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 -. . :
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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
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~ ~
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
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(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
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20701051
JAN-23-96 TUE 16:11
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&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
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• 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
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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
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PACIFIC INVESTMENT MANAGEMENT COMPANY
PIMCO'S TEAM
• Three-pronged structure
• Compliance monitoring at
every level
• Portfolio management: team
of generalists and specialists
2
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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
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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
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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
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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
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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
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PACIFIC INVESTMENT MANAGEMENT COMPANY
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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•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