Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
1996-09-11
FILED ln the Office of 1he Secretar County Sanitatio~ District(~~ No(s) /,:;,>.,3 f/4,~//,;JJ'/i'._'" County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 SEP_251996 By /?ii(. MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday, September 11, 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 August 7, 1996 at 5:30 p.m., at the Districts' Administrative Offices. ROLL CALL The roll was called and a quorum declared present, as follows: Committee Directors Present: George Brown, Chair John J. Collins, Joint Chair Jan Debay James Flora John M. Gullixson Wally Linn Thomas Saltarelli Roger R. Stanton, Vice Chair William G. Steiner Peer Swan, Vice Joint Chair Committee Directors Absent : John C. Cox, Jr. (PJC) Burnie Dunlap Other Directors Present: None Staff Present: Donald F. McIntyre, General Manager Judith A. Wilson, Assistant General Manager Ed Hodges, Director of General Services Admin. Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Mike White, Controller Marc Dubois, Purchasing Manager Christopher Dahl, Information Technology Manager Frankie Woodside, Assistant Committee Secretary Others Present: Russ Patton, Labor Consultant Dan Cassidy, Labor Consultant Thomas Woodruff, General Counsel APPOINTMENT OF A CHAIR PRO TEM No appointment was necessary. PUBLIC COMMENTS No comments were made. Finance, Administration ?"'d Human Resources Committee Page 2 I September 11, 1996 APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the August 7, 1996 meeting of the Finance, Administration and Human Resources Committee. REPORT OF THE COMMITTEE CHAIR The Chair had no report. REPORT OF THE GENERAL MANAGER The General Manager asked that the Directors continue to familiarize themselves with the Strategic Plan by attending the Strategic Plan Workshop on Saturday, September 21. REPORT OF ASSISTANT GENERAL MANAGER -ADMINISTRATION The Assistant General Manager of Administration had no report. New employees Christopher Dahl, Information Technology Manager and Marc Dubois, Purchasing/Contract Manager were introduced. REPORT OF ASSISTANT GENERAL MANAGER -OPERATIONS The Assistant General Manager of Operations was not in attendance. REPORT OF THE DIRECTOR OF FINANCE Gary Streed reported on the Districts' daily COP rates. Since the agenda package was mailed, the COP rates have gone down. Rates traditionally go up at the end of the month and down after the beginning of the month. An internal survey of the Finance department was recently completed. Gary Streed will report the results at next month's meeting. REPORT OF THE DIRECTOR OF HUMAN RESOURCES The Director of Human Resources was not in attendance. REPORT OF THE DIRECTOR OF GENERAL SERVICES ADMINISTRATION The Director of General Services had no report. '. ''-... . .... Finance, Administration and Human Resources Committee . .-.. ,--------, Page 3 September 11, 1996 REPORT OF THE DIRECTOR OF COMMUNICATIONS The Director of Communications deferred, as the report would be included in agenda item FAHR96-53. REPORT OF GENERAL COUNSEL General Counsel had no report for open session. DISCUSSION ITEMS (Nos. 1-6) 1. FAHR96-49: 2. FAHR96-50: 3. FAHR96-51: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF JULY 1996 (All Districts). RECOMMENDED ACTION: Receive and file Treasurer's Report for the month of July 1996 and forward to the Joint Boards. REPORT OF CONTRACTS/PURCHASING MANAGER RE ABC INVENTORY PROGRAM (All Districts). RECOMMENDED ACTION: Receive and file -information only. ANNUAL REVIEW OF THE DISTRICTS' INVESTMENT POLICY (All Districts): Consideration of motion to revise the Districts' Investment Policy Statement, and recommend that the Joint Boards of Directors adopt Resolution No. 96-_ to adopt the updated Investment Policy. COMMITTEE DISCUSSION: The Director of Finance reviewed the changes proposed in the staff 'report which was included in the agenda. The committee asked to have Callan Associates, our Investment Management Advisor, report on the pros and cons of allowing investments to extend beyond 5 years with their next quarterly report. The staff proposal was modified to provide that the monthly Treasurer's Report be distributed at the Committee meeting, in order to meet the 30 day availability required by the revised Government Code. RECOMMENDED ACTIONS 1) Receive and file this report; 2) Approve revisions to the Districts' Investment Policy as recommended in this report, as proposed by the Committee, and as depicted in the updated Investment Policy presented in staff report; and 3) Recommend that the Joint Boards of Directors adopt Resolution No. 96-_ at their meeting of September 25, 1996, to approve the Districts' updated Investment Policy; repeal Resolution Nos. 95-14 and 95-15; and repeal Resolution No. 95-78, and incorporate its contents into Resolution No. 96-_. Finance, Administration ;:-rid Human Resources Committee Page4 September 11, 1996 4. FAHR96-52: 5. FAHR96-53: 6. FAHR96-54: CLOSED SESSION ADOPT ORDINANCE NO. 132 PROVIDING ADDITIONAL SERVICE CREDIT FOR RETIREMENT PURPOSES (All Districts): The Director of Human Resources, in conjunction with the FAHR Committee, recommends that the Directors adopt the Ordinance providing for two additional years of service credit to eligible Districts' employees who retire between January 1 and March 31, 1997, in accordance with the provisions of Government Code Section 31641.04. RECOMMENDED ACTION: Adopt Ordinance No. 132, an Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California, providing eligible Districts' employees to receive two years additional service credit for retirement purposes. RESULTS OF COMMUNICATIONS MINI AUDIT (All Districts): Staff Summary Report on the results of the July Communications Mini Audit and an update of the new and/or expanded programs to reach both internal and external audiences. RECOMMENDED ACTION: Receive and file -information only. PROPOSITION 218, RIGHT TO VOTE ON TAXES ACT (All Districts): The Chief Administrative Officer requests that the Boards go on record in opposition to Proposition 218 which would impose significant and expensive procedural requirements on the noticing of proposed extensions of, or increases to, user fees. The proposition also provides for the application of the voter initiative to user fees, which means that a voter initiative could force a roll-back or reduction in user fees which would have an adverse affect on the Districts' ability to borrow at low interest rates. COMMITTEE DISCUSSION: There was considerable committee discussion about the value and appropriateness of taking a public position on a ballot measure. The consensus was that we should participate in information gathering and disseminating sessions but not take an official position in opposition. RECOMMENDED ACTION: That the Districts not go on record opposing Proposition 218, but investigate methods to inform the public. The Committee convened in closed session at 7:05 p.m., as authorized by Government Code Sections 54957.6, to discuss and consider the item specified under Closed Session as (a)(1) on the published Agenda. Confidential Minutes of the closed session held by the Committee have been prepared in accordance with California Government Code Section 54957 .2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Finance, Administratio~nd Human Resources Committee ~ Page 5 , ! September 11, 1996 Committee Closed Meetings. No reportable action was taken re Agenda Item (a)(1 ). At 7:45 p.m., the Committee reconvened in regular session. OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING There were none. MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. FUTURE MEETING DA TES The next Finance, Administration and Human Resources Committee Meeting is scheduled for Wednesday, October 9, 1996. ADJOURNMENT The meeting was adjourned at 7:50 p.m. Submitted by: ra kie Woodside Finance, Administration and Human Resources Assistant Committee Secretary le A:\MFAHR9.96 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 September 11, 1996, was duly posted for public inspection in the main lobby of the Districts' offices on September 3, 1996. IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of September, 1996. Posted: By: Penny Kyle, Secret Sanitation Districts County, California ~ 1/1 ---.L..,~--+.=--___;,__:=----.3 _ _,, 1996, 7'· 0 §P.M. ~ J:\WPDOC\FINICRANEIFPC.MTG\FAHR.96\CERT.POS\CERTP09.96 September 4, 1996 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE Full Agenda Package Committee 14 & Mailing List Donald F. McIntyre 1 Blake P. Anderson 1 Judith A. Wilson 1 Cymantha Atkinson 1 Brad Cagel 1 Gail Cain 1 Corina Chaudhry 1 Dan Dillon 1 Marc Dubois 1 Linda Eisman 1 Jeff Esber 1 Ed Hodges 1 Steve Kozak 1 Penny Kyle 2 David Ludwin 1 Greg Mathews 1 Chris Dahl 1 Bob Ooten 1 Mike Peterman 1 Gary Streed 1 Michelle Tuchman 1 Dan Tunnicliff (H.R.) 1 Nancy Wheatley 1 Mike White 1 Extras 6 Notice, Agenda, Mins., Etc. Posting 1 Jean Tappan (include Mins) 1 Angela Holden 1 Frankie Woodside 1 Cindy Griego-Sands 1 Fawn Elizondo 1 Guard Shack (Ed Hodges) 1 Extras 3 Ron Zenk, Dist. 14 Treasurer's Report Only le J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\DISTRIB.96\DIST _phone: (714) 962-2411 mailing eddrasa: RO. Box a127 FauntaTn Valley, CA 82-728-8127 street address: 10844 Ellis Avenue Fountarn Valley, CA B27PB-70~B Member, Agencies • Cities Anaheim Brea Buena Park ('Jyppess Foum;ain Valley Fullerton Huorin~pn Beach lrvme La-Habra La Palma. Los Alam,cos Newport Beach ·Qran_ge Placenri(a Sanos Ana Si;JI Bea_ch Stanr:a.n Tuscin v,11a Park Yorl,!o, Linda County of Orange Sanitary •iSllrlcts Cosl/S Mesa Garden Grave Mltfway City Weter Dlstr1cts lrvlne Rerch COUNTY JNITATION DISTRICTS OF 0RA~E COUNTY, CALIFORNIA September 4, 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, SEPTEMBER 11, 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 FINANCE. ADMINISTRA. TION AND HUMAN RESOURCES COMMITTEE MEETING DATES FAHR Action Items Committee to MonthNear Meetings Joint Boards September 1996 September 11, 1996 September 25, 1996 October 1996 October 9, 1996 October 23, 1996 November 1996 None Scheduled November 20, 1996 December 1996 None Scheduled December 18, 1996 January 1997 January 8, 1997 January 22, 1997 February 1997 February 12, 1997 February 26, 1997 March 1997 March 12, 1997 March 26, 1997 April 1997 April 9, 1997 April 23, 1997 May 1997 May 14, 1997 May 28, 1997 June 1997 June 11, 1997 June 25, 1997 July 1997 July 9, 1997 July 23, 1997 August 1997 None Scheduled August 27, 1997 September 1997 September 10, 1997 September 24, 1997 CSDOC e P.O. Box 8127 • Fountain Valley, CA 92728-8127 e (714) 962-2411 AGENDA REGULAR MEETING OF THE 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, SEPTEMBER 11, 1996 AT 5:30 P.M. ROLL CALL ADMINISTRATIVE OFFICES 10844 Ellis Avenue Fountain Valley, California 92708 APPOINTMENT OF CHAIR .PRO TEM, IF NECESSARY. AGENDA 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. PUBLIC COMMENTS All persons wishing to address the Finance, Administration and Human Resources Committee on specific agenda items or matters of general interest should do so at this time. As determined by the Chair, 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). September 11, 1996 RECEIVE, FILE AND APPROVE MINUTES OF PREVIOUS MEETING Recommended Action: Receive, file and approve draft minutes of the August 7, 1996, Finance, Administration and Human Resources Committee meeting. REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF ASSISTANT GENERAL MANAGER-ADMINISTRATION REPORT OF ASSISTANT GENERAL MANAGER -OPERATIONS REPORT OF DIRECTOR OF FINANCE REPORT OF DIRECTOR OF HUMAN RESOURCES REPORT OF DIRECTOR OF GENERAL SERVICES ADMINISTRATION REPORT OF DIRECTOR OF COMMUNICATIONS REPORT OF GENERAL COUNSEL DISCUSSION ITEMS-(Items 1-6) 1. FAHR96-49: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF JULY 1996 (All Districts). RECOMMENDED ACTION: Receive and file Treasurer's Report for the month of July 1996. (Gary Streed -2 minutes) 2. FAHR96-50: REPORT OF CONTRACTS/PURCHASING MANAGER RE ABC INVENTORY PROGRAM (All Districts). RECOMMENDED ACTION: Receive and file -information only. (Marc Dubois -5 minutes) -2- ,. . --, -........:· .. September 11 , 1996 3. FAHR96-51 : ANNUAL REVIEW OF THE DISTRICTS' INVESTMENT POLICY (All Districts): Consideration of motion to revise the Districts' Investment Policy Statement, and recommend that the Joint Boards of Directors adopt Resolution No. 96-_ to adopt the updated Investment Policy. RECOMMENDED ACTION: 1) Receive and file this report; 2) Approve revisions to the Districts' Investment Policy as recommended in this report and as depicted in the updated Investment Policy presented in staff report; and 3) Recommend that the Joint Boards of Directors adopt Resolution No. 96-_ at their meeting of September 25, 1996, to approve the Districts' updated Investment Policy; repeal Resolution Nos. 95-14 and 95-15; and repeal Resolution No. 95-78, and incorporate its contents into Resolution No. 96-_. (Steve Kozak-10 minutes) 4. FAHR96-52: ADOPT ORDINANCE NO. 132 PROVIDING ADDITIONAL SERVICE CREDIT FOR RETIREMENT PURPOSES (All Districts): The Director of Human Resources, in conjunction with the FAHR Committee, recommends that the Directors adopt the Ordinance providing for two additional years of service credit to eligible Districts' employees who retire between January 1 and March 31, 1997, in accordance with the provisions of Government Code Section 31641.04. RECOMMENDED ACTION: Adopt Ordinance No. 132, an Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California, providing eligible Districts' employees to receive two years additional service credit for retirement purposes. (Mike Peterman -5 minutes) 5. FAHR96-53: RESULTS OF COMMUNICATIONS MINI AUDIT (All Districts): Staff Summary Report on the results of the July Communications Mini Audit and an update of the new and/or expanded programs to reach both internal and external audiences. RECOMMENDED ACTION: Receive and file -information only. (Michelle Tuchman -10 minutes) 6. FAHR96-54: PROPOSITION 218, RIGHT TO VOTE ON TAXES ACT (All Districts): The Chief Administrative Officer requests that the Boards go on record in opposition to Proposition 218 which would impose significant and expensive procedural requirements on the noticing of proposed extensions of, or increases to, user fees. The proposition also provides for the application of the voter initiative to user fees, which means that a voter initiative could force a roll-back or reduction in user fees which would have an adverse affect on the Districts' ability to borrow at low interest rates. -3- September 11, 1996 RECOMMENDED ACTION: That the Districts go on record opposing Proposition 218. (Judy Wilson -10 minutes) CLOSED SESSION During the course of conducting the business set forth on this agenda as a regular meeting of the Committee, the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects, the minutes will reflect all required disclosures of information. (a) Convene in closed session. (1) Confer with Districts' representatives re meet and confer; and negotiations for the establishment of salaries, compensation or fringe benefits. (Government Code Section 54957.6). (b) Reconvene in regular session. (c) Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS, COMMUNICATIONS OR SlJPPLEMENTAL AGENDA ITEMS, IF ANY MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUE3SEQUENT MEETING MA TIERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for October 9, 1996. ADJOURN -4- September 11, 1996 NOTICE TO COMMITTEE MEMBERS If you have any questions on the agenda or wish to place any items on the agenda, Committee members should contact the Committee Chair or Secretary ten days in advance of the Committee meeting. Committee Chair: Committee Secretary: George Brown Lenora Crane le J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\AGENDA.96\AGENDA9.96 -5- (310) 431-2185 (714) 962-2411, Ext. 2501 (714) 962-3954 (FAX) ROLL CALL SHEET FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE: September 11, 1996 COMMITTEE MEMBERS GEORGE BROWN (Chair) ...................... . ROGER R. STANTON (Vice Chair) ............... . JOHN C. COX (PJC) ........................... . JAN DEBAY .................................. . BURNIE DUNLAP ............................. . JAMES H. FLORA ............................. . JOHN M. GULLIXSON ......................... . WALLY LINN ................................. . THOMAS SALTARELLI ......................... . WILLIAM G. STEINER ......................... . PEER A. SWAN (VJC) ......................... . JOHN J. COLLINS (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, Director of Human Resources ... · .. GARY STREED, Director of Finance .............. . MICHELLE TUCHMAN, Director of Communications .. NANCY WHEATLEY, Director of Tech. Srvs ........ . STEVE KOZAK, Financial Manager ............... . MIKE WHITE, Controller ........................ . GREG MATHEWS, Principal Administrative Analyst .. . MARC DUBOIS, Purchasing Manager/Contracts Admin. LINDA EISMAN, Training Manager ............... . LENORA CRANE, Committee Secretary. . ......... . -----------............... . OTHERS TOM WOODRUFF. General Counsel ............. . TERRY ANDRUS ............................. . c: Penny Kyle L. Crane TIME: 5:30 P.M. ADJOURN: P.M. OMTS: PDC: FAHR: 9-11-96 EXEC: STEER: JT.BDS: ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN[t ITEM TRANSMITTAL CONTACT FOR INFORMATION 221 0,Gary Sreed, ext. 2500 Division No., Name, and Extension RECEIVE AND FILE REPORT OF DIRECTOR OF FINANCE (All Districts) Recommended Action(s): 1. Receive and file this information-only Report of Director of Finance. CEQA REVIEW: Project is Exempt: NOT APPLICABLE DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on_ BUDGET INFORMATION N/A-CURRENT YEAR CURRENT YEAR-YEAR-TO-OATE REVISED BUDGET TOTAL BUDGET: $ BUDGET AMOUNT TO-DATE BUDGET BALANCE TOTAL SOURCE: N/A EXPENDITURES (Total Budget plus Transfers) Schedule/Line Item: II/If II/A IV/A-11/IJ-AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION ORIGINAL BID, PO, CHANGE ORDERS, AMOUNT AMENDED PROJECT CONTRACT FUNDS PREV. REQUESTED THIS AMOUNT AMOUNT APPROVED AIT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO REQUIRES BOARD POLICY ACTION? NO If YES, state number: _ Permanent Limited Term If YES, explain in ADDITIONAL INFORMATION section CONCURRENCES: ATTACHMENTS TO AGENDA (List) To Committee: 1. Graph -COP Rate History Report Date Sig ature Date To Jt. Bds.: 1. Graph -COP Rate History Report Department Head (Or Designee) ~·u;~ Sature Date Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or 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 graph shows 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. 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. GGS:lc c: Department Head AGM-Administration AGM-Operations General Manager J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\SEPT.AIT\DOF.RPT Revision: 8/1/96 Page 2 of2 ~ ~ G c ~ ~ ~ RATE(¾) ~ ~ m ro ~ ~ • o ~ N w ~ ~ m rr ~ o o o o o o o < rn o o o o o o o ~ :r: 03-Jan-96 . s· -' w ~ I I ! ' ~ co 1 0-Jan-96 ' ' ' 1 1;l 0) I I I I - I I I I g I I I I -17-Jan-96 , , 1 1 ~ (0 24-Jan-96 .I. 1 , 'ft :k 1 ~ 31-Jan-96 t 1 1 1 ~?' , t • ! ~~ 07-Feb-96 14-Feb-96 21-Feb-96 _ I I I . I I I ~ I I I ,-I I (0 l : , ;1 r , 1 , ·1 28-Feb-96 1 1 ~ Ji : :ii: : • i 06-Mar-96 f i , .,......... 888"' i , ~ , i Tl I I \.'Tr I rr l r + I 13-Mar-96 Jr 20-Mar-96 s· ro I I I I n ~ 27-Mar-96 1 1 1 1 0 ro I I I I rr I I I ""O fl 03-Apr-96 , ... + l : I ::;a 10-Apr-96 : 1 : : )> ~ I I I I -t :U 17-Apr-96 : : : m ~ I I :::c Q 24-Apr-96 : : -cg I I en ~ I I _J 01-May-96 , , --, + I I ·, 0 I I I 08-May-96 1 1 t ::;tJ • l I -< G) I I 15-May-96 , , • "Tl en , , , 1 ,w ~ I I I J m -c 22-May-96 , t. , I!> ""O 11 I I \ + I I I I J 0 I I I I ::;tJ 29-May-96 1 1 1 ' T' en I I I I __. g 05-Jun-96 1 ' 1 1 --, G) ro ~ I 12-Jun-96 ~ I I I I I -c 19-Jun-96 l 1 1 , lk , i 1 ~ 26-Jun-96 .I. I : ~ I 1 I al, 03-Jul-96 J. 1 ~~ : :,: : ! 10-Jul-96 .I. ! .._ , 1 ! :k , • 17-Jul-96 1 1 ' ~.,.. , .1, , ,1. 24-Jul-96 31-Jul-96 07-Aug-96 14-Aug-96 ___ , , OMTS: PDC: FAHR: 9-11-96 EXEC: STEER: JT.BDS: DISTRICT NO. ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN~ ITEM TRANSMITTAL CONTACT FOR INFORMATION 221 0,Gary Sreed, ext. 2500 Division No., Name, and Extension RECEIVE AND FILE DRAFT FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MINUTES FOR THE MEETING HELD AUGUST 7, 1996. Recommehded Action(s): 1. Receive and file draft Finance, Administration and Human Resources Committee minutes for the meeting held August 7, 1996. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on_ BUDGET INFORMATION N/1t CURRENT YEAR TOTAL BUDGET: $ BUDGET AMOUNT SOURCE: NIA Schedule/Line Item: tJ /Ir AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent Limited Term CONCURRENCES: Date ~0'wl-b·.,... Sin ure Assistant General Manager (Or Designee) DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET TO-DATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) tJ/1r ti/A-#/A- CHANGE ORDERS, AMOUNT AMENDED PROJECT FUNDS PREV. REQUESTED THIS AMOUNT APPROVED AIT REQUIRES BOARD POLICY ACTION? No If YES, explain in ADDITIONAL INFORMATION section ATTACHMENTS TO AGENDA (List) To Committee: 1. Draft Minutes of FAHR Committee Meeting held 8-7-96 To Jt. Bds.: ADDITIONAL INFORMATION (Background and/or Summary) Attached is a draft of the Finance, Administration and Human Resources Committee meeting minutes of August 7, 1996. These minutes were submitted to the Joint Boards at their August 28, 1996 meeting. GGS:lc c: Department Head AGM-Administration AGM-Operations General Manager J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\SEPT.AIT\MINS.896 Revision: 8/1 /96 Page 2 of2 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. August 7. 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 August 7, 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 J. Collins, Joint Chair Jan Debay John M. Gullixson Wally Linn Thomas Saltarelli Roger R. Stanton, Vice Chair William G. Steiner Peer Swan, Vice Joint Chair Committee Directors Absent : Burnie Dunlap James Flora Other Directors Present: None Staff Present: Donald F. McIntyre, General Manager Judith A Wilson, Assistant General Manager Blake P. Anderson, Assistant General Manager Ed Hodges, Director of General Services Admin. Bo~ Ooten, Director of Operations & Maintenance Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Nancy J. Wheatley, Director of Technical Services Michelle Tuchman, Director of Communications Steve Kozak, Financial Manager Mike White, Controller Tom Dawes, Engineering Supervisor Lenora Crane, Committee Secretary Others Present: Terry C. Andrus, General Counsel Dan Cassidy, Broadbanding Barry Newton, Broadbanding Consultant Kevin J. Murphy, City Mgr., Newport Beach Steve Conklin, Dir. of Engrg., OCWD Craig Scott, R. Craig Scott & Associates Nancy Whitehead, R. Craig Scott & Associates The Chair called for a motion to change the order of the agenda, because two Committee Members had to leave early to attend another meeting. The Closed Session items listed on the agenda would be split into two sessions. ' Minutes of Finance, Adr. .. and Human Resources Committe Page 2 August 7, 1996 It was moved, seconded, and unanimously approved to revise the order of the agenda. (2) CLOSED SESSION The Committee convened in closed session at 5:45 p.m. as authorized by Government Code Sections 54956.9, to discuss and consider the item specified as Item (8)(b)(1) on the published Agenda. Confidential Minutes of the closed session held by the Committee have been prepared in accordance with California Government Code Section 54957.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No reportable action was taken re Agenda Item (8)(b)(1 ). At 6:25 p.m., the Committee reconvened in regular session. (3) APPOINTMENT OF A CHAIR PRO TEM No appointment was necessary. (4) PUBLIC COMMENTS No comments were made. (5) REPORTS OF THE COMMITTEE CHAIR, GENERAL MANAGER, ASSISTANT GENERAL MANAGER(S), DIRECTOR OF FINANCE/TREASURER. DIRECTOR OF HUMAN RESOURCES, DIRECTOR OF GENERAL SERVICES ADMINISTRATION, DIRECTOR OF COMMUNICATIONS AND GENERAL COUNSEL (a) Report of the Committee Chair The Chair had no report. (b) Report of the General Manager The General Manager had no report. (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. '\ i Minutes of Finance, Admin. and Human Resources Committee Page 3 August 7, 1996 (d) Report of the Director of Finance/Treasurer (e) (f) The Treasurer's Report was included in the Agenda Package. Report of the Director of Human Resources The Director of Human Resources had no report. Report of the Director of General Services Administration The Director of General Services Ed Hodges reported that an offer has been made and accepted by Chris Dahl, who is presently the Director of Information Services at the Orange County Water District, to become the Districts' new Manager of Information Technology. Mr. Dahl will join the Districts later this month. (g) Report of the Director of Communications The Director of Communications had no report. (g) Report of General Counsel General Counsel had no report. (6) APPROVAL OF MINUTES (7) It was moved, seconded and duly carried to approve the draft minutes of the July 10, 1996, meeting of the Finance, Administration and Human Resources Committee. OLD BUSINESS FAHR96-11 Consideration of motion to receive and file Quarterly Investment Management Program Report for the period April 1 through June 30. 1996. Steve Kozak summarized PIMCO's Quarterly Investment Management Program Report. The investment program is in compliance and is tracking with the benchmarks. The long-term fund, based on PIMCO's long-term investing approach, slightly underperformed this quarter. The liquid portfolio performed very well. Annualizing the returns for both portfolios, the liquid portfolio's annualized yield is 5.9% and the long-term fund is 6.2%. Annualizing the income from the investment program, the liquid fund would return an estimated $2.9 million and the long-term fund about $18.6 million. Minutes of Finance, Admin. and Human Resources Committee Page 4 August 7, 1996 (8) In response to Chair Brown's questions, Mr. Kozak advised that he is receiving information from PIMCO on a timely basis and is reviewing the information very carefully. Also, Callan Associates, the Districts' investment advisor, does an independent review of the raw data they receive from Mellon Trust, the Districts' custodial bank. The Chair advised Mr. Kozak that the Board wants to insist that he continue to review Districts' investments very carefully and not just accept opinions and recommendations, in order to avoid the same problems the County had. It was moved, seconded and duly carried to receive and file this report. FAHR96-40 Labor Negotiations -Information Only. Mike Peterman, Director of Human Resources, advised that this item will be discussed under closed session. He introduced Mr. Barry Newton, the selected Broadband Consultant. Mr. Newton has done similar work for the cities of Tustin and Newport Beach and some private firms. He is also a broadbanding instructor at the UCI Extension Program. Mike advised that Mr. Newton will be giving a brief description of his proposal in closed session. This was an information-only report and was received and filed. NEW BUSINESS FAHR96-46 Consideration of motion to receive and file Treasurers Report for the month of June 1996. Short and Long-Term Operating Monies indicated that total investments amount to $385,129,885. All Investment Policy requirements are being followed and met. It was moved, seconded and duly carried to approve and forward this report to the Joint Boards. FAHR96-47 Consideration of motions relative to the Basic Integrated Reuse Project proposed by OCWD. IRWD and the City of Newport Beach: 1. Modify the existing Agreement between District 14 and the other Districts to provide that the 1996-97 flow excludes up to 3.2 mgd. providing the three-party BIRP is approved. Minutes of Finance, Admin. and Human Resources Committee Page 5 August 7, 1996 2. Modify the existing Agreement between all Districts and OCWD for Green Acres Project {GAP) water to include a long-term commitment to purchase and to supply reclaimed water at a mutually agreeable price which reflects potential OCWD savings and which does not exceed the costs of operations and maintenance (currently $89/AF). 3. Maintain the June 30, 1997 equity sale from District 14 to the other Districts calculated on the basis of excluding up to 3.2 mgd for approximately four months as an inter- District payable/receivable of approximately $4.8 million, and transfer the funds in 1999-2000 in order to eliminate the negative cash flow impacts on the other Districts from the accelerated flow reduction. 4. Authorize staff to begin negotiations with parties to the three-party agreement to allow for disposal of excess reclaimed water. Blake Anderson, Assistant General Manager, Operations, introduced Kevin J. Murphy, City Manager of Newport Beach and Steve Conklin, Director of Engineering, Orange County Water District, who were in attendance to answer any questions the Committee may have regarding this item. Blake also advised that Director Swan would answer any questions regarding the Irvine Ranch Water District. Blake gave a slide presentation and an overview of the reclaimed water programs currently in place. The Orange County Water District, Irvine Ranch Water District and the City of Newport Beach are the three parties involved in the proposed reclaimed water project. The water project is called the Basic Integrated Reuse Project (BIRP) and would provide wide use of reclaimed water produced by IRWD, especially in winter months when IRWD demands for reclaimed water are low. Under this proposed MOU agreement, IRWD would pump up to 8 mgd of treated effluent to OCWD's Green Acre Project (GAP) pipelines for reclamation purposes and would pay for the intertie to OCWD. The City of Newport Beach has sponsored and encouraged the development of the BIRP, and will benefit by the expanded use of reclaimed water within the City and by satisfying those opposed to the Wetland Water Supply Project (WWSP). The City will spend about $500,00 for retrofits to OCWD. The CSDOC's agreement with the OCWD to purchase reclaimed GAP water would also need to be renegotiated and amended. The amendment to the Districts' agreement would guarantee reclaimed water supplies and eliminate the need for the Districts to find an alternate source. Minutes of Finance, Admin. and Human Resources Committee Page 6 August 7, 1996 Gary Streed reviewed the CORF adjustment required to exclude 3.2 mgd from the equity calculation and eliminate negative cash flow on the other Districts from the accelerated flow reduction. Mr. Murphy of Newport Beach advised that the three parties are attempting to construct the intertie project so that the intertie GAP flow occurs before October 1, 1997. The CORF portion related to CS DOC is required to be in place by October 1, 1996, so that IRWD, which has a permit to discharge into the Bay, does not need to do so. Director Jan Debay, as well as Joint Chair Collins, commended staff for setting such a good example of cooperation between agencies to make reclaimed water use an important issue. After discussion on this matter, it was moved, seconded and duly carried to approve staff's recommendations Director Peer Swan requested that his abstention from discussion and voting be made a matter of record. FAHR96-48 Consideration of Resolution No. 96-1 Amending Personnel and Salary Resolution No. 95-105, to adopt a Districts1 Firearms and Weapons Policy. Mike Peterman advised that with acts of violence in the workplace becoming increasingly more prevalent in today's society, staff believe it would be prudent to adopt a firearms and weapons policy. The proposed policy would prohibit firearms, explosives, and knives on Districts' premises, in Districts' vehicles, in private vehicles parked on Districts' property, and in the possession of Districts' employees while on duty or performing related business assignments. During discussion on this matter, the Committee felt a more detailed no tolerance policy should be written. Counsel advised a more detailed policy would need to be addressed during the meet-and-confer process. It was moved, seconded and duly carried to approve staff's recommendation with the understanding that staff negotiate a more detailed no tolerance Firearms and Weapons Policy during the meet-and-confer process. ) Minutes of Finance, Admin. and Human Resources Committee Page 7 August?, 1996 (9) CLOSED SESSION The Committee convened in closed session at 7:05 p.m. as authorized by Government Code Sections 54957.6, to discuss and consider the item specified as Item (8)(b)(2) on the published Agenda. Confidential Minutes of the closed session held by the Committee have been prepared in accordance with California Government Code Section 54957.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No reportable action was taken re Agenda Item (8)(b)(2). At 7:45 p.m., the Committee reconvened in regular session. (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, September 11, 1996. (14) ADJOURNMENT The meeting was adjourned at approximately 7:47 p.m. ~~ Lenora Crane Finance, Administration and Human Resources Committee Secretary J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\1996.MIN\MFAHRS.96 MEETING DATE OMTS: PDC: FAHR: 9-11-96 EXEC: STEER: JT.BDS: 9-25-96 DISTRICT NO. ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGENL,A ITEM TRANSMITTAL CONTACT FOR INFORMATION 221 0,Gary Sreed, ext. 2500 Division No., Name, and Extension RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF JULY 1996 (All Districts) Recommended Action(s): 1. Receive and file Treasurer's Report for the month of July 1996. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on_ BUDGET INFORMATION N//9 CURRENT YEAR TOTAL BUDGET: $ BUDGET AMOUNT SOURCE: CORF JO DISTRICTS II/A Schedule/Line Item: AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent Limited Term CONCURRENCES: Date ture apartment Head (Or Designee) ~-w~ sture Assistant General Manager (Or Designee) Date DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET TO-DATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) II/A N/IJ A'/4 CHANGE ORDERS, AMOUNT AMENDED PROJECT FUNDS PREV. REQUESTED THIS APPROVED AIT REQUIRES BOARD POLICY ACTION? No If YES, explain in ADDITIONAL INFORMATION section ATTACHMENTS TO AGENDA (List) To Committee: 1. Graph -Cash Investments 2. Monthly Monitoring Reports To Jt. Bds.: 1. Graph -Cash Investments 2. Monthly Monitoring Reports AMOUNT ADDITIONAL INFORMATION (Background and/or 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. Immediate past-month reports are available from the Treasurer. Quarterly presentations are made by PIMCO and our third-party independent consultant, Callan Associates, when requested by the Committee. The Investment Policy adopted by the Joint Boards on May 24, 1995, includes reporting requirements as listed down the left most column of 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. Historical cost and the current market values, "mark-to-market," are shown as estimated by both PIMCO and Mellon Trust. The slight differences are caused by differing assumptions regarding marketability at the estimate date. Attached are schedules showing the detail and summary for both the short-term and long-term portfolio investments. GGS:lc c: Department Head AGM-Administration AGM-Operations General Manager "'::r :•::::::,:';';; ,P§p§.q .. ,., .... , State of Calif. LAIF Bank of America PIMCO -Short-term Portfolio PIMCO -Long-term Portfolio District 11 GO Bond Fund Debt Service Reserves @ Trustees J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\SEPT.AlnTREAS.RPT Revision: 8/1/96 $ 3,229,090 471,512 52,388,846 281,541,877 9,792 33,514,921 $371,156,038 Page 2 of2 September 11, 1996 CSDOC TOTAL CASH & INVESTMENTS 1995 -1996 400 350 300 r! ~ 250 0 Q o 200 ! 0 § 150 :Ii: 100 50 0 July 31Aug. 31 Sept. 30Oct. 3CX'--lov. 30 Dec. 31Jan. 31 Feb. 29Mar. 31 Apr. 30May 31 June 30July 31 J:\WPDOC\FINICRANEIFPC.MTGIFAHR,96\SEPT.AIT\TREAS.GRF MONTHLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT MANAGEMENT PROGRAM PIMCO'S PERFORMANCE MONITORING & REPORTING (for the month ending July 31, 1996) Long Term Operating Monies 14.1.1 PORTFOLIO COST AND MARKET VALUE Current Market Value Estimate: • PIMCO • Mellon Historical Cost: 14.1.2 MODIFIED DURATION Of Portfolio: Oflndex: 14.1.3 1 % INTEREST RATE CHANGE Dollar Impact (gain/loss) of 1 % Change: 14.1.4 REVERSE REPOS % of Portfolio in Reverse Repos: (see attached schedule) 14.1.5 PORTFOLIO MATURITY % of Portfolio Maturing within 90 days: 14.1.6 PORTFOLIO QUALITY Average Portfolio Credit Quality: 14.1.7 SECURITIES BELOW "A" RATING % of Portfolio Below "A": 14.1.8 INVESTMENT POLICY COMPLIANCE "In Compliance" 14.1.9 PORTFOLIO PERFORMANCE Portfolio Total Rate of Return: 1 Month: 3 Months: 12 Months: Year-to-Date: Index Total Rate of Return: 1 Month: C:\OFflCE\IVl'WIN\WPDOCSll'IMCOI\PnL TJUL WPD $282,812,940 $283,303,766 _) $287,463,392 2.5 2.3 $7,070,324 0% NA AAA 0% )-- .37 1.31 ------ .74 .36 MONTHLY REPORT COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT MANAGEMENT PROGRAM PIMCO'S PERFORMANCE MONITORING & REPORTING (for the month ending July 31, 1996) Liquid Operating Monies 14.1.1 PORTFOLIO COST AND MARKET VALUE Current Market Value Estimate: • PIMCO • Mellon Historical Cost: 14.1.2 MODIFIED DURATION Of Portfolio: Of Index: 14.1.3 1 % INTEREST RA TE CHANGE Dollar Impact (gain/loss) of I% Change: 14.1.4 REVERSE REPOS % of Portfolio in Reverse Repos: ( see attached schedule) 14.1.5 PORTFOLIO MATURITY % of Portfolio Maturing within 90 days: 14.1.6 PORTFOLIO QUALITY Average Portfolio Credit Quality: 14.1.7 SECURITIES BELOW "A" RATING % of Portfolio Below "A": 14.1.8 INVESTMENT POLICY COMPLIANCE "In Compliance" 14.1.9 PORTFOLIO PERFORMANCE Portfolio Total Rate of Return: I Month: 3 Months: 12 Months: Year-to-Date: Index Total Rate of Return: I Month: C:IUFFi[,'f:.lWPW/MWPDOCi\PIMCORPT\l.QDJUl~Wl'I) $52,863,199 $52,855,090 $52,959,993 - .07 .25 $37,004 (.07%) 0% 99% AAA 0% - .48 1.38 ------ 3.17 .43 OCSF075111 LIQUID OPER-PIMCO PORTFOLIO DISTRIBUTION CASH & CASH EQUIVALENTS CASH COMMERCIAL PAPER -DISCOUNT FEDERAL HOME LOAN MORTGAGE -LE FNMA ISSUES -LESS THN lYR FED HM LOAN BNK -LESS THN lYR FEDERAL FARM CREDIT BANK -LES BSDT RESERVE DEPOSIT ACCOUNTS CANADIAN GOVERNMENT SHORT TERM TOTAL CASH & CASH EQUIVALENTS FIXED INCOME SECURITIES BANKING & FINANCE INDUSTRIAL TOTAL FIXED INCOME SECURITIES OTHER PORTFOLIO ASSETS PAYABLES/RECEIVABLES TOTAL OTHER PORTFOLIO ASSETS NET PORTFOLIO ASSETS MELLON TRUST PORTFOLIO SUMMARY BY SECTOR 31-JUL-1996 COST 0.17 15,302,049.36 2,369,582.75 10,548,720.10 9,066,185.20 5,476,560.97 151,719.00 4,869,578.25 47,784,395.80 2,050,400.00 2,554,050.00 ------------ 4,604,450.00 570,694.54 ---------- 570,694.54 52,959,540.34 MARKET VALUE 0 .17 15,302,049.36 2,369,582.75 10,548,720.10 9,066,185.20 5,476,560.97 151,719.00 4,869,578.25 47,784,395.80 2,000,000.00 2,500,000.00 ------------ 4,500,000.00 570,694 .54 ---------- 570,694.54 % OF TOTAL 0.00% 28.95% 4.48% 19.96% 17.15% 10.36% 0.29% 9 .21% 90 .41% 3 .78% 4.73% 8.51% 1.08% 1.08% 52,855,090.34 100.00% Page 1 UNREALIZED GAIN/LOSS 0 .00 0 .00 0 .00 0 .00 0 .00 0 .00 0.00 0 .00 0.00 -50,400.00 -54,050.00 --------- -104, 450. 00 0.00 0 .00 -104,450.00 ESTIMATED ANNUAL INCOME 0.00 0.00 0.00 0.00 0.00 0.00 5,689.46 0.00 5,689.46 180,000.00 213,750.00 ---------- 393,750.00 0.00 0.00 399,439.46 BASE: USD HBllOO CURR YIELD 0.00 0.00 0.00 0.00 0.00 0.00 3.75 0 .00 0.01 9 .00 8 .55 8.75 0.00 0.00 0.76 .. OCSF075111 LIQUID OPER-PIMCO SHARES/PAR SECURITY DESCRIPTION CASH & CASH EQUIVALENTS CASH 0 CASH SUBTOTAL CASH COMMERCIAL PAPER -DISCOUNT 500,000 AMERICAN TEL & TL DISC 08/16/1996 1,800,000 AMERICAN TEL & TL DISC 08/09/1996 1,100,000 CANADIAN WHEAT BD DISC 08/09/1996 2,100,000 COMWLTH BK AUST A DISC 08/20/1996 300,000 ELECTRIC FRANCE DISC 08/23/1996 1,700,000 FORD MTR CR CO DISC 08/29/1996 500,000 GENERAL ELEC CAP DISC 08/01/1996 1,100,000 HEWLITT PACKARD DISC 08/20/1996 600,000 KFW INTL FIN INC DISC 08/06/1996 1,100,000 KFW INTL FIN INC DISC 09/19/1996 1,700,000 LILLY ELI & CO DISC 10/21/1996 500,000 NATIONAL RURAL DISC 08/23/1996 2,500,000 ONTARIO HYDRO DISC 09/09/1996 MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 MARKET PRICE 1.000 98.775 98.469 98.633 98.653 98.668 98.580 99.567 98.673 98.601 99 .123 98.670 99.544 98.675 % OF MARKET VALUE TOTAL 0.17 0.17 493,875.00 1,772,437.50 1,084,967.59 2,071,717.67 296,003.58 1,675,860.48 497,837.08 1,085,402.08 591,608.34 1,090,355.14 1,677,389.06 497,718.06 2,466,877.78 0.00 0.00 0.93 3.35 2.05 3.92 0.56 3.17 0.94 2.05 1.12 2.06 3.17 0.94 4.67 SUBTOTAL COMMERCIAL PAPER -DISCOUNT 15,302,049.36 28.95 FEDERAL HOME LOAN MORTGAGE -LESS THAN 1 YR 2,100,000 FEDERAL HOME LN MTG CORP DISC MAT 09/05/1996 300,000 FEDERAL HOME LN MTG CORP DISC MAT 09/12/1996 98.644 99.355 SUBTOTAL FEDERAL HOME LOAN MORTGAGE FNMA ISSUES -LESS THN lYR 700,000 FED HOME LN MTG CORP DISC NTS 08/12/1996 99.310 2,071,518.75 3.92 298,064.00 0.56 2,369,582.75 4.48 695,170.10 1.32 Page 1 COST 0.17 0.17 493,875.00 1,772,437.50 1,084,967.59 2,071,717.67 296,003.58 1,675,860.48 497,837.08 1,085,402.08 591,608.34 1,090,355.14 1,677,389.06 497,718.06 2,466,877.78 15,302,049.36 2,071,518.75 298,064.00 2,369,582.75 695,170.10 BASE: USD HBllOO UNREALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 .00 0.00 0.00 ---------- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 .00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ,JCSF075111 LIQUID OPER-PIMCO MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 SHARES/PAR SECURITY DESCRIPTION ------------------------------ 10,000,000 FEDERAL NATL MTG ASSN DISC 08/23/1996 MARKET PRICE 98.536 SUBTOTAL FNMA ISSUES -LESS THN lYR FED HM LOAN BNK -LESS THN lYR 3,100,000 FEDERAL HOME LN BK CONS DISC 98.435 MAT 08/12/1996 3,100,000 FEDERAL HOME LN BK CONS DISC 98.698 MAT 08/14/1996 500,000 FEDERAL HOME LN BK CONS DISC 97.662 MATURES 11/12/1996 2,500,000 FEDERAL HOME LN BK CONS DISC 98. 671 MAT 08/28/1996 SUBTOTAL FED HM LOAN BNK -LESS THN FEDERAL FARM CREDIT BANK -LESS THAN 1 YEAR 2,500,000 FED FARM CR BK CONS DISC NTS 99.550 MAT 08/15/1996 3,000,000 FED FARM CR BK CONS DISC NTS 99.594 MAT 08/21/1996 SUBTOTAL FEDERAL FARM CREDIT BANK - BSDT RESERVE DEPOSIT ACCOUNTS 151,719 BSDT RESERVE DEPOSIT ACCOUNT- PUBLIC II 100.000 SUBTOTAL BSDT RESERVE DEPOSIT ACCOUN CANADIAN GOVERNMENT SHORT TERM 1,200,000 CANADA GOVT DISC 08/12/1996 3,700,000 CANADA GOVT DISC 08/15/1996 99.511 99.336 SUBTOTAL CANADIAN GOVERNMENT SHORTT TOTAL CASH & CASH EQUIVALENTS ~IXED INCOME SECURITIES BANKING & FINANCE 2,000,000 SEARS DC CORP MTN SER II 9.000% 08/01/1996 DD 08/01/91 100.000 % OF MARKET VALUE TOTAL 9,853,550.00 18.64 10,548,720.10 19.96 3,051,473.81 5.77 3,059,622.50 5.79 488,311.11 0.92 2,466,777.78 4.67 9,066,185.20 17.15 2,488,740.97 2,987,820.00 4. 71 5.65 5,476,560.97 10.36 151,719.00 0.29 151,719.00 0.29 1,194,137.00 2.26 3,675,441.25 6.95 4,869,578.25 9.21 47,784,395.80 90.41 2,000,000.00 3.78 Page 2 COST 9,853,550.00 10,548,720.10 3,051,473.81 3,059,622.50 488,311.11 2,466,777.78 9,066,185.20 2,488,740.97 2,987,820.00 5,476,560.97 151,719.00 151,719.00 1,194,137.00 3,675,441.25 4,869,578.25 47,784,395.80 2,050,400.00 BASE: USD HBllOO UNREALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5,689.46 3.75 0.00 5,689.46 3.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5,689.46 0.01 -50,400.00 180,000.00 9.00 j JCb1'U/~lll LIQUID OPER-PIMCO SHARES/PAR SECURITY DESCRIPTION ----------------- SUBTOTAL BANKING & FINANCE INDUSTRIAL 2,500,000 SEARS ROEBUCK & CO NT 8.550\ 08/01/1996 SUBTOTAL INDUSTRIAL TOTAL FIXED INCOME SECURITIES OTHER PORTFOLIO ASSETS PAYABLES/RECEIVABLES 0 INTEREST RECEIVABLE SUBTOTAL PAYABLES/RECEIVABLES TOTAL OTHER PORTFOLIO ASSETS NET PORTFOLIO ASSETS MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 MARKET PRICE 100.000 1 .000 %' OF MARKET VALUE TOTAL 2,000,000.00 3.78 2,500,000 .00 4.73 2,500 ,000 .00 4.73 4,500,000.00 8.51 570,694.54 1.08 570,694.54 1.08 570,694.54 1.08 COST 2,050,400 .00 2,554,050 .00 2,554,050 .00 4,604,450.00 570,694 .54 ---------- 570,694 .54 570,694.54 BASE : USD HBllOO UNREALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD -50,400.00 -54,050.00 -54,050 .00 -104,450.00 0.00 0.00 0.00 180,000.00 9.00 213,750.00 8.55 213,750 .00 8.55 393,750.00 8 .75 0.00 0.00 ---------- 0.00 0.00 0.00 0.00 ================================-===-==--==--=--==--=--==-==--==-==-========= 52,855,090 .34 100 .00 52,959,540.34 -104,450 .00 399,439.46 0.76 Page 3 X..:SFU'/5222 ,ONG TERM OPER-PIMCO PORTFOLIO DISTRIBUTION :ASH & CASH EQUIVALENTS CASH COMMERCIAL PAPER -DISCOUNT TREASURY BILLS -LESS THN lYR BSDT RESERVE DEPOSIT ACCOUNTS CANADIAN GOVERNMENT SHORT TERM TOTAL CASH & CASH EQUIVALENTS ~IXED INCOME SECURITIES U.S . GOVERNMENTS U.S . AGENCIES BANKING & FINANCE INDUSTRIAL TOTAL FIXED INCOME SECURITIES JTHER PORTFOLIO ASSETS PAYABLES/RECEIVABLES TOTAL OTHER PORTFOLIO ASSETS NET PORTFOLIO ASSETS MELLON TRUST PORTFOLIO SUMMARY BY SECTOR 31-JUL-1996 COST 0.65 11,173,902.20 4,719,669.45 171,302.00 497,644.44 ------------- 16,562,518.74 91,326,196.85 134,518,625 .00 27,627,436.61 11,507,100 .00 -------------- 264,979,358.46 5,954,570.92 5,954,570.92 287,496,448 .12 MARKET VALUE 0.65 11,173,902.20 4,719,669.45 171,302.00 497,644.44 ------------- 16,562,518.74 89,590,765.00 132,475,374.00 27,548,327.45 11,172,210.00 -------------- 260,786,676.45 5,954,570.92 ------------ 5,954,570.92 % OF TOTAL 0.00% 3.94% 1.67% 0.06% 0.18% 5.85% 31.62% 46.76% 9. 72% 3.94% 92.05% 2 .10% 2 .10% 283,303,766.11 100.00% Page 1 UNREALIZED GAIN/LOSS 0.00 0.00 0.00 0.00 0.00 0.00 -1,735,431 .85 -2,043,251 .00 -79,109.16 -334,890.00 -4,192,682.01 0.00 0.00 -4,192,682.01 ESTIMATED ANNUAL INCOME 0.00 0.00 0.00 6,423 .83 0 .00 6,423 .83 6,126,875.00 8,700,040.00 1,905,397.00 988,500.00 17,720,812 .00 0.00 0 .00 17,727,235 .83 BASE: USD HBllOO CURR YIELD 0.00 0.00 0.00 3.75 0 .00 0.04 6.84 6 .57 6.92 8.85 6.80 0.00 0.00 6.26 _, JC~;J:•U l!:.222 LONG TERM OPER-PIMCO SHARES/PAR SECURITY DESCRIPTION :ASH & CASH EQUIVALENTS CASH 0 CASH MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 MARKET PRICE 1.000 % OF MARKET VALUE TOTAL 0.65 0.00 COST 0.65 BASE: USD HBllOO UNREALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD 0 .00 0.00 0.00 ----------------------------------------------------------------------------- SUBTOTAL CASH COMMERCIAL PAPER -DISCOUNT 5,800,000 AMERICAN TEL & TL DISC 08/22/1996 900,000 AMERITECH CORP DISC 10/28/1996 3,100,000 GENERAL ELEC CAP DISC 08/01/1996 1,300,000 GENERAL ELEC CAP DISC 08/06/1996 200,000 PROCTER & GAMBLE DISC 08/05/1996 98.656 98.660 99.567 98.336 99.482 SUBTOTAL COMMERCIAL PAPER -DISCOUNT TREASURY BILLS -LESS THN lYR 5,000,000 US TREASURY BILLS 06/26/1997 DD 06/27/96 94.393 SUBTOTAL TREASURY BILLS -LESS THN 1 BSDT RESERVE DEPOSIT ACCOUNTS 171,302 BSDT RESERVE DEPOSIT ACCOUNT- PUBLIC II 100.000 SUBTOTAL BSDT RESERVE DEPOSIT ACCOUN CANADIAN GOVERNMENT SHORT TERM 500,000 CANADIAN WHEAT BD DISC 08/20/1996 99.529 SUBTOTAL CANADIAN GOVERNMENT SHORTT TOTAL CASH & CASH EQUIVALENTS ?IXED INCOME SECURITIES U . S . GOVERNMENTS 75,500,000 US TREASURY NOTES 101.937 07.125% 09/30/1999 DD 09/30/94 13,000,000 US TREASURY NOTES 97.141 0.65 0.00 5,722,035.11 2.02 887,940.50 0.31 3,086,589.92 1.09 1,278,373.06 0 .45 198,963.61 0.07 11,173,902.20 3.94 4,719,669.45 1. 67 4,719,669.45 1. 67 171,302.00 0.06 171,302.00 0.06 497,644.44 0.18 497,644.44 0.18 16,562,518.74 5.85 76,962,435.00 27.17 12,628,330.00 4.46 Page 1 0.65 0 .00 0.00 0 .00 5,722,035.11 0.00 0.00 0.00 887,940.50 0.00 0.00 0.00 3,086,589.92 0 .00 0.00 0.00 1,278,373.06 0 .00 0.00 0.00 198,963.61 0 .00 0.00 0.00 11,173,902.20 0 .00 0.00 0.00 4,719,669.45 0 .00 0.00 0.00 4,719,669.45 0 .00 0.00 0.00 171,302.00 0.00 6,423.83 3.75 171,302.00 0.00 6,423.83 3.75 497,644.44 0.00 0.00 0.00 497,644.44 0.00 0.00 0.00 16,562,518.74 0.00 6,423.83 0.04 78,223,618.72 -1,261,183 .72 5 ,379,375.00 6.99 13,102,578.13 -474,248.13 747,500 .00 5 .92 '.JCSFU75222 LONG TERM OPER-PIMCO MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 SHARES/PAR SECURITY DESCRIPTION ------------------- 05.750% 10/31/2000 DD 10/31/95 SUBTOTAL U.S. GOVERNMENTS U.S. AGENCIES 10,000,000 FED NATL MTG ASSN MTN 5 .640% 02/20/2001 DD 02/20/96 39,600,000 FEDERAL HOME LN BK CONS BOS 6 .490% 09/13/2000 DD 09/13/95 15,000,000 FEDERAL HOME LN MTG CORP DEBS 5.990% 03/06/2001 DD 03/06/96 25,000,000 FEDERAL HOME LN MTG DEB 6.720% 10/02/2000 DD 10/02/95 25,000,000 FEDERAL NATL MTG ASSN DEB 6.850% 05/26/2000 DD 05/26/95 20,000,000 FEDERAL NTAL MTG ASSN 6.375% 10/13/2000 DD 10/10/95 SUBTOTAL U.S . AGENCIES BANKING & FINANCE MARKET PRICE 95.484 98 .594 96.734 99.185 99 .672 98.297 1,500,000 CHRYSLER FINL MTN TR# 00201 100.901 8.160% 01/31/1997 DD 01/11/95 465,000 CHRYSLER FINL MTN TR# 00224 100.953 8.080% 01/31/1997 DD 01/31/95 1,500,000 CHRYSLER FINL MTN TR# 00258 100.772 7.380% 03/17/1997 DD 03/03/95 2,900,000 CHRYSLER FINL MTN TR# 00306 101 .305 7.270% 04/13/1998 DD 04/13/95 1,000,000 CHRYSLER FINL MTN TR# 00335 99.451 6.260% 07/20/1998 DD 07/18/95 7,100,000 FORD MOTOR CR MTN TR# 00177 100.062 VAR/RT 03/30/1999 DD 03/30/94 4,000,000 FORD MTR CR MTN TRANCHE #TR 96 99 .847 FLTG/RT 11/09/1998 DD 11/08/93 3,000,000 GMAC MED TERM NTS 105 .290 8 .625% 1/10/2000 DD 1/10/95 3,700,000 GENERAL MTRS ACCEP MTN TR00324 103.792 8 .375% 02/03/1999 DD 0/03/95 1,000,000 LEHMAN BROS INC SR SUB NTS 100.474 7.000% 5/15/1997 DD 5/27/94 1,000,000 SEARS ROEBUCK MTN# TR 00491 101 .942 7 .690% 02/27/1998 DD 02/28/95 SUBTOTAL BANKING & FINANCE INDUSTRIAL 1,500,000 CHRYSLER CORP DEB 103.828 % OF MARKET VALUE TOTAL 89,590,765.00 31.62 9,548,400.00 3.37 39,043,224.00 13.78 14,510,100.00 5 .12 24,796,250.00 8.75 24,918,000.00 8 .80 19,659,400.00 6.94 132,475,374.00 46 .76 1,513,515.00 469,431.45 1,511,580 .00 2,937,845.00 994,510.00 7,104,402.00 3,993,880.00 3,158,700.00 3 ,840,304.00 1,004,740.00 1,019,420.00 27,548,327.45 1,557,420.00 0.53 0.17 0.53 1.04 0.35 2 .51 1.41 1.11 1.36 0 .35 0.36 9.72 0.55 Page 2 COST BASE: USO HB1100 UNREALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD 91,326,196.85 -1,735,431.85 6,126,875 .00 6.84 9,593,750.00 -45,350.00 39,890,500.00 -847,276.00 14,554,687.50 -44,587.50 25,000,000,00 -203,750.00 25,351,562.50 -433,562.50 20,128,125.00 -468,725.00 134,518,625.00 -2,043,251.00 1,534,950.00 475,972.61 1,522,140.00 2,952,896.00 993,160.00 6,999,748 .00 3,970,480.00 3,227,070.00 3,911,640 .00 1,007,520.00 1,031,860.00 27,627,436.61 1,603,320.00 -21,435.00 -6,541.16 -10,560 .00 -15,051 .00 1,350.00 104,654.00 23,400.00 -68,370.00 -71,336.00 -2,780.00 -12,440.00 -79,109.16 -45,900.00 564,000.00 5.91 2,570,040.00 6.58 898,500 .00 6.19 1,680,000 .00 6.78 1,712,500 .00 6 .87 1,275,000.00 6.49 8,700,040.00 6 .57 122,400.00 8.09 37,572.00 8.00 110,700 .00 7.32 210,830 .00 7.18 62,600.00 6.29 402,570 .00 5.67 243,200.00 6.09 258,750 .00 8.19 309,875.00 8 .07 70,000 .00 6.97 76,900.00 7.54 1,905,397.00 6.92 156,000.00 10.02 4 VL.:>L"U t::J..::G~ LONG TERM OPER-PIMCO SHARES/PAR SECURITY DESCRIPTION ----------------------------- 10.400% 08/01/1999 9,000,000 PHILIP MORRIS COS NT 9.250% 02/15/2000 SUBTOTAL INDUSTRIAL TOTAL FIXED INCOME SECURITIES JTHER PORTFOLIO ASSETS PAYABLES/RECEIVABLES 0 INTEREST RECEIVABLE SUBTOTAL PAYABLES/RECEIVABLES TOTAL OTHER PORTFOLIO ASSETS NET PORTFOLIO ASSETS MELLON TRUST PORTFOLIO DETAIL BY SECTOR 31-JUL-1996 MARKET PRICE 106 .831 1.000 % OF MARKET VALUE TOTAL 9,614,790.00 3 .39 11,172,210.00 3.94 260,786,676.45 92.05 5,954,570.92 5,954,570.92 5,954,570.92 2.10 2 .10 2 .10 COST 9,903,780.00 11,507,100.00 BASE: USD HBllOO UNRF..ALIZED ESTIMATED CURR GAIN/LOSS ANNUAL INCOME YLD -288,990.00 832,500.00 8.66 -334,890.00 988,500.00 8 .85 264,979,358.46 -4,192,682.01 17,720,812.00 6.80 5,954,570.92 5,954,570 .92 5,954,570.92 0.00 0.00 0.00 0.00 0.00 ---------- 0.00 0.00 0.00 0.00 ================================-===-==--=--==--=--==-==--==-==-===-==-===-== 283,303,766 .11 100.00 287,496,448 .12 -4,192,682.01 17,727,235 .83 6.26 Page 3 MEETING DATE OMTS: PDC: FAHR: 09/11/96 EXEC: STEER: JT.BDS: DISTRICT NO. ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN[,.. ... > ITEM TRANSMITTAL CONTACT FOR INFORMATION ,[) • (Initials of Originator) Div 2230, Marc Dubois, Extension 2650 Division No., Name, and Extension RECEIVE AND FILE INFORMATION-ONLY REPORT OF CONTRACTS/PURCHASING MANAGER (ALL DISTRICTS) Recommended Action(s): Receive and file this information-only report of Contracts/Purchasing Manager CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on ... and Nptice of Determination filed on _ BUDGET INFORMATION N/A TOTAL BUDGETED AMT.: $ SOURCE: CORF JO DISTRICTS Schedule/Line Item: AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT ORIGINAL BID, PO,CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent Limited Term 3J ZI ~b Date ~/ ?I f ctL Date r/211,, i nature Date ssistant General Manager (Or Designee) DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: NOT APPLICABLE CURRENT YEAR· TO-DATE EXPENDITURES CHANGE ORDERS, FUNDS PREV. APPROVED YEAR-TO-DATE BUDGET BALANCE N/A- AMOUNT REQUESTED THIS AIT REVISED BUDGET TOTAL (Total Budget plus Transfers) N/A AMENDED PROJECT AMOUNT REQUIRES BOARD POLICY ACTION? NOT APPLICABLE If YES, explain in ADDITIONAL INFORMATION section ATTACHMENTS TO AGENDA (List) To Committee: 1. To Jt. Bds.: 1. ADDITIONAL INFORMATION (Background and/or Summary) The Districts has implemented an Inventory Classification and Analysis Program that provides a critical element to increase inventory accuracy levels, reconciliation, minimize inventory investment, and enhances Just-In-Time (JIT) contract opportunities. Beginning July 1, 1996, the Purchasing and Warehouse Division conducted an evaluation of the Districts' inventory investment position, annual distributions and the identification of static inventory commodities. Subsequent to the evaluation, an ABC Inventory Program was established which has successfully reduced our inventory error rate to 4.3% based upon 12,234 inventoried items. The ABC Inventory System will provide a mechanism to reduce inventory investment without compromising Districts' operations. c: Department Head AGM-Administration AGM-Operations General Manager J:\WPDOC\AGENDA\FORMS\AIT-FORM. Revision: 8/28/96 Page 2 of MEETING DATE OMTS: PDC: FAHR: 9/11/96 EXEC: STEER: JT.BDS: 9/25/96 DISTRICT NO. All AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN[ ITEM TRANSMITTAL CONTACT FOR INFORMATION 2210, Steve Kozak ext. 2504 Division No., Name, and Extension ANNUAL REVIEW OF THE DISTRICTS' INVESTMENT POLICY (All Districts): Consideration of motion to revise the Districts' Investment Policy Statement, and recommend that the Joint Boards of Directors adopt Resolution No. 96-xx to adopt the updated Investment Policy. Recommended Action(s): 1. Receive and file this report. 2. Approve revisions to the Districts' Investment Policy as recommended in this report and as depicted in the updated Investment Policy presented in staff report. 3. Recommend that the Joint Boards of Directors adopt Resolution No. 96-_ at their meeting of September 25, 1996, to approve the Districts' updated Investment Policy; repeal Resolution Nos. 95-14 and 95-15; and repeal Resolution No. 95-78, and incorporate its contents into Resolution No. 96-_. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on_ BUDGET INFORMATION TOTAL BUDGETED AMT.: $ SOURCE: CORF JO DISTRICTS Schedule/Line Item: AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT NA ORIGINAL BID, PO, CONTRACT AMOUNT NA WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent Limited Term DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: May 24, 1995 CURRENT YEAR- TO-OATE EXPENDITURES NA CHANGE ORDERS, FUNDS PREV. APPROVED NA YEAR-TO-OATE BUDGET BALANCE NA AMOUNT REQUESTED THIS AIT NA REQUIRES BOARD POLICY ACTION? YES REVISED BUDGET TOTAL (Total Budget plus Transfers) NA AMENDED PROJECT AMOUNT NA If YES, explain in ADDITIONAL INFORMATION section CONCURRENCES: nager (Or Designee) Signature Department Head (Or Designee) ~,,'7), WU-4 M Signatu e Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) ATTACHMENTS ' ~GENOA (List) To Committee: 1. Staff Report 2. Resolution No. 96-xx Date Date To Jt. Bds.: 1 . Staff Report 2. Resolution No. 96-xx First Annual review of the Districts' Investment Policy, and recommendation to the Joint Boards for adoption of a Resolution for approval of Districts' updated Investment Policy. svk c: Department Head A GM-Administration AGM-Operations General Manager General Counsel J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\SEPT.AlnFAHR96.51 Revision: 8/27/96 Page 2 of 2 September 11, 1996 STAFF REPORT Annual Review of the Districts' Investment Policy Summary The Districts' current Investment Policy was reviewed and approved by the Finance, Administration & Human Resources Com"'!ittee (FAHR) on May 10, 1995, and adopted by the Joint Boards on May 24, 1995. On September 7, 1995, final professional services agreements were signed, the Districts' Treasury Bill investments matured and funds were wired to Mellon Trust for investment by PIMCO, the Districts' external Money Manager. The Districts' Investment Policy governs PIMCO's investment activities on behalf of the Districts. The Investment Policy, attached, includes the requirement that the Districts shall review its Investment Policy annually (Sections 1.2 and 16.1). This staff report presents the first Annual Review of the Districts' Investment Policy to the Committee for consideration in your capacity as the oversight committee for the Investment Policy (Section 16.2). This review includes: 1. Revisions to the Investment Policy as required by the Government Accounting Standards Board (GASB), and amendments to the California Government Code; 2. Revisions to the Investment Policy as recommended by the Municipal Treasurers' Association of the United States & Canada (MTA); 3. Revisions to the Investment Policy as requested by PIMCO, the Districts' External Investment Advisor; and 4. Recommendations regarding the resolution of several administrative matters. Revisions Required by GASS and the Government Code The following discussion highlights the changes in investment practices that are required of local agencies as a result of the recent revisions in investment laws made by GASB and the California Government Code. Because the Districts' original 1995 Investment Policy was written to be both conservative and prudent in nature, it anticipated some of the changes that are now required of all local governments in California. As such, the Districts' Investment Policy is largely in compliance with the new investment laws and only a few amendments are necessary. The table in Attachment "1," summarizes the new reporting requirements; provides status information on the Districts' implementation of the new requirements; and recommends revisions to the Investment Policy, where appropriate. A copy of the Districts' updated Investment Policy is also presented in Attachment "2," and denotes the recommended revisions for adoption (see redlined text). CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 FAHR 96-51 Page2 September 11, 1996 GASS/Government Code Changes Requiring No Change to Investment Policy Earlier this year, the Government Accounting Standards Board (GASB), which sets governmental accounting standards, followed the lead of the Financial Accounting Standards Board (FASB), which sets business accounting standards, in announcing its decision that state and local governments should report their investments at "fair," or market values. Section 15.1.1 of the Districts' Investment Policy currently requires that the value of the Districts' portfolio be marked-to-market each month. Therefore, no change is required. The California Government Code was recently amended to include the provisions of Senate Bills 564 and 866, which pertain to local agency investments (excluding bond proceeds). The proceeds of the Districts' capital projects financing program are invested in accordance with the provisions of their specific bond covenants and indentures, as noted in Section 2.0 of the Districts' Investment Policy. First, all local government entities must adopt formal investment policies and must annually review and re-adopt policies at a public meeting. The Districts' original 1995 Investment Policy included this requirement. The new laws establish that local agency investment policy objectives must, in priority order, be safety, liquidity, and then yield; and that local agency investment officials are considered trustees and fiduciaries subject to defined prudent investment standards. The Districts' original 1995 Investment Policy included these requirements, as well as a section on Ethics and Conflicts of Interest which applies to the Districts' officers and employees involved in the investment process. The governing bodies of local governments must now receive investment reports at least quarterly, and may require them monthly. The new law specifies what must appear in these reports, including the type of investment, issue maturity, market value of the portfolio, and the source of the valuation. The Districts' original 1995 Investment Policy included these requirements. The new laws limit investment in reverse repurchase agreements ("reverse repos") to 20% of a local agency's portfolio, and contain outright prohibitions on inverse floaters, range notes, and interest-only strips. The Districts' original 1995 Investment Policy included the limitation, in Section 8.13.1, that no more than 20% of the Districts' portfolio shall be invested in reverse repurchase agreements. Inverse floaters, range notes, and interest-only strips are not permitted investments under the Districts' Investment Policy. It should be noted that, with regard to reverse repos, the Districts' original 1995 Investment Policy limits their maximum maturity to 90 days, unless otherwise specifically authorized by the Districts' Board of Directors; and further stipulates that the reverse repos shall mature on the exact date of a known cash flow which will be unconditionally available to repay the maturing reverse repo ("matched"); and finally that reverse repo proceeds shall be used solely to supplement liquidity, and shall not be used to speculate on market movements. Thus, the Districts' Investment Policy is somewhat more restrictive and conservative than required by Government Code. FAHR 96-51 Page 3 September 11, 1996 For protection of local agency funds, the new laws require that all securities must be delivered via book entry, physical delivery, or via a third party safekeeping custodial agreement. The Districts' original 1995 Investment Policy included requirements for all securities transactions to be conducted on a delivery-versus-payment basis (DVP), and that all securities will be held by a third-party custodian. Mellon Trust provides these services to the Districts. Government Code Changes Requiring Revisions to the Investment Policy The new code revisions require that reports must indicate that investments are in compliance with the adopted policies of the local agency, or identify areas of non-compliance. Although the Districts' monthly reports currently include this practice under Section 15.1.8 of the 1995 Investment Policy, a clarification is proposed to this section for more precise compliance with the new laws. Specifically, the current wording of Section 15.1.8 requires that investment reports include a listing of any transactions or holdings which do not comply with the Districts' Investment Policy or with the California Government Code. The clarification would add a phrase to state that all investments are in compliance with the Districts' Investment Policy and the California Government Code. Reports must also state the ability of the local agency to meet the next six (6) months of cash flow requirements. If the agency is not able to meet its cash flow demands, the report must state the reasons for the shortfall. New Section 15.1.1 O is recommended for addition to the Districts' Investment Policy to comply with this requirement. The Quarterly Investment Report for the quarter ended June 30, 1996 contained this statement. The new Code revisions require that reports be available within 30 days of the end of the period. The Districts' current reporting cycle involves completion and submittal of monthly and quarterly investment reports to the Treasurer within 30 days following month or quarter end. Reports from PIMCO and Mellon are available in the second week of each month. The Treasurer reviews the reports and forwards them to the FAHR Committee the following month as the mail- out requirement (first week of each month) for the monthly FAHR Committee meetings arrives before the reports are available. If the FAHR Committee is comfortable receiving the reports on the day of their meeting, rather than in the advanced mailed package, the Joint Boards would be able to review the reports within the 30-day time frame. An alternate solution, however, that would allow the Committee full advance review of reports is to note that the reports are on file with the Treasurer and available upon request for review within the 30-day time frame. Staff recommends the addition of the following phrase to Section 15.1 of the Investment Policy to meet both goals of adequate time for Committee review and full Code compliance: "These reports shall be on file with the Treasurer and available for review within 30 days of the end of the month/quarter ... " FAHR 96-51 Page4 September 11, 1996 Revisions Recommended by the Municipal Treasurers' Association US & Canada Staff consulted with the Municipal Treasurers' Association of the United States & Canada (MTA) for comments on the Districts' Investment Policy, in preparation for submittal of the updated Policy to MTA for consideration under MTA's Certification of Excellence program. Most of the comments received from the MT A involved increasing the level of elaboration and detail in various sections of the Districts' Investment Policy. The MTA also recommended that the Policy contain separate sections covering securities collateralization and maturity topics. Although the 1995 Investment Policy covered these topics, staff recommends the addition of Section 9.0, Collateralization, and Section 12.0, Maximum Maturities, to the updated Policy. Finally, the MTA recommended that the Policy should specifically require that all Repurchase and Reverse Repurchase Agreements be the subject of a Master Repurchase Agreement between the Districts and the investment provider. Staff recommends the addition of Sections 8.12.2 and 8.13.5, to address this comment. Amendments to the Investment Policy Requested by PIMCO Consistent with Section 1.2 of the Investment Policy, which states that the Districts shall review its Investment Policy annually, and may change its policies as its investment objectives change, staff reviewed several investment guideline proposals from PIMCO. The following is a brief discussion of PIMCO's recommendations to revise the Investment Policy. 1. Delete Long-Term Portfolio 5-Year Maximum Maturity Constraint PIMCO proposes that they be allowed to operate the Long-Term Operating Fund without a maximum maturity constraint. This would delete the maturity requirement in Section 12.2.1 of the Investment Policy, which reads: "The maximum final stated maturity of individual securities in the Long-Term Operating Monies account portfolio shall be five (5) years from the date of purchase, unless otherwise authorized by the Districts' Board of Directors." PIMCO states that the five-year maximum maturity does not allow investments in the mortgage sector of the bond market, and impairs their ability to utilize yield curve strategy to maximize earnings. Staff Response Staff does not recommend approval of this recommendation. The Investment Policy currently allows investment in the mortgage sector of the fixed income market through collateralized mortgage obligations issued by the U.S. Government (Section 8.11). Should a specific need or opportunity arise, Section 12.2.1 currently provides PIMCO with the ability to recommend specific securities with maturities greater than five (5) years for Board approval. The maximum maturity provisions of the Districts' Investment Policy are in compliance with the requirements of the Government Code. FAHR 96-51 Page 5 September 11, 1996 2. Allow Direct Investment in Foreign Bonds and Futures PIMCO states that allowing investments in foreign bonds and futures should add return without increasing volatility. It should be noted that the Districts' Investment Policy currently provides thirteen categories of permitted investments. Foreign bonds and futures are not among the permitted investments. Further, the Government Code does not permit investment of public funds in foreign bonds. Staff Response Staff does not recommend approval of this recommendation, given the absence of specific investment authority, the continuing uncertainties in the foreign and futures markets, and the numerous permitted investment opportunities that are currently to PIMCO under the Districts' Investment Policy. 3. Allow Investments in Securities with Lower Credit Quality PIMCO states that lower credit quality issues have outperformed those with higher ratings. While this is a correct statement, it should be noted that this is the case because lower credit quality issues represent a higher investment risk; and higher risks produce higher yields. Staff Response Staff does not recommend approval of this recommendation. In that the Districts' Investment Policy objectives are safety, liquidity, and then yield, as required by the Government Code, lower credit quality securities would increase the market risk of the Districts' investment portfolios. The current Investment Policy allows investments to be rated as low as "A-," except for Collateralized Mortgage Obligations (CMOs), which must be rated "AAA.". 4. Extend the Duration for the Short-term Liquid Operating Fund Beyond 90 Days PIMCO states that because the short-term end of the yield curve tends to be steep, an increase in the average maturity (or duration) of the Short-Term portfolio can produce increased returns without significantly increasing market risk. For example, the current yield for a 90-day Treasury is 5.25%, while a 180-day Treasury is yielding 5.47%; an increase in return of 22 basis points, with no change in the type of investment, or reduction in credit quality. Staff Response Staff recommends approval of an extension of the duration from 90 to 180 days. The Districts' Investment Policy currently allows the maximum final stated maturity of individual securities in the Short-Term Liquid Operating Fund to be twelve (12) months from the date of purchase (Section 12.1.1), and the majority of investments selected by PIMCO for the Short-Term portfolio are U.S. Government securities and prime-rated ("A1/P1") commercial paper with maximum maturities of 180 days. FAHR 96-51 Page6 September 11, 1996 As the Committee considers PIMCO's proposed revisions to the Districts' Investment Policy, it is important to note that in adopting the Districts' 1995 Investment Policy, the Joint Boards of Directors adopted a statement which is a comprehensive declaration of policy, scope of investments, and granting of authorizations and requirements for implementation. Sections 1.0 and 4.0 of the Investment Policy establish a clear understanding for the Joint Boards, Districts' management, responsible employees, and third parties of the objectives, policies, and guidelines for the investment of the Districts' idle and surplus funds, consistent with the safekeeping of public funds, and prudent financial management. Administrative Matters A number of housekeeping items related to the Investment Policy require attention. A brief description of these clean-up items follows. • • • Resolution Adopting Updated Investment Policy: A new Resolution is required for adoption of the Districts' updated Investment Policy by the Joint Boards on September 25, 1996. Resolution No 96-xx is presented as Appendix "B" to the attached Investment Policy. Attendance of PIMCO at Quarterly Meetings: In Section 15.2 of the Districts' original 1995 Investment Policy, PIMCO is required to meet quarterly with the FAHR Committee. Because mandatory meetings may not always be necessary, to control costs, and to increase the flexibility of the FAHR Committee, staff recommends that the following sentence be added to Section 15.2: "External investment advisers may be required to attend said meetings at the discretion of the Chairman of the Finance, Administration and Human Resources Committee." Repeal of Resolution Nos. 95-14 and 95-15: Resolution Nos. 95-14 and 95-15 were adopted by the Joint Boards on February 8, 1995. These Resolutions approved interim investment policies following the Orange County bankruptcy, and before the Districts' permanent Investment Policy was developed and adopted by the Joint Boards on May 24, 1995. While the Boards' adoption of the permanent Investment Policy effectively superseded the earlier actions, staff recommends that Resolution Nos. 95-14 and 95-15 be formally repealed so that the potential for possibly conflicting Resolutions is eliminated. Repeal of these Resolutions can be incorporated into the Resolution that is required for adoption of the Districts' updated Investment Policy. • Consolidation of Benchmark Resolution: Resolution No. 95-78, adopted by the Joint Boards on July 26, 1995, approved investment performance benchmarks for the Districts' short-term and long-term portfolios. To reduce the number of outstanding Resolutions for the investment program, staff recommends that Resolution No. 95-78 be repealed, and that its contents be incorporated into the new Resolution that is required for adoption of the Districts' updated Investment Policy. FAHR 96-51 Page 7 September 11, 1996 Ongojng Monitoring Program Staff continues to monitor pending legislative and regulatory proposals in the public finance area for their potential impact on the Districts' financial programs. For example, SB 1381 proposes additional changes to the California Government Code regarding local agency investments in money market funds. At the present time, SB 1381 remains in the Senate Local Government Committee. Staff will continue to keep the Committee informed of the status of this and other proposals as they may develop. Staff Recommendations Staff recommends that the Finance, Administration and Human Resources Committee adopt a motion to: 1. Receive and file this report. 2. Approve revisions to the Districts' Investment Policy as recommended in this report and as depicted in the updated Investment Policy presented in Attachment "2" to this report. 3. Recommend that the Joint Boards of Directors adopt Resolution No. 96-_ at their meeting of September 25, 1996, which would approve the Districts' updated Investment Policy; repeal Resolution Nos. 95-14 and 95-15; and repeal Resolution No. 95-78, and incorporate its contents into Resolution No. 96-_. SK/le J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\STAFFRPT.96\SRFAHR96.51 ATTACHMENT "1" INVESTMENT PROGRAM REPORTING REQUIREMENTS SEPTEMBER 1996 CODE CHANGES IMPLEMENTATION INVESTMENT POLICY REVISIONS Annual review of Investment Policy at a public meeting. Existing -Section 1.2 and 16.1 None Investment policy objectives must be safety, liquidity and Existing -Section 4.0 None yield. Prudent person investment standard. Existing -Section 3.0 None Quarterly and/or monthly investment reports. Existing -Monthly reports are required, Section 15.1. None Existing -Quarterly reports are currently presented to Add word "quarterly" to Section 15.1. FAHR. Add the following phrase to Section 15.1: "These Completed -Reports submitted 30 days following the month reports shalt be on file with the Treasurer and available or quarter. for review within 30 days of the end of the month/quarter." Quarterly and monthly reports shalt include market value, Existing -Market values as of the end of each None and source of valuation. month/quarter are reported by PIMCO and Melton. Existing -Value of funds in LAIF are reported monthly to None FAHR. Completed -2nd Quarter 1996 None Investment Report will include LAIF market value as reported by LAIF. Reverse repo investments limited to 20% of portfolio. Existing -Section 8.13 None Safekeeping of securities. Existing -Section 10.0 None Mellon Trust is Districts' master custodial bank. Quarterly reports shalt state that investments are in Existing -Section 15.1.18 requires Investment Reports to Add the following phrase to Section 15.1.8: "State that compliance with investment policy. include a listing of any transactions or holdings which do not alt investments are in compliance with this policy and comply with this policy or with the California Government the California Government Code, or provide a .. ." Code. 2nd Quarter 1996 Investment Report included said statement. Quarterly reports shalt state that there are sufficient funds Completed -2nd Quarter 1996 Investment Report included Add new Section 15.1.10 to read: "State that sufficient to meet expenditure requirements for the next six months. said statement. funds are available for CSDOC to meet its operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall." J:\WPDOC\FIN\CRANE\FPC.MTG\FAHR.96\COVERS.96\INVESTRE.996 -· - ATTACHMENT "2" COUNTY SANITATION DISTRICTS OF ORANGE co·uNTY INV.ES'TMENT . POLICY Reviewed and Approved by Finance, Administration and Human Resources Committee on September 11, 1996 Adopted by Boards of Directors on September 25, 1996 (Resolution No. 96-_) COUNTY SANITATION DISTRICTS OF ORANGE COUNTY, CA INVESTMENT STATEMENT 7 1.0 Policy: ) ] , j It is the policy of the County Sanitation Districts of Orange County (CSDOC) to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating expenditure needs, achieving a reasonably rate of return and conforming to all state and local statutes governing the investment of public funds. 1.1. This Investment Policy is set forth by CSDOC for the following purposes: 1.1.1. To establish a clear understanding for the Boards of Directors, CSDOC management, responsible employees and third parties of the objectives, policies and guidelines for the investment of the CSDOC's idle and surplus funds. 1.2. 1.1.2. To offer guidance to investment staff and any external investment advisors on the investment of CSDOC funds (see Appendix "A"). 1.1.3. To establish a basis for evaluating investment results. CSDOC establishes investment policies which meet its current investment goals. CSDOC shall review this policy annually, and may change its policies as its investment objectives change. 2.0 Scope: This Investment Policy applies to all financial assets of CS DOC, except for the funds of the Deferred Compensation Plan, which are managed externally; proceeds of CSDOC's capital projects financing program, which are invested in accordance with provisions of their specific bond indentures; and such funds excluded by law or other Board-approved covenant or agreement. These funds are accounted for by CSDOC as represented in CSDOC's Comprehensive Annual Financial Report and include: • • • • • • • • General Fund Special Reserve Funds Debt Service Funds (unless prohibited by bond indentures) Capital Project Funds Enterprise Funds Internal Service Funds Trust and Agency Funds Any new Fund established by the Boards of Directors, unless exempted by the Board Page 1 of 12 • 1 7 l ] j I J 3.0 Standard of Prudence: 3.1 The standard of prudence to be used by CSDOC internal staff shall be the "prudent person" standard defined below in Section 3.1.1, and shall be applied in the context of managing an overall portfolio. Investment staff acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 3.1.1 The Prudent Person Standard: Investments shall be made with judgment and care-under circumstances then prevailing- which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. 4.0 Investment Objectives: The primary objectives, in priority order, of CSDOC's investment activities shall be: Page 2 of 12 7 7 ) j l 5. 0 Delegation of Authority: 5.1 Authority to manage CSDOC 's investment program is derived from the California Government Code Sections 53600 et seq. and Sections 53635 et seq. The Boards of Directors hereby delegates management responsibility for the CS DOC investment program to it's lil!~"-~;l'rl l,-OF.~ Treasurer, who shall establish written procedures for tfie operation of the investment program consistent with this Policy .WijJti? .•-•.:-:-·-·-:««·_"<='·'.· ~-, ,, ,·-=naF'elr,.. :-·•.•·:·v•:~N' .'·'•''tit ~~~::es,~e~f::arp,J~~1~:i~:~~t~~it~! and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by CS DOC internal staff, and shall establish a system of controls to regulate the activities of internal staff and external investment advisors engaged in accordance with Section 5.3. --,,:-;:,,=~½b~~, . :,;,:.., ❖:-;.:-:-:- 5.3 The Boards of Directors of CSDOC may, in its discretion, engage the services of one or more registered investment advisors to assist in the management of CSDOC 's investment portfolio in a manner consistent with CSDOC's objectives. Such external investment advisors/Mtt1lf'.])l it\l~fl}l~ •···e1~,~,:~1'.trtfffiff&h1'Jt''fb'ffifief.i:fitjif¥if:ijfd.iis11'''~shal I be grantl a--··a 1s"c'refon"fi5 p'~;~=~na'==t!Ji~J1,i~i~i't~~~~~=~[1f:\1fres1fn~f~ccordance with this lnve~tment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or be exempt from such registration. Page 3 of 12 1 l l J l ) J 6.0 Ethics and Conflicts of Interest: 6.1 Officers and employees of CSDOC involved in the investment process shall refrain from personal business activities that could conflict with proper execution of CSDOC's investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions that conduct business within CSDOC's boundaries, and they shall further disclose any large personal financial/investment positions, the performance of which could be related to the performance of positions in CSDOC's portfolio. 7.0 Authorized Financial Dealers and Institutions: 7.1 For investment transactions conducted by CSDOC internal staff, the Treasurer will maintain a list of financial institutions authorized to provide investment services to CSDOC, including "primary" or regional dealers that !t ~O~tl~6ep~K!!~ established by State law. All financial institutions which desire to become qualified bidders for investment transactions with CSDOC must supply the followingf:Jp' -.i1Mf9§,{i.:,Ji fl:it~IBIII ·-w~ ················'···•·· ... • . .w. ».&w.• 7.1.1. Audited financial statements for the institution's three (3) most recent fiscal years. ~~;if~J~i~;ta;,1, .. l'fflPEY·:::i:!11,~,l~!1,!Y!l!,~!e!!! c!s'f56~{1's"J"~~tfme~f'13'o'fi~y and that all securities offered to the Districts shall comply fully and in every instance with all provisions of the California Government Code and with this Investment Policy. Page 4 of 12 7 } l j 8.0 Authorized and Suitable Investments: All investments shall be made in accordance with Sections 53600 et seq. of the Government Code of California, and as described within this Investment Policy. Permitted investments under this Policy shall include: 8.1 Securities issued by the US Government or an agency of the US Government and fully guaranteed as to payment by the US Government or agency of the US Government. Investment in mortgage-backed bonds and CMOs is not governed by this Section 8. 1, even if such bonds are issued by agencies of the US Government. See Section 8.2 for conditions of purchase of mortgage-backed securities. See Section 8.11 for conditions of purchase of CMOs. 8.2 Mortgage-backed securiti es issued by an agency of the US Government, provided that the stated final maturity of such securities does not exceed five (5) years from the date of purchase. 8.3 Commercial paper rated a minimum of "P1" by Moody's Investor Services (Moody's}, or "A1" by Standard & Poor's Inc. (S&P) provided that: (a) the maturity does not exceed 180 days from the date of purchase; (b) the issuer is a corporation organized and operating in the United States with assets in excess of $500 million; and (c) no more than 15% of the portfolio is invested in commercial paper, except that a maximum of 30% of the portfolio may be invested in commercial paper, so long as the average maturity of all commercial paper in the portfolio does not exceed 31 days. Page 5 of 12 -, l J j J _] t -; 8.4 Banker's acceptances issued by institutions, the short-term obligations of which are rated a minimum of "P1" by Moody's, or "A1" by S&P provided that: (a) the acceptance is eligible for purchase by the Federal Reserve System; (b) the maturity does not exceed 270 days; and (c) no more than 40% of the total portfolio may be invested in banker's acceptances. 8.5 Medium term (or corporate) notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States, the long- term obligations of which are rated at least "a3" by Moody's, or "A-" by S&P. No more than 30% of the portfolio may be invested in eligible medium term or corporate notes. 8.6 Shares of mutual funds investing in securities permitted under this policy and under California Government Code Section 53601. Such funds must either: (1) attain the highest ranking, or the highest letter and numerical rating, provided by not less than two of the three largest nationally recognized rating services; or (2) have an investment Advisor registered with the Securities and Exchange Commission with not less than five years of experience investing in the securities and obligations authorized under this Policy and under California Government Code Section 53601, and with assets under management in excess of $500 million. The purchase price of such shares may not include any commissions. Investment in mutual funds may not exceed 15% of the total portfolio. 8.7 Certificates of deposit: 8.7.1 Secured (collateralized) time deposits in banks meeting the following criteria: (a) in good standing with the California State Collateral Pool; and (b) having a net operating profit in the two (2) most recently completed fiscal years. 8.7.2 Negotiable certificates of deposit (NCDs) issued by financial institutions which shall have long-term debt rated "A3" or higher by Moody's, or "A-" or higher by S&P; or have short-term debt rated at least "P1" by Moody's, or "A 1" by S&P; or as otherwise approved by the Districts· Boards of Directors. 8.8 Taxable or tax-exempt municipal bonds issued by the State of California or its subdivisions. Such securities must be rated "A3" or higher by Moody's, or "A-" or higher by S&P; or as otherwise approved by the Districts' Boards of Directors. 8.9 The State of California Local Agency Investment Fund (LAIF). 8.10 The Orange County Investment Pool. Page 6 of 12 ) J 8.11 Collateralized mortgage obligations (CMOs) issued by agencies of the US Government with a maximum stated final maturity of five years and asset- backed securities rated "Aaa" by Moody's S&P and "AAA" by S&P, with a maximum final stated maturity of five (5) years. Securities eligible for purchase under this Section 8.11 shall be issued by an issuer having a rating on its unsecured long-term debt of "A" or higher. Combined purchases of CMOs and asset-backed securities as authorized under this Section 8.11 may not exceed 20% of the total portfolio. 8.12 Repurchase agreements provided that: 8.12.1 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy, and are maintained at a level of at least 102% of the market value of the repurchase agreements. Collateral securities shall be delivered to a third-party safekeeping agent or to CSDOC's custodian bank. 8. 13 Reverse repurchase agreements provided that: 8.13.1 Generally, no more than 20% of CSDOC's portfolio shall be invested in reverse repurchase agreements, and there shall be no long-term reverse repurchase agreements unless otherwise authorized by the Districts' Boards of Directors. 8.13.2 The maximum maturity of reverse repurchase agreements shall be ninety (90) days. 8.13.3 Reverse repurchase agreements shall mature on the exact date of a known cash flow which will be unconditionally available to repay the maturing reverse repurchase. 8.13.4 Proceeds of reverse repurchase agreements shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not be used to speculate on market movements. Page 7 of 12 7 J J 8. 14 Sales of CSDOC-owned securities in the secondary market may incur losses in order to improve the risk or return characteristics of the portfolio, to prevent anticipated further erosion of principal, or when trading for securities that result in an expected net economic gain to CSDOC. 8.15 If securities owned by the CS DOC are downgraded by either Moody's or S&P to a level below the quality required by this Investment Policy, it shall be CS DOC' s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a decision is made to retain the downgraded securities in the portfolio, their presence in the portfolio will be monitored and reported monthly to the CSDOC General Manager, the Finance, Administration and Human Resources Committee and Boards of Directors. 9.0 Collateralization: 10.0 Safekeeping and Custody: 10.1 All securities transactions, including collateral for repurchase agreements, entered into by, or on behalf of CSDOC, shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by CSDOC's third-art custodian bankfiwi1ffiITstlalPb' · l'efitet . ..... ------=-=-=-=·"·=· . l!fiia " ,.,11! . _J!Al'!!ly sa a g rece,p s: .. ,.,JI 11.0 Diversification: 11. 1 There is no limit on investment in securities issued by or guaranteed by the full faith and credit of the U.S. government. 11.2 No more than 20% of the portfolio may be invested in securities of a single agency of the U.S. government, which does not provide the full faith and credit of the U.S. government. 11.3 No more than 5% of the portfolio may be invested in securities of any one issuer, other than the U.S. government or its agencies. Page 8 of 12 l j 11.4 No individual holding shall constitute more than 5% of the total debt outstanding of any issuer. 11 . 5 No more than 40% of the portfolio may be invested in banker's acceptances. 11.6 No more than 15% of the portfolio may be invested in commercial paper, except that 30% of the portfolio may be so invested so long as the average maturity of all commercial paper in the portfolio does not exceed 31 days. 11. 7 No more than 30% of the portfolio may be invested in medium-term (corporate) notes. 11.8 No more than 15% of the portfolio may be invested in mutual funds. 11. 9 No more than 30% of the portfolio may be invested in negotiable certificates of deposit. 11 . 1 O No more than 10% of the portfolio may be invested in eligible municipal bonds. 11. 11 No more than 20% of the portfolio may be invested in a combination of CMOs and asset-backed securities. CMOs and asset-backed securities may only be purchased by the Districts' external money managers with prior Board approval, and may not be purchased by the Districts' staff. 11 .12 No more than the lesser of 15% of the portfolio or the statutory maximum may be invested in LAIF. 11.13 No more than 15% of the portfolio may be invested in the Orange County Investment Pool. 11.14 No more than 20% of the portfolio may be invested in repurchase agreements. 12.0 Maximum Maturities: r :❖»~.:~~lti:: ........ C ill~,.-., .. ·.·... . . ,._:, .. -.-~;,:,~.--~~~:~1l,~f,~r=,!1e,i~11~!tft'~~,1,.,~fr~! fore·ca·s't, whfch '·'shaIr6i upd'atec(quarterly. Based on this forecast, the Treasurer shall designate, from time-to-time, the amounts to be allocated to the investment portfolio. CSDOC monies invested in accordance with this Policy are divided into two (2) categories: 12.1 Liquid Operating Monies. Funds needed for current operating and capital expenditures are known as Liquid Operating Monies. Page 9 of 12 J 12.1 .1 The maximum final stated maturity of individual securities in the Liquid Operating Monies account portfolio shall be one (1) year from the date of purchase. 12.1.2 The average duration of the Liquid Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' cash flow requirements, but may never exceed ffit:~0. days, and shall be reviewed and approved by the Finance, Adminis ra ·ion and Human Resources Committee, and shall be updated as needed. 12.2 Long Tenn Operating Monies. Funds needed for longer term purposes are known as the Long Term Operating Monies. 12.2.1 The maximum final stated maturity of individual securities in the Long Term Operating Monies account portfolio shall be five (5) years from the date of purchase, unless otherwise authorized by the Districts' Boards of Directors. 12.2.2 The duration of the Long Term Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' five-year cash flow forecast, shall be reviewed and approved by the Finance, Administration and Human Services Committee, and shall be updated as needed. ' 12.2.3 The duration of the Long Term Operating Monies account portfolio shall never exceed 120% of the duration as established in accordance with Section 12.2.2. 12.2.4 The duration of the Long Term Operating Monies account portfolio shall never be less than 80% of the duration as established in accordance with Section 12.2.2 13.0 Internal Controls: 13.1 The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. 14.0 Performance Ob jectives and Benchmarks: 14.1 Overall objective. The investment portfolio of CSDOC shall be designed with the overall objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and reasonably anticipated cash flow needs. Page 10 of 12 14.2 The Liquid Operating Monies. The investment performance objective for the Liquid Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index approved by the Finance, Administration and Human Resources Committee, and by the Districts' Boards of Directors, when the duration of the portfolio is established. ~. ::,,Jlfl:r·::::J1ill!lm::JtJ,Jl]1i!liligglli!~iillll!;IB.iM!fB 14.3 The Long Tenn Operating Monies. The investment performance objective for the Long Term Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index selected by the Finance, Administration and Human Resources Committee and approved by the Districts' Boards of Directors, when the duration of the portfolio is :E;i.111:::~,. ...... }!iPMt.~tl01~~iril?Jl~@JtfflEtm1~1:'1&2 15.0 Reporting: 15. 1 Monthly !l~Isl1J.IJI investment reports shall be submitted by the Treasurer to the Finance, Administration and Human Resources Committee which shall forward the reports to the Districts' Boards of Directors. m11rr ., :::.,Jill llln,a'.~--•-•'-:111111\,l!:J!~~!~[r~!~!P!P: ~,n,rriu'n{:;i[:f~~ to lowl 'ng"'1nform'aUon''"'about the risk characteristics of CS DOC· s portfolio: 15.1.1 15.1.2 15.1.3 rates. Cost and accurate and complete market value of the portfolio. Modified duration of the portfolio compared to Benchmark. Dollar change in value of the portfolio for a 1 % change in interest 15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.1.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. 15.1.6 Average portfolio credit quality. 15.1.7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. Page 11 of 12 15.2 15.1.9 Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods. 16.0 Investment Policy Adoption and Revision: 16.1 The Investment Policy of CSDOC shall be reviewed by the Finance, Administration and Human Resources Committee and shall be adopted by resolution of the Boards of Directors of CSDOC. The Policy shall be reviewed on an annual basis by the Finance, Administration and Human Resources Committee, which shall recommend revisions, as appropriate, to the Boards of Directors. Any modifications made thereto shall be approved by the Boards of Directors. 16.2 The Finance, Administration and Human Resources Committee shall serve as the oversight committee for the Districts' Investment program and shall adopt guidelines for the ongoing review of duration, quality and liquidity of the Districts' portfolio. Page 12 of 12 1 1 APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS SHORT TERM OPERATING FUND INVESTMENT U.S. Treasuries Federal Agencies Mortgage-backed Commercial paper Banker's Accept. Medium Term Notes Mutual Funds Negotiable CDs Municipal Bonds LAIF OCIP CMOs Asset-backed Repurchase Agree. Reverse Repos INTERNAL OK Fixed coupon, fixed mat. NO OK OK Fixed coupon, fixed mat.* Money Market Only- Fixed coupon, fixed mat.* OK* OK OK NO NO OK OK* EXTERNAL OK OK NO OK OK OK Money Market Only OK NO NO NO NO NO OK OK LONG TERM OPERA TING PORTFOLIO INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Mortgage-backed NO OK Mutual Funds Money Market Only-OK Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* OK LAIF OK NO OCIP OK NO CMOs NO With Board Approval Asset-backed NO With Board Approval Repurchase Agree. OK OK Reverse Repos OK* OK ~ith prior approval of the Finance, Administration and Human Resources Committee. -using financial institutions approved by the Finance, Administration and Human Resources Committee. J:IWPDOCIFINICRANE\INVEST.PL Y\961NVEST.POL l APPENDIX "B" RESOLUTION NO. ADOPTING THE DISTRICTS' INVESTMENT POLICY A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, ADOPTING THE DISTRICTS' INVESTMENT POLICY; ADOPTING INVESTMENT PERFORMANCE REPORTS AND SCHEDULE OF FREQUENCY OF INVESTMENT PERFORMANCE REPORTS; REPEALING RESOLUTIONS NOS. 95-14, 95-15 AND 95-78; AND RESCINDING MINUTE ORDER OF THE BOARDS OF DIRECTORS OF MAY 24, 1995 APPROVING THE DISTRICTS' INVESTMENT POLICY ., .. , ................... .... WHEREAS, on February 8, 1995, the Boards of Directors adopted Resolutions Nos. 95-14 and 95-15, approving interim investment policies following the Orange County bankruptcy and before the Districts' permanent Investment Policy was adopted; and, WHEREAS, on May 24, 1995, the Boards of Directors adopted, by Minute Order, a comprehensive Investment Policy; and, WHEREAS, on July 26, 1995, the Boards of Directors adopted Resolution No. 95-78, establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and, WHEREAS, pursuant to California Government Code Section 53646, the Districts are required to review their Investment Policy annually and re-adopt their Policy at a public meeting, which Policy will establish specific performance benchmarks and objectives, and specific performance monitoring and reporting. NOW, THEREFORE, the Boards of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California. DO HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the Boards of Directors hereby adopt the Investment Policy of the County Sanitation Districts of Orange County, California, as set forth on Exhibit "A," attached hereto and incorporated herein by reference. Section 2: That the Boards of Directors hereby adopt the following specific performance benchmarks for their two investment funds in accordance with Section 14.0 of the Districts' Investment Policy. LIQUID OPERATING MONIES -The Short-Term Operating Fund will be compared to the three-month T-bill rate, and the Callan Active Cash Fixed Income Style Group. The Callan Active Cash Fixed Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES-The Long-Term Operating Fund will be compared to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 3: That the Boards of Directors hereby adopt a performance monitoring and reporting schedule, as required by Section 15.0 of the Districts' Investment Policy, which schedule is attached hereto as Exhibit "B" and incorporated herein by reference. Section 4: That Resolution Nos. 94-14, 95-15 and 95-78 are hereby repealed, and the Minute Order of the Boards of Directors of May 24, 1995, approving the Districts' Investment Policy is hereby rescinded. Section 5: This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED at a regular meeting held September 25, 1996. 2 APPENDIX "C" GLOSSARY OF INVESTMENT TERMS Agencies. Shorthand market terminology for any obligation issued by a government- sponsored entity (GSE), or a federally related institution. Obligations of GSEs are not guaranteed by the full faith and credit of the US government. There are eight GS Es, five of which are currently active in the new issue market. The five include: FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds. FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds. FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called "FreddieMac" issues discount notes, bonds and mortgage pass-through securities. FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as "FannieMae," issues discount notes, bonds and mortgage pass- through securities. SLMA. The student loan marketing association, also known as "SallieMae," provides liquidity to private lenders who make various types of loans for education. SLMA currently issues floating rate notes. Federally related institutions are arms of the federal government. Most do not issue securities directly into the market. Those which do issue directly include the following: GNMA. The Government National Mortgage Association, known as "GinnieMae," issues mortgage pass-through securities which are guaranteed by the full faith and credit of the US Government. PEFCO. The Private Export Funding corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government. TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio and Mississippi River valleys. TV A currently issues discount notes and bonds. Amortized Cost. Measure of the cost of a security whereby the cost value will change over time as the discount or premium paid for the security is gradually incorporated into the principal value as interest payments are received. Page 1 of 7 Asked. The price at which a seller offers to sell a security. Asset-backed securities. Securities collateralized with consumer receivables, such as automobile loans, credit card receivables, or home equity loans, which are owned by the issuer, but placed with a trustee for the benefit of the investor. Average life. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected. Banker's acceptance. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which "accepts" the obligation to pay the investor. Benchmark. A comparison security or portfolio. A performance benchmark is a partial market index which reflects the mix of securities allowed under a specific investment policy. Bid. The price at which a buyer offers to buy a security. Broker. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position. Bullet structure. A portfolio strategy in which a manager overweights both the short and long end of the yield curve, and underweights the middle part of the curve. Certificate of Deposit (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. Collateral. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public moneys. Collateralized Mortgage Obligations (CMO). Classes of bonds which redistribute the cash flows of mortgage securities (and whole loans) to create securities which have different levels of prepayment risk, as compared to the underlying mortgage securities. Commercial paper. The short-term unsecured debt of corporations. Conditional prepayment rate (CPR). A measure of mortgage prepayment activity. It assumes that a constant fraction of the principal prepays each month and is based on the previous month's remaining balance. The rate is expressed as an annualized percentage. For instance, a CPR of 6% indicates that each month 6% of the remaining principal balance prepays on an annualized basis. Page 2 of 7 Convexity. The rate of change in a bond's price as duration changes. It is a particularly important component of price change for longer term bonds, or for large changes in interest rates. Cost Yield. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return. Coupon. The rate at which a bond pays interest. Credit risk. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. Current yield. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor's cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. Dealer. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position. Debenture. A bond secured only by the general credit of the issuer. Derivative. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components ("Stripped" coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate or index. Discount. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as Tbills and banker's acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality. Diversification. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. Duration. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration and effective duration). Page 3 of 7 Effective duration. Measures the price volatility of a fixed income security that contains embedded options. A more accurate measure of price volatility when the cash flow characteristics of the bond change when interest rates shift. Federal funds rate. The rate of interest charged by banks for short term loans to other banks. It is established by the Federal Reserve Bank through open-market operations. Federal Open Market Committee. A committee of the Federal Reserve Board which establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. Ladder structure. A portfolio strategy in which a manager attempts to weight securities equally across the yield curve. Leverage. Borrowing funds in order to invest in securities which have the potential to pay earnings at a rate higher than the cost of borrowing. Liquidity. The speed and ease with which an asset can be converted to cash. Market risk. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. Market value. The price at which a security can be traded. Marking to market. The process of posting current market values for securities in a portfolio. Maturity. The final date upon which the principal of a security becomes due and payable. Medium term note. A corporate bond which is brought to market over a period of time rather than at a single offering. Generally issued as senior unsecured obligations · of the borrower. Modified duration. Measures the percentage price volatility of a fixed income security or portfolio. Modified duration approximates the change in price for small changes in interest rates, assuming that the cash flow characteristics do not change when the yield curve shifts. Money market. The market in which short term debt instruments (Tbills, discount notes, commercial paper and banker's acceptances) are issued and traded. Mortgage Pass Through Securities. Securities collateralized with residential mortgage loans, the principal and interest payments of which are distributed, or "passed-through" to the investor. Many of these securities are issued by agencies of the federal government, including GNMA and FHLMC. Page 4 of 7 Mutual fund. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund's prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds and money market instruments, as set forth in the individual fund's prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio. Negative convexity. A phenomenon associated with bonds which have embedded call options, it measures the rate at which duration of a callable bond gets smaller as interest rates fall. Negative convexity is an undesirable characteristics in bonds. PSA Standard Prepayment Model (PSA). A measure of mortgage prepayment activity. The model is expressed as a monthly series of annual prepayment rates. The series begins at .2% per year in the first month, and increases by .2% per year in each successive month until month 30, where it levels out at 6% per year until maturity. This series is labeled 100 PSA. 200 PSA doubles this series, and 50 PSA would cut the series in half. Option adjusted spread. A measure of the value of a bond relative to a benchmark security, which takes into account the value of the embedded option inherent in any bond that has uncertain cash flows (i.e., callable bonds). Premium. The difference between the par value of a bond and the market value of the bond, when the market value is above par. Prepayment speed. A measure of how quickly principal is repaid to investors in mortgage securities. Prepayment window. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. Prudent man (person) rule. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." Realized return. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities which have not been sold from the portfolio. Repurchase agreement (RP, Repo). Short term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller's point of view, the same transaction is a reverse repurchase agreement. Page 5 of 7 J J Safekeeping. A service to bank customers whereby securities are held by the bank In the customer's name. Scenario analysis. A portfolio management technique that measures the performance of the portfolio under varying scenarios including, but not limited to, interest rate movements, spread changes and nonparallel yield curve shifts. Structured note. A complex, fixed income instrument which pays interest based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates -for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. Total rate of return. A measure of a portfolio' performance over time. It is the internal rate of return which equates the beginning value of the portfolio with the ending value, and includes interest earnings and realized and unrealized gains and losses on the portfolio. U.S. Treasury obligations. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. Treasury bills. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three-and six-month Tbills at regular weekly auctions. It also issues "cash management" bills as needed to smooth out cash flows. Treasury notes. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually. Treasury bonds. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi- annually. Volatility. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. Yield to Maturity (YTM). The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. Page 6 of 7 l l 7 l l -, l ' -' ' _j J ' j , _j J J J Yield to maturity (at market). The discount rate that equates the present value of the promised cash flow (interest payments and redemption value )to the market price, assuming that all cash flows are invested at the YTM rate. Yield to maturity (at purchase cost). The YTM that equates to the purchase price of the security Page 7 of 7 MEETING DATE OMTS: PDC: FAHR: 9-11-96 EXEC: STEER: JT.BDS: All AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN~ ·" ITEM TRANS MITTAL CONTACT FOR INFORMATION ___ (Initials of Originator) 2520 Mike Peterman ext. 2105 Division No., Name, and Extension ADOPT ORDINANCE NO. 132 PROVIDING ADDITIONAL SERVICE CREDIT FOR RETIREMENT PURPOSES. (All Districts) The Director of Human Resources, in conjunction with the FAHR COMMITTEE, recommends that the Directors adopt the ordinance providing for two years additional service credit to eligible employees who retire between January 1 and March 31, 1997, in accordance with the provisions of Government Code Section 31641.04. Recommended Action (s): Adopt Ordinance No. 132, an Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California providing eligible District employees to receive two years additional service credit for retirement purposes. CEQA REVIEW: Project is Exempt: NOT APPLICABLE DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: Dale Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on _ June 28, 1995, Ordinance No. 126 BUDGET INFORMATION CURRENT YEAR CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET TOTAL BUDGETED AMT.: N/A BUDGET AMOUNT TO-DATE BUDGET BALANCE TOTAL SOURCE: CORF JO DISTRICTS EXPENDITURES (Total Budget plus Transfers) Schedule/Line Item: $0 $0 $0 $0 AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION ORIGINAL BID, PO, CHANGE ORDERS, AMOUNT AMENDED PROJECT CONTRACT FUNDS PREV. REQUESTED THIS AMOUNT AMOUNT APPROVED AIT NIA N/A NIA N/A WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO REQUIRES BOARD POLICY ACTION? YES If YES, state number: _ Permanent _ Limited Term If YES, explain in ADDITIONAL INFORMATION section CONCURRENCES: ATTACHMENTf 'AGENDA (List) To Committee: 1. Attachment A z . 0 rd. ,· n a .., u. ,>J o . I l 2... Date ~~ CZ-2',-i(,, _,__ ________ __.___.--=----------To Jt. Bds.: Signature Date 1. Attachment A -z.. 0 rd. ,'"q"'~ Department Head (Or Designee) ~. {A)~ AA a 2..-o//~r, Date ADDITIONAL INFORMATION (Background and/or Summary) On March 8, 1995, the Boards adopted Resolution 95-19 which implemented the early retirement incentive provisions of Government Code Section 31641.04. This resolution allowed the addition of two years service credit to certain employees otherwise eligible to retire who actually applied for retirement during the period March 1, 1995 through April 30, 1995. The retirement incentive was again offered during the period May 1 through June 30, 1995, and during the period January 1 through March 30, 1996. Eleven employees elected to participate in the program during those three window periods resulting in a substantial savings to the Districts. Salary and benefits cost avoidance over the five-year period FY95 -FY99 is estimated at $2,424,096 One additional employee retired in August, 1996 through a special Board action. Staff continues to believe that District-wide encouragement of accelerated attrition will have a positive effect on the organizational change sought by the Districts. Early retirement will provide an effective means of achieving that objective. By deleting the vacant positions caused by early retirement, the Districts will realize significant cost savings in salaries and benefits. There are currently 53 employees who meet the eligibility criteria for retirement. At least eight employees have expressed strong interest in early retirement. If these employees exercise the early retirement option, it is projected that the Districts will save an additional $939,387 through FY99 (see exhibit A) MP:jb c: Department Head A GM-Administration AGM-Operations General Manager A:\AITSEPT .96 Revision: 8/20/96 Page 2 of2 8/25/96 Total Net Ann'I Dale Working Monthly Annual Position One Time Net Annual Savings Salary Savings Retired Yrs to 65 Salary Salary Changes OCERS 94-95 95-96 96-97 97-98 98-99 Scientist 5/1/95 3 5,281 63,372 Deleted 13,872 10,562 49,500 63,372 63,372 186,806 Fae Mgr 3/31/95 1 5,735 68,820 Deleted 51,402 17,205 17,418 68,820 103,443 Builder 6/30/95 2 3,400 40,800 Deleted 35,497 5,303 40,800 40,800 40,800 127,703 Mech Field Super 3/31/95 13 5,002 60,024 Deleted 31,227 15,006 28,797 60,024 60,024 60,024 223,875 Foreman 3/31/95 7 4,132 49,584 Deleted 31,768 12,396 17,816 49,584 49,584 49,584 178,964 Mech Field Super 4/28/95 7 5,017 60,204 Deleted 41,030 10,034 19,174 60,204 60,204 60,204 209,820 Subtotal 94-95 Program 28,567 342,804 204,796 65,203 138,008 273,984 342,804 342,804 1,030,611 Senior Storeskeeper 3/28/96 10 3,648 43,776 Deleted 26,152 10,944 17,624 43,776 43,776 116,120 HR Asst 3/28/96 7 3,697 44,364 Deleted 26,504 11,091 17,860 44,364 44,364 117,679 OperSuper 1/15/96 4 5,105 61,260 Deleted 36,598 28,078 24,662 44,364 44,364 141,468 Oper Super 1/15/96 10 5,105 61,260 Deleted 36,598 28,078 24,662 61,260 61,260 175,260 Mtce Mgr 3/28/96 13 6,132 73,584 Deleted 43,960 18,396 29,624 73,584 73,584 195,188 Sr.Const.lnspec 8/15/96 12 5,399 64,788 Deleted 38,705 56,690 26,083 64,788 147,560 Subtotal 95-96 Program 29,086 349,032 208,517 96,586 171,122 293,431 332,136 893,275 Total Salary Savings 1,923,886 Total Salary Benefit Savings 500,210 Total Net Salary & Benefit Savings of 94-96 Pro gram 2,424,096 Foreman 1/1/97 11 4,654 55,850 Delete 33,366 27,924 22,484 55,850 106,258 Sr.Const.lnspec 3/31/97 3 4,735 56,821 Delete 33,946 14,205 22,875 56,821 93,901 lnstrum.Tech II 3/31/97 10 4,251 51,018 Delete 30,479 12,753 20,539 51,018 84,310 Sr. Mice. Planner 3/31/97 5 5,549 66,594 Delete 39,784 16,647 26,810 66,594 110,051 Sr. Plant Operator 3/31/97 6 4,488 53,864 Delete 32,179 13,464 21,685 53,864 89,013 Lead Mechanic 3/31/97 2 4,108 49,297 Delete 29,451 12,324 19,846 49,297 81,467 Mice. Manager 3/31/97 15 6,316 75,799 Delete 45,283 18,948 30,516 75,799 125,263 Sr. Clerk 3/31/97 4 2,787 33,453 Delete 19,985 8,361 13,468 33,453 55,282 Subtotal Proposed 96-97 Program 36,888 442,696 264,473 124,626 178,223 442,696 745,545 Total Salary Savings 745,545 Total Salary Benefit Savings 193,842 IS Total Net Salary & Benefit Savings of Proposed 96-97 Program 939,387 ):> ("") ::c Program Total 1,134,532 677,786 65,203 234,594 569,732 814,458 1,117,636 2,669,431 3: I rri :z 16,953 60,994 148,130 211,759 290,585 728,421 1---1 ):> 82,156 295,588 717,862 _j ,026,217 1,408,221 3,397,852 EARLYRET.JB 3:31 PM \ 'C ORDINANCE NO. 132 PROVIDING ADDITIONAL SERVICE CREDIT TO ELIGIBLE DISTRICTS' EMPLOYEES WHO RETIRE EARLY. AN ORDINANCE OF THE BOARD OF DIRECTORS OF COUNTY SANITATION DISTRICT NO. 1 OF ORANGE COUNTY, CALIFORNIA, PROVIDING FOR AN EARLY RETIREMENT INCENTIVE PROGRAM BY GRANTING ADDITIONAL SERVICE CREDIT TO ELIGIBLE DISTRICTS' EMPLOYEES AS AUTHORIZED BY THE COUNTY EMPLOYEES RETIREMENT LAW OF 1937, GOVERNMENT CODE SECTION 31641.04. WHEREAS, the Board of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 adopted Joint Resolution No. 95-19 and Joint Resolution No. 95-53 approving an Early Retirement Incentive Program for all eligible Districts' employees, as authorized by California Government code Section 31641.04; and WHEREAS, pursuant to the provisions of the Joint Ownership, Operation and Construction Agreement by and among County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14, District No. 1 is the appointed authorized agent to act for every other District; and WHEREAS, the Board of Directors of County Sanitation District No. 1, acting as agent for County Sanitation Districts Nos. 2, 3, 5, 6, 7, 11, 13 and 14, adopted Ordinance No. 126 on June 28 1995, incorporating all of the same provisions as in Joint Resolutions Nos. 95-19 and 95-53; and WHEREAS, the Board of Directors of County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 have determined that the manner of performing service, and the total cost savings of having higher compensated employees retire and lower compensated employees hired to replace the retirees exceeds the total actuarial cost of the additional service credit granted to those who retire under this program. NOW THEREFORE, the Board of Directors of County Sanitation District No. 1 of Orange County, California, does hereby ORDAIN: Section I: All regular employees of the County Sanitation Districts of Orange County, California, who are eligible to participate as members and retire under the Orange County Employees Retirement System are granted two (2) additional years of service credit for retirement benefit purposes, provided, they retire from regular employment of the Districts during the period of January 1, 1997 through and including March 31, 1997. 1 Section II: The General Manager of the Districts is authorized to execute any and all contracts of other documents and to transfer all required funds in order to implement the authorized action provided for herein. Section Ill: The total cost savings of positions filled at a lower level or held vacant for a period of time shall exceed the total actuarial cost of the additional service credit granted and related paid leave pay-off costs. Section IV: This ordinance shall become effective January 1 , 1997. Section V: The Secretary of the Board shall certify to the adoption of this Ordinance and shall cause a summary to be published in a newspaper of general circulation as the District is required by law. PASSED AND ADOPTED by the Board of Directors of County Sanitation District No. 1 at a regular meeting held September 25, 1997. Secretary of the Board of Directors County Sanitation District No. 1 of Orange County, California A:\ORD132. Chairman, Board of Directors County Sanitation District No. 1 of Orange County, California 2 OMTS: PDC: FAHR: Sept. 11, 96 EXEC: STEER: JT.BDS: ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGENl t ITEM TRANSMITTAL CONTACT FOR INFORMATION Mr (Initials of Originator) 2190, Michelle Tuchman, ext. 2050 Division No., Name, and Extension RESULTS OF COMMUNICATIONS MINI AUDIT (Districts): Staff Summary Report on the results of the July Communications Mini Audit and an update of the new and/or expanded programs to reach both internal and external audiences. Recommended Action(s): An informational item only. CEQA REVIEW: Project is Exempt: NOT APPLICABLE DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on _ and Notice of Determination filed on _ N/A FUNDS BUDGETED: N/A SOURCE: CORF JO DISTRICTS Schedule/Line Item: AMOUNT OF TRANSFER: Schedule/Line Item: CURRENT YEAR CURRENT YEAR-TO- BUDGET AMOUNT DATE EXPENDITURES N/A N/A YEAR-TO-DATE BUDGET BALANCE N/A TOTAL REVISED PROJECT COST N/A WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO CONSISTENT WITH BOARD POLICY? NOT APPLICABLE If YES, state number: _ Permanent CONCURRENCES: Signature Department Head (Or Designee) ~-wc.-l-d·v-,.. J:\WPDOC\COMMSEC\FORMS\AIT Revision: 8/1/96 Limited Term Date ATTACHMENTS TO AGENDA (List) To Committee: 1. Copy of Mini Audit Survey Instrument 2. Results of Mini Audit To Jt. Bds.: 1. Page 1 of 2 CS DOC • P O Box 8127 e Fountain Valley, CA 92728-8127 e (7 14) 962-2411 ADDITIONAL INFORMATION (Background an Summary) Communications Mini Audit Using January's Communications Audit as our benchmark study, a "Mini Audit" was conducted in July to gauge changes in employees' perceptions, concerns, morale and attitude, and to determine the effectiveness of the Districts' internal communications programs. The results of the Mini Audit show the Districts is exhibiting the normal and anticipated characteristics of an organization in transition. That is, employee morale is decreasing as complaints and frustrations increase. The Mini Audit did reveal one bright spot, however. Employees recognize and appreciate our expanded internal communications efforts. There are several reasons for the current low morale and increased level of frustration. First, as was pointed out during Executive Management Training, whenever an organization experiences major cultural changes, morale and productivity generally have an initial downward trend before there is significant improvement. Second, the Districts implemented a new performance evaluation system in July that immediately preceded the Mini Audit. Numerous employees noted their dissatisfaction with the new system and their performance ratings on the Mini Audit survey instrument. And, third, as some long-time staff have pointed out, this may be the first time in years employees feel comfortable enough to openly vent their frustrations without the fear of retaliation or recrimination. We will continue to conduct communications audits every six months to identify trends and benchmark our progress. Our next comprehensive audit will be in January 1997. Because this audit will take place immediately following labor negotiations, we anticipate the results to mirror those of the July Mini Audit. We hope to see an increase in morale and other "employee satisfaction" indicators by this time next year. Two hundred three employees responded to the July mini audit, a 34% response rate as compared to 42% when 260 employees responded in January. A copy of the Communications Mini Audit and the results are attached. Communications Department Update We continue to fine-tune the organization of the Communications Department to improve efficiency and productivity. Cross-training continues, which has enabled us to provide better service to our internal customers. We have expanded The News Pipeline to improve the quality and variety of articles. In addition, Pipeline is now produced on an in-house color copier. Changing Times is a new publication which profiles changes at the Districts. The need for such a publication was identified during our management training sessions. Special- edition Pipelines feature interviews with members of executive management. Questions are submitted by employees and are asked and reprinted exactly as written. We have received many positive comments on special-edition Pipelines. Our internal communications efforts will continue to expand to meet the information needs of our employees. Our external communications efforts for the first half of fiscal 1996-97 include a Speakers Bureau, outreach to area schools and universities, and outreach to city managers. Our public outreach efforts support the Strategic Plan and our ocean discharge permit renewal efforts. MT c: AGM-Administration AGM-Operations General Manager J:\WPDOC\COMMSEC\FORMS\AIT Revision: 8/1/96 Page 2 of2 Communications "Mini" Audit July 1996 Several new employee communications programs have been implemented as a result of your responses to our Internal Communications Audit last January. For example, we now publish monthly special-edition Pipelines with interviews of executive management. We've expanded our bi-weekly newsletter, The News Pipeline, t9 include employee and department/division feature stories. And, we inaugurated Changing Times, a Pipeline supplement that chronicles change at the Districts. The bulletin boards also seem to be popular with employees as do regular memos from Don McIntyre, General Manager. Only YOU can tell us how we're doing communications-wise and how we can best meet your information needs. That's the reason why the Communications Action Team is conducting this "mini" audit. Please take a moment to answer the following 11 questions, which were identified by the Team as key indicators of the effectiveness of our employee communications efforts. Surveys will be distributed through Aug. 1. Please use the attached envelope to return your survey to the Communications Department by Friday, Aug. 9, or give your survey to a member of the Communications Action Team. Your responses will be tabulated by members of the Team only. No one else will even see your completed forms. So please, be honest, especially with your examples. We'll publish the overall results of this survey in August, and post them on the bulletin boards just as we did the results of the Internal Communications Audit. In advance, thank you for your input! We've gone through some tough years at the Districts, but I think things are improving. • strongly agree • agree • somewhat agree • disagree • strongly disagree Please provide an example that supports your response _______________ _ Morale at the Districts is improving. • strongly agree • agree • somewhat agree • disagree D strongly disagree Please provide an example that supports your response _______________ _ Communications at the Districts is improving. • strongly agree • agree • somewhat agree D disagree D strongly disagree Please provide an example that supports your response _______________ _ over Communications Mini Audit --Results July 1996 1. We've gone through some tough years at the Districts, but I think things are improving. January strongly agree 6% agree 33% somewhat agree 38% disagree 19% strongly disagree 4% 2. Morale at the Districts is improving. strongly agree agree somewhat agree disagree strongly disagree January 1% 17% 40% 35% 7% 3. Communications at the Districts is improving. strongly agree agree somewhat agree disagree strongly disagree January 7% 28% 42% 21% 2% 1 July 6% 18% 33% 29% 14% July 1% 11% 24% 45% 18% July 10% 32% 36% 13% 9% % Change 0 (-) 15 (-) 5 10 10 %Change 0 (-) 6 (-) 16 10 11 % Change 3 4 (-) 6 (-) 8 7 4. The Districts cares about me and what I think. strongly agree agree somewhat agree disagree strongly disagree January 4% 23% 39% 28% 6% July 5% 15% 37% 26% 16% % Change 1 (-) 8 (-) 2 (-) 2 10 5. If I have a question about a policy or procedure, I know where to get an answer. strongly agree agree somewhat agree disagree strongly disagree January 6% 44% 34% 14% 2% July 8% 37% 32% 14% 9% The amount of information I receive on the following topics is ... Districts' future plans January Too much 4% Just right 38% Too little 54% No answer 4% Districts' policies and procedures Too much Just right Too little No answer January 6% 35% 54% 5% July 4% 41% 43% 12% July 6% 42% 39% 13% 2 %Change 2 (-) 7 (-) 2 0 7 % Change 0 3 (-) 11 8 %Change 0 7 (-) 15 8 Proposed expansion/changes in the Districts' operation Too much Just right Too little No answer Management philosophy Too much Just right Too little No answer January July 4% 3% 26% 32% 64% 50% 6% 15% January July 11% 11% 26% 30% 50% 37% 13% 22% Effect of external issues on my job January Too much 2% Just right 21% Too little 62% No answer 15% News of other departments/divisions Too much Just right Too little No answer j:\wpdoc\commsec\percent January 2% 25% 64% 9% 3 July 3% 26% 47% 24% July 5% 45% 39% 11% % Change (-) 1 6 (-) 14 9 % Change 0 4 (-) 13 9 % Change 1 5 (-) 15 9 %Change 3 20 (-) 25 2 OMTS: PDC: FAHR: 9/11/96 EXEC: STEER: JT.BDS: 9/25/96 All AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: ~--...\ AGEN. " ITEM TRANS MITTAL CONTACT FOR INFORMATION 2150, Judy Wilson, Ext. 2005 Division No., Name, and Extension PROPOSITION 218, RIGHT TO VOTE ON TAXES ACT (All Districts): The Chief Administrative Officer requests that the Boards go on record in opposition to Proposition 218 which would impose significant and expensive procedural requirements on the noticing of proposed extensions of, or increases to, user fees. The proposition also provides for the application of the voter initiative to user fees, which means that a voter initiative could force a roll-back or reduction in user fees which would have an adverse affect on the Districts' ability to borrow at low interest rates. Recommended Action(s): That the Districts go on record opposing Proposition 218. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on _ and Notice of Determination filed on _ BUDGET INFORMATION CURRENT YEAR TOTAL BUDGETED AMT.: $ BUDGET AMOUNT SOURCE: CORF JO DISTRICTS Schedule/Line Item: N/A AMOUNT OF TRANSFER: Schedule/Line Item: AIT/PROJECT COST INFORMATION ORIGINAL BID, PO, CONTRACT AMOUNT N/A WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: No previous action taken CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET TO-DATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) N/A N/A N/A CHANGE ORDERS, AMOUNT AMENDED PROJECT FUNDS PREV. REQUESTED THIS AMOUNT APPROVED AIT N/A N/A N/A REQUIRES BOARD POLICY ACTION? NO CONCURRENCES: ATTACHMENn AGENDA (List) To Committee: 1. Draft copy of Proposition 218 Signature Date Division Manager (Or Designee) Signature Date To Jt. Bds.: 1. Draft copy of Proposition 218 Department Head (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) Proposition 218 will be on the November 1996 ballot. Also known as the Fox Initiative, after its author Joel Fox, Proposition 218 is intended to follow the intent of Proposition 13 requiring voter approval of tax increases. Proposi~on 218 states that the "measure protects taxpayers by limiting the methods by which governments exact revenue from taxpayers without their consent. Proposition 218 affects the Districts in two significant ways: 1) Initiative Power for Local Taxes, Assessments, Fees and Charges. Section 3 of the Proposition includes special districts as units of local governments, and states that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessments, fee or charge. This would allow a voter initiative to roll-back or repeal user fees. Currently, Districts' property taxes are not sufficient to meet current debt service and must be supplemented by reserves. If future additional debt is issued, a user fee increase would be necessary to meet debt service. The extent that such user fees are vulnerable to voter initiative must be disclosed to the investment community. Such a circumstance may increase the cost of issuance and affect the marketability of future bonds. 2) Notification Procedures for Fees and Charges. The initiative includes fees for sanitation within the scope of this measure and requires: that all parcels subject to the fee be identified; that the amount of the fee must be calculated for each parcel; that written notice be provided by mail to each owner of record for each identified parcel with the amount of the fee, the basis for the calculation, the reason for the fee change, and the date, time and location of a public hearing. A public hearing must be held within 45 days of the notice. At the public hearing, the agency must consider all protests. If there is a protest by a majority of owners of the identified parcels, no charge to the fee can be imposed. A fee or charge can not be extended , imposed or increased unless these procedures are followed. Sewer fees are not subject to the approval requirement of the majority of property owners or 2/3 of the electorate residing in the area. With over 400,000 parcels, the costs for mailing alone would be $140,000 not including the computer programming to generate the notice and calculation and the staff time to process it. If the proposition should pass, the effective date of Proposition 218 is July 1, 1997. Attached is a draft copy of the actual language as it will appear on the ballot. This copy was provided by the Secretary of State's Office and includes the Attorney General's office edits for ballot preparation. J:\WPDOC\AGENDA\FAHR\996-AIT1 .JAW Revision: 8/20/96 Page 2 of 3 JAW:jt c: Department Head AGM-Administration AGM-Operations General Manager J:\WPDOCIAGENDA\FAHR\996-AIT1 .JAW Revision: 8120196 Page 3 of 3 • 2 J I. ~at of •ropos•4 Law This initiative measure is submitted to the people in accordance vitb the provisions of Article II, Section 8 of the Constitution. This initiative measure expressly amends the Constitution by adding articles thereto; therefore, new provisions proposed to be .!.dded are printed in ital.ic type to i ___ ::!ate that they are new; PBOl'OBBD .IDl)fflmf 01' U~ZCLB U:IX C um u-rxcu nn D DRAFT 'f 08/07/96 13:59 J RIGHT TO V01c ON TAXEJ AC'r C: ~ -. . i SEC'11ON 1. TITLE. -11,is \ct shall be known and may be cited as the Right to Vote on Tax~-Act. 11 . 1 · ~ SEC110N 2.; FINDINGS AND DECLARATIONS. The,eople of tile State of California j hereby find and declare that Proposmon 13 wa.s intended to provide effeetive taX retief and to-require voter appraval of taX increases. However, local govemmentS have mJbjected ~ ta excessive mx, assessment. fee and charge increases tnat not onJy tnJsrrate the puri,ases of vat~r approval far iax increases, but also threaten the economic securitY of all Califomians and the California economy itself. · This .measure pratecT.S iaxpayers bv limiting the methods by which local govemments·exact revenue fron_'l mxpayers without their consent. =.\.. ... ..:_ ~SECTION 3. VOTER ~VAL FOR LOCAL. TAX iMes. lifomia ConstitUtion -v addP?t: · J/0 :I A .,-Ti c.-le... X \ \\ C. C ·, ~ SE½, 1. Definitions. '-TlON s used in this "¥cle: 1 (a) •General tax• means any tax imposed for general govemmental purposes. ~ (b, ~(C) ~ (d) --i.oc:at government• means any county, city, city and caunty, including a ~r city or coumy, any speciat district. or any other locaJ or regional governmental entity. &1 • / •specjal ~istri~ns an agency of the state, farmed pursuan~ to general law ONSpecial act. far the locaJ performance of governmental. or prop~etarv func;tions with limited geographic boundaries ffldudil'lg, but · . not limited to. school district.s and redevefopmem-agenciss. ,,, . . ,I~ . "Special tax• means any tax imposed for specific purposes~ncJuding a- _., imposed for SJledfic purpases_,.whid, a,a ·placed into a gen~raJ fund. ~ SEC, 2. Lac:al l;ovamrnant Taa Limit,~ ~otWith$tanding any other provision of this Constitution: 'f <a> All taXeS imposed by any local government shall be deemed to be either 9enc:ral t:axM or !:peciat t3ltes. 5oecial ourpose districts or agencies, ·, inctuding school districts. shaH have no power t0 levv general ta.Xes. DRAFT .......... __ _ ' ! • l 08/07/96 13:59 1,~--... - Right to Vote on Taxes Act Page 2 ~(bl ... ~~ -No local -govemme_j may impose,-exten~, or increase any general tax -unless and until :::1 ~ is submitted ta the electorate and approved by ✓ / a majoritv vote. A general taX shall not be deemed to have been increased if ft is imposed at a rate not hig;her tnan the maximum rate so approved. The efection required by this subdivision :snail be consolidated with a reguJarfy schedufed general election for members of the governing body Of the local govem~rn in cases of emergency declared by ✓ a unanirnau~ vote of the go~ming body. ,f (c) Any general iax imposed, extendedJor increased, wilhout voter approval, v _by any locaJ govemment on or after January 1, 1995, and prior to the effective date of this ~cle, shaJI continue ta be imposed only if approved by a majority vote of the voters voting in an election on the issue of the imposition,_ which· eJectlan shalJ be held within two years of {~ • the effective date of this \rticle and in compliance with subdivision (b) . ✓· .. ~ -~tsrs _seGticm~ ~ 1 (di No. local govern~rnay impose, extend1or increase any speeial tax / unless and until@D tax is submitted to the electorate and approved by a two•third.s vote. A special taX shaH not be deemed. to have been increased if it is imposed at a rate net higher than the maximum rate so approved. /4 adiUt, -JC . . ~ ~ 3. lni1iativ8 Pawar ~• Local Taxes, As.sessmams, Fees and Charges, :) <;~ding anv other pro{,isian of this ConstiMion. induding; but not limited to, ~eli~ Sections 8 and 9/ the initiative power shall not be prohibited or otherwise v v limiteOln matters of reducing or repealing any local tax, assessment, fee a, charge. The power of initiative to affect local taxes, assessments, fees and charges shall be / applicable to all local gov.emments and neid1er thaJs,gislatu.re nor any lacaJ government charter shall impose a signature requirement higher than that applicable ta statewide J statutory initiatives. · · ;"I ~ .. . • ~ SECTION 4. ASSESSMENT AND PROPERTY RELATED FEE REFORM • '° 1-:t: _,,,.,,,:.~ ~;,~~ ~ ,-,. ,~ Artida .xtdo tf the Catifomia Ccnstitution fs~ereb~lia~ · 1 . J A r-t i c.. I e.. XI \ \ n C... SEC~id'Jp6caiia,. _ G.otWittmanding anv other provision of law, the provisions of this \mete. shall a.,ipty tD ell ~. faas .and eharg~whether imposed pursuant to state "' _i DRAFT J l \\..,;e_..__ Right to Vote an Taxes Act Page 3 · muns or locaf government charter aurhaiity. Nothing in this \rt1cle or Artjcfe ~ shall be construed to: ~ i (a) .Jlrovide any new authority to any agency ta impose a tax, assessme.nt, fee,or cnarg~ (1) .,. -~ (b) -1.ffect existing laws relating to the imposition of 1e9$ or charges as a candition of pror,eny development@f (!) i Cct affect existing laws relating to the imposition of timber yield 1aXSS. ,.J.· ' · ~ ,()l,AIIV--: lf"l,d..(,(,'1\} tJ7 . . . '. if:o) vf ,J_--· - ·" SEC. 2. Definition~ ~ J..,., ff~ ¼ used in this article: i ~ Cal • A~• ~ any local government as defined in I nicleXllk. ./ \ \ Cecno!!... 1 jbJ. v ~ (bJ ~ (C) • Assessment" means any levy or charge upon real property by an agency for a special benefit conferred upon the real property. •Assessment• includes, but is not limited ta, •special assessment.• •benefit assessment,• "maintenance assessment• and •s,eciaJ assessment tax.• •capit.al cost• means u,e cost of acquisition, installation, conmuction, reconswction.,or repJacement of a permanent public improvement by an agency. ~ Cd) •District" means an area determined by an agency to contain all parcels which wm receive a special benefit from a proposed pubUc: improvement or property--r&Jated service. ~ (aJ . ~ (f) •Fee• or •charge• means any levy Other tt,an an ad valorem tax, a speciaJ taX1or an assessment. imposed by an agency upon a parcel or upan a person as an incident of propertv ownership, inc:luding~r fee• or chargef far a property refated service. _ a. •Maintenance and operation expenses• means the cast of refit, repair,~ rehaaitiiation, fueJ, power, electrical current. care, and ~n necessary to property operate and maintain a permanent public improvement. DRAFT .,..,,., 08/07/96 14:00 Right to Vote on Taxes Act Page 4 i (g) f\X (h) tflm · •Property owner..hip• shall be deemed t0 include tenancies of real propertv where tenanrs are directly ·Jiable to pay the assessment, fee, or charge in question. •property-related service• means a public service hav,ng a direct relationship ta property awnt!rship. •special benefit" mea~ a particular and distinct benefit o_ver and above general benefits conferred on real prcpeny located in the district or to tna public·at large. General enhancement of prapeny vaJue does not constitute •st,ecial benefit." ~ SEC. 3. Prap911Y Tuas, Aaassments, Faes and Charges l.imm!d. !) <"ta> No taX. assessment, fee;or charge shall be assessed by any agency upon · any parcaJ cf property or upon any person as an incidem of property ownership e.xcern: ,• .,. V ~ (1) The ad vaiorem property' taX imposed pursuant to Article XIII and .,. 1 I J .JIii Article XII~ atffiie Ee,utittJlieii. . ( ~1 '"'r I{< (2) ~ (3) ~(4) ~ y ' J . Any -ng a two-thirds vote pursuant to Article ;:, XJl~i=lie~~m,tflis Sen___,, _ Assessmems as provided by this \mete. Fees or charges for property ~ated services-as provided by this \rtic1e. ~ (bl For purposes of this ~rticle, fees far the provision of eJecrricaJ or gas service shall not be deemed charges or fees imposed as an incident of property ownership. ~ SEC •. 4. Pracadura and -.nanu far M Asmsmana. 'D <"Ta') An agency which Pn:JPases ta levy an assessment shall identify all pan:a&s which wiD have a .special ben~ conferred upon them and upon which an assessment wm be imposed. The proportionate special benefit derived by each identified parcel shall be determined in relationsj,Jp ta me entirety of the capital eost of a . public improveme~e maintenance and ape,.rion ex~ensea of ~ public if'tlProve~,Pr 4g' the caSt of the property related \ .Jl.-- DRAFT 5- 11v • ....,.....__ Right to Vote on Taxes Act Page 5 ~(bJ . f¥ (C) ~ (di service being provided. N~ -assec.,,.,1An1' shal e imposed on any parcel which exceeds the an le co of the proportional special benefit conferred on ~c-::::,o,., I. ly ss:,eciaf benefits are assessable, and an agency,..______;:.-sep the general benefits · from the special benefits rred o a parcel. Parcels within a district that are owned r used anv agency, ttle State of California or tne Un· States shaJI not be exemsn from assessment unless u, age_!l~ demonstrate by clear and a:onvincing evidence· at ~ pubUcly .owned parcels in fact receive no special be efit. .,, All assessmems@ be supported by a deiarled engineer's report / prepared by a registered professional engineer certified by the State of Califamia. ~ The amount of lhe praposed assessment r each identified parcel shall be calculated and the record ow er of each parcel shall be given written notice by mail of the p posed assessm~ the total amount thereof chargeabz· to entire district, the amo~~ ,,,,. chargeable to the owner's pa · ar parceJ, the duration ot~w;D ~ V payments, the reason far u assessment and the basis upon which the amount of the proposed assessment was d31culated, together with the date, time. and location of a public hearing on the proposed assessment. Each notice shall also indude. in a conspicuous place thereon, a summary of the-procedures applicable ta the c:ompletion, retum,.and tabulation of the ballots required pursuant to subdivision :,(dl, including a discJosure statement that the existence of a .majority protest. as defined in subdivision (e), will resuJt in the assessment not being imposed. - ..J-e-inuoid" ~. ,)IJ'61Vh.\~ (.,C) ~ . • :.- Each ed to owners af · · within the district ~ · · es the ency's address for receipt of <@v sum allot on::9 com d by any owner .;,, ,eceivbig@aJ>notice wherebySCh sum, wner may indicate his " ar her name, reasonable idemific:ation at the parceW1ffdtsupport ar 1 ' opposition ta the proposed assessment. l '-\II,~ or "er The agency shall condue! ~ public hearing upan the proposed assessment not tess than 45 days attar mailing the notice of the proposed asse55"1ent to record owners of each identified parcel. At the public: hearing. 1he agenGY shall consider all .ProtestS against the proposed assessment and tabulate the ballots. The agency shaJJ. not impose an asse5$ment if there is ·a majoritv DRAFT Right ·10 Vote on Taxes Al:t Page 6 promst. A majority proteSt exists if, upon the conclusion of the hearing, baHots submitted in opposition w u:,e assessment exceed the ballots submitted in favor of the assessment. In tabulating the ballotS. the ballots Shall be weighted according to the proportional financial obligation of me affected property. ~ (fl In any legaJ action c:antesting the validity of any assessment. the burden shall be on thit agency ~ demonsinne that the property or propenieS in question receive a special benefit over and above the beneffls conferred on the public at large and that the amount of any contested assessment is proponianaJ to, and no greater than, the benefits conferred on the property or properties. in question. ~(gJ Because onJy special benefits are assessable, electors residing within the district who do not awn property within the district shall not be deemed under this Constitution to have been deprived of u,e right to vote fer any assessment. If a coun determines that the Constitution of the United States or other federaJ law requires athmwise, the assessrnent shall not be imposed unless approved ll\,,,..I• ~.._.._ by a two-thirds vote of the electarate in the district in addition to being approved by the property owners a~ reqµired by SeoaeA r '1(el. -:.1.> \:, d.i-, i'5 iOn l)l,P:ff;:[;if:;:}jbaf r:ry ~SEC. 5. Effective Daur;; 0 ------.: <p""'"ursuant I the provisions of this\,ticte shall become effective the day after the election unlea otherwise provided. Beginning July 1, 1997, all existing, new1 or increased assessments shall comply with ttlis / ~-NotWithstanding the foregoing, the following assessments existing on the effec:tiva date of this~cie shall be exempt tram the procedures arid appraval process set forttl in Section 4: .-, . . · .. \ ~ .... ~(a> .A,nv assessment impo~ed excJusiveJy to finance the capitat casts ar maintenance and operation expenses for sidewalk:s, streets, sewers, water# flood c:om:rol, drainage sniems or vecmr c:amrol. SUbsequent inaeas in suc:n assessments ·shall be subject ta tne procedures and approval process set forth in Section ~ (:) ..Anv assessment imposed pursuant to a petition signed by the -persons owning all of the parcels subject to the assessmem at the time the assessment is initially imposed. Subsequent increases in ~ · suJ:b· assessmenc stlall be subiect ta the pn,cedures and approval · pr~ :&et farth in Sec:tian ~ (:) ~-. ~ . . ~ DRAFT ,", ..... --- · . ... . Right to Vote an Taxes Act o· Page 7 ~ Cd) a ..!PY assessment-the procee of which are exclusively used to repay bonded indebtec:ln of which me failure to · pay would violate the ~ct lrnpa· ent ClaUS8' ..ot. the Constitution of the ~ . United States. · en o © .LJ ---·.J , '--. :ai'Jn6f& .:-L i.nv. ~essment which p~ous,V rece~ed ma· rity ~ter approvai. -,rom the voterS voting ,n an election the ,uue of the . assessment. Subseq\lent increases in assessmems shall be ,,/ subject to the procedures and approval process set forth in Section 4. ~ SEC. 6. Praper1y Rala1ed Feu and ciiarges. 'C Cfa.1 Procedures for New or Increased Fees and Charges. An agency shall follow the procedures pursuant to this section in imposing or increasing ✓ ~n~ fee or charge as. defined pursua~ to this \rticht}ncluding, .but "C?t hmtted to, the f0llaW1ng: •,t .~· u,) ~ (1) ~(2) The parcels upon which a fee or charge is proposed for imposition shall be identified. The amount of the fee or charge proposed to be imposed upon each parceJ shall be caJcuJated: The agency shaJI provide written notice by maiJ of the proposed fee or charge to the teCDrd owner of each identified parcel upon which me fee or charge is proposed for imposition, tne amount of-the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed tee or Charge was calculated. the reascn for the fee or charge. together with the daie. time, and location of a public; hearing on the proposed fee or charge. · The agency sh;JJI canduet a public: hearing upon the proposed fee or cnarge not las than 45 dan after mailing the notice of the proposed fee or charge to the record owners of each identified parcel upan which the fee or charge is propgsed for imposition. At the public hearing. the agency shall cansider au protests against the praposed fee or charge. If written pnnests against the proposed fee or charge are presented by a majority of owners of the ·1dentified pan:e1S, the agencv shall not impose the fee or charge .. Requiremenis far &isting, Naw or -Increased Fees and Charges. A fee or c:harge shall not be extended, impased,1or increased by any agency unless it meets all of the following requirements: ,..,.. -✓ DRAFT g 08/07/96 14:02 1 1-<.J·-.... - Right to Vote on Taxes Act Page 8 ~ (3) ~ (4) Revenues derived from the fee or charge shall not exceed the funds required to provide the propeny related service. Aevenues derived frcm ltle fee or charge shall not be used for -anv purpose other 1t1an that for which tne fee ar charge was imposed. The amount of a fee or charge imposed upon any parceJ or person ·as an inc:ident of property ownership shall not exceed the. proparuonal cost of the service attributable to the parceJ. No fee or charge may be imposed for a service unless that service is actWJUy used by, or immediateJv available to, the owner of th~ propeny in question. Fees or charges based on potemial or future use of a service are not permitted. Standby charges. whether characterized as charges or assessments, shall be classified as assessmems an( shall not be imposed without compliance with Section 4-<qf_jj_i~V#cl)~ ~ {SJ No fee or charge may be imposed tar general governmemal services including, but not limited to, police .. fire, ambulance or library servic:es,;Where tt,e servica is available to the public at large in subsiam:ialJy the same manner as it is to propeny owners. Relianee by an agency on any parcel mapJncludlng~imited ta. / an assessor's parcel map, may be considered a Jignificant facrar in ✓- determining whether a fee or charge is imposed as ~"cident of property ownership· for purpasa of 1his ~de. In any legal action conte$ting the validitV of a fee or charge, the burden shall be on the agency to demonstrate compliance with this )\rticle. ~ (cJ Voter ApprovaJ for New ar Increased Fees and Charges. Except for fees ~ (dJ er charges for sewer, wmer, and refuse callecnan services .• no prop~, L .K . related fee or charge snail be ims,osed or increased unless and until~ 1J'IA1 .,,,~ fee or charge is submitted and approved by a majority vom of the propertY owners of the property subject to the fee or charge or, at the option of the agency. by a two-thirds vote of the etec:mrate residing in me affeded area. The mection shaU be conducted not tess man 45 d&V$ after the pubJic hearing. An agency may adopt procedures similar to those tar increases in assessmems in the conduct of e!ections under this subdivision. Beginning July 1, 1997, all fees ar charges shall -comply witb this ~gn. - DRAFT ) .. t t \. t \ 14:03 Right to Vote on Taxes Act Page 9 ~SECTJQN-S. UBERAL CONSTRUCTION. The ~revisions of this~ shall be fiberally cansrrued to effer:tUate its p~rposes of limiting local government revenue and enhancing taxpayer consent. ~ SiCTJON 6. SEVERASJUTY~ If any provision of this \ctt or part thereof, is for any reason held to be invalid or uncanstitutional, me remaining. sections shall not be ~~-but shall remain in full force and effect, and to this end the provisions af this '\'-L are severable. l'IU• -..J.L'- DRAFT -/0 . September 11, 1996 '""",....,c,.ic.,•. 1 i Consideration of Pay-Back Period Calculation Methodology for Action ,. l Capital Projects · . _: Consideration of Comprehensive Annual Financial Report for the Action / Year Ended June 30, 1996 !1--------------------------+---------11 ; Consideration of Revisions to Purchasing Resolution Consideration of Broker-of-Record for Property and Personnel Insurance Consideration of Meet-and-Confer Process and Status .. .,, Consideration of First Quarter Investment Program Update ···· .. ::.:,::!:!= Consideration of First Quarter Training Program Update .... ,.,, Consideration of First Quarter Budget & Performance Review Consideration of Meet-and-Confer Process and Status Consideration of Renegotiated MOUs Consideration of Progress Report on Implementation of IT Audit .. Recommendations Consideration of Progress Report on Removal of Obsolete :: Inventory . Consideration of Results of Broadbanding Study J:\WPDOC\FINICRANEIFPC.MTGIFAHR.96\SEPT .AlnCAL9.96 Action Action Information Only Action Information Only Information Only Information Only Information Only Action Information Information Information Only