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HomeMy WebLinkAbout1996-05-08... DRAFT 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, May 81 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 May 8, 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: Roger R. Stanton, Vice Chair John C. Cox, Jr., Joint Chair Jan Debay Burnie Dunlap James Flora John M. Gullixson Wally Lynn Thomas Saltarelli William G. Steiner Peer Swan Committee Directors Absent: George Brown, Chair Other Directors Present: John Collins Staff Present: Donald F. McIntyre, General Manager Blake P. Anderson, Assistant General Manager Judith A Wilson, Assistant General Manager Ed Hodges, Director of General Services Admin. David Ludwin, Director of Engineering Gary Streed, Director of Finance Mike Peterman, Director of Human Resources Michelle Tuchman, Director of Communications Steve Kozak, Financial Manager Linda Eisman, Training Manager Dawn McKinley, Sr. Human Resources Analyst Mike White, Controller Isiah Mitchell, Training Supervisor Terri Josway, Safety & Emergency Response Mgr. Others Present: Tom Woodruff, General Counsel (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. FILED In the Office of the Secretar1 eouz Sanitation Oistrict(s) No(s) a?_, 1 r u ! 2 C 1/. I '7.tlf (3) PUBLIC COMMENTS No comments were made. M~22199t By---4-LL·..t.../(,_~,--- ~-· Minutes of Finance, A, .ln. and Human Resources Commi·, i. Page2 May 8, 1996 (4) REPORTS OF THE COMMITTEE CHAIR, GENERAL MANAGER, ASSISTANT GENERAL MANAGER($), 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 Don McIntyre gave a brief verbal report and slide presentation on the proposed upcoming 1996-97 Operating Budget. He noted that the Steering Committee had an opportunity to review progress on the proposed budget last month. Since then, staff has been able to bring the budget down from the proposed 640 FTE to 624 total staffing for this upcoming budget period. Costs per mgd are expected to remain at $555, which is the same cost for mgd as expected for 1995-96. Don announced that the proposed budget will be presented to the Committee at their June 12th meeting. (c) Report of Assistant General Manager -Administration The Assistant General Manager of Administration had no report. Report of Assistant General Manager -Operations The Assistant General Manager of Operations had no report. (d) Report of the Director of Finance/Treasurer The Director of FinancefTreasurer's written report was contained in the agenda package. (e) Report of the Director of Human Resources The Acting Director of Human Resources had no report. Report of the Director of General Services Administration '• : .'·'.·.,-:!l.-:•O :·._, ·11• ___ Jh~t Direetor of General Services Administration had no report. ' I _. ' • ~ (g) Report of General Counsel General Counsel had no report. ·, ) Minutes of Finance, Ad1111n. and Human Resources Committee Page3 May 8, 1996 (5) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the April 10, 1996, meeting of the Finance, Administration and Human Resources Committee. (6) Consideration of PD&C96-17 -Consideration of motion to recommend approval of the requested Capital Outlay Revolving Fund for Fiscal Year 1996-97. David Ludwin handed out two booklets prepared for the Committee's review and reported on the 1996-97 CORF budget. A slide presentation was given by David Ludwin and Gary Streed. Mr. Ludwin reviewed the projects and noted that 85% of the budget would go toward construction, 8% toward planning and research and 7% toward design. Mr. Streed reviewed the costs to the individual Districts, total capital requirements and how these requirements will be met this year without an increase in sewer service fees. Total Capital Improvement Funding is expected to be $44,895,000 this year, an increase of 34% from last year's request. Following discussion, it was moved, seconded, and duly carried to recommend approval of the proposed Capital Outlay and Revolving Fund (CORF) budget. (7) OLD BUSINESS FAHR96-07 Consideration of motion to receive and file status report on Legal Services Committee Activities relative to in-house General Counsel Services. Judy Wilson gave a brief report of the activities to date re the Steering Committee's desire to review in-house General Counsel activities and the formation of the AD Hoc Committee on Legal Services. Judy introduced Greg Mathews who reported in more detail on these activities. Based on various analyses such as cost of proposed in-house legal services, quantitative vs. qualitative issues, staffing utilization, availability, reporting relationships and financial impact, one Attorney, one Paralegal, and one Legal Secretary would be required to operate an in-house office. Duties and responsibilities would focus on the performance of general legal services representing approximately 2,500 hours annually of legal workload. An in-house General Counsel Office is estimated to save the Districts approximately $45,500 annually in offset contract legal fees. Tom Woodruff advised that the possibility of an in-house counsel was looked at one year ago with no changes made. Mr. Woodruff expressed no objection to an in-house counsel as a cost-saving method for the Districts. Tom further advised l Minutes of Finance, Aamin. and Human Resources Commihc.ic Page4 May 8, 1996 he is currently working with Marc Dubois, the new Contracts and Purchasing Manager, who filled the position on March 11, 1996. Tom stated that Marc is already doing an excellent job. Following discussion among the Directors, it was moved, seconded and duly carried to receive and file this status report. Director Gullixson indicated he would like this issue placed on the agenda for a future meeting, and perhaps form an Ad Hoc Committee to review attorney billings. FAHR96-11 Consideration of motion to receive and file PIMCO's Second Quarterly Performance Report, Investment Management Program, for the period January 1. 1996 to March 31, 1996. Steve Kozak summarized PIMCO's Second Quarterly Performance Report, Investment Management Program, for the period January 1, 1996 to March 31, 1996, and Callan Associates' second quarterly performance review for the same period. PIMCO is the Districts' contracted external money manager and Callan Associates is the Districts' independent investme·nt advisor. Mr. Kozak advised that market fluctuations resulted in higher interest rates and a drop in the price of securities during the last quarter. The capital gain and loss from the last two quarters have offset one another. PIMCO is in compliance with the Districts' Investment Program. Mr. Kozak advised that there have been changes in the government code which will be incorporated into the Districts' Investment Policy, and will be brought before the Committee in July for their annual review. The Districts will be fully on- line with Mellon Trust, the Districts' Custodial Bank, enabling us to receive "real time" information. It was moved, seconded and duly carried to receive and file this report. FAHR96-26 Consideration of motion to accept staffs recommendation regarding future funding of Management Performance Review Plan. Dawn McKinley, Sr. Human Resources Analyst, provided a follow-up report and slide presentation to her initial report to the FAHR Committee on April 10, 1996. She indicated the FY96/97 merit fund will be distributed in July 1996 according to the FY96/97 Merit Bonus Guidelines. 5.0 percent of the payroll pool (totaling $569,415) was recommended to fund the FY97/98 MPRP reviews in July 1997. Three (3.0%) percent of the pool was proposed to be distributed as a non-base building merit bonus, and 2.0 percent, or an amount equal to CPI, whichever is lower, was proposed to be distributed to provide a base building market adjustment. The actual dollar amounts to be ,-, Minutes of Finance, Adi, ,.It and Human Resources Committe~ Pages May 8, 1996 (8) distributed are estimated to be $204,547, to be distributed to employees for meritorious performance which is estimated to be 1.85 percent of the management payroll. Some portion of equity issues will also be met with the merit pool funds. Dawn indicated that this proposal is subject to "meet and confer" with the professional and supervisory bargaining units. Their current contract expires on January 31, 1997. Negotiations will be underway in fall of 1996. The approval of this item will ensure that a pool of money is established for performance awards in July 1997 for continued implementation of a merit pay program, and will provide Board support for a performance-based pay program. After considerable discussion, it was moved, seconded and duly carried to approve staff's recommendation with a 2% funding for the Bonus Pool rather than 3%. There was one nay vote. The Committee requested this item be brought and included with other issues in the meet and confer process. 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.) FAHR96-27 Consideration of motion to receive and file Treasurer's Report for the month of March 1996. The month ended March 1996 Performance Monitoring Reports for Liquid and Long-term Operating Monies indicated that total investments amount to $359,143,505. All Investment Policy requirements are being followed and met. There was no discussion on this item. It was moved, seconded and duly carried to approve and forward this report to the Joint Boards. FAHR96-28 Consideration of motion to accept staff's recommendation re adoption of new health benefit plan. Mike Peterman, Acting Director of Human Resources, reported that staff reviews the health benefit insurance plans on an annual basis to determine if the benefits and costs are consistent with market survey information from other agencies, cities and districts. It was concluded that the Northwestern National Life health plan was significantly overpriced and claims payment experience was less than satisfactory. The Districts' broker-of-record, Robert F. Driver Company, was asked in January to obtain estimates for health, dental and vision insurance. After employee informational meetings, MetraHealth was the clear front runner. Delta Dental provided a quotation which would allow the Districts to convert its self-insured plan to fully insured at a slightly higher rate of $1,000 per month. I Minutes of Finance, Adrnin. and Human Resources Comminv-d Pages May 8, 1996 Staff also requested our broker to investigate vision insurance and is proposing to offer vision coverage to all employees regardless of the plan they choose at a cost of $99,324 annually. Net savings to the Districts after all of these changes are estimated to be $688,687. The Committee expressed dissatisfaction with Robert F. Driver's past performance in obtaining competitive health benefit packages and noted that the Districts have not been well served in this area of insurance. Following discussion among the Directors, it was moved, seconded, and after a hand vote, duly carried to approve staff's recommendation to accept the change in the health benefit plan, but to withhold the vision insurance benefit to the collective bargaining process. The changes are as follows: Revision of Resolution 95-105 to reflect agreement with represented employee units to substitute the Metra Health Point-of-Service plan for the Northwestern National Life medical coverage; fund dependent medical premiums at 80% and employee-only coverage at 100%; convert dental insurance from self-funded to fully-insured through Delta Dental; and amend the Memoranda of Understanding with the Districts' bargaining units, and other plan documents accordingly, effective July 1, 1996. FAHR96-29 Consideration of motion to consider alternatives for renewal of All-Risk Property Insurance {including Fire. Flood and Earthquake Coverage) for FY 1996-97. Steve Kozak gave an overview of the Districts' current All-Risk Property Insurance, including fire, flood and earthquake which expires at the end of June 1996, and presented two renewal options provided by the Districts' broker of record, Robert F. Driver Company. After discussion on this item, it was moved, seconded, and duly carried to authorize staff to bind over our current coverage, and negotiate with Robert F. Driver to reduce the cost of coverage, and report back next month. The Committee further requested that staff provide information on Robert F. Driver's commission structure and what commission they are requesting on each of the insurances they provide us. FAHR96-30 Consideration of a motion to renew Excess Workers' Compensation Insurance for the period May 1996 to May 1999, with the California Municipal Excess Workers' Compensation (CAMEX) Program. Steve Kozak briefly reported that the Districts' Broker-of-Record, Robert F. Driver Company, and staff reviewed Excess Workers' Compensation insurance alternatives and learned that the current policy underwriter, American International Group (AIG), has changed its underwriting philosophy and was -~ r-\ Minutes of Finance, Ad,, .• h. and Human Resources Committee 1 Page 7 May 8, 1996 proposing an approximate 35% increase in renewal rates. Driver considered other insurance carriers and, following negotiations with five firms, secured Continental Casualty Company (CNA) for the CAMEX program effective with the May 1996 renewal. The renewal is for a term of three years with a rate guarantee, but the policy is subject to a payroll audit. No additional premium is due unless payroll is increased by more than 10%. After brief discussion, it was moved, seconded and duly carried to renew Excess Workers' Compensation and Employer's Liability Insurance for the period May 1996 to May 1999 with the California Municipal Works' Compensation (CAMEX) Program for a premium of $22,678, which could be adjusted based on a payroll audit. FAHR96-31 Consideration of responses to the Request for Proposals to develop a General Liability Risk Management Program for the Districts. Steve Kozak reviewed the responses received from the Request for Proposals to develop a General Liability Risk Management Program for the Districts effective July 1, 1996. He further provided a summary comparison of the proposals received from the Special District Risk Management Authority, the California Sanitation Risk Management Authority, and Robert F. Driver Company. In response to questions, Gary Streed and Tom Woodruff advised that every year since 1986 the Committee has evaluated purchasing this insurance, however, premiums have consistently been very high. The rates quoted this year seem very reasonable. After discussion among the Committee members, it was moved, seconded and duly carried to: 1 ) Select the proposal submitted by Robert F. Driver to secure Comprehensive General Liability and Excess Liability insurance coverage for the Districts with a Self Insured Retention of $100,000, and a premium cost of approximately $118,750, and recommend approval to the Joint Boards of Directors with an effective date of July 1, 1996; and 2) Directed staff to further investigate the issue of "Known Events Risk Transfer." FAHR96-32 Consideration of motion to receive and file quarterly staff Summary Report of Training and for the Quarter ended March 31, 1996. Linda Eisman presented a brief Quarterly Staff Summary Report of Training for the Quarter ended March 31, 1996. She also gave a brief slide presentation. Linda indicated the Districts are in the process of centralizing and improving I Minutes of Finance, Acunin. and Human Resources Commih.J~ Page 8 May 8, 1996 District-wide training by implementing a Districts' Training Plan which includes required safety, technical and other training needs. She reviewed some of the major projects underway such as safety training, certification programs and the MPRP program. It was moved, seconded and duly carried to receive and file this report. FAHR96-33 Consideration of motion to approve payment of final billing amounts for the Landfill Acquisition due diligence consultant team. Blake Anderson, Assistant General Manager-Operations, reviewed the final billing amounts for the consulting team who worked on the proposed acquisition of the Orange County Solid Waste Management System. Payment of these invoices would bring the total amount expended on consulting services for the landfill acquisition project to approximately $401,737.59. Staff and General Counsel efforts are estimated at an additional $100,000. The Board authorized $100,000 of the consulting work performed by Clements Environmental. Clements performed additional work amounting to $69,945.28. No written agreements were made for the work performed by the other two consultants. Blake advised the Committee that the Districts is still waiting for a response from the County regarding refunding our $100,000. The Districts may offer to provide the reports prepared by these consultants to the County. After discussion, it was moved, seconded, and duly carried to: 1. Approve the payment of $69,945.28 to Clements Environmental. 2. Form an Ad Hoc Committee comprised of Directors Swan, Gullixson and Saltarelli to review the billings of Price Waterhouse and Saybrook Capital in more detail 3. Bring this item back to the FAHR Committee next month. FAHR96-34 Consideration of motion to review and approve the Third Quarter Report prepared by staff for the period ended March 31, 1996. Mike White gave a brief review of the Third Quarter Report of financial and operational expenditures for the period ended March 31, 1996. He advised that 65.74% or $35,747,000 of the 1995-96 net joint operating budget of $54,380,000 has been expended. In addition, the Districts are at only 71. 70 % of the target budget of $49,860,000. After a brief discussion on this matter, it was moved, seconded and duly carried to approve the Financial and Operational Report for the third quarter ended March 31, 1996. Minutes of Finance, Adi :J. and Human Resources Committ~~ Page 9 May 8, 1996 The Committee complimented Mike White for the improved format and information contained in the quarterly report. (9) CLOSED SESSION General Counsel reported to the Committee the need for a closed session, as authorized by Government Code Section 54956. 9 to discuss and consider the item that is specified as Item (9)(b) on the published Agenda. The Committee convened in Closed Session at 8:50 p.m. pursuant to Government Code Section 54956.9. At 9:15 p.m. the Committee reconvened in regular session. Confidential minutes of the closed session held by the Finance, Administration and Human Resources Committee have been prepared in accordance with California Government Code Section 54957 .2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. The Chair reported that an Ad Hoc Committee comprised of Directors Dunlap, Gullixson and Saltarelli had been formed to review the professional services invoices from R. Craig Scott & Associates, and to report to the FAHR Committee in June. (10) OTHER BUSINESS, IF ANY None. (11) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING No reports were requested. (12) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND A STAFF REPORT None. (13) CONSIDERATION OF UPCOMING MEETING DATES AND ITEMS TO BE DISCUSSED AT THOSE MEETINGS The next Committee meeting is scheduled for Wednesday, June 12, 1996. _J Minutes of Finance, AG.llin. and Human Resources Commih-2 Page 10 May 8, 1996 (14) ADJOURNMENT The meeting was adjourned at approximately 9:20 p.m. Lenora Crane Finance, Administration and Human Resources Committee Secretary J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\1996.MINIMFAHRS.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 May 8, 1996, was duly posted for public inspection in the main lobby of the Districts' offices on May 2, 1996. IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of May, 1996. Penny Kyle, Secret f each the Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 & 14 of Orange County, California Posted: -/x_~ ,52__ ~: ~ Sgnature J:IWPDOCIFINICRANE\FPC_MTGIFAHR.96\CERT-POS\CERTPOS.96 May 2, 1996 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE COMPLETE PACKAGES 45 Full Packages Committee 14 & Mailing List Donald F. McIntyre 1 Blake P. Anderson 1 Judith A. Wilson · 1 Corina Chaudhry 1 Greg Mathews 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 Gail Cain 1 Extras 6 Notice,& Agenda Only: (12) Posting 1 Jean Tappan (INCLUDE MtNS.) 1 Angela Holden 1 Clarice Marcin 1 Frankie Woodside 1 Cindy Griego-Sands 1 Fawn Elizondo 1 Guard Shack (Mark Esquer) 1 Extras 3 Treasurer's Report: Ron Zenk, Dist. 14 phone: (714) 962-2411 mailing address: P.O. 805( 8127 Fouptaln Valley, CA 92728-8127 street add11ess: 10844 Ellis Avenue Fo1,11;itain Valley, CA 92708-7018 Member Agencies Cities Anahalm Brea Buena Park Cypress Fountain Valley Fullerton Huntfngcon Beaah /rvfne La Habra La Fslme Los Alsmicos Newport Beech Orange P/sceneia Santa Ana 'Seal Bea"Cih Stanton Tustin Vt1fa Park Yorba Unds Count,,, of Orange Sanitary Districts Costs Mesa Garden Grove Mfdway City Water Oistrlcts lrV/ne Ranch ----, ) COUNTY SJ-\1~ITATION DISTRICTS OF •RANGE COUNTY, CALIFORNIA May 2, 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. MAY 8, 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 May 2, 1996 FINANCE. ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING DATES Finance, Administration and Human Resources Committee Meetings Joint Board Meetings 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 February February 12, 1997 February 26, 1997 March March 12, 1997 March 26, 1997 April April 9, 1997 April 23, 1997 May May 14, 1997 May 28, 1997 CSDOC O P.O. Box 6127 0 Fountain Valley, CA 92726-6127 0 (714) 962-2411 May 8, 1996 AGENDA flNANCE:1 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. MAY 81 1996 -5:30 P.M. :····••·••-................... b .......................... L............................................... ., L ·-•-' ...... ', ··········••-•···· ~ ....... " .......................... -........ • _____ ,.,._,._,._.,,.· ...... -····-·· _ ................ · q · ....... .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 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. ~ ....................................... "I······ ............. ,. ............................ •·"'1•------·--•-···· ................................. , ....... , ................ , ••••. , ............. , ...... , ·····~· .............. .,........ .. ........... ., .................... , ···r···_,. (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). May 8, 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 • Status report on 1996-97 Operating Budget (c) Report of Assistant General Manager -Administration ( d) Report of Assistant General Manager -Operations (e) Report of Director of FinancefTreasurer (f) Report of Director of Human Resources (g) Report of Director of General Services Administration (h) Report of General Counsel (5) Approval of draft Finance, Administration and Human Resources Committee Minutes for Meeting of April 10, 1996. (6) Consideration of PD&C96-17 -Consideration of motion to recommend approval of the requested Capital Outlay Revolving Fund for Fiscal Year 1996-97. (David LudwinfTom Dawes) (7) Old Busi'ness. FAHR96-07 FAHR96-11 FAHR96-26 (8) New Business. FAHR96-27 Consideration of motion to receive and file status report on Legal Services Committee Activities relative to in-house General Counsel Services. (Judy Wilson/Greg Mathews) Consideration of motion to receive and file PIMCO's Second Quarterly Performance Report, Investment Management Program, for the period January 1, 1996 to March 31, 1996. ( Steve Kozak) Consideration of motion to accept staff's recommendation regarding future funding of Management Performance Review Plan. (Mike Peterman, Dawn McKinley) Consideration of motion to receive and file Treasurer's Report for the month of March 1996. (Gary Streed) -2- May 8, 1996 (a) Convene in closed session. (b) Confer with General Counsel re status of litigation: Louis Sangermano v. County Sanitation Districts of Orange County, California, Orange County Superior Court Case No. 732680 (Government Code Section 54956.9(a). (c) Reconvene in regular session. (d) Consideration of action, if any, on matters considered in closed session. (10) Other business, if any. (11) Matters which a Director would like staff to report on at a subsequent meeting. (12) Matters which a Director may wish to place on a future agenda for action and a staff report. (13) Consideration of upcoming meeting dates and items to be discussed at those meetings. (14) 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 j .. (714) 962-3954 (FAX) i ••••••• f -·•"I••-·· .. ••• .................. -..................... ......................................................................................................................... -................................... . J:IWPOOC\FIN\CRANEIFPC.MTGIFAHR.96\AGENOA.96\AGENDAS.96 -4- May 8, 1996 FAHR96-28 FAHR96-29 FAHR96-30 FAHR96-31 FAHR96-32 FAHR96-33 FAHR96-34 (9) Closed Session. Consideration of motion to accept staff's recommendation re adoption of new health benefits plan. (Mike Peterman) Consideration of motion to consider alternatives for renewal of All-Risk Property Insurance (including Fire, Flood and Earthquake Coverage) for FY 1996-97. (Steve Kozak) Consideration of a motion to renew Excess Workers' Compensation Insurance for the period May 1996 to May 1999, with the California M~nicipal Excess Workers' Compensation (CAMEX) Program. (Steve Kozak) Consideration of responses to the Request for Proposals to develop a General Liability Risk Management Program for the Districts. (Steve Kozak) Consideration of motion to receive and file quarterly staff Summary Report of Training and Travel Costs for the Quarter ended March 31, 1996. (Linda Eisman) Consideration of motion to approve payment of final billing amounts for the Landfill Acquisition due diligence consultant team. (Blake Anderson) Consideration of motion to review and approve the Third Quarter Report prepared by staff for the period ended March 31, 1996. (Mike White) 1_.:::: .. •g·~~:-~i~~i~~~:~::~~~~?~~~~~~~~~~ii~~~·~£~c~~=:~:~~~:::;:··--·········:::.:= .. 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 .................... J ......... , ................. ··---~ '•• , ...................... '• '' ............ , ·••-•·· ) '. · ......... 1 ... ' ................................................................................... • -3- ROLL CALL SHEET FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE: May 81 1996 COMMITTEE MEMBERS GEORGE BROWN (Chair) ...................... . ROGER R STANTON (Vice Chair) ............... . JANDEBAY .................................. . BURNIE DUNLAP ............................. . JAMES H. FLORA ............................. . JOHN M. GULLIXSON ......................... . WALLY LINN ................................. . THOMAS SALTARELLI ......................... . WILLIAM G. STEINER ......................... . PEER A. SWAN (VJC) ......................... . JOHN C. COX, JR. (JC) ........................ . STAFF DON MCINTYRE, General Manager .............. . BLAKE ANDERSON, Asst. Gen'I. Mgr. -Ops. . ..... . JUDITH WILSON, Asst. Gen'I. Mgr. -Admin. . ...... . ED HODGES, Director of Gen'I. Srvs. Admin ........ . DAVID LUDWIN, Director of Engineering .......... . BOB OOTEN, Director of Operations & Maintenance .. MIKE PETERMAN, Acting Director of Human Res .... . GARY STREED, Director of Finance .............. . MICHELLE TUCHMAN, Director of Communications .. NANCY WHEATLEY, Director of Tech. Srvs ........ . STEVE KOZAK, Financial Manager ............... . GREG MA THEWS, Principal Administrative Analyst .. . MIKE WHITE, Controller ........................ . LENORA CRANE, Committee Secretary ........... . DAWN MCKINLEY, Sr. Human Resources Analyst .. . LINDA EISMAN, Training Manager ............... . -----------............... . OTHERS TOM WOODRUFF, GEN'L. COUNSEL ............ . ------------............. . ------------............. . c: Penny Kyle L. Crane ROLL5.96 TIME: 5:30 P.M. ADJOURN: P.M. Format • Written Report •overheads •Slldes • FllpCharts Originator Department Head Sign--/~ rre Anticipated Time 5 min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 (4)(e): 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. 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:\WPOOC\FIN\CRANE\FPC.MTG\FAHR.96\COVERS.96\00FS.96 a ~ ~ C ~ ~ ~ RATE(¾) ~ ~ m ~ ~ 0 --" N W ~ CJl ~ C--1 o o o o o o o -< m o o o o o o o ::!1 ::i:: 04-Oct-95 +------+-----t-----lll-----+---¥---+--"it'---1 iii ~ I I I~. I I E • t I t '" I I CD ~ 11-Qct-95 I 1 I 111. I )!( I - I I ~ I I -18-Qct-95 j_ I I I • )( I )i,'. I ~ i : ~ 25-Oct-95 J. • , 1 Ml 1 ,k : -~ T I 0 01-Nov-95 .L ' "8 ' :k : ~ ! 08-Nov-95 ..I. , 1 ,i: I 15-Nov-95 , ;t + I I f I 22-Nov-95 , !' -0 I m 1 ~-29-Nov-95 1' ~ I • <I> I ! g: 06-Dec-95 1 )f: (") (IJ I I .., 13-Dec-95 : * ~ I + 20-Dec-95 1 1 ' ' * 0 : : : I : (") ~ 27-Dec-95 : : l , ;::c '-o I I l )> • I I 3 ~ 03-Jan-96 1 1 -I ra : : T m m 1 0-Jan-96 1 1 :k :C j ! - 17-Jan-96 1 1 1 ;· C/J : : : -I + 24-Jan-96 ; ; : 0 11 I I :::ti I I I -< ~ 31-Jan-96 1 , 1 I G) I I I "'" en 1 1 I I ,v ~ 07-Feb-96 , , 1 1 m {l : : : T : . "'tJ 14-Feb~96 ' 1 1 :i ' I O + 21-F•b-00 _j. : : • ;, , :I: , ,!-I I ~ en I 28-Feb-96 0 ~ 06-Mar-96 t 1 ¾ , ;:k (IJ I I I j I I I ~ 13-Mar-96 1 1 ~ , m I I I t "C I I I I I I ~~~-I I . : 27-Mar-96 1 .JJ J 03-Apr-96 10-Apr-96 17-Apr-96 24-Apr-96 01-May-96 FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 { 5): Consideration of motion to approve the draft Finance, Administration and Human Resources Committee Meeting Minutes of April 10, 1996. Summary Attached is a draft of the Finance, Administration and Human Resources Committee meeting Minutes of April 10, 1996, for approval by the Committee. Staff Recommendation It is recommended that the minutes of the April 10, 1996, Finance, Administration and Human Resources Committee meeting be approved. These minutes were submitted to the Joint Boards at their April 24, 1996 meeting, and no further action is required. J:IWPOOC\FINICRANE\FPC.MTGIFAHR.98\1996.MINICVRMINS.96 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, April 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 April 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 John C. Cox, Jr., Joint Chair Jan Debay Burnie Dunlap Wally Lynn Thomas Saltarelli Roger R. Stanton, Vice Chair William G. Steiner Peer Swan Committee Directors Absent: James Flora John M. Gullixson Staff Present: Donald F. McIntyre, General Manager Blake P. Anderson, Assistant General Manager Judith A. Wilson, Assistant General Manager Ed Hodges, Director of General Services Admin. Gary Streed, Director of Finance Mike Peterman, Director of Human Resources Michelle Tuchman, Director of Communications Steve Kozak, Financial Manager Linda Eisman, Training Manager Dawn McKinley, Sr. Human Resources Analyst Others Present: Tom Woodruff, General Counsel (2) APPOINTMENT OF A CHAIRMAN PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS No comments were made. Minutes of Finance, A ... ,in. and Human Resources Commi, 1 Page2 April 10, 1996 (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 Don McIntyre reported on the proposed reorganization of the Operations and Maintenance Departments to combine the maintenance functions with operational functions. He presented slides of the proposed organizational changes showing how the reorganization is to take place. It is proposed that Bob Ooten head an expanded Operations and Maintenance Department that includes all current operations functions at Plants 1 and 2, as well as mechanical maintenance and all of instrumentation and electrical maintenance, with the exception of pump station electrical and instrumentation maintenance. A new General Services Administration (GSA) Department is proposed to be formed with Ed Hodges as department head. GSA will include Collections, Information Technology and Facilities Maintenance (Auto Shop, Paint Shop, Rebuild Shop and the new CNG gas station). The contract for security services will also be managed by GSA. The restructuring will be included in the 1996-97 budget and will allow increased operational efficiency, cross-training and better use of staff resources. The restructuring was included in the Ernst & Young recommendation, but is even more important due to privatization issues. (c) Report of Assistant General Manager -Administration The Assistant General Manager of Administration Judy Wilson announced that in trying to improve efficiency at the Districts, a strong Management Audit Program will be underway. Greg Mathews, Principal Administrative Analyst, who recently worked on the Performance Measurements, is currently working for Judy on management studies. Department Heads have been invited to request management studies if they think they will improve their management efficiency and productivity. An Internal Management Audit Team is being formed and will be trained in management audit analytical techniques. There will be an application process with two or three individuals being chosen per quarter to work with Judy and Greg. Judy further described the qualifications and resulting benefits to the various departments and individuals to be chosen to work ' -, ' I Minutes of Finance, Adm1n. and Human Resources Committet:, Page3 April 10, 1996 (d) on the team, once they have acquired these new skills. This new program will be implemented in the upcoming year. Report of Assistant General Manager -Operations The Assistant General Manager of Operations reported on the current reorganization affecting the Districts' Engineering and Technical staff; updated the Committee on the status of the County Bankruptcy; and briefed the Committee on clean-up items concerning the landfills. The Districts received the Plan of Adjustment from the County and is currently evaluating it. Ballots have to be returned to the County by April 29. Recommendations on the Plan of Adjustment will be brought before the Joint Board this month for action to meet the April 29 deadline. Blake reviewed the issues before the Option A and Option B participants involved in the Plan of Adjustment decisions. He further updated the Committee on the Merrill Lynch litigation. Blake advised that staff is cleaning up the details of the invoices received from the various consultants who worked on the Landfill acquisition. There are three principals involved, Clements Environmental, Saybrook Capital and Price Waterhouse. The Districts is in the middle of a dispute with Saybrook and Price Waterhouse regarding their hourly fees. The hours seem reasonable, but the rates are much higher than what is normally paid for Financial Advisors. In response to the Committee, Blake advised that staff is drafting a second letter to the County's Chairman of the Board in-an effort to have our $100,000 refunded, but is making sure that all the facts supporting the $100,000 are clear and accurate, and the tone of the letter is not confrontational. Expenses that the Districts have incurred may be included in the letter. Report of the Director of Finance/Treasurer Gary Streed updated the Committee on the status of the budget process, advising that all divisions received budget manuals and were given training sessions. The Budget Committee representatives from each division had sit-down meetings with Don McIntyre to go over their budgets. Staff is in the process of preparing a reduced budget from the previous 1995-96 Budget . The Budget recommendations will be brought to the June 12 FAHR Committee meeting. Staff received five proposals from reputable software firms and will be making site visits in the next month. Final responses from the bidders are expected in early May. In the second week of May, staff will be observing 'I Minutes of Finance, Admin. and Human Resources Committee Page4 April 10, 1996 (e) (f) vendor demonstrations. A recommendation will be brought to the June 12 FAHR Committee meeting. Gary Streed updated the Committee on the status of the Districts' Certificates of Participation (COPs). Mr. Streed advised that there was a dip in rates in the middle of March on the borrowing, and returns on investments were a little worse due to the fluctuations on Wall Street during that month. Report of the Director of Human Resources The Acting Director of Human Resources had no report. Report of the Director of General Services Administration The Director of General Services Administration had no report. (g) Report of General Counsel General Counsel reported the need for a closed session at the end of the meeting. (5) APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the March 13, 1996, meeting of the Finance, Administration and Human Resources Committee. (6) OLD BUSINESS FAHR95-37 Consideration of motion to receive and file Quarterly Status Matrix from Ernst & Young Administrative Function Review. Gary Streed, Ed Hodges and Mike Peterman briefly reviewed the items enumerated in the Status Matrix pertaining to the Finance, Human Resources and Information Technology Departments and divisions. A significant number of goals were completed and those items that have not been completed were highlighted. Staff will continue to update the Committee on their 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. I Minutes of Finance, Admin. and Human Resources Committee Page 5 April 10, 1996 (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.) FAHR96-23 Consideration of motion to receive and file Treasurer's Report for the month of February 1996. The month ended February 1996 Performance Monitoring Reports for Liquid and Long-term Operating Monies indicated that total investments amount to $357,876,613. All Investment Policy requirements are being complied with and performance to date exceeds the index rates. There was no discussion on this item. It was moved, seconded and duly carried to approve and forward this report to the Joint Boards. FAHR96-24 Consideration of motion to adopt policy allowing staff to make supplier name changes to Board-approved purchases. Mr. Streed requested that staff be given the authority to make supplier name changes to Board-approved purchases in the event of supplier assignments, sales or reorganizations, as long as other terms and conditions of the contracts remain the same. Previous practice required that any change to a purchase approved by the Boards be made with another Board action. This old practice required significant effort in the Board Secretary's office. Staff's request concurs with the Ernst & Young recommendation. Staff will be working with General Counsel reviewing and combining the purchasing resolutions (Resolutions 86-81, 95-9 and 95-62) that govern the purchasing policies and practices and will include the name change procedure. After brief discussion on this item, it was moved, seconded and duly carried to approve staff's recommendation. FAHR96-25 Consideration of motion to approve 1996-97 Sewer Use, Connection Fee, and Annexation Fee recommendations. Staff recommended that 1996-97 sewer use fees be maintained at the 1995-96 levels, and that annexation fees and connection fees be automatically increased on July 1, based upon the change in the Engineering News Record Construction Cost index for the preceding March-to-March time period, and in accordance with the Districts' Board-approved annexation fee p~licy resolutions approved in 1991. After a brief discussion on this matter, it was moved, seconded and duly carried to approve staff's recommendation that the 1996-97 user fees remain unchanged from the 1995-96 rates. It was further moved, seconded and duly carried to allow Minutes of Finance, Admin. and Human Resources Committee Pages April 10, 1996 the connection fees/the capital facilities connection charge, to increase in accordance with the Engineering News Record Los Angeles Index, pursuant to the adopted Resolutions. The Committee suggested that Director Debay's concern regarding connection fees for a Senior project in her District be brought before the Joint Board. FAHR9 6-26 Consideration of motion to accept staff's recommendation regarding future funding of Management Performance Review Program. Judy Wilson introduced Dawn McKinley, Sr. Human Resources Analyst, who provided a slide presentation and gave an overview of the MPRP process and past Board and FAHR Committee actions relative to the process. A plan to improve the MPRP, including extensive training to managers and supervisors, was developed to ensure that the FY96-97 5.0 percent Target Merit Pool Fund would be distributed to provide incentive for meritorious performance. This 5.0 percent merit fund will be distributed as a non-base building bonus, will not become part of an employee's base salary, and would be in addition to the already authorized 3.0 percent fund which would be used to provide a cost-of- living adjustment to those employees whose performance had at least met expectations. The improved MPRP pay for performance program can play a vital role in increasing productivity and improving the quality of the service provided by the Districts as long as future funding is made available for the program. During discussion staff advised this would be brought back to the Committee. The Committee directed staff to look at lowering the cap on the merit pool bonus. It was also requested that the percentages be identified in dollar amounts. After considerable discussion, it was moved, seconded and duly carried to receive and file this information only report. (8) CLOSED SESSION General Counsel reported to the Committee the need for a closed session, as authorized by Government Code Section 54956.9 to discuss and consider two items needing immediate attention that arose subsequent to the publication of the agenda. He reported that these items could be added pursuant to Government Code Section 54954.2(b) upon a two-thirds vote of the Directors. No other items would be discussed or acted upon. It was moved, seconded and duly carried that the pending matter of litigation entitled, Sebastiano Serrantino v. County Sanitation Districts, Orange County Superior Court Case No. 737044, be added to the agenda for discussion, as Item No. 8(b)(1 ). I ) Minutes of Finance, Admin. and Human Resources Committee Page? April 10, 1996 It was moved, seconded and duly carried that the pending matter of litigation entitled Louis Sangermano v. County Sanitation Districts et. al., Orange County Superior Court Case No. 732680, be added to the agenda for discussion, as Item No. 8 (b )(2). The Committee convened in Closed Session at 7:30 p.m. At 8:00 p.m. the Committee reconvened in regular session. Confidential minutes of the closed session held by the Finance, Administration and Human Resources Committee have been prepared in accordance with California Government Code Section 54957 .2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No actions were taken re Agenda Items Nos. 8(b)(1) and (2). (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, May 8, 1996. (14) ADJOURNMENT The meeting was adjourned at approximately 8:00 p.m. ~~ Lenora Crane Finance, Administration and Human Resources Committee Secretary J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\1996.MIN\MFAHR4.96 Format • Written Report • Overheads "1'Slides o Flip Charts ,--) FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 PDC96-17: Consideration of motion to recommend approval of the requested Capital Outlay Revolving Fund for Fiscal Year 1996-97. Summary Each year, staff prepares and the Boards of Directors, through the Committee system, review and approve a capital budget plan for both individual Districts (collection system) and the joint treatment works which, together with the Districts' operating funds, constitute the Districts' budget. The proposed Capital Outlay Revolving Fund (CORF) budget provides funds for the Joint Works Treatment and Disposal System projects. Attached for your review is the summary of the proposed CORF budget, which outlines the requested budget for fiscal 1996-97, together with the cost to complete the projects planned for future years. The CORF budget has been presented in a new format, arranged by plant and process. In total, the requested funds are $44,895,000.00, an increase of 34% from last year's request of $33,530,000.00. The Directors are aware that we have now started our new Strategic Plan, a planning effort that will define the Districts' goals, responsibilities, and requirements over the next 10-year planning period in great detail, and in future years with less certainty. The proposed 1996-97 fiscal year budget includes funding for this planning effort, as well as other research and planning activities; provides a significant share of the funding for rehabilitation and upgrade of existing joint work facilities; and provides funding for construction projects in progress. Only a small percentage of the requested funds are for treatment capacity expansion projects. New expansion projects will await completion of the Strategic Plan. Approximately one-half of the requested CORF budget is for projects which will improve treatment. The largest project in that category is the Secondary Plant Expansion at Reclamation Plant No. 1, where $14.5 million is included to rehabilitate and enlarge our secondary treatment facilities at Reclamation Plant No. 1. Major projects also include replacement of chlorine facilities, the addition of new hydrogen peroxide odor control chemical handling facilities, and other projects in which upgrades and improved treatment are included. The great majority of projects, and nearly all the new projects, are focused on the rehabilitation of existing civil, mechanical, and electrical facilities. Seismic upgrades of older facilities are included in this category, as is funding for the upgrades of existing primary treatment facilities. Also included are studies, designs, and construction projects to upgrade electrical distribution and switching systems. The other major category of expenditures includes support facilities and support systems. These projects include improvements to the information systems which will provide future efficiencies, and upgrades to the buildings and shops which serve the Districts' mission. The remaining five percent of funds are devoted to added capacity, led by such projects as the replacement of older Surge Tower No. 1 with a newer, higher capacity surge tower which will allow the Districts to use the standby ocean outfall with increased reliability. Approximately 85% of the CORF budget is for projects in construction, 7% for projects in design, and 8% for planning and research projects. The projects will be funded through connection fees, which is a fee paid by new development, estimated at 10%; interest on our construction reserves of about 12%; and use of our reserves estimated at 78%. Staff Recommendation Staff recommends that the Finance, Administration and Human Resources Committee review the proposed Capital Outlay and Revolving Fund Budget and recommend approval to the Boards of Directors. J:\WPDOC\PDC96\MA Y\FAHR9617.WPD Construction 85% TOT AL $ 44,895,000 Reserve 78% TOTAL $ 44,895,000 REQUESTED CORF BUDGET FOR FY 96-97 Plannlng /Research 8% Design 7% • Planning El Design a Construction FIGURE 1 Connection Fees 10% j II Connection Fees a Interest • Reserve I 12% SOURCE OF FUNDING -FIGURE 3 Added Capacity 5% Support Facilities/Systems 21% Improved Treatment 48% 26% TOT AL $ 44,895,000 l11 Rehabllitation EJlmproved Treatment •Added Capacity •Support Facilities I FIGURE2 A Beclamatloo Plans 1 New and Ongoing Profects 1. Headworl<s a. Emergency Sewage Bypass System b. Headworl<s No. 1 Rebuild c. Headworl<s No. 2 Increase Capacity 2. Primary Treatment a. Primary Trealmenl 72 MGO Expansion, P1 •37 b. Primary Clarifier Rehab. P1-41 c. 72 MGO Primary Treatment, 2004 & 2012 3. Secondary Treatment a. Electrification ol Pump Drives, P1-36-1 b. Secondary Trmt Expansion to 80 MGO, P1-36-2 c. 40 MGD Oxygen Activated Sludge & OAF's d. 40 MGD Oxygen Act'd Sludge & OAF, 2017 4. Solids Processing a. Belt Presses (4 Units) b. Solids Slorage (4 Bins) c. Dlgesters: 2 O 11 O' Diameter d. Remove Triciding Ftlters 1 & 3 e. Remove Trickllng Filters 2 & 4, 2007 r. 11 0 ft Digesters g. 4 Belt Presses 5. Electrical Power Systems a. Trickling Filter & Satety Improvements. P1-40.1 b. 12 KV Distribution Sys for Support Fae., P1-47 c. 12 KV Electrical Power Dlstnbutlon d. 12 KV Power Dis1nbutlon, 2001-2012 e. S1andby Power Generation, 2005 & 2015 6. Salety Improvements a. Fire Prolect!on, Signs & Waler Sys Mlods P1 -38-5 b. Seismic Retroftt ot Non-StnJct Systems P1-43 c. Seismic Retrofit. Slructural Items P1 -44-1, 3 7. Miscellaneous Projects a. Security & Landscaping, P1-38-1 b. Misc. Mods. Priority Elements P1 -38-2 c. Misc. Improvements lo Plant 1 P1-38-4 d. Fae. Mods.& Salety Upgrades, P1-40.2 e. Facility & Process Mods., P1-40-3 r. Chemical and Wastehauler Fae Mods, P1-46-2, 3 g. Allowance lor Planned Small Projects h. Anowance for Eme,gency Repalrs/lmpr. SUB-TOTAL -RECLAMATION PLANT 1 CORFTl.lLS A 2020 VISION MSTR PLAN OR ORIG EST 1,992,000 14,950,000 2,600,000 32,500,000 C a 32,500,000 a 21,697,000 a 65,463,000 34,000,000 14,300,000 10,140,000 9,100,000 1,300,000 1,300,000 18,200,000 10,920,000 a a 2,477,000 1,099,000 4,914,000 a a a 3,000,000 a a a B REVISED TOTAL PROJECT EST 1,992,000 14,950,000 2,600,000 38,450,000 1,S45,000 32,500,000 1,610,000 40,600,000 65,463,000 34,000,000 14,300,000 10,140,000 9,100,000 1,300,000 1,300,000 18.200,000 10,920,000 6,328,000 4,800,000 2.450,000 1,099,000 4,914,000 2,685,100 1,300,000 1,750,000 CAPITAL OUTLAY REVOLVING FUND SUMMARY OF JOINT WORKS CONSTRUCTION REQUIREMENTS C ESTACCUM COSTS TO 6130/96 450,000 470,000 1,600,000 8,600,000 1996-1997 TO 2005-2006 ,:;:::::· ·o·::· ·2•-:· 1 E , REQUESTED ESTIMATED './ BUDGET . BUDGET • '1996-97 °:: 1997·98 . .:::: •.. -:.-·;· ·~~~ 0 I • 0 •• -_ ,-. ... (;o;_ . : -.>\· sso,ooo I 15,000,000 I 1.200.000 I 1,500,000 BS0.000 I 725,000 350,000 4/25/96 F ESTIMATED BUDGET 1998-99 1.000.000 I 100,000 2,soo,000 I 2.150.000 I 2,000,000 50,000 25.000 I 100,000 130,000 1,000,000 G ESTIMATED BUDGET 1999-2000 10.000.000 I I 2.000.000 I 915,000 1,000,000 I 530,000 4 eage l H I J K II L ESTIMATED FIVE ESTIMATED TEN COST TO BUDGET YEAR BUDGET YEAR COMPLETE 2000.01 TOTAL 2001-2006 TOTAL PROJECTS 1,992,000 1,992,000 14,950,000 2,600,000 1 s.000.000 II 26.000.000 I 12,000,000 38,000,000 1,375,000 1,375,000 2,000,000 2.000.000 II 30,500,000 ,o.ooo I 10,000 II 32,000,000 32,000,000 463,000 463,000 65,000,0I'' 34,000,C 14.300.000 I 14,300,000 6,000,000 6,000,000 4,140,000 9,100,000 9,100,000 1,300,000 1,300,000 1,300,000 18,200,000 10,920,000 II 738.000 II 6.188.000 I I 6,188,000 4,615,000 4,615,000 1,400,000 2,450,000 2,450,000 1,099,000 4,914,000 II II 2.,so.000 I I 2,150,000 1,175,000 1,175,000 750,000 750,000 11'1 Ptl Page 2 A I REVISE~ TOTAL I C II •~:,, . D . ' ,. • • I E I F I G I H II I I Esm;:ATED I K II l 2020VISION EST ACCUM j _EOUESTE~. ESTIMATED ESTIMATED ESTIMATED ESTIMATED FIVE TEN COST TO MSTR PLAN OR PROJECT EST COSTS TO : ,, BUDGET·'t.!·· BUDGET BUDGET BUDGET BUDGET YEAR BUDGET YEAR COMPLETE ORIG EST &'30/96 ·5 19116-97 ..::: 1997-98 1998-99 1999-2000 2000-01 TOTAL 2001-2006 TOTAL PROJECTS B e1am 21:it'.tll aad Qaggla!I emi11:11b 1. Headwor1<s .'-.... ;.~ ""=:· ~-~t-. a. Planl 2 Influent Diversion 2,400,000 • ·'' 1 100,00D 1,500,000 800,000 2,400,000 2,400,000 2. Primary Trealment ··,.~-~,;,,,,_.( a. Primary Treatmenl 24 MGD Expansion, P2-41 14,300,000 14,306,000 6,000 -l • •-300,000 300,000 14,000,000 14,300,000 b. Primary Clatifior Re/lDb. P2-48 a 5,700,000 700,000 _ • .. 1 ;sso.ooo 2,450,000 1,000,000 5,000,000 5,000,000 c, Replace Primary Basins A, 8, C, 2006 11,700,000 11,700,000 ":,. ;t{/tr II 11,700,000 3. Secondary Trea.lment a. Secondaly Treatment Elcpansion, P2-42-2 10,270,000 17,610,000 17,600,000 ~~~, 10,000 10,000 4. Solids Processing a. Rehab 7 Digesters, P2-39 5,000,000 e 9,920,000 670,000 3,000,000 4,000,000 2,000,000 9,250,000 9,250,000 b. Solids Storage: 2 Bins 5,200,000 5,200,000 200,000 200,000 5,000,000 5,200,000 c. Add~lonal l OS Foot Digesl.er 3,900,000 5,100,000 100,000 300,000 2,500,000 2,000,000 4,900,000 200,000 5,100,000 d. Rehabilitale Solld.s Storage-Equipment 500,000 200,000 500,000 500,000 5. Eleclrical Power systems a. Eloc. Fae. Mods. & Safety Upgrades, P2-47·1 a 2,870,000 145,000 :'._:',;;·:~~~;i 1,000,000 1,175,000 450,000 2,725,000 2,725,000 b. Facir11y & Process Mods., P2-47-3 2.410,000 80,000 ~:"'"'~:~:~:r ~-~~--400,000 1,000,000 930,000 2,330,000 2,330,000 c. Standby Power Gen., 2005 & 2015 16,120,000 6. Satety Improvements .r.;;,•,-q-:;;.:,,.:~:· a. Fae Mods & Salety Upgrades. P2-47•2 a 2,008,000 380,000 ··:1~~~8CI0,9!>!> 500,000 328,000 1,628,000 1,628,000 b. Selomlc Relm!it al Non-Structure Syslems, P2·50 a 1,680,000 480,000 ;~..,¥~·~ 700,000 100,000 1,200,000 1,200,000 c. Seismic Retro!it, 511\1Clural hems P2·53 4,305,000 I 4,075,000 3,400,000 -~~-/!,325,~. 325,000 25,000 675,000 675,000 d. Chemical and Plant Water Moo~ns. P2·SS a 4,200,000 700,000 ~~1.~J;,~.~ 1,500,000 550,000 3,500,000 3,500,000 e. Rec!aimed Water System PtnL 2 3,746,000 a 3,335,000 15,000 ~~2!),!)!10 250,000 1,500,000 1,500,000 50,000 3,320,000 3,320.000 f. Fire Proloclion, Signs & Water Sys Mods, P2-46 4,535,000 985,000 ,·,r:~-n'·-~~IJ!IO 1,450,000 200,000 3,550,000 3,550,000 7. Miscellaneous projects ~:~;t~·::.!~~~ a. Priority Misc. Mod., P2-43-1 5,145,000 5 135 000 -~~0,000 10,000 10,000 b. Misc. Modifications, P2-43-3 a 2,730,000 2:120:000 ~"-'•:~10,000 10,000 10,000 c. Allow3nce fOI' Emergency RepaiJSltmpr. a 4,250,000 250 000 .!'~~~400 000 400,000 400,000 400,000 400,000 2,000,000 2,000,000 4,000,000 d. Allowance IOI' PlanJll!d Small Projects 1,500,000 a1: 300,000 300,000 300,000 300,000 1,500,000 1,500,000 8. Suppo~ Facillt.ies ard Stte l!f!Jrovoments a. Operations Building, P2-23-S-1 3,125,000 3,615,000 3,600,000 : ~. 15,000 15,000 b. Warehouse Upgrades, P2·23-6-2R 485,000 ,,, ... ii, 450,000 450,000 c. Maintenance Buildlng, P2-3S-3 5,488,000 6,087,800 587,800 !-"' ~~-1 ,000 3,100,000 500,000 5,500,000 5,500,000 d. Phase II Stte & Security Imp., P2·35-5 2,300,000 2,200,000 200,000 1..: .· iso,cioo' 800,000 900,000 50,000 2,000,000 2,000,000 a. Constrt.l!llon Menaqmnl Office, M-044 IPN15-41 1288,000 d 529.000 510,000 '. ,..., _ :19,oif 19,000 19,000 SUB-TOTAL• TREATMENT PLANT 2 86,742,000 124.090,800 38.198.800 ;l,!;~10.559,000 17,975,000 13,078,000 B.130.00Q. _ __!._250.000 52,992.000 21.200.000 1~m.ooo 11 11.700.000 C lol!2[RIIDI IDd J12lol Em:lllllu 1. Support Facilities and Site Improvements ;~!.:IC;: a. Rehab,rrtatlon al Old Lab 10 Offices J-11-1 A, 2 353,700 23,700 · -~ ,000 330,000 330,000 b. Demolillon or Reuse or Old Control ~nter 200,000 ..,::,,~~~~ -.~~~ 100,000 100,000 200,000 200,000 c. Demolftlon of Support bldg O P2, J-27 215,000 ~J:i,;..~:i::;-:.·, 100,000 100,000 100,000 115,000 -~11tfl£t;i d. CNG Reluellng Stallon 840,000 50,000 ~---·B<,:'.i,-.• C!)C!. 240,000 240.000 II ,- e. New Trailers for rr P1-46-1 400,000 150.000 :e.~1"~~1~ 350,000 350,000 f. Open Bay Enclosures at P1 Warehouse 60,000 60,000 60,000 4/25/96 1,n '" COR.ff:2 .lLS Page J A B C ,..~~"""o~ E F G H I J K L 2020 VISION REVISED TOTAL ESTACCUM t iieauE~TE-6-: ESTIMATED ESTIMATED ESTIMATED ESTIMATED FIVE ESTIMATED TEN COST TO MSTRPLANOR PROJECT EST COSTS TO :''-:-euDGET =. BUDGET BUDGET BUOGET BUOGET YEAR BUOGET YEAR COMPLETE ORIG EST &130/96 _,-:,. ,jggi;:g7. _:: 1997-98 1998-99 1999-2000 2000-01 TOTAL 2001-2006 TOTAL PROJECTS 2. Ou11aJI & Booster Pump Slalioos .j;::.·o, .~··.:. i.e. a. Surge Tower Replacemen1 J-34-1 1,300,000 h 6,550,000 800,000 :,:>,: ·1,000,000 4,000.000 750,000 5,750,000 5,750,000 b. Outfall Reliability & Pumping Annex OOBS ·c· 31,085,000 31,085,000 {~)./ft;f: 31,085,000 31,085,000 c. Ext & Repl 78" to Deep Water W/120" Outfall 56,640,000 k 111,000,000 1,000,000 10,000,000 11,000,000 11,000.000 11 100,000,000 3. ln1onnation Management Systems a. Computerized Fae. Records and Owg. Sys., J-25-1 3,930,000 425,000 ~=-'~-.-. ; . 5,000 500,000 1,000,000 1,000,000 1,000,000 3,505,000 3,505,000 b. Financ[aJ lnfOfflllJUon System (IT) 1,650,000 625,000 ·i, :7.1,000,000 25,000 1,025.000 1,025,000 c. Network System lnlegralion (IT) 797,000 475,000 .~;...-:~~-~56,000 136,000 30,000 322,000 322,000 d. CD-Optical Oma Ardlivlr,g (IT) 75,000 ~f::.w.~~t#.t~ 75,000 75,000 75,000 e. lnfonnation Cabling Add~lon (IT) 100,000 ~1~~2100,~ 100,000 100,000 I. Upgrade Phone ·System (IT) 260,000 ~-?D~:: 30,000 30,000 260.000 260,000 g_ Nelv«>rk Hardware Upgrade (IT) 540,000 130,000 130,000 540,000 540.000 h_ Replace Secumy Aoc8s3 System (!T) 180,000 -1-~,.-;iv e~.ooo 180.000 180,000 l Miscellaneous PLC Hot Slandby Upgrades J.;j~-.~ 160,000 4. P!ahls 1 & 2 MonijorfConlml System, J-31 4,200,000 3,700,000 ~ ... ~ -~-f 350,000 150,000 500.000 500,000 a_ Fioor Optic Inter, J-31-1 300,000 700,000 ; ~:,t!l;JJ 150,000 150,000 300,000 300,000 b. OOB's Control System, J-31 ·2 950,000 550,000 =~~~~!~t~.~ 400,000 400,000 c. Plant 1 Haadworl<s System, J-31-3 850,000 ~~~•300000 550,000 860,000 850,000 d. Secondary Expansion, Plant 2, J-31-4 500,000 ,:_.-::,;_ '"='-,... 'cii, 300,000 500,000 500,000 =·---200 e. SCADAIAutomallon Master Plan & Upgrades 1,350,000 750,000 ~,;;~l-:ioc,ooo 300,000 600,000 600,000 5. Eledliail Power Systems .~~·~ . ~·-•·tJ ... ~ ...... a. Elect!. Power Systems Rehab. Studies J.2S-2 a 1,330,000 220,000 ·i~300.000 300,000 300,000 210,000 1,110.000 1,110,000 b. Slandby Power & RellabiH!y Mods. J-33-1 9,204,000 I 13,900,000 so.ooo , ~~oo.~ 2,000,000 4,000,000 5,000,000 700,000 11,850,000 2,000,000 13,860,000 c. MSP No. 3 al Headworks 2, J-33-2 1,675,000 675,000 -~~-400,000 600,000 1,000,000 1,000,000 d. Electrical Power Olstli:lution, 12Kv 2,707,000 2,707,000 ·~M II 2,707,000 e. lmprovemen1s lo Central GeneraUon 455,000 ,,,.~ , 5,000 250,000 200,000 455,000 455,000 f. Cable Tray Improvements 2,750,000 -200,000 500,000 500,000 500,000 1,750,000 1,000,000 2,750,000 6. Bushard lnlerp4ant Trunk Replacement 26,370,000 26,100,000 ""' -100,000 1,000,000 5,000,000 10,000,000 8,100,000 10,000,000 26,100,000 7. Mlscellal)eous Projects ;/1_ a. In Plant Sampffr,g Sys1em Mod. 70,000 20,000 . ,000 25.000 50,000 50,000 b. Allo~e for Planned Small Projects 3,000,000 ~~300poc) 300,000 300,000 300,000 300,000 1,500,000 1,500,000 3,000,000 c. Allowance for tm01119ncy Repalrsllrnpr. 2,220,000 120,000 • ·~ _ ·;ooo 250,000 250,000 250,000 250,000 1,250,000 250,000 1,500,000 8. Bl0150ffds Dlsj:psal Projecm a. Compos! Demonsttallon Plan! 9,000,000 9,000,000 b_ Land Acqulsi1fon 22,000,000 22,550,000 c. l..!ndlill D811elopment Phase I 28,600,000 28,600,000 d. Compost Faciflly 50,000,000 50,000,000 e. Biosollds Disp. Landflll Phase II 2011 15,600,000 15,600,000 f. Biosollds Disp. Equip Phase I & II 2001 11,550,000 11,550,000 9. Water Reclamation 77,000.000 76.859.200 SUS. TOTAL,• INTERPI.ANT & JOINT 3"11 ,056,000 --434]51.900 COU'Tl .n.s: (125/96 11'7'" D $QtCl•I Pmfocts 1. Mas1er Planning a. Admin. Support Fae C Ph 1, J-38 b. Ocean Outfall Rehabifotalion J-39 c. Peak Hydraulic Discharga'Outfall Sludies J-40-1 d. Financial Planning J-40-2 e. Trealmenl & Disposal S1ra1eglc Studies J-40-3 I. CEOA. Public Partlclpalion, J-40-4 2. Technical Se,vice Projects a. Cenlral Lab Modificallons b. LIMS lmplemenlallon c. Miscellaneous Lab lmpravemenls d. NPDES Perm~ Support e. Emission Modellng Testing r. At Ouallly Dalaba,:e Developmenl g. Sulfur Monfforing h. Central Generation Parametric Monilor Sys I. RelmITI of Chemical Scrubbers 3. Operations Department Projects a. OOB's Ccoflned Spaca study & Mod b. Energy Studles, Envf?S1 c. Turbidity "lonilor & Regulatory Equip d. Full-Scale Blosolids Reductloo e. Misc Optlmaa1lor studies & Improvements I. Scrubber Chemical Feed System Mod. g. Pulse-Power MiclWB Deslruction Project h. Headworj<.s S<Sreenipg Mal. Dewater. Dev. I. Mi:;ct,llaneous Refiabifrty & fledund, Projeats I. Plant Waler fiNratlon System SUB TOTALS • SPECIAL PROJECTS I;: i= TOT AL JOINT WORKS CAPITAL REQ Pmjected Average Daily Flow In MGD A 2020VISION MSTR PLAN OR ORIG EST 737.2SO,OOO J Estimated Future Capital Requirements From Last Yeats Budge! COUTJ.Jl,,S B REVISED TOTAL PROJECT EST 2,472,000 1,225,000 1,500,000 470,000 750,000 155,000 641,300 280,000 125,000 255,000 40,000 60,000 223,000 487,000 50,000 50,000 1,850,000 85,000 1,500,000 430,000 12,448~300 25,WU,IXX C ESTACCUM COSTS TO 613Q./96 172,000 25,000 75,000 50,000 11,300 5,000 338,300 ·-:_--:•~:"D -·•.:-: . REQUESTED --BUOGET-•:t- .., 1-.97 tl~: I~1f;f! .-'-, -·· 700000 •. r-:'"' w I • -=--_ 200i000 .·.: ...... .,. , ; 100,000 -: ,, .. , '"'5000 '~_;-,t~,~i~~ . , _ · -,:!· 125°000 ' ,•· ": 100:000 lit~ j1f;VC:l :~:,~-..~~q.ooo ,f ~~~~.:..85,000 ~~~330,0(!0 ~~~300,000 • ,,, ',;J>.:.". 200,000 ~~~200000 t~~1so:ooo r~--.ff5 so ·-• -~..,,_-v -~,ooo .,_,c • 12u,OOO ij.\:;.~4,205,000 ::2t.•: ,,,_~~.-!!001000 I ~:.~~-c-·-:.r:-w--~~~.r.;,:.., E ESTIMATED BUDGET 1997-98 800,000 700,000 200,000 500,000 130,000 280,000 130,000 80,000 190,000 25,000 330,000 1.170,000 130,000 200,000 235,000 170,000 4,665,000 2.500.00U F ESTIMATED BUDGET 1998-99 2,000,000 25,000 20,000 150,000 20,000 350,000 10,000 10,000 21,000 220,000 330,000 200,000 390,000 30,000 I ' 3,156,000 _1.500,00( G ESTIMATED BUDGET 1999-2000 21,000 26,000 330,000 440,000 30,000 3TT,OOO 2,500_,non H ESTIMATED BUDGET 2000-01 150,000 21,000 26,000 330,000 390,000 30,000 527,000 z;soo.ooo I FIVE YEAR TOTAL 2,300,000 1.200,000 1,425,000 420,000 750,000 155,000 630,000 280,000 125,000 250,000 40,000 60,000 223,000 487,000 50,000 50,000 1,850,000 85,000 1,500,000 430,000 600,000 1,655,000 410,000 150,000 120,000 15.045,000 T2:50o.OO!l" 94V12".lOOJ 72.935,MG ][ ~~-44,895,!iCIQ_J_ 59,136,000 ! 37.229.000 I 39,512,000 I 46,865.ooo IL__lli,142:0001 241 MGD 246MGD 254MGD 260MGD 270MGD 75.1115,000 74,810,000 59.~ooo 36,547,000 4125/96 J ESTIMATED BUDGET 2001-2006 72,500,000 K TEN YEAR TOTAL 2,300,000 1,200,000 1,425,000 420,000 750,000 155,000 630,000 280,000 125,000 250,000 40,000 60,000 223,000 487,000 50,000 50,000 1,850,000 85,000 1,500,000 430,000 12,110,000 25:000.00il Page 4 L COST TO COMPLETE PROJECTS fS,SllU.UOU I 404,897.000 II 465,_165,IXX 28SMGD 360MGD 272,760,000 , 434252,000 11'1 ftt f2!!!!fil 0 Written Report •Overheads •Slides •Flip Charts Originator~ Greg Mathews Department Head Sign Off~ J~lson Anticipated Time __ _ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAHR96-07: Consideration of status report on Legal Services Committee Activities relative to in-house General Counsel Services. Summary At its December 13, 1995 meeting, the Steering Committee, at the request of the Joint Chair, received a progress report from the Ad Hoc committee on Legal Services. This Ad Hoc committee was formed to review the options relative to the Districts' required legal services. As a result of the committee's report, the Steering Committee recommended the FAHR Committee review future matters in regard to these issues. On January 10, pursuant to FAHR96-07, staff committed to development of a report to be presented to the committee on Legal Services and the F AHR Committee. This report addresses two major issues: • A review of the position of Contracts Administrator, its role, responsibilities, and potential cost savings. • Upon review of the Contracts Administrator position, an analysis of the options relative to hiring in-house legal counsel. This includes staffing, duties and responsibilities, potential cost savings, reporting relationships, and other related issues. Budget Information After a review of the Contracts Administrator position, and discussion with the FAHR Committee in January 1996, it was recommended the duties of the Contracts Administrator be combined with the vacant Purchasing Manager position. Annual savings related to transfer of contract review tasks from Rourke, Woodruff & Spradlin is estimated at $68,500 annually. Elimination of the Engineering Department's Contracts Administrator position is estimated at $71,500 annually. The Contracts and Purchasing Manager began work on March 11, 1996. After a review of the option relative to in-house Legal Counsel, it was detennined one Attorney, one Paralegal, and one Legal Secretary would be required to operate the in-house office. Duties and responsibilities would focus on the performance of general legal services representing approximately 2,500 hours annually of legal workload. Estimated savings of an in-house General Counsel Office has been calculated at $45,400 annually. The following report provides a detailed analysis of the foregoing issues. Staff Recommendation Information only item. J:IWPDOC\FINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR98.07A . ., April 10, 1996 STAFF REPORT FAHR96-07: Status Report on in-house General Counsel services BACKGROUND At its December 13, 1995 meeting, the Steering Committee, at the request of the Joint Chair, received a progress report from the Ad Hoc Committee on Legal Services. This Ad Hoc Committee was formed to review the options relative to the Districts' required legal services. As a result of the Committee's report, the Steering Committee recommended that the FAHR Committee be responsible to review future matters in regard to these issues. At the January 10, 1996 Finance, Administration and Human Resources Committee meeting, staff agreed to the development of a report analyzing various alternatives regarding in-house legal services. The report was to be presented to the Committee on Legal Services and the FAHR Committee at a future date. This report addresses two major issues: • A review of the position of Contracts Administrator, its role, responsibilities, and potential cost savings. • Upon review of the Contracts Administrator position, an analysis of the options relative to hiring in-house legal counsel. This includes staffing, duties and responsibilities, potential cost savings, reporting relationships, and other related issues. CONTRACT ADMINISTRATOR OVERVIEW As detailed in a special report presented to the Finance, Administration and Human Resources Committee on January 1 oth, an analysis of the Contract Administrator position was conducted. This included a review of available documentation identifying current Districts contracts; interviews with the General Manager, Assistant General Managers, all Department-heads, an Engineering group with special interest in this position, General Counsel, Board Secretary, Warehouse Supervisor, Senior Buyer, and the Human Resources Supervisor; a review of Contract Administrator job descriptions from other organizations; and a review of Rourke, Woodruff & Spradlin's (RWS) monthly billings to determine their participation in the contract process. CSDOC • P.O. Box 8127 0 Fountain Valley, CA 92728-8127 • Tel. (714) 962-2411 D FAX (714) 962-3954 FAHR96-07 Page2 April 10, 1996 It was recommended that the duties of the Contract Administrator be combined with the vacant Purchasing Manager position and a new classification entitled Contracts & Purchasing Manager be created. Annual savings related to transfer of contract review tasks from Rourke, Woodruff & Spradlin is estimated at $68,500 annually. Additionally, elimination of the Engineering Department's Contract Administrator position, is estimated at $71,500 annually. The Contracts/Purchasing Manager concept was widely accepted by Districts personnel and the FAHR Committee directed staff to proceed with the recommendations. This has resulted in the recruitment and selection of a new Contracts & Purchasing Manager, Mr. Marc Dubois, who began with the Districts as of March 11. Mr. Dubois' prior employer was the County Sanitation Districts of Los Angeles County. Mr. Dubois, a Certified Purchasing Manager (C.P.M.), was responsible for approximately 75% of all procurement/warehousing of materials, supplies, equipment and services for CSDLAC. Additionally, Mr. Dubois has been responsible for RFP development and contract review and negotiations with numerous vendors in the chemical, engineering, heavy equipment, fleet, and integrated waste fields. IN-HOUSE COUNSEL A. Cost Analysis In order to conduct an analysis of developing and utilizing in-house counsel, certain assumptions must be made and data sources referenced to draw reasonable conclusions. In summary, the following points are noted: • Rourke, Woodruff & Spradlin (RWS) legal services are categorized into three areas as follows: Individual Districts, Litigation, and Joint Operations. Based on an analysis of legal workload, and solely for purposes of this analysis, it is assumed in-house counsel would be responsible for all Joint Operations items with the exception of Technical Services, Environmental Management, and Source Control. RWS would continue to be responsible for these technical service areas as well as Individual Districts and litigation including liability. FAHR96-07 Page3 April 10, 1996 • Based on RWS' legal payment report for the first six months of FY 95-96, and as summarized in Figures 1 and 2, it is estimated Rourke, Woodruff & Spradlin will spend approximately 2,840 hours this year performing "general" legal services (non-litigation) at an annual cost of $418,500. Mint 1'11. Jlprel 4DDD•Hvd Dbtrlbldlm alRWS Gaenl 8enke Boan ~-Ope. 8% 1% Ff&are2 Annnalbbl DldrlbuUoD alR.WS Genenl Senke $ Landll K Admn. 46" • Based on the analysis associated with the Contracts Administrator position, it is estimated 300 hours of the aforementioned general legal services could be performed by the new Contracts & Purchasing Manager. This would require an in-house counsel to perform 2,540 hours per year of general legal services. Based on a cost analysis, RWS' hourly rate for general legal services is just over $147 per hour. Assuming the hours above, the annual billing for general legal services by RWS is estimated at $374,300 ($147.36 x 2,540 hrs.). FAHR96-07 Page4 April 10, 1996 • Based on Rourke, Woodruff & Spradlin's billable hours for one in-house Attorney position, and an estimate of annual billable hours available for one Paralegal, two full-time equivalent (FTE) positions can provide 2,696 hours annually of general legal services. This provides sufficient coverage to meet the estimated 2,540 hour obligation stipulated above. • Based on a review of salaries for Orange County (public/for-profit), competitive Attorney and Paralegal salaries for agencies of our size are $120K and $49K respectively. Although the sub-committee directed staff to examine the feasibility of a lower starting salary for an attorney position, as shown in Table 1 below, given the depth and breadth of responsibilities as well as need to be competitive with larger jurisdictions, the $120K salary is appropriate. Similarly, based on the anticipated clerical/secretary workload needed to support the Attorney and Paralegal (who will be occupied, as stipulated above, with legal tasks) a $40K salary legal secretary position is suggested. Total salary and benefits for the office would amount to approximately $263,300 annually. Anaheim $94,188 $141,168 $117,678 Costa Mesa $97,440 $130,572 $114,006 Orange County $114,732 $114,732 $114,732 Fullerton $99,000 $99,000 $99,000 Huntington Beach $111,468 $111,468 $111,468 Newport Beach $117,084 $117,084 $117,084 Santa Ana $140,484 $140,484 $140,484 AVERAGE: $110,628 $122,072 $116,350 Table 1 -Annual Salary Comparison of Local City Attorneys • Extrapolated from the existing General Management Division's Materials, Services and Supplies budget, it is estimated in-house counsel would have annual overhead of $65,6001 per year. Total operating budget for the in-house general counsel would approximate $328,900. 1 This does not include the additional one-time cost to establish a legal library estimated at $5-$20K dependent upon availability of references on CD-ROM. FAHR96-07 Pages April 10, 1996 • As shown in Figure 3 below, based on the aforementioned data elements, implementation of in-house counsel would result in an approximately $25 per billable hour reduction compared to Rourke, Woodruff & Spradlin's average rate for general legal services. This amounts to an estimated $45,400 per year savings. B. Qualitative Issues Fipre3 Comparative Hourly Cods Although a quantitative analysis indicates there are some cost benefits to in-house counsel, there are several qualitative issues that need to be resolved. These include the following: • Counsel Expertise. It is clear that Rourke, Woodruff & Spradlin's two decades of service to the Districts has resulted in significant and valuable knowledge related to the Districts' operations. As a result, it is readily apparent that litigation and technical services such as environmental management and source control should continue to be contracted to RWS. However, other general legal services as reflected in the aforementioned Figures 1. and 2 typically do not require such technical expertise. Rather, these legal services primarily mirror the functional areas of a full-service city (e.g. Administration, Personnel, Finance) and as a result can be readily accomplished by a trained "City Attorney" professional at a comparatively reduced cost. FAHR96-07 Page6 April 10, 1996 • Staffing Utilization/Availability. There are several issues related to the in- house staffing of a general counsel's office. Foremost is the ability of one Attorney and one Paralegal to complete the general legal service work currently accomplished by Rourke, Woodruff & Spradlin. As previously demonstrated, there appears to be sufficient billable hours available for two (2) FTE's to accomplish the workload. However, one in-house Paralegal would be required to complete approximately 50% of the legal work whereas RWS only completed an estimated 25% of such workload with their paralegal staff. Nevertheless, one of RWS' stated opportunities for Districts expenditure reduction2 is the expanded use of their paralegal staff for general legal services. As a result, it appears viable that an in-house paralegal, especially one budgeted at an experienced classification, could manage half the legal workload. An issue of importance is the actual availability of in-house general counsel staff to advise the Districts management and Board. Concerns were raised in the November 27th General Counsel Report that indicated an in-house counsel promotes wasteful use of assets. Interruptions, meetings, scheduling conflicts, etc., were cited as problems related to staffing an in-house counsel. Although such observations have merit, such administrative interruptions and their attendant "costs" were considered in Rourke, Woodruff & Spradlin's billable hours calculation reflected in Figure 3; two hours daily was scheduled for each FTE position for these administrative duties. Furthermore, there are benefits to an in-house counsel, including on-going availability and immediate access as needed, third party monitoring of all outside legal billings, etc. Finally, from a practicality standpoint, such conflicts are not atypical of any in-house attorney in a public sector organization. • Reporting Relationships. A significant issue related to in-house counsel is the reporting relationships to be developed. Currently, the General Counsel reports to the Joint Boards. Although this reporting arrangement has existed for several years, it is not a written policy. Rather, according to the Joint Ownership, Operation and Construction Agreement, Article II. Section B., the General Counsel "will serve in accordance with the terms and conditions set forth by the Joint Boards of Directors of the Districts." Thus, the existing reporting relationship is likely a condition set forth by the Board-a condition that can change if the merits warrant. 2 November 27, 1995 General Counsel Report, pg. 19. FAHR96-07 Page7 April 10, 1996 Nevertheless, the existing General Counsel reporting relationship has served the Districts appropriately for full-contract legal services. However, this reporting relationship should be modified if in-house counsel is implemented. Such in- house services would require on-going management, supervision and review of a specialized and integral executive position. As a result, an in-house counsel should report directly to the General Manager. In addition to the organizational reporting relationship, the relationship between the existing General Counsel and an in-house attorney position would need to be fonnalized. Requiring one position to be subordinate to another is not administratively appropriate. In brief, establishing an in-house counsel would necessitate a change in roles. If an in-house counsel is implemented, the attorney selected would likely assume the role of General Counsel with the principals and staff of Rourke, Woodruff & Spradlin acting as Special Counsel. As previously delineated, Mr. Woodruff and staff would continue to act as the Districts provider of litigation/technical services, and should continue to report to the Board, Executive Management team, etc., as any other existing long-tenn contract recipient. The relationship between the in-house General Counsel and Special Counsel would, at minimum, consist of oversight of the RWS service contract by the in-house attorney with the assistance of the Contracts & Purchasing Manager. It should be noted that General Counsel has concerns with the aforementioned organizational structuring. In brief, issues were raised in regard to the difficulties arising from parallel reporting relationships (e.g. one attorney reporting directly to the GM while one attorney ostensibly reports to the Board as a Districts "contractor"). Furthermore, there was concern as to the potential blurred lines of authority. If an in-house General Counsel is implemented, a policy must be developed for distribution of legal workload by type between the in-house and contract services Counsels. This should be developed by the attorneys in question. A guiding principal for the distribution of workload should be based on the previously discussed "general" legal services and special services categories. If a conflict arises in regard to legal assignment(s), the General Manager should be the final authority on delegation of the legal workload in question. FINANCIAL IMPACT Savings related to implementation of the foregoing is as follows: • Approximately $68,500 annually in offset contract legal fees through implementation of the approved/implemented Contracts & Purchasing Manager. FAHR96-07 Page 8 April 10, 1996 • Approximately $45,400 annually in offset contract legal fees through implementation of an in-house general counsel office providing general legal services. Total estimated annual savings related to the above is $113,900 per year. RECOMMENDATION This is an information item only. /gm J:\WPDOC\FtN\CRANEIFPC.MTGIFAHR.98\STAFFRPT.96\SRFAHR96.07B Format D Written Report •Overheads •Slides D Flip Charts Department Head Sign Ge Slreed Anticipated Tirne 5~ FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR May 8, 1996 FAH R96-11 : Consideration of motion to receive and file PIMCO's Quarterly Performance Report, Investment Management Program, for the period January 1 through March 31, 1996 Summary 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. At the February 1996 FAHR Committee meeting, PIMCO presented its first quarterly investment report for the period of October through December 1995. PIMCO has submitted its second quarterly investment management report for the period of January through March 1996. Callan Associates, the Districts' independent investment advisor, will present its second quarterly performance review for the same period. Staff Recommendation Information only. J:IWPDOCIFINICRANEIFPC.MTGIFAHR.96\COVERS.96\FAHR96.118 May 8, 1996 STAFF REPORT FAHR96-11: Consideration of motion to receive and file PIMCO's Quarterly Performance Report, Investment Management Program for the period January 1 through March 31, 1996 Background The Districts' Investment Policy, adopted by the Joint Boards on May 24, 1995, includes monthly and quarterly reporting requirements in Section 14.0 for the Districts' two investment portfolios. These two funds, the "Liquid Operating Monies," and the Long-Term Operating Monies," are managed by PIMCO, the Districts' external money manager. The first Quarterly Performance Report, covering the Districts' investment program from its start in September 1995 through December 31, 1995, was presented to the Committee in February 1996. The ongoing monitoring of the Districts' investment program by staff and Callan Associates, the Districts' independent investment advisor, indicates that all Investment Policy requirements are being complied with and overall performance has tracked with benchmark. indices. Quarterly performance reports prepared by PIMCO and Callan Associates are attached for your reference. Portfolio Performance Summary The following table presents a summary of the performance of both of the Districts' portfolios for the period January 1 through March 31, 1996. Portfolio Perfonnance Summary First Quarter 1996 Liquid Operating Monies Long-Term Operating Monies Total Rate of Return 1 month 0.4% -0.4% 3 months 2.8% 2.9% 6 months 1.3% -0.3% Since inception 2.8% 2.9% 30 Sept 96 Benchmark 2.7% 2.9% Market Value per PIMCO $51,916,775 $262,956,806 31 Mar 96 Estimated Current Yield 5.4% 6.5% 31 Mar 96 Quarterly Contributions -0-$21.BM Estimated Annual Income $2.8M $17.2M CSDOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 (714) 962-2411 FAHR96-11 Page2 May 8, 1996 Market Recap The financial markets in the first quarter of 1996 were marked by fears of faster than expected growth in the U.S. economy, associated fears of inflation and higher interest rates and shifting expectation to a tightening of the rates by the Federal Reserve. The impacts of these market expectations included significant selling of securities which reversed the course from decreasing interest rates in the fourth quarter, 1995, to increasing interest rates in the first quarter, 1996. Associated with this rate increase was a drop in the price of securities. In that PIMCO maintained a slightly above-index first quarter portfolio duration for the "Long- Term Operating Monies" fund (2.5 years vs. 2.4 years for the Merrill Lynch Corp/Government Bond Index) the performance of the portfolio was hurt. Duration is a financial term which is a measure of market risk or price sensitivity. Generally, longer portfolios have higher returns, but they can also experience greater price fluctuation or volatility. The marked-to-market ending value of the portfolio on March 31, 1996 declined approximately $700,000 from the market value on December 3, 1995, had the securities been sold in the open market on March 31, 1996. However, PIMCO intends to hold the securities in the portfolio until they mature, thus eliminating potential loss of principal. Investment Policy Review The California Government Code was recently amended to include the provisions of Senate Bill 564 which pertain to local agency investments. Effective January 1, 1996, the Code includes seven new requirements for local agency investments (excluding bond proceeds). 1. Annual review of investment policy at a public meeting. 2. Submission of a quarterly investment report to the board at a public meeting. 3. The quarterly investment report must include the current market value, and the source of the valuation of all investments unless all of the funds are in the Local Agency Investment Fund or a county pool. 4. The quarterly report must state that investments are in compliance with investment policy. 5. The quarterly report must state that there is sufficient cash on hand to meet its operating requirement for the next 6 months. 6. The local agency's Board of Directors can require these reports monthly. 7. The quarterly report may use the most recent statements from the Local Agency Investment Fund, Federal Deposit Insurance Corporation-insured accounts in a bank, or a county pool, in lieu of its own current market value report. FAHR96-11 Page3 May 8, 1996 These requirements will be incorporated into staff efforts currently underway to consolidate the Districts' investment authorities, and to revise reporting requirements applied to PIMCO and Mellon Trust, the Districts' master custodial bank. A report to your Committee is scheduled for July, along with the annual review of the Districts' Investment Policy. Recommendation Receive and file this report. SK:lc J:\WPOOC\FINICRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.03 APR 30 •g5 12:57 FR CAL~ ASSOCIATES ' J 415 g74 5g44 TO ~g623954 P.02/15 CALLAN ASSOCIATES lNVESTMENT MEASUREMENT REVIEW County Sanitation Districts of Qr:ange County March 319 1996 The following statistical analysis was prepared by Callan Associates Inc. utilizing secondary data from statements provided by the p1an trustee and/or custodian, CAI computer software. and selected infonnation in CAf>s database. This report may also contain retums 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 completeness of this report. Copyright 1996 by Callan Associates Inc. APR 30 '96 12: 57 FR CA1 ,_ ~N ASSIJC !ATES 415 974 5944 TO •~149523954 I CAUAN ASSOCIATES INVESTMENT MEASUREMENT REVIEW COUNTY SANITATION DISTRICTS OF ORANGE COUNTY MAR.CH 31, 1996 Market Performance P.03/1::, Measures of Market Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 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 • RPR 30 '96 12:59 FR CRU~ ASSOCIRTES 415 974 5944 TO ~9623954 COUNTY SANITATION DISTRJCfS OF ORANGE COUNTY MEASURES OF MARKET PERFORMANCE P.05/15, After advancing in tandem throughout 1995, U.S. stock and bond markets went their separate ways in the first quarter of 1996. Stocks continued to rise, hitting new all-time highs and generating above-average returns. Bonds, however, did an aJ;,rupt turnaround. Prices dropped enough to offset interest income and produce negative returns. The move was sparked by signs of strengthening economic activity, which raised fears of inflation. Nevertheless, most early GDP estimates look for annualized growth of about l % for the quarter, only slightly above the tepid 0.5% rate of the previous quarter. Domestic stocks again performed weJl last quarter. The return on the S&P 500 Stock Index was 5.47%. its fifth straight above-average quarterly gain. Of the stocks in the Index, those with positive returns out-numbered those with negative returns by about 7 to 3 . Best performers among the ten stock sectors were rdw and intermediate materials and finMcials. with returns of 13.77% and 8.61 %, respectively. Laggard sectors -included utilities and consumer staples. with returns of -4.69% and ~.94%, r_espectively. Among other stock indices, the Dow Jones Industrial Average returned 9.79% for the quarter, while the S&P "Mid Cap'' 400 Stock Index returned 6.16% and the NASDAQ Index returned 4.87%. Results for the Callan Indices indicate that smaller capitalization stocks tended to do better than larger capitalization stocks. The Callan Broad 2000 had a return of 5.68%. which included returns of 5.49% for the Callan Large 150, 6.02% for the Callan r~fedium 350, and 5.75% for the Callan Small 1500. The return for the Callan 1vficro 1000 was 7.08%. The 1•forgan Sta.-rtley Capital International EAFE Index, which is composed of representative stock issues from Europe, Australia, and the Far East, produced a return of 5.'37% on a local currency basis, but the higher dollar relative to some other currencies resulted in a U.S. dollar-based return of 2.89%. This included a 3,71 % return from the European component of the Index and a 2.08% return from the Pacific Rim component. The Salomon Non-U.S. Government Bond Index return was 0.95% in U.S. dollars hedged against currency t1uctuations. On an unhedged basis, the higher dollar resulted in a return of -1.69%. Bond returns turned negative on a rise in interest rates triggered by the market's nervousness about inflation. Rates on 30-year Treasuries jumped 71 basis points through March 29. Rates on Moody's seasoned AAA corporates also rose 71 basis points. The Lehman Brothers Government/Corporate Bond Index returned -2.34%, with the 1ong component returning -6.05% while the intermediate component returned -0.83%. The Salomon High Yie1d Bond Index returned 1.54%. Treasury Bills earned 1.26% for the quarter. The Consumer Price Index for Urban Wage Earners and Clerical Workers rose. at an annual rate of 5.43%, up from the previous quarter's 2.71 % rate. Although unsettling, volatile prices for food and energy caused much of the spurt in the CPI and are likely to fall to more noililB1 lcvels later in the year. • APR 30 '95 12: 58 FR CAI '-~N ASSOC I ATES County Sanitation District of Orange County First Quarter 1996 Bond Market Overview • Rise in interest rates caused decline in bond prices. 2Year Yield Change Since 12/31/95 +59bp Treasuries 3Year +68 bp • "Good News .. for the economy means "Bad News" for the bond market • February employment report was higher than expected Fund Perfonnance r , ~''-+·' J.;) 5Year +72 bp Period Ended March 31, 1996 Quarter 6Months Liquid Operating 1.39% 2.89% 90 Day T -Bills 1.26 % 2.61% Long Tenn Operating (0.21%) 2.98% ML 1-5 Gov/Corp (0.09%) 2.88% Comolidated Fund Performance 0.08% 2.94% • The 6-month return on an annualized basis is equal to current yields --capital gain from 4th Quarter 1995 and capital loss from 1st Quarter 1996 have offset one another. Ill Callan Associates Inc. April 26, 1996 P.PR 30 '96 12: 59 FR CAL.~ ASSOCIATES Last Quarter (12'J5·3/96) Raw & Intermediate MS1eri.als Financial Con.~umer Cyclicals Industrial Equipment & Services Transportation Energy Miscellaneous Technology Consumer Staples Public Utilities S&P500 La.lit Qu.al'ter (12195-3/96) Electronics (Defense) Hotc-1-Motel Retail Stores {Apparel) Oil & Gas Drilling Gold Mining Chemicals Airlines Person.al Loans Oil Weli Equlpmem & Service Containers (Metal & Glass) Last Quarter (11.JIJS-3196) Electric Power Manufactured Housing Publishing Broadcast Media Savings & Loan He.alth Can, (HMO's) Specially Printing Electrpnics (Semicons & Cmpnts) Telephone Homebuilding 13.77% 8.61 8.17 7.98 6.86 5.37 5.25 4.81 3.94 -4.69 5.47% 31.40% 24.83 24.11 23.65 20.97 19.49 19.29 17.34 16.68 16.49 -2.95% -3.35 -3.61 -4.71 -4.76 -4.77 -5.00 -5.72 -7.20 -10.38 415 '374 5,'::144 TCJ 1 ':lb,:!S~:,.q Sectors Industry Best Worst Last Twelve Months (3195-3196) Financial Consumer Staples Technology Industrial E'.(Juipme.nt & Services Transportation Public Utilities Raw & Intermediate Mar.eriaL~ Bnergy Consumer Cyclical Mlscellaneous S&P500 Last Twelve Months (3195-3196) Electronics (Defense) Banks (Money Center) Drugs Oil & Gas Drilling Shoes Personal Loans Aerospolce Health Care (Miscellaneous) Bever.:iges (Soft Drinks) Investment Bankers/Brokers Last Twel'Ve Month.~ (3'95-3196) Paper & Fore!>t Products Containers (Metal & Glass) Retail Stores (Miscellaneous) Specialty Printing Retail Stores (Gen '1 Merchandise) Housewares Truckers Steel Oil Exploration & Production Containers (Paper) r-'.UO-'.l.:;;;, 48.40% 38.86 34.16 32.72 29.38 26.64 26.01 23.92 21.26 18.62 32.17% 135.12% 73.17 59.44 58.14 58.03 56.90 5$.13 53.88 $3.36 51.29 7.91% 7.67 6.92 5.95 4.35 2.42 0,30 -1.09 -2.53 -7.76 • APR 30 '96 12:59 FR CP1 9N ASSOCIATES 415 974 5944 TO 1 7149623954 I COUNTY SANITATION DISTRICTS QF ORANGE COUNTY PERFORMANCE TO DATE Periods Ended Last Mareh 31 J 996 Quarter Liquid Operating Monies 1.39% Long Tenn Operating Fund (0.21) Total Fund 0.08 Market Indicators Government/Corporate 1-5 Year Index (0.08)% l-3yr Govt/Corp Index 0.38 Merrill Lynch 1-5yr Govt/Corp (0.09) Lehman Brothers G/C Int (0.83) Treasury Bills 1.26 Median Rates ofRetum Active Cash Management Database 1.21% Defensive Fixed-Income Style 0.38 Ranking (] =BesttlOO=Worst) vs. Active Cash Management Database Liquid Operating Monies 12 vs. Defensive Fixed-Income Style Long Term Operating Fund 95 For explanation of market indicators and comparable funds sec end of repon. t"'.l!J(/1:::;. II Last 1/2 Year 2.90% 2.98 2.94 2.84% 2.91 2.88 2.66 2.61 2.89% 2.95 46 42 .... , APR 30 '96 13:00 FR CALri~ ASSOCIATES 415 974 5944 TO ~49623954 F'.01:Vl:::. -----------------------COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE VS. ACTIVE CASH MANAGEMENT DAT ABASE PERIODS ENDED MARCH 31, 1996 3.5% - 3.0% -~-----· i---e1A T=R 2.5% - 2.M''o - 1.5% - • A ~----- 1.0% - 0.5% - Last Last l/2 Quarter Year ACTIVECASH T ~ MANAGEMENT DATABASE 10th Percentile 1.40 3.45 25th Percentile 1.35 3.00 Median 1.21 2.89 75th Percentile 1.03 2.78 90th Percentile 0.86 2.64 Treamry Bills 1.26 2.61 Liquid Operating Monies A 1.39 2.89 Ranking 12 50 (l=Bcsl.l~Worst) II APR 30 ' 96 13: 00 FR CAI · ''I~ ASSOC I ATES 415 974 5944 TO J?149623954 ) COUNTY SANITATION DISTRICTS OF ORANGE COUNTY LONG TERM OPERATING FUND PORTFOUO CHARACI'ERISTICS SUMMARY MARCH 31, 1996 Sector Allocation Long Term Operating Fund f-". H'.J/1:) • APR 30 '96 13: 00 FR CHLI O ASSIJCIATES COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE VS. DEFENSIVE FIXHD-INCOME STYLE PERIODS ENDED MARCH 31, 1996 3.5% - 3.0% -~-----Mf::-4 • A 0/C -----· 2.5% - ~ Int .,__ .. 2.0% - 1.S% -. , 1.0% - 0.5% -~ - 0.0% -~~ G/C • A -0.5% - ~ -1.0% - Last Last 1/l Quarter Year DEFENSIVE ~ T FIXED-INCOME STYLE l 0th Percentile 0.71 3.24 25th Percentile 0.50 3.05 Median 0.38 2.95 75th Percentile 0.25 2.81 90th Percentile 0.11 2.57 Mcmll Lynch 1-SyrGovt/Cmp (0.09) 2.88 Lehman B:rotbcrs G/C Int (0.83) 2.66 Long Tenn Operating Ftmd A (0.21) 2.98 Ranking 95 42 {1-Besl,lOO=Worst) • APR 30 '96 13:01 FR CA1 lN ASSOCIATES COUNTY SANITATION DISTRICTS OF ORANGE COUNfY LONG TERM OPERA TING FUND PORTFOUO CHARACTERISTICS DETAIL MARCH 31. 1996 Weighted Average Portfolio Characteristics Total Fund. By Asset Class and By Sector- Fmiag Paa2ll Marbt of ~ B&,ctive SootDI-\lalm: Panmtio CooDon Mmxitv Y-x:Jd Totaffu,d $242,911.()66 100.0CXt 6.83 3.44 6.Z, Agcnclc& $109,636,:374 45.1% 6.60 3.9S 6.57 Cmporates $24.778,461 10.2% 8.4-7 2.65 6.45 TreaNt'.t.!a~ $90,9:;10,20S 37.4% 6.93 3.65 6.04 Total mcd-.111!:cmc $225,345,040 92.81, 6.94 3..c;, 6.34 Casb Equivaletl111 $17.566.,026 7.2'1, S.36 oz S.36 5 1...arpl Holdings EDlfmg Pc:m& Mamt of Effediwc .blmc[-Namc h:i:tu!IName Seen-Valm Pmdi>lio Y-,191d Unilll<i S14tes To:.tts NIB Nt 7.125% 9130/1999 neasul'ies SSO,B23,481 33.3% 6.02 Fcdellll Ffome Ln Bks Deb 6.49% 9/1312000 ~ucics $39,617,226 16.3% 6.62 r-ed~.rnl Natl Mtg Assn Deb 6.8S0'k S/26/00 Agf:llC.ie5 $25,770,368 10.6% 6.3!! Federal Home Ln M1g Cmp Deb 6.7201'"10/02/00 Agenc.ies $25,897,8..'4 10.7% 6.74 Fedcnl Natl Mtg Aun Deh 6.37$%10/13100 Agencies $20,515,02.5 8.4% 6.48 5 Lowest Rated Holdings (Moody's Rating) F.mliar; Pcmclll Mme& of Effi:clrrc ~Nmic !=!&Name Sedor-V'alm Portmlio Y"IBld Lehman Bros Inc Nt 7.00% 5/15/1997 COl'l'Ot'&tes $1,034,974 0.4% 6.01 C"'Jcn Mm Accep Tr #'324 M1n 8.375~ 2/03/1999 C.orporatcs $4,049,372 1.7% 6.49 Chryucr Fin1 Min 6.26% 7f2Gl1998 Corporates $1,003,392 0.4% 6.38 ChcyslM rrm1 Mtn 7.27% 4/J3/B9S Corpot·a res $2,969,052 1.2% 6,34 Chrysler Corp Deb 10.400% 8/0Ii99 Corporates $1.,5911,960 0.7%• 6.25 5 Longest Duration Boldin~ F.1111.iag Pcncat Marlr8t of Efiel:t.ive IssuerNmae ID!JoNat:ne Sect« V21lm: Portfalio Yicld Urutc.d States Tn:.as Nt.~ Nt 5.75% 10/31/2000 Treasuries $13,125,306 5.4·% 6.12 Philip Moms Co! Inc Nt 9.250% 02/lSiZOOO Corporatts $9,903,665 4.1% 6.77 .!-cdcral ~atl Mtg Assn Deb 6.375%10/13100 Agencies SZO,SlS,025 8.4% 6.48 United States 'l'roas Nti: Nt 7.1Z5% 9/30/1999 Treasuries $80,823,481 33.3% 6.02 Federnl Home Ln Bb .oc.b 6.49% 9113/2000 Ar,t.nciei; $29,617;2.26 16.3·% 6.6i S Hol~ with Bi~ Effecl Yield Enclmg Pm:mi Mabt of EfliediYe Issuer Name Iauc:Name Seem-VaJoe Pmfulio y'.-::Jd Philip Morris Cos me Nt 9.2.S~, C,2!15/2000 Corporute5 $9,903,865 4.1% 6.77 Federal Home T .n Mte; Corp Deb 6.720%10I02J00 Asencie~ $25,897,824 10.7% 6.74 FedeTal Home Lrl Bks Deb 6.49% 9/13/2000 Ag~ncits $S9,617.226 16.3% 6.62 Gen Mirs Accep Tr #324 Min S.375% ~0M9~9 Corporates $4,049,372 1.7% 6.49 Fedet'lll Natl Mtg Asm Deb 6375%i01!3/00 Agencies $20,515.025 8.4% 6.48 OA OA Dumtian Omvmtv Onalitv Z.68 (0.23) .A.Ill 2.'.75 (0,63) Aen 2.28 o.oe 11:1 2.18 (1.12 Aaa+ Ui1 (0.25) Am 0.25 0.00 A.Ila OA OA DurlSialt Ca:iVCXJl}'. Omilitv 3.07 0.11 Aaa+ 2.81 (1.26) Aaa+ 2~10 (0.53) At1:1 2.61 (0.35) Au 3.ll 0.13 ADIi OA OA Duration Convexitv Oualit1 1,03 0.02 Baal 2,50 0.08 A3 2.10 0.06 i'-,3 l.85 0.04 A3 1.22 0.02 A3 OA OA Duration Conva!,!~ Ouui1.1 3,87 0.18 AM+ 3.22 0.13 A1 3.11 0.13 A:.a 3.07 0.11 Aaa+ 2.81 (1.26) Aaa+ OA OA Dur.tipgn_Convexilv Omlil! 3,22 0.13 A2 2.61 (0.35) Aan 2.81 (1.26) Aaa+ 2.50 0.01, A3 3.11 0.13 Aaa * All Statfatics shown en t.he page are dependent on the securities in the portfolio being recognized (by their Cusip) and priced. In this case 94% of tile securities in the portf oJio (by market value) were recognized and priced. • APR 30 '96 13:01 FR CALI~ ASSOCIATES I -----------~ 415 974 5g44 lU J~~b~~~~4 I FIXED--INCOME MARKET ~ICATORS 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 Intermediat.e 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 Govermnent/Corpomte represents bonds with maturities between one and five years that are issued by the U.S. Treasury and U.S. Agencies. and by Corporations with investment grade credit ratings. As of year end 1995, the index covered 2,785 issues. II APR 30 '96 13:02 FR cp· ~N ASSOCIATES I 415 974 5'344 7 U ->_ (1~1':,t:,.=:.::>:,::>.:.. FIXBD-JNCOME MANAGEMENT STYLE GROUPS Active C.ash -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 Duration~ 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 minimize 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 wen as capital gains. High Yield -Managers whose investment objective is to obtain high cUITent 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. lntennediate -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 (Fl-Il.MC, GNMA. FNMA) and private issue pass-tbroughs, 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. • ~ I APR 30 '96 13:03 FR CA~ ASSOCIRTES 415 974 5944 TO ~4~623554 FIXED-INCOME PORTFOLIO CHARACTERISTICS Average Years to Stated Mamrity-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 Yield -The current yield is the Cllrrent 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. Effe.ctive Yield -The effective yield is the actual total annualiz~ 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 ca.sh flows. Thill measure incorporates sinking fund paydowns, expected mortgage principal prepayments, and the exercise of any "in-the-money" imbedded put or call options. Weighted Average Life -The weighted average life ofa 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 1s commonly used as a measure of the investmem life for pass-through security types for comparison to non-pass-through securities. II APR 30 '96 13:02 FR cp· -1N ASSOCIATES 415 974 5944 TO ·• 714'3b23':l::>4 ) FIXED-INCOME PORTFOLIO CHARACTERISTICS All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of the.lile 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 sect.or weights ex:bibit can be used to contrast a portfolio's weights with those of tbe 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 Raring for Total Portfolio -A measure of the. credit quality as determined by the individual security ratings. The ratings for each seeurity, from Moody's Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quw.ity -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 wiU 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. \'\'hen a security's duration changes it indicates that the stream of expected future cash-flow~ 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 derermine 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 Aqjusted (Effective) Duration -Duration is one measure of the portfolio's exposure to interest rate risk. Generally, the liligher a portfolio's duration, the more that its value will change m response to interest rate changes. The option adjusted duration for each security in the ponfolio is calculated using models de~·eloped by Lehman Brothers and Salomon Brothers which determine the expected streru:n of cash-flows for the security based on various interest rate scenarios. Expected cash-flows talce 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 cWTent income than those with an average price below par. Average Yeats 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 rhe 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 STRATEGY REVIEW 111 MAY 8, 1996 Sanitation Districts of Orange County Post Office Box 9000 840 Newport Center Drive Newport .Beach California 926.58-9030 714 · 640-3031 y • AGENDA BOND MARKET REVIEW .J II PERFORMANCE/ PORTFOLIO REVIEW Ill CURRENT OUTLOOK/ STRATEGY _) PACIFIC INVESTMENT MANAGEMENT COMPANY RATES BACK UP AFTER 1995 DRAMATIC RALLY YIELDS ROSE FROM 1995 AS INFLATION FEARS REIGNITED • Market expectations shift to Fed tightening HIGHER YIELDS REDUCE BOND PRICES 11•;-,t~t:t1};'1''.!~1~ifri[t~~f~f~t[k:V$J{;t:M~w.r::~:::~'.:~l::: 7 -~ ~ "'Cl 6 ~ 5= 5 Maturity 0 Duration 0 100 a:. ,e, ~ 50 c:: "' .c u 6 oLC 3 Mos. 5 4.2 Mar 31, 1996 L-----Dec 31, 1995 24 r 1 Yr. 10 7.4 60 2 Yrs. ~68_ 70 - 3 Yrs. 5 Yrs. 10 Yrs. 30 13.0 30 Yrs. SOURCE: Bloomberg PACIFIC INVESTMENT MANAGEMENT COMPANY -~ STRATEGY RECAP - PERFORMANCE RELATIVE TO INDEX Long-Term Operating Fund -First Quarter 1996 DURATION • MATURITY MIX • SECTOR • ABOVE INDEX SIMILAR TO INDEX MORE AGENCY BONDS IN PORTFOLIO THAN IN INDEX SHORT TERM CORPORATE SECURITIES 2 • • • DETRACTED FROM PERFORMANCE NO IMPACT ON PERFORMANCE ADDED TO PERFORMANCE • Agency returns outperform Treasuries • Corporates outperform Treasuries PACIFIC INVESTMENT MANAGEMENT COMPANY . ... ~ REVIEW OF PERFORMANCE Through March 31, 1996 Long-Term Operating Fund 3/31 /96 Market Value $262,956,806 Liquid Operating Fund 3/31/96 Market Value $51,916,775 Sanitation Districts of Orange County (L-T) (%) Merrill 1 -5 Year Gov't. I Corp. Index (%) Sanitation Districts of Orange County (Liq-op) (%) 3 Month T-Bill (%) 3 Since Inception 9/30/95 3 Mos. 2.9 (0.3) ., I 2.9 (0.1) Since -) Inception 9/30/95 3 Mos. 2.8 1.3 2.7 1.3 PACIFIC INVESTMENT MANAGEMENT COMPANY i,,-.. CURRENT OUTLOOK AND STRATEGY GDP RANGING BETWEEN 0% TO 1 % • Inflation/ growth scare unsubstantiated LATE CYCLE UPTICK IN INFLATION • CPI trending to 3% INTEREST RATES DECLINE AFTER RECENT RISE •. Long rates decline toward 6% • Fed resumes easing late in 1996 ~ ABOVE BENCHMARK DURATION TO CAPTURE PRICE GAINS AS RATES FALL MATURITY MIX CONSISTENT WITH INDEX SECTOR CONCENTRATION: • Focus on agencies • Hold short-term corporates 4 PACIFIC INVESTMENT MANAGEMENT COMPANY d Fomiat a Written Report a Overheads Originator~ Department Head Sign Off · Anticipated Time __ la_= __ a Slides a Flip Charts FINANCE, AD.MINISTRATION AND HUMAN RESOURCES COMMITTEE FAHR 96-26 Summary AGENDA FOR May 8, 1996 Consideration of motion to accept staff's recommendation regarding future funding of Management Performance Re.view Plan On April 10, 1996, staff presented a report to the Finance, Administration and Human Resources Committee that jdentified the improvements made to the Management Performance Review Program, discussed the competitive position of the Districts' pay program, and defined the FY96/97 Target Merit Pool Fund of 5.0 percent as a non-base building merit bonus for employees whose performance exceeds expectations or is considered outstanding. The improved MPRP pay for performance program will provide an incentive to management, supervisory and professional employees for consistent and meritorious performance and will play a vital role in increasing productivity and improving the quality of the service provided by the Districts as long as future funding is made available and the fund is distributed as a non- base building bonus. This proposal is subject to "meet and confer" with the professional and supervisory bargaining units. Their current contract expires on January 31, 1997. Negotiations will be underway in the fall of 1996. The purpose of this action is to ensure that a pool of money is reserved for the continued implementation of a merit pay program and that there is Board support for a performance-based pay program. It is important to secure this commitment prior to the FY '96-97 since the performance based program presumes that the reward system will be in place for the following fiscal year. Staff Recommendation 1. Staff recommends that a 5.0 percent of payroll pool (totaling $569,415) be established to fund the FY97/98 MPRP. Three (3.0) percent of the pool would be distributed as a non-base building merit bonus and 2.0 percent, or an amount equal to CPI, whichever is lower, would be distributed to provide a base building market adjustment. a.) Establish a FY97/98 Target Merit Pool Fund of 3.0 percent of payroll (totaling $341,649) to be distributed as a non-base building bonus in July of 1997 to employees whose performance exceeds expectations or is considered outstanding. The fund would be distributed according to the FY97/98 Merit Bonus Guidelines Chart (Exhibit 2). b.) Provide for a market adjustment not to exceed 2.0 percent of payroll (totaling $227,766) or CPI for Los Angeles-Anaheim-Riverside, all urban consumers, whichever is lower. The increase would be distributed equally to all employees who at least meet expectations to keep the employees' salaries at market. This increase amount is based on CPI and other market conditions, including comparison of increases at other cities and agencies. 2. Do not move FY97/98 pay ranges per the results of the salary survey discussed earlier. f:\home\mckinley\wpdoc\stfrep.pm2 ·. April 25, 1996 STAFF REPORT F AHR 96-26: Future Funding of Management Performance Review Program Background On April 10, 1996, staff presented a report to the Finance, Administration and Human Resources Committee that identified the improvements that have been made to the Management Performance Review Program (MPRP) over the last seven months. The improvements identified will ensure that the FY96/97 Target Merit Pool Fund of 5.0 percent, and all future funds, are distributed for meritorious performance, which is performance that exceeds expectations or is considered outstanding. The improvements made to the program include a revised performance evaluation form, including performance objectives and measurement standards that support the agency's critical goals; extensive performance management training to all managers, supervisors and professionals; and, a merit bonus system in which the fund is distributed as a non-base building bonus. Staff also reported that the Districts' pay position is competitive with the market. The midpoints of the Districts' pay ranges are 6.9 percent above public sector midpoints and 8.2 percent above private sector midpoints; however, the average position of the employees' salaries within the pay ranges is only 44 percent (midpoint is 50 percent). This indicates that employees are actually being paid at market. Also, the distribution of salaries within the pay ranges is very close to the established target. Distributing the FY96/97 merit fund as a non-base building bonus will allow the Districts to maintain the competitive position of its salary structure, continue to pay employees market rates, and recognize above average management employees for meritorious performance in the delivery of critical goals. This method of distribution will best serve the Districts' financial interests by providing incentive while holding the line on payroll costs. The FY96/97 merit fund will be distributed according to the FY96/97 Merit Bonus Guidelines Chart (Exhibit 1). Per the Committee's request at the April 10, 1996 FAHR Committee meeting, the actual dollar amounts to be distributed have been added to the chart. As shown on the Guidelines Chart, an estimated $204,547 will be distributed to employees for meritorious performance which is 1.85 percent of management payroll. (These are estimates based upon the performance evaluations conducted in July of 1995. Specific amounts would not be known until the actual performance evaluations are completed in July of 1996). To the extent that there remain equity issues, some portion of the merit fund may be used to meet this need. Given the recent equity adjustments made in July, 1995, it is unlikely that there would be very many required. CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 FAHR 96-26 Page 2 of2 April 25, 1996 This proposal is subject to "meet and confer" with the professional and supervisory bargaining units. Their current contract expires on January 31, 1997. Negotiations will be underway in the fall of 1996. The purpose of this action is to ensure that a pool of money is reserved for the continued implementation of a merit pay program and that there is Board support for a performance-based pay program. It is important to secure this commitment prior to the FY '96- 97 since the performance based program presumes that the reward system will be in place for the following fiscal year. Staff Recommendation 1. Staff recommends that a 5.0 percent of payroll pool (totaling $569,415) be established to fund the FY97/98 MPRP. Three (3.0) percent of the pool would be distributed as a non- base building merit bonus and 2.0 percent, or an amount equal to CPI, whichever is lower, would be distributed to provide a base building market adjustment. a.) Establish a FY97/98 Target Merit Pool Fund of 3.0 percent of payroll (totaling $341,649) to be distributed as a non-base building bonus in July of 1997 to employees whose performance exceeds expectations or is considered outstanding. According to a report published by William M. Mercer, a leading compensation and human resources consulting firm, the average lump sum bonus in lieu of pay increase for professionals in 1995/1996 will be 3.3 percent. The American Compensation Association reported that the average variable pay fund for 1995/1996 will be 5.3 percent. The average of the two projections is 4.3 percent. The fund would be distributed according to the FY97 /98 Merit Bonus Guidelines Chart (Exhibit 2). As shown on the Guidelines Chart, an estimated $210,683 would be distributed to employees for meritorious performance which would be 1.85 percent of management payroll. b.) Provide for a market adjustment not to exceed 2.0 percent of payroll (totaling $227,766) or CPI for Los Angeles-Anaheim-Riverside, all urban consumers, whichever is lower. The increase would be distributed equally to all employees who at least meet expectations to keep the employees' salaries at market. This increase amount is based on CPI and other market conditions, including comparison of increases at other cities and agencies. 2. Do not move FY97/98 pay ranges per the results of the salary survey discussed earlier. DMM f:\home\mckinley\wpdoc\stfrep.pm2 • .i,,l'!J/~1>1 -{~~""~~,,>,,Z~ NJ,tJ,,_ • -~-~'-•'~ ;:;:¥_%~ ---./ "l\\lllll\V . ",tw "%.?·'·'· Exhibit 1 6-97 Merit Bonus Guidelines No contract increase No merit $0 Performance Needs Improvement (0%) *No merit $0 Performance Meets Expectations (56%) 1%-4% $181,328 Performance Exceeds Expectations (41%) 5%-7% $23,219 Outstanding Performance (3%) *Note: 3% market adjustment for employees whose performance at least 11 Meets Expectations" will be $331,698 _) Exhibit 2 7-98 Merit Bonus Guidelines No contract Increase No merit $0 Performance Needs Improvement (0%) *No merit $0 Performance Meets Expectations (56%) 1%-4% $186,768 Performance Exceeds Expectations (41%) 5%-7% $23,915 Outstanding Performance (3%) .. ., ,:, *Note: 2% market adjustment for employees whose performance at least "Meets Expectations" estimated to be $227,766 Format D Written Report D Overfleads •Slides D Flip Charts Department Head Sign An1iclpa1ed Time S min. FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAHR96-27: Consideration of motion to receive and file Treasurer's Report for the month of March 1996. 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 PIMCO and our third-party independent consultant, Callan Associates. The second quarterly report from Callan Associates is on the agenda for this meeting. 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. Cash at the Bank of America includes a tax apportionment received on Friday, March 29, which had not "cleared" and could not be transferred to another investment prior to March 31. CSDOC ···; t:·M;~iit~,s~:~~!l! .-.... .. _ .... •.:-:-.-- State of Calif. LAIF $ 8,624,809 Bank of America 7,016,427 PIMCO -Short-term Portfolio 51,582,565 PIMCO -Long-term Portfolio 258,396,947 District 11 GO Bond Fund 4,218 Debt Service Reserves @ Trustees 33,518,539 $359,143,505 Staff Recommendation Staff recommends the Committee receive, approve and forward this report to the Joint Boards. J:IWPDOC\FINICRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.27 May 8, 1996 400 350 300 !! .!!250 0 Q 0200 • C ~150 i 100 50 CSDOC TOTAL CASH & INVESTMENTS 199·5 -1996 0 ""--------+-----+-------r'------__,,,_--+------~-"---------,''---------r'-----t"__,. June 30 July 31 Aug. 31 Sept. 30 Oct. 30 Nov. 30 Dec. 31 Jan. 31 Feb. 29 Mar. 31 J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\COVERS.96\FAHR96.27 .. - Format • Written Report Originator -~ Department Head Sign Off1-i'-"i1/....:..U-'----- Anticipated Time Jo M / rJ • Overheads ;;;t"S lid es • Flip Charts FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR May 8, 1996 FAH R 96: 28 Health, Dental, and Vision Benefits Program Summary The Districts Human Resources staff review the insurance plans on an annual basis to determine if the benefits and costs are consistent with market survey information from other agencies, cities, and districts. After review, staff came to the conclusion that the Northwestern National Life health plan was significantly overpriced. Furthermore, claims payment experience by staff was less than satisfactory. In January, staff asked the Districts broker, the Robert Driver Company, to obtain estimates for health, dental and vision insurance. Of the responses received MetraHealth (formerly MetLife) was the clear front runner. Delta Dental provided a quotation which would allow the Districts to convert its self-insured plan to fully insured at a slightly higher rate of $1,000 per month. By changing to fully insured, Districts' staff will save time in plan administration while fixing the price to the premiums quoted without having fluctuations based on claims experience. The Districts' staff also asked our broker to investigate the vision insurance market. Limited vision coverage to Districts employees is currently being provided only under the FHP plan. Districts' staff is proposing to offer vision coverage to all employees regardless of the plan they choose at a cost of $99,324 annually. The total savings to the Districts and its employees by approving staff's recommendations equal $826,860 per year. Recommendation Revision of Resolution 95-105 to reflect agreement with represented employee units to substitute the MetraHealth Point-of-Service plan for the Northwestern National Life medical coverage, fund dependent medical premiums at 80% and employee only coverage at 100%, convert dental insurance from self-funded to fully-insured through Delta Dental, provide Districts'-funded vision insurance through Vision Service Plan and amend the Memoranda of Understanding with the Districts' bargaining units, and other plan documents accordingly effective July 1, 1996. May 1, 1996 STAFF REPORT Revision of Resolution 95-105 to reflect tentative agreement with represented employee units to substitute the MetraHealth Point-of-Service plan for the Northwestern National Life medical coverage, fund dependent medical premiums at 80% and employee only coverage at 100%, convert dental insurance from self- funded to fully-insured through Delta Dental, provide Districts'-funded vision insurance through Vision Service Plan and amend the Memoranda of Understanding with the Districts' bargaining units, and other plan documents accordingly effective July 1, 1996. BACKGROUND Health Insurance Proposal The Districts currently have three health insurance plans that consist of two Health Maintenance Organizations (HMOs) and one indemnity type plan. Kaiser and FHP represent the two HMOs and Northwestern National Life represents the indemnity type plan. The types of plans offered are consistent with the Districts' six Memoranda of Understanding (MOUs) with its labor groups that state that "the Districts shall provide medical-health insurance coverage through both HMOs and an indemnity type group health plan." The Districts' Human Resources staff reviews the plans annually to determine if the benefits and costs are consistent with market survey information from other agencies, cities and districts. After review, staff concluded that the Northwestern National Life plan was significantly overpriced according to market comparisons. Besides the high cost of the plan, staff was experiencing many complaints from employees who were having trouble getting their medical claims paid. In January of this year, staff asked the Districts' insurance broker, the Robert Driver Company, to obtain estimates for health insurance with the same or better coverage than what the Northwestern plan offered. Of the responses received by the Driver Company, MetraHealth (previously MetLife) was the clear front runner. MetraHealth offered a two-tiered point-of-service plan that would lower the Districts' premiums more than $800,000 annually. A two-tier point-of-service plan allows employees the choice to go through a gatekeeper physician for 100% coverage or to any doctor of his or her choice for 80% coverage. In addition, hospital coverage would be increased from 90% CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Health, Dental, Vision Staff Report May 1, 1996 Page 2 of 4 to 100% as compared with the Northwestern plan. Because MetraHealth has offered better insurance coverage than our current indemnity type plan, at a lower cost, with a three-year rate guarantee, staff is proposing to change our indemnity type insurance coverage to MetraHealth while maintaining the two HMO options of Kaiser and FHP. Health Benefits Cost Analysis In Cost Summary section below and Appendix A of this report, both the employer and employee cost of premiums is broken out by plan. The savings to the Districts for switching to the indemnity type insurance plan offered by MetraHealth will be approximately $836,088 annually. To share in the savings to both the Districts and employees and to provide the same, equitable premium cost percentage under all plans, staff is proposing 100% payment for the employee only coverage and an 80/20 part split for the premiums for dependent coverage. The current fixed rates as a percentage of premiums for employees range from 16% to 35%. The effect to the Districts by changing the rates to 20% across the board would be a shift of approximately $35,837 annually from employees to the Districts (see Cost Summary). The current MOUs read: The Districts' will contribute up to the following amounts toward the medical health plans: Northwestern Employee Only Employee + 1 dependent Full Family FHP Employee Only Employee + 1 dependent Full Family Kaiser Employee Only Employee + 1 dependent Full Family Districts' Contribution $338.62 $477.92 $653.96 $134.65 $215.00 $275.00 $136.62 $215.00 $275.00 CSDOC • P.O. Box 8127 e Fountain Valley, CA 92728-8127 • (714) 962-2411 Health, Dental, Vision Staff Report May 1, 1996 Page 3 of 4 Any Change in insurance rates caused by a carrier after 11-25-94 as a result of a premium decrease or increase will be shared equally by the Districts and the employees, except that any additional costs to the Districts shall not exceed $10 per month. Any change in insurance rates caused by a carrier after 11-24-95 as a result of a premium decrease or increase will be shared equally by the Districts and the employees, except that any additional cost to the Districts again not exceed $1 O per month. Any unused portion of the November 1994 $1 O increase in Districts' contribution shall be carried forward and applied towards any November 1995 increase. Before the renewal of anv Districts' sponsored health insurance plan, the parties agree to meet and confer as to the plans to be offered in the subsequent vear as well as the benefits and premiums of such plans. The proposed cost sharing arrangement would be stated in the MOUs as follows and all other language from above would be deleted: The Districts' will contribute 100% of Employee Only premiums for the medical health plans and will contribute 80% of the Employee + 1 dependent and Full Family premiums. Any change in insurance rates will be shared equally in same ratios as premiums are currently paid by the Districts and employees. Before the renewal of any Districts'-sponsored health insurance plan, the parties agree to meet and confer as to the plans to be offered in the subsequent year as well as the benefits and premiums of such plans. All six labor groups have tentatively agreed to the above changes including A) the change in the indemnity type coverage from Northwestern National Life to MetraHealth, and B) the 100% Districts contribution to Employee Only premiums and 80% Districts' contribution to the Employee + 1 dependent and Full Family premiums. Vision Insurance Coverage The Districts' staff also asked our broker to investigate the vision insurance market. Limited vision coverage to Districts employees is currently being provided only under the FHP plan. Districts' staff is proposing to offer vision coverage to all employees despite the plan they choose. The Driver Company obtained quotes from several insurance companies and Vision Service Plan (VSP) offered the best value. Coverage under the plan would provide for a $15 deductible with an exam and lenses every 12 months, frames every 24 months, or contact lenses instead of frames and lenses. The cost of the coverage with a two-year rate guarantee is $8,277 per month based on our current employee population or $99,324 per year. Appendix B provides a summary of the plan and a cost breakdown. CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Health, Dental, Vision Staff Report May 1, 1996 Page 4 of 4 Dental Insurance Coverage Finally, the Driver Company obtained cost comparison quotes on the Districts' dental insurance. The Districts' is currently self-funded through Delta Dental. To staffs surprise, Delta Dental has offered to fully insure our current plan for only an additional $12,240 per year. The Districts currently pay $437,556 annually for claims and outside administration as self-funded verses the option to go fully insured for $449,796. Staff is recommending that the Districts change our self-funded plan to a fully insured plan through Delta Dental. The additional cost is approximately $12,240 per year. By changing to fully insured, Districts' staff will save time in plan administration while fixing the price to the premiums quoted without having fluctuations based on claims experience. Cost Summary -.-.---.· Total Employee -:Em~l'loy-er Board Action ,,costl(Savings-) • Cost/(Savings) c-o~t/(Savings) Approve recommendation to substitute $(938A44) $(102,336) \$:(836 ,088:) MetraHealth for Northwestern : ., Approve recommendation for 80/20 split ··$0 $(35,837) :::J?:51837 +::--:-: for dependent coverage. :i Approve conversion of dental insurance \${12i24.0 $0 $12)240' from self-funded to fully-insured. - Approve additional vision coverage under $9'9)'124 $0 \ \$9:g"s.24 · Vision Service Plan Total Savings to Districts $(826,860) $(138,173) $(688;687) RECOMMENDATION Revision of Resolution 95-105 to reflect tentative agreement with represented employee units to substitute the MetraHealth Point-of-Service plan for the Northwestern National Life medical coverage, fund dependent medical premiums at 80% and employee only coverage at 100%, convert dental insurance from self-funded to fully- insured through Delta Dental, provide Districts'-funded vision insurance through Vision Service Plan and amend the Memoranda of Understanding with the Districts' bargaining units, and other plan documents accordingly effective July 1, 1996. F:\HOME\PETERMAN\CSDOC\BENEFITS\HEALTH96 Appendix A Health Benefits Worksheet Current Total Costs Coverage #ofEmp. Kaiser # of Emp. FHP #ofEmp. NWNL Monthly Total Annual Total Emp. Only 30 132.93 62 137.34 175 338.62 71 ,761 861 ,138 Emp. + 1 11 265.86 40 269.82 93 567.92 66,534 798,406 Emp. + 2 or more 43 376.18 43 420.35 113 813.96 126,228 1,514,739 84 23,088 145 37,383 381 204,053 264,524 3,174,283 Proposed Total Costs Coverage #ofEmp. Kaiser # of Emp. FHP # of Emp. MetraHlth Monthly Total Annual Total Emp. Only 30 130.37 62 137.34 175 169.76 42,134 505,610 Emp. + 1 11 260.73 40 269.84 93 351 .28 46,331 555,968 Emp. + 2 or more 43 368.94 43 420.35 113 561.71 97,413 1,168,952 84 22,644 145 37,384 3B1 125,850 185,878 2,230,531 Total Savings 943,752 I Current Districts' Cost Coverage ofEmp Kaiser ofEmp FHP ofEmp NWNL Monthly Tot.al Annual Tot.al Emp. Only 30 131.74 62 134.65 175 338.62 71,559 858,708 Emp. + 1 11 205.24 40 215.00 93 477.92 55,304 663,650 Emp. + 2 or more 43 261.18 43 275.00 113 653.96 96,953 1,163,439 84 17,441 145 28,773 381 177,603 223.816 '2,685;797 Proposed Districts' Cost Cove~ge ofEmp Kaiser ofEmp FHP of Emp MetraH/th Monthly Total Annual Total Emp. Only 30 130.37 62 137.34 175 169.76 42,184 505,61U Emp.+ 1 11 208.58 40 215.87 93 281.02 37,065 444,774 Emp. + 2 or more 43 295.15 43 336.28 113 449.37 77,930 935,162 84 18,897 145 31,610 381 106,622 157,129 1,885,547 Total Districts' Savings 800,251 I Current Employee Cost Coverage ofEmp Kaiser ofEmp FHP ofEmp NWNL Monthly Total Annual Total Emp. Only 30 1.19 62 2.69 175 0.00 202 2,430 Emp. + 1 11 60.62 40 54.82 93 90.00 11,230 134,755 Emp. + 2 or more 43 115.00 43 145.35 113 160.00 29,275 351 ,301 84 5,648 145 8,610 381 26,450 40,707 488,486 Proposed Employee Cost Coverage ofEmp Kaiser ofEmp FHP of Emp MetraHtth Monthly Total Annual Total Emp. Only 30 0.00 62 0.00 175 0.00 0 - Emp. + 1 11 52.15 40 53.97 93 70.26 9,266 111,194 Emp. + 2 or more 43 73.79 43 84.07 113 112.34 19,483 233,790 84 3,746 145 5,774 381 19,228 28,749 344,984 Total Employee Savings 143,502 I Employee Share of Current Premiums Proposed Share of Premiums Employee % of Premium Kaiser FHP NWNL Employee % of Premium Kaiser FHP MetraHealth Employee only 0% 0% 0% Employee only 0% 0% 0% Employee + 1 Percentage 23% 20% 16% Employee + 1 Percentage 20% 20% 20% Employee + 2 Percentage 31% 35% 20% Employee + 2 Percentage 20% 20% 20% • • Appendix B f Vision Insurance Plan Type: Deductible $ 15 Exam Schedule 12 months Lense Schedule 12 months Frame Schedule 24 months Rate Summary: Monthly Rate: # of Employees Employee: $ 8.80 252 Employee + 1 dependent: $ 12.80 122 Full Family: $ 22.95 196 Monthly Costs: Employee: $ 2,218 Employee + 1 dependent: $ 1,562 Full Family: $ 4,498 Rate Guarantee 2 years Monthly Total 1s 8,278 I Annual Total 1s 99,336 I .E!!.!!!!!!! D Written Report •Overheads •Slides •Flip Charts Department Head Sign FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 F AH R96-29: Consideration of motion to consider alternatives for renewal of All-Risk Property Insurance (including Fire, Flood and Earthquake Coverage) for FY 1996-97 Summary: The Districts' current all-risk property insurance, including fire, flood and earthquake, expires at the end of June 1996. Robert F. Driver Associates, the Districts' broker of record, has made preliminary inquiries of the major insurance carriers in anticipation of the Districts' annual policy renewal, and has presented the following two renewal options for the Districts' consideration: A. maintain existing coverage levels at a premium similar to last year (Option "A:); or B. seek a moderate increase in earthquake coverage levels at higher premium costs (Option "B"). These options are summarized in the table below: All-Risk Property Insurance including earthquake and flood, personal property, business interruption. $1,375,032,593 $200,000,000 $30,000,000 $1,377,451 $1,411,367,936 $200,000,000 $30,000,000 $1,370,000-$1,400,000 $1,411,367,936 $200,000,000 $40,000,000 $1,520,000-$1,550,000 For this year's renewal cycle, we are experiencing a stabilization of the tightening or worsening market that we were in last year. Several of the larger insurers and reinsurers are not writing this type of coverage any longer, but new insurers are entering the marketplace. The attached letter from Robert F. Driver describes conditions found in the current insurance market. In Option "B," Robert F. Driver proposes an increase in the earthquake sub-limit of $10 million. The cost for the additional coverage is approximately $150,000. Staff recommends the FAHR Committee members discuss this proposal, weighing the need for additional coverage against the additional premium amount. Robert F. Driver Associates has asked for direction in order to focus their renewal efforts and to reduce the commitments required of insurers. Staff Recommendation Staff recommends that the Committee authorize staff to pursue Option "A" to provide the Districts with as much All-Risk Property Insurance coverage as possible at no, or a very modest, increase in premium for FY 1996-97. J:\WPDOC\FIN\CRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.29A ASSOCIATES April 22, 1996 Mr. Steve Kozak Financial Manager ROBERT F. DRIVER ASSOCIATES a Division of Robert F. Driver Co., Inc. County Sanitation Districts of Orange County, CA P.O. Box 8127 Fountain Valley, CA 92728-8127 RE: All Risk Property and Earthquake Insurance Program Renewal for Fiscal Year 1996-1997 Dear Steve: • COMPLETE INSURANCE/BOND SERVICE • The substantial deterioration of the earthquake insurance marketplace, which began in 1993 and accelerated in 1994 as a direct consequence of the N orthridge earthquake, extended through 1995. This year, for the first time in this hard market cycle, we have begun to see signs of stabilization although there are still insurers leaving the marketplace while some new insurers are entering the marketplace. We foresee a continued "hard" underwriting cycle extending through year end 1996. Within this adverse underwriting environment, there remain few viable earthquake insurers. Given these significant limitations and restrictions, we are nonetheless aggressively negotiating the placement of the County Sanitation Districts of Orange County's all risk property and earthquake insurance program. At this point, we estimate that the program may generate an approximate annual premium of $1,370,000 with similar coverage and limits similar to the current program. This premium represents the same rate per $100 of value as expiring. This reflects the stabilization trend in the marketplace. As a part of our renewal strategy, we will attempt to place additional coverage limits of $10,000,000. We expect the premium for additional coverage limits to be approximately $150,000. Again, the nature of the constantly changing earthquake marketplace will determine our ability to purchase these additional limits. We envision difficulties in finalizing the program near the renewal date. We plan to prepare a detailed report as we did last year. 3636 BIRCH STREET. SUITE 230. NEWPORT BEACH, CALIFORNIA 92660-2619 (714) 756-0271 • FAX (714) 756-27/3 Steve Kozak Financial Manager County Sanitation Districts of Orange County, CA April 22, 1996 Page-2- We shall continue to pursue program renewal consistent with directions from the Finance Administration and Human Resources Committee and shall keep you apprised of our efforts on the Districts' behalf. Sincerely, R08!3)T F. DRNEYJ,:s;ci:ms .v~4u7~ Donald H. McLean, Jr. First Vice President CHM:djs fs!mm! •Written Report •Overheads •Slides 0 Flip Charts Originator ~ ,)' Department Head Sign~ Gary Streed Anticipated Time '5 lf'N.A- FINANCE ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 F AH R96-30: Consideration of a motion to renew Excess Workers' Compensation Insurance for the period May 1996 to May 1999, with the California Municipal Excess Workers' Compensation (CAMEX) Program. , Summary This report is presented regarding the renewal of Excess Workers' Compensation and Employer's Liability Insurance for the period May 1996 to May 1999. Background The Districts have maintained a self-insurance fund for primary workers' compensation coverage since 1979. An appropriation of $225,000, in lieu of premium payments, was made to the Workers' Compensation Self-Insurance Fund for primary workers' compensation coverage for FY 1995-96. Excess Workers' Compensation and Employer's Liability coverage provides the Districts, as a self-insurer, with an additional layer of Workers' Compensation insurance protection above a $250,000 retention, and Employer's Liability at $1 million each accident. The FY 1995-96 premium cost for Excess Workers' Compensation and Employer's Liability coverage through the CAM EX program was $21,662. During the Excess Workers' Compensation Insurance renewal process in 1994, the Boards authorized the Districts to participate in the California Municipal Excess Workers' Compensation (CAMEX) Program. This joint powers agency was formed in 1994 to provide local agencies access to lower cost excess Workers' compensation coverage. Staff and Robert F. Driver (Driver) Company, the Districts' Broker of Record, have reviewed Excess Workers' Compensation insurance alternatives. We learned that the current policy underwriter, American International Group (AIG) has changed its underwriting philosophy and was proposing an approximate 35 percent increase in renewal rates. As such , Driver considered other insurance carriers and, following negotiations with five firms, secured Continental Casualty Company (CNA) for the CAMEX program effective with the May 1996 renewal. The most notabie aspect of CNA's participation in CAM EX is that the renewal is for a term of three years with a rate guarantee. The policy is subject to audit, but no additional premium is due unless payroll is increased by more than 10%. Total payrolls for the CAMEX program have only increased by approximately 3% during the past two years. Given this information staff and Diver have determined that the Districts should continue to participate in the CAMEX program, as described in the attached letter. Sufficient funds will be included in the FY 1996-97 Districts' Workers' Compensation Self-Insurance Fund budget to cover premium costs. Staff Recommendation Renew Excess Workers' Compensation and Employer's Liability Insurance for the period May 1996 to May 1999 with the California Municipal Excess Workers' Compensation (CAM EX) Program for a premium of $22,678, which could be adjusted based on a payroll audit. J:\WPDOC\FIN\CRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.30A ' ' ROBERT F. DRIVER ASSOCIATES a Division of Robert F. Driver Co., Inc. ASSOCIATES April 18, 1996 Mr. Steve Kozak, Financial Manager County Sanitation Districts of Orange County, CA P.O. Box 8127 Fountain Valley, CA 92728-8127 RE: California Excess Municipal Workers' Compensation (CA?vIEX) Insurance Program Dear Steve: • COMPLETE INSURANCE/BOND SERVICE • We recently forwarded to you our proposal for the continued provision of excess workers' compensation insurance as of May 1, 1996, under our CAMEX program. As you know, the CAMEX Program was developed over the course of eighteen months during 1993 and 1994 and was implemented May I, 1994. The purpose behind our developing this joint purchase program was severalfold. Most importantly, we realize the enhanced leverage of a large group which, we believe, will continue to assure broad and flexible coverage as well as stability of premiums even if adverse marketplace conditions develop in the future. We also gain the further significant benefit of negotiating premiums at substantial discounts to those generated under an individual policy. These premium savings were tangibly demonstrated when in March, 1994, National Union bound coverage for the Districts on a single policy basis at an approximate annual premium of $38,000.00, a cost lower than those of several other competing insurers. Subsequently, following authorization from the Districts' Board of Directors, we replaced coverage as of May I, 1994, through our CAMEX insurer at an annual premium of approximately $29,000.00, an additional savings of almost twenty-four percent (24%). We were able to negotiate further rate reductions of approximately five percent (5%) as of the May 1, 1995, anniversary date. As detailed in our proposal, we aggressively marketed the program this year in order to thoroughly explore the marketplace for viable alternatives and have, in fact, bound the program with Continental Casualty Company (CNA) at rates five percent (5%) below expiring rates, 3636 BIRCH STREET. SUITE 230. NEWPORT BEACH. CALIFORNIA 92660-2619 (714) 756-0271 • FAX (714) 756-2713 Mr. Steve Kozak, Financial Manager County Sanitation Districts of Orange County, CA April 18, 1996 Page-Two- further guaranteed not to increase for three years. We believe that your participation in the CAMEX Program will continue to serve the Districts' Excess Workers' Compensation insurance needs much more effectively than an individual policy placement, and we are implementing coverage based upon our recommendation of your continuing participation under the CAMEX Program. Sincerely, ROBERT F. DRIVER ASSOCIATES ~[Jfti;r"'- First Vice President ~,,../'· DHM:rrnj nnat • Written Report •Overheads •Slides •Flip Charts Department Head Sign FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAHR96-31: Consideration of responses to the Request for Proposals to develop a General Liability Risk Management Program for the Districts Summary On March 13, 1996, the Finance Administration and Human Resources (FAHR) Committee considered a motion to receive and file a staff report regarding review of the Districts' risk management and insurance activities. The purpose of the program evaluation was to initiate a regular review of the Districts' Risk Management Program and to recommend both short-term and medium-term improvements, based on industry benchmarks. At this meeting, the Committee authorized staff to solicit formal proposals for general liability insurance through Robert F. Driver Associates, the Special District Risk Management Authority and the California Sanitation Risk Management Authority. This item reports on the Request for Proposal process for development of a General Liability Risk Management Program for the Districts effective July 1, 1996. Staff Recommendation 1) Receive and file this report. 2) Select the proposal submitted by Robert F. Driver to secure Comprehensive General Liability and Excess Liability insurance coverage for the Districts with a Self Insured Retention of $100,000, and a premium cost of approximately $118,750, and recommend approval to the Joint Boards of Directors with an effective date of July 1, 1996. 3) Provide direction to staff regarding further investigation on the issue of Known Events Risk Transfer. J:IWPOOC\FIN\CRANE\FPC.MTGIFAHR.96\COVERS.96\FAHR96.31 May 8, 1996 FAHR96-31: Summary STAFF REPORT Consideration of Responses to the Request for Proposals to Develop a General Liability Risk Management Program for the Districts This item reports on the Request for Proposal process for development of a General Liability Risk Management Program for the Districts effective July 1, 1996. Background On March 13, 1996, the Finance Administration and Human Resources (FAHR) Committee considered a motion to receive and file a staff report regarding review of the Districts' risk management and insurance activities. The purpose of the program evaluation was to initiate a regular review of the Districts' Risk Management Program and to recommend both short-term and medium-term improvements, based on industry benchmarks. The report indicated that the Districts had purchased excess liability insurance until 1986, when a major increase in premiums made it difficult to place and maintain coverages. Since that time, the Districts have implemented a fully self-insured general liability program. A recent risk management study "The Cost of Risk Evaluation in State and Local Government, n conducted by the Public Risk Management Association and Deloitte & Touche LLP, showed that almost 70% of the agencies surveyed purchase primary general liability limits averaging approximately $6 million, and excess/umbrella limits of $1 O million. The most common general liability deductible is $100,000. In comparison, the Districts is completely self-insured for general liability coverage, with an ending FY 1995/96 reserves balance of $3.4 million. Although the Districts have enjoyed a history of few significant losses, staff's review noted that any single catastrophic accident or large settlement award could completely deplete the Districts' self-insurance fund. As a result, the FAHR Committee authorized staff to solicit formal proposals for general liability insurance through Robert F. Driver Associates, the Special District Risk Management Authority and the California Sanitation Risk Management Authority. CSDOC O P.O. Box 8127 0 Fountain Valley, CA 92728-8127 0 (714) 962-2411 FAHR96-31 Page2 May 8, 1996 Request for Proposals (RFP) Process Districts' staff drafted the RFP with the intent of developing and implementing a Comprehensive General Liability Risk Management Program for the Districts effective July 1, 1996. The RFP was distributed to the three targeted agencies each of whom submitted a proposal by the April 25th deadline. The proposals were evaluated and ranked by the Districts' risk management staff. The criteria for evaluating the proposals included, but was not limited to the following: • Demonstrated experience in successfully completing similar insurance programs for local public agencies; • Demonstrated understanding of the Districts' needs • Costs; and • Services and support provided. The RFP requested that the agencies recommend a specific liability coverage program tailored to the Districts' needs. Each proposal took a slightly different response to the proposed coverage limits, self insurance retentions and support services recommended. In preparing the RFP, Districts' staff was advised by Robert F. Driver, the Districts' Broker-of-Record, that stop-loss coverage, or coverage to insure against a higher self insurance retention (SIR), was not advisable. This coverage is expensive and it is more economical to seek out proposals with low SIRs as part of their premiums. The agencies were advised of the Districts' interest in a low SIR. Results of Proposal Evaluation The following presents a summary of the three proposals. CSRMA CSRMA, the California Sanitation Risk Management Authority, is an association of wastewater agencies joined to provide pooled liability coverage and quality risk management services. The Joint Powers Authority (JPA) that makes up CSRMA is comprised of over 50 California wastewater agencies and is staffed by Sedgwick James of California, Inc. Sedgwick James is one of the largest insurance brokers in the industry and has been in business for over 135 years. The JPA was formed in 1986. Total assets for the fiscal year ending June 30, 1995 were $13.3 million. FAHR96-31 Page 3 May 8, 1996 CSRMA's proposal was responsive and easily interpreted. They are proposing full general liability coverage, including pollution coverage. While the Districts have recently stopped using chlorine at either plant site, CSRMA's proposal suggests that pollution coverage still may be of value to the Districts. CSRMA recommends a $20 million layer and a $30 million layer using two insurance carriers, both of whom are of admitted status and highly ranked by A.M. Best. The premium for the coverage is $243,000 with the SIR amount proposed at $1 million, pending the Districts admittance into CSRMA's Pooled Liability Program in December. Once admitted into the Pooled Liability Program, the Districts' SIR could drop to $250,000 for general/auto liability and $25,000/$2,500 for employment practices/errors & omissions coverage. The premium for these lower SIRs, as a member of the Pooled Liability Program, would be approximately $245,000. CSRMA proposes excellent support services that are offered to all member agencies. The annual membership fee to participate in CSRMA is $15,000. SDRMA SDRMA, the Special Districts Risk Management Association, also provides pooled liability coverage. SDRMA's main objective is to provide risk financing for the 180 Special Districts that make up the JPA's membership. The Authority has a risk management staff of approximately nine JPA employees, and has been operating since 1986. Total assets for the fiscal year ending July 31, 1995 were $10.26 million. SDRMA submitted a strong comprehensive proposal. They propose full general liability coverage, however they exclude pollution coverage. The proposal recommends a $25 million coverage limit provided in four incremental layers. The insurance carriers providing the coverage are all of admitted status and are highly ranked by A.M. Best. The premium for this coverage is $273,846 with a SIR of $50,000. SDRMA membership also includes excellent support services that would prove valuable in augmenting the Districts' staff effort as the Risk Management Program and Work Plan are developed. In addition to providing the basic claims management services, SDRMA offers on-site visits, safety and risk training, contract review and analysis as well as having policy and training manuals available that can be tailored to the Districts' needs. The annual membership fee to participate in SDRMA is $1,846. Robert F. Driver Associates Robert F. Driver Associates (Driver) has been the Districts' broker of record since 1992 and has been serving the risk management needs of public agencies for almost twenty years. Although Driver is not similar to the other JPA agencies, CSRMA and SDRMA, Driver is proposing that the Districts participate in their California Municipal Excess Liability (CAMEL) Program, a pooled municipal liability program. FAHR96-31 Page4 May 8, 1996 Driver submitted a responsive and complete proposal, although it was more difficult to interpret and evaluate than the other proposals. Driver proposes full general liability coverage to $25 million, and does not include pollution coverage. The policy carrier is both admitted and highly ranked by A.M. Best. The premium for this coverage is quoted at $118,000 with a SIR of $100,000. The coverage provides basic claims administration through Carl Warren, Inc., the Districts' current third party administrator. No auxiliary support services were proposed. Comparison of Proposals A summary comparison of the proposals is presented in the following table. General Liability Auto Liability Errors and Omissions Employment Practices 500k, $1 OM, $15 M, $25M Layers $50,000 $243,256 $273,846 0ncludes membership fees) 0ncludes membership fees) Claims Administration Claims Administration Program Development Assist. General Liability Auto Liability Errors and Omissions Employment Practices $25M Layer $100,000 $118,750 0ncludes broker commission of 7-10%) Claims Administration All three proposals were responsive and met the Districts' need to provide general liability insurance. However, if one of the goals of the Districts is to secure a low SIR, the CSRMA proposal stated that their JPA cannot provide any general liability limit less than $250,000 due to the size of the Districts. SDRMA has a much more competitive SIR of $50,000 and includes valuable support services that would prove very useful to staff in development of the risk management program and work plan. The premium for this full service approach to risk management planning and coverage is $273,846. FAHR96-31 Page 5 May 8, 1996 Driver provides a an attractive SIR of $100,000 with a competitive premium of $118,750. Alternative levels of coverage and SIR are shown on the attached schedule (see Attachment 1 ). This premium however is for basic placement of the catastrophic coverage. This "self-serve" approach to risk management would provide only for straight liability placement and coverage. Staff, General Counsel and the current liability claims administrator would continue to provide claims management services. Risk Transfer The RFP requested that the agencies discuss their capabilities of providing the Districts with risk transfer alternatives for "known events" catastrophic liability coverage. None of the proposals included known events risk transfer in their basic recommendations for the Districts, but all indicated that the coverage could be secured. It should be noted that there was consensus among the proposers that this coverage would be very expensive for the Districts to obtain. Staff recommends that the Committee discuss whether further investigation into this coverage is warranted. Conclusion While support services would add expanded capabilities to the Districts' risk management program, the core issue is to place the most amount of catastrophic liability coverage at minimum cost. Therefore, it is recommended that the Districts obtain general liability and excess liability insurance through Robert F. Driver Associates, as well as maintain the Districts' existing general liability reserves balance of $3.4 million. Staff Recommendation 1) Receive and file this report. 2) Select the proposal submitted by Robert F. Driver to secure Comprehensive General Liability and Excess Liability insurance coverage for the Districts with a Self Insured Retention of $100,000, and a premium cost of approximately $118,750, and recommend approval to the Joint Boards of Directors with an effective date of July 1, 1996. 3) Provide direction to staff regarding further investigation on the issue of Known Events Risk Transfer. SK:lc J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.31 Attachment • Robert F. Driver General Liability Insurance Quotations Total Premiums ATTACHMENT 1 SIR $SM Layer $10M Layer $2SM Layer $SOM Layer $25,000 $135,000 $145,000 $163,750 $188,750 $50,000 $110,000 $120,000 $138,750 $163,750 $100,000 $90,000 $100,000 I $118,7501 $143,750 $250,000 $75,000 $85,000 $103,750 $128,750 $1,000,000 $37,500 $47,500 $66,250 $91,250 $2,000,000 $20,000 $30,000 $48,750 $73,750 Format • Written Report • Overheads Original~~~ Department Head Sign O~nr=-' 1 Anticipated Time --S d /1'1 1 P <t ~ • Slides • Flip Charts FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAHR96-32: Consideration of Motion to Receive and File Staff Summary Report on Training. Summary The Districts are currently in the process of centralizing and improving District-wide training. The following information provides a progress report on major projects currently under development. Staff Recommendation An informational item only. G:\WP\HR\TRAINING\EISMAN\STAFFRPT.426 STAFF REPORT FAHR96-32: Consideration of Motion to Receive and File Staff Summary Report on Training. TRAINING AND EMPLOYEE DEVELOPMENT UPDATE Background: The major emphasis of the Training Division during the last quarter has been to initiate projects to move toward District-wide centralization and coordination of training. The focus of this effort has been the development of a Districts Training Plan which includes required safety, technical, and other training. Inherent in this process is the establishment of a system to track and monitor all Districts' training along with associated costs. MAJOR PROJECTS UNDERWAY Cross-training: Effective July 1, 1996, the Districts will be restructuring the organization to include an expanded Operations and Maintenance Department that will incorporate all current operations functions, as well as mechanical maintenance and all of instrumentation and electrical maintenance, with the exception of pump station maintenance. There will also be a new General Services Administration (GSA) Department which will include Collections, Information Technology and Facilities Management (Auto Shop, Paint Shop, Rebuild Shop and the new CNG gas station). The major goals of this restructuring will be to facilitate cross-training between operations and maintenance functions in order to: (1) create a more flexible workforce, to improve productivity and efficiency; and (2) accelerate the plant automation program. The Districts' initial cross-training effort is being planned for implementation in two phases: Phase I training will consist of general maintenance tasks (i.e., replacing electric lamps, area cleanup, etc.) that can be performed with minimal on-the-job training and effort. Seventy-one of these tasks have been identified for training thus far and more are being identified on a daily basis. CSDOC • P.O. Box 8127 • Fountain Valley, CA 92728-8127 • (714) 962-2411 FAHR96-32 Page 2 of 3 April 23, 1996 Phase II training will consist of routine repetitive tasks that are currently performed at the Plant Technician level, such as calibrations, routine preventative maintenance, etc. These tasks are considered more complex in nature and may require a more in-depth, formal training effort. Development of a Centralized Database and Record Keeping System: We have received a Training Management System which we are in the process of installing now. We will be downloading current training and personnel data from TD 2000 and HR 2000 into the system and training key personnel by the first week in June 1996. Our plan is to have the system fully implemented no later than July 1996. This system will also include a Training Cost Tracking System that we will use to monitor and track training costs by Department and category of training. From this system, we will be able to generate departmental reports on a monthly basis to notify departments of personnel who need required training, personnel who have been trained, associated costs, etc. Human Resources Policies and Procedures Training: 108 supervisors and managers received an initial four hour training session on Human Resources Policies and Procedures in March 1996. Supervisors and managers used an open discussion forum to identify policies and procedures which they thought were inconsistently being applied throughout the Districts and those which they felt needed to be better defined or revised by the Human Resources Department. The identified inconsistent policies and procedures will be prioritized by the Human Resources Director and training will be conducted quarterly as revisions are made to keep supervisors and managers informed and to facilitate consistent application. Development of Safety Training Program: We have completed identification of all safety training requirements for the District and have developed a training matrix that will identify type of training, regulatory requirements, target audience, hours of training, frequency, priority, scheduled training dates, and training source. This training matrix will be used to implement the Districts' Safety Training Program along with a monitoring and tracking system to ensure that all employees meet regulatory training requirements. Training of all supervisors is currently being scheduled on use of CD-ROM training modules on a variety of safety topics. Implementation of the program is scheduled for June 1996. Development of a Districts-wide Training Plan: Departmental Training Plans have been completed and reviewed by the Training Division. Monthly meetings have begun with managers to discuss alternative training options, implementation, scheduling, and tracking of departmental training, FAHR96-32 Page 3 of 3 April 23, 1996 Management/Executive Development Training: Training for the Executive Management Team has been scheduled for May 1996. Training for all Division Managers has been scheduled for June 1996. The focus of these separate training sessions will be to improve communication skills; increase leadership style awareness; manage conflict; build effective teams; strategic leadership; and business process redesign. Training for both groups together is also scheduled for June 1996. This training will emphasize working together as a team to implement FY 96-97 critical goals. Secretarial/Clerical Certificate Training Program: We are developing a certificate program for secretarial/clerical personnel to enhance on the job technical skills, i.e. effective writing, communication skills, team effectiveness, improved customer service, time management, conflict resolution, etc. We are currently meeting with the Clerical Steering Committee to identify specific training content. Job Certification Reimbursement Program: We have completed a proposed Districts' Certification Reimbursement Policy which has been reviewed by all Departments. We are in the process of determining the costs to implement the program in FY 96-97. Management Performance Review Program: Training for all supervisors, managers and professional personnel on the new Management Performance Review Program was conducted in April and May 1996. Training on Individual Development Plans was included as part of the training. Individual Development Plans for all employees will be established at the same time as the performance review. LE:dm J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\COVERS.96\FAHR96.32A 5/1 /96 Computer 44% Technical Types Of Training & Travel 6 Month Total $121,048 Annual Budget $513,500 Training.xis Safety 6% ATTACHMENT 1 SUMMARY & CHARTS 5/1 /96 ATTACHMENT 2 Technical Services 22% Engineering 11% Plant Operations 9% 21% General Manager 3% Human Resources 10% 6% lnfonnation Tech 18% Departmental Share of Training & Travel Expense 6 Month Total $121,048 Registration 85% Annual Budget $513,500 Training & Travel Expense Components 6 Month Total $121,048 Annual Budget $513,500 Training.xis Travel & Per Diem 11% Supplies & Other 4% Local Meetings 0% SUMMARY & CHARTS 5/1 /96 Technical Services 38% Engineering 8% Directors 10% General Manager 11% Human Resources 2% Finance 0% Information Technology 20% Maintenance Plant Operations 1 % 10% Departmental Share Of Meeting & Travel Expense 6 Month Total $70,622 Travel & Per Diem 68% Annual Budget $134,000 Supplies & Other 0% Local Meetings 4% Registration 28% Meeting & Travel Expense Components 6 Month Total $70,622 Annual Budget $134,000 2STOTRVL.XLS ATTACHMENT 3 meeting charts ATTACHMENT 4 5/2/96 COUNTY SANITATION DISTRICTS OF ORANGE COUNTY Summary Comparison of Training & Meeting Expenses to Budget 6 Months Ended December 31, 1995 Training & Travel Meetings & Travel Annual 6 Month Budget% Annual 6 Month Budget% Department Budget 8gygl Realized Budget Actual Realized Directors $ 15,000 $ 6,775 45% General Management $ 19,500 $ 3,787 19% 10,000 7,635 76% Human Resources 15,000 12,651 849/o 3,000 1,118 37% Finance 25,000 7,817 31% 3,500 149 4% Information Technology 157,000 21,726 14% 19,000 14,031 74% Maintenance 110,000 24,722 22% 10,000 772 8% Plant Operations 57,500 11,060 19% 12,500 7,206 58% Technical Services 85,000 25,919 30% 50,000 27,592 55% Enginering 44,000 13,366 30% 11,000 5,344 49% Total $513,000 $121,048 24% $134,000 $ 70,622 53% SUM_ TABL.XLS 8:06AM .. ,' Fonnat •Written Report •Overheads •Slides • Flip Charts Originator ;bft;{_ Blake Anderson Department Head Sign Off __ _ Gary Streed Anticipated Time S-~ I ,J FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAHR96-33: Consideration of motion to approve payment of final billing amounts for the Landfill Acquisition due diligence consultant team. Summary The final billing amounts for the consulting team who worked on the proposed acquisition of the Orange County Solid Waste Management System are presented for the FAHR Committee's review and approval for payment. Payment of these invoices would bring the total amount expended on consulting services for the landfill acquisition project to approximately $401,737.59. Staff and General Counsel efforts, are estimated at an additional $100,000. Staff recommends final payments to Clements Environmental, Price Waterhouse and Saybrook Capital in the following amounts: Recommended Finn Final Payments Clements Environmental $ 69,945.28 Price Waterhouse 125,104.81 Saybrook Capital 71,687.50 Total $266,737.59 Staff Recommendation Consideration of motion to authorize payment of the final negotiated invoice amounts as follows: 1. 2. 3. Clements Environmental: Price Waterhouse: Saybrook Capital: $ 69,945.28 $125,104.81 $ 71,687.50 May 8, 1996 STAFF REPORT FAHR96-33: Consideration of motion to approve payment of final billing amounts for the Landfill Acquisition due diligence consultant team Summary The final billing amounts for the consulting team who worked on the proposed acquisition of the Orange County Solid Waste Management System are presented for the FAHR Committee's review and approval for payment. Background A team of consultants was retained to provide technical and analytical support to Districts' Ad Hoc Committee re Landfill Issues, while working on the solid waste management acquisition project. The team included the following firms: Consultant Firm Discipline The Diamond Group Public relations and governmental liaison. Planning Solutions LAFCO application preparation. Clements Environmental Technical review of the County's closed landfill sites and solid waste industry analysis . Price Waterhouse Financial modeling and system valuation. Saybrook Capital Financial analysis. On March 27, 1996, the Districts Joint Boards of Directors voted to withdraw the Districts' offer to purchase the County landfill system. At this time, staff is concluding the project, attempting to secure a refund of the $100,000 deposit paid to the County in December 1995, and settling the final billing statements with the consultant team. All of the invoices from The Diamond Group and Planning Solutions have been paid and the contracts are being closed. Those billing amounts are $24,000 and $12,000 respectively for all known charges through April 1996. With regard to Clements Environmental, the total of all invoices for work completed amounts to $168,945.28; a $68,945.28 overrun of the $100,000 initially authorized by their contract. The work constituting the overrun (closed landfill site assessments), however, was essential to the project during the seventy-five day exclusive negotiations period, and came at a point that did not allow for securing pre-approval. Staff was advised of the additional work Clements needed to complete on the closed landfill site investigations, directed the consultant to complete their studies, and now recommends that Clements Environmental be paid in full. CSDOC O P.O.Box8127 0 FountainValley,CA92728-8127 0 (714)962-2411 FAHR96-33 Page2 May 8, 1996 Price Waterhouse and Saybrook Capital participated on the project team providing system valuation, financial advice and modeling expertise. They initially became involved in the landfill acquisition project through their relationship as the professional team for the OCIP Creditors' Committee. Their assistance on the project was valuable and the deliverables produced served to guide critical decisions by the Districts. In December, as the seventy-five day exclusive negotiations period was proposed to the County Board of Supervisors, and the Districts' due diligence efforts accelerated, the Districts became, in essence, direct clients of Price Waterhouse and Saybrook Capital. . These firms, however, did not have contracts in place with the Districts, and their consultant fees were left for negotiations until this time. Both firms have submitted final invoices representing their total work effort during the due diligence process. Although Districts' staff concurs with the value and quality of the assistance provided by both firms, staff has endeavored to negotiate more favorable final invoice amounts. Through our negotiations, both firms have agreed to discount their final billings by 14 percent. The following are the final billing amounts and those amounts discounted by the proposed 14 percent. Negotiated Amounts Firm Invoice (Final billing amount Amounts discounted by 14%) Price Waterhouse $145,470.71 $125,104.81 Saybrook Capital 83,357.55 71,687.50 Payment of these invoices would bring the total amount expended on consulting services for the landfill acquisition project to $401 ,737.59. Staff recommends the payment of Clements Environmental, Price Waterhouse and Saybrook Capital in the following amounts: Recommended Firm Final Payments Clements Environmental $ 69,945.28 Price Waterhouse 125,104.81 Saybrook Capital 71,687.50 Total $2661737.59 Staff Recommendation Consideration of motion to authorize payment of the final negotiated invoice amounts as follows: 1. 2. 3. Clements Environmental: Price Waterhouse: Saybrook Capital: $ 69,945.28 $125,104.81 $ 71,687.50 BA:lc J:\WPDOCIFIN\CRANE\FPC.MTGIFAHR.96\STAFFRPT.96\SRFAHR96.33 Format • Written Report DOVerheads •Slides • Flip Charts FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 1996 FAH R96-34: Consideration of motion to review and approve the Third Quarter Report prepared by staff for the period ended March 31, 1996. Summary Attached, in a separately bound document, is the Districts' Financial and Operational Report for the third quarter ended March 31, 1996. This report is a consolidation of both the financial and operational accomplishments of the Districts through the third quarter of fiscal year 1995-96. Contained within the Financial Report section 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 Operational Report section is the status of the Activity Trends and Projects previously identified in the 1995-96 Approved Budget. As indicated within the Overview section of the report, 65.74 percent or $35,747,000 of the 1995-96 net joint operating budget of $54,380,000 has been expended. In addition, the Districts are still at only 71. 70 percent of the "target" budget of $49,860,000. The total year-to-date cost per million gallons is $553 which is below the approved budget and target goals of $627 and $599, respectively. Staff Recommendation Staff recommends that the Committee review and approve the Financial and Operational Report for the third quarter ended March 31, 1996. J:\WPDOC\FIN\CRANBFPC.MTG\FAHR.96\COVERS.96\FAHR96.34A Format D Written Report •Owtrheads •Slides •Flip Charts (13): Summary FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE AGENDA FOR MAY 8, 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, June 12, 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. w Consideration of 1996-97 Budget Recommendations Quarterly Communications Program Update Consideration of Property Insurance Renewal Consideration of Motion Authorizing G.M. to Negotiate Agreement for F.I.S. Annual Review of Investment Policy Consideration of Broadbanding Salary Schedule Review Commercial Bank Selection Alternatives Consideration of approval of F.I.S. Vendor Contract No meeting is currently scheduled. Consideration of RFP for Classification Studies. Staff Recommendation Information only item. J:IWPDOC\FIN\CRANE\FPC.MTGIFAHR.96\COVERS.96\CALENS.96