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HomeMy WebLinkAbout1996-02-14FtLEO In the 01fice of the Secretary County Sanitation Dtrlr~(•) No(s) ~. -?1 ~,s; "7/ i )/1 J.3 ~It/ fEB 2 81996 DRAFT By ~!?--'-A__,___. ___ _. MINUTES OF FINANCE, County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday, February 14, 1996, 5:30 P.M. A meeting of lhe 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 February 14, 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: John C. Cox, Jr., Joint Chair George Brown, Chair Jan Debay James Flora John M. Gullixson Wally Lynn Thomas Saltarelli Roger R. Stanton, Vice Chair William G. Steiner Peer Swan Committee Directors Absent: Burnie Dunlap Other Directors Present: 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 Steve Hovey, Director of Information Technology Bob Ooten, Director of Operations Gary Streed, Director of Finance Nancy Wheatley, Director of Technical Services Ed Hodges, Director of Maintenance Michael D. White, Controller Steve Kozak, Financial Manager Linda Eisman, Training Manager Greg Mathews, Principal Administrative Analyst Terri Josway, Safety & Emergency Response Mgr. Mike Peterman, Human Resources Supervisor Isiah Mitchell, Training Supervisor Cymantha Atkinson, Financial Analyst Lenora Crane, Committee Secretary Others Present: Tom Woodruff, General Counsel Ruthann Moomy, Callan Associates, Inc. Rita Seymour, PIMCO Gordon Hally, PIMCO (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. Minutes of Finance, Adr ·,. and Human Resources Committ, -I Page2 -. . : ~-·f· t•-•: .... ,-\I f t!.::X ,• •. 1 ':'if February 14, 1996 -. l : r:i.• 1 ! tl...;1: ,! .,. ; .. ('~··i:_,.' . . ~~;"a • (3) PUBLIC COMMENTS • l 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 The Committee Chair had no report. (b) Report of the General Manager The General Manager had no report. (c) Report of Assistant General Manager -Operations The Assistant General Manager -Operations had no report. Report of Assistant General Manager -Administration Judy Wilson, Assistant General Manager, Administration, announced that a manila envelope was placed before each Director containing the Districts' new Employee Handbook, a red book entitled "Human Resources Policies and Procedures, u and a copy of the Resolution adopted by the Boards. Every Districts' employee was sent this information, and all of our managers and supervisors will receive training on the policies and procedures. This will ensure that everyone is in compliance and has a good understanding of what is expected. (d) Report of the Director of Finance/Treasurer Finance DirectorITreasurer Gary Streed referred to his report contained in the agenda package which provided a history of the Districts' refunding on its variable rate debt. With the successful substitution of the Liquidity Providers on the 1992 Refunding COPs, Moody's has restored the Districts' Aaa rating. 1he average daily rate paid in the first six months of FY 1995-96 has been approximately 3. 76%. As of today, that rate has dropped to 3.05%, with 3.25% on the refunding. Mr. Streed advised that the Treasurer's Report will be given later in the evening and will appear as a New Business numbered item, in order to facilitate carrying it forward to the Joint Boards. Minutes of Finance, Adro) and Human Resources Committe~ Page 3 February 14, 1996 (e) (f) In conclusion, Mr. Streed indicated that expanded reports will be given by - Callan Associates, the Districts' third-party Investment Advisor, and Pacific Investment Management Company, the Districts' External Money Manager, regarding the Districts' performance over the first six months. Report of the Director of Human Resources The Director of Human Resources had no report. 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 January 10, 1996, meeting of the Finance, Administration and Human Resources Committee. (6) OLD BUSINESS FAHR96-04 Consideration of motion to approve Resolution No. 96-, extending benefit coverage for regular employees working a reduced work week. This item was brought back to Committee from the January 10, 1996 meeting with a request for further information. In this supplemental report, Mr. Hasenstab reported on the three areas raised by the Committee at the last meeting, specifically, retirement benefits, prevalence of part-time employment in Orange County and other industries, and job sharing. Mr. Hasenstab reported that part- time employees working a minimum of 20 hours are currently covered under the Social Security Act at 7.65% of their hourly rate. Social Security vs. the Districts' retirement system would mean a cost avoidance of $6,400. Public agencies surveyed by the League of California Cities indicated 38% of them provide part- time benefits to their employees, with approximately 90% of other industries providing these benefits. Time-off benefits are prorated based upon hours worked. Job sharing has its pros and cons. To avoid problems, many of these employees sign agreements regarding their benefits so there will be no issue. The Districts' current Employee Benefit Program is specifically limited to full-time employees by Resolution 95-105. 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 Minutes of Finance, Ad~ ·1;1. and Human Resources Committr Page 4 · February 14, 1996 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. Staff recommended providing part-time employees with entitlement to employee benefits prorated on the basis of 75 percent, if the employee works on average 30 to 40 hours per week, and 50 percent, if the employee works 20 to 30 hours per week. After discussion, it was moved, seconded and duly carried, with two abstentions, two nays, and four ayes, to recommend amending 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, to the Joint Boards of Directors for further consideration. 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 this item had been held over from the FAHR Committee's January 10, 1996 meeting pending receipt of the County's Financial Disclosure Statement. That statement has been released and the Joint Agreement, the Disclosure Statement and Plan of Adjustment are coincident with each other. Mr. Anderson advised that the Districts are about 6% of the Pool claims, with about $1.3 billion in total claims. By approving the Agreement, it allows the County to improve its position, it improves our place in line in receiving litigation proceeds from Merrill Lynch and others, and gives the schools super priority in that litigation recovery. On an immediate basis, withheld proceeds of $6.2 million held by the County under the existing Comprehensive Agreement would be released to the Districts, and the undisputed portion of the County Administered accounts amounting to $1.3 million will be released immediately. 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 all Option A participants (the 190 schools, cities, special districts and other public entities that signed the Option A v13rsion of the Comprehensive Settlement Agreement that was approved in May 1995) for their individual consideration and approval. Minutes of Finance, Adrr) and Human Resources Committe1 Page 5 · February 14, 1996 After discussion on this item the Committee moved, seconded and duly carried - with one nay vote, to recommend that the Joint Boards approve the "Joint Agreement Proposed by the County of Orange for the Resolution of Pool-Related Claims of Option A Pool Participants, and Other Related Matters." (7) 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.) FAHR96-10 Consideration of motion to renew Boiler & Machinery Insurance for the period March 1. 1996 to March 1. 1997, with American Manufacturers Mutual Insurance (Kemper Insurance Group), in an amount not to exceed $79,698. Steve Kozak, Financial Manager, reported that the Districts' Boiler & Machinery insurance coverage is due for renewal on March 1, 1996. Robert F. Driver Associates, the Districts' Broker-of-Record, recommends the Districts renew its Boiler and Machinery Insurance with Kemper Insurance for a renewal period effective March 1, 1996 to March 1, 1996, in an amount not to exceed $79,698. The renewal premium adjustment will allow for increases in Districts' property values and is only $2,307 higher than last year's. Driver's recommendation is based on their recent survey which indicates there is a limited number of available underwriters still providing Boiler and Machinery coverage and, those that still do provide this coverage are imposing high deductibles and premiums for large underwritings such as the Districts. It was moved, seconded and duly carried to recommend renewal of Boiler & Machinery Insurance for the period March 1, 1996 to March 1, 1997, with American Manufacturers Mutual Insurance (Kemper Insurance Group), in an amount not to exceed $79,698. FAHR96-11 Consideration of motion to receive and file PIMCO's First Quarterly Performance Report, Investment Management Program. Steve Kozak introduced Rita Seymour and Gordon Hally of Pacific Investment Management Company (PIMCO), the Districts' external money manager, who gave an overview of their company's background, services, processes, procedures, reporting techniques and strategies. Also in attendance was Ruthann Moomy, of Callan Associates, Inc., the Districts' third-party Investment Advisor. Ms. Moomy described Callan's responsibilities to the Districts' and reviewed the Districts' First Quarterly Performance Report. It was moved, seconded and duly carried to receive and file this report. Minutes of Finance, Adr --,-and Human Resources Committr , Page6 February 14, 1996 FAHR96-12 Consideration of motion to receive and file staff summary report on training. Judy Wilson introduced Linda Eisman who was hired in November 1995, to fill the position of Training Manager. Linda Eisman summarized the Districts' Training Program for the Committee using a slide presentation. Terri Josway, the Districts' Safety & Emergency Response Manager, demonstrated the use of a multi-media computer program on hazard awareness as a training tool. The program allows for testing with a pre-test and post-test feature. The cost to operate this equipment is expected to be as little as $1 per employee. The Training Program is aimed at addressing past problems identified in the Ernst & Young Study completed in 1995, along with recommendations made in other past studies. A centralized record keeping system has begun, and a Training Advisory Committee with representation across departments was formed in September 1995. Ms. Eisman introduced Isiah Mitchell, who was recently hired to fill the newly established Training Supervisor position. This position supports the Training Manager position. The Training Division will be coordinating and centralizing training functions, identifying cost-effective methods and providing data base administration and management of Districts-wide training. It was moved, seconded and duly carried to receive and file this item. FAHR96-13 Consideration of motion to waive Districts' policy in order to retain former employee on a work-order basis. The Districts' Human Resources Policies and Procedures states that any former employee who retires from the agency and forms a business in which he or she is sole proprietor, may not be retained to provide service directly to the Districts for a period of one year subsequent to their last day of employment. Ms. Tuchman requested a waiver of this policy in order to retain Corinne Berenson on a work- order basis. Ms. Berenson, a long-time employee, has been working part-time since April 1995. Her in-depth knowledge of the agency makes her a valuable asset. Providing support on an as-needed basis represents a significant savings to the Districts over part-time emp!oyment. It was moved, seconded and duly carried to waive the Districts' policy in order to retain Corrine Berenson on a work-order basis. Minutes of Finance, Ad~ and Human Resources Committe) Page 7 February 14, 1996 FAHR96-14 Consideration of motion to receive and file Treasurer's Report for the month of December 1995. Gary Streed, Districts' Treasurer, reviewed the quarter ended December 31, 1995 Performance Monitoring Reports. Total investments amount to $367,805,049. All Investment Policy requirements are being complied with and performance to date exceeds the index rates. It was moved, seconded and duly carried to approve and forward this report to the Joint Boards. FAHR96-15 Consideration of motion to review, approve and file the Mid- Vear Report prepared by staff for the period ending December 31, 1996. Mike White, Controller, introduced his report enclosed in the agenda packet. The bound book is the Districts' first comprehensive Mid-Year Report for the period ending December 31, 1995. The report consolidates both the financial and operational accomplishments of the Districts at the midpoint of the 1995-96 fiscal year. Due to time constraints, it was moved, seconded and duly carried to table this report until the March 13, 1996 meeting. FAHR96-16 Consideration of motion to approve proposed update to the Districts' Fiscal Policy Statements. Mike White explained that the Fiscal Policy Statements are used to formally define the goals for the financial operations of the Districts and provide the Directors with tools for financial decision-making. The Fiscal Policy was used as a guide in the 1995-96 budget, which also included the status of the Districts' compliance with each of those statements. After reviewing the adopted Fiscal Policy statements, staff is proposing five additional policy statements to ensure the Policy is current and relevant to today's operations. Mr. White reviewed the additional Fiscal Policy Statements. After discussion on this item, it was moved, seconded and duly carried to adopt the proposed update to the Districts' Fiscal Policy Statements with a change to the statement regarding training opportunities to read, "To provide training opportunities for available jobs within the organization, to the extent possible, for those employees ... " Minutes of Finance, Ad· il. and Human Resources Committ' ' Page 8 February 14, 1996 (8) FAHR96-17 Consideration of motion to review and approve 1996-97 Budget Assumptions for use in preparation of Districts' 1996- 97 Budget. Mike White advised that certain assumptions are necessary as a foundation for developing the Districts' budget. The assumptions guide the Board of Directors and Districts' staff in determining the level of wastewater treatment services that will be provided to the community and how these services will be funded. After review and discussion of the 1996-97 Budget Assumptions, it was moved, seconded and duly carried to approve the 1996-97 Budget Assumptions and their use in the preparation of the 1996-97 Budget, with a change to the fourth Budget Assumption to read, " ... earnings on the investment of the Districts' idle operating cash and reserves will be budgeted at six percent." FAHR96-18 Consideration of motion to waive Districts' policy in order to retain former employee on a work-order basis. The Districts' Human Resources Policies and Procedures states that any former employee who retires from the agency and forms a business in which he or she is sole proprietor, may not be retained to provide service directly to the Districts for a period of one year subsequent to their last day of employment. Mr. Hovey requested a waiver of this policy in order to retain Steve Fanizza on a work-order basis. Mr. Fanizza, a Districts' employee of five years standing, recently resigned his position as Programmer Analyst to further his career as an independent software consultant. Mr. Hovey requested Mr. Fanizza be retained on a work-order basis in order to minimize the impact of Mr. Fanizza's resignation and to provide uninterrupted support to Technical Services only until a permanent replacement is recruited. It was moved, seconded and duly carried to waive the Districts' policy in order to retain Steve Fanizza on a work-order basis. CLOSED SESSION There was no closed session required. (9) OTHER BUSINESS, IF ANY None. Minutes of Finance, Adw;..1 and Human Resources Committe1 Page 9 February 14, 1996 (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, March 13, 1996. (14) ADJOURNMENT The meeting was adjourned at 7:15 p.m. ~(!)µv Finance, Administration and Human Resources Committee Secretary J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\1996.MIN\MFAHR2.96 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 February 14, 1996, was duly posted for public inspection in the main lobby of the Districts' offices on February 8, 1996. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of February, 1996. Penny Kyle, Secretary of Sanitation Districts Nos. County, California Boards of Directors of County , 7, 11, 13 & 14 of Orange Posted: -f~-ZS , 1996, ~ ;()-u A.M@) By: ~ ~ \../ 7T ~t"""u..;;.re __ ___,_.:,.._-"'-----'----='------ J:\WPDOC\FIN\CRANE\FPC.MTGIFAHR.96\CERT.POS\CERTP02.96 February 8, 1996 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE COMPLETE PACKAGES 45 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 Greg Mathews 1 Gary Hasenstab 1 Patty Steeves 1 Mike Peterman 1 Linda Eisman 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 Cymantha Atkinson 1 Mike White 1 Brad Cagel 1 Michelle Tuchman 1 Pat McNelly 1 Dan Tunnicliff (Bldg. 6) 1 Extras 5 Notice and Agenda Only: (13) Posting 1 Gail Cain 1 Angela Holden 1 Clarice Marcin 1 Frankie Woodside 1 Patty Steeves 1 Carolyn Snyder 1 Fawn Elizondo 1 Guard Shack (Mark Esquer) 1 Extras 3 phone: (714) 962.-2411 malljng -addrass: P,EI Bex 8127 Fountain Valley, CA 92728-8127 street -address: 10844 Ellrs AVenue Fountain Valley, CA 8270B-7018 Member Agencies • Cities Anaheim Brea Buena Park Cypress Founr,sin Ve/fey Fu/lerr;on H11m:in9con Beech Irvine La Hebre Le Pe/ma Las AlamltOI! Newport Beech Orange Placentia 5an/;a Ane Seal Beach Stanton Tustin VII/a Park Ybrb.a Linde County of Orange Sanitary Olstriots Costa Mase Gerdan Grove Midway City Water Districts Irvine Ranch ~ ~ COUNTY SANITATION DISTRICTS OF •RANGE COUNTY, CALIFORNIA February 8, 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, FEBRUARY 14, 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 February 8, 1996 FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING DATES Finance, Administration and Human Resources Committee Meetings Joint Board Meetings February February 14, 1996 February 28, 1996 March March 13, 1996 March 27, 1996 April April 10, 1996 April 24, 1996 May May 8, 1996 May 22, 1996 June June 12, 1996 June 26, 1996 July July 10, 1996 July 24, 1996 August None Scheduled August 28, 1996 September September 11, 1996 September 25, 1996 October October 9, 1996 October 23, 1996 November None Scheduled November 20, 1996 December None Scheduled December 18, 1996 January January 8, 1997 January 22, 1997 CSDOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 Tel. (714) 962-2411 0 FAX (714) 962-3954 Roll Distribution After Meeting Penny Kyle __ Lenora Crane ROLL CALL SHEET FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE: February 14.1996 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 •••••••.•••••••••.•••••••••.•••••• MIKE HERRERA •••••••••.••••••••••••••.••..•••.••••..•.••• LINDA EISMAN ••••••.•..••••••••••••.•...••..•.••••.••••••• GREG MATHEWS ••••••.•••.•••••••••.•.........•••••••••••• OTHERS TOM WOODRUFF, GEN'L. COUNSEL •••••••••••••••••••••••••• RUTHANN MOOMY, CALLAN ASSOCIATES, INC •...••.••••••..•.• RITA SEYMOUR, PACIFIC INVESTMENT MANAGEMENT CO. (PIMCO) GORDON HALLY, PACIFIC INVESTMENT MANAGEMENT CO. (PIMCO) ROLL2.96 TIME: 5:30 P.M. ADJOURN ___ _ ABSENT PRESENT February 14, 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, FEBRUARY 14. 1996 -5:30 P.M. . ' ' : . . . . . . .. . . . : I 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 I 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). February 14, 1996 (4) The Committee Chairman, General Manager, Assistant General Manager(s), Director of FinancefTreasurer, 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) Report of Director of FinancefTreasurer (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 January 10, 1996. (6) Old Business. FAHR96-04 Consideration of Resolution No._, extending benefit coverage to regular employees working a reduced work week. (Gary Hasenstab) FAHR96-09 Consideration of motion to receive and file staff report dated February 5, 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) (7) New Business. FAHR96-10 Consideration of motion approving renewal of Boiler & Machinery Insurance for a one-year period effective March 1, 1996 to March 1, 19971 with American Manufacturers Mutual Insurance (Kemper Insurance Group), in an amount not to exceed $79,698. (Steve Kozak) -2- \ .. February 14, 1996 New. Business (Cont'd.) FAHR96-11 Consideration of motion to receive and file PIMCO's First Quarterly Performance Report, Investment Management Program. (Steve Kozak) FAHR96-12 Consideration of motion to receive and file staff summary report on training. (Linda Eisman) FAHR96-13 Consideration of motion to waive Districts' policy in order to retain former employee on a work-order basis. (Michelle Tuchman) FAHR96-14 Consideration of motion to receive and file Treasurer's Report for the month of December 1995. (Gary Streed) FAHR96-15 Consideration of motion to review, approve and file the Mid-Year. Report prepared by staff for the period ending December 31, 1995. (Mike White) FAHR96-16 Consideration of motion to approve proposed update to the Districts' Fiscal Policy Statements. (Mike White) FAHR96-17 Consideration of motion to review and approve 1996-97 Budget Assumptions for use in preparation of Districts' 1996-97 Budget. (Mike White) FAHR96-18 Consideration of motion to waive Districts' policy in order to retain former employee on a work-order basis. (Mike Herrera) (8) Closed Session . .................... , .............................................................. r··•······ ... · ... · ... ---·-··••-··--·········-------····•--····•··•···•••• , ............................ •••••••••••••• ................. .. Closed Session: During the course of conducting the business set forth on this agenda as a regular meeting of the Committee, the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. ........... •• '.-............................................................... 1 ••••••• • ................................................ , ......................... • .................... , ................................................................................. . -3- February 14, 1996 (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 . • • • ...... --.1. ----........... , ... --......... • ............................ -•.••••• ••·•. •--. •·• ............................. -.. ... •• • • • • • •• • .. .... ... .... .... •• • • ..... .. --........... ··••-•-·. ----............... --• Notice to Committee Members: If you have any questions regarding the Agenda, or wish to place items on the Finance, Administration and Human Resources Agenda, Committee members should contact the Committee Chair or Secretary ten days in advance of the Committee meeting. Committee Chair: George Brown (310) 431-2185 Secretary: Lenora Crane (714) 962-2411 , Ext. 2501 i (714) 962-3954 (FAX) . .................................................................................................................................................................. ,.. ··-. .. .......... ,.. ..................................................................... ,, .......... , J:IWPDOC\FINICRANEIFPC.MTGIFAHR.96\AGENDA.96\AGENDA2.96 -4- (4)(d) Director of Finance Report ) Format D Written Report •Overheads •Slides D Flip Charts Department Head Sign Gary Streed Anticipated Time 5 min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 1996 {4)(d): Director of Finance Report Summary 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, as they did again this year. 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:IWPDOC\FINICRANE\FPC.MTGIFAHR.96\COVERS.96\DOF2.96 95-uer-1£ 95-uer-i,z: 95-uer-H 96-uer-o~ I-0:: 95-uer-£0 0 a.. C. 'ss-~aa-LZ ! w i:: 0:: ., (!) 0 0 >-en ss-~a-oz: + 0:: 0 I-ss-~•-£( en C. ! I (!) < w ss-~aa-so + I-~ S6-AON-6Z: i:: a.. .. E!' 0 0 :; a: 0 SS-AON-Z:Z: -, 0 + 0 0 SS-AON-S~ en :;; .,, .,, 0 ~ ., SS-AON-80 i:: 'jij Cl. t SS-AON-~0 co ~ ss-i:,o-sz: co 0 co O> O> ..- ss-i:,0-01 --co 0 --N co 0 O> Q) ,-: (.J ss-i.::io-~~ C: en Cll :r: C: u: w f->, ~ .0 ss-i.::io-vo 0 0 ~ 0 0 0 0 -0 0 0 0 0 ~ 0 S2 Q) 10 .,; ., N d .... > Cll w a. (%)31\/~ I-~ Q) c§ 0 .... D.. (5) Director of Finance Report ... FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 1996 ( 5): Consideration of motion to approve the draft Finance, Administration and Human Resources Committee Meeting Minutes of January 10, 1996 Summary Attached is a draft of the Finance, Administration and Human Resources Committee meeting Minutes of January 10, 1996, for approval by the Committee. Staff Recommendation It is recommended that the minutes of the January 10, 1996, Finance, Administration and Human Resources Committee meeting be approved. These minutes were submitted to the Joint Boards at their January 24, 1996 meeting, and no further action is required. J:IWPDOC\FINICRANEIFPC.MTGIFAHF<.96\1996.MINICVRMIN2.96 .. County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728.a127 Telephone: (714) 962-2411 DRAFT 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, Ar! ·n. and Human Resources Commit• '1 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 FINANCE/TREASURER. 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, Adrr"') and Human Resources Committr') Page 3 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 (e) (f) (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. Report of the Director of Human Resources The Director of Human Resources had no report. 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 ·n. and Human Resources Committ 'i Page4 January 10, 1996 (6) OLD BUSINESS 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. (7) 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 Committe-1 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 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 ArneriData (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, Ar ·n. and Human Resources Committ \ Page6 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 to 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, Adr' ..... 1-and Human Resources Committ(1 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, Ar' ·n. and Human Resources Commit' ' 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 staff's 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, Adr-_.._,,_ and Human Resources Committr",, 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.MIN\MFAHR1 .96 Format • Written Report • Overheads Originator // JI} Department Head Sign Off~ _ Anticipated Time t{"' • Slides • Flip Charts FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 1996 FAHR96-04: Consideration of Resolution No. __ _, Extending 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. Budget Considerations The Districts currently pays 7.65% of the part-time employees' Social Security Tax. The annual incremental cost of prorating additional benefits for a part-time position is dependent upon the weekly hours worked. Based on the existing thirteen part-time staff, the following table portrays the estimated additional expense associated with extending the Employee Benefit Program. Depending on the hours worked the incremental costs to the Districts is between $35,000 and $52,000 annually. 30-40 Hour Work 20-30 Hour Work % Total Benefits Currently Paid by Week Week Districts? Social Security $21,700 $14,600 7.65% Yes Tax Additional Benefit $52,000 $35,000 18.35% No Program Total Benefits $73,700 $49,600 26.00% No Net AdtJitional ' $52·!'000-$35;.ooo --- Expense to Districts Table-Benefit Expenses for Existing Thirteen Part-Time Personnel 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. g:\wp\hr\steeves\fahr\ptben96.cov ,_ January 29, 1996 FAHR96-04: SUPPLEMENTAL STAFF REPORT Consideration Of Resolution No. ___ ,, Extending Benefit Coverage For Regular Employees Working A Reduced Work Week At the January 10, 1996, meeting of the Finance, Administration and Human Resource Committee, certain issues were raised and questions asked with regard to the staff report proposing to extend benefit coverage to regular employees who may work a reduced work week. Those issues include: 1. How the Orange County Retirement System relates to part-time employees. 2. How prevalent the use of part-time employees is in Orange County and elsewhere. 3. Potential problems associated with Job Sharing programs. DISCUSSION Retirement costs. The Districts currently employ thirteen individuals on a part-time basis. After July 1, 1991, all state and local government employees not covered by a retirement plan of their employer are covered by Social Security and Medicare. Since our part-time employees did not participate in OCERS at that time, they were required to pay the Social Security tax of 7.65 percent. The Districts is required to pay the same amount. As stipulated by law, the Districts must pay retirement or pension plan contributions for part-time personnel. Currently we pay 7.65% Social Security tax for part-time employees. This retirement "benefit" is currently less than the 9.89% rate paid by the Districts to OCERS for each full-time position. Thus, there is no additional cost attributed to retirement contributions for part-time employees. Indeed, as a result of the different retirement systems, there is a $6,400 annual cost avoidance (based on the existing staff of thirteen part-time positions). As the OCERS contribution fluctuates annually, this savings will vary in future years. CSDOC e P,O, Box 8127 e Fountain Valley, CA 92728-8127 • (714) !"<;2-2411 FAHR96-04 Page 2 January 29, 1996 Part-time employment survey. In a survey of 34 agencies in Orange County, thirteen (38 percent) were found to offer benefits to part-time workers (see Attachment 1 ). A Hewitt Associates survey of 505 private sector employers found that nearly 75 percent offered medical benefits, sick leave, vacation and holidays on a prorata basis to employees working 30 hours or more per week. The primary reason cited for offering part-time employment was because such work is "necessary to meet business needs". Other reasons given include: a means to adjust for changing workloads; and a tool to retain valuable employees. Job Sharing. Job sharing is a form of regular part-time employment in which two employees voluntarily share the duties and responsibilities of a single full-time position. Job sharing can reduce overtime costs, improve attendance levels, enable employees to fulfill family obligations more easily and encourage the retention of experienced support staff employees. Job sharers can frequently be used to fill in for absent workers, avoiding the additional cost of temporary help. As with any part-time position, job sharing holds the potential for misunderstanding if the individuals involved are not clear on the particular circumstances of their employment relationship. For that reason, we currently require part-time employees to enter into a Part-Time Employment Agreement (see Attachment 2) specifying their contractual relationship with the Districts. This agreement would be modified to include a prorated benefit schedule, and would be entered into by all part-time employees. The Operations Department is currently evaluating the potential for overtime cost reductions that might be achieved through a Plant Operator Apprenticeship Program. Participants in the program as envisioned would work part-time and receive training while pursuing a formal course of study at an accredited school. Once sufficiently trained, these individuals could augment full-time staff levels at approximately half the hourly rate of a Plant Operator. These positions would also allow present staff a greater flexibility to participate in cross training programs without necessarily incurring overtime costs. Individuals graduating from the Apprenticeship Program would be required to compete for full-time positions only when such positions became available. The findings of this evaluation will be reported in detail at a later date. GH:ps g:\wp\hr\hr\steeves\fahr\ptben.96 . Attachment 1 Survey of Orange County Cities/Agencies with Benefits for Part-Time Workers January 18, 1996 City/Agency Anaheim Brea Buena Park Costa Mesa County Cypress Dana Point Fountain Valley Fullerton Garden Grove Huntington Beach Irvine La Habra La Palma Laguna Beach Laguna Hills Laguna Niguel Lake Forest Los Alamitos Mission Viejo Newport Beach O.C. Fire Orange Placentia S.J. Capistrano San Clemente Santa Ana Seal Beach Stanton OCTA Tustin Villa Park Westminister Yorba Linda Benefits for PT Workers No Yes Yes No (only minimal leave benefits) Yes Yes Yes (no medical) No Yes No Yes No No No No No No No No Yes No ( only PERS contrb) Yes Yes No No (Except 3 special cases) Yes (no medical) No No No (only leave benefits) Yes No (only deferred comp) No No Yes (no medical) ' Attachment 2 PART-TIME EMPLOYMENT AGREEMENT This Agreement of Part-time Employment in the classification of Districts is entered into between the County Sanitation of Orange County, California (hereinafter "Districts"), -, (hereinafter "employee") to be ---,----------------and effective on understands hours. :---::----:------=---·Employee recognizes and that their regular work week may be less than 40 Employee's Duties. The employee will perform the duties and responsibilities as are set forth on the Class Specification for the job classification referenced above. Employee's performance of these duties shall at all times be accomplished in a manner satisfactory to Districts' management. Compensation. Employee is entitled to compensation for services rendered under this agreement at the hourly rate established by the Districts' Boards for the above referenced job classification. Benefits. Employee is not entitled to receive benefits of employment provided to regular, full-time Districts employees, including, but not limited to, health coverage, life and disability insurance, paid leaves and retirement plan. Employee will be covered under benefits required by law, such as Workers' Compensation, and will contribute required contributions to the Federal Insurance Contributions Act. Termination of Employment. This Agreement may be terminated by either Districts or employee at any time without cause by providing two weeks written notice. This Agreement may be terminated by the Districts for cause at any time in the event the employee fails to perform their duties and responsibilities in a manner satisfactory to Districts' Management. In Witness Whereof, the parties hereto have executed this Agreement on the day and year written below. 11 DISTRICTS 11 "EMPLOYEE" Name Date Name GEH 1/95 Date Format • Written Report • Overheads D Slides D Flip Charts Originator #(. Blake P. Anderson Department Head Sign Off __ _ • 41 Anticipated Time 15 Minutes _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-09: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to receive and file Staff Report dated February 5, 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. On January 10, The Joint Agreement was held over for consideration by the FAHR Committee to February 14 to allow time to receive the County disclosure statement filed January 19 in federal Bankruptcy Court. 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 Executive Committee. J:IWPDOC\GM\BANOERSO\FAHR196.098 February 5, 1996 FAHR96-09: STAFF REPORT Consideration of motion to receive and file Staff Report dated February 5, 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 ~eptember 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 CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Staff Report Page2 February 5, 1996 pleading was sufficient and that the County could proceed with the suit against M~rrill Lynch. Interest in amending the Joint Agreement was renewed by both the County and 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 pr~ceeds 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 Staff Report Page 3 February 5, 1996 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. 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. The last document for completing the workout of the bankruptcy is the County's Plan of Adjustment which was filed in December. The associated Disclosure Statement was filed January 19, 1996. It is, in essence, the "business plan" of the Plan of Adjustment and provides the specific details on how the County will meet its obligations under the Plan of Adjustment. The Disclosure Statement is approximately 350 pages long. It classifies all claims against the County and discloses how each will be treated. It also describes and assigns the assets and revenues the County intends to use to pay the claims. The Plan of Adjustment, Disclosure Statement and Joint Agreement are consistent with one another with respect to the treatment of the Sanitation Districts. All three propose that our position for receiving proceeds from the litigation against Merrill Lynch and others is improved in exchange for our agreeing to take no further recourse against the County for the secured and non-secured claims fully-allowed under the Comprehensive Settlement Agreement (CSA). The Joint Boards approved it April of last year and it was approved by federal Bankruptcy Court Judge Ryan in May. These claims amount to 20% or approximately $93 million of our original investments in the OCIP. Litigation against Merrill Lynch and others is, of course, the issue of most interest to all of us. The proceeds from this litigation is the largest and (arguably) the most likely Staff Report Page4 February 5, 1996 source of additional funds for repaying the losses suffered by the cities, schools and special districts that had invested in the OCIP. Pat Shea provided a January 22 update on the bankruptcy (attached). On February 16, Judge Ryan will re-hear the County's motion to simplify the case against Merrill Lynch by bifurcating the causes of action into two portions. He will also hear the County's motion to strike Merrill Lynch's estoppel defense which asserts that since the County knew full well that its investment practices were illegal, then the County can't turn to Merrill Lynch. The County, on the other hand, under the theory of ultra vires, claims that because Merrill Lynch knew or should have known that it was supporting illegal investment practices as the vendor, it must return all of the original investments back to the citizens of Orange County. The citizens are the ones who are ultimately protected from the illegal activities of the vendor, irrespective of the actions of the County Treasurer. February 16 may well be a defining moment for the ease and timeliness of resolving the County's case against Merrill Lynch. If Judge Ryan agrees to the County's motion to strike Merrill Lynch's estoppel defense and if he agrees to the County's motion to simplify the case by bifurcating so that only ultra vires is tried first, then the case moves quickly without extensive discovery. Merrill Lynch may be more likely to settle and to settle early. In any event, the case against Merrill Lynch will move forward and will remain the only discernable source of significant source of funds for paying back our lost investments. The Executive Committee will also be considering the Joint Agreement when it meets on February 21. 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:cmc J:IWPDOC\GMIBANDERSO\FAHR9609.SRB LOS ANGELES NEW YORK SACRAMENTO SAN FRANCISCO WASHINGTON, DC TOKYO WRITER'S OFFICE AND DIRECT DIAL NUMBER (619) 544-3177 LAW OFF"ICES OF PILLSBURY MADISON & SUTRO LLP SUITE 1800 IOI WEST BROADWAY SAN DIEGO, CALIFORNIA 92101-8201 TELEPHONE C619l 234-5000 FACSIMILE (619) 236-1995 December 27, 1995 TO: ORANGE COUNTY INVESTMENT POOL PARTICIPANTS' DISTRIBUTION LIST Re: In re County o f Oran ge, Case No. SA94-22272-JR MENLO !;>ARK ORANGE COUNTY SAN D IEGO SAN JOSE HONG KONG "JOINT AGREEMENT " PROPOSED BY THE COUNTY OF ORANGE FOR THE RESOLUTION OF POOL-RELAT ED CLA IMS OF OPTI ON 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 Oran ge, 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 o f t hese 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 Czarny 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 recove~ 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 bot h 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; 208~6332 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' defeat 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 lirni t 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 Participants Committee (the "Pool Committee") has negotiated the terms of the accompanying Joint Agreement. Of particula~ note to Option A Pool Participants is Paragraph 12 of the Joint Agre~ement 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. Realiocate 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 wi th 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 ;l\greement. 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 Poor- 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 ("OCRA") 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 Cammi ttee 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 Cammi ttee 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 S(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 Cammi ttee "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- J?iN-23-96 TUE 16: l 0 San Francisco San J'oae Sacramento Menlo Park Bong Kong PILLSBURY MADISON & SUTRO 101 V. Broadway TOI FROM: FILE NO. 1 Suite 1800 San Diego, CA 92101~8083 Tel (619)234-5000 FaK (619)236-1995 January 23, 1996 FACSIMILE TRANSMITTAL Blake Anderson (714) 962-0356 Paul Brady (714) 724-6045 Andrew Czorny ( 714) 379 .. 3372 Walter Kreutzen (714) 436-9848 Michael o. Martello (415) 967-4215 John L. Nelson (714) 662-3570 Stan Oftelie (714) 560-5796 Kennard R. Smart (714) 835-7787 Alan G. Tippie (213) 629-4520 Merrill R. Francis (213) 620-1398 G. Larry Engel (714) 752-7522 Allan H. Ickowitz (213) 612-7801 Clark F. Ide (714) 378-3373 Paul R, Glassman (310) 312-9507 John T. Hansen (415) 398-2438 Alan Martin (714) 851-0739 Thomas L. Woodruff (714) 835-7787 John J. Giovannone (714) 851-0739 M, Freddie Reiss (213) 622-5063* Michael Ozawa (714) 435-8774 Jon Schotz (310) 820-0313 Patrick c. Shea, Esq. USBR NO.:11364PCS (J, Samala) 66345-100-0001 NUMBER OF PAGES INCLUDING COVER SHEET: 3 P. 01 Los Angeles Vashington, D.C. Orange County New York Tokyo IF YOU HAVE NOT PROPERLY RECEIVED THIS FACSIMILE, PLEASE CALL US AT (619)234-5000 THANK YOU, Letter to Pool Participants regarding status of Merrill Lynch litigation. OPERATOR: .=-=,,.,,,,....,....,.... ........ =~=-,,,,_,...,.,..,._ TIME ENT1 " 'l'SK tlfl!OllMA,TION CONTAINED 18 THIS l'AC6iiffi.i tlESSAGE IS ATl'O!UmY l'RIVILEGiD Alfi) CONUJ5ENT1AL llfJORHA! lON INTENDBI> OMl.Y lOR UU OF THE IRDIVIDUAL OR DTITr HAHE0 ABOVE, 11 TIIX IWal>El O! THIS MESSAGE IS BOT THE IIITEl'ID~ llECIPIBHT, 011. THE iKPI:DYEB OR AGf!NT llESl'OBSIBLB 'l'O DRLIVD IT TO '1'BE INT&Nl>!D REC:tPlEIIT, YOU ARE BEllllt HOTIIlED THAT AJf'f D!SSOONAnON, DlSTRillllTI.OR DR COPYlll"G 01 nl1S COMMUtflCA.no11 II SDICTI.Y i'ROIII.Bll'SD, 11 YOU HAVE IECBIV!D 'l'Bl.S CmtrllNICAnOli! l.lf IDlROll, PLY.SE Dll'IEDIAnLt HOTI!Y tJ!i JIY 'l'EIJll'llONI, 1Nl> JlETl1IN THE OUGIIIAL ME3SAGE TO OS AT THli 4BOVl ADDWS VlA TQ! IJ.!i. POSTAL SEl!.VlC.E. TiWll YOU. 20701051 JAN-23-96 TUE 16:11 ______ ___..._.II ... __ ....,...._ __________ ,...,. ...... _______ .. ...__. -... - &AN FRANCISCO L05 ANl,E;LES $AN ,J05E; WASHINGTON, D,C, WRITER'S OFFICE AIIID 01RCCT DIAL NUM91Elil (619) 544-3177 VIA TELECOPIER LAW OFFICES OF PILLSBURY MADISON & SUTRO LLP SUITE: 1800 IOI \IVE;ST aR0AOWAY SAN DIEGO, CALI FORNI~ 92101 TE:l.£PHON£ (6191 23-4--$000 f"ACSIMILlt 16191 UG-1995 January 22, 1996 TO: ORANGE COUNTY INVESTMENT POOL PARTICIPANTS' DISTRIBUTION LIST Re: ln re County of Orange, Bankruptcy case No. SA94-22272-JR P. Uc OAANGii; COUIIITY SACAAMEN"fO MEf\11.Q t>ARK TOKYO HONG KONC. NEWYOl'llt County of Orange v. Merrill Lynch & co., Inc. et al. Dea~ Pool Participant: This letter will update you regarding the status of the County of Orange litigation against Merrill Lynch. The principal parties have commenced taking depositions. Merrill Lynch appeared in Court today on a motion to stay the County's discovery until the depositions of Merrill Lynch e.mployees can be coordinated with discovery proceedings in other bankruptcy-related litigation. Specifically, Merrill Lynch sought to avoid producing its representatives for deposition, including Mr. Michael Stamenson, until the County filed all of its complaints against other professionals and brokerage houses. Merrill Lynch argued that its representatives would otherwise risk being deposed in each adversary proceeding. (There are currently only two filed adversary proceedings -Merrill Lynch and J{PMG Peat Marwick. ) In addition·, Merrill Lynch sought to lift the current stay on obtaining docwnents and testimony from Pool Participants. ~he Merrill Lynch motion was unsuccessful on both issues. · In denying the Merrill Lynch request for consolidation, the court reiterated its intention that the parties proceed with all non-Pool Participant discovery without limitation. In addition, the Court continued the stay on pool participants discovery to pending the hearing on the County's motion to strike portions of the Merrill Lynch Answer. That motion is acheduled to be heard February 16, 1996 at 9s30 a.m. J.AN~23-96 TUE 16:06 To All Pool Participants January 22, 1996 Page 2 .t'. Ub The parties reached an agreement regarding the exchange of SEC transcripts. Pursuant to this arrangement, Merrill Lynch and the County will exchange all SEC transcripts. The employees of Merrill Lynch and the County, i~cluding the Board of Supervisors, were gb,en ten days to object to the production of their transcripts. If no objection is asserted, the transcript must be produced. Finally, the Court ruled that the deposition of Mr. Stamenson will go forward on January 29, 1996. Mr. Stamenson has until January 25, 1996 to file any objection to the production of his SEC transcript. The Court has scheduled a hearing for Friday, January 26, 1996 at 3:30 p.m. to rule on the objections, if any. In general, these ·rulings indicate an intent by the Court to keeping the case moving. I will continue to keep you updated regarding the status of this matter. If you have any questions, you can r~ach me at (619) 544-3177. Very truly yours,, Pcdle-- Patrick c. She~e5 PCS/sgm cc: Official Connnittee of Pool Participants and Counsel Z08:i70'.39 .E!!!!!!!! •Written Report D Overheads •Slides Department Head Sig GaryStr~ • Flip Charts Anticipated Time __ _ FINANCE, ADMINIST-RATION AND HUMAN RESOURCES COMMITTEE FAHR96-10: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to renew Boiler & Machinery Insurance for the period March 1, 1996 to March 1, 1997, with American Manufacturers Mutual Insurance (Kemper Insurance Group), in an amount not to exceed $79,698. This agenda item relates to the annual renewal of Boiler & Machinery insurance coverage for the Districts for the period March 1, 1996 through March 1, 1997. During the renewal process last year, the Districts' Broker of Record, Robert F. Driver Company, submitted the Districts' Boiler & Machinery insurance requirements to six (6) insurance carriers. Three (3) proposals were received. Upon the Committee's review of the proposals and recommendation, the Joint Boards of Directors approved placement of Boiler & Machinery insurance coverage with American Manufacturers Mutual Insurance (Kemper Insurance Group) for the period March 1, 1995 through March 1, 1996. Kemper's overall superior policy terms, their knowledge of the Districts' facilities and programs, and the fact that theirs was the lowest cost proposal, were cited as factors in the recommendation to select Kemper. Robert F. Driver Company has surveyed the current Boiler & Machinery insurance market, and has reported (see attached letter) that only the three (3) carriers that submitted proposals last year still offer coverage for operations as large as the Districts. Given today's restrictive insurance market and the fact that Kemper will renew coverage for the Districts' with only a premium adjustment ($2,307) to allow for the increase in the Districts' property values, the Districts' Broker recommends Boiler & Machinery insurance renewal with Kemper. Staff concurs. Sufficient funds are contained in the current budget to cover the premium costs ($79,698). Staff Recommendation Renew Boiler & Machinery Insurance for the Districts for the period March 1, 1996 to March 1, 1997, with American Manufacturers Mutual Insurance (Kemper Insurance Group), in an amount not to exceed $79,698. J:\WPDOCIFINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR96.10 .. ASSOCIATES January 25, 1996 Mr. Steve Kozak ROBERT F. DRIVER ASSOCIATES • COMPLETE INSURANCE/BOND SERVICE • a Dil'isio11 of Roherr F. D1'il-er Co .. Inc. County Sanitation Districts of Orange County P.O. Box 8127 Fountain Valley, CA 92728-8127 RE: Boiler and Machinery Insurance Renewal Dear Steve: As we discussed, the Boiler and Machinery insurance marketplace has not changed very m_uch since last renewal. The limited number of available underwriters still providing Boiler and Machinery coverage are imposing high deductibles and premiums for large underwritings, such as County Sanitation Districts of Orange County. As you may recall from last year, Reliance National quoted premiums considerably higher than the incumbent Kemper, while Hartford Steam Boiler provided a quotation that was slightly higher than Kemper's. We have surveyed the market, and have found that, today, these three carriers are the only ones able to insure and service complex co-generation facilities such as those owned by the Districts. Based on the similar marketplace and unchanged underwriting positions of the other markets, we recommend that County Sanitation Districts of Orange County remain with Kemper Insurance Group for the renewal effective March 1, 1996. The current premium is $77,377, including state mandated CIGA fees. The renewal premium, including CIGA fees, is $79,698 allowing for a premium increase based on trended values. Sincerely, ROBERT F. DRIVER ASSOCf S ~f£~/} /{feli Assistant Vice ~sident DJK/msy .MJ6 BIRCH STREET. SUITE 2.10 . NEWPORT BEACH. CALIFORNIA 92MIJ-26/9 171-11 75(,-0271 • FAX (7/-1/ 75(,-2713 H:\U\Pl.\WORDICSOOC\BML TllOOC ~ 0 Written Report •Overheads •Slides •Flip Charts Originato~ ~noc Department Head Sign~ Anticipated Time?-0 tAJ.M- FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-11: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to receive and file PIMCO's First Quarterly Performance Report, Investment Management Program On September 7, 1995, the Districts' Treasury Bill investments matured and funds were wired to PIMCO, the Districts' newly contracted external money manager. The funds were allocated to maximize safety, liquidity, diversification, flexibility, and yield. During January 1996, PIMCO began preparation of its quarterly investment management report for the period October through December 1995. The quarterly report will also cover the month of September 1995, during which time PIMCO structured the Districts' short-term and long-term portfolios. Also during January 1996, the Districts' third-party investment advisor, Callan Associates, began preparation of its first quarterly performance review. Representatives from both PIMCO and Callan will attend the meeting and will present their reports to the Committee. Copies of their presentation outlines are enclosed. Staff Recommendation Information only. J:IWPDOC\FINICRANBFPC.MTGIFAHR.96\COVERS.96\FAHR96.11 ... •-- 011 COUNTY SANITATION DISTRICTS OF ORANGE COUNTY Investment Management Program First Quarterly Performance Review February 14, 1996 Presentation to: Finance, Administration and Human Resources Commiftee Callan Associates Inc. Our Role = To Provide Objective, Third-Party Review Callan Callan Associates Inc. 1 Callan Associates Inc. Our Responsibilities: • Monitor for compliance with CS DOC Investment Policy • Recompute returns • Compare performance to benchmarks -Other active managers -Market indices • Interpret results • Report to CSDOC Callan Associates Inc. 2 J Prices and Marking-to-Market • All analysis is based on market values • The portfolio is priced by three independent firms: -PIMCO (Investment Manager) -Mellon (Custodian Bank) -Callan (Consultant) » EJV: Electronic Joint Venture • Bond prices will vary by source -Not all bonds trade every day -Prices for bonds that have not traded are estimated Callan Associates Inc. 3 ''The First Quarter'' Quarter ended December 31 , 1995 Returns Your Fund Benchmark Liquid Operating 1.49 1.33 (90 day T-Bills) Long-Term Operating 3.20 2.97 (ML 1-5 Gov't/Corp.) Total Fund 2.85 Risk Measure: Duration is within 20% of the benchmark duration. Callan Associates Inc. 4 _ County Sanitc;1tion Distr-ic,s l ' ! ·_ of Orange Co-unty ' ' - lnves~ment Management Program1 First , Quarterly Report Presentation to ' Financ::·e, Administration _ & Human Resources Committee February 14, 1 996 ·. . t ~J .._ ·: .. ~-.·~: ri1"1"·'\ •• .. f -~---1. ·:--........ •·--. -• ·:· . -,...~ . ·. .. • · • '.' 0 Post Office Box 9000 I 840 Newport Center Ofive Newport Be,ich C~lifornia 92658-9030 714 -640-3031 PACIFIC INVESTMENT MANAGEMENT COMPANY A GEN D A • Background • PIMCO's Team • Investment Philosophy/ Process _) • Monitoring Procedures • Information Flow/ Reporting • Your Portfolio • The First Quarter • Current Strategy • Summary PACIFIC INVESTMENT MANAGEMENT COMPANY BACKGROUND • History of the firm • History of the PIMCO / CSDOC relationship J J PACIFIC INVESTMENT MANAGEMENT COMPANY PIMCO'S TEAM • Three-pronged structure • Compliance monitoring at every level • Portfolio management: team of generalists and specialists 2 .J J PACIFIC INVESTMENT MANAGEMENT COMPANY PIMCO'S TEAM (CONT'D) MORTGAGE SPECIALISTS Bill Powers Pasi Hamalainen Jeff Saye CORPORATE SPECIALISTS Ben Trosky GENERALIST Frank Rabinovitch INTERNATIONAL SPECIALISTS Lee Thomas Michael Rosborough GOV'TS/FUTURES SPECIALISTS Lesli Barbi SHORT TERM SPECIALISTS John Brynjolfsson Portfolio Management Team 3 PACIFIC INVESTMENT MANAGEMENT COMPANY INVESTMENT PHILOSOPHY/ PROCESS • Risk diversification dominates philosophy • Investment process disciplined and democratic • Process involves all investment professionals 4 J ) PACIFIC INVESTMENT MANAGEMENT COMPANY INVESTMENT PHILOSOPHY/ PROCESS (CONT'D) LONG-TERM FORUM SHORT-TERM FORUMS ANNUALLY QUARTERLY ~ / PIMCO INVESTMENT OUTLOOK PORTFOLIO STRUCTURE Duration Yield Curve Position ISSUE SELECTION t CREDIT RESEARCH t QUANTITATIVE ANALYSIS Disciplined Investment Process 5 I J PACIFIC INVESTMENT MANAGEMENT COMPANY MONITORING PROCEDURES • Account Managers fine-tune guidelines • Portfolio Managers access computerized guidelines • Back office checks each security • Computer-driven guideline checker runs nightly • Reconcile portfolio holdings with bank 6 J PACIFIC INVESTMENT MANAGEMENT COMPANY INFORMATION FLOW (REPORTING) • Continual dialogue with CSDOC staff • Nightly dispatch of trade information • Specialized monthly & quarterly report • Quarterly appearance before committee • Specialized graphic presentations • Written report recaps firm-wide expectations 7 PACIFIC INVESTMENT MANAGEMENT COMPANY YOUR PORTFOLIO • Funded September 7, 1995 • Thorough understanding of CSDOC Investment Policy • Issues selected thoughtfully & prudently • Duration strategy implemented cautiously 8 ) PACIFIC INVESTMENT MANAGEMENT COMPANY THE FIRST QUARTER • Invested prudently, consistent with guidelines • Bond market rally key to overall return • Slightly outperformed index based on issue selection 9 J PACIFIC INVESTMENT MANAGEMENT COMPANY CURRENT STRATEGY • Maintain cautious/ conservative approach to portfolio structure • Implement slight duration extension • Callable agency securities offer slight yield enhancement 10 PACIFIC INVESTMENT MANAGEMENT COMPANY SUMMARY • Committed to achieving CSDOCs goal • Systems/ process/ procedures assure goals are met 11 ) J PACIFIC INVESTMENT MANAGEMENT COMPANY J J CALLAN ASSOCIATES INVESTMENT MEASUREMENT REVIEW County Sanitation Districts of Orange County December 31, 1995 The following statistical analysis was prepared by Callan Associates Inc. utilizing secondary data from statements provided by the plan trustee and/or custodian, CAI computer software and selected information in CAi's database. This report may also contain returns and valuations from outside sources as directed by the client. CAI assumes no responsibility for the accuracy of these valuations or return methodologies. Reasonable care has been taken to assure the accuracy of the CAI computer software and database. CAI disclaims responsibility, financial or otherwise for the accuracy or completen~ss of this report. Copyright 1996 by Callan Associates Inc. 7 I l j CALLAN ASSOCIATES INVESTMENT MEASUREMENT REVIEW COUNTY SANITATION DISTRICTS OF ORANGE COUNTY DECEMBER 31, 1995 Market Performance Measures of Market Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l Fund Performance Performance to Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Performance vs. Active Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Performance vs. Defensive Fixed-Income Style .................................. 5 Fund Profile Portfolio Characteristics Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Portfolio Characteristics Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Definitions Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Fixed-Income Management Style Groups ....................................... 9 Fixed-Income Portfolio Characteristics ......................................... 10 Bl l I I -j J l J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY MEASURES OF MARKET PERFORMANCE Domestic financial markets registered another quarter of strong gains in the final quarter of 1995. Slow economic growth coupled with low inflation and falling interest rates provided a favorabl~ environment, making 1995 one of the best years ever for both stocks and bonds. Despite soaring markets the Federal Reserve Board reacted to the sluggish economy by easing short term interest rates 25 basis points and many investors were anticipating further rate reductions in 1996. Government data on which to base such decisions was sparse, however due to the budget impasse between Congress and the President. Surveys of private economists estimated real annualized GDP growth of 2.3% during the quarter, down from 4.2 % in the third quarter. Domestic stock indices generally ended 1995 at, or near, historic highs following their fourth consecutive quarter of strong gains. The return on the S&P 500 Stock Index was 5.95%. Issues with positive returns out-numbered those with negative returns by about 7 to 1 within the Index. Leaders among the ten stock sectors were the energy and public utility sectors with returns of 11.47% and 11.18%. respectively. The weakest sectors were technology and raw and intermediate materials with returns of -1.94% and -1.02% respectively. For the year the S&P 500 returned 37.48%. Among other stock indices, the Dow Jones Industrial Average returned 7.48% and 36.87% for the quarter and year, while the S&P "Mid Cap" 400 Stock Index returned 1.43% and 30.94% and the NASDAQ Index returned 1.02% and 41.28%. Results for the Callan Indices indicate better returns for larger capitalization stocks for both the quarter and year. For the fourth quarter and full year, the Callan Broad 2000 returned 5.01 % and 36.02%, while the Callan Micro 1000 returned 1.23% and 35.98%. Within the Broad 2000, the Large 150 returned 6.91 % and 39.48%, while the Medium 350 returned 3.35% and 32.93%, and the Small 1500 returned 2.17% and 30.99%. The Morgan Stanley Capital International EAFE Index which is composed of representative stock issues from Europe, Australia, and the Far East, produced returns of 6.30% and 9.50% for the quarter and year on a local currency basis. Returns adjusted for conversion to U.S. dollars were 4.05% and 11.21 %. This included dollar-based returns of 3.41 % and 21.63% for the European component and 4.69% and 2.78% for the Pacific Rim component. Returns for the Salomon Non-U.S. Government Bond Index for the same periods were 3.97% and 17.93% in U.S. dollars hedged against currency fluctuations. The same Index produced returns of 2.07% and 19.55% on an unhedged basis. Domestic bond returns improved after a third quarter lull. Rates on 30-year Treasuries fell 53 basis points in the quarter. Rates on Moody's seasoned AAA corporates dropped 56 basis points. The Lehman Brothers Govt/Corp Bond Index returned 4.66% for the quarter and 19 .24% for the year. Results for the long component of the Index were even better at 7.61 % and 29.95%, respectively. The intermediate component earned 3.51 % and 15.32%. The Salomon High Yield Index returned 3.13% and 19.23%. Treasury Bills earned 1.32% for the quarter and 5.70% for the year. The Consumer Price Index for Urban Wage Earners and Clerical Workers rose at an annual rate of 2. 71 % during the quarter, up from the previous quarter's 1.89%. The rate for all of 1995 was 3.00%. II II Standard & Poor's 500 Stock Index Sectors Last Quarter (9195-12/95) Last Twelve Months (12/94-12/95) Energy 11.47% Financial 54.01% Public Utilities 11.18 Consumer Staples 46.66 Consumer Staples 10.75 Public Utilities 42.02 l Industrial Equipment & Services 8.81 Technology 41.92 , Miscellaneous 6.59 Transportation 39.65 Financial 5.12 Industrial Equipment & Services 34.49 Transportation 3.21 Energy 30.75 Consumer Cyclicals 2.37 Miscellaneous 23.51 Raw & Intermediate Materials -1.02 Consumer Cyclical 20.69 Technology -1.94 Raw & Intermediate Materials 19.93 S&P 500 5.95% S&P 500 37.48% l Industry Best Last Quarter (9195-12/95) Last Twelve Months (12J94-12JIJ5) Health Care (HMO's) 30.72% Electronics (Defense) 98.90% Manufactured Housing 30.52 Drugs 71.73 Electronics (Defense) 24.44 Medical Products & Supplies 69.08 Homebuilding 19.19 Aerospace 65.14 Drugs 18.24 Savings & Loans 64.79 Oil & Gas Drilling 16.83 Banks (Money Center) 62.96 Restaurants 15.20 Financial (Miscellaneous) 60.42 Engineering & Construction 14.77 Electronics (Instruments) 58.85 Photography/Imaging 14.21 Health Care (Miscellaneous) 57.70 Telephone 13.54 Banks (Regional) 57.01 Worst j Last Quarter (9/95-12/95) Last Twelve Months (12J94-12JIJ5) Investment Bankers/Brokers -3.93% Metals (Miscellaneous) 11.16% Chemicals (Diversified) -4.55 Retail Stores (Apparel) 11.14 Transportation (Miscellaneous) -4.78 Heavy Duty Trucks & Parts 10.73 Personal Loans -5.49 Paper & Forest Products 10.16 Electronics (Instruments) -6.60 Housewares 7.71 Retail Stores (Gen'l Mdse) -9.71 Containers (Metal & Glass) 6.11 Paper & Forest Products -10.94 Retail Stores (Miscellaneous) -2.73 Machine Tools -12.37 Containers (Paper) -3.05 Containers (Paper) -16.57 Steel -7.23 Electronics (Semicons & Cmpnts) -22.30 Truckers -10.04 7 l j j COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE TO DATE Periods Ended December 31. 1995 Liquid Operating Monies Long Term Operating Fund Total Fund Market Indicators Government/Corporate 1-5 Year Index 1-3yr Govt/Corp Index Merrill Lynch 1-5yr Govt/Corp Lehman Brothers G/C Int Treasury Bills Median Rates of Return Active Cash Management Database Defensive Fixed-Income Style Ranking (1 =Best,100= Worst) vs. Active Cash Management Database Liquid Operating Monies vs. Defensive Fued-Income Style Long Term Operating Fund Last Qnarter 1.49% 3.20 2.85 2.92% 2.52 2.97 3.52 1.33 1.67% 2.47 73 1 For explanation of market indicators and comparable funds see end of report. II 7 ] ) ) l -j COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE VS. ACTIVE CASH MANAGEMENT DATABASE PERIOD ENDED DECEMBER 31, 1995 2.60% - 2.40% - 2.20% - 2.00% - 1.80% - 1.60% - ____ .. A 1.40% - T~ 1.20% - Last Quarter ACTIVE CASH T MANAGEMENT DATABASE 10th Percentile 2.45 25th Percentile 1.94 Median 1.67 75th Percentile 1.49 90th Percentile 1.44 Treamuy Bills 1.33 Liq~id Operating Monies A 1.49 Ranking 73 (l=Bes~lOO=Worst) ·1 ·1 -1 . l l l J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE VS. DEFENSIVE FIXED-INCOME STYLE PERIOD ENDED DECEMBER 31, 1995 3.60% - ~ 3.40% - 3.20% -• A 3.00% -M~ G/C 2.80% - 2.60% - 2.40% 2.20% - 2.00% - Last Quarter DEFENSIVE T FIXED-INCOME STYLE 10th Percentile 2.79 25th Percentile 2.65 Median 2.47 75th Percentile 2.36 90th Percentile 2.11 Meaill Lynch 1-Syr Govt/Corp 2.97 Lehman Brothers G/C Int 3.52 Long Term Operating Fund A 3.20 Ranking 1 (1=Best,100=::Worst) Ill COUNTY SANITATION DISTRICTS OF ORANGE COUNTY WNG TERM OPERATING FUND PORTFOLIO CHARACTERISTICS SUMMARY DECEMBER 31, 1995 Treasuries 32% Sector Allocation Corporali!s [4% Other 1% Agencies 8% Treasuries 78% Corporates 13% Long Tenn Operating Fund Lehman Govt/Corp 1-5 Years 0 ..... ~ ~ ~ 5 ~ ~ Duration Distribution Weighted Average Duration 50% ~----.------.------.-------,----t [] Long Term Operating Fund: 241 0 Lehman Govt/Corp 1-5 Years: 232 40% 30% 20% 10% 0% ----------i ------------ -----------::!:~:r ---- ~\::.. .. i <1.0 1.0-1.5 1.5-2.0 2.0-2.5 2.5-3.0 3.0-3.5 3.5+ Years Duration Quality Distribution 100% ~-------.-----~----;------.-----I Weighted Average Quality • Long Term Operating Fund: Aal • Lehman Govt/Corp 1-5 Years: Aaa 80% 60% 40% 20% 0% Aaa+ Aaa Aal Aa2 Aa3 Al A2 A3 <A3 Moody's Rating * All Statistics shown on the page are dependent on the securities in the portfolio being recognized (by their Cusip) and priced. In this case 97% of the securities in the portfolio (by market value) were recognized and priced. II l j l j COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LONG TERM OPERATING FUND PORTFOLIO CHARACTERISTICS DETAIL DECEMBER 31, 1995 Weighted Average Portfolio Characteristics Total Fund, By Asset Class and By Sector Ending PeireDt Maret of Efrective Effective Sectoc Value Portfulio Cowon Malmitv Yield Total Fund $252,695,079 100.0% 6.91 2.52 5.62 Agencies $114,079,602 45.1% 6.64 2.03 5.77 Corporates $34,316,982 13.6% 8.25 2.87 5.81 Treasuries $80,053,405 31.7% 7.13 3.75 5.33 Totalfixcd-lncome $228,449,989 90.4% 7.05 2.76 5.62 Cash Equivalents $24,245,090 9.6% 5.61 0.25 5.61 5 Largest Holdings Ending PeireDl Maret of Effective · Issuer Name Issue Name Sectoc Value Portfulio Yield United States Treas Nts Nt 7.125% 9/30/1999 Treasuries $80,053,405 31.7% 5.33 Federal Home Ln Bks Deb 6.49% 9/13/2000 Agencies $40,125,888 15.9% 5.87 Federal Natl Mtg Assn Deb 6.850% 5/26/00 Agencies $25,668,000 10.2% 5.68 Federal Home Ln Mtg Corp Deb 6.720%10/02/00 Agencies $25,596,250 10.1% 5.77 Federal Natl Mtg Assn Deb 6.375%10/13/00 Agencies $20,328,200 8.0% 5.71 5 Lowest Rated Holdings (Moody's Rating) Ending Percent Madel of Effi:ctivc Issuer Name Issue Name Sectoc Value Portfulio Yiekl Lehman Bros Inc Nt 7.00% 5/15/1997 Corporates $1,011,160 0.4% 6.00 Gen Mtrs Accep Corp #00231 Mtn 8.625% 1/10/2000 Corporates $3,293,850 1.3% 5.81 Gen Mtrs Accep Tr #324 Mtn 8.375% 2/03/1999 Corporates $3,972,653 1.6% 5.89 Chrysler Fml Mtn 6.26% 7/20/1998 Corporates $1,010,220 0.4% 5.79 Chrysler Finl Mtn 7.27% 4/13/1998 Corporates $2,991,234 1.2% 5.76 5 Longest Duration Holdings Ending Pen:ent Muet of Effective IssuerName Issue Name Sectoc Value Portfulio Yield Philip Morris Cos Inc Nt 9.250% 02/15/2000 Corporates $10,080,630 4.0% 5.92 Gen Mtrs Accep Corp #00231 Mtn 8.625% 1/10/2000 Corporates $3,293,850 1.3% 5.81 United States Treas Nts Nt 7 .125% 9/30/1999 Treasuries $80,053,405 31.7% 5.33 Federal Natl Mtg Assn Deb 6.375%10/13/00 Agencies $20,328,200 8.0% 5.71 Gen Mtrs Accep Tr #324 Mtn 8.375% 2/03/1999 Corporates $3,972,653 1.6% 5.89 5 Holdings with Highest Effect Yield Ending Pen:ent Market of Effective Issuer Name Issue Name Sectoc Valrie Portfulio Y-,eld Lehman Bros Inc Nt 7.00% 5/15/1997 Corporates $1,011,160 0.4% 6.00 Philip Morris Cos Inc Nt 9.250% 02/15/2000 Corporates $10,080,630 4.0% 5.92 Gen Mtrs Accep Tr #324 Mtn 8.375% 2/03/1999 Corporates $3,972,653 1.6% 5.89 Federal Home Ln B ks Deb 6.49% 9/13/2000 Agencies $40,125,888 15.9% 5.87 Gen Mtrs Accep Corp #00231 Mtn 8.625% 1/10/2000 Corporates $3,293,850 1.3% 5.81 OA OA Duration Convexity Ouali!! 2.41 (0.21) Aaa 2.39 (0.58) Aaa 2.13 0.08 A2 3.22 0.13 Aaa+ 2.64 (0.23) Aaa 0.25 0.00 Aaa OA OA Duration Convexitv Oualitv 3.22 0.13 Aaa+ 2.39 (0.58) Aaa 2.43 (0.10) Aaa 2.09 (1.53) Aaa 3.00 (0.04) Aaa OA OA Duration Convexm: Ouali!! 1.27 0.02 Baal 3.27 0.13 A3 2.66 0.09 A3 2.28 0.o7 A3 2.04 0.05 A3 OA OA Duration Convexity Ouali!! 3.34 0.14 A2 3.27 0.13 A3 3.22 0.13 Aaa+ 3.00 (0.Q4) Aaa 2.66 0.09 A3 OA OA Duration Convex.itv Ouali!I 1.27 0.02 Baal 3.34 0.14 A2 2.66 0.09 A3 2.39 (0.58) Aaa 3.27 0.13 A3 * All Statistics shown on the page are dependent on the securities in the portfolio being recognized (by their Cusip) and priced. In this case 97% of the securities in the portfolio (by market value) were recognized and priced. l FIXED-INCOME MARKET INDICATORS The market indicators included in this report are regarded as measures of equity or fixed-income performance results. The returns shown reflect both income and capital appreciation. 90-Day U.S. Treasury Bills provide a measure of riskless return. The rate of return is the average interest rate available on the beginning of each month for a Treasury Bill maturing in ninety days. Lehman Brothers Govt/Corp Intermediate Index is one of the components of the Government/Corporate Index which includes only bonds with maturities between one to ten years. Merrill Lynch 1-5 Year Government/Corporate represents bonds with maturities between one and five years that are issued by the U.S. Treasury and U.S. Agencies and by Corporation with investment grade credit ratings. As of year end 1995, the index covered 2,785 issues. ) . j FIXED-INCOME MANAGEMENT STYLE GROUPS Active Cash -Managers whose objective is to achieve a maximum return on short-term financial instruments through active management. The average portfolio maturity is typically less than one year. Active Du.ration-: Managers who aggressively employ interest rate anticipation in setting portfolio duration. Portfolios are actively managed so that large changes in duration are made in anticipation of interest rate changes in hopes of profiting from downward rate movements and minimizing losses from upward rate movements. Core Bond -Managers who construct portfolios to approximate the investment results of the Lehman Brothers Government/Corporate Bond Index or the Lehman Brothers Aggregate Bond Index with a modest amount of variability in duration around the index. The objective is to achieve value added from sector and/or issue selection. Defensive -Managers whose objective is to mmmnze interest rate risk by investing predominantly in short to intermediate term securities. The average portfolio duration is similar to the duration of the Merrill Lynch 1-3 Year Bond Index. Extended Maturity -Managers whose average portfolio duration is greater than that of the Lehman Brothers Government/Corporate Bond Index. These portfolios exhibit risk/return characteristics similar to the long-bond portion of the Lehman Brothers Government/Corporate Index, called the Lehman Brothers Government/Corporate Long Bond Index. Variations in bond portfolio characteristics are made to enhance performance results. This results in an aggressive risk/return profile that embraces interest rate risk in search of both high yields as well as capital gains. High Yield -Managers whose investment objective is to obtain high current income by investing primarily in non-investment grade fixed-income securities. Due to the increased level of default risk, security selection focuses on credit-risk analysis. Intermediate -Managers whose objective is to lower interest rate risk while retaining reasonable yield levels by investing primarily in intermediate term securities. The average portfolio duration is similar to that of the duration of the Lehman Brothers Intermediate Government/Corporate Bond Index. Money Market -Open-end mutual funds that invest in low-risk, highly liquid, short-term financial instruments and whose net asset value is kept stable at $1 per share. The average portfolio maturity is 30 to 60 days. Mortgage -Managers who invest primarily in mortgage-backed securities including agency (FHLMC, GNMA, FNMA) and private issue pass-throughs, asset-backed securities, and mortgage derivatives (REMICS/CMOs, IOs, POs). Funds may also contain a small percentage of U.S. Treasuries. STIF -Bank investment funds in low-risk, highly liquid, short-term financial instruments. The average portfolio maturity is 30 to 60 days. • l FIXED-INCOME PORTFOLIO CHARACfERISTICS All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector -Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio's weights with those of the index to identify any significant sector bets. Average Coupon -The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody's Rating for Total Portfolio -A measure of the credit quality as determined by the individual security ratings. The ratings for each security from Moody's Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality -lowest credit risk) to C (lowest investment quality -highest credit risk). Average Option Adjusted (Effective) Convexity -Convexity is a measure of the portfolio's exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally. securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security's duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted (Effective) Duration -Duration is one measure of the portfolio's exposure to interest rate risk. Generally, the higher a portfolio's duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price -The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity -This is a measure of the market-value-weighted-average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. I FIXED-INCOME PORTFOUO CHARACTERISTICS Average Years to Stated Maturity -The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns, or prepayments. Current Yi~ld -The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. Effective Yield -The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns, expected mortgage principal prepayments, and the exercise of any "in-the-money" imbedded put or call options. Weighted Ave.rage Life -The weighted average life of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. 1 _j j _j _J I J J CALLAN ASSOCIATES APPENDIX REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY DECEMBER 31, 1995 Fund Assets and Growth Detail Liquid Operating Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Long Term Operating Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Total Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Ill 7 7 7 -l l l J -1 l COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LIQUID OPERATING MONIES ASSET ALLOCATION ($000) Quarter Eguities F.ixed-lncome Ended: Amount Percent Amount Percent 09/95 0 0.0% 4661 7.7% 12/95 0 0.0% 4723 7.7% Cash&~uiv. Total Amonnt Percent Amount 55498 92.3% 60159 56393 92.3% 61116 I 1 J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LIQUID OPERATING MONIES ASSET FLOWS ($000) Quarter Fnded: 09/95 12/95 Equities 0 Net New Investment FIXed-Cash & Income Equiv. (90) 90 Total Fund 0 Quarterly Tum.over (Lower of Pur/Sales Div by Avg Value) FIXed- Equities Income 0.0% 0.0% 7 7 -1 ·1 I l l I j j COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LIQUID OPERATING MONIES QUARTERLY FACTORS Quarter Ended: 09/95 12/95 Eguities Fixed- Income 1.0197 Total Fund 1.0149 90-Day T-Bills 1.0133 Ill Merrill 1-5 Merrill 1-3 Govt/Corp Govt/Corp 1.0297 1.0252 7 7 I l l l _j j COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LIQUID OPERATING MONIES CUMULATIVE RESULTS Quarter Ended: 09/95 12/95 :Equities 100.00 100.00 FIXed- lncome 100.00 101.97 Total Fund 100.00 101.49 90-Day T-Bills 100.00 101.33 Merrill 1-5 Merrill 1-3 Govt/Corp Govt/Corp 100.00 100.00 102.97 102.52 7 7 7 l l ] I j _j ] COUNfY SANITATION DISTRICTS OF ORANGE COUNfY LONG TERM OPERATING ACCOUNT ASSET ALLOCATION ($000) Quarter Ended: 09/95 12/95 Eguities Amount Percent 0 0 0.0% 0.0% FIXed-Income Amount Percent 193392 239388 82.5% 90.8% Cash&&J:uiv. Amount Percent 40908 24328 17.5% 9.2% Total Amount 234300 263716 I J _j l J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LONG TERM OPERATING ACCOUNT ASSEf FLOWS ($000) Net New Investment Quarter Fixed-Cash& Ended: F.guities Income Equiv. 09/95 Total Fund 12/95 0 38982 (17146) 21836 Ill Quarterly Turnover (Lower of Pur/Sales Div by Avg Value) Fixed- .Equities Income 0.0% 10.4% 7 l l l COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LONG TERM OPERATING ACCOUNT QUARTERLY FACTORS Quarter F.nded: 09/95 12/95 Equities Ftxed- Income 1.0352 Total Fund 1.0320 90-Day T-Bills 1.0133 II Merrill 1-5 Merrill 1-3 Govt/Corp Govt/Corp 1.0297 1.0252 l 7 l . 1 l I J l J J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LONG TERM OPERATING ACCOUNT CUMULATIVE RESULTS Quarter FJXed-Total 90-Day Ended: F.quities Income Fund T-Bills 09/95 100.00 100.00 100.00 100.00 12/95 100.00 103.52 103.20 101.33 Merrill 1-5 Merrill 1-3 Govt/Corp Govt/Com 100.00 100.00 102.97 102.52 7 l l -1 l ~ I 7 1 1 COUNTY SANITATION DISTRICTS OF ORANGE COUNTY TOTALFUND ASSEf ALLOCATION ($000) Quarter Ended: 09/95 12/95 Equities Amount Percent 0 0.0% 0 0.0% Fixed-Income Amount Percent 198053 67.3% 244111 75.2% Cash & Equiv. Amount Percent 96406 32.7% 80721 24. 8 % Total Amount 294458 324832 l I ' _j l J COUNTY SANITATION DISTRICTS OF ORANGE COUNTY TOTALFUND ASSEf FLOWS ($000) Quarter Ended: F.quities Net New Investment FIXed-Cash& Income Equiv. Total Fund 09/95 12/95 0 38892 (17056) 21836 Ill Quarterly Turnover (Lower of Pur/Sales Div by Avg Value) FIXed- F.quities Income 0.0% 10.2% l 7 l COUNTY SANITATION DISTRICTS OF ORANGE COUNTY TOTALFUND QUARTERLY FACTORS Quarter Fixed-Total 90-Day Ended: ~uities Income Fund T-Bills 09/95 12/95 1.0348 1.0285 1.0133 Merrill 1-5 Merrill 1-3 Govt/Corp Govt/Corp 1.0297 1.0252 7 7 I -1 I -1 l ' _j l COUNTY SANITATION DISTRICTS OF ORANGE COUNTY TOTALFUND CUMULATIVE RESULTS Quarter FIXed-Total 90-Day F.nded: F.gyities Income Fond T-Bills 09/95 100.00 100.00 100.00 100.00 12/95 100.00 103.48 102.85 101.33 Ill Merrill 1-5 Merrill 1-3 Govt/Com Govt/Corp 100.00 100.00 102.97 102.52 CAILAN ASSOCIA1ES.~ Atlanta Consulting Office Six Concourse Parkway, Suite 2900 Atlanta, Georgia 30328 Phone: (770) 804-5585 Chicago Consulting Office 123 N. Wacker Drive, Suite 970 Chicago, Illinois 60606 Phone: (312) 346-3536 Denver Consulting Office 550 East 8th Avenue Denver, Colorado 80203 Phone: (303) 861-1900 New York Consulting Office 163 Madison Avenue Morristown, New Jersey 07960 Phone: (201) 993-9595 San Francisco Consulting Office 71 Stevenson Street, Suite 1300 San Francisco, California 94105 Phone: (415) 974-5060 r Format • Written Report • Overheads Originatorh· Department Head Sign Off • • Anticipated Time • Slides • Flip Charts FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 1996 FAHR96-12: Consideration of Motion to Receive and File Staff Summary Report on Training. Summary The Districts are currently in the process of coordinating and improving District wide training programs. The following information provides a report on the background, progress and future direction of this effort. Recommendation An informational item . January 31, 1996 STAFF REPORT FAHR96-12: Consideration of Motion to Receive and File Staff Summary Report on Training. TRAINING AND EMPLOYEE DEVELOPMENT UPDATE Background. The Districts are currently developing a Training Program aimed at addressing past problems identified in the Ernst & Young Study completed in 1995 along with recommendations made in other past studies. According to these studies, training in the Districts was conducted randomly, in a reactive manner as requirements emerged. There was no systematic or coordinated Districts wide process for identifying training requirements, planning, budgeting, scheduling, tracking, evaluating or reporting training. This approach resulted in inconsistent training across departments; training redundancies across the Districts and inadequacies in training programs and personnel training. In addition to a decentralized and uncoordinated effort, there was a marked lack of emphasis and resources dedicated to training. In essence, there was no vision of where training should be or where it was going. With the advent of a new administration, a number of actions have begun to centralize and coordinate the Districts training program and to create a centralized record keeping system. A Training Advisory Committee with representation across departments was formed in September 1995. Their purpose is to help develop training strategies and to advise on where allocation of funds should be made. In November 1995, a Training Manager was hired to coordinate and centralize training functions, identify cost-effective methods and provide database administration and management of Districts wide training. This position was supported by the selection of a Training Supervisor in December 1995. Both positions were recommended in the Ernst and Young Study. ACTIONS UNDERWAY Development of a District Wide Training Plan. We are currently working on the development of a comprehensive Districts Training Plan which will provide prioritization of training and associated costs. The training plan will be used for CSDOC e P.O.Box8127 e FountainValley,CA92728-8127 e (714)962-2411 FAHR96-12 Page2 January 31, 1996 planning long term direction and implementation for Districts training. We will be working with representatives from Finance Administration and each of the other departments to identify required training, establish priorities, capture associated costs, and to help the Districts develop a realistic training budget. Supervisory Training. We are currently conducting the first phase of Supervisory Training with a Leadership Education and Development course. This is the first management or supervisory training class held at the Districts since 1991. The course focuses on developing interpersonal skills and organizational interdependence. Topics include: situational leadership; team building skills and group development; conflict management; motivation techniques; organizational change; communication skills, problem solving and decision making; and values and ethics. By the end of February, approximately eighty employees will have received this training. The course was specifically designed to concentrate on building effective teams; providing feedback of on-the-job experiences through group discussions centered around what is working properly and what areas need improvement across the Districts, and to use problem solving techniques to look at processes and to formulate workable solutions. A second phase of supervisory training is being planned for March which will focus on mandated or recommended types of training: i.e., policies and procedures; occupational safety and health training for supervisors; prevention of sexual harassment; recognizing and dealing with violence in the workplace. Pre-Supervisor Training. Competencies for personnel in leadership positions but who have not yet attained supervisor level (i.e., leads, senior plant operators), have been identified and pre-supervisory training is currently being developed. Management/Executive Development Training. Management/Executive Training will be provided for all Districts management and executive staff during the fourth quarter of the fiscal year 1996. Subject matter for this training will be identified through a Districts specific management/executive training needs assessment currently under development. Tuition Assistance Program. A Tuition Assistance Program was implemented in January 1996 for all employees. The purpose of the program is to foster career development and provide employees with financial reimbursement far educational courses that are consistent with individual career goals, directly job related and serve the Districts needs and objectives. FAHR96-12 Page 3 January 31, 1996 Job Certification Reimbursement. A Job Certification Reimbursement Program is currently under review to develop a policy on payment for certifications and certificate renewals that are required on the job. In the past, these expenses were borne by the employee, even though certifications were required in order to perform the job. The review of this policy will be completed by the end of February 1996 and our recommendations presented to the Board. Cross Training. Recognizing the impact of automation on the Districts and the need to be as competitive and efficient as possible, we have begun to focus on cross training in order to maximize efficiency and to provide a career path for our employees. We have identified 85 tasks for cross training in the Operations and Maintenance Departments and are designing a training program which will be gradually phased in for personnel. Our goal is to train personnel District-wide to perform multiple skills versus being specialists. Management Performance Review Program Training. Training for managers, supervisors and professional personnel on the new Management Performance Review Program is scheduled to begin the first week of May 1996. Individual Training Plans which provide a career path and identify skills and abilities employees need to develop will be an integral component of the Management Performance Review process. Integrating the Individual Training Plan with the Management Performance Review, ensures a commitment from both supervisor and employee on training goals and provides a framework for resolving individual performance issues. Human Resources Policies and Procedures Training. Training of all supervisory staff in policies and procedures, benefits, and deferred compensation is scheduled for March 1996. Bench Marking. New Benchmarks are being identified to more accurately reflect the performance of the Districts training trends and will be in place by the end of April 1996. These will more accurately indicate where and how resources are being expended on training and provide an instrument for measuring, evaluating and managing training efforts. Development of Safety Training Program. A pilot multimedia Safety Training Program is being implemented to provide individualized, self-paced training on a variety of safety topics. The training modules are CD-ROM based and will be located at selected job sites throughout the Districts for easy employee access. FAHR96-12 Page4 January 31, 1996 In addition, we are developing a comprehensive Safety Training Program that will address all the Districts safety needs. Development of a Centralized Database and Record Keeping System. We are currently working on centralizing a training database and record keeping system which will track training and certification requirements and generate departmental reports. Provide Ongoing Evaluation and Improvement Systems. Development and implementation of internal and external evaluation systems to determine the effectiveness of training programs and provide feedback for continuous improvement. An evaluation system provides a means to identify needed changes to existing training; update new processes and procedures; regulatory and legal changes; and also ensures additional training needs and programs are continuously and systematically identified and improved. FUTURE INITIATIVES AND GOALS Expansion of Cross Training Effort. Expand cross training effort District wide to encompass all departments. Establish a Training Resource Center and Library. Center will include multimedia computer workstations, reference books, videotapes, etc. The Center will be used to provide training to enhance job related skills, prepare employees for job certification and licensing requirements, and offer education in new technical processes and procedures. Train the Trainer. Develop on-site District employees as in-house trainers to become more cost-effective. Provide Continuous Training Improvement Effort. Provide a continuous cycle for evaluating and improving the quality of Training Programs throughout the Districts and that objectives are being met. This includes a yearly assessment of training needs and update of the Districts Training Plan. LE:dm g:\wp\hr\training\martinez\staffrpt.214 2/5/96 *1 STQTRG.XLC Chart 1 Computer Training 51% $34,784 TRAINING SUMMARY First Quarter 1995-96 Technical Training 14% $9,516 Training Materials 1% $682 Safety Training 8% $5,630 Management Training 26% $17,601 5:26 PM ,!:t3/96 Page 1 TRAINING SUMMARY 1 ST QUARTER FY 1995-1996 Number Of Beginning Ending Local Travel, Room Supplies Bfil Event or Description Attendeei; Days ~ Dates Meetings Registratioo B, Per Diem &Other Total Costs Location ~ SAFETY TRAINING FIRST AID/ C.P R. TRAINING 32 6/8/95 860.00 860.00 C.S,D.O.C. MAINTENANCE DIVISIONS 2 FIRST AID/ C.P.R. TRAINING 10 2 6/13/95 6/15/95 2,550,00 2,550.00 C.S D.O.C. MTGE, ENGR, SAFETY, TS, OPER 3 FIRST AID/ C.P.R. TRAINING 19 1 8/24/95 520.00 520.00 C.S.DO.C. COLL, MECH, CONST MGT 4 HAZ MAT TRAINING 7 2 8/1/95 8/3/95 1,190.00 1, 190,00 C.S.D.O.C. MAINTENANCE & OPERATIONS 5 HAZ MAT TRAINING 3 8/8/95 510.00 510.00 C.SD.O.C. PURCHASING 6 Total Safety Training $5,630.00 $5,630.00 ( MANAGEMENT TRAINING 8 PLANNING MTG W/ TED GAEBLER 7/10/95 255.14 255.14 SACRAMENTO GENERAL MANAGER 9 WRKG MTG W/ RETREAT FACILITATOR 15 8/21/95 307.63 307.63 C S.D.O.C. EXEC MANAGEMENT TEAM 10 PLANNING MTG W/ TED GAEBLER 8/23/95 72.08 7208 C.S.D.O.C. GENERAL MANAGER 11 REINVENTING GOVT BOOKS 8/23/95 60.00 60.00 GENERAL MANAGER 12 EXECUTIVE MANAGEMENT RETREAT 7 14 8/24/95 8/25/95 11,058 27 11,058.27 NPT BCH LIBRARY EXEC MANAGEMENT TEAM 13 BUSINESS WRITING SKILLS 13 1 8/9/95 780,00 780.00 IRVINE PURCH,MTCE,ENGR,HR 14 BUSINESS WRITING SKILLS 6 9/6/95 360.00 360.00 IRVINE MTCE, ENGR, HR, TECH SERV 15 MANAGING MULTIPLE PROJECTS 1 8/1/95 99.00 99.00 ANAHEIM PLNTMTCE 16 TAKE CHARGE ASSISTANT SEMINAR 2 8/3/95 278.00 16.00 294.00 ANAHEIM COLLECTION'S INS 17 GFOA ADV GOVT FINANCE INSTITUTE 5 8/6/95 8/11/95 395.00 184.78 579.78 WISCONSIN FINANCE 18 TOASTMASTER INTERNATIONAL 8/17/95 45.00 45.00 SAN DIEGO OPERATION ADMIN 19 FIND AND HIRE GOOD PEOPLE 9/14/95 295.00 295.00 ANAHEIM HUMAN RESOURCES 20 SELF DIRECTED WORK TEAMS 4 9/14/95 500.00 500.00 COSTA MESA SOURCE CONTROL 21 MANAGEMENT SKILLS FOR NEW MNGRS 1 9/22/95 99.00 99.00 IRVINE ENVIRO MNGMT 22 OVERCOMING NEG @ THE WORK PLACE 4 9/26/95 356.00 356.00 ANAHEIM PLNT. MTGE. 23 EROGONOMICS IN THE WORK PLACE 10/5/95 195.00 195.00 IRVINE SAFETY I / .,4 TECHNIQUES TO CUT ENERGY COSTS 2 10/12/95 10/13/95 595.00 595.00 SAN DIEGO OPERATIONS ADMIN J NEGOTIATE ANYTHING WITH ANYBODY 5 2 10/4/95 10/5/95 1,945.00 1,945.00 ANAHEIM CONST MGT, TECH SERV 26 REFUND UNIVERSITY OF IRVINE (295.00) (295.00) IRVINE LABORATORY 27 Total Management Training $11,437.98 $5,052.00 $1 ,050.92 $60.00 $17,600 90 28 COMPUTER TRAINING 29 PATHWORK VS SEMINAR 2 6/1/95 6/2/95 40.00 40.00 L.A. SOFTWARE SUPPORT 30 CRISP 32 TRAINING FOR JOB J-31 2 14 6/18/95 7/1/95 2,774,00 2,774.00 NO CAROLINA PLANT AUTOMATION 31 ORACLE TUNE & TROUBLE SHOOT 2 2 6/22/95 6/23/95 1,000.00 1,000.00 IRVINE SOFTWARE SUPPORT 32 EN -TRONIC FT 100/210 TRAINING 4 7/17/95 7/21/95 1,200.00 1,200.00 OHIO PLANT AUTOMATION 33 PRO WORX PLUS 12 3 7/25/95 7/27/95 5,485,03 5,485 03 C.S.D.O.C. INSTRUMENTATION 34 INTERNET WORKING MS IN WINDOWS 1 3 7/25/95 7/28/95 40.00 40.00 LA. SOFTWARE SUPPORT 35 ORACLE USER GROUP 8/10/95 120.00 120.00 NORWALK PLANT AUTOMATION 36 BEGINNING WORD PERFECT FOR WIN 60 8/22/95 3,000.00 3,000.00 C.S 0.O.C. PLANT 2 FIELD 1 STQTRNG XLS BY DATE 6:22 PM '.!23/96 Page2 TRAINING SUMMARY 1ST QUARTER FY 1995-1996 Number Of Beginning Ending Local Travel, Room Supplies Ref Event or Description Attendees ~ Dates Dates Meetings Begistration & eer Di!;lm & Other Total Costs Location Divisions 37 SUPPORTING MS WINDOWS NT. 3 8/28/95 9/1/95 2,050.00 137.60 2,187.60 L.A. SOFTWARE SUPPORT 38 BEGINNING WORD PERFECT FOR WIN 46 3 9/5/95 9/7/95 2,300 00 2,300.00 C.S.D,O.C. MTCE, LABS, OPER, ENGR, FIN 39 BEG & INT WRD PERECT FOR WINS 54 9/12/95 9/14/95 2,700.00 2,700.00 C.SD.O.C. CONS'T MGMT PLANT 1 40 INT & ADV WRD PERFECT FOR WINS 44 9/19/95 9/21/95 2,200.00 2,200 00 C.S D.O.C. ENGR, MTCE, OPER, FIN, TS 41 ADV WORD PERFECT & BEG EXCEL 46 9/26/95 9/28/95 2,300.00 2,300.00 C.S.D.O.C. COMM, ENGR, LABS, OPER, FIN 42 BEG. EXCEL 5.0 FOR WINDOWS 36 10/3/95 10/5/95 1,800.00 1,800.00 C.S.D.O.C. LAB, FIN, ENGR, MTCE, OPER, HR 43 INT WORD PERFECT FOR WINDOWS 12 1 10/3/95 600.00 600.00 C.S.D.O.C. ENV MGT, FIN, LABS, OPER '4 WINDOWS N T. TRAINING 1 5 10/8/95 10/13/95 1,875.00 1,875.00 NEWPORTBCH SOFTWARE SUPPORT .5 BEG. EXCEL 5.0 & INT. EXCEL 5.0 49 10/10/95 10/13/95 2,450.00 2,450.00 C.S.D.O.C. ENGR, FIN, MTCE, OPER, HR, TS 46 BEG. EXCEL 5 O & INT. EXCEL 5.0 47 10/17/95 10/19/95 2,350.00 2,350.00 C.S.D.O.C. ENGR, FIN, LAB, COMM, MTCE, GM 47 BEG. EXCEL 5 O FOR WINDOWS 2 1 10/27/95 10/28/95 100.00 100.00 C.S.D.O.C. MECHANICAL MTCE 48 COMDEX FALL '95 2 11/13/95 11/13/95 100.00 162.00 262.00 NEVADA INFO TECH ADMIN 49 Total Computer Training $34,404 03 $217.60 $162,00 $34,783 63 50 TECHNICAL I RA!NING 51 ISCO SAMPLER MTCE REPAIR 3 8/23/95 594.00 594.00 NEBRASKA SOURCE CONTROL 52 ISCO SAMPLER TRAINING 1 2 10/3/95 10/5/95 250.00 250.00 NEBRASKA SOURCE CONTROL 53 ISCO SAMPLER TRAINING 2 2 9/13/95 9/15/95 500.00 500.00 NEBRASKA SOURCE CONTROL 54 NATIONAL ELECTRIC SEMINAR 3 2 6/29/95 6/30/95 144.00 144.00 ONTARIO CONSTRUCTION MNGMT 55 CWEA TECH CERTIFICATION PRGRM 6/29/95 25.00 75.90 100.90 OXNARD LABORATORY 56 AQMD RULE 431.1 WORKSHOP 1 7/5/95 17.85 17.85 DIAMOND BAR ENVIRO MNGMNT 57 EFFECTIVE MTCE. PLANNING 2 2 7/11/95 7/12/95 160.10 160.10 SAN FRANCISCO MTCE. SCHEDULING 58 NO CAL SOC ENVIRO TOXICOLOGY 2 7/13/95 7/14/95 202.02 202.02 SANTACRUZ ENVIRO. MTCE 59 WATER FUNDAMENTALS WORK SHOP 1 8/4/95 100.00 100.00 IRVINE GENERAL MANAGER 60 WASTE WATER INSTRUMENTATION 1 8/16/95 75.00 5.00 80,00 SANTAANA LABS, OPER 'i1 PREVENTIY,E & PREDICTIVE MTCE 2 8/17/95 8/18/95 42.04 42.04 FULLERTON PLANTMTCE .;2 ENVIRO SCltNCE LAB. 4 9/5/95 9/9/95 425.00 425.00 IRVINE LABORATORY 63 TITLE "V" PERMITS TRAINING WRKSHP 2 9/7/95 9/8/95 395.00 194.19 589.19 SAN FRANCISCO ENVIRONMENTAL MGMT 64 BETTER WAREHOUSE MANAGEMENT 4 1 9/13/95 556 00 556.00 ANAHEIM PURCHASING 65 ACCESSING OCEAN & MARINE DATA 1 2 9/18/95 9/20/95 300.00 300 00 WASHINGTON LABORATORY 66 DESIGN AND INSTALL BURIED PIPES 2 2 9/18/95 9/20/95 1,786.50 1,78650 IRVINE DESIGN ENGR, CONST MGT 67 NATURAL RESOURCE MANAGEMENT 2 9/18/95 9/20/95 195.00 195,00 WASHINGTON LABORATORY 68 THIRD THERMATIC CONF 2 9/18/95 9/20/95 385.00 385,00 WASHINGTON LABORATORY 69 ENHANCING YOUR VALUE VIA INTERNET 1 9/19/95 175.00 175.00 IRVINE SAFETY 70 POLLUTION PREVENTION WORKSHOP 1 9/20/95 10.00 10.00 IRVINE SOURCE CONTROL 71 TRI STATE SEMINAR 9 2 9/21/95 9/23/95 270.00 365.50 635.50 NEVADA SOURCE CONTROL 72 ELECT MTCE. 302 CLASS 1 3 9/21/95 9/24/95 98 60 98.60 FTN VALLEY SOFTWARE SUPPORT 73 ANALYTICAL CHEM & SPECTROSCOPY 5 2 10/4/95 10/5/95 280.00 280.00 FULLERTON LABORATORY 74 SOURCE SAMPLING WORKSHOP 4 11/13/95 11/17/95 899.00 899.00 N.C. LABORATORY 1STQTRNG.XLS BY DATE 6:22 PM "f23/96 Number Of Beginning Ref Event or Description Attendees Days Dates 75 NEGOTIATING YOUR N.P.D.E.S. PERMIT 2 2 11/28/95 76 Total Technical Training 77 TRAINING MATERIALS 78 VIDEO TAPES ON EXCAVATION 79 AMSA TRAINING TAPES FROM SUMMERTECH 80 CERTIFIED EMPLOYEE BENEFIT SPECIALIST 81 HANDBOOK OF EMP.'S BENEFITS C 32 STUDY MANUAL 83 Total Training Materials 84 FIRST QUARTER GRAND TOTAL r •. 1STQTRNG.XLS ... TRAINING SUMMARY 1ST QUARTER FY 1995-1996 Ending Local Travel, Room Dates Meetings Registratio• & Per Diem 11/29/95 990.00 $6,965.10 $2,550.60 $11,437.98 $52,051.13 $3,819.12 BY DATE Page 3 Supplies ~ Total Costs Location Divisions 990.00 SAN FRANCISCO TECH. SERVICES $9,515.70 402.50 402.50 SAFETY 22.00 22.00 GENERAL MANAGER 105.00 105.00 C.S.D.O.C. HUMAN RESOURCES 87.50 87.50 C.S.D.O.C. HUMAN RESOURCES 65.00 65.00 C.S.D.O.C. HUMAN RESOURCES $682 00 $682.00 $904.00 $68,212,23 6:22 PM 1 /18/96 Page 1 TRAVEL AND MEETING EXPENSES 1st Quarter FY 1995-96 Number of Beginning Ending Local Travel, Room Supplies & fk[ Event or Description Atlendees Days Dates ~ ~ Reqisjralion & Per Diem Qlllfil Total Costs Location Dept Divisions FA H.R. COMMITTEE 7/12/95 • 159.80 159.80 C.S.D.O.C. DIRECTORS 2 EXECUTIVE COMMITTEE 7/20/95 140.25 140.25 C.S.0 .0 ,C. DIRECTORS 3 SELECTION COMMITTEE LUNCHEON 7/31/95 36,41 36.41 FOUNTAIN VALLEY DIRECTORS 4 AD HOC COMMITTEE 8/09/95 71 .80 71.80 C.S.D.OC. DIRECTORS 5 AD HOC COMMITTEE 8/16/95 90.46 90.46 C.S.D.OC. DIRECTORS 6 STEERING COMMITTEE 8/23/95 73.72 73.72 C.S.D.O,C. DIRECTORS 7 OMTS COMMITTEE 9/06/95 68.40 68.40 C.S.D.O.C. DIRECTORS 8 PDC COMMITTEE 9/07/95 68.40 68.40 C S.D.OC. DIRECTORS -" EXECUTIVE COMMITTEE 9/20/95 78.87 78.87 C.S,D.O.C. DIRECTORS 10 AMSA MEETING 2 6/28/95 6/30/95 627.28 627.28 WASH., D.C. GENERAL MANAGER 11 AMSA SUMMER TECH WORK CONF 4 7/18/95 7/22/95 425.00 583.32 1,008.32 RHODE ISLAND TECHNICAL SERVICES 12 WATER ENV FED RESIDUALS/BIOSOLIDS 4 7/22/95 7/26/95 450.00 762.20 1,212.20 MISSOURI ENVIRO SERVICES 13 CASA FALL WORK SHOP 8 3 8/09/95 8/12/95 800.00 2,844.65 3,644.65 SAN DIEGO GENL MGR & DIRECTORS 14 TRI TAC & TRI TAC RETREAT 1 2 9/14/95 9/15/95 24.25 24.25 SACRAMENTO TECHNICAL SERVICES 15 AMSA CONFERENCE 3 9/30/95 10/03/95 140.00 140 00 WASH, DC, GENERAL MANAGER 16 WATER ENV FED TECH\ PROF WRK CONF 4 10/21/95 10/25/95 2,115.00 627.00 2,742.00 FLORIDA DESIGN ENGINEERING 17 VARIOUS MONTHLY MEETINGS 7/01/95 33.50 33.50 VARIOUS GENERAL MANAGER 18 VARIOUS MONTHLY MEETINGS 8/01/95 569.88 569.88 VARIOUS GENERAL MANAGER 19 SOURCE CONTROL SURVEILLANCE 30 6/01/95 132.00 132.00 ORANGE. CNTY SOURCE CONTROL 20 CARTEL SECURITY SURVEILLANCE 8/03/95 21 ,30 21.30 VARIOUS SOURCE CONTROL 21 RELOCATION FOR TECH SERVICES DIR 7/25/95 2,597.15 2,597.15 FROM MA. TECHNICAL SERVICES 22 PROGRAMMER CONF 1 3 6/06/95 6/09/95 995.00 995.00 CHICAGO PLANT AUTOMATION 23 EFFECTIVE MTGE. 2 2 7/11/95 7/12/95 500,00 500.00 SAN FRAN ELECTRICAL MTCE EN-TRONICS MTG. 4 7/17/95 7/21/95 1,092.59 1,092.59 OHIO HARDWARE SUPPORT J RAPC MTG. 7/20/95 2.25 2 25 SANTAANA ENVIRONMENTAL MNGMT 26 ADVISORY & PLANNING COUNSEL 7/20/95 3 00 3.00 SANTAANA ENVIRONMENTAL MNGMT 27 OCIP MEETINGS 7/26/95 168.24 168 24 C S.D.O C. GENERAL MANAGER 28 BENCH MARKING STUDY 7/27/95 47.30 47.30 SACRAMENTO OPERATIONS ADMIN 29 AICHE SUMMER NATIONAL MTG. 6 7/28/9? 8/03/95 675.00 675.00 BOSTON ENVIRO MNGMNT 30 CWEA DIREGTORS MEETING 7/28/95 161.00 161.00 OAKLAND OPERATIONS MNGMT 31 SIXTH ANNUAL BORLAND DEV. CONF. 2 8/08/95 8/09/95 1,194.00 1. 194 00 SAN DIEGO SOFTWARE SUPPORT 32 CAL SOC MUNICIPAL FINANCE OFFICERS 4 8/10/95 80.00 80.00 SANTAANA FINANCE/ACCT'G 33 CAL SOC MUNICIPAL FINANCE OFFICERS 2 40,00 8.00 48.00 COSTA MESA ACCOUNTING 34 PUBLIC BOARD HEARING SCAQMD 8/11/95 15 90 15 90 DIAMOND BAR ENVIRONMENTAL MNGMT 35 EPA/ SSO MTG 3 8/16/95 8/19/95 1,737.05 1,737.05 WASH, D.C. TECHNICAL SERVICES 36 ANALYTICAL CHEMISTRY 27 8/16/95 9/13/95 335 00 335.00 ANAHEIM LABORATORY 37 SANTA ANA COURT/ SMALL CLAIMS 1 8/16/95 3.00 3.00 SANTAANA ACCOUNTING 1 STOTAVL.XLS lrvl_dte 3:19 PM 1/18/96 Page 2 TRAVEL AND MEETING EXPENSES 1st Quarter FY 1995-96 Number of Beginning Ending Local Travel, Room Supplies & Rel Event or Description Anendees Qm Qel§ ~ ~ Registration & Per Diem Qlllltl Tola! Costs ~ Dept Divisions 38 BIOSOLIOS SITE INSPECTION & MEETINGS 8/18/95 , 26.30 26.30 ARIZONA TECHNICAL SERVICES 39 D.O D. DATA BASE 2 8/28/95 8/30/95 250.00 250.00 SAN DIEGO HUMAN RESOURCES 40 NEW EMPLOYEE ORIENTATION 20 1 8/30/95 95.61 95.61 C.S.D.O.C. HUMAN RESOURCES 41 D.E.C. EQUIPMENT AUDIT 1 13 9/02/95 9/15/95 250.00 250.00 OHIO SOFlWARE SUPPORT 42 A&WMA TITLE 'V' OPERATING PERMITS 2 9/07/95 9/06/95 490.00 114.00 604.00 SAN FRANSISCO ENVIRONMENTAL MNGMT 43 CWEA NORTHERN REGIONAL CONF. 2 9/07/95 9/09/95 142.00 349.75 491.75 BURLINGAME, CA OPERATIONS ADMIN 44 ENGR PART,NERING MTG W/ CONTR 6/22/95 59,02 59.02 FTN VALLEY ENGINEERING ADMIN 45 ENGR PARnlERING MTG WI CONTR 9/11/95 101 .14 101.14 C.S.D.O.C. ENVIRONMENTAL MNGMT .46 CALIF. E.P.A. PERMIT STREAM LINING 9/13/95 26.00 26.00 SACRAMENTO TECHNICAL SERVICES ORANGE COUNTY FORUM LUNCHEON 1 9/14/95 25.00 25.00 IRVINE GENERAL MANAGER 48 TRI-STATE CONFERENCE 2 9/21/95 9/23/95 30.00 30.00 NEVADA OPERATIONS ADMIN 49 ISA CONFERENCE 4 10/02/95 10/06/95 250.00 250.00 NEW ORLEANS PLANT AUTOMATION 50 2 ND ANNUAL S.C.E. WATER CONF 1 10/03/95 10/03/95 40.00 40.00 IRWINDALE OPERATIONS ADMIN 51 OCEANS '95 MTS/IEEEE 4 10/09/95 10/12/95 480.00 355.00 835.00 SAN DIEGO ENVIRONMENTALMNGMT 52 1995 HAY HUMAN RESOURCES CONF I 10/11/95 590.00 590.00 LA HUMAN RESOURCES 53 MISC. KITCHEN UTENSILS 101.52 101.52 DIRECTORS KITCHEN 54 REFUND ON PREPAYMENT FOR TERRI AHN (181 .00) (161.00) ENVIRONMENTALMNGMT 55 ARMED FORCES REFUND (35.00) (35 00) SAFETY 56 FIRST QUARTER TOTAL 721.41 10,314.73 13,123.17 24,159.31 1STQTRVL.XLS lrvl_dle 3:19 PM .Emml!.1 D Written Report D Overheads •Slides D Flip Charts Originator ~ Michelle]~ Department Head Sign Off ----"'-,_,.,11"- Michelle Tuctvnan Anticipated Time $ IM¥-: - FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-13: Summary AGENDA FOR FEBRUARY 14, 1996 Request a waiver of Districts' policy in order to retain a former employee on work-order basis. The Districts' Human Resource Policies and Procedures states that any former employee who retires or resigns from the agency and forms a business in which he or she is sole proprietor may not be retained to provide service directly to the Districts for a period of one year subsequent to their last day of employment. Corinne Berenson, a long-time Districts employee, has been working on part-time status, 20 hours per week, since April 1995. Her primary responsibilities have been to represent the Districts on the Think Earth Environmental Education Foundation and to work on the development of EcoPark, which was recently voted down in committee. She also coordinated special projects, including last summer's Family Day and the Districts' booth at the Orange County Fair. Her in-depth knowledge of the agency and our industry makes Corinne a valuable asset. However, because of her diminishing responsibilities, combined with a reorganization of the Communications Division, Corinne's talents can best be utilized on an as-needed, work-order basis. As an independent contractor, she will work from her home, coming to the Districts' office only when requested. Providing support on an as-needed basis would represent a significant savings to the Districts over part-time employment. In addition,· the position Corinne now encumbers would be vacated, facilitating further reorganization of the Communications Division. Staff Recommendation Staff recommends that the Committee approve a waiver to retain Corinne Berenson on a work-order basis. 'I- ,., Format D Written Report D Overheads •Slides D Flip Charts Originator ro?l;i oQyl Department Head Sign~ Gary Streed Anticipated Time 5 min. - FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 1996 FAHR96-14: Consideration of motion to receive and file Treasurer's Report for the month of December 1995. Summary Both Pacific Investment Management Co., PIMCO, and Mellon Trust began their professional external management of our funds in September 1995. In order to give the Directors an opportunity to review the month-end reports available from PIMCO, and to avoid distribution at the meeting, reports from the prior month are included with the agenda. Quarterly presentations are made to the Committee by both PIMCO and our third- party independent consultant, Callan Associates. 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." All of the Investment Policy requirements are being complied with and performance to date exceeds the index rates. / ' ,:;_; •0sarances ,-. , } '• _, : \ :O_~_C-: 3<-1_995 : ' csboc State of Calif. LAIF $16,843,353 Bank of America 351,082 PIMCO -Short-term Portfolio 60,559,387 PIMCO -Long-term Portfolio 256,129,758 District 11 GO Bond Fund 16,715 Debt Service Reserves @ Trustees 33,904,754 $367,805,049 Staff Recommendation Staff recommends the Committee receive, approve and forward this report to the Joint Boards. J:\WPDOC\FINICRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.14 February 14, 1996 $500 $400 I! i $300 Cl 1 I $200 • $100 CSDOC TOTAL CASH & INVESTMENTS 1994 -1995 Dec6 Dec31 Js,31 Feb28 Mor31 Apr30 Moy31 June30 July31 Aug.31 Sept.30 Od.30 Nov.30 Dec.31 J:\WPDOC\FIN\CRANE\FPC MTGIFAHR.96\COVERS.98\FAHR96.14 ~ MONTHLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY lNVESTMENT MANA.GW.IENT PROGRAM Pll\tCO'S PERFORMANCE MONITORING & REPORTING (for the month e1Uiing December 31, 1995) Liq11id Operating 1\lonies - 14.1.l I'()RTFOLIO COST AND l\·lARKET VALUE Current Market Value: Hislmical Cost: 14.1.2 1\.-IODIFIED DURATION Of Portfolio: Of Index: 14.1.3 1% INTEREST RATE CHANGE Donar Impact (gain/loss) of 1 % Change: 14.l.4 REVERSE REPOS % of Portfolio in Reverse Repos: (sec 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 11A11 RATING % of Portfolio Below "A 11 : 14.1.8 INVESTMENT POLICY COMPLIANCE "In Compliance" 14.1.9 PORTFOLIO PER.FORl\,1ANCE Portfolio Total Rate of Return: 1 Month: 3 Months: 12 Months: Year-to-Date: Index Total Rate of Return: L Month: r: lm:tri:or\uym,mr\ocmoldom603. J }95 $61,121,663 $61,131,613 :14 .25 ' -- $85,570 (.14%) 0% 88% AA 0% .50 1.50 ---I --- .46 MONT BLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT A-L4N/lGEMENT PROGRAM PI.J\.1CO'S PERFORl\.'IANCE f\:IONITORING & REPORTING · (for the month erulin~~ December 31, 1995) Long Tenn Operating Mo11ies .. -~ --~- 14.1. l PORTFOLIO COST AND MARKET VALUE Current lvlarket Value: Historical Cost: - 14.1.2 MODil1IED DURATION Of Portfolio: Of llldex: - 14.1.3 L % lNTF.ItEST RA TE CHAN GR Dollar Impact (gain/loss) of 1 % Change: - 14.1.4 REVERSE REPOS % of Portfolio in Reverse Repos: (sec attached scl1cdule} 14.1.5 PORTFOLIO MATURITY % of Portfolio Maturing within 90 days: 14. l.6 PORTFOLIO QUAI .. ITY Average P01tfolio Credit Quality: 14.1.7 SECURITIES BELOW 11A" RATING % of Portfolio Below "A 11: 14.1.8 INVESTMENT POLICY COMJ>LIANCE uln Compliance" r-- 14.1.9 PORTFOLIO PERFORMANCE Portfolio Total Rate of Return: J Month: 3 Months: 12 Months: Year-to-Date: Index. Total Rate of Return: 1 Moalh: ---.. -.. . . . $264.147,577 $260,440,714 2.7 2.4 ~7, 131,985 {2.6%) 0% - NA AA 0% I. L3 -3.39 -- ----- .90 Format D Written Report •Overheads •Slides • Flip Cherts I Originator~ Micti-,~ ~ite ~ Department Head Sign c/,,(')-/.J,.,i._('O ,.._ GaryG~1r~ Anticipated Time / S ~ FrNANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-15: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to review, approve and file the Mid-Year Report prepared by staff for the period ending December 31, 1995. Attached, in a separately bound document, is the Districts' first comprehensive Mid-Year Report for the period ending December 31, 1995. This report is a consolidation of both the financial and operational accomplishments of the Districts' at the midpoint of the 1995-96 fiscal year. Contained within the Mid-Year Financial Report are budget summary reviews of the Joint Operating & Working Capital Funds, the Capital Outlay Revolving Fund, individual Districts, and the self-insurance funds. Contained within the Mid-Year Operational Report is the status of the Activity Trends and Projects previously identified in the 1995-96 Approved Budget. As indicated within the Overview Section of this report, 44.25 percent, or $24,060,000 of the 1995-96 net joint operating budget of $54,380,000, has been expended. In addition, the Districts' are still only at 48.26 percent of the "target" budget of $49,860,000. The total cost per million gallons is $555.87, which is below the approved budget and target goals of $627.30 and $599.00 respectively. Staff Recommendation Staff recommends that the Committee review, approve and forward the 1995-96 Mid-Year Report to the Joint Boards. J:IWPOOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.961FAHR96.15 I .E2!r!!!!! D Written Report •Overheads •Slides • Flip Charts Originator~ Department Head Sign GaryG. Streed.- Anticipated Time f O fl>N...'- FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-16: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to approve proposed update to the Districts' Fiscal Policy Statements. Prior to the start of the 1995-96 budget process, staff presented a listing of proposed Fiscal Policy Statements that were reviewed and approved by this Committee. The purpose of such a policy is to formally define the goals for the financial operations of the Districts, and to provide the Directors with the tools necessary for making financial decisions. Staff used the adopted Fiscal Policy as a guideline in the preparation of the 1995-96 budget. In the budget document, staff described the status of the Districts' compliance with each individual fiscal policy statement. Staff has again reviewed the compliance status with each of the adopted fiscal policy statements, and has proposed additional policy statements to ensure that the Districts' Fiscal Policy is current and relevant to today's operations. Upon approval, staff will again incorporate the Fiscal Policy Statements into the 1996-97 proposed budget process. Attached is the status of the current Fiscal Policy statements along with the proposed new Fiscal Policy statements for consideration by the Committee. Staff Recommendation Staff recommends that the Committee adopt the following update to the Districts' Fiscal Policy. As part of the current year's budget process, staff will again evaluate the Districts' current status in relation to the Policy and make recommendations for improvements. J:IWPDOC\FINICRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.16 Fiscal Policy Fiscal Policy Statement Status Comments General Financial Goals To maintain financially viable Sanitation Districts that can maintain an adequate level of wastewater treatment services. ✓ To maintain financial flexibility to be able to continually adapt to local and regional economic changes. ✓ To maintain and enhance the sound fiscal condition of the Districts. ✓ To ensure that the value added of every program and Proposed Addition for activity within the Districts' is proportional to its cost; and 1996-97. eliminating those programs and activities that do not contribute to the Districts' mission. To provide training opportunities for available Jobs within Proposed Addition for the organization for those employees working in 1996-97. programs or activities that have been reduced or eliminated. To provide employees with cross-training opportunities in Proposed Addition for order to achieve multi-tasking capabilities. 1996-97. Operating Budget Policies The Districts will adopt a balanced budget by June 30 of each year. ✓ The budget will be used as a fiscal control device as well Proposed Addition for as a financial plan. 1996-97. Budget preparation and monitoring will be performed by Proposed Addition for each division within the Districts, the level at which 1996-97. accountability and control will be held. The Director of Finance will prepare a budget calendar no later than January of each year. ✓ An annual operating budget will be developed by verifying or conservatively projecting revenues and expenditures for the current and forthcoming fiscal year. ✓ During the annual budget development process, the existing programs will be thoroughly examined to assure removal or reduction of any services or programs that could be eliminated or reduced in cost. ✓ 1 Fiscal Policy Fiscal Policy Statement Status Comments Annual budgets including reserves will provide for adequate design, construction, maintenance and replacement of Districts' capital plant and equipment. ./ The Districts will maintain all physical assets at a level adequate to protect the Districts' capital investment and to minimize future maintenance and replacement costs. ./ The Districts will project equipment replacement and Equipment Replacement maintenance needs for the next five years and will update this Schedule will be prepared projection each year. From this projection a maintenance and in 1995-96. replacement schedule will be developed and followed. (On Schedule) The Districts will avoid budgetary and accounting procedures which balance the current budget at the expense of future budgets. ./ The Districts will forecast its Joint Works' expenditures and Current forecast is done in revenues for each of the next five years and will update this the aggregate. Forecast forecast at least annually. of expenditures by division line item will be completed in '95-'96. (On Schedule) Revenue Policies Because revenues are sensitive to both local and regional economic conditions, revenue estimates adopted the Districts' Board must be conservative. ./ Staff will estimate annual revenues by an objective, analytical process utilizing trend, judgmental, and statistical analysis as appropriate. ./ Ad valorem property tax revenues of the Districts will be dedicated to debt service. ./ Expenditure Policies The Districts will maintain a level of expenditures which will provide for the health, safety and welfare of the residents of the community. ./ The Districts will set fees and user charges at a level that fully supports the total direct and indirect costs.of operations, capital improvements, and debt service requirements not covered by reserves. ./ 2 Fiscal Poricy Fiscal Policy Statement Status Comments Sewer Service User Fee will be projected for each of the next Scheduled for completion five years and this projection will be updated annually. in 1995-96 along with Sewer Rate study. (Delayed Until Strategic Plan Completed) Capital Improvement Budget Policies The Districts will make all capital improvements in accordance with an adopted and funded capital improvement program. ✓ The Districts will develop an annual five-year plan for capital Current schedules will be improvements, including design, development, expanded to include O&M implementation, and operating and maintenance costs. costs in 1995-96. (Update delayed Until Strategic Plan Completed) Staff will identify the estimated costs, potential funding sources and project schedule for each capital project proposal before it is submitted to the Joint Boards for approval. ✓ The Districts will use intergovernmental assistance to finance only those capital improvements that are consistent with the Capital Improvement Plan and Districts' priorities, and whose operating and maintenance costs have been included in the budget. ✓ Staff will coordinate development of the capital improvement budget with the development of the operating budget. All costs for internal professional services needed to implement the CIP will be included in the operating budget for the year the CIP is to be implemented. ✓ The Districts will use intergovernmental assistance and other outside resources whenever possible. ✓ Cost tracking for components of the capital improvement program will be updated quarterly to ensure project completion against budget and established time lines. ✓ Vehicle Replacement Policy In order to provide safe, reliable transportation appropriate to the work to be performed, the following policies have been established: • The newest vehicles will be used for those purposes requiring the highest annual ✓ mileage. 3 Fiscal Policy Fiscal Policy Statement Status Comments • Vehicles may be replaced when they are 10 years old or have accumulated 100,000 miles. ✓ • A vehicle may be replaced in advance of the above criteria, if it can be reallocated to a low mileage use between the plants. ✓ • Electric vehicles are to be purchased for all in-plant only activities. ✓ Short-Tenn Debt Policies The Districts may use short-term debt to cover temporary or emergency cash flow shortages. All short-term borrowing will be subject to Board approval by resolution. ✓ The Districts may utilize Board approved inter-District loans rather than outside debt instruments to meet short-term cash needs. Inter-District loans will be permitted only if an analysis of the affected Districts indicates funds are available and the use of these funds will not impact the District's current operations. The prevailing interest rate, as established by the Districts' Treasurer will be paid to the lending District. ✓ Long-Tenn Debt Policies The Districts will confine long-term borrowing to capital Policy will be re- improvements that cannot be financed from current revenue. evaluated as a part of In accordance with the 1989 Master Plan, one-half of all future the Strategic Plan long-term capital improvements will be funded from long-term process. debt with the remaining cost funded from capital improvement reserves and current revenues. ✓ Proceeds from long-term debt will not be used for current on- going operations. ✓ Before any new debt is issued, the impact of debt service payments on total annual fixed costs will be analyzed. ✓ Reserve Policies An operations contingency reserve will be established to provide for non-recurring, unanticipated expenditures or to set aside funds to cover known contingencies with unknown costs. The level of this reserve will be established as needed but will not be less than 20% of the annual operating expenses. ✓ 4 Fiscal Policy Fiscal Policy Statement Status Comments A dry-period operations reseive will be established to fund operations and maintenance expenses for the first half of the fiscal year prior to receipt of taxes and user fees. The level of this reseive will be established as needed, but will not be less than 50% of annual operating expenses. ✓ Reseive balances will be accumulated and maintained to fund approximately one years worth of the total cost of future capital improvements. ✓ Self-insurance reseives for property (fire, flood, and earthquake), general liability, and workers' compensation will be maintained at a level which, together with purchased insurance policies, adequately protect the Districts. The Districts will maintain a reseive of $100,000,000. ✓ Board approval is required before expending contingency reseive funds. ✓ Investment Policies The Districts' Treasurer will annually submit an investment policy to the Districts' Board for review and adoption. ✓ The investment policy will emphasize safety and liquidity before yield. ✓ Accounting, Auditing, and Financial Reporting The Districts' accounting and financial reporting systems will be maintained in conformance with generally accepted accounting principles and standards promulgated by the Governmental Accounting Standards Board. ✓ A fixed asset system will be maintained to identify all Districts' assets, their condition, historical cost, replacement value, and useful life. ✓ Quarterly financial reports will be submitted to the Districts' Board and will be made available to the public. ✓ Full disclosure will be provided in the general financial statements and bond representations. ✓ The Districts' will maintain a good credit rating in the financial community. ✓ 5 Fiscal Policy Fiscal Policy Statement Status Comments An annual audit will be performed by an independent public accounting firm with the subsequent issue of an official Comprehensive Annual Financial Report, including an audit opinion and a management letter. ✓ 6 ,I E2!!!!!! D Written Report •Overheads •Slides 0 Flip Charts Originator~ Michael hite Department Head Sign ~•"=~~==- Gary G. Streed po Anticipated Time / 0 MJJ.- FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-17: Summary AGENDA FOR FEBRUARY 14, 1996 Consideration of motion to review and approve 1996-97 Budget Assumptions for use in preparation of Districts' 1996-97 Budget. Certain assumptions are necessary as a foundation for developing the Districts' budget. These assumptions guide the Board of Directors and Districts' staff in determining the level of wastewater treatment services that will be provided to the community and how these services will be funded. Attached are key assumptions staff has developed in order to guide the Districts' through the development of the 1996-97 Budget. Staff encourages Directors' to propose additional assumptions that they believe should be used in the budget development process, or to propose any other changes they would like to see incorporated in the 1996-97 Budget. Staff Recommendation Staff recommends that the FAHR Committee review the attached Budget Assumptions and approve their use in the preparation of the 1996-97 Budget. J:\WPDOC\FINICRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.17 FAHR96-17 ATTACHMENT A 1996-97 Proposed Budget Assumptio·ns • Inflation for Orange County in 1996-97 is projected to be 2.5 percent based on the percentage of change in the consumer price index obtained from the December 1995 Economic and Business Review report prepared by Chapman University. • Connection fees, or capital facilities connection charges, and annexation fees will increase by the Engineering News Record index for Los Angeles in accordance with the adopted Board Resolution. However, user fees will remain at the same rates for the fifth consecutive year. • Property tax revenues are projected to remain constant as the increases from new development are expected to be offset by a general decline in overall property valuation. ·• After discussion with the Districts' External Investment Manager, PIMCO, earnings on the investment of the Districts idle operating cash and reserves will be budgeted at seven percent. • Staffing levels will remain the same or will be lower than the levels approved in the 1995-96 budget. There will be no new net positions added. In addition, salaries will remain at prudent levels as memorandum of understanding agreements are due to expire in November 1996. Step increases will be budgeted for all non-exempt employees not currently at the top of their salary range. • The proposed joint operating budget will continue to reflect an improvement in safety, technical, and management training as the Districts moves towards national standards in the percentage of training costs to total salaries. In 1996-97, the Districts will emphasize cross-training for operational and maintenance employees in order to achieve multi-tasking positions within the organization and reduce the total number of employees needed to operate the treatment facilities. • All programs and activities will be re-evaluated to determine their contribution towards the Districts' mission with the intent to eliminate those programs and activities that do not. • The capital improvement program will continue forward with only the completion of the most critical projects until the Strategic Plan update is completed. With the goal of completing at least 80 percent of the total capital improvement program budget within a 12 month period, staff is estimating that the total 1996-97 Capital Improvement Program will fall within a range of $25 million to $50 million. J:\WPDOC\FIN\CRANBFPC.MTG\FAHR.96\STAFFRPT.96\BUDG.ASS Format D Written Report • Overheads •Slides • Flip Charts Mike Department Head Sign Off '-.I ' Steven . HQlley Anticipated Time 5 ~- FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR96-18: Summary AGENDA FOR FEBRUARY 14, 1996 Request a waiver of Districts' policy in order to retain a former employee on work-order basis. The Districts' Human Resource Policies and Procedures states that any former employee who retires or resigns from the agency and forms a business in which he or she is sole proprietor may not be retained to provide service directly to the Districts for a period of one year subsequent to their last day of employment. This provision may be waived by the Finance, · Administration and Human Resources Committee on a case-by-case basis. Steve Fanizza, a Districts' employee of five years standing, recently resigned as his position as a Programmer Analyst. His main tasks were providing programming services, Oracle database administration and end-user support to Technical Services personnel. Districts' staff negotiated a three week notice and initiated a recruitment campaign when Mr. Fanizza turned in his resignation. Mr. Fanizza left the Districts' to further his career as an independent software consultant. In order to minimize the impact of Mr. Fanizza's resignation and to provide uninterrupted support to Technical Services, Districts' staff would like to engage Mr. Fanizza's services, on a strictly part time basis, to provide software support. Mr. Fanizza's will be used only until a permanent replacement is recruited. His hours will be limited to twenty (20) per week. Staff Recommendation Staff recommends that the Committee approve a-wahrer•to·"retain Steve"Fanizza-on a-work"" order basis. H:\WPOOCS\ITSEC\COMMITTE\FAHR\96-18 (12) Upcoming Meetings .E2m!fil D Written Report •Overheads •Slides •Flip Charts (12): Summary GaryStr~ Anticipated Time ?-~ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR FEBRUARY 14, 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, March 13, 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 Quarterly Communication Program Update Review Insurance Coverages 1996-97 Budget Update Review Responses to F.I.S. RFP Process Review Commercial Bank Selection Alternatives Consideration of 1996-97 User Fees, Connection Fees, Annexation Fees Quarterly Ernst & Young Status Report Consideration of Broad-banding Classifications and Pay-for-Performance Compensation 1996-97 Budget Update Quarterly Treasury & Investment Report Annual Review of Investment Policy Quarterly Budget Review Personnel Classification Studies Quarterly Training Program Status Report 1996-97 Bud et U ate Staff Recommendation Information only item. J:\WPDOC\FIN\CRANEIFPC.MTG\FAHR.96\COVERS.96\CALEN2.96