treatments To indicate the volume of dry sludge produced Outcomes: Number of main stoppages per 100 miles of sewer main (by District) Average service response time (in hours) Number of complaints (by District) Number of days effluent exceeded federal and/or state standards--number of violations of discharge permit (include reasons for noncompliance) Number of days influent exceeded treatment plant capacity Number of gallons effluent that did not meet federal standards/total number of gallons processed through system Quality of water in receiving body downstream from discharge Infiltration and inflow ratio Efficiency; Percentage of repairs and Preventive Maintenance completed within goal time Percentage of line staff hours applied to actual maintenance tasks/plant operations To determine how well the infrastructure is maintained To indicate the quality of service, particularly from the customer's perspective To indicate the ability of treatment process to remove pollution adequately To indicate the condition of the infrastructure and the effectiveness of the maintenance program To indicate ability of the service group to clear calls within goal time To indicate the productivity and cost-effectiveness of personnel Efficiency (cont.J: Wastewater treatment cost per MGD treated (by treatment type): Primary treatment Secondary treatment Sludge disposal or use cost/dry ton Revenue from sales of by-products less costs Explanatory; Description of what the receiving body is used for Population served Square miles served Average daily flow/maximum daily treatment capacity (by treatment plant) Debt service coverage ratio Projected needed capacity in 5 years/current capacity To indicate the cost of providing the service and for comparison with other wastewater entities To provide information on the system's impact on the environment To allow the reader to understand the size and demographics of the system To indicate the extent of excess capacity To show ability to pay debt To indicate the need for future expansion and funding Total revenues from customer billings/total operating costs I To determine how much subsidization, if any, is occurring and debt service GM:jt C:\GMATHEWS\WPFILESIPERFORM\FAHRIFAHREXB.1_2 ~ EY FY 85/86 FY 86/87 FY 87/88 FY 88/89 FY 89/90 FY 90/91 FY 91/92 FY 92/93 FY 93/94 FY 94/95 10 Year Increases Exhibit 3 Data below reflect 10-year history of operating costs and the percentage(%) change in Personnel, Utilities, Maintenance & Other Costs (Research, Contracts, Supplies, etc.). Percentage changes have also been adjusted for the Consumer Price Index factor in the given Fiscal Year. Data are also presented for cost per million gallons (MG) based on average annual gallons treated. Personnel '% Change $10,238 - $11,426 11.6% $ 13,279 16.2% $ 13,945 5.0% $16,334 17.1% $ 20,796 27 .3% $22,352 7.5% $24,660 10.3% $24,715 0.2% $ 25,861 = 4.6% Utilities $ 4,766 $ 5,002 $ 4,539 $ 5,025 $ 5,036 $ 5,018 $ 5,424 $ 6,740 $ 4,042 $ 2,630 Dollars in Thousands -Joint Operating % Change Majht/Oth % Change' SUM -$ 8,698 -$ 23,702 5.0%1 $11,177 28.5% $27,605 -9.3%1 $14,069 25.9% $31,887 10.7% $17,607 25.1%, $36,577 0.2% $18,349 4.2% $39,719 -o.4% $ 1 s,s3s 2.e¾l $ 44,649 8.1% $19,802 5.1% $47,578 24.3% $18,921 -4.4% $ 50,321 -40.0% $18,870 -0.3% $47,627 -34.9% $ 22,791 20.8% $ 51 ,282 % Change 16.5% 15.5% 14.7% 8.6% 12.4% 6.6% 5.8% -5.4% 7.7% ~ A_~;:~----£~~ 3.0% 4.3% 4.8% 5.2% 5.2% 3.5% •. 3.1% 1.5%•· 1.6%•,, ,_;.~-~;:;- ::tS.f~$. fWl.'¼ 9.9¾ -i4% t:2% _,3-:i:~ >~4'% ·••,: ::' "<f" ~.6.9?o ~.1% ilM.G: $269 $304 $339 $380 $406 $455 $574 $594 $565 $578 % Chg $/MG MGD Treated 241 12.7% 249 11.5% 258 12.1% 264 7.0% 268 12.0% 269 26.3% 227 3.5% 232 -4.9% 231 2.4% 243 10 }'_r AVE. 11.1%, -4.0% I _ 12.0%, 9.1% 3.6% 5Ji°lo *These numbers have not been adjusted for Joint Operating revenues. Data below show the change in actual Full-time (FT) staffing levels and attendant percentage growth/decline in personnel as of June 30th of the Fiscal Year. Personnel Changes FY FT Act. 0/q Change FY 85/86 335 - FY 86/87 353 5.4% FY 87/88 382 8.2% FY 88/89 418 9.4% FY 89/90 487 16.5% FY 90/91 542 11.3% FY 91/92 579 6.8% FY 92/93 581 0.3% FY 93/94 587 1.0% FY 94/95 572 -2.6% 10 yr AVE. 6.3% _I 10YRCOST.XLS .. ; . : f2!!!!!!! •Written Report •Overheads •Slides 0 Flip Charts Originator __M_ #~11f£!). I A Department Head Sign Off 1S-.;/(J 00 Ii\ ~~ Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-07: Summary AGENDA FOR JANUARY 10, 1996 Consideration of status report on Legal Services Committee Activities At its December 13, 1995 meeting, the Steering Committee, at the request of Joint Chair, John Cox, received a report on the work of the Ad Hoc Committee on Legal Services. (Attached is a copy of the December 6, 1995, memorandum which was on the Steering Committee Agenda). The Steering Committee has recommended that this matter be directed to the Finance, Administration and Human Resources Committee. Currently, the staff is conducting an analysis of the proposed Contracts administrator position to ascertain its appropriate role and function in the organization, and the extent to which outside legal counsel could be relieved of routine review of contractual issues if this position were to be established. This analysis is expected to be completed in mid-January and a "white paper" outlining the various options on the provision of legal services should be completed in time for the February FAHR meeting. Staff Recommendation This report is intended to formally submit this matter to the Finance, Administration and Human Resources Committee pursuant to the Steering Committee recommendation. J:\WPDOC\FIN\CRANBFPC.MTG\FAHR.96\COVERS.96\FAHR96.07 December 6, 1995 TO~ FROM: MEMORANDUM Members of the Steering Committee Donald F. McIntyre General Manager SUBJECT: Committee on Legal Services Pursuant to a request from Joint Chair John Cox for a status report on this Committee's activities, this memorandum has been prepared. In early October, a committee on legal services was established to review the Districts' legal services and consider ways and means of containing costs. Committee members are Directors John Gullixson and Tom Saltarelli, and former Joint Chair Bill Mahoney. To date, two meetings have been held. The first meeting was held on October 11 and included staff members Don McIntyre, Blake Anderson and Judy Wilson. Tom Woodruff, General Counsel, was not in attendance, as he was on vacation at the time. The issues raised at the October 11, 1995 meeting included: the cost of special counsel for litigation; the feasibility of retaining an in-house counsel and paralegal to review routine legal matters; training Districts' staff to monitor legal costs and request work only when necessary; the option of having an attorney from Rourke, Woodruff and Spradlin on-site for extended office hours during the week to improve access and reach closure on issues more quickly. At the close of the October 11, 1995 meeting, the staff was requested to review first quarter billings from Rourke, Woodruff and Spradlin and determine which tasks could be done by a competent in-house attorney and paralegal and which would need to be contracted. It was agreed that upon Tom Woodruff's return from vacation he would be asked to conduct a similar analysis. This work was to be completed by the end of November and a follow-up meeting was to be scheduled to include Tom Woodruff. The follow-up meeting was held on November 29, 1995. The staff prepared an analysis assuming a three-person staff including an attorney, a secretary and a paralegal, with the assumption that all litigation, source control, air quality, and labor law work would continue to be contracted out. Savings were estimated at approximately $120,000. Tom Woodruff prepared an extensive report outlining opportunities for future savings to include the use of a contracts administrator to handle routine contract review; continuing to train Districts' staff to prudently use legal services; continuing to use paralegal services as a cost-effective alternative to attorneys where appropriate. CSDOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 Tel. (714) 962-2411 0 FAX (714) 962-3954 Members of the Steering Committee Page2 December 6, 1995 After several hours of discussion, the Committee requested that a detailed option paper be prepared for review. It was also agreed that no firm consensus had been reached and further meetings would be required. Among the options to be reviewed in the proposed "white paper" are: • Establishing the position of Contracts Administrator and continuing to follow Tom Woodruff's recommendations for continued cost containment; • Converting the Contracts Administrator position to an attorney position and assigning this person routine contract review, routine legal work, review of billings by outside counsel and special counsel, and other routine legal work as time is available; • If the proposed workload supports a full-time Contracts Administrator, filling this position and also hiring a full-time attorney to do the routine legal work and review of outside legal billings. Among the issues which were to be examined in the "White Paper" were reporting relationships, i.e. how would an inside counsel relate to the outside General Counsel: If the inside legal counsel reports to the General Manager, how does this relate to the General Counsel, who reports to the Boards? Another issue requiring more information is the duties and responsibilities of the proposed Contracts Administrator and how many person-hours these duties entail. It was agreed the staff would evaluate the workload of the proposed Contracts Administrator and further survey the staff on their current and anticipated legal needs. The "White Paper" will be prepared this month and be circulated to the Committee for review and comment. Because this issue is quite complex, it was agreed that a decision of this nature should not be rushed. The Committee plans to meet again in January to develop a recommendation for the Boards. DFM:JAW:jt J:\WPOOC'IFIN\CRANBFPC.MTGIFAHR.96\120695.M1 c: Director John Gullixson Director Tom Saltarelli Bill Mahoney fg!!!!.!! • Written Report • Overheads •Slides •Alp Charts Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-08: Summary AGENDA FOR JANUARY 10, 1996 Consideration of a motion adopting Districts' position on SCAG's Regional Comprehensive Plan and Guide -Finance Chapter and authorizing staff to report to SCAG. The goal_of SCAG's Regional Comprehensive Plan and Guide is to raise the level of economic performance of the region to a higher level, while ensuring that environmental needs are met and the quality of life for the region is enhanced. The Public Finance Chapter is not mandated. It was provided for information and advisory purposes; however, since the Regional Comprehensive Plan frequently provides the basis for new legislative efforts and mandates, staff has been following this process and reviewing any recommendations which could potentially impact the Districts' revenue base. SCAG has established a February 1, 1996 deadline for comments or concerns. In its Finance Chapter, SCAG has included ten •Principles and Options for Improving the system of Public Finance: Of particular concern to the Districts is Principle No. 6, which states: "Special Districts with Independent Means to Raise Revenues Should Not Drain Property Taxes from Cities and Counties Unless the Transfer Serves Appropriate Government Policy Objectives." The report goes on to state that MSpecial district property taxes have often been used to support voter approved debt. To the extent that values depend on the viability of the district owned and operated infrastructure, their use of property taxes is a reasonable revenue source and provision must be made to ensure security for the repayment of this debt: Currently, the Districts receive $31,162,000 a year in property taxes representing 6.7% of its total funding sources including reserves. Property taxes have been primarily used for COP debt service. Debt service on the COPs is approximately $34.6 million. If property tax were not available for this purpose, user fees would need to be increased by an average of $34.32 or 48%. Average user fees are currently $71.31. There would be no change in user fees in Districts 13 and 14 since they were formed subsequent to the passage of Proposition 13 and do not receive property taxes. Staff Recommendation Given the importance to the Districts of retaining property tax to service debt and maintaining user fees at a reasonable level, the Districts should send formal comments to SCAG. Comments should emphasize the importance of wastewater treatment to the environment and public health, and that the use of property taxes to retire debt on priority infrastructure is a reasonable and appropriate use of these funds and contributes to enhanced property values. J:IWPDOCIFINICRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.08 January 10, 1996 FAHR96-08: Background STAFF REPORT Districts' Position on SCAG's Regional Comprehensive Plan and Guide -Finance Chapter The Regional Comprehensive Plan and Guide (RCPG) is a publication of SCAG. Most of the Chapters in the RCPG are mandated by Federal funding programs and local actions must be consistent with the adopted RCPG in order to be eligible to receive funding. The Public Finance Chapter is non-mandated and has been provided for information and advisory purposes. The RCPG is still in draft. The staff received this draft on December 15. Because these issues are of extreme importance to the fiscal foundation of the Districts, it was deemed advisable to bring this report to the attention of the Board through the FAHR Committee. Policy comments provided by the Joint Chair should receive a high level of attention from SCAG. February 1, 1996, is the closing for comments, therefore, there was sufficient time to bring this matter through the Committee cycle to the full Board. Although the Public Finance Chapter is advisory in nature, its policy recommendations will receive significant attention at both the local and state level. The major thrust of the report is that the fiscal system of California has become a dysfunctional patchwork. Since the passage of Proposition 13 and the reallocation of property tax through the State, fiscal responsibility and accountability have been diffused. Property tax, which had traditionally been a local source of revenue to provide property-related services, is now in the control of state government and subject to a subvention-type process. In recent years, with the very deep recession, this situation has been exacerbated as the State moved first to help itself to the funds and also shifted responsibilities to locals--often without increased resources. To address this situation, the Public Finance Chapter recommends sweeping changes in fiscal policy. Ten basic principles guide the recommendations in the draft Public Finance Chapter. (Attachment #1 to this report lists these ten principles.) Of particular concern to the Districts is Principle No. 6 "Special Districts With Independent Means to Raise Revenues Should Not Drain Property Taxes from Cities and Counties Unless the Transfer Serves Appropriate Governmental Policy Objectives." The report notes that there were 855 special districts in Southern California as of FY '93. Although it is suggested that the special districts should be weaned from the property tax to make that revenue available for other purposes, it acknowledges that such a shift is not simple. The report states: "Special district property tax revenues have often been used to support voter approved debt. To the extent that property taxes depend on the viability of district owned and operated infrastructure, their use of property taxes is a reasonable revenue source, and provision must be made to ensure security for the repayment of this debt." SCAG is recommending that the subregional entities would have the authority to eliminate property taxes as a method of funding. The special districts would then be required to readjust their user fees to support their services. The SCAG report also suggests three other options for further study: CS DOC D P.O. Box 8127 • Fountain Valley, CA 92728-8127 • Tel. (714) 962-2411 0 FAX (714) 962-3954 FAHR96-08 Page2 January 10, 1996 • Encourage special district mergers with financial incentives where counterproductive duplication of services is occurring. • Collapse special districts entirely as recommended in the past by the County Supervisors Association (CSAC). • Make all districts subsidiaries of local government so that citizens could look, for accountability purposes, only to the state or a locality and to no other tier or agency with additional or alternative authority. The California Special District Association has argued that special districts that enhance property wealth should not be excluded from sharing property taxes. Potential Impact on CSDOC As noted in the summary of this report, the Districts' property taxes, approximately $31.6 million, are primarily used to meet debt service on its Certificates of Participation {see attachment No. 2 to this report). If the Districts were to lose this revenue source and still maintain its current service levels, user fees would need to be increased an average of 48% (see attachment No. 2 for complete detail on the consequences for each district). Other Related Developments In addition to the SCAG recommendations regarding special districts' funding, a more sweeping recommendation on special districts has been put forward by State Assemblyman Curt Pringle (R-Garden Grove). Assemblyman Curt Pringle's proposal would place a measure on the November 6, 1996 ballot to consolidate the sanitation and water special districts in Orange County into a single County-wide Water/Sanitation District. This has been recommended by Assemblyman Curt Pringle as a cost saving measure and an effort to improve accountability. The CSDOC Steering Committee has recommended that Joint Chair, John Cox, communicate the Districts' position on this bill, including the current efforts underway to consolidate the nine Districts through the LAFCO process. Finally, in a related development, the Orange County Division of the League of California Cities will be considering a proposal to form a separate Council of Governments (COG) at its January 11 meeting. The potential membership could include cities, the County, Sanitation Districts, OCTA, Orange County Business Council and schools. The role of the COG would be to address subregional and regional issues, prepare demographic projections, and provide input into all SCAG activities, including the Regional Comprehensive Plan and Guide. If this COG were to be established, it would appear to be the likely subregional entity to have "the authority to eliminate property taxes" for various special districts within its jurisdictions should the SCAG proposal actually be implemented. Given the importance of these issues to the Districts, this initiative also needs to be followed carefully. The schedule for implementation of the proposed COG assumes the development and formation of a Joint Powers Authority by the end of February, 1996. FAHR96-08 Page 3 January 10, 1996 Conclusion Given the current economic and political climate, it should come as no surprise that special districts are under scrutiny. It is important that sufficient information is provided to the policy makers at the local and state level so that they can understand the mission of this agency. The importance which effective wastewater treatment plays in maintaining the environment and public health must be underscored. The infrastructure financed through Certificates of Participation is certainly needed for economic growth and for the protection and enhancement of property values. These points need to be made in formal comments to SCAG on the RCPG. On the other hand, not every existing special district in Southern California deserves to exist without change. There are many examples of special districts which are very local, duplicative, and offer little in the way of regional problem solving. CSDOC should avoid finding itself in the untenable position of defending all special districts. The message needs to be one of careful study, consolidation where appropriate, and support for those districts which are providing important regional service. Not all special districts should be treated exactly the same. There are significant differences among special districts. CSDOC should work to distinguish its role and mission as an agency with a critical regional function, which needs to have a predictable and reasonable financial foundation. Recommendation The District should send formal comments to SCAG on the Public Finance Chapter of the Regional Comprehensive Plan and Guide, emphasizing the importance of wastewater treatment to the environment and public health and supporting the use of property taxes to retire debt on priority infrastructure as a reasonable and appropriate use of these funds. JAW:cmc J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.08 January 10, 1995 Principles and Options for Attachment No. 1 Improving the system of Public Finance 1) Different Local Finance Models Can Be Followed in Different Parts of the State. 2) Any Reallocation of Sources of Revenues Must Insure that the State, at the Time of Implementation, Does not Collect more Total Tax Revenue Under the New system that it Did Previously, Although the Burden may Be Shifted Among Groups of Taxpayers. 3) Flexible Fiscal Management is Needed at the Scale of the Subregion and the Region. 4) Revenue Incentives Need to be Restructured to Maximize the Attraction and Maintenance of Quality Jobs in the Region. 5) To the Extent that the State Continues to Mandate Functions on the Localities the State Must Raise and Provide the Necessary Revenues to Local Authorities. Local Governments May, at Their Option, Contract with the State to Provide the Services So Mandated. 6) Special Districts With Independent Means To Raise Revenues Should Not Drain Property Taxes from Cities and Counties Unless The Transfer Serves Appropriate Governmental Policy Objectives. 7) Incentives Should Be Created or Disincentives Removed to Encourage Subregional or Regional Service Delivery Where it is Demonstrably Less Expensive, More Efficient and Improves the Business Climate. 8) Dedicated Sources of Revenues for Local Services Should Be Created. 9) The System Adopted Should Be Understandable and Reinforce the Capacity for Public Accountability. 1 O) Market Pricing Should Be A Preferred Approach to Financing Government Services and Allocating Service Levels. JAW:cmc J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\ATFAHR96.07 • . -, ATTACHMENT No . 2 1/3/96 ( User Fee Increases Needed for COP Service To Replace Property Taxes 1995-96 Budgeted COP Service No. Of Taxes For 1995-96 Potential Tax Loss Budgeted COP (Debt) Made From Equivalent COP Serv Single Fam Revised %Change ECQpiaxe~ s~~i!;;e ·e[Ql2 Ta~e~ Qwelling Units Per !;Q!.! !.!~er Fee SEB Fee ~ 1 $ 2,105,000 $ 4,289,000 $ 2,105,000 73,847 $ 28.50 $ 83.24 $ 111 .74 34.24% 2 9,515,000 11,392,000 9,515,000 274,504 34.66 71.52 106.18 48.47% 3 10,615,000 10,694,000 10,615,000 285,750 37.15 73.89 111.04 50.27% 5 2,415,000 2,013,000 2,013,000 27,590 72.96 96.75 169.71 75.41% 6 1,225,000 1,468,000 1,225,000 43,682 28.04 76.47 104.51 36.67% 7 3,230,000 2,401,000 2,401,-000 106,000 22.65 50.09 72.74 45.22% 11 2,041,000 2,160,000 2,041,000 52,000 39.25 60.00 99.25 65.42% 13 27,000 8,175 100.00 100.00 0.00% Total $ 31,146,000 $ 34,444,000 $ 29,915,000 871,548 $ 34.32 $ 71.31 $ 105.63 48.13% COP _TAX.1.XLS 9:19 AM ., .E!!!!!!fil • Written Report • Overt\eads • Slides • Flip Charts Anticipated Time 15 Minutes FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-09: Summary AGENDA FOR JANUARY 10, 1996 Consideration of motion to receive and file Staff Report dated January 4, 1996 re the Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant; and consideration of Resolution No. 96-_ approving said Agreement. On the afternoon of January 3, 1996, the Orange County Investment Pool (OCIP) Committee reached final agreement with the County on all of the details of the "Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant" for the resolution of claims against the County of Orange dated December 18, 1995. The Joint Agreement has been conveyed to all Option A participants (the 190 schools, cities, special districts and other public entities that signed the Option A version of the Comprehensive Settlement Agreement that was approved in May 1995) for their individual consideration and approval. The attached staff report outlines the major features of the Joint Agreement. Copies of the conveyance letter from Pillsbury Madison & Sutro and the executive summary of the Joint Agreement are attached. To obtain a copy of the entire Joint Agreement, call Corina Chaudhry at (714) 962-2411, extension 2003. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee receive and file the staff report, and recommend approval of the Joint Agreement to the Joint Boards of Directors. J:\WPDOC\GMIBANDERSOIFAHR196.09A January 4, 1996 FAHR96-09: STAFF REPORT Consideration of motion to receive and file Staff Report dated January 4, 1996 re the Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant; and consideration of resolution approving said Agreement. The OCIP Committee has approved the "Joint Agreement of the County of Orange, the Official Investment Pool Participants' Committee and Each Option A Pool Participant." This has been a very lengthy process. Meetings were held throughout the summer to develop a platform which would be the basis for paying off all of the County's vendors, bond holders and non-governmental creditors. These meetings resulted in the OCIP Committee first approving the Joint Agreement on September 7. The September version of the Joint Agreement formed the basis of the legislation which was approved by the legislature and signed into law by Governor Wilson in late-September. The Joint Agreement moves revenues of certain County agencies and the OCTA into accounts that will be used for paying off new borrowings which will be used to pay off the various creditors mentioned above, and improves the order in which Option A participants receive litigation proceeds from the lawsuits against Merrill Lynch and others. It also removes all future recourse against the County by the Option A participants who sign the Joint Agreement. The September legislation did not check with all of the details of the Joint Agreement. Naturally, the OCIP Committee insisted that the Joint Agreement be amended to coincide with the state laws that had been passed to support it and was also concerned that the errata of the September Joint Agreement be corrected. Unfortunately, bankruptcy counsel for the County did not agree with the concerns of the OCIP Committee and he delayed any substantive and constructive action necessary to amend the Joint Agreement and resolve the impasse. When Judge Ryan originally directed the County to amend its complaint against Merrill Lynch because the County had not adequately demonstrated that it even had proper standing to sue Merrill Lynch regarding the commingled investment pool, the Joint Agreement became valueless because the ability of the Option A participants to receive any litigation proceeds from the County's efforts was suddenly thrown into serious question. The OCIP Committee had no reason to continue to press for amending a Joint Agreement whose very basis was in such peril. Fortunately, on December 1, 1995 Judge Ryan ruled that the County's amended pleading was sufficient and that the County could proceed with the suit against Merrill Lynch. Interest in amending the Joint Agreement was renewed by both the County and CSDOC • P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Staff Report Page 2 January 4, 1996 the OCIP Committee and, as a result of intense efforts by the attorneys and financial professionals working for the OCIP Committee and the County, the December 18 amended Joint Agreement was approved in principle with the assumption that the pending side letters between the County and the Cities Subcommittee and between the County and the TCA would be subsequently approved by all relevant parties. The side letters have been approved, and after a flurry of letters between the attorneys, the Joint Agreement was approved for distribution on January 3 and has been conveyed to the Option A participants for their consideration and approval. Price Waterhouse is handling the distribution and will be receiving the approval/disapproval results from each of the approximately 190 councils and boards that must decide on the Joint Agreement. Impact on the Sanitation Districts The Joint Agreement is favorable to the interests of the Sanitation Districts. Under the Comprehensive Settlement Agreement of May 1995, the Option A participants (which includes the Sanitation Districts) were entitled to share in the first layer of the litigation proceeds 2: 1 with the County. Under the Joint Agreement, the County is now in the third layer of litigation receipts. Schools will receive the first $55 million in litigation proceeds, the non-school Option A participants will receive the second layer of proceeds up to $325 million, and the County will receive the third layer of proceeds up to $176 million. Layers four through seven are a combination of splits between the Option A participants, the OCTA, and the County. OCTA's share will be a payback for the $15 million per year it loses under the Joint Agreement. In exchange for this improvement in the Option A's position in the litigation "receiving line", the OCIP participants give up any further recourse against the County other than the litigation proceeds. However, assuming that the secured and unsecured claims that were fully allowed by the County under the terms of the CSA are, in fact, of limited value because of the County's dire financial position, giving them up in favor of an improved litigation position is prudent. It can be argued that only the litigation proceeds will provide any further payback to the Sanitation Districts and the other Option A participants. Today we have received approximately 80% of our original deposits that were held by the County. Assuming that the litigation (or settlement) with Merrill Lynch and the others goes reasonably well, we may approach 90% of our original deposits. There is more good news. The Joint Agreement and its supporting letter from the County's bankruptcy counsel provides that the withheld proceeds now being held by the County will be released. The amount due to the Sanitation Districts will be listed in the final Price Waterhouse documents which Sanitation Districts' staff does not have at the time of this writing. We will report on this amount at the meeting. r Staff Report Page 3 January 4, 1996 Most importantly, the Joint Agreement will provide the necessary funds for the County to repay all of its non-government creditors. This is done by a net $15 million per year reallocation of OCTA revenues to the County, and a total of $12 million per year ($4 million each) from Harbors, Beaches and Parks, Flood Control, and the Orange County Development Agency. For the Sanitation Districts, this is a very favorable part of the agreement. The repayment of all outstanding bonds by the County will remove the cloud of default once and for all from the name "Orange County." The Joint Agreement also provides that the County will use Thomas Hayes to oversee the disbursement of revenues under the Joint Agreement. It also provides that the County will not seek or support any diversion of revenue from any signing Option A Pool Participant for the purpose of financing the repayment of claims in the County's Plan of Adjustment. This particular provision is important because, as you may recall, the County had advocated that the property tax revenues of the Sanitation Districts be reallocated to the County for just that purpose. Staff will provide additional details at the meeting of the Committee. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee approve the Joint Agreement. BPA:jt J:IWPDOC\GM\BANDERSOIFAHR9609.SRA •. LOS ANGELES NEW YORK SACRAMENTO SAN FRANCISCO WASHINGTON, OC TOKYO WRITER'S OFFICE AND DIRECT OIAL NUMBER (619) 544-3177 LAW OFFICES OF PILLSBURY MADISON & SUTRO LLP SUITE 1800 IOI WEST BROADWAY SAN DIEGO, CALIFORNIA 92101-B201 TELEPHONE 1619) 234-5000 FACSIMILE (6191 236-1995 December 27, 1995 TO: ORANGE COUNTY INVESTMENT POOL PARTICIPANTS' DISTRIBUTION LIST Re: In re County of Orange, Case No. SA94-22272-JR MENLO PARK ORANGE COUNTY SAN DIEGO SAN JOSE HONG KONG "JOINT AGREEMENT" PROPOSED BY THE COUNTY OF ORANGE FOR THE RESOLUTION OF POOL-RELATED CLAIMS OF OPTION A POOL PARTICIPANTS, AND OTHER RELATED MATTERS Dear Pool Participant: Enclosed herewith you will find an execution copy of an agreement entitled JOINT AGREEMENT OF THE COUNTY OF ORANGE, THE OFFICIAL INVESTMENT POOL PARTICIPANTS' COMMITTEE AND EACH OPTION A POOL PARTICIPANT FOR RESOLUTION OF CLAIMS AGAINST THE COUNTY OF ORANGE ("Joint Agreement") along with an Executive Summary relating to that agreement. This proposed Joint Agreement by the County is intended to address the treatment of the remaining claims of Option A Pool Participants allowed under the Comprehensive Settlement Agreement ("CSA"), and to address certain other specific matters related to the interests of Pool Participants. While the Joint Agreement is not a Plan of Adjustment, if executed by your government entity, it will have material impact on your right to participate in the Plan of Adjustment process, and will, to a large extent, define your entitlements under the Plan of Adjustment. This is obviously a very important document. It is technically drafted and requires your attention, along with the specific advice of your own financial and legal professionals. As with the Comprehensive Settlement Agreement, the financial and legal professionals of the OCIP Committee are unable to act as advisors to you on an individual basis. Rather, the financial and legal advisors to the OCIP Committee have prepared the Executive Summary which accompanies 20846332 December 27, 1995 Page 2 this letter to assist you in understanding the Joint Agreement. The impact of the Joint Agreement will be different for virtually every individual government agency and, as a result, the analysis required must be done by each agency on an individual basis. To put the Joint Agreement in context, it is important to briefly review the history of this case as it pertains to Pool Participants. On December 6, 1994, the County of Orange filed two separate bankruptcy cases: one for the County (In Re County of Orange, Bankruptcy Case No. SA94-22272-JR) and one for an entity of the County entitled The Orange County Investment Pools (In Re Orange County Investment Pools, Bankruptcy Case No. SA94-22273- JR). The filing of these two separate bankruptcy cases was intended by the County to identify the separate assets and interests of the Pools as opposed to the rights of general creditors of the County of Orange. There may have also been a political interest in attempting to distance the County of Orange from the operations of the Treasurer's Office in connection with the investment decisions leading up to the $1.64 billion loss sustained by the Pool. Shortly after the filing of the bankruptcy cases, the County announced its intent to challenge the entitlement of Pool Participants to recover their deposits in the Pool under the provisions of California law intended to protect Pool Participant deposits from invasion by a County under circumstances mirroring those in this case. (California Government Code§ 27100.1, and others.) Long term denial of access by Pool Participants to their deposits in the Orange County Investment Pools threatened the economic viability of a substantial number of Pool Participants. After the filing of the two bankruptcy cases, the United States Trustee for the Central District of California, Marcy Tiffany, formed a special committee to represent Pool depositors in the Pool case. This committee consists of seven members: Chairman, Stan Oftelie of the Orange County Transportation Authority ("OCTA"); Andrew Czerny of the Orange County Water District; Blake Anderson of the Orange County Sanitation District; Paul Brady, City Manager of the City of Irvine (representing a special subcommittee of Orange County cities); John Nelson, Assistant Superintendent of the Orange County Department of Education (representing a special subcommittee of Orange County schools); Walter Kreutzen of the Transportation Corridor Agencies; and Michael Martello, City Attorney of the City of Mountain View (representing a special subcommittee of 20846332 December 27, 1995 Page 3 non-Orange County agencies). This committee became known as the OCIP Committee. The OCIP Committee began meeting almost daily in early January and crafted, along with the County, an interim funding mechanism to meet-the emergency needs of Pool Participants. The intent of that facility was to provide the minimal funding required to keep the constituent agencies of the OCIP financially alive during the time necessary to resolve the dispute between the OCIP Committee and the County regarding Pool Participants' entitlement to their deposits in the investment pools. That interim facility operated successfully through May of 1995 and disbursed over $900,000,000. During that same period of time, the Pool Committee conducted extensive financial analysis and legal research on the issue of whether Pool Participants could recover all their deposits from the Orange County Investment Pools, leaving the County to bear the entire $1.64 billion loss against their December 6, 1994 deposit balance of approximately $2.3 billion. There was support for that position, including the specific intent of Government Code§ 27100.1, the reliance of Pool Participants upon the County for investment policies and capital protection, and the revelation of numerous financial irregularities relating to Pool Participants' interests in the Pools pre-bankruptcy (the skimming of interest, misallocation of assets, and other similar activities). In other words, there were good legal and equitable arguments for requiring the County to sustain the loss in the Investment Pools from its own deposit balance. However, there was another side to the argument. Notwithstanding the culpability of the County for the intentional and unintentional losses in the Pools, certain principles that apply generally in bankruptcy cases, though never specifically applied to a case of this type, provided the possibility for a different result. These arguments, in brief, start with the general disfavor trust interests are accorded in bankruptcy cases, because such interests run contrary to general bankruptcy concepts of equitable distribution to similar claimants. Additionally, the legal foundation for the trust position asserted by Pool Participants in this case was uniquely a matter of California law. There was thus the potential for statutory interpretation, and Tenth Amendment Constitutional issues, to be in controversy. Specifically, it was unclear whether California was entitled to structure a unique distribution priority for municipal entities in bankruptcy inconsistent with general bankruptcy principles. 20846332 December 27, 1995 Page 4 In other words the issue presented a case of first impression with billions of dollars, and the economic lives of the Pool Participants, at stake, and good arguments on both sides. 1 Moreover, a number of Pool Participants had municipal financings coming due in June of 1995 for which a substantial portion of their Pool deposits were required. Litigation of the trust issue, even if successful at the trial court level, would if appealed probably not produce an actual disbursement of funds by the County within the timeframe necessary to meet the June 30 1 As most of you know, the issue of the trust status of the Orange County Investment Pools was recently litigated in the context of a Motion to Dismiss brought by Merrill, Lynch, Pierce, Fenner & Smith in the case filed against it by the County. Among other arguments, Merrill Lynch contended that, under California Government Code§ 27100.1, the assets in the Orange County Investment Pools belonged to Pool Participants, not the County. Further, any losses sustained by the Pool would be losses of the Pool Participants, not the County. On December 1, 1995, Bankruptcy Judge John Ryan addressed for the first time the critical trust issue in the context of the Merrill Lynch motion. Judge Ryan denied the motion. In his opinion, Judge Ryan specifically found that here where the trust managed by the County is assumed to be insolvent, and where deposits can not be definitively traced, the trust fails and the Pool assets become assets of the County of Orange. Judge Ryan concluded that the protection to Pool Participants under Government Code§ 27100.1 failed because it was inconsistent with the federal bankruptcy principle of equitable, uniform distribution of assets in insolvent estates. While it is unclear whether this decision would have been the same had it been litigated earlier, and it is equally unclear whether it will withstand appeal, at least on the face of it a good argument can be made that had the OCIP Committee elected to litigate the trust theory back in May of this year, the court would have made the same findings, in which case the County would have had access to the entire $5.3 billion proceeds from the sale of the Pool securities. The County would then have been entitled to distribute those proceeds to its unsecured creditors, including all municipal noteholders, vendors and all labor claimants, along with Pool Participants. Under those circumstances, the recovery by Pool Participants would have been much less than the $4.1 billion in cash recovered so far. The County's "fresh start" may have occurred months ago at the cost of the financial vitality of numerous Pool Participants. 20846332 December 27, 1995 Page 5 deadline for Pool Participants having municipal obligations maturing at that time. The Pool Committee crafted with the County a "settlement" of its collective claims of entitlement to all Pool Participant deposits under the trust theory in an agreement entitled the "Comprehensive Settlement Agreement" ("CSA"). Under this agreement, approximately 80% of non-school deposit balances and 90% of school deposit balances have been or should shortly be released. The remaining account balances would be allowed in full; however, there would be different repayment entitlements on those balances. A portion of the remaining balance would be entitled to general unsecured creditor treatment with a credit enhancement from recoveries from third party litigation ("Settlement Secured Claims"), and another portion would be in a subordinated position ("Repayment Claims"). This compensation package was available to Pool Participants agreeing to assign and collectivize their claims against third party defendants. Most Pool Participants elected this option. Fourteen Pool Participants, primarily non-Orange County entities, elected a different package of compensation, retaining their third-party litigation rights. Approximately $4.1 billion dollars has been distributed to Pool Participants to date in accordance with the CSA. The County has since been unsuccessful in obtaining taxpayer funding to refill the $1.64 billion dollar hole left by the losses sustained by the Pool, and the amounts of deficit hidden until the filing of the bankruptcy case. The County was successful in obtaining the agreement of noteholders to the idea of "rolling" their obligations from fiscal 1994-1995 into fiscal 1995-1996, a procedure which on its face appears to contradict several government code statutes and Constitutional provisions. The OCIP Committee raised these issues before the Bankruptcy Court, without success, and those issues are now on appeal. Since August of this year, the County has attempted to craft a Plan of Adjustment which would allow it to emerge from bankruptcy. For a number of reasons, including its diminished credit rating and its inability to obtain any tax revenue from its citizens, the County's plan for recovery inevitably turned back to the revenues and assets of Pool Participants whose financial condition and operations were more regularly conducted, and whose economic health was more vital. The initial assault by the County was across the board to the interests of virtually all Pool Participants. Legislative realities circumscribed the County's efforts. Ultimately, a 20846332 December 27, 1995 Page 6 legislative package was approved which, in essence, calls for the State to divert a net amount of $15 million per year for 15 years from the Orange County Transportation Authority and $12 million per year for 20 years from Harbors, Beaches and Parks, the Flood Control District, and the County Development Agency. These diverted funds will be pledged to finance the issuance of new municipal debt, the proceeds of which will be used to pay off the "rolled" municipal debt and other obligations of the County. While the legislative package is still violative of the interests of some Pool Participants, and will have an impact on transportation and on future infrastructure construction in Orange County, it was considered the least destructive of the various alternatives that were considered by the legislature. However, this limited invasion of Pool Participants' assets was crafted with certain expectations relating to the remaining claims of Pool Participants. Namely, it was anticipated that Pool Participants would be willing to relieve the County of their remaining Pool-Related Claims (approximately $850 million) and have those claims become recourse only against third party litigation recoveries. Were this assumption not correct, the County was prepared to argue that further invasions of Pool Participants' assets and/or tax revenues would be required to enable the County to pay all of its obligations under the Plan of Adjustment. The next level of asset and/or tax diversion would have been at the expense of cities and special districts, and the representatives of those constituencies on the OCIP Committee were insistent on avoiding that possibility. The concept of making the remaining Pool Participant Pool- Related Claims non-recourse to the County, but recourse against third party litigation recoveries, is incorporated into the Joint Agreement. In addition to the concepts described above, other related issues, and nonrelated issues of importance to specific Pool Participant constituencies, are also addressed in the Joint Agreement. Of particular concern to Orange County cities is the treatment of, and access to, Pool Participant interests in certain County Administered Accounts ("CAAs"). These are accounts kept on the books and records of the County which hold funds on behalf of Pool Participants, and sometimes the County, for specific purposes. Under the CSA, the CAAs were deemed to have suffered percentage losses in the Pools similar to the losses deemed to have occurred to the deposit balances of specific Pool Participant agencies. The remaining balances in these County-administered accounts are, in many cases, owned in part by Pool Participants. However, Pool Participants have not 20846332 December 27, 1995 Page 7 had access to these funds since the filing of the bankruptcy case on December 6, 1994, and absent agreement with the County, the County has no inclination to release these funds to Pool Participants until the case is concluded, probably not earlier than June of next year. In addition, certain CAAs have funds which reflect unique interests of parties, like the Eminent Domain account, and the treatment of these accounts in a manner inconsistent with the treatment of other CAAs was also a matter of great interest to the Committee. The Joint Agreement requires the County to immediately distribute the cash balances in numerous CAA's to Pool Participants, to the extent of their undisputed claims against those accounts. It further provides a mechanism for recovering the deficiencies in those accounts. The Joint Agreement also announces, as part of the financial limitations of the County of Orange, the discontinuation of the Arterial Highway Funding Program ("AHFP") by the County of Orange. This program, previously in existence for over 40 years, provided disbursement of approximately $3.5 million a year by the County of Orange to various Orange County cities for the maintenance and improvement of certain roads and highways. The program was administered by the Orange County Transportation Authority. It is the intent of the County to confirm with Pool Participants that the AHFP will be discontinued. Pool Participants acknowledge in the Joint Agreement the County's discontinuation of the program and agree that the OCTA will not be obligated in the future to fund the AHFP. It was important to the OCIP Committee that third-party litigation be conducted in an environment insulated from political influences in County politics. The Committee has agreed to accept Thomas w. Hayes as the representative entitled to make all critical decisions relating to the litigation. The Joint Agreement describes the scope of Mr. Hayes' authority and relationship to the County and the Committee. The Option B Pool Participants expressed concerns that the Joint Agreement not be inadvertently construed in a manner adverse to the claims they hold under the CSA. In response, specific language has been added to confirm that there are no third-party beneficiaries to the agreement, nor is the agreement intended to adversely affect the interests of third parties, including Option B Pool Participants. The Joint Agreement establishes a priority schedule for disbursement of third-party litigation proceeds. Of note to Pool Participants is the fact that Orange County schools receive a priority in excess of $50 million from the first distributions 20846332 December 27, 1995 Page 8 of litigation proceeds available for Pool Participants. This priority was granted to schools in response to the Committee's interests in re-establishing the financial stability of the school system, and to respond to the interest of the State legislature to bring the schools into compliance with funding requirements necessary to prevent state intervention. The Joint Agreement provides for the establishment of a five-person monitoring committee to ensure that the Plan of Adjustment conforms to the provisions of the Joint Agreement, so that the parties executing the Joint Agreement without the benefit of the information normally available in the Plan of Adjustment and/or Disclosure Statement, will be protected from inadvertent mistake, manipulation or surprise. The Committee is comprised of two representatives of the County, two representatives of the Pool Committee (one of which must be a cities representative), and Mr. Hayes. This committee ceases its function upon the confirmation of the County's Plan of Adjustment. There are a number of other important provisions in the Joint Agreement which apply to the interests of various Pool Participants, and a careful reading of the Agreement is required. On Monday, December 18, the OCIP Committee considered the final draft of the Joint Agreement and approved the agreement with its support for distribution to Pool Participants as soon as possible. It is hoped that each Pool Participant entity will give this matter its earliest and fullest consideration and will act on it as promptly as possible. As with the CSA, the financial and legal representatives of the Committee are available to you to answer your questions in connection with your deliberations. This Joint Agreement constitutes the next major step in the case on behalf of Pool Participants. It has been closely considered by the Committee and its professionals. While it is not a completely attractive approach in that it does not assure payment of the remaining claims of Pool Participants, it does have some benefits which you might want to consider as part of your deliberations, including the following: 1. The County undertakes not to seek any further diversion of Pool Participants' assets or tax revenues in connection with this case. This is of particular interest to Orange County cities and special districts; 20846332 December 27, 1995 Page 9 2. With respect to entities having interests in CAAs, those parties signing the Joint Agreement will have immediate access to their account balances, while those not signing the Joint Agreement may not have immediate access to those balances; 3. With respect to schools, there is a distribution priority from litigation proceeds in excess of $50 million; 4. With respect to all Pool Participants, those signing the Joint Agreement will avoid the possible appointment of a State Trustee,2 and will receive the priority of distribution of litigation proceeds set forth in the Agreement. These considerations are benefits to which Pool Participants would not be automatically entitled under a Plan of Adjustment, or otherwise. Ultimately, each entity needs to be prepared to weigh the prospect of losing recourse status for its allowed claims against the County in return for a different percentage of litigation proceeds. This is a difficult analysis because it is impossible at this point to know what the actual value of Pool Participants' remaining claims are against the County, because we do not know the County's capacity to make payment on those claims. Likewise, it is impossible at this stage of the litigation to be able to value the Merrill Lynch, or recently filed Peat Marwick, litigation. Those litigations could prove to be very valuable. On the other hand, they could be defeated in their entirety by technical defenses which have yet to be surfaced. What can be said is that, as of this date, the County's Second Amended Complaint has survived a motion to dismiss by Merrill Lynch, and the comments of the Judge at the hearing on the motion to dismiss were such that it does not appear that the Complaint, or its principal component parts, are subject to immediate dismissal on technical grounds. No responsive pleadings have yet been filed in the Peat Marwick litigation. There is likely to be other litigations filed by the County against brokers and professionals relating to pre-bankruptcy actions. 2 Under the recovery legislation enacted in October of this year, a State Trustee could, under certain conditions, be appointed by the Governor for the County and for any Pool Participant to facilitate the Plan of Adjustment. 20846332 December 27, 1995 Page 10 The Orange County bankruptcy case is moving into its final stage with the submission and confirmation of a Plan of Adjustment. The County filed its Plan of Adjustment on Thursday, December 21. The bankruptcy court extended the time for the County to file its Disclosure Statement, which is the narrative description of the Plan of Adjustment with related projections and financial material, until January 19, 1996. It is the intent of the County to obtain confirmation of the Plan of Adjustment by May of 1996. If the Joint Agreement is approved by overwhelming numbers of Option A Pool Participants, and the Plan of Adjustment is confirmed incorporating the material elements of the Joint Agreement, the County will likely emerge from this bankruptcy case by the summer of 1996. Thereafter, third party litigation will be prosecuted by the Representative on behalf of the County and Pool Participants. This case continues to be a monumental effort on the part of the OCIP Committee. The members of the Committee have placed the collective interests of the community above their own, and have established a disciplined and successful course and direction for Pool Participants as a united constituency. This Joint Agreement is being presented to you as the next step in the bankruptcy process and it has been approved unanimously by the OCIP Committee. If you have any questions, or would like to have a further presentation by the financial or legal professionals of the Committee, please telephone me as soon as possible. If your municipal entity supports the Joint Agreement, an appropriately executed signature page must be returned to Price Waterhouse LLP, attention Bernar Burke, 575 Anton Boulevard, Suite 1100, Costa Mesa, CA 92626. Thank you for your continued courtesies and support in this case. Very sincerely, \. Patrick--C-. Shea PCS/wpc cc: Official Committee of Pool Participants and Counsel 20846332 .. EXECUTIVE SUMMARY of JOINT AGREEMENT OF THE COUNTY OF ORANGE, THE OFFICIAL INVESTMENT POOL PARTICIPANTS' COMMITTEE, AND EACH OPTION A POOL PARTICIPANT FOR RESOLUTION OF CLAIMS AGAINST THE COUNTY OF ORANGE (THE "JOINT AGREEMENT") THIS EXECUTIVE SUMMARY IS BEING PROVIDED TO YOU FOR YOUR CONVENIENCE ONLY, AND IS NOT INTENDED TO BE, AND SHOULD NOT BE, RELIED UPON BY YOU IN DETERMINING WHETHER TO ENTER INTO THE JOINT AGREEMENT. YOU SHOULD CAREFULLY REVIEW THE JOINT AGREEMENT IN ITS ENTIRETY WITH YOUR COUNSEL AND OTHER PROFESSIONALS. THIS EXECUTIVE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE JOINT AGREEMENT. IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE JOINT AGREEMENT AND THIS EXECUTIVE SUMMARY, THE TERMS OF THE JOINT AGREEMENT SHALL CONTROL. THE JOINT AGREEMENT WILL AFFECT THE RIGHTS OF ALL OPTION A POOL PARTICIPANTS WHO SIGN THE JOINT AGREEMENT AS THOSE RIGHTS CURRENTLY EXIST UNDER THE COMPREHENSIVE SETTLEMENT AGREEMENT RE ORANGE COUNTY INVESTMENT POOLS (THE "CSA"). IN MANY CASES, THAT EFFECT MAY BE ADVERSE. INTRODUCTION In response to the voters' def eat of the Measure R Sales Tax proposal, the County of Orange (the "County") has engaged in the process of developing an alternative recovery plan which relies, in part, upon the diversion of future tax revenues from other local governmental entities within the County. Included among those from which the County sought reappropriation by the California State Legislature was the Orange County Transportation Authority (the "OCTA"). In order to limit the County's access to the assets and revenues of special districts and cities, most of which suffered substantial losses as a result of the collapse of the orange county Investment Pools, the Orange County Investment Pool Parti cipants Committee (the "Pool Committee") has negotiated the terms of the accompanying Joint Agreement. Of particular note to Option A Pool Participants is Paragraph 12 of the Joint Agreement in which the County agrees, G\Z006663F.NAF 122195 -1- except for the recovery legislation that was passed in September of 1995: "not to request of the Legislature, nor otherwise support if requested or approved by any entity other than the County, the diversion of revenue allocated to the undersigned Option A Pool Participant for the purpose of financing the repayment of claims in the County's debt adjustment case or the payment of claims under the County's Plan of Adjustment." This provision is intended to make it politically difficult for the County to seek, and to provide substantial moral suasion against the County seeking, further diversions of revenues from other local governmental entities within the County. However, this provision does not seek to preclude the County from seeking such reappropriations in response to natural disasters or other cir- cumstances beyond the payment of claims against the County in connection with its bankruptcy proceeding. The Joint Agreement may, in some cases, improve the status of the remaining outstanding claims of an Option A Pool Participant which signs the Joint Agreement ( a "Participating Option A Pool Participant"); and, in other cases, it may worsen it. Each Option A Pool Participant should consider carefully the impact of the Joint Agreement upon its rights under the CSA and applicable law and the potential benefits to be derived by such Pool Participant from the provisions of the Joint Agreement. CONSENSUS LEGISLATION In accordance with the Joint Agreement, the California State Legislature passed on September 15, 1995, and Governor Wilson subsequently signed into law, several bills which will, upon becoming effective: 1. Reallocate to the County $38 million of sales tax revenue currently allocated to the OCTA or the Orange County Transit District for a period of 15 years beginning July 1, 1996; 2. Reallocate to the OCTA $23 million of the county's yearly apportionment of Motor Vehicle Fuel Taxes for a 16 year period beginning July 1, 1997; 3. Reallocate to the County $4 million of property taxes per year for a period of 20 years (plus G\Z006663F.NAF 122195 -2- ) increments in such taxes in (a) and (b) below) beginning July 1, 1996 from each of: (a) the County Harbors, Beaches and Parks Fund; (b) the County Flood Control Fund; and (c) the County Development Agency. The effect of this legislation will be to divert $15 million per year for 15 years (a total of $225 million) from the OCTA to the County, along with $12 million per year for 20 years ($240 million in total) from County-controlled agencies to the county to fund the issuance of new municipal debt. The proceeds of the new debt issue will be used to pay off the County's pre- bankruptcy note holders and certain other creditors. Such legislation is to take effect only if a Plan of Adjustment for the County consistent with the Joint Agreement is confirmed in the County's bankruptcy or upon the appointment of a trustee for the County by the Governor as described in the last paragraph of this Executive Summary. Under the recovery legis- lation, all revenues received by the County pursuant to such legislation must be used for the performance of the County's obligations under its Plan of Adjustment. If any of the diver- sions from Flood Control, Harbors, Beaches and Parks, or the Redevelopment Agency are successfully challenged, the County is required to make up the shortfall from the County general account. TERMS OF THE PLAN OF ADJUSTMENT The Joint Agreement requires the County to prepare and file as soon as possible, and by no later than January 1, 1996, a Plan of Adjustment which contains, in substance, the terms and conditions specified in the Joint Agreement. Under the Joint Agreement, participating Option A Pool Participants waive all rights to object to, and agree to accept, any county Plan of Adjustment which contains provisions incorporating the material terms in the Joint Agreement. Importantly, under the Joint Agreement, the County's Plan may provide for payment in full of the allowed claims of all County vendors, employees and short term note debt. It also permits the County to restore up to $15 million in reserve for County Certificates of Participation which have previously been depleted. Under the CSA, Settlement Secured Claims are "allowed general unsecured claims against the County." Repayment Claims G\Z006663F.NAF 122195 -3- are defined under the CSA as "allowed .•• claims" against the County as well, but the holder of a Repayment Claim "shall not be entitled to receive • • . any payment . . . from the County • . . [ other than from the proceeds of the litigation of Pool-Related Claims (as defined in the CSA) against third parties] until after the payment in full of all Senior Claims against the County and the payment in full of all interest on such Senior Claims which accrues or matures after the County Petition Date. • 11 The "Senior Claims" to which Repayment Claims are subordinated under the CSA include the vendor and employee claims and the short term notes which may be paid in full under the County's Plan pursuant to the Joint Agreement, the $275 million in Recovery Bonds issued by the County, the proceeds of which were paid to Option A Pool Participants in June of this year, and Option A Pool Participants' Settlement Secured Claims. Under the CSA, the County may also restore a portion of the losses suffered by county Administered Accounts in advance of making any payment on Repayment Claims other than from the proceeds of the Pool- Related Claim litigation. Under the Joint Agreement, both settlement Secured Claims and Repayment Claims would become non-recourse claims. This means that they would no longer be debts for which the County would be responsible. Rather, holders of Settlement Secured Claims and Repayment Claims could look only to the proceeds of third-party litigation of Pool-Related Claims and to the $50 million litigation fund to be set up under the Joint Agreement to prosecute those claims. A five member Orange County Recovery Committee ( 11 OCRA 11 ) is to be appointed to evaluate the County's Plan of Adjustment for consistency with the Joint Agreement and the CSA. Its members will be Mr. Hayes, two individuals appointed by the County and two individuals appointed by the Pool Committee, one of whom is to be a city representative. The OCRA would be disbanded once the County's Plan of Adjustment is confirmed. POOL-RELATED CLAIMS LITIGATION The County's Plan must also provide for the appointment of a Representative under Section 1123 (b) (3) (B) of the Bankruptcy Code to "enforce, prosecute and collect upon" all of the County's and Option A Pool Participants' Pool-Related Claims against the brokerage houses, banks and professionals which are, at least in part, responsible for the losses in the Orange County Investment Pools. The Representative is required to keep the Pool Committee and its counsel informed concerning the progress of such litiga- G\Z006663F.NAF 122195 -4- tion, including in the manner specified in Exhibit 6 to the CSA. However, the Representative would have "the sole and absolute discretion in all matters concerning the prosecution, collection, settlement and compromise of Pool-Related Claims subject only to such jurisdiction as may be retained by the Bankruptcy Court pursuant to the Plan of Adjustment." Under the Joint Agreement, the Representative also has "sole and absolute discretion" in determining what portions of the net proceeds from the litigation of such claims are to be distributed and when, although the legislation recently passed by the California State Legislature requires that all interest earned on the Litigation Fund be distributed annually. The Representative will initially be Mr. Tom Hayes. DISTRIBUTION OF LITIGATION PROCEEDS Under the CSA net proceeds from Pool-Related Claims litigation are to be distributed approximately 62% (rather than 65% had all Pool Participants elected Option A under the CSA) to the holders of Settlement Secured Claims and approximately 38% to the County until all Settlement Secured Claims are paid in full (a total of $525,457,359). Then, approximately 62% of the net proceeds of such litigation are to be distributed to the holders of Repayment Claims and approximately 38% to the County until the Repayment Claims are paid in full (a total of an addi- tional approximately $798,367,684). Thereafter, the County is entitled to retain all of the net proceeds of such litigation until it has received at least $236.7 million. Under the Joint Agreement, the first $54.7 million in the net proceeds of such litigation would be paid to satisfy Repayment Claims held by the Option A Pool Participants listed on Exhibit 1 to the CSA (the "Schools"). The next $325 million of the net proceeds of such Pool-Related Claim litigation would be paid to the holders of Settlement Secured Claims to repay those claims in full. This means that holders of settlement Secured Claims would fare worse under the Joint Agreement until approximately $144 million in net litigation proceeds have been collected; then they would fare better until the Settlement Secured Claims are paid in full. After all Settlement Secured Claims are paid in full, the next $202. 8 million of net litigation proceeds would be distributed solely to the County, $22 million of which may be used by the county solely to settle the claims of the Option B Pool Participants. Thereafter, the next $713 million in net litigation proceeds would be distributed 61. 59% to the holders of Repayment Claims and approximately 38. 41% to the County. G\Z006663F.NAF 122195 -5- Accordingly, under the Joint Agreement, holders of Repayment Claims, other than the Schools, would be in a worse position than they would be under the CSA until such claims are .paid in full. After $1. 295. 5 billion in net litigation proceeds has been collected, in order to restore a portion of the funds diverted from the OCTA under the recovery legislation described above, the OCTA would receive approximately 43% of the next $525 million in net litigation proceeds and the County would retain the balance. Thereafter, net litigation proceeds would be split between Option A Pool Participants and the County 61.59%/38.41%. Under the Joint Agreement any portion of the $50 million Litigation Fund which is not used in pursuing Pool- Related Claims would also be available for distribution in accordance with the scheme described above. No such fund is established under the CSA. Lastly, the Joint Agreement requires the County to apply the first net litigation proceeds it receives under the scheme described above to repay the claims of Option A Pool Participants against certain enumerated County Administered Accounts which the Pool Committee and the County have identified as containing the funds of some Option A Pool Participants. No such provision exists under the CSA. TREATMENT OF CLAIMS AGAINST COUNTY ADMINISTERED ACCOUNTS Promptly after execution and Bankruptcy Court approval of the Joint Agreement, the County is required to distribute to those Option A Pool Participants that sign the Joint Agreement, to the extent they are lawfully entitled to such amounts under applicable non-bankruptcy law and to the extent of any portion of a claim therefor is not being disputed by the County, all amounts which remain, after allocation of the Orange County Investment Pool losses, and including both pre-and post- petition interest earned on the cash balances therein, in 54 specified County Administered Accounts and such other accounts as the Pool Committee and the County may jointly agree. In return, Participating Option A Pool Participants agree not to object to any other distributions from such accounts to those who are legally entitled to those distributions. Under Paragraph B(i) of the Joint Agreement, the County's Plan of Adjustment must provide that "all claims based upon ... deficiencies Administered Accounts resulting from . in County losses in . held by the as such claims the Orange County Investment Pools .. County will receive the same treatment" held by Option A Pool Participants. G\Z006663F.NAF 122195 -6- However, under the Joint Agreement, the Plan may provide for the payment of such claims to Option A Pool Participants over a period of 20 years without interest. The Joint Agreement calls for all Participating Option A Pool Participants to also waive any post-petition, post-confirmation and post-effective date interest on their claims for recovery of the deficits in the County Administered Accounts. The County also waives its rights to interest on the deficits in all County Administered Accounts and agrees that the $13.4 million County Administered Account deficit claims of the Schools with respect to 19 unapportioned tax accounts maintained by the County shall be paid before the county's own claims. Participating Non-School Option A Pool Participants would agree to a similar time of payment priority for the schools. MISCELLANEOUS CONTRACTUAL PROVISIONS Participating Option A Pool Participants and the Pool Committee agree to suspend and, upon Bankruptcy court approval of the County's Plan of Adjustment, to dismiss with prejudice all appeals they have pending relating to the Bankruptcy Court's Order of June 27, 1995 approving the County's compromise with its short term note holders regarding the validity of their note debt and approving the roll-over of that debt to June 30, 1996. It is a condition to the effectiveness of the Joint Agreement, which the County has the sole ability to waive, that the Orange County Cities Subcommittee separately agree to do so as well. The Joint Agreement also confirms the discontinuation of the County's Arterial Highway Financing Program (the "AHFP"). Under that program the County provided funding of over $3 million per year, administered by the OCTA, for distribution to Orange county cities for the repair and improvement of roads and high- ways throughout the County. The parties to the Joint Agreement specifically agree that the AHFP will not be funded in the future by either the County or the OCTA. There are also provisions in the Joint Agreement for the accounts of the Schools Subcommittee and the Orange County Cities Subcommittee in the Professional Fee Reserve established under the CSA to be replenished with a portion the Withheld Proceeds ($2 million and $1.2 million, respectively) which would otherwise be distributed under the CSA to Schools and Option A orange county Cities. The Joint Agreement would become effective only if: a. signed by all Option A Pool Participants (a condition which the County can waive); and G\Z006663F.NAF 122195 -7- b. the Joint Agreement is approved by the Bankruptcy Court. TREATMENT OF POOL PARTICIPANTS WHO DO NOT SIGN JOINT AGREEMENT Paragraph 20 of the Joint Agreement provides that there are to be no third party beneficiaries of the Joint Agreement and that the Joint Agreement is not intended to waive any claims against or adversely affect the rights of any person or entity which is not a party to the agreement. Other than that, the Joint Agreement is silent as to the effect of the agreement upon Option A Pool Participants which choose not to sign it or upon Option B Pool Participants (which are not being asked to sign the agreement). This means that Option A Pool Participants holding Settlement Secured Claims would not benefit from the County's agreement to permit net proceeds from Pool-Related Claims litigation to be applied first to such claims, nor would such Pool Participants' Settlement Secured or Repayment Claims be voluntarily made non-recourse or subordinated other than as provided now in the CSA. However, the bills passed by the state Legislature include a mechanism for the appointment of a trustee by the Governor if the County fails to file a Plan of Adjustment con- sistent with the Joint Agreement by January 1, 1996 or if the Governor determines that as of May 1, 1996 or at any time there- after the County, the Committee of Unsecured Creditors and the Pool Committee "have failed to reach substantial agreement on the terms of a plan of adjustment and the timely confirmation of the plan appears unlikely." The trustee would have not only all of the powers of the Board of Supervisors, but also, "solely to the extent necessary to prevent denial of confirmation of the plan of adjustment . . . " the following powers, among others, of Non- County Pool Participants which are governmental entities: a. to vote to accept or reject the Plan of Adjustment; and b. to subordinate or otherwise restructure Pool Participants' claims against the County which are based upon investment losses in the Pools. In other words, if a trustee is appointed for the County, that trustee could, but would not be required to, agree to the treat- ment of a Pool Participant's claims against the County in the manner specified in the Joint Agreement or in a manner which is better or worse than that specified in the Joint Agreement. The only constraint upon the trustee in exercising such powers on behalf of Pool Participants is that he "not act in a manner inconsistent with the fair treatment of any [such Pool Participants)." G\Z006663F.NAF 122195 -8- (12) Upcoming Meetings Fonnat •Written Report •Overheads •Slides •Flip Charts (12): Summary Anticipated Time __ _ FIN ANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR JANUARY 10, 1996 Consideration of upcoming meetings and items to be discussed at those meetings. 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, February 14, 1996. . 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. Review of Legal Service Options and Ad Hoc Committee Report Review Responses to F.I.S. RFP Process Revised Employee Handbook Quarterly Training Program Update Hardware Maintenance Contract for Personal Computers Help Desk Services Contract for Personal Computers Review Commercial Bank Selection Quarterly Communication Program Update Quarterly Investment Program Report by PIMCO Fiscal Policy Assumptions for 1996-97 Budget Quarterly JO and CORF Budget Review for 12/31/95 Initiate Long-term Financial Plan Review Staff Recommendation Information only item. J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\COVERS.96\CALEN1 .96