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Home My WebLink About1997-07-09,. ~ . .:0 In the Oflice of the Secret, County Sanitation Oistrie\(1,., .! No(s) lpx a S. &? , ?, JI,, JJ,1-/,Y !L:311997 DRAFT County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley, CA 92728-8127 Telephone: (714) 962-2411 Bi/ ~t: MINUTES OF FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE Wednesday. July 9, 1997. 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 Wednesday, July 9, 1997, at 5:30 p.m., at the Districts' Administrative Offices. ROLL CALL The roll was called and a quorum declared present, as follows: Commjttee Directors Present: George Brown, Chair John J. Collins, Joint Chair Jan Debay Barry Denes Norman Z. Eckenrode Thomas R. Saltarelli Mark Schwing Peer Swan, Vice Joint Chair Committee Directors Absent : Mark A. Murphy William G. Steiner Other Directors Present: None APPOINTMENT OF A CHAIR PRO TEM No appointment was necessary. PUBLIC COMMENTS No comments were made. APPROVAL OF MINUTES Staff Present: Donald F. McIntyre, General Manager Judith A. Wilson, Assistant General Manager Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications Chris Dahl, Information Technology Manager Barbara Collins, Senior Administrative Analyst Linda Eisman, Training Manager Lisa Lorey, Human Resources Manager Terri Josway, Safety & Emergency Response Manager Dan Tunnicliff, Safety & Emergency Response Supvr. Steve Kozak, Financial Manager Mike White, Controller Lenora Crane, Committee Secretary Others Present: Tom Woodruff, General Counsel It was moved, seconded and duly carried to approve the draft minutes of the June 11, 1997 meeting of the Finance, Administration and Human Resources Committee. Minutes of Finance, Admh hd Human Resources Committee Page 2 July 9, 1997 REPORT OF THE COMMITTEE CHAIR The Committee Chair had no report. REPORT OF THE GENERAL MANAGER j' r , , , . , ;-_::.;lf. ·. ~. ,·:; !~ l •. /1:;·:~::.~11 ) ·P);;f ::1"i~,:? •i:·i•.:C·,..: • General Manager Don McIntyre reported that he sent a fax to the Directors today regarding AB 769 -Consolidation of the Districts. He advised that the bill was signed by the Governor today. There will be a meeting of the Executive Committee in September to approve the LAFCO plan. Director Collins noted that the bill is not effective until January. The hearing process for LAFCO will be after January 1, 1998. REPORT OF ASSISTANT GENERAL MANAGER-ADMINISTRATI.ON Assistant General Manager Judy Wilson had no report. REPORT OF ASSISTANT GENERAL MANAGER-OPERATIONS The Assistant General Manager of Operations had no report. REPORT OF THE DIRECTOR OF FINANCE • Finance Director Gary Streed advised the Committee that the monthly Treasurer's Report was distributed prior to the meeting in accordance with policy. Total cash and investments total $390 Million, including deferred compensation, and we are in compliance with all of the Investment Policy guidelines. • Tax apportionments will be started in November. • Since the Agenda was mailed, COP rates have gone down. Interest rates are one half of what they were when the report was mailed. They were 4% at the mailing and are now at 2%. 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 Administration had no report. REPORT OF THE DIRECTOR OF COMMUNICATIONS • Communications Director Michelle Tuchman reported that since word has gotten out that AB 769 has been signed, we received phone calls from two reporters from the Register and one reporter from the Times. The Times reporter spoke to Director Collins and the other two reporters from the Register have spoken to Judy Wilson. Michelle anticipates there will be articles in the "Metro" sections of either or both of those two newspapers tomorrow. Minutes of Finance, Adn r-~nd Human Resources Committee Page 3 July 9, 1997 • Michelle reported that some of her staff has spent the day setting up the Districts' booth at the Orange County Fair which opens on Friday and will run from the 11th through the 27th. She invited those Directors who can find the time to stop by building number 8 at the Fair. She also advised that tickets can be picked up at her office. Metropolitan Water District of Orange County (MWDOC) will be helping staff the booth and has donated an ultra low-flush toilet for the display model. The public will be given information about the low-flush toilet exchange program at the Fair. A 4' x 6' stylized model of all of the Districts' treatment processes has been set up. REPORT OF GENERAL COUNSEL General Counsel had no report. CONSENT CALENDAR ITEMS (1 -7) 1. FAHR97-45: 2. FAHR97-46: 3. FAHR97-47: 4. FAHR97-48: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF JUNE 1997 (All Districts): The Treasurer's Report was handed out at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. RECOMMENDED ACTION: Receive and file Treasurer's Report for the month of June 1997 and forward to the Joint Boards. CERTIFICATES OF PARTICIPATION (COP) REPORT (All Districts): RECOMMENDED ACTION: Receive and file this information-only item. EMPLOYMENT STATUS REPORT (All Districts): Total head count at the Districts as of June 19, 1997 RECOMM~NDED ACTION: Receive and file this information-only item. ANNUAL REVIEW OF THE DISTRICTS' INVESTMENT POLICY STATEMENT AND DELEGATION OF INVESTMENT AUTHORITY TO THE DIRECTOR OF FINANCE/TREASURER (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt Resolution No. 97-XX. Minutes of Finance, Adm,. lnd Human Resources Committee Page 4 July 9, 1997 5. FAHR97-49: 6. FAHR97-50: DECLARATION OF DISTRICTS' OFFICIAL INTENT TO REIMBURSE THE DISTRICTS' EXISTING CAPITAL RESERVE FUNDS FOR CERTAIN EXPENDITURES MADE IN ADVANCE OF, AND IN ANTICIPATION OF, CAPITAL IMPROVEMENT EXPENDITURES FROM PROCEEDS OF A FUTURE INDEBTEDNESS ISSUE (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joints Boards of Directors adopt Resolution No. 97-XX. 1997-98 FINANCIAL INFORMATION SOFTWARE UPDATE AND SOFTWARE MAINTENANCE AGREEMENT WITH THE DISTRICTS' FINANCIAL INFORMATION SOFTWARE VENDOR, J.D. EDWARDS, IN THE AMOUNT OF $55,384.87 (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration, and Human Resources Committee accept the 1997-98 financial information software update and software maintenance agreement with the Districts' financial information vendor, J.D. Edwards, in the amount of $55,384.87, and recommend approval by the Joint Boards at the July 30, 1997 meeting. • Director Swan requested that staff include in the COP report a chart that shows the aggregates of each of the remarketing agents at the end of the month. They should be pretty close, he noted. This will allow the Committee the opportunity to compare the remarketing agents' performance at the end of the month. MOTION: A motion was made, seconded and unanimously carried to approve the recommended actions for items specified as 1 through 6 under "Consent Calendar." ACTION ITEMS (Nos. 7 -9) 7. FAHR97-51: FINANCIAL ASSISTANCE PROGRAM FOR PURCHASE OF COMPUTER EQUIPMENT (All Districts): COMMITTEE DISCUSSION: Barbara Collins, Senior Administrative Analyst, GSA, advised that a computer purchase assistance program will allow Districts employees the opportunity to work with a computer at home to enhance their computer literacy and skills and increase their cross- training capabilities. Barbara advised that a recent survey of 450 cities, with responses from 218 of those agencies, showed 40.4% of the respondent cities already have some type of financial assistance programs; 82% offer a program at no interest; 84% have programs with 24-month or more pay-back periods. A survey of cities and special districts within the CSDOC Districts showed 30.4% of the cities have computer purchase assistance programs, 80% of the water districts have programs, with the sanitary sewer districts having none. A survey of sanitation districts in California and Nevada indicated that 18.2% of those districts have programs. ,-, Minutes of Finance, Adn ~nd Human Resources Committee Page 5 /~ ) July 9, 1997 8. FAHR97-52: In response to Committee questions regarding computer purchases, credit worthiness, priority lists, and loan repayments, staff advised that an employee would need to purchase software, a monitor and a printer to properly function with the computer. Monitors and printers have become relatively inexpensive. Any equipment to be purchased with the loan money must first be approved by Chris Dahl, Information Technology Manager. The loan must be paid through payroll deductions over 24 months. The employee is to make a 10% down payment on computer purchases. If an employee leaves the Districts, the loan must be paid off by deductions from the employee's last paycheck and using accumulated leave, if necessary. The maximum loan amount per employee will be $3,000. If the aggregate maximum loan fund is expended, a waiting list will be established until the fund is replenished through payroll deductions. The Irvine Ranch Water Districts' program will be our model. The program will initially be established on a first come, first serve basis. However, adjustments may be made later, if it is necessary to establish a priority list. During discussion, the Directors agreed such a program would be of enormous benefit to the Districts by enhancing the skills of its employees and creating a more efficient work force. Prior to the final motion, several motions were made and failed. MOTION: A motion was moved, seconded, and approved with 5 ayes and 2 nays to recommend that the Joint Boards establish a computer financial assistance program for Districts' employees with the following terms: • Maximum loan of $3,000 • 10% down payment • 24 months repayment period • Interest rate of 5% per year • Aggregate maximum loan fund of $150,000 • Equipment purchased must be compatible with Districts' equipment SEWER SERVICE CHARGES-PROPOSITION 218 (All Districts) COMMITTEE DISCUSSION: Gary Streed advised that the County Tax Collector collects the Districts' sewer service fees as a separate line item on the property tax bill. Since this is a special assessment, the County has requested that the Districts sign a certificate that indemnifies and holds the County harmless to any challenges based upon the provisions of Proposition 218. General Counsel Tom Woodruff informed the Committee that he received a faxed memo yesterday from the County Auditor which was sent to cities, schools and special districts indicating that he has backed off, on the advise of County Counsel, of his original request. The County Auditor does, however, have a smaller certificate which he is asking the Joint Chair to sign indicating that the assessments have been adopted in accordance with law and are legal and valid. Mr. Woodruff advised he is concerned that they are asking the Joint Chair to certify as to a matter of Minutes of Finance, Admi. .hd Human Resources Committee Page6 July 9, 1997 9. FAHR97-53: law. This is putting the Directors in an impossible position. Mr. Woodruff felt that this request probably will also be withdrawn, since many of the other government agencies will not be supportive of it. MOTION: It was moved, seconded, and duly carried to refer this item to the Steering Committee at their meeting of July 30, 1997. AUTHORIZE STAFF TO NEGOTIATE AN AGREEMENT WITH R. W. BECK TO DEVELOP ASSUMPTIONS AND STRATEGIES TO IMPLEMENT A REPLACEMENT FUND FOR FIXED ASSETS FOR AN AMOUNT NOT TO EXCEED $75,000 (All Districts) COMMITTEE DISCUSSION: Mr. Streed advised that during the user fee and budget processes, several Directors requested a formal review of the Districts' accumulated funds policies. R. W. Beck is a firm that has experience in this area, they know a lot about Orange County, they know the soil conditions, earthquake faults and political conditions. R. W. Beck recently completed a model for the Irvine Ranch Water District. A firm proposal can be negotiated later this month after they complete a site visit to review records. Mr. Streed advised that initial discussions indicate the project can be completed by September 1997 at a cost not to exceed $75,000. Director Swan advised that he recommended this firm highly. They are based in Seattle. They did an extensive job for the Irvine Ranch Water District. Its a computer model which allows all kinds of variables to be plotted. Director Eckenrode questioned if equipment replacement would be included in this model and staff indicated it would be. Staff advised annual depreciation is about 3% for assets in the ground. We depreciate, but do not fund the depreciation. This program will clear up misconceptions that the public and media may have regarding the Districts' accumulated fund balances. Judy Wilson announced that the reserves study is being moved to the October F AHR Committee meeting in order to allow time for the study to be completed in September. MOTION: It was moved, seconded and duly carried to authorize staff to negotiate an agreement with R. W. Beck to develop assumptions and strategies to implement a Replacement Fund for fixed assets for an amount not to exceed $75,000. • Minutes of Finance, Adrr, ~nd Human Resources Committee l Page 7 July 9, 1997 INFORMATIONAL PRESENTATIONS 10. SAFETY AND EMERGENCY RESPONSE STATUS REPORT (All Districts) COMMITTEE DISCUSSION: Dan Tunnicliff advised that since fiscal year 1995-96, the Safety and Emergency Response Division has been working on three critical programs: 1) The Integrated Emergency Response Program, which includes ~pecific training for . emergency response personnel. Dan advised that the Districts have been conducting table top exercises, which are classroom responses to specific emergency scenarios, since February. Functional exercises which are specific activations of components of the IERP are in the planning phase; 2) The Industrial Hygiene Monitoring Program which looks at hazards in the workplace; and 3) The Hazardous Energy Control Procedures Needs Assessment Program which is to ensure that employees are protected from stored energy such as electrical, hydraulic, pneumatic and mechanical energy during maintenance and repair. Dan gave a status report and slide presentation on each of these critical programs. Mike Peterman, Human Resources Director, advised the Committee that the work plan for this fiscal year for the Safety and Emergency Response Division will not only include table top exercises, but requires participation in full-scale exercises, particularly concerning critical incidents, with local emergency response agencies. Terri Josway, Safety & Emergency Response Manager, exhibited the Districts' Emergency Response Plan and advised the Directors that copies are available upon request. CLOSED SESSION The Chair reported the need for a closed session, as authorized by Government Code Sections 54957.6, to discuss and consider the item specified under "Closed Session" as Item 11 (a) on the published Agenda. The Committee convened in closed session at 6:20 p.m. At 6:42 p.m., the Committee reconvened in regular session. Confidential Minutes of the Closed Session held by the Committee have been prepared in accordance with California Government Code Section 549057.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. 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. Minutes of Finance, Admi. Jnd Human Resources Committee 1 Page 8 July 9, 1997 MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for Wednesday, September 10, 1997, at 5:30 p.m. ADJOURNMENT The meeting was adjourned at 6:45 p.m. Submitted by: ~ ~ Finance, Administration and Human Resources Committee Secretary H:\WP .DTA\FIN\221 0\CRANE\FAHR\FAHR.97\JUL Y\7MIN.97 STA TE 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 July 9, 1997, was duly posted for public inspection in the main lobby of the Districts' offices on July 2, 1997. IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of July 1997. ach of the Boards of Directors of County , 2, 3, 5, 6, 7, 11, 13 & 14 of Orange Posted: » ,;2_ , 1997.//,'80 8/P.M. By:~~ ignature H :\WP .DTA\FIN\221 O\CRAN E\FAHR\FAHR.97\J UL Y\CERTP007 .97 July 2, 1997 DISTRIBUTION FAHR COMMITTEE MEETING PACKAGE Full Agenda Package Committee 15 & Mailing List Donald F. McIntyre 1 Blake P. Anderson 1 Judith A. Wilson 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 Terri Josway 1 Dan Tunnicliff (H.R.) 1 Nancy Wheatley 1 Mike White 1 Laurie Arnold 1 Gail Cain 1 Bob Geggie 1 Corina Chaudhry 1 Lenora Crane 1 Barbara Collins 1 File 1 Extras 3 Notices and Agenda 13 Posting 1 Jean Tappan (include Mins) 1 Angela Holden 1 Frankie Woodside 1 Patricia Magnante 1 Janet Gray 1 Fawn Elizondo 1 Debra Lecuna 1 Guard Shack (Ed Hodges) 1 Extras 3 (3-hole punched) (3-hole punched) (3-hole punched) (3-hole punched) Ron Zenk, Dist. 14 Treasurer's Report Only le H:\WP .DTA \FIN\221 O\CRAN E\FAH R\DISTLST .97 phone: (7141 962-2411 mailing addrei:;s: P.O. Box 8127 FountBJr't Valley, CA 92728-81 27 street,address: 10844 Bhs Avenue Founta1n Valley, CA 9270&7018 Member Agencies • Cities Anaheim Brea Buena PeBrk Cypress Foun/ialn Valley Fuller-con Hunl:ingr;on Beach Irvine Ls Habra La Palme Las Alamitos Newport Beach Orange Pll;laentls Santa Ana Ssal Baaoh Scarrt:on Tusttn VIiia Park Yorba L;inda Coun!ly of Orange Sanitary Oistrict,s Costa Mesa Garden Grave Midway City Watler liJlstricts Irvine Ranch ~ '\ COUNTY "-)NITATION DISTRICTS OF •Rh .. GE COUNTY, CALIFORNIA July 2, 1997 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. JULY 9. 1997 -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, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE TENTATIVELY SCHEDULED MEETING DATES FAHR Committee Joint Board Month Meetings Meetings July July 9, 1997 July 30, 1997 August NONE SCHEDULED August 27, 1997 September September 10, 1997 September 24, 1997 October October 8, 1997 October 22, 1997 November November 12, 1997 November 19, 1997 December December 10, 1997 December 17, 1997 January January 14, 1998 January 28, 1998 February February 11, 1998 February 25, 1998 March March 11 , 1998 March 25, 1998 April April 8, 1998 April 22, 1998 May May 13, 1998 May 27, 1998 June June 10, 1998 June 24, 1998 July July 8, 1998 July 29, 1998 AGENDA REGULAR MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE ROLL CALL COUNTY SANITATION DISTRICTS NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA WEDNESDAY, JULY 9, 1997 AT 5:30 P.M. ADMINISTRATIVE OFFICES 10844 Ellis Avenue Fountain Valley, California 92708 APPOINTMENT GF 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). July 9, 1997 RECEIVE. FILE AND APPROVE MINUTES OF PREV.IOUS MEETING Recommended Action: Receive, file and approve draft minutes of the June 11, 1997, Finance, Administration and Human Resources Committee meetings. REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF ASSIST~NT GENER;A,l MANAGER -ADMINISTRATION REPORT o 'F 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 ()F COMMUNICATIONS REPORT OF GENERAL COUNSEL CONSENT CALENDAR ITEMS ................................................................................ -................. --, ________ -············••·••·· .......................................................... ., .... . All matters placed on the consent calendar are considered as not requiring discussion or further explanation and unless any particular item is requested to be removed from the consent calendar by a Director, staff member or member of the public in attendance, there will be no separate discussion of these items. All items on the consent calendar will be enacted by one action approving all motions, and casting a unanimous ballot for resolutions included on the consent calendar. All items removed from the consent calendar shall be considered in the regular order of business. Members of the public who wish to remove an item from the consent calendar shall, upon recognition by the chair, state their name, address and designate by number the item to be removed from the consent calendar. The Chair will determine if any items are to be deleted from the consent calendar. ~-····················-·························•· ... · .... -.......................................... _ ......... -------·-.. -.. -..................................... _ ........ __ . ____ ............... --.. --.... -.............. _ ..................... , 1. FAHR97-45: RECEIVE ANIJ> Fil£ TREASURER'S REPORT FOR THE MONTH OF JUNE 1997 (All Districts): The June Treasurer's Report will be handed out at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. RECOMMENDED ACTION: Receive and file Treasurer's Report for the month of June 1997 and forward to the Joint Boards. 2 , July 9, 1997 CONSENT CALENDAR (Continued) 2. FAHR97-46: CERTIFICATES 'OF PARTICIPATION (COP) REPORT (All Districts): RECOMMENDED ACTION: Receive and file this information-only item. 3. FAHR97-47: EMPLOYMENT STATUS REPORT (All Districts): Total head count at the Districts as of June 19, 1997. RECOMMENDED ACTION: Receive and file this information-only item. 4. FAHR97-48: ANNUAL REVIEW OF THE DISTRICTS'· INVESTMENT POLICY STATEMENT AND DELEGATION OF IN1/E-STMENT AUTH0RITY TO THE DIRECTOR OF FINANCE/TREASURER (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt Resolution No. 97-XX. 5. FAHR97-49: DECLARATl(i)N OF DISTRICTS' CllPFICIAL IN:rEN:f TO REIMBURSE THE DISTRICTS' EXISTING CAPITAL RESERVE FUNDS i;:oR CERTAIN EXPENDITURES MADE 'IN ADVANCE OF. AND fN ANTICIPATION OF, CAPITAL IMPROVEMENT EXPENDITURES FROM PHOCEEDS OF A FU'f..URE INDEBTEDNESS ISSUE (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt Resolution No. 97-XX. 6. FAHR97-50: 1997-.~8 Fl'NANClt\L INFORMATION SOFTWARE UPDATE ~ND SOFTWARE MAINTENANCE AGR,EEMENT WITH THE DISTRICTS' FINANCIAL INFORMATION SOFTWARE-VENDOR. J.D. EDWARDS, IN THE AMOUNT OF $55,384.87 (All Districts) RECOMMENDED ACTION: Staff recommends that the Finance, Administration, and Human Resources Committee accept the 1997-98 financial information software update and software maintenance agreement with the Districts' financial information software vendor, J.D. Edwards, in the amount of $55,384.87, and recommend approval by the Joint Boards at the July 30, 1997 meeting. END OF CONSENT CALENDAR Consideration of items deleted from Consent Calendar, if any. Consideration of one motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same. 3 July 9, 1997 ACTION ITEMS 7. FAHR97-51: FIMANClAb. ASSISTANCfi PR'OGRAM FOR PURCHASE OF COMPUTER EQUIPMENT (All Districts): GSA staff will present information on cities/agencies offering computer assistance programs to employees. RECOMMENDED ACTION: Based upon the information in the attached report, approve a computer financial assistance program with the following terms: • Maximum loan of $3,000 • 10% down payment • 24 months repayment period • Interest rate of 5% • Aggregate maximum loan fund of $150,000 (Barbara Collins -15 minutes) 8. FAHR97-52: SEWEg SERVICE CHARGES-PROPOSl'TION 218, (All Districts) RECOMMENDED ACTION: Authorize staff to execute the Proposition 218 Certification as required by the County of Orange. (Gary Streed/Tom Woodruff -10 minutes) 9. FAHR97-53: AUTHORIZE STAFF TO N~GOTIATE Af'.J AGREEMENT WITH R. W. BECK TO DEVELOP ASSUMPTIOt.-JS AND STRATEGrES "fO IMPLEMENT A REPLACEMENT FUND FOR FIXED. ASSETS F<DR AN AMOUNT NOT TO E~CEE0 $75,,000 (All Districts) RECOMMENDED ACTION: That the Directors authorize staff to negotiate an agreement with R. W. Beck to develop assumptions and strategies to implement a Replacement Fund for fixed assets for an amount not to exceed $75,000. (Gary Streed -5 minutes) INFORMATIONAL PRESENTATIONS 10. SAFETY AM) EM'ERGENCY eESPONSE PR0GRAM STA--rus REPORT (All Districts) RECOMMENDED ACTION: Information only. (Terri Josway/Dan Tunnicliff -5 minutes) 4 ., July 9, 1997 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 ............................................................................................................... . 11. Convene in closed session. (a) Confer with Districts' Negotiator re pending MOU Labor Negotiations (Government Code Section 54957.6). 12. Reconvene in regular session. 13. Consideration of action, if any, on matters considered in closed session. OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS. IF ANV MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTIONAND STAFF REPORT FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for September 10, 1997. NOTICETO 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. : I : Committee Chair: George Brown (310) 431-2185 I :Comm. Secretary: Lenora Crane (714) 962-2411, Ext 2501 I (714) 962-3954 (FAX) ! Asst Comm. Se.cretary: ................... Frankie Woodside ............ ..(714) 9t!2-2411 1• Ext. 3001 .......................................... . le H:\WP .DTAIFIN\2210\CRANEIFAHRIFAHR.97\JUL Y\AGENDA7.97 5 ROLL CALL FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE MEETING DATE: July 9, 1997 COMMITTEE MEMBERS GEORGE BROWN (Chair) .............................................•.... JOHN J. COLLINS (JC) .................•..................................... JAN DEBAY ................................................................. ·-······ BARRY DENES ...............................................•...•.•.•.....•..... NORMAN ECKENRODE ................................................... . MARK MURPHY .................................................................. . THOMAS SALTARELLI ..................................................... . MARK SCHWING ............................................................... . WILLIAM STEINER .......•...................................................... PEER SWAN (VJC) ............•................................................ STAFF DON MCINTYRE, General Manager ................................... . BLAKE ANDERSON, Asst. Gen'I. Mgr. -Ops .................... . JUDITH WILSON, Asst. Gen'I. Mgr. -Admin ...................... . TIME: 5:30 P .M. ADJOURN: 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, Contracts/Purchasing Manager ................ . LINDA EISMAN, Training Manager ..................................... . CHRIS DAHL, Information Technology Manager ................. . NICK ARHONTES, Maintenance Manager .......................... . TERRI JOSWAY, Safety & Emergency Response Mgr ...... . DAN TUNNICLIFF, Safety & Emergency Response Supvr. LISA LOREY, Human Resources Manager ....................... . BARBARA COLLINS, Senior Administrative Analyst... ....... . LENORA CRANE, Committee Secretary .......••..................... OTHERS TOM WOODRUFF, General Counsel .............................. . -----------································ -----------·••······························ c: Penny Kyle Debra Lecuna P.M. )> f i 1J ' 1J ::0 0 < )> r 0 .,, s: ' -' z C -I m en 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, June 11. 1997, 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 Wednesday, June 11, 1997, 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 Barry Denes Norman Z. Eckenrode Thomas R. Saltarelli Peer Swan, Vice Joint Chair Committee Directors Absent : Mark A. Murphy Mark Schwing William G. Steiner Other Directors Present: None Staff Present: Donald F. McIntyre, General Manager Judith A. Wilson, Assistant General Manager Ed Hodges, Director of General Services Admin. David Ludwin, Director of Engineering Bob Ooten, Director of Operations & Maintenance Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Chris Dahl, Information Technology Manager Marc Dubois, Contracts/Purchasing Manager Linda Eisman, Training Manager Steve Kozak, Financial Manager Mike White, Controller Corina Chaudhry, Executive Assistant II Lenora Crane, Committee Secretary Others Present: Tom Woodruff, General Counsel Barry Newton, Broadbanding Consultant APPOINTMENT OF A CHAIR PRO TEM No appointment was necessary. PUBLIC COMMENTS No comments were made. APPROVAL OF MINUTES It was moved, seconded and duly carried to approve the draft minutes of the May 14, 1997 meeting of the Finance, Administration and Human Resources Committee. Minutes of Finance, Admin. . 1d Human Resources Committee Page 2 June 11, 1997 REPORT OF THE COMMITTEE CHAIR The Committee Chair had no report. REPORT OF THE GENERAL MANAGER • General Manager Don McIntyre advised the Committee that at the PDC Committee meeting last Wednesday, Director Peer Swan had some questions regarding justifications for equipment requests contained in the proposed CORF budget. Copies of the justifications were distributed prior to the meeting for the Committee's review and are not included in the budget document because of their volume. • A special meeting of the OMTS Committee has been called for this Saturday, June 14, from 9:00 a.m. to 12:00 Noon, at the request of Director Wedaa. Director Wedaa wants to discuss some of his concerns dealing with performance measurements. The meeting has been noticed and everyone is encouraged to attend, if they can. Director Swan stated he spoke with Director Wedaa after the OMTS meeting last week and Director Wedaa is concerned with performance measurements, since they ultimately have an impact on budget in more general terms. REPORT OF ASSISTANT GENERAL MANAGER -ADMINISTRATION • Assistant General Manager Judy Wilson informed the Committee that a copy of the Districts' FY 97-98 Work Plan was placed before them for their review. The Work Plan is a companion piece of the budget. The Budget itself includes performance measures that really measure the day-to-day activities at the Plants, our basic tasks, and our main mission. The Work Plan is directed towards the seven critical goals and is organized by goals. It reflects what each department and division is doing to carry out those seven goals. We will be monitoring the Work Plan on a quarterly basis. • Judy Wilson also updated the Committee on the status of AB 769 (Baugh) dealing with the Districts' consolidation efforts. AB 769 should be before the State Local Government Committee on June 18. So far, there is no organized opposition and it is expected to be placed on the Committee's Consent Calendar. Our consultant will have a report to us on Monday of next week. Director Collins advised that he spoke to Assemblyman Scott Baugh and he indicated he expects no problem. Don McIntyre stated that the new Pringle Bill might cause some confusion in the minds of the Senators. The Pringle Bill deals with consolidation of special districts in South County. REPORT OF ASSISTANT GENERAL MANAGER -OPERATIONS The Assistant General Manager of Operations had no report. REPORT OF THE DIRECTOR OF FINANCE • Finance Director Gary Streed advised the Committee that the monthly Treasurer's Report was distributed prior to the meeting in accordance with policy. A new schedule has been added to the Treasurer's Report which includes yield calculations. Total cash and investments total ' Minutes of Finance, Adr Page 3 and Human Resources Committee June11,1997 $393 Million, including deferred compensation, and we are in compliance with all of the Investment Policy guidelines. • A copy of the slide presentation for the Budget was placed before each of the Committee members. • Regarding the two insurance items on the Consent Calendar, Mr. Streed stated that firm prices were received today. Both the property insurance and liability insurance costs came in a little lower than the not-to-exceed amounts contained in the AIT. There is about a $5,000 savings on the liability. We have been able to increase our earthquake coverage from $30 to $40 million and still reduce premium costs on the liability coverage by $100,000. In response to the Committee, Mr. Streed advised that the Districts' earthquake deductible is 5%. The increase in earthquake coverage will have some effect on required reserve balances, but it is not expected to be significant. Judy Wilson informed the Committee that a Reserves Study being conducted this summer will include a risk analysis of reserves set aside for self- insurance type activities. This study should be completed in September. 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 Administration had no report. REPORT OF THE DIRECTOR OF COMMUNICATIONS • Communications Director Michelle Tuchman reported that she received only one phone call as a result of the May 29 article in the Register regarding user fees. • As a part of the Districts' Outreach Program, our meeting rooms have been made available to outside groups such as COG. They have requested another meeting for June 19 in the Board Room. LAFCO has also requested the use of our facilities for an upcoming meeting. REPORT OF GENERAL COUNSEL General Counsel Tom Woodruff updated the Committee on the status of the disciplinary appeals process. The disciplinary appeals regarding terminations are drawing to a close, with just four more cases to go. No one has been ordered back to work. There are a few major hearings scheduled for disciplinary cases of lesser degrees which should last another 40 to 45 days. There is no indication that anyone has filed a suit. CONSENT CALENDAR ITEMS (1 -7) 1. FAHR97-34: RECEIVE AND FILE TREASURER'S REPORT FOR THE MONTH OF MAY 1997 (All Districts): The Mwy Treasurer's Report was handed out at the FAHR Committee meeting in accordance with the Board-approved Investment Policy, and in conformance to the Government Code requirement to have monthly reports reviewed within 30 days of month end. Minutes of Finance, Admin. . 1d Human Resources Committee Page 4 June 11, 1997 2. FAHR97-35: 3. FAHR97-36: 4. FAHR97-37: 5. FAHR97-38: 6. FAHR97-39: 7. FAHR97-40: RECOMMENDED ACTION: Receive and file Treasurer's Report for the month of May 1997 and forward to the Joint Boards. CERTIFICATES OF PARTICIPATION (COP} REPORT (All Districts}: RECOMMENDED ACTION: Receive and file this information-only item. EMPLOYMENT STATUS REPORT (All Districts): Total head count at the Districts as of May 19, 1997 RECOMMENDED ACTION: Receive and file this information-only item. ANNUAL RENEWAL OF THE DISTRICTS' ALL-RISK PROPERTY AND EARTHQUAKE INSURANCE PROGRAM FOR THE PERIOD JUNE 25, 1997, TO JUNE 25, 1998 (All Districts} RECOMMENDED ACTION: Renew the Districts' All Risk Property and Earthquake Insurance Program for the period June 25, 1997, to June 25, 1998, in an amount not to exceed $1,136,525 million. ANNUAL RENEWAL OF THE DISTRICTS' GENERAL LIABILITY AND EXCESS LIABILITY INSURANCE PROGRAM FOR THE PERIOD JULY 1, 1997, TO JULY 1, 1999 (All Districts} RECOMMENDED ACTION: Renew the Districts' General Liability and Excess Liability Insurance Program for the period July 1, 1997, to July 1, 1998, in an amount not to exceed $125,000; and 2) Renew the Districts' General Liability and Excess Liability Insurance Program for the period July 1, 1998 to July 1, 1999, in an amount not to exceed $120,000. SUMMARY REPORT ON TRAINING FOR THIRD-QUARTER FISCAL YEAR 1996-97 (All Districts} RECOMMENDED ACTION: Receive and file staff summary report on Training for Third-Quarter Fiscal Year 1996-97. STATUS REPORT ON IMPLEMENTATION OF THE SAFETY & RISK MANAGEMENT POLICY REVIEW COMMITTEE (All Districts) RECOMMENDED ACTION: Receive and file this information-only report. MOTION: A motion was made, seconded and unanimously carried to approve the recommended actions for items specified as 1 through 7 under "Consent Calendar." ACTION ITEMS (Nos. 8 -11) 8. FAHR97-41: STRATEGIC INFORMATION PLAN FOR INFORMATION TECHNOLOGY (All Districts} COMMITTEE DISCUSSION: Ed Hodges gave a brief overview of the Information Technology Division, and the decision to restructure the Division in 1996 to meet the needs of the Districts' internal customers. Minutes of Finance, Ad, Page 5 and Human Resources Committee June 11, 1997 9. FAHR97-42: Chris Dahl gave a slide presentation and reviewed the benchmark study conducted by the Gartner Group and their recommendations. Mr. Dahl reviewed the external and internal views of the SIP and its key issues. He also reviewed the long and short-term strategies and projects that need to be undertaken and implemented by the Districts to attain the goals identified in the Strategic Information Plan. In response to Committee questions, Mr. Dahl advised that the Districts were categorized as "best in costs" based on equipment costs, people costs and management and administrative costs when compared to industry and peer groups, and ubest in classn in some areas in the study, such as in help desk efficiency. He also advised that the Division's Work Plan is the tool which will be used to show how the SI P's critical goals will be achieved. During discussion Judy Wilson explained that in addition to using the Work Plan as a tool to monitor accomplishments of the division's critical goals, performance objectives are included in the division's budget and are also used as measurement tools. Performance objectives are very quantifiable and can be tracked regularly. There are three or four performance measures in the IT Division budget that will be tracked and monitored. Judy Wilson also advised the Directors that SIP Work Plan quarterly reports will be provided to the Committee and will address requests for more specific milestones, deliverables and budget tracking. MOTION: It was moved, seconded and duly carried to: 1.) Receive and file the Strategic Information Plan; and 2.) Authorize staff to proceed with the direction established within the Strategic Information Plan. PROPOSED FY 1997-98 JOINT WORKS OPERATING AND CAPITAL BUDGETS, AND 1997-98 INDIVIDUAL DISTRICTS' BUDGETS (All Districts) COMMITTEE DISCUSSION: Don McIntyre stated this is the best budget we have produced since he has been with the Districts, and that the process, the project and the product continue to improve. Gary Streed advised that each Director received a copy of the proposed budget in the mail. The justifications have been provided to the Committee, and budget assumptions have previously been reviewed by the FAHR Committee and the Steering Committee. The budgets do incorporate the recent user fee increases. Mr. Streed stated that the budgets have a requirement of $156 million, revenues of $136 million, and borrowing of $32 million. He briefly reviewed the Joint Operating Fund, Joint Works Capital budget, the Districts' Operating Budget, the Districts' Capital Improvement Program, Joint Operating Changes, Average Daily Flow, JO Cost Per Million Gallon, the 5-Year Staffing Plan, the Joint Works Capital Improvements, the District's Total Requirements, proposed New Borrowing/COP and Other Topics which included critical goals, long-term planning, multi-year user fee program, consolidation, accumulated funds and reserves, and staff purchasing authority. Minutes of Finance, Admin. ,d Human Resources Committee Page6 June 11, 1997 The Joint Operating Budget is proposed at $46.9 million; total Joint Capital Budget is proposed at $54.4 million; the number of FTE's is expected to be 549 at June of next year; and the cost per million gallons is expected to be $525 at June 30, 1997 and in 1997-98. Director Collins requested that staff place an overlay in the budget presentation in the future that depicts the Districts' true staffing level and includes the level of contractual services. David Ludwin explained the evolution of a new capital project. Director Swan felt the process was acceptable, however, even if a project is budgeted, it must be brought before the PDC Committee and approved before any funds can be expended. Staff advised the Committee that detail sheets of proposed capital projects are included in the budget in Section 8. Director Swan expressed concern about the 32 items identified in the budget costing over $50,000 and fall within Purchasing Resolution 96-87's delegation of authority. The Resolution provides that purchases of supplies, equipment and services that have appropriate budgetary approvals shall be awarded directly by the Contracts Administrator/Purchasing Manager. In response to questions regarding the 32 items, Gary and Judy advised the Committee that the J. D. Edwards project is a software package for the new Financial Information System. Ed Hodges advised that the Wakenhut contract is up for renewal, that the Districts is looking at reducing its security needs, and we will be taking bids from several other agencies in addition to Wakenhut. Discussion also took place regarding costs of the OCR Project. Until costs are identified in the project's Financial Plan, Judy and Don explained that the Districts does not propose spending a lot of money or issuing debt. Chair Brown advised that he requested staff to highlight the important points of the budget and focus in on the key items. He advised this would be the time to discuss any of the Committees' concerns. He noted that the entire budget will not be redone. Small changes might be made. Saturday's meeting of the OMTS may also result in small changes being made. After lengthy discussion on this issue, and a perusal of the proposed list, the Committee felt that the total budget request was high and Committee approval would be appropriate for some of the items. The Committee, therefore, directed staff to: 1. In future budgets, provide a general descriptive paragraph for each of the Purchasing line items. 2. Provide a three or four-page pre-budget report in early spring of each year to the appropriate Committees describing all items staff proposes to purchase. Minutes of Finance, Adi. . and Human Resources Committee Page 7 June 11, 1997 3. Include all of the purchasing items on this year's list for budgetary approval, however, staff will have no authority to purchase items 2, 3, 4, 6, 7, 8 without Committee approval. For items 12, 13, 14, 17, 25 and 26, purchases shall be authorized, but a report must be given to the appropriate Standing Committee explaining how the purchases were made and at what cost. 4. Staff may proceed with the chemical purchases, however, quarter1y reports must be brought back to Committee to track costs against budgeted amounts. Director Swan suggested that staff not include accumulated funds in the total budget as it appears in Section 1, Page 1 of the proposed budget. He advised no other agencies include these amounts. He stated he also has other suggestions for improving the General Manager's Message, which he will discuss with Don McIntyre. Judy Wilson and Michelle Tuchman advised the Committee that an Executive Summary of the budget will be prepared once all budget amounts are firm. This will be a small two or three page pamphlet. MOTION: It was moved, seconded and duly carried to recommend the Joint Boards: 1.) Approve the proposed Joint Works Operating and Capital Budgets for 1997-98 as follows: Joint Works Operating/Working Capital Worker's Compensation Self-Insurance Public Liability Self-Insurance Joint Works Capital Outlay Revolving $46,922,650 270,000 525,000 54,540,200 2.) Approve the proposed Individual Districts' Budgets for FY 1997-98 as follows: District No. 1 District No. 2 District No. 3 District No. 5 District No. 6 District No. 7 District No. 11 District No. 13 District No. 14 $ 41,537,000 170,725,500 185,427,000 37,245,000 30,140,000 50,928,000 37,117,000 11,246,000 12,954,000 Minutes of Finance, Admin. . id Human Resources Committee Page 8 June 11, 1997 10. FAHR97-43: 11. F AHR97-44: PRESENTATION ON BROADBANDING (All Districts) COMMITTEE DISCUSSION: The Human Resources Director Mike Peterman provided a presentation on the Broadbanding Study that was recently completed by Barry Newton of Creative Management Solutions. Mr. Peterman explained the objectives of the Districts and the objectives of Creative Management in providing this study. Broadbanding eliminates the seniority and tenure based compensation system and/or step system, eliminates overlapping job functions, eliminates the narrow scope of current job specifications to minimize working out of classification, and increases the competency of the work force which will move us toward a performance based organization. The system will wipe out traditional tenured systems that do not recognize nor reward excellence. The broadbanding proposal reduces nearly 60 salary ranges into 7 broad ranges or bands, and deletes nearly 90 job titles. Each band is comprised of five zones. Movement between zones within a band would be determined by the number of competencies the employee obtains. Don McIntyre advised the Committee that it may take anywhere from six to eight months to get all of the bargaining units to approve this plan, and advised that the DART Committee is expected to play an important role in selling the plan. Bob Ooten advised that Broadbanding is working at a national level. Many of the points in the plan must be negotiated to make it work and that the recommended action tonight is to move forward with the plan conceptually. After discussion on this item, the Committee felt the move to Broadbanding would be good for the Districts, however, getting approval from all of the bargaining units may be difficult. MOTION: It was moved, seconded and duly carried to 1.) Receive and file the Broadbanding Study; and 2.) Authorize the Director of Human Resources to reopen negotiations with Orange County Employees Association, Local 501 and the Supervisors and Professional Team to meet and confer on a performance and skill-based compensation system, with the condition that staff will provide quarterly status reports and the FAHR Committee must approve the final compensation plan. ADOPTION OF "IDEA" PROGRAM AS A REPLACEMENT FOR THE PRIDE PROGRAM IN ORDER TO REWARD EMPLOYEE SUGGESTIONS FOR COST SAVINGS (All Districts) COMMITTEE DISCUSSION: Judy Wilson introduced her Executive Assistant, Corina Chaudhry, who gave the presentation on this item. Corina provided an overview of the IDEA Program which replaces the Districts' old PRIDE suggestion program. Corina advised the Committee that the old PRIDE Program paid out $26,000 in awards, based on the initial first year's saving since 1981, and the Districts received a cost savings of $90,000. Corina explained the IDEA program's evaluation • Minutes of Finance, Adr . and Human Resources Committee Page 9 June 11, 1997 process, and the percentages that are proposed to be paid to award recipients. She advised that monthly reports will be provided to the Executive Management Team on the status of IDEAs being submitted, approved or disapproved. The Committee determined from staff that $25,000 has been budgeted in the General Manager's budget for the IDEA Program. Discussion took place regarding the proposed increase in award amounts. The Committee suggested that staff to look into other forms of awarding employees, such as movie tickets, recognition, etc. Since the maximum award amounts are large, the Committee felt that the ultimate approving authority should be the General Manager. MOTION: It was moved, seconded and duly carried to recommended the following with the stipulation that the General Manager be designated as the final approving authority for monetary awards: 1.) Approve an increase from the current $150 maximum award amount to $200 maximum for approved IDEAs for improvement and; 2.) Approve an increase from the current $1,500 maximum award amount to $3,000 award maximum for approved IDEAs that offer significant cost savings. Cost saving awards to be calculated as the equivalent of 10% of the initial first year's projected savings upon implementation of the suggestion. INFORMATIONAL PRESENTATIONS There were none. CLOSED SESSION The Chair reported the need for a closed session, as authorized by Government Code Sections 54957.6, to discuss and consider the item specified under "Closed Session" as Item 9(a) on the published Agenda. The Committee convened in closed session at 8:00 p.m. At 8:10 p.m., the Committee reconvened in regular session. Confidential Minutes of the Closed Session held by the Committee have been prepared in accordance with California Government Code Section 549057.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA rTEMS, IE ANY There were none. MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING There were none. Minutes of Finance, Admin. Id Human Resources Committee Page 10 June 11, 1997 MATTERS WHICH A DIRECTOR MAY WISH TO Pl.ACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. FUTURE MEETING DATES The next Finance, Administration and Human Resources Committee Meeting is scheduled for Wednesday, July 9, 1997, at 5:30 p.m. ADJOURNMENT The meeting was adjourned at 8:12 p.m. Submitted by: Lenora Crane Finance, Administration and Human Resources Committee Secretary H:\WP.DTA\FIN\2210\CRANE\FAHR\FAHR.971.JUNE\6MIN.97 ' \ .,, OMTS: PDC: FAHR: 07/09/97 EXEC: STEER: JT.BDS: ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: ,'" AG EN-A ITEM TRANSMITTAL ~- CONTACT FOR INFORMATION (Originator) 2210, Gary G. Streed, Ext. 2500 Division No., Name, and Extension RECEIVE AND FILE CERTIFICATES OF PARTICIPATION (COP) REPORT (All Districts) Recommended Action(s): 1. Receive and file this information-only COP Report of the Director of ·Finance. 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_ CURRENT BUDGET/COST INFORMATION TOTAL BUDGETED AMT.: $ SOURCE: CORF JO DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET INFORMATION First Year in Budget: Master Plan Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT N/A ORIGINAL BUDGET TOTAL N/A ORIGINAL BID, PO, CONTRACT AMOUNT N/A WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent _ Limited Term Revised 05/14197 H:\WP .DTA \FIN\2210\CRANE\FAHR\FAHR.97\IUL Y\FAHR97.46 DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR- TO-DATE EXPENDITURES N/A PREVIOUS BUDGET CHANGES N/A CHANGE ORDERS, FUNDS PREV. APPROVED N/A N/A YEAR-TO-DATE BUDGET BALANCE N/A BUDGET CHANGE THISAIT N/A AMOUNT REQUESTED THIS AIT N/A REVISED BUDGET, TOTAL (Total Budget plus Transfers) NIA REVISED TOTAL PROJECT BUDGET $0.00 AMENDED PROJECT AMOUNT $0.00 REQUIRES BOARD POLICY ACTION? NOT APPLICABLE If YES, explain in ADDITIONAL INFORMATION section Page 1 of2 Originator CONCURRENCES: a rtment Heaa (Or Designee) ~ t:.,uJ>~ Siture Assistant General Manager (Or Designee) Date Date t.,,/ 2-, /97 Date ADDITIONAL INFORMATION (Background and/or Summary) ATTACHMENTS TO. --",MITTEE AGENDA (List): 1. Graph -COP Rate History Report ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. 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 Revised 05/14197 H:\WP .DTA\FIN\221 0\CRANE\FAHR\FAHR.97\JUL Y\FAHR97 .46 Page 2 of2 :::r: "'tl ;..:-CJ CD )> RATE(%) "O ;,, -I Ill m CD z 0 ~ I\.) c,, ~ 01 m a. )> 0 0 0 0 0 0 0 C" z 0 0 0 0 0 0 0 '< (") 3-Jul-96 'Tl m =i' Kl 1 Ill I\.) :::, ~ 17-Jul-96 0 0 _CD ~ ; ~ 0 . S;! 31-Jul-96 e ID 25 i _ ...... ~ ID -I 14-Aug-96 0 m ' ID :::r: )> en s::: -I 28-Aug-96 io ...... 11-Sep-96 c( • r 25-Sep-96 9-0ct-96 "'tl Ill 0 :5· CD 23-0ct-96 0 ~ C" "'1J • • """'rJ C" ~ 6-Nov-96 ::0 ? )> 20-Nov-96 -I ~ m :u 4-0ec-96 s: :c 0 -<£l en Ill 18-Dec-96 :::, -I + 0 2-Jan-97 ~ )> Gi en 15-Jan-97 ::0 ::;; Ill m "O 29-Jan-97 "'1J t 0 12-Feb-97 ::0 en 0 -I 0 G) 26-Feb-97 -CD :::, en !J 12-Mar-97 26-Mar-97 9-Apr-97 23-Apr-97 7-Moy-97 21-Moy-97 4-Jun-97 18-Jun-97 \~, L ~1,'\Pdffi. OF For Bd. Sec. 1:-~~ AGE~,~~ .,... 0 D COMM. INFO. ITEM ~~ ;:-,. ITEM 1i ~ .., D COMM. ACTION ITEM ,. ~-D JT. BOS. CONSENT TRANSMITTAL ~7 D JT. BOS. DISCUSSION (NON-CONSENT) D '-~ PUBLIC HEARING JT. BOS. MEETING DATE JT. BDS. AGENDA ITEM NO. 3. MEETING DATE COMM. ID. NO. DISTRICT NO. CONTACT FOR INFORMATION OMTS: OMTS (Originator) PDC: POC FAHR: 719197 FAHR f::1.-111-2520, M~terman, Ext. 2105 EXEC: EXEC All STEER: STEER Division No., Name, and Extension JT.BDS: AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: EMPLOYMENT STATUS REPORT: Total headcount at the Districts as of June 19, 1997. Recommended Action(s}: 1. Receive and file the Employment Status Report. CEQA REVIEW: Project is Exempt: NOT APPLICABLE DATE OF MOST RECENT BOARQ ACTION ON THIS SPECIFIC Date Notice of Exemption Filed: ITEM: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on_ NIA CURRENT BUDGET/COST CURRENT YEAR CURRENT YEAR· YEAR-TO-DATE REVISED BUDGET INFORMATION BUDGET AMOUNT TO-DATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) TOTAL BUDGETED AMT.:$ NIA NIA NIA NIA SOURCE: CORF JO DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET ORIGINAL PREVIOUS BUDGET BUDGET CHANGE REVISED TOTAL INFORMATION BUDGET TOTAL CHANGES THISAIT PROJECT BUDGET First Year in Budget: NIA NIA NIA $0.00 Master Pian Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST ORIGINAL BID, CHANGE ORDERS, AMOUNT AMENDED INFORMATION PO, CONTRACT FUNDS PREV. REQUESTED THIS PROJECT AMOUNT APPROVED AIT AMOUNT NIA NIA NIA $0.00 WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO REQUIRES BOARD POLICY ACTION? NOT APPLICABLE If YES, state number: _ Permanent -Limited Term If YES, explain in ADDITIONAL INFORMATION section Revised 05/14/97 Page 1 of 2 H:\WP .OTA \HR\2520\STEEVES\AIT\797 .AIT CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 CONCURRENCES: Signature D~jf{:;.r;:xOr Desig Signature Department Head (Or Designee) ~w~ iatm ssistant General Manager (Or Designee) Date Date Date ADDITIONAL INFORMATION (Background and/or Summary) ATTACHMENTS TO C'~MMITTEE AGENDA (List): 1. June 19, 1997 E yment Status Report. 2. Performance to o . dar Staffing Plan ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. The Districts have a Full-Time Equivalent (FTE) headcount of 539.25 as of June 19, 1997. The actual body count is 549. The current FTE headcount is equivalent to a 13.6% reduction from the budgeted 624 positions. The one- month turnover rate for June 1997 was .55%. There was one external hire during June, a Secretary for Engineering. Total external hires this fiscal year has been 13 (11 FTEs). The Districts are currently seeking internal or external candidates for the following replacement positions: Engineer (3 positions, Design Engineering), Associate Engineer II (Design Engineering), Engineer and Engineering Supervisor (Construction Management), Engineer (2 positions, Plant Automation Support), Collection Facilities Worker I (4 positions, Collections Facilities Mtce.), Senior Engineer (Design Engineering), Environmental Specialist II (Environmental & Special Projects), Contracts/Purchasing Supervisor (Purchasing & Warehouse), and three intern positions (Safety, Engineering and Environmental Compliance & Monitoring). /ps c: Department Head AGM-Administration AGM-Operations General Manager Revised 05114197 H:\WP.DTA\HR\2520\STEEVES\AIT\797.AIT Page 2 of 2 Employment Status Report Run Date: 19-Jun-97 Regular Regu~r Total Regular Part-time Part-time Actual Vacant Total Full-time 20hours 30hours Contract Intern LOA Headcount Positions Positions 2150 -General Management Administration 6 0 0 0 0 0 6 0 6 2160 -Board Secretary 1 0 0 0 0 0 1 0 1 2190 -Communications 8 0 1 0 0 0 9 0 9 Total General Management 15 0 0.75 0 0 0 16 0 16 2210 -Finance Administration 4 0 0 0 0 0 4 0 4 2220 -Accounting 18 0 0 0 0 1 19 1 20 2230 -Purchasing & Warehousing 13 0 0 0 0 2 15 2 17 Total Finance 35 0 0 0 0 3 38 3 41 2410 -General Services Administration 3 0 0 0 1 0 4 0 4 2420 -IT Hardware Support 8 0 0 2 0 0 10 0 10 2430 -IT Software Support 7 0 0 0 0 0 7 1 8 2440 -Plant Automation Support 6 0 0 0 0 0 6 1 7 2450 -Collection Facilities Maintenance 13 0 0 0 0 0 13 18 31 2460 -Plant Facilities 38 0 0 0 0 2 40 5 45 Total General Services Admin. 75 0 0 2 0.5 2 80 25 105 2520 -Human Resources 5 1 1 0 0 1 8 1 9 2530 -Safety & Emergency Response 5 0 0 0 0 0 5 1 6 2540 -Education & Training 6 ·o 0 0 0 0 6 0 6 Total Human Resources 16 0.5 0.75 0 0 1 19 2 21 3410 -Operations & Maintenance Admln. 16 0 0 1 3 0 20 1 21 3420 -0 & M Scheduling 4 0 0 0 0 0 4 2 6 3430 -Plant Operations 1 36 0 0 0 0 2 38 5 43 3440 -Plant Operations 2 41 0 0 0 0 1 42 11 53 3450 -Mechanical O & M 52 0 0 0 0 0 52 10 62 3460 -Electrical O & M 26 0 0 0 0 0 26 1 27 3470 -Instrumentation O & M 31 0 0 0 0 1 32 1 33 3490 -Central Generation Operations 13 0 0 0 0 0 13 0 13 Total Operations & Maintenance 219 0 0 0.25 1.5 4 227 31 258 3510 -Technical Services Adm1nistra!1on 3 0 0 1 4 0 8 3 11 3550 -Environmental Compliance & Monitoring 18 0 0 1 0 1 20 1 21 3580 -Environmental Sciences Laboratory 32 4 0 0 0 1 37 0 37 3590 -Source Control 36 0 0 0 0 2 38 2 40 Total Technical Services 89 2 0 2 2 4 103 6 109 3710 -Engineering Administration 2 0 0 0 0 0 2 0 2 3720 -Design Engineering 21 0 2 0 0 0 24 3 27 3730 -Engineering Planning 4 0 0 0 0 0 4 0 4 3790 -Construction Management 30 0 0 4 1 1 36 5 41 Total Engineering 57 0 1.5 4 0.5 1 66 8 74 Total Staffing 506 2.5 3 8.25 4.5 15 549 75 624 H:\excel.eta\hr\sleeves\empdiv.xls Total FTE Count 539.25! Performance to 5-Y ear Staffing Plan 640 ,---------------------- 620 ·- 600 I.,_ • •. ~ I-+-FTE Headcount [ 580 . :::i: ... . _ • _ • I --. 560 -. -'" -· -.. -. -. ---. ---. -. ---• 540 ,-------~=-==+-+----------~~ 5201---------------------J 500 -+--~~~--~~-~~~-~~-~~~-~~~--..-------. JASON DJ FM AM J1J AS ON DJ FM AM J I FY 96-971 I FY 97-98 I OMTS: PDC: FAHR: 9 Jul 97 ALL EXEC: STEER: JT.BDS: 30 Jul 97 AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN. , ITEM TRANSMITTAL CONTACT FOR INFORMATION (Originator) 2210, Steve Kozak, 2504 Division No., Name, and Extension ANNUAL REVIEW OF THE DISTRICTS' INVESTMENT POLICY STATEMENT AND DELEGATION OF INVESTMENT AUTHORITY TO THE DIRECTOR OF FINANCE/TREASURER (All Districts) Recommended Acfion(s): 1. Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt attached Resolution No. 97-XX. 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 January 22, 1997 Final EIR Approved on_ and Notice of Determination filed on_ CURRENTBUDGETICOST CURRENT YEAR CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET INFORMATION BUDGET AMOUNT TO-DATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) TOTAL BUDGETED AMT.: $21,958,000 $21,958,000 NIA N/A N/A SOURCE: DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET ORIGINAL BUDGET PREVIOUS BUDGET BUDGET CHANGE REVISED TOTAL INFORMATION TOTAL CHANGES THISAIT PROJECT BUDGET First Year in Budget: Revenue Master Plan Estimate: producing program. $21,958,000.00 Year of First Costs: THIS AITNENDOR/PROJECT COST ORIGINAL BID, PO, CHANGE ORDERS, AMOUNT AMENDED INFORMATION CONTRACT FUNDS PREV. REQUESTED THIS PROJECT AMOUNT APPROVED AIT AMOUNT 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 Revised 05114/97 Page 1 of2 H:\WP .DTA \FIN\221 O\KOZAK\97INVEST.AIT ATTACHMENTS TC" }1MITTEE AGENDA (List): 1. Investment Policy Statement 2. Board Resolution ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. Investment Policy Statement 2. Board Resolution ~ .<A, 7'-Wi ,_,_,,,__ Sig e Ass~eneral Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) Background The Districts' current Investment Policy Statement was reviewed and approved by the Finance, Administration & Human Resources Committee (FAHR) on September 11, 1996, and originally adopted by the Joint Boards on September 25, 1996 (Resolution No. 96-79). On January 22, 1997, the Joint Boards approved certain technical revisions to the Districts' Investment Policy as recommended by the FAHR Committee. The Investment Policy governs the investment activities of Pacific Investment Management Company (PIMCO), the Districts' external money manager, on behalf of the Districts. The Districts' Investment Policy Statement has received the Investment Policy Certification of Excellence Award from the Municipal Treasurers' Association of the United States & Canada. The attached Investment Policy document consists of the Policy Statement itself, and the following four Appendices: A. Summary of Investment Authorization; 8. Board Resolution No. 97-XX; C. California Government Code Section 53600, Investment of Surplus Funds; and D. Glossary of Terms. Annual Review of Investment Policy The Investment Policy includes the requirement that the Districts shall review its Investment Policy annually (Sections 1.2 and 16.1 ). Likewise, Section 53646 of the California Government Code (the "Code") requires local agencies to review their investment policy annually, and readopt their policy at a public meeting. This staff report presents the second annual review of the Districts' Investment Policy Statement to the FAHR Committee for consideration in your capacity as the oversight committee for the Investment Policy (Section 16.2). With adoption of the attached Resolution, the Joint Boards would readopt the Districts' current Investment Policy Statement, portfolio performance benchmarks, and monitoring and reporting requirements. Annual Delegation of Investment Authority Effective January 1, 1997, SB 109 introduced a new requirement to the annual review process. Section 53607 of the Code now states that governing boards of local agencies may delegate authority to invest and/or reinvest agency funds to the agency's Treasurer for a one-year period only. With adoption of the attached Resolution, the Joint Boards would delegate investment authority to the Director of Finance/Treasurer for a one-year period commencing on the date that the Resolution is adopted. Recommended Action Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt attached Resolution No. 97-XX. Revised 05/14/97 Page 2 of2 H:\WP.DTA \FIN\221 0\KOZAK\97INVEST.AIT .. COUNTY SANITATION DISTRICTS OF ORANGE COUNTY INVESTMENT POLICY STATEMENT Reviewed and Approved by Finance, Administration and Human Resources Committee on July 9, 1997 Adopted by Joint Boards of Directors on July 30, 1997 (Resolution No. 97-XX) .. ~ co MUNICIPAL TREASURERS' ASSOCIATION UNITED STATE'S & CANADA December 10, 1996 Gary G. Streed Director of Finance/Treasurer County Sanitation Districts of Orange County. California P.O. Box 8127 Fountain Valley, CA 92728-8127 Dear Mr. Streed: The Municipal Treasurers' Association is pleased to present the County Sanitation Districts of Orange County. California with the Association's Investment Policy Certification. Members of the Association's Investment Policy Certification Committee congratulate the County Sanitation Districts of Orange County. California for its success in developing a comprehensiv~ written investment policy which meets the criteria set forth by the Association's Investment Policy Certification Program. Our review of your investment policy is limited to the doc·..une:itation submitted. The Certification is not a guarantee against loss due tei economic and market conditions or human behavior. The Association's Investment Policy Certification Committee Chairman, Rod Rich, will be presenting the Investment Policy Certification plaque to all recipients at the Association's 1997 Annual Conference in Sacramento, California. The County Sanitation Districts will be recognized during the Awards Luncheon on Wednesday, August 20. We hope that you will be able to attend this luncheon, however, if your schedule does not permit you to attend, please call me at (202} 833-1017. The County Sanitation Districts of Orange County, California is to be commended for enhancing its fiscal responsibility in the management of fiscal funds. Sincerely, j ~'f.jrr~ 1229 Nineteenth Street. N. W .. Washington, DC 20036 PHONE 202-833-1017 FAX 202-833-0375 Section 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 Appendix A. B. C. D. TABLE OF CONTENTS Topic Policy ........................................ 1 Scope ........................................ 1 Standard of Prudence . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Investment Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Ethics and Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . 4 Authorized Financial Dealers and Institutions . . . . . . . . . 4 Authorized and Suitable Investments . . . . . . . . . . . . . . . . 5 Collateralization ................. ·. . . . . . . . . . . . . . . 8 Safekeeping and Custody . . . . . . . . . . . . . . . . . . . . . . . . 8 Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Maximum Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 O Performance Objectives and Benchmarks . . . . . . . . . . . . 10 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Investment Policy Adoption and Revision . . . . . . . . . . . . 12 Summary of Investment Authorization Board Resolution No. 97-XX, Authorizing the Districts' Treasurer to Invest and/or Reinvest Districts' Funds, and Adopting Investment Policy and Performance Benchmarks Government Code Sec. 53600 Glossary .. "', ~ COUNTY SA~~. 'A TION DISTRICTS OF ORAt--JE COUNTY, CA INVESTMENT POLICY STATEMENT 1.0 Policy: 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 reasonable 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. 1.1.2. 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. 1.2. CSDOC establishes investment policies which meet its current investment goals. CS DOC 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 CSDOC, 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 13 ) 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 CS DOC' s investment activities shall be: 4.1 Safety: The safety and preservation of principal is the foremost objective of the investment program of CSDOC. Investments shall be selected in a manner that seeks to ensure the preservation of capital in CSDOC's overall portfolio. This will be accomplished through a program of diversification, more fully described in Section 11.0, and maturity limitations, more fully described in Section 12.0, in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The investment program will be administered in a manner that will ensure that sufficient funds are available for CSDOC to meet its reasonably anticipated operating expenditure needs. 4.3 Return on Investments: The CSDOC investment portfolio will be structured and managed with the objective of achieving a rate of return throughout budgetary and economic cycles, commensurate with legal, safety, and liquidity considerations. Page 2 of 13 5.0 Delegation of Authority: 5.1 Authority to manage CS DOC' 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 CSDOC investment program to it's Director of Finance/ Treasurer, who shall establish written procedures for the operation of the investment program, consistent with this Policy. The Financial Manager/Assistant Treasurer shall be responsible for day-to-day administration, monitoring, and the development of written administrative procedures for the operation of the investment program, consistent with this Policy. No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by CSDOC 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. 5.2 The administrative procedures for the operation of CSDOC's investment program will provide for, but not be limited to, the following: 5.2.1 Formats for monthly and quarterly reports to the Finance, Administration and Human Resources Committee, and the Boards of Directors. 5.2.2 Compliance with generally accepted accounting principles of the Government Accounting Standards Board. 5.2.3 Establishment of benchmarks for performance measurement. 5.2.4 Establishment of a system of written internal controls. 5.2.5 Establishment of written procedures for competitive bids and offerings of securities that may be purchased or sold by internal CSDOC staff. 5.2.6 Establishment of a Desk Procedures Manual for treasury operations and management. 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, which shall be selected through a competitive process, shall be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or be exempt from such registration. Page 3 of 13 6.0 Ethics and Comncts 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 qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule), and Federal or State of California chartered banks. No public deposit shall be made except in a qualified public depository as established by State law. All financial institutions which desire to become qualified bidders for investment transactions with CSDOC must supply the following for evaluation by the Treasurer: 7.1.1 . Audited financial statements for the institution's three (3) most recent fiscal years. 7. 1 .2. A statement, in the format prescribed by the Government Finance Officers Association (GFOA), certifying that the institution has reviewed CS DOC' s Investment Policy 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. 7.1.3. A statement describing the regulatory status of the dealer, and the background and expertise of the dealer's representatives. Selection of financial institutions, broker/dealers, and banks authorized to engage in transactions with CSDOC shall be made through a competitive process. An annual review of the financial condition of qualified institutions will be conducted by the Treasurer. Page 4 of 13 7.2 Selection )broker/dealers used by external ir:Jstment advisors retained by CSDOC, shall be in compliance with contract provisions between CSDOC and any external investment advisors, and shall be in substantially the following form: Use of Securities Brokers: Neither the Investment Advisor nor any parent, subsidiary or related firm shall act as a securities broker with respect to any purchases or sales of securities which may be made on behalf of CSDOC, provided that this limitation shall not prevent the Investment Advisor from utilizing the services of a securities broker which is a parent, subsidiary or related firm, provided such broker effects transactions on a "cost only" or "nonprofit" basis to itself and provides competitive execution. The Investment Advisor shall provide the Districts with a list of suitable independent brokerage firms (including names and addresses) meeting the requirements of Government Code Section 53601.5, and, unless otherwise directed by CSDOC, the Investment Advisor may utilize the service of any of such independent securities brokerage firms it deems appropriate to the extent that such firms are competitive with respect to price of services and execution. 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 securities issued by an agency of the US Government, which are backed by pools of mortgages guaranteed by the full faith and credit of the U.S. Government, or an agency thereof. Selection of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage Investment Conduits}, is hereby prohibited. 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 Page 5 of 13 in commerc;1al paper, except that a maximum of ::,0% 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. 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. Page 6 of 13 -~ ,,--.\ ' I 8.9 The State of California Local Agency Investment Fund (LAIF). 8.10 The Orange County Investment Pool. 8.11 Collateralized mortgage obligations (CMOs) issued by agencies of the US Government which are backed by pools of mortgages guaranteed by the full faith and credit of the U.S. Government, or an agency thereof, and asset- backed securities rated "Aaa" by Moody's and "AAA" by S&P. Selection of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICS (Real Estate Mortgage Investment Conduits), is hereby prohibited. 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 mortgage-backed securities, CMOs and asset-backed securities as authorized under this Section 8.11, may not exceed 20% of the total Long-Term Operating Monies 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 CS DOC' s custodian bank. 8.12.2 Al I repurchase agreements must be the subject of a Master Repurchase Agreement between CSDOC and the provider of the repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by the Public Securities Association. 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. Page 7 of 13 ) 8.13.4 t'roceeds of reverse repurchase agret::ments shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not be used to speculate on market movements. 8.13.5 All reverse repurchase agreements must be the subject of a Master Repurchase Agreement between CSDOC and the provider of the reverse repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by the Public Securities Association. 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 CSDOC are downgraded by either Moody's or S&P to a level below the quality required by this Investment Policy, it shall be CSDOC'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: Collateralization will be required for secured time deposits, as more fully described in Section 8. 7 .1; and repurchase agreements, as more fully described in Section 8.12.1. Collateral will always be held by an independent third-party, as more fully described in Section 10.1. The right of collateral substitution is granted. 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-party custodian bank, which shall be selected through a competitive process, or that agent's representative, or in the agent's account at the Federal Reserve Bank, and evidenced by safekeeping receipts. 11.0 Diversification: CSDOC will diversify its investments by security type, issuer, and financial institution in accordance with the following: Page 8 of 13 1 ) 11.1 There is no Iimit 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 c~edit 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. 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. 11.10 No more than 10% of the portfolio may be invested in eligible municipal bonds. 11.11 No more than 20% of the Long Term Operating Monies portfolio may be invested in a combination of mortgage-backed securities, CMOs and asset- backed securities. Mortgage-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. Page 9 of 13 12.0 Maximum Maturities: To the extent possible, CSDOC will attempt to match its investments with reasonably anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow forecast, which shall be updated 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. 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 180 days, and shall be reviewed and approved by the Finance, Administration 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 Page 10 of 12 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 Objectives 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. 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. This market index is more fully described in Board Resolution No. 96-79 (see Appendix "B"). 14.3 The Long Term 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 established. This market index is more fully described in Board Resolution No. 96-79 (See Appendix "B"). 15.0 Reporting: 15.1 Monthly and quarterly 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. The monthly reports shall be submitted to the Finance, Administration and Human Resources Committee within 30 days of the end of the month. These reports shall disclose, at a minimum, the following information 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 Page 11 of 12 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. 15.1.8 State that all investments are in compliance with this policy and the California Government Code, or provide a listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 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. 15.1.10 State that sufficient funds are available for CS DOC to meet its operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. 15.2 CSDOC's Treasurer shall meet quarterly with the Finance, Administration and Human Resources Committee to review investment performance, proposed strategies and compliance with this investment policy. External investment Advisors may be required to attend said meetings at the discretion of the Chairman of the Finance, Administration and Human Resources Committee. 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. Page 12 of 13 ') ) 16.2 The Finaned, Administration and Human Resour1,;es 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 13 of 13 APPENDIX "A" . i L - APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS SHORT TERM OPERATING FUND INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Mortgage-backed NO NO Commercial paper OK OK Banker's Accept. OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** Money Market Only Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* NO LAIF OK NO OCIP OK NO CMOs NO NO Asset-backed NO NO Repurchase Agree. OK OK Reverse Repos 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 *W"rth pr"ror approval of the F"rnance, Adm"rnistration and Human Resources Comm"rttee. **Using financial institutions approved by the Finance, Adm"rnistration and Human Resources Comm"rttee. H:IWP.DTAIFIN\221 O\CRANEIINVEST.PL Y\97INVEST.PL Y ' __ j APPENDIX "B" L'_ RESOLUTION NO. 97-XX-X AUTHORIZING THE DISTRICTS' TREASURER TO INVEST AND/OR REINVEST DISTRICTS' FUNDS, AND ADOPTING DISTRICTS' INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICT NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, AUTHORIZING THE DISTRICTS' TREASURER TO INVEST AND/OR REINVEST DISTRICTS' FUNDS, AND ADOPTING DISTRICTS' INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS ••••••••••••••• WHEREAS, on December 8, 1994, the Boards of Directors adopted Resolution No. 94-156, appointing the Director of Finance as Treasurer of County Sanitation District Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California; and, WHEREAS, on September 25, 1996, the Boards of Directors adopted Resolution No. 96-79, readopting the Districts' Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and, WHEREAS, pursuant to California Government Code Section 53607, the Boards of Directors may delegate authority to invest and/or reinvest Districts' funds to the Treasurer for a one-year period; and, WHEREAS, pursuant to California Government Code Section 53646, the Districts are required to review their Investment Policy annually and readopt their Policy at a public meeting, which Policy will establish specific performance benchmarks and objectives, and specific monitoring and reports. NOW, THEREFORE, the Boards of Directors of County Sanitation District 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 authority of the Boards of Directors to invest or reinvest Districts' surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the Districts' Treasurer for a one-year period commencing on the date this Resolution is adopted, as authorized by California Government Code Section 53607. Section 2: That the Boards of Directors hereby adopt the Investment Policy Statement of the County Sanitation Districts of Orange County, California, as set forth in Exhibit "A," attached hereto and incorporated herein by reference. Section 3: 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 Flow Income Style Group. The Callan Active Cash Flow 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 4: 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. PASSED AND ADOPTED at regular meeting held July 30, 1997. H:\WP .DTA\FIN\221 0\CRANE\RESOS\971PRESO.DOC POLICY REFERENCE 15.1.1 15.1.2 15.1.3 15.1.4 15.1.5 15.1.6 15.1.7 15.1.8 15.1.9 ADDL** ADDL** ADDL** ADDL** EXHIBIT "B" COUNTY SANITATION DISTRICTS OF ORANGE COUNTY PERFORMANCE MONITORING & REPORTING FOR THE DISTRICTS' INVESTMENT PROGRAM PERFORMANCE CHARACTERISTIC Cost and market value of the portfolio (monthly mark-to-market). Modified duration of the portfolio compared to benchmark. Dollar change in value of the portfolio for a 1 % change in interest rate. Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the m of such reverse repurchase agreements with the cash flows which are available to repay them at matu For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. Average portfolio credit quality. Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. Listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 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. Comparison of portfolio performance to market index benchmark. Comparison of Manager's performance to peer group benchmark. Monitoring of organizational and structural changes of investment management firm. Audit portfolios for compliance with investment policy guidelines. REPORTING PARTY* PIMCO MELLON CALLAN M,Q M,Q a M,Q a M,Q Q ~turity rity. M,Q M,Q Q M,Q a M,Q Q M,Q M,Q Q M,Q Q Q a a 15.1.10 CSDOC will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if not, state the reasons 1 the shortfall. Notes *M = Monthly Q = Quarterly ·-···"'=--c:==--=----=-=-::,-=:===--==========-== ~· 7--l !· APPENDIX "C" u_l ,- ==-'==-==--==-====-==-====-==-==---""===d Section 53600 ofthe California Government Code Introduction A requirement of Section 8, Authorized and Suitable Investments, of the Districts' Investment Policy Statement, is that all investments shall be made in accordance with Section 53600 et seq. of the California Government Code. This section presents a copy of Section 53600, Investment of Surplus, for the reader's reference. Jnvestment of Surplus Sec. 53600. Local agency, definition As used in this article, "local agency" means county, city, city and county, including a char- tered city or county, school district, community college district, public district, county board of educ~tion, county superintendent of schools, or any public or municipal corporation. (Added by Stats.1949, c. 81, p. 289, Sec. 1; Stats.1984, c. 124, Sec. 2; Stats. 1984, c. 1226, Sec. l; Stats.1987, c. 887, Sec. 2.) Sec. 53600.3. Prudent investor standard; investments on behalf of local agencies Governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, pur- chasing, acquiring, exchanging, selling, and managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person Page 1 of 8 acting in a like capacity d familiarity with those matters would in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part to an overall strategy, a trustee is authorized to acquire investments as authorized by law. (Added by Stats.1995, c. 784 (S.B.866), Sec. 11.) Sec. 53600.5. Objectives; managing public funds When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The thir:d objective shall be to achieve a return on the funds under its control. (Added by Stats.1995, c. 784 (S.B.866), Sec. 12.) Sec. 53600.6. Legislative findings and declarations; solvency and creditworthiness The Legislature hereby finds that the solvency and creditworthiness of each individual local agency can impact the solvency and creditworthiness of the state and other local agencies within the state. Therefore, to protect the solvency and creditworthiness of the state and all of its political subdivisions, the Legislature hereby declares that the deposit and investment of public funds by local officials and local agencies is an issue of statewide concern. (Added by Stats.1995, c. 784 (S.B.866), Sec. 13.) Sec. 53601. Authorized investments; circumstances The legislative body of a local agency having money in a sinking fund of, or surplus money in, its treasury not required for the immediate necessities of the local agency may invest any portion of the money that it deems wise or expedient in those investments set forth below. A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, .bearer, registered, or nonregistered format,.shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisors, consultants, or managers using the agency's funds, by book entry, physical delivery, or by third party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book entry delivery. For purposes of this section "counterparty" means the other party to the transaction. A counterpart)• bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an invest- ment program approved by the legislative body no less than three months prior to the invest- ment: (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Registered state warrants or treasury notes or bonds of this state, including bonds pay- able solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Page 2 of 8 (d) Bonds, note~. arrants, or other evidences of indebte ts~ of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or author- ity of the local agency. (e) Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority, or in obligations, participations, or other instruments of, or issued by, or fully guaran- teed as to principal and interest by, the Federal National Mortgage Association; or in guaranteed portions of Small Business Administration notes; Or in obligations, participations, or other instru- ments of, or issued by, a federal agency or a United States government-sponsored enterprise. (f) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 270 days ma- turity or 40 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any surplus money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6 (com- mencing with Section 11501) of the Public Utilities Code). (g) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corpo- ration. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars (S500,000,000) and having an "A" or higher rating for the issuer's debt, other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corpora- tion. Purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Purchases of commer- cial paper may not exceed 15 percent of the agency's surplus money that may be invested pursu- ant to this section. An additional 15 percent, or a total of 30 percent of the agency's surplus money, may be invested pursuant to this subdivision. The additional 15 percent may be so in- vested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days. "Dollar-weighted average maturity" means the sum of the amount of each outstanding commer- cial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. (h) Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state or federal association (as defined by Section 5102 of the Financial Code) or by a state-li- censed branch of a foreign bank. Purchases of negotiable. certificates of deposit may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposits do not come within Article 2 (commenc- ing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. (i) (1) Investments in repurchase agreements or reverse repurchase agreements of any se- curities authorized by this section, as long as the agreements are subject to this subdivision, including, the delivery requirements specified in this section. (2) Investments in repurchase agreements may be made, on any investment autho- rized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Page 3 of 8 (3) Reverse rE ,chase agreements may be utilized on. ,.hen either of the following conditions are met: (A) The security was owned or specifically committed to purchase, by the local agency, prior to December 31, 1994, and was sold using a reverse repurchase agreement on December 31, 1994. (B) The security to be sold on reverse repurchase agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements on inves~ents owned by the local agency not purchased or committed to purchase, prior to December 31, 1994, does not exceed 20 percent of the base value of the portfolio; and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. (4) After December 31, 1994, a reverse repurchase agreement may not be enter-ed into with securities not sold on a reverse repurchase agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the security sold on a reverse repurchase agreement, but may only be entered into with securities owned and previ- ously paid for for a minimum of 30 days prior to the settlement of the reverse repurchase agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the immediate payment of a local agency obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement, on securities originally purchased subsequent to December 31, 1994, shall not be used to purchase another security with a ma- turity longer than 92 days from the initial settlement date of the reverse repurchase agree- ment, unless the reverse repurchase agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. Reverse repurchase agreements specified in subparagraph (B) of paragraph (3) may not be entered into unless the percentage restrictions specified in that subparagraph are met, including the total of any reverse repurchase agreements specified in subparagraph (A) of paragraph (3). (5) Investments in reverse repurchase agreements or similar investments in which the local agency sells securities prior to purchase, may only be made upon prior approval of the governing body of the local agency. (6) (A) "Repurchase agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (B) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (C) "Reverse repurchase agreement" means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. (D) For purposes of this section, the base value of the local agency's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements· or other similar borrowing methods. Page 4 of 8 -, (E) For • .JOSes of this section, the spread is th /ference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. ' (F) Repurchase agreements and reverse repurchase agreements shall only be made with primary dealers of the Federal Reserve Bank of New York. (j) Medium-term notes of a maximum of five years maturity issued by corporations orga- nized and operating within the United States-or by-depository institutions licensed by the United States or any state and operating within the Unit~d States. Notes eligible for investment under this subdivision shall be rated in.a rating category of "A" or its equivalent or better by a nation- ally recognized rating service. Purchases of medium-term notes may not exceed 30 percent of thf agency's surplus money which may be invested pursuant to this section. (k) Shares of beneficial interest issued by diversified management companies investing in the securities and obligations as authorized by subdivisions (a) to (l), inclusive, of this section and that comply with the investment restrictions of this article and Article 2 (commencing with Sec- tion 53630). To be eligible for investment pursuant to this subdivision, these companies shall 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. (2) Retain an investment adviser registered with the Securities and Exchange Commis- sion with not less than five years' experience investing in the securities and obligations as authorized by subdivisions (a) to (m), inclusive, and with assets under management in excess of five hundred million dollars ($500,000,000). The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that these companies may charge and shall not exceed 15 percent of the agency's surplus money that may be invested pursuant to this section. (1) Notwithstanding anything to the contrary contained in this section, Section 53635, or any other provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provi- sions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provi- sions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance. (m) Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the pur- pose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collat- eral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commer- cial Code or federal regulations applicable to the types of securities in which the security interest is granted. {n) Any mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or oth~r pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher Page 5 of8 rating for the issuer's de 1s provided by a nationally recognizec. dng service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Pur- chase of securities authorized by this subdivision may not exceed 20 percent of the agency's sur- plus money that may be invested pursuant to this section. 1983 Main Volume: (Added by Stats.1949, c. 81, p. 289, Sec. 1. Amended by Stats.1951, c. 1643, p. 3697, Sec. 1; Stats.1953, c. 537, p. 1798, Sec. 2; Stats.-1954, Ex.Sess., c. 10, p. 257, Sec. 1; Stats.1967, c. 275, p. 1433, Sec. 1; Stats.1967, c. 1316, p. 3140, Sec. 2; Stats.1974, c. 1354, p. 2938, Sec. 1; Stats.1975, c. 649, p. 1406, Sec. 1; Stats.1977, c. 1138, p. 3657, Sec. 1.5; Stats.1978, c. 65, p. 181, Sec. 1; Stats.1979, c. 158, p. 354, Sec. 1; Sfots.1979, c. 275, p. 942, Sec. 2.5; Stats.1981, c. 185, Sec. 2; Stats.1982, c. 508, Sec. 2.) 1996 Pocket Part: (Amended by Stats.1983, c. 550, Sec. 1; Stats.1983, c. 567, Sec. 1.5; Stats.1984, c. 659, Sec. 2; Stats.1984, c. 741, Sec. 1; Stats.1985, c. 983, Sec. 14, eff. Sept. 26, 1985; Stats.1985, c. 983, Sec. 15, eff. Sept. 26, 1985, operative Jan. 1, 1988; Stats.1985, c. 1526, Sec. 1; Stats.1985, c. 1526, Sec. 1.5, operative Jan. 1, 1988; Stats.1986, c. 784, Sec. 1; Stats.1986, c. 784, Sec. 2, .opera- tive Jan. 1, 1988; Stats.1986, c. 853, Sec. 1, eff. Sept. 17, 1986; Stats.1986, c. 853, Sec. 2, operative Jan. 1, 1987; Stats.1986, c. 853, Sec. 1.5; Stats.1986, c. 853, Sec. 2.5, operative Jan. 1, 1988; Stats.1987, c. 446, Sec. 1; Stats.1987, c. 887, Sec. 3.5; Stats.1988, c. 294, Sec. 1, eff. July 7, 1988; Stats.1988, c. 491, Sec. 1; Stats.1992, c. 173 (A.B.3576), Sec. 1; Stats.1994, c. 705 (S.B.1804), Sec. 10; Stats.1995, c. 784 (S.B.866), Sec. 14.) Sec. 53601.1. Investment in financial futures or financial option contracts The authority of a local agency to invest funds pursuant to Section 53601 includes, in addition thereto, authority to invest in financial futures or financial option contracts in any of the invest- ment categories enumerated in that section. (Added by Stats.1983, c. 534, Sec. 3.) Sec. 53601.5. Investments; qualified purchase agent The purchase by a local agency of any investment authorized pursuant to Section 53601 or 53601.1, not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a broker-dealer, as defined in Section 25004 of the Corporations Code, or from a member of a federally regulated securities exchange, from a national or state-chartered bq.nk, from a federal or state association (as defined by Section 5102 of the Financial Code) or from a brokerage firm designated as a primary government dealer by the Federal Reserve bank. (Added by Stats.1984, c. 929, Sec. 1. Amended by Stats.1985, c. 983, Sec. 16, eff. Sept. 26, 1985.) Sec. 53601.6. Prohibited investments (a) A local agency shall not invest any funds pursuant to this article in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages. (b) A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohib- ited instruments until their maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management com- panies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-l, and follow- ing) that are authorized for investment pursuant to subdivision (k) of Section 53601. (Added by Stats.1995, c. 784 (S.B.866), Sec. 15.) Page 6 of 8 Sec. 53602. lnvestr,,.--)t in legal investments for savings 1,,,--,--')ks; securities of public districts The legislative body shall invest only in notes, bonds, bills, certificates of indebtedness, war- rants, or registered warrants which are legal investments for savings banks in the State, provided, that the board of supervisors of a county may, by a four-fifths vote thereof, invest in notes, war- rants or other evidences of indebtedness of public districts wholly or partly within the county, whether or not such notes, warrants, or other evidences of indebtedness are legal investments for savings banks. (Added by Stats.1949, c. 81, p. 289, Sec. 1. Amended by Stats.1953, c. 537, p. 1799, Sec. 3; Stats.1954, 1st Ex.Sess., c. 10, p. 257, Sec. 2.) Sec. 53603. Direct purchase of securities The legislative body may make the investment by direct purchase of any issue of eligible securities at their original sale or after they have been issued. (Added by Stats.1949, c. 81, p. 289, Sec. 1. Amended by Stats.1953, c. 537, p. 1799, Sec. 4.) Sec. 53604. Sale or exchange of securities, reinvestment of proceeds The legislative body may sell, or exchange for other eligible securities, and reinvest the pro- ceeds of, the securities purchased. (Added by Stats.1949, c. 81, p. 289, Sec. 1. Amended by Stats.1953, c. 537, p. 1799, Sec. 5.) Sec. 53605. Sale of securities, application of proceeds to original purposes From time to time, the legislative body shall sell the securities so that the proceeds may be applied to the purposes for which the original purchase money was placed in the sinking fund or the treasury of the local agency. (Added by Stats.1949, c. 81, p. 289, Sec. 1. Amended by Stats.1953, c. 537, p. 1799, Sec. 6.) Sec. 53606. Bonds issued by purchaser, cancellation, resale The bonds purchased, which were issued by the purchaser, may be canceled either in satisfac- tion of sinking fund obligations or otheIWise. When canceled, they are no longer outstanding, unless in its discretion, the legislative body holds them uncanceled. While held uncanceled, the bonds may be resold. (Added by Stats.1949, c. 81, p. 289, Sec. 1.) Sec. 53607. Delegation of duties to treasurer; monthly report The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for such transactions until such time as the delegation of authority is revoked, and shall make a monthly report of such transactions to the legislative body. (Added by Stats.1957, c. 220, p. 882, Sec. 1.) Sec. 53608. Deposit of securities; receipt; delegation of authority The legislative body of a local agency may deposit for safekeeping with a federal or state association (as defined by Section 5102 of the Financial Code), a trust company or a state or Page 7 of 8 national bank located · }in this state or with the Federal Resen p.nk of San Francisco or any branch thereof within tt .. .s state, or with any Federal Reserve banl\. ..ir with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System, the bonds, notes, bills, debentures, obligations, certificates of indebtedness, war- rants, or other evidences of indebtedness in which the money of the local agency is invested pur- suant to this article or pursuant to other legislative authority. The local agency shall take from such financial institution a receipt for securities so deposited. The authority of the legislative body to deposit for safekeeping may be delegated by the legislative body to the treasurer of the local agency; the treasurer shall not be responsible for securities delivered to and receipted for by a financial institution until they are withdrawn from the financial institution by the treasurer. (Added by Stats.1959, c. 1392, p. 3670, Sec. 1. Amended by Stats.1967, c. 582, p. 1928, Sec. l ; Stats.1980, c. 689, p. 2080, Sec. l; Stats.1985, c. 983, Sec. 17, eff. Sept. 26, 1985.) Sec. 53609. Eligible securities for investment of funds held by local agency pursuant to deferred compensation plans Notwithstanding the provisions of this chapter or any other provisions of this code, funds held by a local agency pursuant to a written agreement between the agency and employees of the agency to defer a portion of the compensation otherwise receivable by the agency's employees and pursuant to a plan for such deferral as adopted by the governing body of the agency, may be invested in the types of investments set forth in Sections 53601 and 53602 of this code, and may additionally be invested in corporate stocks, bonds, and securities, mutual funds, savings and loan accounts, credit union accounts, life insurance policies, annuities, mortgages, deeds of trust, or other security interests in real or personal property. Nothing herein shall be construed to permit any type of investment prohibited by the Constitution. Deferred compensation funds are public pension or retirement funds for the purposes of Sec- tion 17 of Article XVI of the Constitution. (Added by Stats.1971, c. 1629, p. 3511, Sec. 2. Amended by Stats.1972, c. 1370, p. 2736, Sec. 12; Stats.1974, c. 544, p. 1254, Sec. 26; Stats.1975, c. 822, p. 1874, Sec. 1; Stats.1979, c. 373, p. 1320, Sec. 162.) Page 8 of 8 APPENDIX "D" ..................... I 1-.r1 1 1_1 j APPENDIX "D" 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. Page 1 of 7 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. 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. Page 2 of 7 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. 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. Page 3 of 7 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). 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. Page 4 of 7 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. 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. Page 5 of 7 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. 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, 11 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. Page6of7 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. 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 \ PDC: FAHR: 7-9-97 ALL EXEC: STEER: JT.BDS: 7-30-97 AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: ----. AGEN \ ITEM TRANSMITTAL CONTACT FOR INFORMATION (Originator) 2210, Steve Kozak, 2504 Division No., Name, and Extension DECLARATION OF DISTRICTS' OFFICIAL INTENT TO REIMBURSE THE DISTRICTS' EXISTING CAPITAL RESERVE FUNDS FOR CERTAIN EXPENDITURES MADE IN ADVANCE OF, AND IN ANTICIPATION OF, CAPITAL IMPROVEMENT EXPENDITURES, FROM PROCEEDS OF A FUTURE INDEBTEDNESS ISSUE (All Districts) Recommended Action(s): 1. Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt attached Resolution No. 97-XX. 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_ CURRENTBUDGETICOST INFORMATION TOTAL BUDGETED AMT.: $ SOURCE: CORF JO DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET INFORMATION First Year in Budget: Master Plan Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT N/A ORIGINAL BUDGET TOTAL ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent _ Limited Term Revised 05114197 H:\WP .DTA \FIN\221 0\CRANE\FAHR\FAHR.97UUL Y\FAHR97.49 DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR- TO-OATE EXPENDITURES N/A PREVIOUS BUDGET CHANGES CHANGE ORDERS, FUNDS PREV. APPROVED July 13, 1994 YEAR-TO-OATE BUDGET BALANCE N/A BUDGET CHANGE THISAIT AMOUNT REQUESTED THIS AIT REQUIRES BOARD POLICY ACTION? YES REVISED BUDGET TOTAL (Total Budget plus Transfers) N/A REVISED TOTAL PROJECT BUDGET $0.00 AMENDED PROJECT AMOUNT $0.00 If YES, explain in ADDITIONAL INFORMATION section Page 1 of2 ) .1. -.1\.4 L-'/ ~ T' Date 7 I fc,7 Date Signature Date Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) Background ATTACHMENTS TO ----~MITTEE AGENDA (List): 1. Board Resolution ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. Board Resolution The "2020 Master Plan" and the "Five-Year Financial Plan" call for a 50:50 mix of capital improvement funding from borrowing, and pay-as-you-go, over the 30-year Master Plan period. The 1990-92 Capital Improvement Program Certificates of Participation (COP), Series "A," "B," and "C," were issued in the aggregate amount of $316,055,000 in accordance with this policy direction. The last "new money'' COP (Series "C") was issued in September 1992. Two Refunding COPs to refinance already existing debt, were completed in December 1992, and September 1993. However, there were no new borrowings in 1993-94, 1994-95, or 1995-96. The Finance, Administration & Human Resources Committee has previously expressed the Committee's intent to conduct a selection process for a public financing team prior to the next financing; and this process will take several months. During the selection process, the Districts will use accumulated capital reserves to fund capital projects at the Plants, or within individual Districts, until the proceeds from a new COP issue are available. Update Intent to Reimburse In accordance with U.S. Treasury Regulations, the Joint Boards of Directors adopted Resolution No. 94-81 (July 13, 1994) declaring the Districts' intent to reimburse, from future long-term borrowings, Districts' reserve funds expended for certain capital improvement costs. However, the capital financing program planned for 1994-95 and 1995-96 was postponed due to the Orange County bankruptcy. Staff is initiating preparations for a new capital financing program to support the "Strategic Plan Update," and related capital projects. To ensure that the Districts can include monies in upcoming borrowings to reimburse reserve funds for expenditures made in advance of available COP proceeds, it is necessary to update the Districts' declaration of intent to do so. Therefore, the attached "Reimbursement Resolution" has been prepared by General Counsel for adoption by the Joint Boards of Directors. Under provisions of U.S. Treasury Regulation 1.150-2, the Districts may reimburse its reserves for preliminary expenditures, such as design, engineering and similar costs, advanced to fund projects covered by the July 1994 Reimbursement Resolution. The Regulations permit up to 20% of the aggregate par amount of bond proceeds from a new issue to be used for reimbursement of preliminary project expenditures, subsequent to the July 1994 Reimbursement Resolution. Recommended Action Staff recommends that the Finance, Administration & Human Resources Committee adopt a motion to recommend that the Joint Boards of Directors adopt attached Resolution No. 97-XX. SVK:lc ReYised 05/14197 H:\WP.OTA\FIN\2210\CRANE\FAHR\FAHR.97\JULY\FAHR97.49 Page 2 of2 RESOLUTION NO. __ DECLARATION OF OFFICIAL INTENT TO REIMBURSE CERTAIN OF THE DISTRICTS' CAPITAL RESERVES FUNDS FOR EXPENDITURES MADE IN ADVANCE FOR 1997-98 CAPITAL IMPROVEMENT PROJECTS FROM PROCEEDS OF A FUTURE INDEBTEDNESS ISSUE A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICT NOS. 1, 2, 3, 5, 6, 7, 11, 13 AND 14 OF ORANGE COUNTY, CALIFORNIA, DECLARING THEIR INTENT TO REIMBURSE CERTAIN OF THE DISTRICTS' CAPITAL RESERVES FUNDS FOR EXPENDITURES MADE IN ADVANCE FOR 1997-98 CAPITAL IMPROVEMENT PROJECTS FROM PROCEEDS OF A FUTURE INDEBTEDNESS ISSUE *************** WHEREAS, on July 13, 1994, the Joint Boards of Directors of County Sanitation District Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California (collectively the "Issuer") adopted Resolution No. 94-81, declaring their official intent to reimburse their existing capital reserve funds and accounts for certain expenditures made in advance of and in anticipation of issuing indebtedness for capital improvements to be acquired, constructed, or paid for, by or on behalf of the Districts during the period from July 1, 1994 to June 30, 1995, or such later date as the Districts shall determine; and, WHEREAS, the Issuer intends to acquire and/or construct, or otherwise improve, certain capital improvements during Fiscal Year 1997-98, as described in Exhibit "A" (the "Project"), attached hereto and incorporated herein by reference; and, WHEREAS, the Issuer expects to pay certain expenditures (the "Reimbursement Expenditures") in connection with the Project prior to the issuance of indebtedness for the purpose of financing costs associated with the Project on a long-term basis; and, WHEREAS, the Issuer reasonably expects that the debt obligations in an amount not to exceed $100 million will be issued and that certain of the proceeds of such debt obligations will be used to reimburse the Issuer for Reimbursement Expenditures; -1- NOW, THEREFORE, the Board 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 Issuer finds and determines that the foregoing recitals are true and correct. SECTION 2: That this declaration is made solely for purposes of establishing compliance with the requirements of Section 1.150-2 of the U.S. Treasury Regulations. This Resolution declaration does not bind the Issuer to make any expenditure, incur any indebtedness, or proceed with the Project. SECTION 3: That the Issuer hereby declares its official intent to use proceeds of indebtedness to reimburse itself for the Reimbursement Expenditures. SECTION 4: That this Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a regular meeting held July 30, 1997. H:\WP .DTA\FIN\221 0\CRANE\RESOS\97RERESO.DOC -2- .r EXHIBIT A DESCRIPTION OF THE PROJECT The following capital projects and improvements shall constitute the Project, to the extent such capital projects and improvements are acquired, constructed or paid for by or on behalf of the Districts during the period commencing July 1, 1997, and ending on June 30, 1998 (or such later date as the Districts shall determine.) Category A. Plant No. 1 new and rebudgeted major projects to provide increased primary and secondary treatment plant facilities and Master Plan projects for headworks, digesters, and power systems. Also includes seismic retrofit, primary treatment, and secondary treatment upgrades and expansion and other safety and miscellaneous improvements. Category B. Plant No. 2 new and rebudgeted major projects to provide the necessary digestion capacity to serve the increased primary and secondary treatment plant facilities. Includes Master Plan projects for primary basins and power systems. Also includes seismic retrofit, primary treatment, and secondary treatment upgrades and expansion and other safety and miscellaneous improvements. Category C. Includes improved treatment and additional capacity projects for regional water reclamation. Category D. Includes replacement and rehabilitation, improved treatment, and additional capacity projects for interplant and joint facilities such as support facilities, outfall and booster pump stations, sludge disposal, and other Master Plan projects. Category E. Includes special projects, studies, and research for improved treatment and additional capacity at Plants No. 1 and No. 2. Category F. Includes certain equipment for replacement and rehabilitation, improved treatment, and additional capacity at Plants No. 1 and No. 2. Category G. Includes miscellaneous capital improvement projects within County Sanitation District No. 1. Category H. Includes certain manhole access modifications, subtrunk rehabilitation, pump station rehabilitation, pump station rehabilitation, sewer line crossing upgrades, and projects required by freeway widenings and other miscellaneous projects within County Sanitation District No. 2. Category I. Includes certain sewer line replacements, trunk rehabilitation, force main replacements, pump and lift station rehabilitation, sewer line crossing upgrades, and projects required by freeway widenings and other miscellaneous projects within County Sanitation District No. 3. Category J. Includes certain pump station improvements, trunk rehabilitation, and other miscellaneous projects within County Sanitation District No. 5. Category K. Includes pump station improvements and rehabilitation, sewer line and trunk rehabilitation, and other miscellaneous projects within County Sanitation District No. 6. -1- Category L. Includes manhole access modifications, trunk replacement, sewer system improvements, pump station expansion and rehabilitation, projects required by freeway widenings, and other miscellaneous projects within County Sanitation District No. 7. Category M, Includes pump station improvements and replacements, sewer line and trunk rehabilitation, and other miscellaneous projects with County Sanitation District No. 11 . Category N. Includes certain subtrunk and interceptor capacity projects and other miscellaneous projects within County Sanitation District No. 13. Category 0 . Includes certain interceptor capacity and other miscellaneous projects within County Sanitation District No. 14. H:\WP.OTA\FIN\2210\CRANE\FAHR\FAHR.97\.JUL Y\CIP.EXA -2- OMTS: PDC: FAHR: 7/9/97 EXEC: STEER: JT.BDS: 7/30/97 ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN~\ ITEM TRANSMITTAL 6. CONTACT FOR INFORMATION (Originator) 2220, Michael D. White, 2520 Division No., Name, and Extension 1997-98 FINANCIAL INFORMATION SOFTWARE UPDATE AND SOFTWARE MAINTENANCE AGREEMENT WITH THE DISTRICTS' FINANCIAL INFORMATION SOFTWARE VENDOR, J.D. EDWARDS, IN THE AMOUNT OF $55,384.87 (All Districts) Recommended Action{s): Staff recommends that the Finance, Administration, and Human Resources Committee accept the 1997-98 financial information software update and software maintenance agreement with the Districts' financial information software vendor, J.D. Edwards, in the amount of $55,384.87, and recommend approval by the Joint Boards at the July 30, 1997 meeting. 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_ CURRENT BUDGET/COST CURRENT YEAR INFORMATION BUDGET AMOUNT TOTAL BUDGETED AMT.: $57,860 $57,860 SOURCE: JO Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET ORIGINAL BUDGET INFORMATION TOTAL First Year in Budget: N/A Master Plan Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST ORIGINAL BID, PO, INFORMATION CONTRACT AMOUNT $- WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent _ Limited Term Revised 05/14/97 H:\WP .DTA\FIN\221 0\CRANE\FAHR\FAHR.97\.JUL Y\FAHR97.50 DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: July 24, 1996 -Approval of J.D. Edwards contract. CURRENT YEAR-YEAR-TO-DATE REVISED BUDGET TO-OATE BUDGET BALANCE TOTAL EXPENDITURES (Total Budget plus Transfers) $-$57,860 $57,860 PREVIOUS BUDGET BUDGET CHANGE REVISED TOTAL CHANGES THISAIT PROJECT BUDGET N/A N/A N/A CHANGE ORDERS, AMOUNT AMENDED FUNDS PREV. REQUESTED THIS PROJECT APPROVED AIT AMOUNT $-$55,384.87 $55,384.87 REQUIRES BOARD POLICY ACTION? NOT APPLICABLE If YES, explain in ADDITIONAL INFORMATION section Page 1 of2 'M7 Date Date Signature Date Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) ATTACHMENTS TC ~MITTEE AGENDA (List): 1. . ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. At the July 24, 1996, the Joint Boards approved the acquisition and installation of a new financial information system through J.D. Edwards at a cost not to exceed $1 ,485,000. The payroll, budget, and human resource modules were implemented in January, February, and June of 1997, respectively. General ledger, accounts payable, and accounts receivable went "live" this month, and we are projecting to go "live" with purchasing, warehousing, inventory, and fixed assets in October of this year. Final hardware, software, and installation costs are now projected to be under budget by as much as $200,000. Part of the cost of any computer system is the annual cost of maintaining the system and upgrading the software as new releases become available. During the negotiations for the acquisition and installation of a new financial information system in July of 1996, J.D. Edwards informed us that the annual software update and software maintenance agreement for fiscal year 1997-98 would be $52,292, excluding sales tax. The amount of this service has now been reduced to $51,401.37, or $55,384.87 including sales tax. Staff recommends that the Finance, Administration, and Human Resources Committee accept the 1997-98 financial information software update and software maintenance agreement with the Districts' financial information software vendor, J.D. Edwards, in the amount of $55,384.87 , and recommend approval by the Joint Boards at the July 30, 1997 meeting. c: Department Head AGM-Administration A GM-Operations General Manager Revised 05114197 H:\WP.DTA \FIN\221 0\CRANE\FAHR\FAHR.97\JUL Y\FAHR97.50 Page 2 of 2 ' JDEdwards ADDENDUM Customer Address County Sanitation Districts of Orange County 10844 Ellis Avenue . Fountain Valley, CA 92708-7018 J.D. Edwards & Company 8055 East Tufts Avenue Denver, Colorado 80237 This Addendum is made by and between J.D. Edwards & Company ("J.D. Edwards") and Customer in consideration of their mutual promises and subject to its Terms and Conditions. This Addendum amends the Software Update Agreement, ("Agreement"), by and between J.D. Edwards and Customer by its Terms and Conditions as follows: Customer understands and agrees that, concurrent with the execution of this Agreement, J.D. Edwards & Company is assigning this Agreement and all Attachments attendant to this Agreement to "J.D. Edwards World Solutions Company". The Section entitled "PERIOD OF COVERAGE" on the face of this Agreement, Sentence 1, is hereby amended in its entirety to read as follows: The Period of Coverage shall coincide with Customer's fiscal year. The initial Period of Coverage shall commence upon expiration of the Limited Warranty and shall extend through Customer's current Fiscal Year, expiring on June 30, 1997 at which time Customer shall pay the then-current annual Software Update Fees for the subsequent one ( 1) year Period of Coverage. Section 5., PROPRIETARY RIGHTS, Paragraph (D) is hereby amended in its entirety to read as follows: ( 1) THE LICENSED PRODUCTS CONTAIN DISABLING PROCEDURES. IF THERE OCCURS ANY UNAUTHORIZED USE OF THE LICENSED PRODUCTS, SUCH DISABLING PROCEDURES WOULD RENDER TfiE LICENSED PRODUCTS INOPERABLE. (2) The date-sensitive Software Protection Codes are initially issued with an expiration consistent with the payment terms for the Software License Fees. Upon payment in full of the Software License Fees, the Software Protection Codes will be reissued with a one ( 1 ) year expiration. Thereafter, during the term of this Agreement, J.D. Edwards shall make available to Customer additional Software Protection Codes with successive one (1) year expirations reasonably prior to the expiration date of Customer's then-current Software Protection Codes. (3) As long as the Licensed Products remain in their initial warranty coverage, or are covered by J.D. Edwards' Software Update Agreement, Customer may contact J.D. Edwards' Response Line services for the issuance of Software Protection Codes for unscheduled but permitted usages of the Licensed Products, including but not limited to disaster recovery. Otherwise, Software Protection Codes are available upon Customer's request or Notice. • • I JDfdwards SOFTW<\RE UPDATE AGREEMENT \ 9 ~. Tufts Avenue ~r. Colorado 8023 7 Customer ____ ...,G,,,o::.:u:..:n,.;t._y"-'S'"'a=-n=i.:.t:::a..:t.:ic=oc.:.:n:....::Da::1:.::s:.:t:..:r:..:1::.:c:::.;t:..:S=--o=-:.f_0=r:::aa.::n,.g"'e'--=C:.::oc:u:::;n:..:t:..:Y'----------------- Address-----1 ... Q,..R..,4""4,.__E ...... ] .._] .._1_.5_.,A.,.y..,e..,n..,n..,e ..... ____________________________ _ Fountain Valley. CA 2ZZP8-70l8 Software Updates Provision-J.O. Edwards & Company ("JOE") provides 10 Customer. a ___________ 0 corporacion 0 --------; and Customer accepts, subject to 1he terms and conditions of this Software Update Agreement ("Agreement"), the Response Linc/Software Updates services indicated below: Designated Processor: IBM AS/400™ Model: ___________ Serial Number __________ _ RE: Software License Agreement dated: ____________ _ Licensed Products: The Licensed Products shall be defined as all or and only 1he Licensed Products under 1he Software License Agreement and its Attachments and Addenda for which )DE has expressly agreed to offer a warranty 1ha1 the Licensed Produces will perform submnlially in accordance with the JOE published specifications. Start Date: Upon Limited Warranty Expiration Period of Covernge: One ll...J yca,<s) plus initial pro-med partial year if checked •. The Period or Coverage is the time during which the Response Line/Software Updates Services shall be available under this AgrecmenL PREMIER Mafotenance. if chosen, is also available: for a Period of Coverage. whieh is the same as the Period of Coverage for Response Line/Software Updates services unless otherwise indicated in writing. Unless eancekd by either inn:y by written notice no less than thin:y (30) days prior 10 the .end of chc Period of Coverage or extended by written agreement of both pmics efTcccivc no Iner than the end of the Period nf Coverage, this Agreement and the Period of Coverage shall au1om21ially extend for one (I) year at the then current prices. Reinitiation Charge: ........................ $ ---'-N~/ .... A _________ _ Software Update Fee: ..................... $ ___...5=-2..,2._9-=2 ____ _ N/A PREMIER Maintenance Fee: ............ $ ---------52, 292 Updates Total: ................................. $ --"-------- Tax: (or Exemption Number) ............... $ ----------52, 292 Total: .......................................... $ --------- T!ii. Ai:rccmcnt, including 1he Attachments 2nd Amendments. is a complerc ,nd exclusive smemcn1 of the agreement between the parties. which supersedes all p:inr or concurrcn1 proposals and understandings, whether oral or written, and all ocher communications between the parties relating 10 the subject matcer of chis AgrecmenL This Agreement shall not be efTcccive uncil execuced by Cuscomer and accepted by 1n authorized represenmive of JDE ac a principal place of business, -\ccepced by J.D. Edwards & Company and effective 3S of By cxccurion, signer certifies that signer is authorized 10 execute =.,E~ O 7 ~19 _ . Cc 8 h~is,:_ATgr0ee:_m?'8enR,:&_c~; /4-C~ro= ~. ~~.BDWA~~~ ~---'-~ ~ ,...._..~. MICHAEL~ .. HHMITT Donald F. McIntyre 1 •--,..,.~-• ,,__,...~enera 1 ManagP.r V .P . /liEHEl!AI. ~~HllfiER ,,. .. , U£S1ERN ARO ,.. ... , JI. OTlCXLl oo (Up to 60 Users) Pa.., I )> 0 -I -0 z --I m s: en PDC: FAHR: 7/9/97 EXEC: STEER: JT.BDS: ALL AGENDA WOR[?ING AND RECOMMENDED ACTION(S): Agenda Wording: AGENC ITEM TRANSMITTAL CONTACT FOR INFORMATION (Originator) 2410, Barbara Collins, 3027 Division No., Name, and Extension FINANCIAL ASSISTANCE PROGRAM FOR PURCHASE OF COMPUTER EQUIPMENT: GSA staff will present information on cities/agencies offering computer assistance programs to employees. Recommended Action(s): 1. Based upon the information in the attached report, approve a computer financial assistance program with the following terms: • Maximum loan of $3000. • 10% down payment. • 24 months repayment period. • Interest rate of 5 %. • Aggregate maximum loan fund of $150000. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on _ and Notice of Determination filed on _ CURRENT BUDGET/COST INFORMATION TOTAL BUDGETED AMT.:$ SOURCE: CORF JO DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET INFORMATION First Year in Budget: Master Plan Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST INFORMATION Revised 05114/97 H:\WP .DTA\GSA\241 0\COLLINS\AIT\JUL Y972.WPD CURRENT YEAR BUDGET AMOUNT N/A ORIGINAL BUDGET TOTAL N/A ORIGINAL BID, PO, CONTRACT AMOUNT N/A DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: N/A CURRENT YEAR- TO-DATE EXPENDIT\JRES NIA PREVIOUS BUDGET CHANGES N/A CHANGE ORDERS, FUNDS PREV. APPROVED N/A YEAR-TO-DATE BUDGET BALANCE NIA BUDGET CHANGE THIS AIT N/A AMOUNT REQUESTED THIS AIT N/A REVISED BUDGET TOTAL (fetal Budget plus Transfers) N/A REVISED TOTAL PROJECT BUDGET $0.00 AMENDED PROJECT AMOUNT $0.00 Page 1 of3 WILL PROJECT REQUIRE ADDITIONAL Pf )NNEL? NO REQUIRES BOARD' '?Y ACTION? YES NO NOT APPLICABLE If YES, state number: _ Permanent .led Term If YES, explain in AOL. .iNAL INFORMATION section ~ (.,. 'JfJ ?'/-ATTACHMENTS TO COMMITTEE AGENDA (List): 1. Staff report 2. Participation and Loan Agreement Originator Date 3. Financial Assistance Program Policies and Procedures CONCURRENCES: Signature Date Division Ma ager (Or Designee) F Signature Department ad (Or Designee) ~'cuclsM.. · ature Date Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) 4. Computer Purchase Specification Sheet ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. Education and training make employees more valuable and flexible. Computer skills are a priority for both administrative and field personnel to prepare for changes in technologies at the Districts. The new information systems (LIMS, FIS, Plant Automation) will require higher computer skills from employees and will also eliminate some current job responsibilities. Employees with home personal computers, especially employees without access to PC's at work, will increase their computer literacy and, in doing so, increase cross-training capabilities. A proposal for a financial assistance program was brought initially to the May 1997 Board Steering Committee for comment. The Steering Committee recommended a $3000 maximum loan amount and, after some discussion, concurred with a 5% interest rate and 10% down payment. The Steering Committee referred the issue to the FAHR Committee for action. As CSDOC employees became aware of this proposal, they offered other types of suggestions to amend the program. The F AHR Committee should be aware of the following proposals from employees: • Offer a 0% loan because the employees would be training at home, not on Districts' time. • Establish a commercial account with CompUSA . Chase Manhattan Bank has such a program. Employees could go to any store worldwide to "shop", and the Districts would purchase equipment through the Sales Representative at the Fountain Valley store. • Offer discount purchasing through suppliers (Dell). • Conversion of sick and vacation or personal time towards computer purchases. In addition to these comments, we are aware that there has been a petition circulating which requests the following policy changes as quoted: • The dollar limit for computer/peripheral purchases to be a maximum of $5000 to cover the (costs of) computer, printer, monitor, software etc. • The term for repayment to be a maximum of 36 months. • The interest rate to be 0%. • No 10% down payment required. • An effort to be made to coordinate the purchases of computer equipment from one source, at one time to receive discounted pricing for a volume purchase. Revised 05/14197 Page 2 of 3 H:\WP .DTA\GSA \241 0\COLLINS\AIT\JUL Y972.WPD GSA staff is not recommending t:\ proposals; however, the Committee'ly wish to discuss these points at the July 9, 1997 meeting. BAC c: Department Head AGM-Administration A GM-Operations General Manager Revised 05/14197 H:\WP.DTA\GSA\2410\COLLINS\AIT\JULY972.WPD Page 3 of3 July 9, 1997 STAFF REPORT Consideration of a proposal to establish an employee computer purchase assistance program. Proposal Based upon the following report Executive Management Team and Steering Committee recommend an employee assistance program for purchasing computers with the following suggested terms: • Maximum loan of $3,000. • 5% interest (Local Agency Investment Fund rate) • Repayment period of 24 months. • Aggregate maximum loan fund of $150,000. • 10% Down Payment Report The City of San Louis Obispo recently surveyed 450 California cities concerning computer assistance programs. They received 218 responses ( 48.4% response rate) with 88 cities (40.4%) indicating some type of financial support. There are direct loan programs in 73 of the responding cities, and a breakdown of the supplied information indicates that: Maximum Loan Amount Number Percent >$4,000 11 15% $3,500-$3,999 8 11% $3, 000-$3,499 22 29% $2,500-$2,999 14 19% <$2,500 15 21% Interest Rate Number Percent No interest 60 82% Low Interest (5-6%) 13 18% Maximum Repayment Time Number Percent >36 months 24 33% 25-35 months 3 4% 24 months 34 47% <24 months 12 16% Computer Assistance Program Page 2 of 4 July 9, 1997 The following table includes the computer assistance information of some local cities and agencies within the service area of the Districts. City Eligibility Interest Loan Repayment Period Maximum Maximum La Palma 1070 hours 0% $2000 24 months Los Alamitos 1 year 0% $5,000 24 months Orange None 0% $5,000 48 Months Fullerton 6 months 0% $3,000 30 months Stanton None 0% $2,500 24 months Garden Grove 6 months 0% $3,000 24 months Anaheim 6 months 0% $3,000 24 months Irvine Ranch W. D. 1 year 0% $3,000 24 months O.C.W.D. 1 year 0% $3,000 12 months O.C.W.D. 1 year 0% $5,000 24 months Metropolitan_ W. D. 1 year 0% $2,000 12 months There are aggregate caps in some cities/agencies. When the aggregate maximum amount is loaned to employees, waiting lists are established; as loan amounts are repaid, the city/agency will loan available funds to more employees. City/Agency Aggregate Cap Number of Employees $ per Capita Irvine Ranch W. D. $150,000 261 $575 Orange County W. D. $50,000 175 $286 Metropolitan W. D. $10,000 25 $400 San Clemente $38,000 169 $225 City of Orange $200,000 650 $308 Stanton $10,000 38 $263 Anaheim $200,000 2400 $83 Chino Basin S. D. $100,000 213 $470 Computer Assistance Program Page 3 of 4 July 9, 1997 Employee eligibility for loans varied: • 1 year of employment • After probationary period. • 1070 hours worked. • Six months (often probationary time). • No waiting period, immediate eligibility. • A few cities, computer assistance to part time employees. • Most cities, regular full time employees after probation. In addition to direct loans, there were other means of assistance. • Purchase surplus computers. • Purchase computers at a city negotiated price with volume discounts. • Reimburse the employee for the interest on a privately secured loan on a yearly basis. • Direct reimbursement for career enhancement and professional development programs. • Conversion of sick leave accruals toward computer purchase. • Loans from employees deferred compensation plans (457 and 401 a). During interviews, representatives from various local cities indicated areas of concern and interest with programs that they had implemented. • City/agency must ensure that employee has no garnishments or liens before granting loan, causing extra administrative work. • Some of the cities surveyed required a down payment, usually of 10%, but most did not. • When participating employees terminated employment, payments from last check usually covered the remainder of the loan. Infrequently, they did not and the city/agency either lost the income or lost time and money pursuing the claim. • Public perception of giving employees benefits generated from taxes could be a problem. • One agency decided against claiming money from the families of employees who had died. • No MAC's were allowed at one agency because of incompatibility. • Some agencies allowed upgrades, others did not. • Some agencies had a stated minimum to prevent "nickel and dime" purchases. • Some agencies allowed the purchase of any software and some were highly restrictive. • Most stipulated that the software be similar to the software used at work. • Some cities dealt with one manufacturer and the employees were limited to those packages; some cities allowed any vendor and any packages; and some cities offered combinations of all three. Computer Assistance Program Page 4 of 4 July 9, 1997 The cities and agencies which are serviced by the Districts offered computer assistance in the following manner: Type of Organization Number Total Percent Cities 7 23 30.4% Sanitary Districts 0 4 0% Water Districts 4 5 80% Interviews with representatives of 22 sanitation districts of varying size throughout the States of California and Nevada determined that only four of 22 agencies (18.2%) offered employee assistance in purchasing computers. Sanitary Eligibility Interest Loan Repayment # of Agg.Cap $ per District Period Maximum Maximum Emp. Cap. West Bay 6 months 0% $3,000 24 months 21 0 ? Chino 6 months 0% $3,000 24 months 213 $100,000 $470 Central C.C. Off prob. 6% $2,000 $100/mo. 247 0 ? Union 6 months 0% $3,000 36 months 139 $100,000 $719 The attached contracts, policies and procedures, and computer specification form were created based upon existing plans at the Irvine Ranch Water District (IRWD) and the Orange County Water District (OCWD) and adapted to the requirements of the Districts. If you have any questions regarding this report, or if you require and further analyses, please call me at extension 3027. \BAC H:\WP .OTA \GSA \241 0\COLLINS\AIT\JUL Y97RP .WPD Attachments COUNTY SJ\~ITATION DISTRICTS OF ORA~GE COUNTY PERSONAL C._,IIIPUTER FINANCIAL ASS1s· •.. NCE PROGRAM Participation and Loan Agreement Employee Name: Social Security Number: The above named employee (Participant) of the County Sanitation Districts of Orange County (CSDOC) has been provided a copy of the CSDOC Computer Purchase Financial Assistance Program (FAP) and hereby elects to purchase a personal computer and/or certain related equipment and/or software as specified on the Employee's Personal Computer Specification Sheet (Equipment) attached hereto and participate in the financing arrangement offered under the Program and further agrees to and accepts the following terms and conditions: 1. The total price of the equipment to be purchased is $ ____ and is identified on the attached Employee's Personal Computer Specification Sheet. The Participant provides a down payment equal to ten percent of the total price of the equipment to the vendor. 2. CSDOC agrees to make an 5% loan to the Participant in the amount of $ ____ for a period not to exceed ____ months to purchase the computer equipment shown on the Employee's Personal Computer Specification Sheet. 3. Participant authorizes CSDOC to deduct $ ____ from each paycheck of the Participant beginning _________ until the amount identified in Paragraph 2 has been paid in full. Participant may elect to pay the remaining unpaid balance at any time prior to the last payroll deduction. 4. Participant agrees not to sell, trade, or otherwise dispose of the Equipment until the loan has been paid in full. Participant also agrees that any reassignment or transfer of the Equipment or this Agreement will result in cancellation of this Agreement. Violation of these provisions will require Participant to immediately pay to CSDOC the remaining amount due on the loan. 5. Upon termination of the Participant from the employment of CSDOC for any reason, any remaining amount to be paid to CSDOC under this Agreement shall immediately become due and payable. Participant hereby authorizes CSDOC to withhold from his/her final pay, including sick leave and vacation payoff, any amount remaining under this Agreement. If such Participant's final pay is not sufficient to cover said balance, then such Participant shall personally be responsible for paying the balance to CSDOC within ten (10) days of termination. 6. All warranties and service or maintenance contracts shall be between the vendor and the Participant. Participant shall deal directly with the vendor, and in no event shall Participant look to CSDOC for any claims relating to warranty, service, or maintenance. 7. This Agreement may be changed only by a written document signed by CSDOC and the Participant and supersedes any and all written or oral agreements, proposals, and communications concerning the Program. 8. In the event either party hereto brings any suit against the other party to enforce any rights under this Agreement, the prevailing party in such suit shall recover from the other party its reasonable attorney's fees and costs incurred in connection therewith. Accepted: Participant: Date: Approved: Treasurer/Finance Director: Date: COUNTY SANITATION DISTRICTS OF ORANGE COUNTY POLICIES AND PROCEDURES OF THE PERSONAL COMPUTER FINANCIAL ASSISTANCE PROGRAM PURPOSE The Financial Assistance Program for purchasing computer equipment is provided to assist employees in developing and/or increasing computer skills which will enhance performance and prepare for the Districts' plans to implement progressive information technology systems. EMPLOYEE ELIGIBILITY Regular and part-time employees, in good standing, who have completed six months of service with the District are eligible for loans under this program. Participants must agree to comply with all requirements and provisions. LOAN LIMITATIONS • Loans will be made to employees on a first-come, first-serve basis, until the $150,000 loan fund is depleted. As funds become available through loan repayment, additional loans will be processed. • A written agreement between the District and the participant is required. The Participation and Loan Agreement outlines the responsibilities of the participant, terms of the agreement, payroll deduction arrangements and other conditions of the plan. • The purchase of games and entertainment software is not allowed with loan funds. • All computer equipment purchases must be approved by the Manager of the Information Technology Division before the loan is issued. LOAN CRITERIA The provisions of the Financial Assistance Program are: • A maximum of $3,000 will be loaned to eligible employees for initial purchase and/or upgrades for systems determined to be eligible under the plan. • Due to administrative costs, a minimum of $500 will be loaned to employees. • Each loan will be repaid over a period of 24 months (48 payments) and will be issued at a 5% interest rate. Early repayments or shorter payback periods are acceptable at employee's request. • Loan payments will be made through semi-monthly payroll deductions. Payment will be determined by the amount financed, plus interest, divided by 48 pay periods (24 months). • Loans are due and payable in full upon termination of employment for any reason. The loan balance will be deducted from the final paycheck. Outstanding balances will be paid within 10 days of termination. RECOMMENDED SYSTEM CRITERIA • Pentium Computer with 16-32 MB memory, Minimum 1.5 GB hard drive. • VGA or SVGA Monitor • Minimum BX CD ROM, 3.5 floppy disk drives. • Districts compatible software applications. • Printer or printer/scanner. RESTRICTIONS ON TRANSFER OR ASSIGNMENT Each participant in the Program agrees that equipment and software made available with Districts' funding remains the property of the employee. Any reassignment or transfer of the equipment violates the agreement and cancels the right to participate in the plan. PROCEDURE TO APPLY FOR A LOAN • Obtain an explanation of the Computer Purchase Financial Assistance Program, a Personal Computer Specification Sheet, and a Participation and Loan Agreement from Human Resources. • Obtain a quotation(s) from vendor(s) for the hardware and software purchases to be covered by the program. • Submit the Loan Application Form and the Personal Computer Specification Sheet with attached quotation(s) from vendor(s) to Human Resources. • Human Resources will route the Specification Sheet and quotations to the Manager of Information Technology for approval. • After approval, Human Resources will verify employment, calculate payroll deductions, prepare the Loan Agreement, and route it to the Director of Finance/Accounting. • The Director of Finance/Accounting will approve and sign the loan agreement and have warrants prepared in the names of the employee and vendor(s); the warrants will be returned to Human Resources. • Human Resources will notify the employee that the Participation and Loan Agreement is ready for signature. • Employee will sign Loan Agreement and pick up warrants at Human Resources. A:\2COMPUTE.WPD COUNTY s:JITATION DISTRICTS OF OR"'•"GE COUNTY PERSONAL COMPUTER FINANCIAL ASSISTANCE PROGRAM Employee's Personal Computer Specification Sheet Employee: Check one: • Addition to Existing System Computer Equipment Sub Total Tax Less 10% Total Loan Amount Employee Signature: Manager of Information Technology Signature: Department: • New System Price Date: • Approved • Denied ., OMTS: PDC: FAHR: 7-9-97 EXEC: STEER: JT.BDS: 7-30-97 ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: --AGE N \ ITEM TRAN SMITTAL CONTACT FOR INFORMATION (Originator) 2210, Gary G. Streed, 2500 Division No., Name, and Extension SEWER SERVICE CHARGES-PROPOSITION 218 CERTIFICATION (All Districts) Recommended Action(s): 1. Authorize staff to execute the Proposition 218 Certification as required by the County of Orange. 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 _ CURRENT BUDGET/COST INFORMATION TOTAL BUDGETED AMT.: $ SOURCE: CORF JO DISTRICTS Schedule/Line Items: AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET INFORMATION First Year in Budget: Master Plan Estimate: Year of First Costs: THIS AITNENDOR/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT N/A ORIGINAL BUDGET TOTAL N/A ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent _ Limited Term DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR- TO-DATE EXPENDITURES N/A PREVIOUS BUDGET CHANGES N/A CHANGE ORDERS, FUNDS PREV. APPROVED N/A YEAR-TO-DATE BUDGET BALANCE NIA BUDGET CHANGE THISAIT NIA AMOUNT REQUESTED THIS AIT REVISED BUDGET TOTAL (Total Budget plus Transfers) N/A REVISED TOTAL PROJECT BUDGET $0.00 AMENDED PROJECT AMOUNT $0.00 REQUIRES BOARD POLICY ACTION? NOT APPLICABLE If YES, explain in ADDITIONAL INFORMATION section Revised 05/14197 Page 1 of2 H:\WP .DTA\FIN\221 0\CRANE\FAHR\FAHR.97\JUL Y\CERT218.PRP ATTACHMENTS TO "'flMITTEE AGENDA (List): 1. Sewer Service C1. J~s -Proposition 218 Certification Originator Date CONCURRENCES: Date ~ ·ts 17 Date ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. Sewer Service Charges -Proposition 218 Certification Sign t re Assi nt General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) The County Tax Collector and Auditor-Controller have recently prepared a memo, together with a draft certification to all public agencies that utilize the County Tax rolls for collection of user charges or fees. Specifically, they are requiring the agency to sign a certification that the fees and charges are in compliance with the requirements of Proposition 218, that the agency will agree to defend, indemnify and hold harmless the County of Orange and all of its entities, agencies and officers; and that if any judgment is entered in favor of a claimant third party against the County or any of the indemnified parties, they can offset the amount of judgment against any revenues collected. The estimated user fees to be collected in 1997-98 as a separate line item on the property tax bill total $63,177,000 for all Districts. Collecting these fees on the tax bill is the most cost-effective method of collection. Should there be a law suit regarding Proposition 218, the Districts would need to take the lead to protect our position and revenues. The requested certification does not change our position or increase our liability. Recommendation That staff be authorized to execute the Proposition 218 Certification as required by the County of Orange. c: Department Head AGM-Administration AGM-Operations General Manager Revised 05/14197 H:\WP .OTA \FIN\221 0\CRAN E\F AH R\F AHR.97\J UL Y\CERT218.PRP Page 2 of 2 SEWER SERVICE CHARGES PROPOSITION 218 CERTIFICATION The COUNTY SANITATION DISTRICT NO. 1 hereby certifies that the special assessments, special taxes, parcel taxes, charges, and/or fees which are to be placed on the FY 1997-98 property tax roll meet the requirements of Proposition 218 which added Articles XIIIC and XIIID to the State Constitution. The COUNTY SANITATION DISTRICT NO. 1 agrees to defend, indemnify and hold harmless the County of Orange, the Board of Supervisors of the County of Orange, .the County of Orange Auditor-Controller and Treasurer- Tax Collector, and Orange County officers and employees from litigation over whether the requirements of Proposition 218 were met with respect to these special assessments, special taxes, parcel taxes, charges, and/or fees. If any judgment is entered against any indemnified party as a result of not meeting the requirements of Proposition 218 for these special assessments, special taxes, parcel taxes, charges, and/or fees, the COUNTY SANITATION DISTRICT NO. 1 agrees that the County of Orange may offset the amount of any judgment paid by an indemnified party from any monies collected by the County of Orange on behalf of the COUNTY SANITATION DISTRICT NO. 1, including property taxes, special assessments, special taxes, parcel taxes, charges, or fees. Signature of Authorized Representative of COUNTY SANITATION DISTRICT NO. 1 Title of Authorized Signer Date LAW OFFICES OF ~ I WOODRUFF, SPRADLIN & SM........<.T A PROFESSIONAL Co!IPORATION TO: FROM: DATE: RE: MEMORANDUM Chairman and Members of FAHR Committee County Sanitation Districts General Counsel June 26, 1997 Request for Certification and Indemnification by the County of Orange re District User Charges By letter dated April 30, 1997, the County Auditor-Controller sent a detailed report to all Cities and Special Districts regarding 1997-98 special assessments, notifying that his office was changing the procedures for adding special assessments to the 1997-98 secured tax roll as a part of those procedures. The Auditor-Controller has indicated that he is requiring that each City, Special District and School District sign a certification statement certifying that the charges and/or fees which are being requested to be added to the property tax roll, comply with the provisions of Proposition 218, and his office has prepared a certification which also adds a significant legal requirement that the City or District agree to defend, indemnify and hold harmless the County and all of its officers and departments from litigation over Proposition 218 issues. My office has been requested to review this, and to report to your Committee and the Joint Boards as to the legal authority of the County to impose this requirement upon the Districts as a condition to adding our user charges to the 1997-98 tax roll. It is our opinion that neither the County Auditor-Controller nor the County Tax Collector has the authority to impose conditions such as requiring a certification of compliance with the provisions of Proposition 218, and/or to require a hold harmless and indemnification agreement in exchange for the Auditor-Controller including the charges on the tax roll. This opinion is based primarily on the provisions contained in Article IV, Chapter 3, Title 1 of the California Health & Safety Code, Sections 5470 et seq. This referenced Article is a comprehensive scheme of legislation available for use by all local government entities who wish to adopt rates or charges relating to services and facilities of a sewer and wastewater treatment system. Within this comprehensive scheme, are the provisions that allow the local entity that adopts an ordinance enacting charges to be collected on the tax roll, and the provisions are mandatory in their language, in that they provide that the County Auditor "shall" and the County Tax Collector "shall" perform the required duties of their offices, such as entering the required charges on the current assessment rolls and including the amounts of the fees or charges on the tax bills. Chairman and Members of FAHR Committee County Sanitation Districts June 26, 1997 Page2 Specifically, each year the Districts, as do many other local agencies, on or before August 10th, by action of the governing body, certify to the County Auditor a list of the lots or parcels of land as they appear on the current assessment roll that are subject to the fees or charges and the amounts of the installments to be paid. California Health & Safety Code Section 547 4.5 provides: "The auditor ~ enter on the current assessment roll the amounts of the installments of such fees or charges and interest and .... " (Emphasis added) Section 547 4.5 Additionally, Health & Safety Code Section 547 4.6 provides: "The tax collector shall include the amounts of the installments of fees or charges and the interest on bills for taxes levied against the respective lots and parcels of land .... " (Emphasis added) Section 547 4.6 There is no grant of statutory authority to either the Auditor or the Tax Collector to impose contractual obligations or conditions upon those local entities who exercise their rights under this Article of the Health & Safety Code. Accordingly, we believe that the request by the Auditor-Controller is without legal basis. Notwithstanding the above, the Districts, of their own determination, may elect to provide the certification to the County of Orange and the Auditor-Controller and Tax Collector. It would seem certain that in the event of any litigation challenging the Districts' actions enacting their annual user fees, it would include the County as a party-defendant. The actions to have this done are, of course, those of the Districts, and in fact the Districts will be taking all possible measures to ensure that they comply with all of the applicable provisions of Proposition 218. I can also indicate to you that there is a great degree of concern being expressed by Cities and Special Districts throughout the State of California at this effort being made by County Auditors on a state-wide basis. I know of several Counties where Cities and Special Districts have in fact taken the position that there is no legal authority to impose this condition and are refusing to provide the certificate to their respective County Auditors. I am also aware of at least two Counties where, on the advice of County Counsel, the County Auditor has withdrawn the request. Here in Orange County, I am aware that a considerable number of Special Districts and a few Cities have expressed their displeasure and disagreement with the County's asserted right to impose this condition. Based _, Chairman and Members of FAHR Committee County Sanitation Districts June 26, 1997 Page 3 thereon, I would suggest that I would report back to you by the end of July as to the current status of this proposal and whether the County intends to continue forward with the request. Obviously, the Districts, who annually receive many millions of dollars on property taxes, are placed at great risk in the event the Auditor-Controller and Tax Collector should refuse to carry out their duties and put our charges on the tax rolls because the Districts refuse to provide this certification. TLW:pj cc: Mr. D.F. McIntyre Mr. B.P. Anderson Ms. J.A. Wilson Mr. G.G. Streed OMTS: PDC: FAHR: 7/9/97 EXEC: STEER: JT.BDS: ALL AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: AGEN~\ ITEM TRANSMITTAL CONTACT FOR INFORMATION (Originator) 2210, Gary G. Streed, 2500 Division No., Name, and Extension AUTHORIZE STAFF TO NEGOTIATE AN AGREEMENT WITH R. W. BECK TO DEVELOP ASSUMPTIONS AND STRATEGIES TO IMPLEMENT A REPLACEMENT FUND FOR FIXED ASSETS FOR AN AMOUNT NOT TO EXCEED $75,000 (All Districts) Recommended Action(s): 1. That the Directors authorize staff to negotiate an agreement with R. W. Beck to develop assumptions and strategies to implement a Replacement Fund for fixed assets for an amount not to exceed $75,000. CEQA REVIEW: Project is Exempt: YES Date Notice of Exemption Filed: Negative Declaration Approved on Final EIR Approved on_ and Notice of Determination filed on _ CURRENT BUDGET/COST INFORMATION TOTAL BUDGETED AMT.: $ SOURCE: CORF Schedule/Line Items: Strategic Plan AMOUNT OF TRANSFER: Schedule/Line Item: CURRENT YEAR BUDGET AMOUNT $200,000 DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR- TO-DATE EXPENDITURES N/A YEAR-TO-DATE BUDGET BALANCE N/A REVISED BUDGET TOTAL (Total Budget plus Transfers) $200,000 TOTAL PROJECT BUDGET INFORMATION ORIGINAL BUDGET PREVIOUS BUDGET BUDGET CHANGE THISAIT REVISED TOTAL PROJECT BUDGET TOTAL CHANGES First Year in Budget:: Master Plan Estimate: Year of First Costs: 1996-97 1996-97 THIS AITNENDOR/PROJECT COST INFORMATION $470,000.00 ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, state number: _ Permanent _ Limited Term Revised 05/14/97 H:\WP .OTA \FIN\221 0\CRANE\F AH R\F AH R.97\J UL Y\F AH R97 .53 $11,000.00 CHANGE ORDERS, FUNDS PREV. APPROVED $0.00 AMOUNT REQUESTED THIS AIT $75,000.00 REQUIRES BOARD POLICY ACTION? YES If YES, explain in ADDITIONAL INFORMATION section $481,000.00 AMENDED PROJECT AMOUNT $75,000.00 Page 1 of2 Originator CONCURRENCES: Sig ature Department Head (Or Designee) Signature Assistant General Manager (Or Designee) Date Date 7(r((r7 Date Date ADDITIONAL INFORMATION (Background and/or Summary) ATTACHMENTS TO ,--~1MITTEE AGENDA (List): 1. ATTACHMENTS TO JOINT BOARDS AGENDA (List) 1. During the User Fee and Budget adoption processes, several Directors requested a formal review of the Districts' accumulated funds and reserves policies. At the May FAHR Committee meeting, staff reported that the Strategic Plan consultants had agreed to accelerate the Financial Plan portion of their work at no additional cost. As part of the Strategic Plan, the mix of pay-as-you-go and debt financing would be evaluated as well as the accumulated funds and reserves policies of other agencies. The FAHR Committee directed staff to add to the scope an analysis of assumptions and strategies to develop a replacement reserve for fixed assets. Originally, staff believed we had sufficient information available to proceed in- house. However, after review of the scope of work and the work product obtained by IRWD earlier this year, we have determined we would get a better, more solid report from a consultant. Staff has contacted the firm that was selected by IRWD after a competitive process and held preliminary discussions as to scope, scheduling, and compensation. A firm proposal can be negotiated later this month after a site visit to review records and availability of other information. However, initial discussions indicate the project can be completed by October 1997, at a cost not to exceed $75,000. The scope of work would include preparing an inventory of existing fixed assets in the collection, treatment, disposal and general facilities; reviewing the nature and extent of facilities to be constructed through system build-out; developing replacement costs and schedules; developing a computerized spreadsheet model; and preparing a final report. Timing of this project is very important as the accumulated funds and reserves policy will be critical for our rate- setting process and for future debt financing. The firm of R. W. Beck has experience with the type of project we are expecting, has experience with the local environmental impacts on sewers and facilities, and has experience with the Orange County attitude toward fees and reserves. Recommendation Staff recommends authorization to negotiate an agreement with R. W. Beck to develop assumptions and strategies to implement a Replacement Fund for fixed assets for an amount not to exceed $75,000. GGS:lc c: Department Head AGM-Administration AGM-Operations General Manager Revised 05114197 H:\WP .DTA \FIN\221 O\CRANE\F AHR\F AHR.97\JUL Y\F AHR97.53 Page 2 of2 May 14, 1997 Accumulated Funds Policy From 1996-97 Budget As a part of the "2020 Vision" Master Plan, the Five-Year Financial Plan and subsequent financial planning sessions, the Directors have developed a comprehensive policy regarding reserves accumulated funds. The levels and purposes are described as follows: • General Liability: In 1979, the Directors established a Self-Insurance Fund for liability insurance and a reserve of $250,000. The fund was designed to self-insure for basic small claims, and to purchase excess-loss insurance for larger claims. Each year an in-lieu premium would be paid and any excess would accumulate in the reserves. In 1986, the Directors decided to become completely self-insured and not purchase any liability insurance. However, in 1996 the Directors voted to limit the Districts' self-insurance exposure to $100,000 and acquired excess public liability insurance of $25 million at a cost of $115,000 annually. A goal of $2.5 million has been established for this fund. • Operating Fund General or Dry Period Funds: The principal revenue stream of the Operating Funds follows the County of Orange Tax Collection and apportionment schedule as the Sanitary Sewer Service Fee is collected as a separate line item on the property tax bill. Since the first major apportionment is scheduled for late November, the first five or six months of operating costs must be paid from funds on hand. For this reason, "Dry-Period Funds" of 50 percent of the current year's operating budget have been established. The goal for these funds is approximately $30 million. • Operating Fund Contingency Funds: The Sanitary Sewer Service Fee can only be assessed once each year. The fee is collected on the County property tax bill to minimize collection costs and delinquencies, but cannot be changed after the tax bills are mailed. Since a District cannot generate any additional revenues at mid-year, a contingency has been added to the budgetary requirement. This requirement has been established at 20 percent of the annual operating expense, or approximately $12 million. • Capital Projects Funds: Funds for capital improvement projects, estimated to exceed $1.5 billion by the year 2020, come from connection fees, savings and borrowing. Because the capital improvement program is master-planned to meet federal and state environmental regulatory requirements and additional capacity needs, projects must be started and completed on a schedule. While the "2020 Vision" Master Plan proposed a 50:50 mix of construction funds from pay-as-you-go and borrowing, the financial markets may not be optimal for a debt issue when construction funds are needed. In order to provide for cycles in the financial market, Capital Projects Funds equal to one year's estimated capital outlay has been established. The current goal is $50 million, but was $100 million when the policy was adopted. • Environmental Requirement Funds: An Environmental Requirement Fund has been established at 10 percent of one year's estimated capital outlay program to provide for contingency capital funding for unforeseen or quick-breaking environmental requirements on projects to improve the quality of the air, ocean, or the land. Current plans are to have $5 million in this fund. CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411 Accumulated Funds Policy FY 96-97 Page2 May 14, 1997 • Earthquake and Flood Damage Reserve: The current replacement value of the Districts' sewerage system is estimated to be approximately $1.5 billion. The two treatment plants are adjacent to the Santa Ana River and near the Newport-Inglewood Fault. Although our facilities are designed and built to the highest seismic standards, property insurance is very expensive and difficult to obtain. The 1996-97 property insurance premium for excess loss is estimated at $1.37 million for $200 million of all-risk insurance, but only $30 million of earthquake coverage. Because of the minimal amount of cost-effective insurance available, an Earthquake and Flood Reserve of $100 million has been established. This is aproximately equal to 10% of fixed asset value at cost. • Debt Service Reserves: A condition of some Certificate of Participation (COP) issues is that a reserve be established to guarantee some future payments. Required Debt Service Reserves, under the control of the Trustees, are approximately $32 million. • Debt Service Dry Period Funds: The main revenue source for debt service payments is property tax revenues also collected by the County of Orange on the property tax bill. Since the first major apportionment is scheduled for late November, and the annual principal payments on COP debt is due in August, the payment must be paid from cash on hand. For this reason, "Dry-Period Funds" equal to the Debt Service requirements due in August of each year have been established. The current requirement is approximately $26 million. GGS:lc H:\WP.DTA\FIN\2210\CRANE\FAHR\FAHR.97\MAY\FINOVR.497 INF.ORMA,TlO,NAL. P'RESENTATIONS C C ,, I MEETING DATE OMTS: 06/04/97 PDC: 06/05/97 FAHR: 07 /09/97 EXEC: STEER: JT.BDS: All AGENDA WORDING AND RECOMMENDED ACTION(S): Agenda Wording: Safety and Emergency Response Program Status Report. Recommended Action(s): Receive and file this information-only Status Report. CEQA REVIEW: Project is Exempt: NOT APPLICABLE Date Notice of Exemption Flied: Negative Declaration Approved on Final EIR Approved on _ and Notice of Determination filed on _ CURRENTBUDGETICOST INFORMATION TOTAL BUDGETED AMT.: $480,204 SOURCE: JO Schedule/Line Items: 2530 AMOUNT OF TRANSFER: Schedule/Line Item: TOTAL PROJECT BUDGET INFORMATION First Year in Budget: 1995-96 Master Plan Estimate: Year of First Costs: 1996 THIS AITNENDOR/PROJECT COST INFORMATION CURRENT YEAR BUDGET AMOUNT $355,204 ORIGINAL BUDGET TOTAL $480,204.00 ORIGINAL BID, PO, CONTRACT AMOUNT WILL PROJECT REQUIRE ADDITIONAL PERSONNEL? NO If YES, stale number: _ Permanent _ Limited Term Revised 01/14197 G:\NTGLOBAL\LENORA\SER_STAT.WPD AGEN \ ITEM TRANSMITTAL JO. CONTACT FOR INFORMATION (Originator) 2530, Daniel Tunnicliff, 2143 Division No., Name, and Extension DATE OF MOST RECENT BOARD ACTION ON THIS SPECIFIC ITEM: CURRENT YEAR- TO-OATE EXPENDITURES $283,545 PREVIOUS BUDGET CHANGES $0.00 CHANGE ORDERS, FUNDS PREV. APPROVED YEAR-TO-DATE BUDGET BALANCE $71,659 BUDGET CHANGE THISAIT $0.00 AMOUNT REQUESTED THIS AIT REQUIRES BOARD POLICY ACTION? NO REVISED BUDGET TOTAL (Tolal Budget plus Transfers) $0 REVISED TOTAL PROJECT BUDGET $0.00 AMENDED PROJECT AMOUNT $0.00 If YES, explain in ADDITIONAL INFORMATION section Page 1 of5 CONCURRENCES: ATTACHMENTS TO AGENDA (List) .--' -Jl-t; I To Committee: Date s--(2 -·i1 Signature Date To Jt. Bds.: 1. Department Head (Or Designee) ~-{A)~ ~11~/q, -ra ~ Assistant General Manager (Or Designee) ADDITIONAL INFORMATION (Background and/or Summary) The Safety and Emergency Response Division is responsible for ensuring a safe and healthful workplace. Several projects were begun during the 1995-96 and 1996-97 Fiscal Years to accomplish these goals, including development of an Integrated Emergency Response Plan (IERP), an Industrial Hygiene Program, and Hazardous Energy Control Procedures Needs Assessment. INTEGRATED EMERGENCY RESPONSE PLAN On October 25, 1995, the Districts awarded a Professional Services contract to develop an Integrated Emergency Response Plan (IERP) to Communications Performance Group, Inc. for a total amount not to exceed $312,232 over the 1995-96 (Phase 1) and 1996-97 (Phase 2) Fiscal Years (OMTS95-43). The Safety and Emergency Response Division has oversight and project management responsibilities for the IERF and the Districts' Emergency Response Program. A cross-department IERP Review Team was formed to facilitate the gathering of information and to provide input to and review of the various documents developed for this project. The IERP will ensure that the Districts: • Provides personnel with the procedures to safely respond to an emergency, thereby protecting life, environment, and property • Meets regulatory requirements The IERP will ensure that the Districts have a unified, integrated approach to emergency preparedness and response and will enable the Districts to be eligible for state reimbursement of response-related personnel costs during a major emergency. IERP Status The IERP was completed on December 31, 1996 and was distributed to Department Directors, Division Managers, and the IERP Review Team on February 21, 1997. The IERP consists of two volumes. Volume I, Emergency Preparedness contains plans for preparing for an emergency, for example, the Media Plan and Finance Plan. Volume II, Emergency Plans and Procedures, contains plans and procedures for specific types of emergencies such as earthquakes, floods, and hazardous materials releases. Revised 01 /14/97 H:\WP.DTA\HR\2530\TUNNICLI\SAFETY\OMTSSTAT.WPD P~ge 2 of' 5 ,, \ Several products were developed that were not in the original scope ot worK w1tnout an increase in me rota1 cost 01 the project. For example: ,,~ l • A Hazardous Materials Chemical Inventory database was developed by the consultant. This database allows for the tracking of the amount and location of hazardous materials at the Districts. • The /ERP Pocket Guide was developed to inform all employees of the contents of the IERP and explain their responsibilities in the event of an emergency. • Emergency procedures for Electrical Outages have been developed. IERP Recommendations Report A recommendations report was competed on January 31, 1997. The report contains recommendations to support the Districts' IERP, including specific training, equipment and supplies, establishment of facilities, and the development of specific policies and procedures. The Safety and Emergency Response Division will be including many of the recommendations into the 1997-98 Fiscal Year budget. IERP Training All Districts' employees have completed the IERP Overview course which provides a background of the IERP, discusses the emergency recognition procedure, and provides an awareness of hazardous materials. The Incident Command System Introduction course training has been completed. The course is designed to familiarize the Districts' IERP personnel with their roles in the Districts' ~ncident Command System and satisfy the Standardized Emergency Management System (SEMS) Field Orientation and Basic performance objectives. The next course to support the IERP, Incident Command System Emergency Management, is currently under development and will begin in July. The course will satisfy SEMS Field Intermediate and Advanced performance objectives. IERP Exercises The Districts have been conducting table top exercises which are classroom responses to specific emergency scenarios. Functional exercises which are specific activations of components of the IERP are in the planning phase. Ultimately, the Districts will participate in full-scale exercises with the local emergency response agencies such as the Huntington Beach Fire Department and Fountain Valley Fire Department and other Operational Area Members. Revised 01 /14/97 H:\WP.DTA\HR\2530\TUNNICLI\SAFETY\OMTSSTAT,WPD Page 3 of 5 INDUSTRIAL HYGIENE MONITORING PROGRAM On July 26, 1996, the Districts awarded a Professional Services contract to perform Industrial Hygiene-related services to Clayton Environmental, Inc. for an amount not to exceed $125,000 during the 1996-97 Fiscal Year (OMTS96-019). The field of industrial hygiene is concerned with the control of occupational health hazards which arise in the work environment. This is achieved through the anticipation, recognition, evaluation, and control of those environmental factors or stressors, such as chemical, physical, biological, or ergonomic, which may cause employee illness, injury, or discomfort. Industrial hygiene activities include surveys, measurements, evaluations, controls, and recommendations. Industrial hygiene surveys are conducted to determine the nature and extent of any conditions that may adversely affect the well-being of employees. Usually the principal benefit of such a survey is obtaining information necessary to assist in the development of administrative, engineering, and medical control measures for avoiding or eliminating potentially harmful conditions. Since the collection and compilation of industrial hygiene related data requires the use of specialized equipment and is extremely labor intensive, a consultant specializing in industrial hygiene has been retained to conduct this work. The primary goal of performing industrial hygiene surveys is to protect the Districts most valuable resource, its' employees. In addition, there are numerous regulatory requirements mandating the collection of employee exposure data. The Federal Occupational Safety and Health Administration (OSHA) and California OSHA (CalOSHA) have specific regulations governing employee exposure monitoring. Non-compliance with OSHA and CalOSHA regulations may result in citations, however, fines are not assessed to government agencies. All citations dictate immediate corrective action, usually requiring mitigation and the development or revision of the appropriate programs (i.e., respiratory protection, hearing conservation, permit-required confined space, etc.). The Districts do not currently have employee exposure data that satisfy regulatory requirements. Data collected during industrial hygiene studies may also help defend the Districts against future Workers' Compensation claims alleging overexposure to occupational hazards. In addition, the Districts has been able to use employee exposure data to develop work procedures that are more cost-effective. Industrial Hygiene Projects • Noise exposure evaluation • Laboratory roof ventilation evaluation • Permit required confined space alternate method evaluations • Pump station evaluations for noise, gases, confined space determination • Primary basin ventilation study • Occupational exposure of contaminates for painters, source control inspectors • Investigation of employee complaint about work environment exposure • Evaluation of dewatering indoor air quality Future Industrial Hygiene Projects • Ergonomic evaluations • Continuation of permit required confined space reclassifications • Continuation of occupational exposure to contaminates Revised 01 /14/97 H:\WP.DTA\HR\2530\TUNNICLI\SAFETY\OMTSSTAT.WPD Page 4 of 5 HAZARDOUS ENERGY CONTROL PROCEDURES NEEDS ASSESSMENT On December 20, 1996, the Districts awarded a Professional Services contract to Communications Performance Group, Inc for completion of a Hazardous Energy Control Needs Assessment . The total cost of the needs assessment is not to exceed $42,972. Hazardous Energy Control, also known as lockout/tagout, is a system to ensure that all forms of energy, such as hydraulic, gravity, electrical, pneumatic, are completely isolated prior to performing maintenance or repair on a piece of equipment. As part of the regulatory requirements, detailed procedures must be developed to ensure proper and complete isolation of each piece of equipment prior to performing maintenance or repair. Common procedures may be used for similar equipment but the procedure must specifically identify the locations to place locks or tags on the equipment. The scope of the needs assessment includes: • Identification of the processes, equipment, and jobs that need hazardous energy control procedures • A recommended systematic approach to developing the needed procedures • A categorization of all processes, equipment, and jobs that need hazardous energy control procedures by degree of difficulty • An estimate of the time required to complete one procedure in each of the difficulty categories identified These tasks will be completed and incorporated into a final Needs Assessment Report by June 30, 1997. Once the final report is reviewed by staff, a work plan will be produced to start development of the most critical procedures during the 1997-98 Fiscal Year. DET:dt c: Department Head AGM-Administration AGM-Operations General Manager Revised 01/14/97 H:\WP.DTA\HR\2530\TUNNICLI\SAFETY\OMTSSTAT.WPD Page 5 of 5 FAHR CA_L.ENDAR July 9, 1997 Accumulated Funds & Reserves Policy Action · Human Resources Policies and Procedures Manual Action Fire Alarm Smart Panel System Integration Action Security Services Contract Action Delegation of Authority Revisions Action H Intranet/Internet Policy and Implementation Action ;: CNG Station Update and Revision Action Quarterly Investment Management Report Information Information I ,, .... ·· tiii, t)1I:t?_:_f_ii'.''t , '!;,~( Human Resources Policies and Procedures Update i-,, ill' ~ill Fleet Reduction Program/Rate Adjustments !i 1:'.: Ii(~;~ ;;•i~]:r: Scope of Work and Milestones for Plant Automation FY '97-98 !i::,;;;:~~~t:ii!~ :~op:::~d::.::::~~::::: .::. _ii:" ''::1 Ji External Relations/Communications Strategy "",,,,;:1-----------------__::.:._ __________ --1-------11 .m .. ·: _;: '.ttfP: Hf\-2'fr--:!;'.' , Worker's Compensation Report -1st Quarter Action Action Action Action Information Information Information :1, r --· Information ~;':[I~~~·,:.::': 1996-97 Management Letter !t :1; 'd' '.!,, •'~ RFP for Selection of Financing Team [)}J;;n· .::!11!1 I ·: ;if:':" f: :i :. ·'"' First Quarter Financial and Performance Report ,: ,i,; J}}j' · \. Status Re ort -Meetin s with Ra tin A encies Action Action Action Information Information H:\WP.DTA\FIN\2210\CRANE\FAHR\FAHR.971JULYICAL7.97 CSDOC e P.O. Box 8127 e Fountain Valley, CA 92728-8127 e (714) 962-2411