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Home My WebLink About2006-09-13MINUTES OF THE REGULAR JOINT MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE & STEERING COMMITTEE Orange County Sanitation District Wednesday, September 13, 2006, 5:00 p.m. A joint meeting of the Finance, Administration and Human Resources Committee and the Steering Committee of the Orange County Sanitation District was held on September 13, 2006, at 5:00 p.m., in the Sanitation District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: (2) FAHR COMMITTEE MEMBERS: DIRECTORS PRESENT: Mike Duvall, Vice Chair Bill Dalton Phil Luebben Joy Neugebauer Mark Waldman Jim Ferryman, Board Chair DIRECTORS ABSENT: James W. Silva Darryl Miller, Chair Doug Davert, Board Vice Chair Rich Freschi STAFF PRESENT: Jim Ruth, Interim General Manager Lorenzo Tyner, Director of Finance Jeff Reed, Human Resources Manager Mike White, Controller Jim Matte, Health & Safety Supervisor Bret Colson, Public Information Office Lilia Kovac, Committee Secretary OTHERS PRESENT: Brad Hogin, General Counsel Juanita Skillman Norbert Gaia Don Hughes Lori Koh Christina Telish John Miller Dan Duncan John Bartel. FILED fN THE OFFICE OF THE SECRETARY ORANGE""' .. ,-,,~ ,. .. .,. .... ,NI l"llSTRICT APPOINTMENT OF CHAIR PRO TEM SEP 27 2006 No appointment was necessary. ly ~ J<. --.J.L ______ _ (3) PUBLIC COMMENTS There were no public comments. (4) REPORT OF THE COMMITTEE CHAIR Committee Vice Chair Duvall did not give a report. (5) REPORT OF THE GENERAL MANAGER Jim Ruth, Interim General Manager, briefly reported that a new policy has been presented for approval which addresses nepotism. Minutes of the Regular Joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee Meeting September 13, 2006 Page 2 (6) REPORT OF DI RECTOR OF FI NANCE/TREASURER Lorenzo Tyner, Director of Finance, reported that the Sanitation District hosted a contractor's open house and 80 people attended representing 60 different companies. A survey was taken and 20 responses have been received indicating their interest to bid future contracts. Mr. Tyner also referred the Directors' attention to a news article highlighting the city of Hollister's sewer rate structure, and a comparison rate of similar agencies putting the Sanitation District's current rates very low, and still lower based on the Capital Improvement Program. (7) REPORT OF DIRECTOR OF HUMAN RESOURCES/PUBLIC INFORMATION OFFICE No report was given. (8) REPORT OF GENERAL COUNSEL General Counsel did not give a report. (9) CONSENT CALENDAR ITEMS a. Approve minutes of the July 12, 2006 joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee meeting. b. FAHR06-57 Receive and file Employment Status Report as of August 23, 2006. c. FAHR06-58 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. d. FAHR06-59 Recommend to the Board of Directors to adopt Resolution No. 06-22, amending Resolution No. OCSD 98-33, amending Human Resources Policies and Procedures Manual. e. FAHR06-60 Recommend to the Board of Directors to adopt Resolution No. OCSD 06- 23, Adoption of District's 2006 Conflict of Interest Code, and Repealing Resolution No. OCSD 04-24. f. FAHR06-61 Recommend to the Board of Directors to receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. g. FAHR06-62 Recommend to the Board of Directors to receive and file the FY 2005-06 Quarterly Financial Report for the period ended June 30, 2006. h. FAHR06-63 Recommend to the Board of Directors to approve revisions to SAFETY- POL-101, Injury and Illness Prevention Program Policy, as provided for in Resolution No. OCSD 02-5 regarding the District's Injury and Illness Prevention Program. { . Minutes of the Regular Joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee Meeting September 13, 2006 Page 3 Motion: It was moved, seconded and duly carried to approve the recommended action for the item specified as 9(a) and 9(h) under consent calendar. END OF CONSENT CALENDAR (11) INFORMATIONAL ITEMS a. FAHR06-64 Investment Strategies Christine Telish and John Miller of PIMCO reviewed the investment strategies and market trend information used for managing the Sanitation District's investment portfolio. Ms. Telish and Mr. Miller answered the Directors' questions and gave justification to the satisfaction of the committee members. b FAHR06-65 Retirement/Benefits -30-day update Mr. John Bartel of Bartel & Associates, presented the current benefits structure, and clarified the position of the Sanitation District and its obligation to fulfill its commitment to current and retired employees. Alternatives for consideration at labor negotiations will be presented in future meetings. c. FAHR06-66 Joint Powers Insurance Authority (JPIA) Feasibility Analysis Due to the time constraints of the evening, Mr. Tyner proposed that this item be brought back to the FAHR Committee in October. (12) CLOSED SESSION The Committee convened in Closed Session at 7:05 p.m. pursuant to Government Code Section 54957.6 to confer with General Counsel re: open compensation claims (Government Code Section 54956.9): Heller, Lynda; Nguyen, Nguyen; Nguyen, Thuthuy; Smith, Suzanne; Woodside, Frankie. Confidential Minutes of the Closed Session held by the Finance, Administration and Human Resources Committee have been prepared in accordance with California Government Code Section 54957.2, and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No reportable actions were taken re Agenda Item No. 12(a)(1 ). (13) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. /I _, -· B Rl -r 1 / 7 S S () C:~ I /\I. [ S. L L C~ July 5,2006 James D. Ruth General Manager Orange County Sanitation District I 0844 Ellis A venue Fountain Valley, CA 92708-7018 Re: Orange County Sanitation District -Actuarial Information Dear Mr. Ruth: / Distributed at 7, I o{o <,., FAHR Meeting Bartel Associates would be happy to provide the Orange County Sanitation District actuarial consulting services. Background Retirement Benefits: The District participates in the Orange County Employees' Retirement System (OCERS), providing employees the 2.5%@ 55 benefit. In addition to the District's contribution, the District pays 3.5% of each employee's contribution. District employees do not participate in Social Security. Medical Benefits: Active employees have three medical plan choices, Blue Cross California Care (HMO), Blue Cross Point of Service and Kaiser. The District pays 80-90% of the employee's coverage and 75-80% of dependent coverage, based on bargaining group and plan selection. District employees hired after April I, 1986 participate in Medicare Retiree Medical Benefits: The District pays, for employees hired before July I, 1988, 2.5% of medical premium for each year of District service, with the retiree paying any additional amount. Employees hired after July 1, 1988 are allowed to continue to participate in the District's medical program, paying a blended premium (based on active and retiree experience). Dental Benefits: The District pays 80% of the Delta Dental Plan premium. Life Benefits: The District pays 100% of the Vision Service Plan premium. Life Insurance/AD&D: $50,000 basic life/ AD&D and the option to purchase additional life insurance up to $500,000. Spouse and child life insurance are also available for purchase. We understand the District is concerned about OCERS retirement and retiree healthcare issues. To that end the District has asked Bartel Associates to provide a fee estimate to: 1. Prepare a menu of alternative benefits for: a. Pension (retirement) benefits, b. Retiree healthcare benefits, and -111 Hurd .\vclilH.\ .Sllitc 1·1:; •~:u1 \IJ H1>, C:.1lifur1Wl 9t'.J(j~ main: (iSt\/3 i7 I (10t1 •fax: (;;)tl/~'~s .~rr,;, • web: W\\.'\i,' b;trrd .1,,soc1:11c~.c,J1n DATA SUMMARY Active -Total Service till X < 1 1 <= X < 5 5 <=x < 10 10 <=x<l5 15 <=x <20 x <25 Count 3 6 . . Pay 39.644 36,699 . . 25 <= X < 30 Count 4 20 . . Pay 31,153 57.522 . . 30 <= X < 35 Count 6 20 6 4 . Pav 49,132 54,665 76.662 72.354 . 35 <= X < 40 Count 4 19 19 14 14 Pav 49.279 64.422 84.179 90,938 68,615 40 <=x <45 Count 9 20 14 26 37 Pay 60,569 77,810 93.421 86.750 81,128 45 <=x<S0 Count 3 19 5 25 36 Pay 71 ,252 74.424 92.476 81,485 82.053 S0 <=x<SS Count 2 18 5 20 36 Pay 67,602 78,612 96,696 90.076 83,641 55<=x<60 Count 9 6 12 20 Pay -83.402 109,077 88,045 82.426 60 <= X <65 Count I 5 3 4 16 Pay 38,459 80,028 88,556 83,815 76,070 65 <=x Count 2 . 2 7 Pav . 81,180 . 94,201 85,232 <Total> Count 32 138 58 107 166 Pay 52.125 68,017 90.229 86,326 80,660 9 PLAN DESIGN ALTERNATIVES • Separate members into following groups: • Current retirees eligible for Medicare • Current retirees not eligible for Medicare • Active employees eligible to retire • Active employees ~ 40 • Active employees < 40 • Review MOU Language • Legal Issues • Vested rights • Establish Goals IO 20 <= X <25 25<= X <Total> -. 9 . . 37,681 . . 24 . . 53,127 . 36 . . 59.375 . . 70 . 75.061 7 I 114 70,994 94.108 81 ,206 8 9 105 75,829 86.533 80.635 18 14 113 95,608 94.290 87.498 IO 8 65 90,008 102.903 89.745 3 4 36 80,633 92,839 79,720 I -12 146,001 91 .116 47 36 584 87.500 94,098 79.476 A comparison in sewage rates Friday, September 08, 2006 -By Kate Woods Hollister's projected sewage fees are off the chart compared to nearby cities Hollister residents already pay a high cost for their sewage bills: at $31.30 a month, it's higher than any residential sewage rate charged by surrounding cities. So with an incremental increase every year that could take the Hollister user to an eye-popping $124.10 by the fiscal year 2009-2010, it's no wonder some folks are unhappy about it. The total cost of the project is estimated at $120 million, and is to last until 2023. The project consists of three components: Treatment Facility -$73 million; Recycled Water Distribution System -$25 million; Seasonal Storage Pond System -$22 million. The new system will have the capacity to treat 5 million gallons of wastewater a day, double what the system can handle now. Given Hollister's current population of 37,183 (source: 2005 census), the $120 million cost amounts to $3,227 for every man, woman and child in the city. Following is a list of what residential sewage fees are now in neighboring cities, compared to Hollister: Los Banos --$12.30/mo -Sewage pond system, 118 miles of sewage mains, 13 lift stations; maintains 600 acres of cattle pasture, 185 acres of alfalfa. Treats 3.85 million gallons a day. Santa Cruz--$27/mo (low users are $15.90/mo)-Treats 10 million gallons a day, 21 lift stations, 200 miles of sewer lines. Built a secondary treatment facility in 1998. High treatment standard since the effluent is dumped in the bay. Watsonville --$35.10/every two months ($17.65/mo)-Treats 7 million gallons a day, 170 miles of pipeline. Treated to advanced secondary treatment standards since it's released into Monterey Bay. Salinas --$27/every two months ($13.50/mo) -Pond system plus modern plant; treated to tertiary standards (the highest and cleanest) as it goes into bay. Gilroy/Morgan Hill --$29.74/mo -Award-winning modern system, pond system, built in 1990 and continually improved. Built to last up to 2038. Services both Gilroy and Morgan Hill. Hollister's -Currently a pond system, handles 2.7 million gallons a day. On Tuesday, the Hollister City Council voted unanimously for the rate hikes. Rates can go significantly lower if residential housing growth keeps pace with projections, but even the best case scenario leaves Hollister residents paying more than double what residents of nearby cities pay. Sewer rates will go through the roof on a yearly basis: Hollister 2005-0066 $ 31.30/mo 2006-2007: $ 46.33 2007-2008: $ 64.86 2008-2009: $ 90.15 2009-2010: $124.10 OCSD $12.58 $13.82 $15.17 $17.13 $19.34 ROLL CALL JOINT FINANCE, ADMINISTRATION AND HUMAN RESOURCES AND STEERING COMMITTEES Meeting Date: September 13, 2006 COMMITTEE MEMBERS Time: 5:00 p.m. Adjourn: Darryl Miller (Chair) Mike Duvall (Vice Chair) Bill Dalton Richard Freschi Phil Luebben Joy Neugebauer James W. Silva Mark Waldman Jim Ferryman (Board Chair) Doug Davert (Board Vice Chair) OTHERS I Brad Hogin, General Counsel STAFF Jim Ruth, Interim General Manager Bob Ghirelli, ActinQ Assistant General ManaQer Lorenzo Tyner, Director of Finance and --Administrative Services David Ludwin, Director of Engineering Jim Herberg, Director of Operations & Mgmt. Patrick Miles, Director of Information Technoloav Nick Arhontes, Director of Regional Assets --and Services Ed Torres, Acting Director of Technical Services Bret Colson, Public Information Manager Jeff Reed, Human Resources ManaQer Mike White, Controller Lilia Kovac, Committee Secretary c: Lenora Crane AGENDA REGULAR JOINT MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE & STEERING COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, SEPTEMBER 13, 2006, AT 5:00 P.M. (1) ROLL CALL ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 www.ocsd.com (2) APPOINTMENT OF CHAIR PRO TEM, IF NECESSARY (3) PUBLIC COMMENTS (4) REPORT OF COMMITTEE CHAIR (5) REPORT OF GENERAL MANAGER (6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES (7) REPORT OF GENERAL COUNSEL (8) CONSENT CALENDAR.ITEMS Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: a. Approve minutes of the July 12, 2006 joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee meeting. b. FAHR06-57 Receive and file Employment Status Report as of August 23, 2006. Book Page 10 c. FAHR06-58 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. Book Page 17 Book Page 1 September 13, 2006 Page2 d. FAHR06-59 Recommend to the Board of Directors to adopt Resolution No. 06-_, amending Resolution No. OCSD 98-33, amending Human Resources Policies and Procedures Manual. Book Page 20 e. FAHR06-60 Recommend to the Board of Directors to adopt Resolution No. OCSD 06-_, Adoption of District's 2006 Conflict of Interest Code, and Repealing Resolution No. OCSD 04-24. Book Page 70 f. FAHR06-61 Recommend to the Board of Directors to receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. Book Page 78 g. FAHR06-62 Recommend to the Board of Directors to receive and file the FY 2005-06 Quarterly Financial Report for the period ended June 30, 2006. Book Page 80 h. FAHR06-63 Recommend to the Board of Directors to approve revisions to SAFETY- POL-101, Injury and Illness Prevention Program Policy, as provided for in Resolution No. OCSD 02-5 regarding the District's Injury and Illness Prevention Program. Book Page 83 END OF CONSENT CALENDAR i. Consideration of items deleted from Consent Calendar, if any. (9) ACTION ITEMS (10) INFO~MATIONAL ITEMS a. FAHR06-64 Investment Strategies Book Page 117 Lorenzo Tyner -20 Minutes b FAHR06-65 RetiremenUBenefits -John Bartel 30-day update Book Page 119 Lorenzo Tyner -15 Minutes c. FAHR06-66 Joint Powers Insurance Authority (JPIA) Feasibility Analysis Book Page 123 Lorenzo Tyner -10 Minutes (11) CLOSED SESSION H:\dept\agenda\FAHR\FAHR2006\0906\03.091306 FAHR Agenda.doc Book Page 2 September 13, 2006 Page3 I During the course of conducting the busine~s set forth on this ~genda as a regular meeting of the Committee, 1 [ the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, r I pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, i 54957 or 54957.6, as noted. l 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 j under the California Public Records Act, may be reviewed by the Committee during a permitted closed session j and are not available for public inspection. At such time as final actions are taken by the Committee on any of j these subjects, the minutes will reflect all required disclosures of information. ! . , ..... .._.._,.,.,_.,..,_, _____ ,,u.•-······ .............. ·····••H••·••' ......... -•• '."" ·••·• ............................... -............................ _H_~~-·--••H••····-••u••·-········••O••· .. ··········•HOOH·ooooo,,,....... ···••·••·· .. ····-....... , __ ....................... .,., a. Convene in closed session. 1. Confer with General Counsel -Pending litigation and significant exposure to litigation; Open compensation claims (Government Code Section 54956.9): Heller Lynda; Nguyen Nguyen; Nguyen Thuthuy; Smith Suzanne; Woodside Frankie. b. Reconvene in regular session. c. Consideration of action, if any, on matters considered in closed session. (12) OTHER BUSINESS. COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY (13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT (14) FUTURE MEETING DATES The next regular FAHR Committee meeting is scheduled for October 11, 2006, at 5 p.m. (15) ADJOURNMENT H:\dept\agenda\FAHR\FAHR2006\0906\03.091306 FAHR Agenda.doc Book Page 3 September 13, 2006 Page4 Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted in the main lobby of the District's 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. Items Not Posted, 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 because there is a need to take immediate action, which need came to the attention of the Committee subse·quent to the posting of 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: Ariy member of the public may address the Finance, Administration and Human Resources Committee on specific agenda items or matters of general interest. As determined by the Chair, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to three 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). Consent Calem<::lar: All matters placed on the consent calendar are considered as not requiring discussion or further explanation, and unless a particular item is requested to be removed from the consent calendar by a Director of staff member, 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. The Committee Chair will determine if any items are to be deleted from the consent calendar. Items Continued: Items may be continued from this meeting without further notice to a Committee meeting held within five (5) days of this meeting per Government Code Section 54954.2(b)(3). Meetil"lg Adjournment: This meeting may be adjourned to a later time and items of business from this agenda may be considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section 54955 (posted within 24 hours). Accommodaticms for the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Board Secretary's office at (714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Notice to Committee Members: For any questicms _on the agenda or to place any items on the agenda, Committee members should contact the Committee Chair or Secretary ten days in advance of the Committee meeting. Committee Chair: Committee Secretary: Interim General Manager: Acting Assistant General Manager Director of Finance and Administrative Services Human Resources Manager: Darryl Miller Lilia Kovac Jim Ruth Bob Ghirelli Lorenzo Tyner Jeff Reed (949) 453-5300 (714) 593-7124 (714) 593-7110 (714) 593-7400 (714) 593-7550 (714) 593-7144 H:\dept\agenda\FAHR\FAHR2006\0906\03.091306 FAHR Agenda.doc Book Page 4 lkovac@ocsd.com jruth@ocsd.com bghitelli@ocsd.com ltyner@ocsd.com jreed@ocsd.com MINUTES OF THE REGULAR JOINT MEETING OF THE FINANCE, ADMINISTRATION AND HUMAN RESOURCES COMMITTEE & STEERING COMMITTEE Orange County Sanitation District Wednesday, July 12, 2006, 5:00 p.m. A joint meeting of the Finance, Administration and Human Resources Committee and the Steering Committee of the Orange County Sanitation District was held on July 12, 2006, at 5:00 p.m., in the Sanitation District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: FAHR COMMITTEE MEMBERS: DIRECTORS PRESENT: Darryl Miller, Chair Mike Duvall, Vice Chair Bill Dalton Rich Freschi Phil Luebben Joy Neugebauer Mark Waldman Doug Davert, Board Vice Chair DIRECTORS ABSENT: Jim Ferryman, Board Chair James W. Silva STAFF PRESENT: Jim Ruth, Interim General Manager Lisa Tomko, Director of Human Resources Lorenzo Tyner, Director of Finance Jeff Reed, Human Resources Manager Mike White, Controller Lilia Kovac, Committee Secretary Marc Dubois, Contract & Purchasing Manager Paul Loehr, Human Resources Supervisor OTHERS PRESENT: Brad Hogin, General Counsel Dave Kendig, General Counsel Don Mclean, Driver Alliant Juanita Skillman Ryal Wheeler Norbert Gaia (2) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (3) PUBLIC COMMENTS There were no public comments. (4) REPORT OF THE COMMITTEE CHAIR Chair Miller directed the attention to the actuarial proposal letter from a benefits consultant, Bartel Associates, L.L.C., was distributed by the General Manager, who may assign the consulting contract within the General Manager's delegation of authority. Chair Miller also reported that the internal auditors were given a scope of work for the internal audit. Book Page 6 Minutes of the Regular Joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee Meeting July 12, 2006 Page2 (5) REPORT OF THE GENERAL MANAGER Jim Ruth, Interim General Manager, indicated that the Bartel proposal would be discussed in detail during the closed session. (6) REPORT OF DIRECTOR OF FINANCE/TREASURER Lorenzo Tyner, Director of Finance, reported that state's budget restores approximately $18 million property tax revenue, returning the Sanitation District to its previous level. (7) REPORT OF DIRECTOR OF HUMAN RESOURCES/PUBLIC INFORMATION OFFICE Lisa Tomko, Director of Human Resources, had no report. (8) REPORT OF GENERAL COUNSEL Brad Hagin, General Counsel, had no report. (9) CONSENT CALENDAR ITEMS a. Approve minutes of the June 14, 2006 and June 15, 2006 joint meetings of the Finance, Administration and Human Resources Committee and Steering Committee regular meeting, and Benefits Workshop special meeting. b. FAHR06-51 Receive and file Employment Status Report as of June 23, 2006. c. Item pulled for discussion. d. Item pulled for discussion. Motion: It was moved, seconded and duly carried to approve the recommended action for the item specified as 9(a) and 9(b) under consent calendar. END OF CONSENT CALENDAR (10) ACTION ITEMS c. FAHR06-52 Receive and file OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. Motion: Lisa Tomko, Director of Human Resources, briefly presented the report to the committee; the discussion inquired about the reserve funds for cases that have not been settled. Staff will prepare a report and present it at the September FAHR meeting that will include discussion regarding reserves, how the funds are being invested, and open cases. It was moved, seconded and duly carried to receive and file. Book Page 7 Minutes of the Regular Joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee Meeting July 12, 2006 Page3 d. FAHR06-53 Recommend to the Board of Directors to adopt Resolution No. OCSD 06- MOTION: XX, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks for FY 2006-07; and Repealing Resolution No. OCSD 05-21. Lorenzo Tyner, Director of Finance, reported to the Committee the purpose of the resolution was designed to delegate staff to perform routine investing activities within the state-mandated guidelines. It was also reported that PIMCO, the investment management consultant, will be presenting investment strategies to the FAHR Committee for consideration and approval by the Board of Directors in October 2006. It was moved, seconded and duly carried to recommend approval to the Board of Directors. (11) INFORMATIONAL ITEMS a. FAHR06-54 Insurance level criteria and indemnification. Marc Dubois, Contract & Purchasing Manager and General Counsel, Dave Kendig presented various insurance requirement scenarios anticipated based on current contract possibilities, in order to evaluate the exposure to the District, yet maintain the requests of bidders reasonable and viable. b. FAHR06-55 Insurance Renewal Process. Mike White, Controller, and Don Maclean of Driver Alliant Insurance Broker presented a timeline for next years' insurance premium request process. c. FAHR06-56 Actuarial valuation of the retiree paid medical premium benefit plan and the additional retirement benefit account (ARBA). Mike White, Controller, presented to the committee a summary of a valuation study conducted by Demsey, Filliger and Associates, and the recommended funding levels for the retirement benefit account. Recommendations of alternate funding schedules will be presented at the next FAHR meeting in September. (12) CLOSED SESSION The Committee convened in Closed Session at 6:25 p.m. pursuant to Government Code Section 54957.6 to: (1) Confer with designated representatives Lisa Tomko, Director of Human Resources; Jeff Reed, Human Resources Manager; and Paul Loehr, Human Resources Supervisor, re Meet and Confer Update re contract negotiations for employees represented by 1 ). Orange County Employees Association; 2). International Union of Operating Engineers, Local 501, and 3). Supervis~rs, Professional Management Team (part of Peace Officers Council Book Page 8 Minutes of the Regular Joint meeting of the Finance, Administration and Human Resources Committee and Steering Committee Meeting July 12, 2006 Page4 of California), Government Code Section 54957.6; and (2) Confer re appointment of Assistant General Manager, Government Code 54957(8)(1). Confidential Minutes of the Closed Session held by the Finance, Administration and Human Resources Committee have been prepared in accordance with California Government Code Section 54957.2, and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No reportable actions were taken re Agenda Item No. 12(a)(1) and (2). (13) OTHER BUSINESS, COMMUNICATIONS 'OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. (14) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT (15) CONSIDERATION OF UPCOMING MEETINGS The next regular FAHR Committee meeting is scheduled for September 13, 2006, at 5:00 p.m. (16) ADJOURNMENT The Chair declared the meeting adjourned at 7:20 p.m. Submitted by: L~~ Committee Secretary H :\dept\agenda\FAHR\FAHR2006\0706\071206 FAHR Minutes.doc Book Page 9 FAHR COMMITTEE Meeting Date To Bd. of Dir. 09/13/06 AGENDA REPORT Item Number Item Number FAHR06-57 Orange County Sanitation District FROM: Lorenzo Tyner, Director of Finance & Administrative Services Originator: Jeff Reed, Acting Human Resources & Employee Relations Manager SUBJECT: EMPLOYMENT STATUS REPORT AS OF AUGUST 23, 2006 GENERAL MANAGER'S RECOMMENDATION Receive and file the Employment Status Report. SUMMARY The number of full-time equivalent (FTE) employees at OCSD is 591.50; actual headcount is 601. PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. 1Z! Not applicable (information item) ADDITIONAL INFORMATION NEW HIRES: 6 Total Job Title Division Business Need Engineer Regional Assets and Services Admin. 2 -Important Senior Lab Analyst Environmental Sciences Lab 2 -Important Laboratory Analyst Environmental Sciences Lab 2 -Important Senior Staff Analyst Accounting 3 -Regular Intern General Management 3 -Regular Intern Technical Services Administration 3 -Regular H:ldept\agenda\FAHRIFAHR2006\0906\06-57.Employment Status Report.docPage 1 Book Page JO SEPARATIONS: 6 Total Job Title Division Reason Plant Operator Plant 1 Operations Resignation Instrumentation Tech II Instrument & Electrical Maintenance Resignation Plant Operator Plant 2 Operations Resignation Office Assistant Board Services Termination Intern General Management Administration Term Internship Intern Environmental Assessment Term Internship PROMOTIONS: 6 Total Current Pay Former Job Pay Name Division Job Title Grade Title Grade Engineer 84 Associate 80 Yanza, Eugene O&M Process Engineering Engineer Ill Lead 75 Electrical Tech II 71 Manriquez, Rueben Instrument & Electrical Electrical Maintenance Maintenance 82 Senior Mechanic 67 Towns.Shane Mechanical Maintenance & Supervis0r Power Production Senior 67 Mechanic 61 Cabral, James Collection Facilities O&M Mechanic Senior 67 Mechanic 61 Schuler, Darren Collection Facilities O&M Mechanic Senior Plant 71 Plant Operator 66 Shelp, Curt Operations Plant 2 Operator RECLASSIFICATIONS: 17 Total Current Pay Former Job Pay Name Division Job Title Grade Title Grade Engineer 84 Regulatory 82 Brooks, Rebecca Environmental Compliance Specialist Services Executive 69 Administrative 67 Echavarria, Margaret Regional Assets & Services Assistant Assistant Administration IT Tech II 65 IT Tech I 61 Nguyen, Nguyen IT User Support Mechanic 61 Maintenance 60 Olaiz, Raul Collection Facilities O&M Worker Mechanic 61 Maintenance 60 Padilla, Gilbert Collection Facilities O&M Worker Mechanic 61 Maintenance 60 Rech.Doug Collection Facilities O&M Worker Operator-In-58 Senior Mechanic 67 Smith, Duane Operations Plant 2 Training Plant 67 Operator-In-58 Brooks, Judes Operations Plant 2 Operator Tr~ining H:\deptlagenda\FAHRIFAHR2006\0906\06-57.Employment Status Report,docPage 2 Book Page 11 Principal Senior Engineering *N/C Engineering Data *N/C Brown, Marc Planning Data Mgmt Mgmt Specialist Specialist Principal IT 87 Senior IT Analyst 83 Cady, Pongsakdi Programming & Database Analyst Systems Senior Buyer 76 Buyer 70 Kaura, Jay Contracts, Purchasing & Material Management Senior 88 Engineer 84 Bingman, Brian Engineering & Construction Engineer Senior Engineering *N/C Engineering Data *N/C Rulison, Doug Planning Data Mgmt Mgmt Specialist Specialist Senior IT 83 IT Analyst Ill 79 Brandvold, Anne Customer & Network Analyst Support Senior IT 83 IT Analyst Ill 79 Nelius, Sharon Customer & Network Analyst Support Senior IT 83 IT Analyst Ill 79 Rao, Balachandra Programming & Database Analyst Systems Senior Laboratory Laboratory 73 69 Diaz, Arturo Laboratory -Microbiology Analyst Analyst *N/C = No Change CLASSIFICATION CHANGES: 5 Total Current Job Title Pay Former Job Title Pay Name Grade Grade Acting Assistant General Manager 114 Director of Technical Services 108 Ghirelli, Robert Director of Finance & Administrative 109 Director of Finance/Treasurer 109 Tyner, Lorenzo Services Acting Director of Technical Services 108 Engineering Manager 96 Torres, Edward Acting Human Resources & 96 Human Resources Manager 94 Reed.Jeff Employee Relations ManaQer Clerk of the Board 84 Secretary of the District 84 Vacant H:\dept\agenda\FAHRIFAHR2006\0906\06-57.Employment Status Report.docPage 3 Book Page 12 RECRUITMENT STATUS: All current recruitments have been reviewed and approved by the General Manager through the Position Analysis process. RECRUITMENTS GREATER THAN 90 DAYS: 2 Total Job Title Engineer -Mechanical Principal Accountant ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS Date Posted 2/6/2006 4/4/2006 1. August 23, 2006 Employment Status Report Days Open 199 142 Division Status O&M Process Interviews are currently Engineering being conducted. Accounting Interviews are currently being Scheduled 2. FY 2006/07 Staffing Report (year to date performance compared to budgeted FTE's) 3. August 23, 2006 Recruitments in Process H:\dept\agenda\FAHRIFAHR2006\0906\06-57.Employment Status Report.docPage 4 Book Page 13 t:,::1 0 0 :,,;- '"O ~ (l) -~ EMPLOYMENT STATUS REPORT DIVISION/DEPARTMENT AUTHORIZED FTE ACTUALFTE VACANCIES 11 O General Management Administration 3.50 2.00 1.50 320 Board Services 7.50 5.50 2.00 330 Public Information Office 7.00 7.00 - 530 Safety & Health 8.00 8.00 - General Management Totals 26.00 22.50 3.50 210 Finance Administration 2.00 2.00 - 220 Accounting 19.00 17.00 2.00 230 Contracts, Purchasing & Materials Management 29.50 26.50 3.00 240 Human Resources 19.00 16.00 3.00 Administrative Services Totals 69.50 61.50 8.00 410 Regional Assets & Services Administration 8.00 8.00 - 420 Collection Facilities O&M 24.00 20.00 4.00 430 Facilities Maintenance Services 19.00 16.00 3.00 Regional Assets & Services Totals 51.00 44.00 7.00 610 Technical Services Administration -4.50 3.50 1.00 620 Environmental Assessment 16.00 15.50 0.50 630 Environmental Sciences Laboratory 38.00 36.50 1.50 640 Source Control 39.00 38.00 1.00 660 Environmental Compliance Services 21.50 20.50 1.00 Technical Services Totals 119.00 114.00 s.-oo 710 Engineering Administration 3.00 2.00 1.00 740 Planning 16.00 16.00 - 750 Project Management Office 15.75 14.75 1.00 760 Engineering & Construction 63.50 59.50 4.00 Engineering Totals 98.25 92.25 6.00 810 O&M Administration 4.00 4.00 - 820 O&M Process Engineering 14.50 11.50 3.00 830 Operations, Plant No. 1 42.25 40.25 2.00 840 Operations, Plant No. 2 47.50 44.50 3.00 850 Mech Main! & Power Production 73.00 67.00 6.00 860 Electrical & Instrumentation Maintenance 68.00 62.00 6.00 Operations & Maintenance Totals 249.25 229.25 20.00 910 IT Administration 2.00 2.00 - 920 IT Customer Support 9.00 8.00 1.00 930 IT Network Support 8.00 8.00 - 940 IT Programming & Database Systems 12.00 10.00 2.00 Information Technology Totals 31.00 28.00 3.00 GRAND TOTAL FTEs AUTHORIZED F-TE ACTUAL FTE VACANCIES 644.00 591.50 52.50 # of \lacancies Not In RE_!cruitment: RECRUITMENTS - 1.00 -- 1.00 - 2.00 3.00 1.00 6.00 - 3.00 - 3.00 - 0.50 1.50 -- 2.00 - -- 2.00 2.00 - 2.00 2.00 1.00 5.00 2.00 12.00 - - 1.00 1.00 2.00 lo Reerultment 28'.00 24.50 to 0 0 ;,;-- ""l:j ~ -V, 700.00 - - -• - -• - - - OCT Authorized FTE* 644.00 Actual FTE** 595.50 Difference*** 48.50 In Recruitment 38.50 Vacancies 10.00 • Authorized FTE as of August .. Actual FTE as of August ... Difference = Recruitments + Vacancies • • NOV 644.00 595.50 48.50 38.50 10.00 STAFFING REPORT • • • • • • • • • • • • • • • • DEC FEB MAR APR MAY JUN JUL SEP 644.00 644.00 644.00 644.00 644.00 644.00 644.00 644.00 598.50 601.00 598.50 596.50 591.50 593.50 590.50 591.50 45.50 43.00 45.50 47.50 52.50 50.50 53.50 52.50 36.50 16.50 24.00 21.00 22.00 17.50 18.00 28.00 9.00 26.50 21.50 26.50 30.50 33.00 35.50 24.50 I-+-Authorized FTE* -II-Actual FTE** I RECRUITMENTS IN PROCESS 8/23/06 NEW/ DIV FTE POSITION DIVISION REPLACEMENT POSTING DATE 220 1.00 Principal Accountant Accounting & Finance Replacement 4/4/2006 220 1.00 Principal Financial Analyst Accounting & Finance New 7/31/2006 230 1.00 Storekeeper Purchasing Replacement 6/26/2006 230 2.00 Contracts Administrator Purchasing New 8/16/2006 240 1.00 HR Analyst Workforce Support Services Replacement 7/31/2006 320 1.00 Clerk of the Board Board Services New 6/30/2006 420 3.00 Maintenance Worker Regional Assets & Services Admin Replacement 8/24/2006 620 0.50 Intern -Biosolids Environmental Assessment Division Replacement 8/23/2006 630 1 00 Lab Analyst (633) Environmental Sciences Laboratory Replacement 9/8/2006 630 0.50 Intern (634) Environmental Sciences Laboratory Replacement 7/12/2006 760 1 00 Planner/Scheduler Engineering & Construction Management New 8/17/2006 760 1.00 Sr. Construction Inspector Engineering & Construction Management Replacement 8/11/2006 820 1.00 Engineer -Mechanical O & M Process Support Replacement 2/6/2006 820 1.00 Associate Engineer 11/111 O & M Process Support Replacement 7/19/2006 830 2.00 OIT/Plant Operator Plant 1 Operations Replacement 7/6/2006 840 1.00 OIT/Plant Operator Plant 2 Operations Replacement 7/31/2006 850 1.00 Engineer -Reliability Mechanical Maintenance Replacement 4/17/2006 850 2.00 Lead Mechanic Mechanical Maintenance Replacement 7/26/2006 Maintenance worker/ Mechanic I 850 2.00 Sr. Mechanic Mechanical Maintenance New Post Pending 860 1.00 Instrumentation Tech II Instrumentation & Electrical Maintenance Replacement 9/7/2006 860 1.00 Engineering Supervisor Instrumentation & Electrical Maintenance New 7/19/2006 930 1.00 IT Analyst I Customer & Network Support Replacement 4/11/2006 940 1 00 Principal IT Analyst Programming & Databases New Post Pending 28.00 FTE's 29.00 Actual Recruitments (Headcount) Book Page 16 FAHR COMMITTEE AGENDA REPORT Orange County Sanitation District FROM: Bob Ghirelli, Acting Assistant General Manager Originator: James Matte, Safety & Health Supervisor Meeting Date To Bel. of Dir. 09/13/06 Item Number Item Number FAHR06-58 SUBJECT: OSHA INCIDENCE RATES AND WORKERS' COMPENSATION CLAIMS AND COSTS REPORT GENERAL MANAGER'S RECOMMENDATION Receive and file the OSHA Incidence Rates and Workers' Compensation Claims and Costs Report. SUMMARY The Safety and Health Division tracks OSHA Incidence Rates for DART<1> Cases (DART Incidence Rate) and Total Accidents (Total Injury Frequency Rate) and the District's Workers' Compensation Claims and Costs. The data for January-May 2006 are shown in the table below: OCSD DART Cases OCSD DART Rate\"'1 OSHA Recordable Accidents District OCSD Total Injury Frequency RatePJ NOTES: (1) Days Away, Restricted or Transfer (2) Industry Average for DART is 2.80 (3) Industry Average for TIFR is 6.00 Injuries January- July 2006 5 1.48 11 3.26 July 2006 Data 0 0.00 0 0.00 • The zero recordable injuries for this reporting period. Revised: 06/04/03 Book Page 17 Change (June to July) -4 -4.15 -2 -6.23 Page 1 Claims and Costs The Division also tracks the District's Workers' Compensation Claims and Costs. Information regarding OCSD workers' compensation claims is presented below. January -July July 2006 Change 2006 Data (June to July) OCSD Workers' Compensation Claim Count (report period) 10 2 -2 OCSD Workers' Compensation Claim Cost (report period) $27,856 $5,000 $1,200 Total Open Claims 31 Total OCSD Workers' $1,765,645 Compensation Claim Cost Closed Cases The three closed cases for this reporting period are as follows: • A claim involving a Maintenance Worker who developed a ganglion cyst on his wrist after using jackhammer on May 22 closed with a total incurred cost of $93.35. • A claim filed by an Instrumentation Technician II was denied and subsequently closed with a total incurred cost of $1,854.66. • A claim involving a Senior IT Analyst who sustained neck injury while moving computer monitor closed with a total incurred cost of $28,044.35. (Date of injury was 9/18/98). PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [8] Not applicable (information item) ADDITIONAL INFORMATION The reporting period ends June 30. Revised: 06/04/03 Book Page 18 Page2 ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS N/A Revised: 06104/03 Page 3 Book Page 19 FAHR COMMITTEE Meeting Date To Bd. of Dir. 09/13/06 09/27/06 AGENDA REPORT Item Number Item Number FAHR06-59 Orange County Sanitation District FROM: Lorenzo Tyner, Director of Finance & Administrative Services Originator: Jeff Reed, Acting Human Resources & Employee Relations Manager SUBJECT: CHANGES AND ADDITIONS TO THE ORANGE COUNTY SANITATION DISTRICT (OCSD) PERSONNEL POLICIES AND PROCEDURES MANUAL AS AUTHORIZED BY RESOLUTION 98-33 GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 06-XX, amending Resolution No. OCSD 98-33, amending the Human Resources Policies and Procedures Manual. SUMMARY In support of-recent organizational changes, it is the intent of staff, with Board approval, to re-title the Human Resources Policies and Procedures Manual to the "OCSD Board of Directors Personnel Policies and Procedures Manual". All modifications to existing policies or additions/deletions of policies will be coordinated with General Counsel. Human Resources Division staff will continue to administer the program in concert with the General Manager and will serve as the liaison with General Counsel on policy development. The following table outlines recommended changes to OCSD policies: Policy Number and Reason For Policy Changes Subject B10.00 -Conflict of Updating Conflict of Interest Code (Exhibit A) to reflect accurate Interest Code and Code • of Ethics designated positions. B150.00 -Recruitment • Remove employment of relatives information to incorporate into and Selection the new Nepotism policy. • New policy. Establish guidelines and procedures to avoid nepotism and conflicts of interest in employment decisions; B160.00 -Nepotism including hiring, promoting, evaluating, awarding salary, and discipline. This policy is written to ensure that the basis for employment decisions is based on the individual's qualifications for the position, ability, and performance. H:\dept\agenda\FAHRIFAHR2006\0906\06-59.HR Policy Procedure Update.doc Page 1 Book Page 20 Policy Number and Reason .For Policy Changes Subject • Add submittal of electronic receipts for reimbursement to allow for greater efficiency in processing. C110.00-Travel • Outline process on reimbursement without a receipt for process clarification. (Lost/ unavailable receipts memo) • Add ''for any reason" to employee termination repayment schedule for clarification. 090.00 -Tuition • Incorporate repayment information into the application and Reimbursement request for reimbursement forms for employee acknowledg,ement and understanding. Program • Add an application submittal limitation of 30 days prior to the course start date in order to streamline the administrative process and ensure tracking accuracy. • Add language that the use of private vehicles for OCSD F41.00 -Vehicle Usage business requires supervisor approval in order to limit liability and reduce employee relation issues. PRIOR COMMITTEE/BOARD ACTIONS • OCSD policy revisions were presented at the June 2006 FAHR Committee and Board of Directors meetings. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. 1ZJ Not applicable (information item) ADDITIONAL INFORMATION 810.00 -Conflict of Interest Code and Code of Ethics California Government Code section 87300 requires that all local agencies conduct a biannual review of their Conflict of Interest Codes and make necessitated changes. The OCSD Conflict of Interest Code is updated to periodically ensure accuracy with organizational position control. 8150.00-Recruitment and Selection This policy is being modified to remove nepotism information in order to establish a standalone policy that provides more information on acceptable employment practices H:ldept\agenda\FAHR\FAHR2006\0906\06-59.HR Policy Procedure Update.doc Page2 Book Page 21 for familial relationships. Policy 8160.00 -Nepotism is identified as a related document for future reference. 8160.00 -Nepotism This is a new policy designed to avoid favoritism in employment and personnel decisions involving employees and employment applicants who are near relatives and share or may share a working relationship. The policy restricts all OCSD employees, employment applicants, and contracted employees from being in a supervisor- subordinate relationship with a near relative unless approved by the General Manager. C110.00 -Travel In order to process travel reimbursement requests in an orderly and efficient manner, this policy is being amended to clarify the process by which employees are reimbursed in the event that a receipt is lost or unavailable. In addition, this policy is being modified to include the submission of electronic receipts for reimbursement since many travel receipts are available online or electronically. D90.00-Tuition Reimbursement Program The amendments to this policy clarify the Tuition Reimbursement Program process to ensure that OCSD is repaid for tuition expenses owed in the event of an employee's termination for any reason. Language describing repayment terms is also being added to the Tuition Reimbursement Program Application and Request for Reimbursement form. The timeline for employee application submittals is being changed to limit submission to thirty (30) days prior to the course start date, in order to allow for administrative efficiency and equal opportunity for employees to participate in the program. These changes are an effort to ensure that the budgeted amount for the program is not depleted by individuals who submit their reimbursement requests early (such as a year in advance), which leaves little or no money allocated for employees taking courses in later semesters. F41.00 -Vehicle Usage In an effort to limit OCSD's liability for private vehicle usage, language is being added to this policy to ensure that the use of an employee's personal vehicle for OCSD business requires supervisor approval. It is anticipated that supervisory control will limit employee private vehicle usage and encourage employees to use the OCSD vehicle pool for traveling on OCSD business. This change is also being made in an effort to avoid employee relations issues in the future. Throughout the aforementioned policies, housekeeping changes were made as a result of recent organizational changes. The employee classification of "Director of Finance/Treasurer" and "Director of Human Resources" has been changed to "Director of Finance & Administrative Services". The classification "Secretary of the District" has been changed in some instances to "Clerk of the Board", to reflect the job duties of the new Clerk of the Board position. "Human Resources Manager'' has been changed to "Human Resources & Employee Relations Manager", and "Human Resources Department" has been changed to "Human Resources Division". H:\deptlagenda\FAHRIFAHR2006\0906\06-59.HR Policy Procedure Update.doc Page 3 Book Page 22 ALTERNATIVES NIA CEQA FINDINGS N/A ATTACHMENTS 1. 810.00 (Conflict of Interest Code and Code of Ethics) 2. 8150.00 (Recruitment and Selection) 3. 8160.00 (Nepotism) 4. C 110.00 (Travel) 5. D90.00 (Tuition Reimbursement Program) 6. F41.00 (Vehicle Usage) 7. Resolution No. OCSD 06-XX H:ldepl\agenda\FAHRIFAHR200610906106-59.HR Policy Procedure Update.doc Book Page 23 Page4 to file a Statement of Economic Interest in accordance with provisions of the Political Reform Act. 5.1.1 . Officers and employees of the District who hold Designated Positions, as defined and listed on "Exhibit A" in Joint Resolution Q1 36, as amended by Resolution Q5 1 , are deemed to make or participate in the making of decisions which may have a material effect on a financial interest. Accordingly, those officers and employees must file a Statement of Economic Interest with the District. 5.1.2. Financial statements of the members of the Boards of Directors and the General Manager are held on file by the Clerk of the Orange County Board of Supervisors. Statements for all other persons are retained by the District Board Secretary Plerk of the Board. 5.2. District employees are bound to uphold the Constitution of the United States and of the State of California, and to carry out the laws of the nation, state and local government agencies, and the ordinances, resolutions, rules, policies and procedures of the District. District employees are bound to observe the highest standards of morality and to perform the duties of their position regardless of personal consideration, recognizing that the public interest must be of primary concern and that their conduct must be above reproach. 5.3. Employees shall not use nor permit the use of District-owned property, vehicles, equipment, or material except when such services are available to the public generally or are provided as District policy for the use of such employee in the conduct of District business. 5.4. Employees shall not use their own time nor that of another District employee during working hours for personal convenience or profit. 5.5. District employees shall not grant, in the course of their employment, any special consideration, treatment or advantage to any person beyond that which is generally available in the same circumstance. 5.6. District employees shall not willfully and knowingly disclose, for personal gain, to any other person, confidential information acquired in the course of District employment, nor shall any employee use any such information for personal gain. 5.7. District employees shall not receive, directly or indirectly, any compensation, reward or gift from any source except the District for any service, advice, assistance or other action related to the conduct of District business, except fees for speeches or published works on subjects related to District business except as follows: 5. 7.1. Acceptance of food and drinks of nominal value in the ordinary course of District business; 5.7.2. Acceptance of gifts, favors or entertainment where there is an obvious familial or personal relationship between the employee or his immediate family and the donor, and it is that relationship that motivates the gratuity; 2 Book Page 25 5.7.3. Purchase of articles or admissions at advantageous rates where such rates are offered to all District employees; 5.7.4. Acceptance of unsolicited advertising or promotional items of nominal value; 5.7.5. Acceptance of incidental transportation provided it is furnished in connection with the employee's official duties and of a type customarily provided; 5.7.6. A gift or gratuity that is prohibited by this policy shall be returned to the donor. If such return is not possible, it shall be turned over to a public or charitable organization and the matter reported to the employee's supervisor. 6.0 EXCEPTIONS 7 .0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 8.1 . 8.2. 8.3 8.4 California Political Reform Act of 1974 (Government Code Section 87100 et seq.) Title 2, Division 6, Chapter 7, Article 1, of the California Code of Regulations, known as the Fair Political Practices Commission Regulations Joint Boards Resolution 91 36, as amended by Resolution 95 1, The DistAGt ~st-4-1-nterest Code District Statement of Economic Interest. 3 Book Page 26 RESOLUTION NO. OCSD 06- ADOPTING DISTRICT'S 2006 CONFLICT OF INTEREST CODE A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING THE DISTRICT'S 2006 CONFLICT OF INTEREST CODE AND REPEALING RESOLUTION NO. OCSD 04-24 WHEREAS, the Political Reform Act of 1974, Government Code Sections 81000, et seq., (the "Act"), requires a local governmental agency to adopt a Conflict of Interest Code pursuant thereto; and, WHEREAS, the Orange County Sanitation District adopted Resolution No. OCSD 04-24 on September 22, 2004, adopting such a Code by incorporating the provisions of Section 18730 of Title 2 of the California Code of Regulations pursuant to the Act, which Code was approved by the Orange County Board of Supervisors, as the Code-reviewing body; and, WHEREAS, Exhibit "A" must be amended to correct the list of Designated Employees by revising the titles of existing positions, and by deleting the titles of positions that have been eliminated. NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the Code entitled "2006 Conflict of Interest Code of the Orange County Sanitation District", a copy of which is attached hereto and incorporated herein by reference, be, and is hereby approved and adopted for the District, subject to the approval thereof by the Orange County Board of Supervisors, which is the designated Code-reviewing body pursuant to California Government Code Section 87303. 4 Book Page 27 Section 2: That the Clerk of the Board is hereby authorized and instructed to submit a copy of this Resolution and the Code hereby adopted to the Orange County Board of Supervisors, and to request said Board of Supervisors to approve said Code in accordance with California Government Code Section 87303. Section 3: That Resolution No. OCSD 04-24, adopted September 22, 2004, adopting a revised Conflict of Interest Code of the Orange County Sanitation District, is hereby repealed, effective ten (10) days after approval of the District's 2006 Code adopted herein by the Orange County Board of Supervisors. PASSED AND ADOPTED at a regular meeting held September 27, 2006. Chair Board Secretary 5 Book Page 28 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT Section 1: Purpose. The purpose of this 2006 Conflict of Interest Code of the Orange County Sanitation District, is to comply with the requirements of the California Political Reform Act of 197 4 (California Government Code Sections 87100 et seq.), and particularly the requirement to adopt and promulgate a local Conflict of Interest Code (California Government Code Section 87300). Section 2: Designated Positions. The positions listed on Exhibit "A', attached hereto and incorporated herein by reference, are Designated Positions. Officers and employees holding those positions are Designated Employees, and are deemed to make, or participate in the making, of decisions which may foreseeably have a material effect on economic interests. Section 3: Disclosure Categories. Each Designated Employee shall disclose on Fair Political Practices Commission Form 700, all required information for the following disclosure categories, and as specified for the Designated Position: Category I Category 11 - Category Ill - Category IV - Investments Interests in Real Property Income Business Positions Section 4: Incorporation by Reference of Section 18730 of Title 2 of the California Code of Regulations. Pursuant to authority of Section 18730 of Title 2 of the California Code of Regulations, the Regulations set forth in Title 2, Division 6, Chapter 7, Articles 1-3, and any amendments thereto, duly adopted by the Fair Political Practices Commission, along with the attached Exhibit "A", in which officers and employees of the District are designated and disclosure categories are set forth, are hereby incorporated by reference and constitute the Conflict of Interest Code of the Orange County Sanitation District. Section 5: Place of Filing for Statements of Economic Interest. Persons occupying Designated Positions shall file Statements of Financial Interest with the Orange County Sanitation District Board Secretary. Upon receipt of the Statements of the Board of Directors and General Manager, the District's Board Secretary shall make and retain a copy and forward the original of these Statements to the Clerk of the Orange County Board of Supervisors. Statements for all other persons occupying Designated Positions will be retained by the District. 6 Book Page 29 Section 6: Severability. If any article, section, subsection, paragraph, subparagraph, sentence, clause, or phrase of this Code is for any reason held to be invalid, unconstitutional, or unenforceable, such decision shall not affect the validity of the remaining portions of this Code. The District declares that it would have adopted this Code and each article, section, subsection, paragraph, subparagraph, sentence, clause, and phrase thereof irrespective of the fact that any one or more of such portions of this Code be declared invalid, unconstitutional, or unenforceable. Section 7: Effective Date: The District's 2006 Conflict of Interest Code shall take effect ten (10) days after approval by the Orange County Board of Supervisors, acting as the Code-reviewing body, pursuant to Government Code Section 87303. 7 Book Page 30 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT EXHIBIT "A" DESIGNATED POSITIONS Designated Position Disclosure Categories General Manager I, II , Ill, IV Assistant General Manager I, 11, Ill, IV Director of Engineering I, 11, Ill, IV Director of Financerrreasurer & Administrative Services I, 11, Ill, IV Director of Information Technology I, II , 111 , IV Director of Operations & Maintenance I, II , Ill, IV Director of Technical Services I, II , Ill , IV Director of Regional Assets & Services I, II, Ill , IV Accounting Manager I, 11 , Ill, IV Clerk of the Board 1,. II, Ill, IV Contract and Purchasing Manager I, II , 111 , IV Controller I, II , 111 , IV Engineering Manager I, II, Ill , IV Environmental Assessment Manager I, 11 , 111 , IV Human Resources & Employee Relations Manager I, II , Ill , IV Information Technology Manager I, II , Ill , IV Public Information Manager I, II , Ill , IV Laboratory Manager I, II, Ill , IV Maintenance Manager I, II , 111 , IV Operations Manager I, II , Ill, IV Process Controls Manager I, II , Ill , IV Source Control Manager I, II , 111 , IV Accounting Supervisor I, 11, Ill, IV Chief Plant Operator I, II , Ill, IV Purchasing Supervisor I, II, Ill, IV Contracts Supervisor I, II , Ill, IV Senior Construction Inspection Supervisor I, II, Ill , IV Construction Inspection Supervisor I, II, Ill , IV Engineering Supervisor I, II , 111 , IV Environmental Supervisor I, II, 111 , IV Human Resources Supervisor I, II , Ill , IV Information Technology Supervisor I, II , Ill , IV Laboratory Supervisor I, 11 , 111 , IV Maintenance Supervisor I, 11, 111 , IV 8 Book Page 31 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT EXHIBIT "A" DESIGNATED POSITIONS Designated Position Senior Maintenance Supervisor Materials Control Supervisor Operations Supervisor Safety & Health Supervisor Secretary of the District Source Control Supervisor Principal Accountant Senior Financial Analyst Principal Financial Analyst Buyer Senior Buyer Capital Improvement Program Project Manager Construction Inspector Senior Construction Inspector Contracts Administrator Senior Contracts Administrator Principal Contracts Administrator Senior Engineer Legislative Affairs Liaison Legal and Regulatory Affairs Liaison Regulatory Specialist Senior Regulatory Specialist Senior Scientist General Counsel *Consultants Disclosure Categories I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II , Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill , IV I, II, Ill, IV I , II , 111 , IV I , II , 111 , IV I, 11, 111 , IV I, II, 111 , IV I, II, 111 , IV I, II, Ill, IV I, II , Ill, IV I, II, Ill, IV I, 11, 111, IV I, II, 111, IV I , 11, 111 , IV I, II, 111, IV I , II , Ill , IV I , II , 111, IV *The governing body of the District shall determine on a case-by-case basis whether a particular Consultant is required to comply with the disclosure requirements in this Section. If the governing body determines that a particular Consultant must comply with the disclosure requirements of this Section, the governing body shall notify the Consultant in writing. The written notification shall include a description of the Consultant's duties, and based upon those duties, a statement of the extent of disclosure requirements. The governing body's notification is a public record and shall be retained for public inspection by the Board Secretary. 9 Book Page 32 ~ Subject: 1.0 Orange County Policy Number: 8150.00 Sanitation District Effective Date: MarGh 23, 2005 Personnel Policies September 27, 2006 RECRUITMENT AND SELECTION Supersedes: July 21, 2004 March 23, 2005 Approved by: Lisa L. Tomko Board of Directors - PURPOSE 1.1 The purpose of this policy is to establish uniform guidelines and procedures for Orange County Sanitation District (OCSD) recruitment activities. 2.0 ORGANIZATIONAL UNITS AFFECTED 2.1 This policy applies to all OCSD departments, divisions, sections and employees. 3.0 DEFINITIONS 3.1 Recruitment is the process of attracting qualified individuals to apply for jobs that are open within the organization, whether internal or external. 3.2 Internal recruitment means considering only present employees as applicants for job openings within the orijanization. 3.3 Open recruitment means attracting applicants from outside the organization, as well as internally to apply for job openings within the organization. 3.4 Planned Recruitment is the process of recruiting a candidate for a position held by an existing OCSD employee who plans to retire or leave the agency. 3.5 Probationary Period -Initial as defined in applicable Memorandum of Understanding (MOU) provisions, includes at least the first 6 months or 26 weeks of employment with OCSD beginning with the date of hire. This period is regarded as an extension of the hiring process, and provides an opportunity for both the employee and OCSD management to assess, over a substantial period of time, whether or not the hiring decision was appropriate. Employees, who have not yet successfully completed their initial probationary period, serve "at-will" and may be released from employment without cause or recourse to any appeal or grievance procedures. 3.6 Probationary Period -Promotional as defined in applicable MOU provisions, includes at least the first 6 months or 120 days of employment with OCSD, beginning with the effective date of promotion. This period is regarded as an extension of the selection process, and provides an opportunity for both the employee and OCSD management to assess, over a substantial period of time, whether or not the decision was appropriate. "At-will" employees do not serve a promotional probationary period. Page 1 of 10 Book Page 33 3.7 3.8 Probationary Period -Reassignment or Lateral Transfer as defined in applicable MOU provisions, includes at least the first 26 weeks of employment with OCSD, beginning with the effective date of the reassignment or lateral transfer. This period provides an opportunity for both the employee and OCSD management to assess, over a substantial period of time, whether or not the decision was appropriate. Relative is any person related by one of the following familial relationships to any employee at OCSD: spouse, mother, father, brother, sister, child, step child, step parent, grandmother, grandfather, grandchild, coosin, aunt, 1,mcle, mother in law, father in laV.«, brother in la•N or sister in~ 4.0 POLICY 4.1 OCSD is an Equal Opportunity Employer (EOE). OCSD does not discriminate on the basis of race, religion, color, national origin, disability, pregnancy, martial status, age, gender, sexual orientation, or participation in any protected class/activity. 4.2 It is OCSD's policy to provide nondiscriminatory, lawful, and consistent guidelines and procedures to all recruitment processes, whether internal or open. 5.0 PROCEDURE 5.1 PERSONNEL REQUISITION 5.1.1 A personnel requisition is the first step for the hiring manager/supervisor to communicate staffing needs to the Human Resources Department Division. If the recruitment requires testing (hands-on, written, essay, etc.) as part of the recruitment process, the testing methods must be reviewed for validity and reliability by the Human Resources Cepaftmeflt Division prior to the initiation of a personnel requisition. 5.1.2 The hiring manager/supervisor completes the personnel requisition and receives the appropriate signatures required before sending it to the Human Resources Department Division. 5.1.3 The recruiter reviews the requisition to make sure the qualifications are appropriate for the position. If changes are necessary, the recruiter will work with the appropriate manager/supervisor. 5.2 EMPLOYMENT OPPORTUNITY BULLETINS/POSTINGS 5.2.1 The recruiter prepares the employment opportunity bulletin, also known as a posting. Each posting will include the following information: • Wage range • Department • Brief job description • Required qualifications • Desired qualifications • Posting/closing dates • Procedure for applying • Brief benefits overview 5.2.2 The recruiter provides the draft posting to the hiring manager/supervisor for approval. Page 2 of 10 Book Page 34 5.2.3 Upon approval, all job postings for Student Intern and management positions may be advertised as an open recruitment (internal and external) at the beginning of the recruitment process. All other job postings shall be advertised as internal recruitments for ten business days unless authorized by the Director of Finance & Administrative Services Human Resources, or designee. During the internal posting process, if there is at least one internal applicant and he/she meets the minimum qualifications for the position, that applicant will be interviewed. If an internal applicant is not selected or if there are no internal applicants, the position shall be advertised as an external recruitment. 5.2.4 Internal job opportunities will be posted to the intranet which is accessible to all OCSD employees. 5.2.5 Internal Job Announcement Notifications are sent via e-mail to all OCSD employees for internal and external recruitments. 5.3 ADVERTISING 5.3.1 Advertising for positions at OCSD ensures positions are filled with the best- qualified candidate for the job. OCSD shall make every reasonable effort to advertise external positions to all segments of the public to ensure EOE guidelines are followed. 5.3.2 All positions are advertised on the Internet and may be posted in other media when deemed appropriate. Technical and hard-to-fill positions are advertised on trade specific websites. 5.3.3 Trade magazines and other forms of advertising may be used for hard-to-fill or specialized positions. 5.4 APPLICANT SCREENING 5.4.1 Applications and resumes shall only be accepted electronically after March 2005. All other application material will be accepted at the interview process. Unsolicited application material will not be accepted at anytime. 5.4.2 Once an application and/or resume is received and reviewed, it will only be selected for further consideration if the minimum job requirements for the open position are met. 5.4.3 The hiring manager/supervisor is given access to files on the online application program pertinent to the job opening for which the manager submitted a personnel requisition. The manager may review applications that meet the minimum qualifications to determine which candidates may be interviewed. 5.4.4 All materials (e.g., applications, resumes, interviewer notes, interview packets, packets, etc.) submitted by applicants/candidates during the interview process are confidential and are considered OCSD property and must be returned to the Human Resources Department Division upon completion of the hiring process. All recruitment files are maintained by OCSD in accordance with established record keeping guidelines. Page 3 of 10 Book Page 35 5.5 INTERVIEW PROCESS 5.5.1 The interview panel members are selected along with the interview date(s). Applicants are scheduled, interview questions are prepared, and the interview panel conducts the actual interview. 5.5.2 The recruiter and the hiring supervisor work together to select the interview panel. However, the recruiter makes the final decision to ensure consistency. The ideal interview panel will include the hiring supervisor, one employee within the department, two individuals outside the department, and the recruiter, or another member of the Human Resources DepartmeAt. Division. Normally, subordinates within the hiring department are not included in the interview panel. 5.5.3 The recruiter and the hiring manager work together to establish a set of questions for the candidates. 5.5.4 The recruiter prepares interview packets and distributes them to the interview panel. Packets include: • An overview of the interview process • A copy of the interview schedule • A copy of the employment bulletin opportunity/posting • Copies of candidate applications • Interview questions and evaluation forms for each candidate 5.5.5 The interview panel will meet at least one half hour before the interview. The panel will finalize the interview questions that are recommended by the hiring supervisor and the recruiter. The panel may add or delete questions. The panel will gain an understanding from the hiring supervisor about the criteria with which to select the ideal candidate, and adopt the appropriate criteria. 5.5.6 The recruiter facilitates the interview process. When interviews are completed, the interview panel members evaluate each candidate interviewed. The top three candidates are identified and ranked in order of preference based on the criteria established prior to the interview. The recruiter collects the documentation at the end of the interview process. 5.5. 7 The final candidate is selected from the top three candidates when a majority decision is reached. If a majority decision cannot be reached, the General Manager or designee will make the final determination based on the input of the hiring supervisor, the panel, and the Human Resources Department Division. If a majority decision is reached, and the hiring supervisor does not agree with the final decision, he or she may appeal for a final decision from the General Manager or designee. 5.6 RECRUITMENT APPEALS PROCESS 5.6.1 Employees should bring recruitment process and decision-making issues to the attention of the Human Resources & Employee Relations Manager as soon as possible. The manager will review the issue and provide a written response within five business days from the issue notification date. 5.6.2 If the issue is not resolved to the employee's satisfaction, the employee may file a written statement concerning the problem to the Director of Finance & Administrative Services ~Resources within ten business days of receipt Page 4 of 10 Book Page 36 of the manager's decision. Upon request by either party, a meeting may be held to discuss the issue and establish remedies. 5.6.3 The employee will be provided a written response from the Director of Finance & Administrative Services Human Resources, or designee, within ten business days after their statement is received. The decision of the Director of Finance & Administrative Services Human Resources, or designee, is final (see policy F50.00, Problem Solving Procedure and F60.00, Grievance Procedure). 5.6.4 Time limits may be extended for cause upon mutual consent of the parties. 5.7 EMPLOYMENT OFFERS 5. 7 .1 The recruiter and hiring supervisor determine an appropriate starting salary for all candidates, except those designated as "at-will" employees, based on a Salary Offer Analysis. This analysis will include the applicant's: • Qualifications • Years of experience • Educational background • Salary history • Parity within the department 5.7.2 The Human Resources Compensation Analyst reviews the recommended salary, and approves or makes additional recommendations. All salary offers that are either at or beyond step 4 of the range will require the approval of the Director of Finance & Administrative Services Human Re5el:lrces, or designee. Under no circumstances should panel members (excluding the Human Resources representative) or any other OCSD employee discuss salary offers with candidates or make promises of any kind. Human Resources staff are the only employees authorized to engage in salary discussions with job candidates. 5.7.3 The recruiter completes a status change form for the candidate and initiates the background investigation. Background investigation results are provided to the candidate by OCSD's background screening firm. 5.7.4 When the status change form is approved, the recruiter makes a verbal employment offer to the candidate, which is contingent upon results of a background investigation, pre-employment physical and drug screening. Upon acceptance of the employment offer, the recruiter sends regret letters to unsuccessful candidates. Internal candidates are contacted personally prior to receiving regret letters. 5.7.5 The recruiter schedules the pre-employment physical and drug screen for the candidate, works with the supervisor to establish a potential start date and prepares a formal offer letter for the candidate. 5.7.6 When the recruiter (or designee) has cleared the background investigation, pre-employment physical and drug screening results, the applicant will be contacted to confirm the employment offer. 5.7.7 The recruiter coordinates the candidate's start date. Page 5 of 10 Book Page 37 5.7.8 In the event that a candidate is selected and voluntarily or involuntarily vacates the position prior to completing the required six month probationary period, the Human Resources ~artment Division, at the request of the hiring manager, may exercise the option to extend an offer to the second candidate from the original interview process. 5.8 PLANNED RECRUITMENT 5.8.1 In instances where an existing OCSD employee plans to retire or leave the agency, the Department Head may request to initiate the planned recruitment process by notifying the Director of Finance & Administrative Services Human Resources, or designee. If approved, the Human Resources Department Division shall begin the recruitment process for the anticipated vacancy using the internal recruitment process. The Human Resources DepartmeRt Division must have a minimum of six months notice to consider a planned recruitment, a signed memo from the existing OCSD employee stating his/her retirement or leave date, and at least one budgeted but vacant position that OCSD can borrow from. 5.8.2 The Planned Recruitment process will be initiated, as scheduling permits, prior to the individual leaving OCSD in order to allow for an adequate amount of cross training. 5.8.3 If a candidate is selected from the internal recruitment process, the candidate shall remain in his/her existing position with the same salary and benefits while cross-training in the new position as scheduling permits. 5.8.4 The candidate shall assume the salary, benefits and full range of duties of the vacant position the first business day that the position is vacant. The position used to initiate the planned recruitment will then be returned to the "pool" within the Human Resources Division a4G full-time equivalent (FTE) budget for use with other planned recruitments. 5.8.5 The date the candidate assumes the vacant position shall be the first day of the candidate's six-month probationary period. The six-month probationary period will be utilized as an opportunity for the candidate and OCSD management to assess whether or not the decision was appropriate. The candidate may be returned to his/her previous position if the decision is determined to be inappropriate. 5.8.6 If a candidate is not selected from the internal recruitment process, the position will be posted for external candidates immediately to ensure an adequate amount of time for cross-training. 6.0 EXCEPTIONS 6.1 EMPLOYMENT OF FORMER EMPLOYEES 6.1.1 Employment of former employees for full-time equivalent or part-time positions shall be subject to and conducted in accordance with this policy. 6.1.2 Employment of a former employee is subject to the approval of the General Manager and the Director of finance & Administrative Services Human Resources. Page 6 of 10 Book Page 38 6.1.3 In all cases, approval of the General Manager and the Director of Finance & ~dministrative Services l=luman Resources shall be received prior to an offer of employment to a former employee. 6.1.4 OCSD policy prohibits the rehire of former full-time, regular employees or "at- will" employees who: were terminated for workplace misconduct; resigned while charges were pending against the employee; resigned while serving a suspension; failed to provide two weeks written notice in advance of resignation depending upon employment status, unless approved by the Director of Finance & Administrative Services Human Resources, or designee; or failed to return to work following an absence without leave of 40 consecutive work hours without notifying the immediate supervisor or the Human Resources ~ Division with an acceptable reason for their absence. 6.1.5 If any former employee commences doing business wherein the employee, his/her spouse, or members of his/her immediate family are sole proprietors, or majority or controlling shareholders or owners of a corporation, partnership or other business entity, such business shall not be retained as an independent contractor or consultant to provide service directly to OCSD for a period of one year after leaving OCSD's employment. Thereafter, said business entity shall be allowed to contract with OCSD upon compliance with all resolutions and regulations of OCSD then in effect, relating to the procurement of services. 6.1.6 If any former employee becomes employed by any firm or business entity in which the former employee, his/her spouse or members of his/her immediate family own less than the majority or controlling interest in said entity, said entity shall not be prohibited from contracting with the OCSD. However, the former employee shall not perform work on OCSD projects for a period of one year after leaving OCSD employment; nor shall such former employee contact OCSD officers or employees for the purpose of attempting to influence any OCSD decision, including but not limited to, the award of contract, issuance of permits, or compromise of administrative civil penalties, for a like period of one year. Said services shall be obtained only in accordance with all rules and procedures of OCSD relating to procurement. 6.1. 7 Any OCSD employee who receives an offer of employment or a request to discuss potential employment from any person or business entity performing services for OCSD shall report such contact to his or her immediate supervisor, who shall decide whether any change in assignment is necessary or appropriate while the offer or discussions are pending. 6.1.8 The prohibitions of this policy may be waived by the Finance, Administration and Human Resources Committee of the Boards of Directors if, on a case-by- case basis, it is determined to be in the best interests of OCSD to do so. 6.1.9 All former employees who are rehired will be placed on an initial probationary period as defined in this policy. All prior service with OCSD will not be counted for accrual purposes including, but not limited to, leaves of absence and seniority. 6.2 RE-EMPLOYMENT OF OCSD RETIRED EMPLOYEES 6.2.1 The General Manager may, with the written approval of the Board Chair, employ on an as-needed basis, a former employee retired from OCSD when Page 7 of JO Book Page 39 7.0 PROVISIONS AND CONDITIONS 7.1 The interview process for Student Intern positions shall be an abbreviated version of the process outlined in section 5.5 and will be administered by the appropriate division manager/supervisor and a Human Resources representative. 7.2 OCSD's Board of Directors must approve unbudgeted positions for new hires or promotions before any internal or open recruitment effort is initiated. 7.3 Hiring an individual into a budgeted position requires the approval of the Department Head and General Manager. 7.4 Promoting an individual into a budgeted position requires the approval of the Division Manager, Department Head or General Manager. 7.5 OCSD retains the-fight to refuse to place a relative under the direct supervision of an OCSD empl01f00-Wher-e-sllsh has a potential for creating an adverse impact on ~n, safety, security o~ral&.- 7.6 OCSD retains the-right to refuse to place relatives in the same department, division, or facility where such has a potential-feF-SFeating an adverse impact on supervision, safety, security or moi=a~r--involves potential conflicts of interest. 7.7 Employees on Performance Improvement Plans are not eligible for promotional opportunities. 7.8 INITIAL PROBATIONARY PERIOD 7.8.1 Unless designated as an "at-will" Executive Management Team (EMT) member or Student Intern, all new employees and employees who are reassigned or laterally transferred serve a probationary period. In accordance with applicable MOUs and policies, the probationary period begins with the date of hire, reassignment, or transfer and extends to at least the first day of the pay period following twenty-six weeks of employment without a break in service. For new employees, this probationary period is regarded as an extension of the hiring process, and provides an opportunity for both the employee and OCSD's management to assess, over a substantial period of time, whether or not the hiring decision was appropriate and resulted in a relationship that adequately meets the needs of both the individual and OCSD. 7.8.2 The probationary period may be extended by mutual agreement between OCSD and the employee, prior to the expiration of the probationary period. An employee's probationary period may be extended when there is a need to further assess the individual's abilities to satisfactorily perform the duties required for their job classification. Probationary employees may be released by OCSD at any time during the probationary period (including any extension) without cause or reason. 7.8.3 A probationary employee's work performance is closely monitored during this period to ensure that the employee understands the duties, responsibilities and management expectations of the position, and to allow an opportunity for the supervisor or manager to provide proper direction and guidance. Employees who do not demonstrate the potential for meeting performance expectations for their position within a reasonable period of time may be released prior to the completion of the Probationary Period. Probationary Page 9 of 10 Book Page 41 employees shall serve at the will of OCSD during this period. In the event of release of a probationary employee, the employee shall not be entitled to receive any severance pay. 7.9 PROMOTIONAL PROBATIONARY PERIOD 7.9.1 All promoted employees, except those designated as "at-will" employees, shall serve a promotional probationary period lasting at least 120 days or 6- months, depending upon the applicable MOU provisions, beginning with the effective date of promotion. This period is regarded as an extension of the selection process, and provides an opportunity for both the employee and OCSD management to assess, over a substantial period of time, whether or not the decision was appropriate. 7.10 REFERENCE CHECKS 7.10.1 Employment with OCSD is contingent upon a pre-employment screening process which includes a physical examination, drug/alcohol test and background investigation. Candidates must also be able to provide documentation authorizing their legal right to work in the United States as per the Immigration Reform and Control Act of 1986. 7.10.2 OCSD may verify information contained in the job application of a prospective employee with the prospective employee's authorization. 7.10.3 Inquiries to OCSD employees regarding reference or employment verification checks of former or present employees shall be discussed with or referred to Human Resources prior to any response. 8.0 RELATED DOCUMENTS 8.1 OCSD Student Intern Program guidelines 8.2 Policy F50.00, Problem Solving Procedure 8.3 Policy F60.00, Grievance Procedure 8.4 Policy C180.00, At-Will Policy 8.5 Policy 8160.00, Nepotism 8.6 Local 501, Operations and Maintenance Unit MOU 8. 7 Administrative and Clerical Unit MOU 8.8 Engineering Unit MOU 8.9 Technical Services Unit MOU 8.1 O Professional Group MOU 8.11 Supervisor Group MOU Page 10 of 10 Book Page 42 NEW POLICY 4.0 POLICY 4.1 It is the policy of OCSD not to discriminate in its employment and personnel actions with respect to its employees and applicants on the basis of marital and familial status. 4.2 Notwithstanding the above statement, OCSD retains the right to refuse to appoint a person to a position in the same department, division or facility, wherein his or her relationship to another employee has the potential for creating an adverse impact on supervision, safety, security, or morale, or involves a potential conflict of interest. The department head shall have the authority and responsibility for determining if such a potential for adverse impact exists or does not exist. 4.3 Near relatives of employees or of members of the Board of Directors shall not be hired, promoted or transferred into positions in which one near relative may supervise, directly or indirectly, any other relative, or work in a capacity which would allow an employee to evaluate or control the terms, conditions or performance circumstances of employment of a near relative. 4.4 Near relatives of members of the Board of Directors shall not be employed in any position where there is a potential for adversely impacting the safety, security, morale or efficiency of supervision of other employees, or in which there may be created a potential conflict of interest. 4.5 No person shall be appointed, promoted, demoted, flexibly placed, or transferred to any position, whether exempt, permanent, provisional, acting, part-time, or temporary, in any division of any department, where such person's near relative already holds a position which would create a supervisory relationship. 4.6 No employee shall interview, recommend, or in any way be involved in the selection or disciplinary process of his or her near relative. 4. 7 All current employees of OCSD on the effective date of this policy will not be allowed to remain in positions where they are in a supervisory relationship with a near relative, except in those situations where a direct level of supervision or the ability to impact the terms or conditions of employment of a relative does not occur. 4.8 There shall be no appointments to any position at OCSD of a near relative of any member of the Board of Directors or Executive Management Team without the express written approval of the Chair of the Board of Directors and the General Manager. 4.9 Any individual having appointive power shall not appoint or promote any of their near relatives to any position at OCSD. 4.10 Hiring, reinstatement, promotion or transfer which will result in near relatives of employees working in the same department may be permitted, but only in such cases where direct supervision or the ability to impact the terms or conditions of employment of the near relative does not exist. 4.11 In cases whereby persons who are near relatives are employed in the same department, action shall be taken by the Department Head, Division Manager, or Supervisor to protect against situations which: Page 2 of 4 Book Page 44 NEW POLICY • may interfere with response to public health emergencies; • may adversely impact working conditions; • may jeopardize confidentiality; and, • may suggest a conflict of interest. 4.12 Remedies to the cases referred to in Section 4.11 may include, but are not necessarily limited to, shift change, reassignment to another position or location, transfer, or dependent upon a case-by-case basis, possible termination of one of the involved employees. 4.13 All appointments, transfers or promotions of near relatives under this policy will be evaluated under guidance of this policy and in terms of the extent to which the relationship could have an adverse effect on the operations of OCSD. This policy does not necessarily preclude the near relative or an OCSD employee applying for an OCSD position or promotion. The policy provides that the General Manager, or designee, may withhold approval to appoint a relative if such an appointment is not in the best interest of OCSD or does not follow this policy. 4.14 In those cases in which the aforementioned relationships exist, or in which employees marry or acquire a covered relationship, the Human Resources Division shall be responsible to ensure that work assignments are made or other steps taken so as to avoid conflicts of interest or violation of this policy. If no conflict of interest exists because employees have no working interrelationship, supervisory or evaluative control over one another, no action shall be necessary. If conflict exists, action may include reassignment to another position, work location, or work shift. If such reassignment or other alternative is not deemed appropriate by OCSD, one of the conflicted individuals may have to resign or be terminated. 4.15 Employees are responsible for immediately notifying their supervisor or the Human Resources Division of an impending marriage or relationship with another employee of OCSD. 4.16 No persons who have a near relative working at OCSD may be hired without the approval of the General Manager, or designee. No OCSD employee who is related to any other OCSD employee may be transferred or promoted within OCSD without the approval of the General Manager, or designee. 4.17 The General Manager is responsible for enforcing this policy with the assistance of the Human Resources Division. 4.18 OCSD reserves the right to take action when relationships or associations of employees impact its mission. 4.19 OCSD retains the right to refuse to place a relative under the direct supervision of an OCSD employee, or place relatives in the same department, division, or facility, where such has a potential for creating an adverse impact on supervision, safety, security or morale. 4.20 OCSD will make reasonable efforts to assign job duties to eliminate any potential for an adverse impact on supervision, safety, security or morale, or potential conflicts of interest. 4.21 Except as otherwise provided by law, no employee, prospective employee or applicant shall be excluded from the competitive hiring and examination process Page 3 of 4 Book Page 45 NEW POLICY or denied employment or benefits of employment solely on the basis of his or her familial relationship with an employee of the agency or a member of the Board of Directors. 5.0 PROCEDURE 5.1 OCSD employees shall submit the Near Relative Notification form, which is attached to this policy, to the Human Resources Division within 30-days of the effective date of this policy , if they currently have near relatives working for OCSD or within 30-days of becoming a near relative of another OCSD employee. Failure by an employee to complete and submit the required Near Relative Notification to the Human Resources Division may be grounds for disciplinary action, up to and including termination of employment. 5.2 If the Human Resources Division determines that employment of near relatives in a supervisory relationship violates this policy, the Human Resources Division may transfer one of the employees to a vacant position in another division or department for which he or she is qualified. The determination of which employee will be transferred will be based upon the promotion of effective and efficient operations of OCSD. Transfer must be to the same or equivalent position in another department without loss of classification, salary or benefits to the employee who is transferred. No regular, full-time employee shall be terminated at the time of the implementation of this policy as a result of a supervisory relationship with a near relative. 5.3 Any employee, contractor, or member of the Board of Directors who knowingly violates this policy may be subject to disciplinary action, up to and including termination of employment. 5.4 In cases involving a near relative of a member of the Board of Directors, the matter will be referred to the Steering Committee, General Manager, and General Counsel for resolution. 6.0 EXCEPTIONS 6.1 The General Manager may authorize exceptions to this policy whenever he or she determines that the best interests of OCSD so require. If an exception is granted, it shall be in writing and a copy placed in the employee's personnel file. 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 8.1 Near Relative Notification Form 8.2 Policy B150.00, Section 6.1 Employment of Former Employees Page 4 of 4 Book Page 46 NEW POLICY Orange County Sanitation District NEAR RELATIVE NOTIFICATION EMPLOYEE INFORMATION Employee Name: Job Title: Phone Number: Department: Division: NEAR RELATIVE INFORMATION Near Relative Name: Job Title: Relationship: Department: Division: Check all that apply: 1. None: • 2. Supervisory Relationship: • Direct • Indirect • Same supervisor 3. Sharing of Duties: • On the same work assignment • Related work assignments 4. Other (identify): Note: Attach separate sheet for additional Near Relatives. I hereby certify that this is a true and correct statement and that I have identified all of my near relatives who work for the Orange County Sanitation District in any and all capacities. Signature: Date: -------------------------- Book Page 47 4.1.7 Business travel expenses incurred in excess of those described in this policy are not reimbursable. For example, if employees choose to drive instead of fly from Los Angeles to Phoenix, the total reimbursement will not exceed the amount that would have been incurred had air travel been used (e.g., mileage, lodging and meal expense reimbursements resulting from car travel cannot exceed the amount that would have been required if air travel had been used). 4.1.8 Employees will be responsible for repaying OCSD for any expenses paid on their behalf by OCSD that are subsequently determined to be excessive. 4.1.9 OCSD's reimbursement plan has been developed to be considered an "accountable plan" by the IRS. The plan includes a combination of reimbursements based upon receipts and a "per diem" component approved by the IRS. You should check with your income tax preparer if you have any questions. Travel reimbursement amounts are not reported on your annual W-2. 4.2 REIMBURSEMENT 4.2.1 A Travel Expense Reimbursement form and a Daily Expense Breakdown form (if applicable) shall be completed if any eligible out-of-pocket expenses have been incurred. In addition, the employee shall also attach applicable receipts such as airfare itinerary, detailed hotel receipt, electronic receipts, rental car contract and receipt, etc. Receipts are not required for authorized meals. 4.2.2 A Travel Expense Reimbursement form shall be completed and submitted no later than two weeks after the travel has occurred. 4.2.3 Original receipts, including electronic receipts, are required for all reimbursable expenses except meals regardless of the dollar amount. If a receipt is missing, a lost/unavailable receipts memo must be prepared detailing the date, the expense and the amount of the missing receipt. The memo must be signed by the Department Head and attached to the Travel Expense Reimbursement package. See section 4. 7 for meals. 4.2.4 The approval level required on the Travel Expense Reimbursement form is based on total expenses incurred. Employees cannot approve their own travel expenses. 4.2.5 The designated department/division travel coordinator is responsible for auditing and signing the Travel Expense Reimbursement form. They shall also ensure that all applicable forms are completed and attached; applicable receipts are attached, when required; and appropriate signatures have been obtained. 4.2.6 Travel and reimbursement requests shall be forwarded to the appropriate division; Accounting for meetings or the Human Resources Employee Development division for training functions. 4.3 LODGING 4.3.1 Lodging shall be in a hotel, motel or lodge. Hotel/motel rooms shall be standard (single occupancy) rather than deluxe accommodations. The employee shall pay lodging expenses directly. Direct billings to OCSD for employee lodging will not be accepted unless the circumstances are unavoidable and written authorization from the General Manager's office is obtained in advance. Page 2 of8 Book Page 49 4.3.2 Meals or other reimbursable charges on the hotel bill will be applied towards, and must not exceed, the daily reimbursement maximum. 4.3.3 Overnight stays may be allowed for meetings or training functions lasting more than one day in OCSD's general geographical area (Orange, Los Angeles, Ventura, San Bernardino, Riverside, San Diego, Imperial and Kern Counties) when the travel time involved is significant. Such matters will be determined on a case-by-case basis and at the discretion of the appropriate supervisor, manager or department head. 4.3.4 Making Reservations -When making hotel reservations, always ask for the lowest available rate the hotel is offering (e.g., government, season special), which may be lower than the convention/conference rate. 4.3.5 Canceling Reservations -A traveler canceling the reservation shall do so according to the hotel's policy in order to avoid charges. OCSD does not reimburse for non-canceled reservations, early departure, or late cancellation charges unless approved by the Department Head via an "Exceptions-Unauthorized Expenditures" memo. 4.4 GROUND TRANSPORTATION 4.4.1 Employees shall select the most economical, practical means of ground transportation that is appropriate for the particular site. 4.4.2 Reimbursement for personal auto usage for business will be calculated per the current Internal Revenue Service (IRS) guidelines. This rate is subject to change. 4.4.3 Automobile mileage is reimbursable if an employee is required to use a personal vehicle for travel within OCSD's general geographical area, which includes Orange, Los Angeles, Ventura, San Bernardino, Riverside, San Diego, Imperial and Kern Counties. Mileage is based upon the following: • If an employee drives round-trip from their residence to a meeting or training function, the round-trip mileage the employee would have driven from his/her residence to work must be subtracted from the round-trip mileage to the event. Any excess mileage is reimbursable to the employee at the current IRS approved rate. • If an employee drives round-trip from work to a meeting or training function, the round-trip mileage from OCSD to the event is reimbursable at the current I RS approved rate. 4.4.4 OCSD shall pay local transportation costs from the employee's residence to the departure airport and from the departure airport to the employee's residence. Local transportation to and from a departing airport shall be by bus, shuttle or taxi. If the employee uses his/her personal vehicle, then mileage is reimbursable at the current IRS approved rate. 4.4.5 The reimbursable mileage for air travel departures is the mileage between the last stop (e.g., OCSD or employee's residence) and the terminal. The reimbursable mileage for air travel arrivals is the mileage between the terminal and the first stop (e.g., OCSD or employee's residence). 4.4.6 Parking at the departure airport is reimbursable with receipts. Page 3 of8 Book Page 50 4.4. 7 Round-trip mileage expenses are reimbursable when family chauffeuring is the most economical alternative. 4.4.8 OCSD vehicles may be used to transport business guests (see Policy F41.00, Vehicle Usage: section 4.6.9). 4.4.9 Travel while at the local destination may be by shuttle, bus or taxi, as needed. A rental car may be allowed when it is more economical. 4.5 AUTO RENTALS 4.5.1 Rental Car Reservations -Employees shall utilize either OCSD's designated travel agency or the Internet, whichever is more cost effective, to secure rental car reservations. Internet reservations may require employees to charge their personal credit card. Employees will be reimbursed for pre-approved reservations made on their personal credit card after they submit a detailed receipt of the charges. Reservations made through the Internet require a written statement from the employee detailing the cost savings. 4.5.2 Rented autos shall only be used when no other means of transportation is economically feasible. Use of airport or hotel shuttles is encouraged. 4.5.3 Class size -Intermediate or standard model, mid-size car (Class C), or the smallest size compatible with the specific need, are to be used. Exceptions shall be explained on an "Exceptions-Unauthorized Expenditures" memo signed by the Department Head. The original copy of the car rental contract and receipt must be attached to the "Travel Expense Reimbursement" form. 4.5.4 Insurance -OCSD is insured or self-insured for damage to rental cars used on company business. ONLY the "Loss Damage Waiver Fee" is to be accepted and is reimbursable. Any additional insurance purchased for the rental car is not reimbursable. 4.5.5 Rental Contract -When completing the rental agency contract, sign for OCSD, not as an individual (i.e. Orange County Sanitation District, CA, by (your name). 4.5.6 Gas Surcharge -OCSD will not pay fuel surcharges. 4.5.7 Damage -In the event of damage to rental cars, all details of the event reported to the police and/or the rental firm shall also be provided to OCSD Safety Division within 24 hours of the incident. 4.6 AIR TRAVEL 4.6.1 Airline Reservations -Employees shall utilize OCSD's designated travel agency or the Internet, whichever is more cost effective, to secure airline reservations. Internet reservations may require employees to charge their personal credit card. Employees will be reimbursed for pre-approved reservations made on their personal credit card after they submit a detailed receipt of the charges. 4.6.2 Frequent Flyer Miles -Employees who belong to frequent flyer programs are entitled to personally use all bonuses accrued by them on company business. Under no circumstances, however, may employees purchase more expensive tickets in order to Page 4 of8 Book Page 51 accumulate frequent flier mileage or upgrade the class of service. First or Business Class upgrades may be used as long as the original ticket still represents the lowest practical airfare. 4.6.3 Excess Baggage Fees -OCSD will not reimburse for excess baggage fees if not related to company business. This includes sporting equipment. 4.6.4 Alternative Airports -Alternative airports within close proximity (Los Angeles, Long Beach, and Ontario) shall be used if the savings exceed $150. 4.6.5 Lost or Unused Tickets/Ticket Changes -Once an employee accepts an airline ticket on behalf of OCSD, he or she is responsible for it. If the employee loses his/her ticket, the employee must incur any related fees. Unless directed by OCSD management, an employee who fails to use or changes an airline ticket for his/her convenience shall incur any related fees. It is the employee's responsibility to contact the agency that issued their ticket to find out how to remedy lost, unused or ticket change situations. 4.6.6 Flight Limitations -There shall be no more than four (4) OCSD employees total per flight. 4.6. 7 Saturday Night Stay-over -OCSD may require a Saturday night stay-over if the stay- over results in significant cost savings to OCSD. In general, it is expected that business meetings that start on Tuesday or end on Thursday will not justify a reimbursement for Saturday night stay-over. Saturday night stay-over expenses are reimbursable only if the sum of the airfare plus the expenses of the additional lodging, meals and incidentals resulting from the stay- over are less than the lowest available airfare without the stay-over. 4.6.8 Flight Insurance -Flight insurance is not reimbursable. 4.7 MEALS/INCIDENTALS 4.7.1 On overnight stays, or travel beyond the normal work day, OCSD employees are entitled to a "per diem" reimbursement per day depending upon the destination. The daily maximum includes amounts for breakfast, lunch and dinner and an allowance for incidentals. Receipts are not required to receive the per diem amount. 4.7.2 Per Diem amounts have been approved by the Board of Directors and comply with the Federal Meals Incidental Expense Rates found in the Code of Federal Regulations 301- 11.18. Use of these rates allows OCSD's reimbursement plan to be considered an "accountable plan" by the IRS. The file containing the daily rates and governing destinations is accessible through MyOCSD. 4.7.3 When a training function or meeting does not involve overnight stay, the meal reimbursement shall not exceed the individual maximums above for the meals that are appropriate for travel times. 4. 7.4 Provided Meals -Meal expenses are not reimbursable if furnished as part of the event and included in the registration or if provided by others. 4.7.5 Meals served by airlines are not counted as a full meal. If an airline serves breakfast, for example, an employee remains eligible for the breakfast per diem. Page 5 of8 Book Page 52 4.8 GROUP EXPENSE REIMBURSEMENT 4.8.1 When employees travel in a group, they shall pay their own expenses. If this is not practical, one member of the group may pay. Expense reimbursement form shall include: • Names of the individuals for whom the expense has been incurred • Department number(s) to be charged • Circumstances involved Expenses for meals etc. cannot exceed individual maximums on an average per employee basis. 4.8.2 When more than one OCSD employee is present for a business meal, the expense(s) must be reported by the most senior OCSD person. The cost of business meals should be in line with per diem rates. 4.9 COMBINING BUSINESS AND PERSONAL TRAVEL 4.9.1 If an employee combines business and personal travel, the personal travel expenses will be paid directly by the employee. For trips in which the primary purpose is personal, OCSD pays only that portion of the trip directly related to business. 4.9.2 Business travel is based on actual business expenses incurred. Therefore, no adjustment is permitted between expense categories (e.g., funding extra airfare expense in exchange for reduced lodging in a private home on a personal side trip). 4.9.3 In general, it is not appropriate for family members to accompany employees on business trips. Any costs incurred on behalf of family members are not reimbursable. 4.10 FOREIGN TRAVEL 4.10.1 Regardless of when expense reports are submitted, the exchange rate for converting foreign currency expenses into U.S. dollars will be the rate in effect at the time the U.S. dollars are converted to foreign currency and supported by receipts. 4.11 TELEPHONE CALLS 4.11 .1 Business telephone calls and modem services are reimbursable with receipt. On overnight stays, a $4.25 per day allowance is provided for personal telephone calls. Employees with OCSD-issued cellular phones are encouraged to use their cellular phones for calls. 4.12 CASH ADVANCE 4.12.1 Cash advances may be requested for overnight stays FOR EMERGENCY PURPOSES ONLY. The minimum request amount per trip is $100. The maximum request amount is $250 per trip. To receive a cash advance, the traveler is required to complete a "Request for Emergency Cash Advance" form, obtain proper signatures and submit the completed form to the Accounting Division. Page 6 of8 Book Page 53 4.13 NON-REIMBURSABLE EXPENSES 4.13.1 Expenses that are personal (not directly connected with OCSD business) are not reimbursable unless there are extenuating circumstances approved by the General Manager. These include, but are not limited to the following: • Clothing and toiletries • Personal side trips, personal entertainment and personal trip insurance • Fees for use of recreational, health and gym facilities • Home maintenance, baby sitting and pet boarding expenses • Personal legal charges and traffic violations • Loss or theft of cash, travelers checks, travel tickets and credit cards • Loss, theft or damage to personal property such as luggage, auto and clothing • Medical expenses • Accident related costs resulting from an employee's business use of a personal auto • Tips exceeding 15% • Movies • Alcohol 4.14 AGENCYNENDOR-REIMBURSED EXPENSES 4.14.1 When any meeting or training fees are to be reimbursed by an outside agency or vendor, the agency/vendor shall provide a letter to the employee stating exactly which expenditures will be reimbursed. The letter shall accompany the employee's reimbursement package. The designated travel coordinator shall prepare a letter to the agency/vendor listing all expenditures that the agency/vendor has agreed to reimburse and enclose a copy of the agency/vendor authorization letter and copies of all receipts. This letter is copied to the employee and to Accounts Receivable in the Finance Department so that the payment can be credited to the proper account. 4.15 REIMBURSEMENT FOR NON-OCSD EMPLOYEES 4.15.1 Occasionally, OCSD requests others to travel either to OCSD properties or on behalf of OCSD. ln those instances, the Department Head shall prepare a letter authorizing the travel. After completing the travel, the traveler submits a detailed invoice along with a payment request voucher to Accounts Payable for processing. A copy of the authorization letter shall accompany the payment request voucher. 4.16 EXCEPTIONS 4.16.1 Exceptions to the policy shall be indicated on the original Travel Expense Reimbursement form. Additionally an Exceptions-Unauthorized Expenditures memo shall be completed, signed by the Department Head and attached to the package. Page 7 of8 Book Page 54 5.0 PROVISIONS AND CONDITIONS 5.1 Employees shall have Department Head approval in writing before agreeing to appear on a panel or to give a presentation on behalf of OCSD. Failure to do so may preclude attendance. 6.0 RELATED DOCUMENTS 6.1 Travel Expense Reimbursement form 6.2 Airfare Payment Request Voucher form 6.3 Registration Payment Request Voucher form 6.4 Request for Travel Authorization form 6.5 Lost -Unavailable Receipts memo 6.6 Request for Emergency Cash Advance form 6.7 Federal Meals and Incidental Expense Rates per Code of Federal Regulations (CFR 301-11 .18) 6.8 Policy F10.00, Rules of Conduct 6.9 Policy C190.00, Variable Non Base Pay 6.10 Policy F41.00, Vehicle Usage Policy Page 8 of8 Book Page 55 4.2 Employees may be reimbursed for the following: 4.2.1 Specific, job-related Associate, Baccalaureate, and Graduate degree program courses. 4.2.1.1 Requests for reimbursement of courses above the Bachelor degree level require special approval by the Department Head, Human Resources and the General Manager. Such requests will be subject to a more extensive process, including an analysis to determine the value to OCSD of the proposed courses or degree program. 4.2.2 Specific, job-related courses through accredited colleges or universities. 4.2.3 Specific, job-related courses offered through an institution of study approved by the W HR Division. 4.2.3.1 The employee's Division Manager is responsible for determining whether or not the course is "job-related." 4.3 When an employee successfully completes a course with a grade of "C" or better and within the guidelines of this policy, OCSD will reimburse the employee for eligible expenses incurred, based on the number of hours worked per week, not to exceed $5,250 per calendar year. Reimbursements are paid through payroll. Examples of eligible and ineligible expenses are: Eligible Expenses • Tuition • Registration fees • Laboratory fees • Parking fees • Health fees • Application fees • Required textbooks and materials per the course syllabus • Supplies required per the course syllabus not to exceed $100.00 per course 5.0 PROCEDURE Ineligible Expenses • Travel • Optional student fees • Doctoral dissertation fees • Masters thesis fees • Supplemental textbook costs • Supplies and materials used for the course and retained by the employee after course completion (i.e., paper, pencils, notebooks, diskettes, etc.) • Graduation or diploma fees 5.1 To participate in the Tuition Reimbursement Program, employees must submit a completed Tuition Reimbursement Application and a copy of the course description which includes the course cost, course start/end date, and number of units for each course to the ED Division or HR Division Department NO EARLIER THAN 30 days prior to the course start date and NO LATER THAN one day prior to the course start date. Tuition Reimbursement Applications received in the HR Division more than 30 days prior to the course start date will not be processed and will be returned to the employee for future submittal. Tuition Reimbursement Applications received in the W HR Division on or after the course start date will not be approved. 5.1.1 The Director of Finance & Administrative Services Human Resources ( or designee) will sign completed applications. A copy of the approved application will be forwarded to the employee to be re-submitted upon course completion. 5.1.2 Incomplete applications will be returned to the employee with explanation(s) attached. Page 2 of4 Book Page 57 5.2 Upon course completion, the employee must complete and submit a Request for Tuition Reimbursement along with (1) an official record of the final grade, (2) itemized receipts for eligible expenses, (3) a copy of the course syllabus (if requesting reimbursement for required textbooks, materials and/or supplies) and (4) a copy of the original approved Tuition Reimbursement Application for each course to the ED Division within 60 calendar days following the course end date. 5.2.1 The Director of Finance & Administrative Services Human Resources (or designee) will sign completed requests. Copies of the approved request will be forwarded to the employee and submitted to the Accounting Division for reimbursement. 5.2.2 Incomplete requests will be returned to the employee with explanation(s) attached. 6.0 EXCEPTIONS 6.1 If an employee terminates employment or gives notice of termination prior to the completion of a course, no reimbursement will be made. 6.2 Reimbursement may be authorized whenever the employee's manager and HR Manager (or designee) determines that there is substantial benefit to be derived by OCSD when an employee takes a course that does not meet the requirements of this policy. 7.0 PROVISIONS AND CONDITIONS 7.1 This policy does not apply to student interns or temporary employees. 7.2 Requests for Tuition Reimbursement received in the HR W Division more than 60 days after the course end date will not be approved. 7.3 Tuition Reimbursement Applications received in the HR Division more than 30 days prior to the course start date will not be accepted and will be returned to the employee for re- submittal at a later date. 7.4 Tuition Reimbursement Applications received in the HR W Division on or after the course start date will not be approved. 7.4.1 Reimbursement requests must be received by payroll by the second-to-last pay period of the calendar year to be applied to an employee's reimbursement limit for that calendar year. 7.4.2 Reimbursement requests received by payroll on or after the last pay period of the calendar year will be applied to the employee's reimbursement limit for the following year. 7.5 Employees, who for any reason, voluntarily terminates employment with OCSD and received reimbursement through the Tuition Reimbursement Program within 36 months of resignation, shall be subject to the following: 7.5.1 Should an employee, for any reason, voluntarily terminate employment with OCSD 1-12 months after receiving reimbursement, he/she shall repay OCSD 100% of the funds received through this program within the twelve-month period prior to the date of his/her voluntary termination. 7.5.2 Should an employee, for any reason, voluntarily terminate employment with OCSD 13-24 months after receiving reimbursement, he/she shall repay OCSD Page 3 of4 Book Page 58 66% of all funds received through this program within the twenty-four month period prior to the date of his/her •Joluntary termination. 7.5.3 Should an employee, fer any reason 1Joluntarily terminate employment with OCSD 25-36 months after receiving reimbursement, he/she shall repay OCSD 33% of all funds received through this program within the thirty-six month period prior to the date of his/her \<oluntary termination. 7.6 Reimbursement will be at the discretion of OCSD provided the employee meets the criteria specified in this policy. 8.0 RELATED DOCUMENTS 8.1 Fair Labor Standards Act, as amended. 8.2 Sections 127 and 132-J8 of the Internal Revenue Code. 8.3 Tuition Reimbursement Pre-Approval Application 8.4 Request for Tuition Reimbursement Form Page 4 of4 Book Page 59 Orange County Sanitation District REQUEST FOR TUITION REIMBURSEMENT CJ Upon course completion, the employee must complete and submit a Request for Tuition Reimbursement (this form) along with an official record of the final grade, itemized receipts for eligible expenses, a copy of the course syllabus (if requesting reimbursement for required textbooks, materials or supplies) and a copy of the original approved Tuition Reimbursement Application for each course to the Employee Development Division within 60 calendar days following the course end date. LATE REQUESTS WILL NOT BE APPROVED. 1. Employee Name: ______________ Division: Extension: 2. COURSE INFORMATION: COURSE COURSE TITLE ACTUAL START END NUMBER COSTS DATE DATE 3. ALL of the following eligible expense documents are attached: D Official Record of final grade(s) D Receipt(s) for tuition and eligible fees D A copy of the course syllabus (if requesting reimbursement for required textbooks, materials and/or supplies) D A copy of the original approved Tuition Reimbursement Application 4. I request reimbursement in the amount of$ ____ _ Should I terminate employment with OCSD 1-12 months after receiving reimbursement, I agree to repay the District 100% of the funds received through this program within the twelve-,mon'th period prior to the date of my termination. Should I terminate employment with the District 13-24 months after receiving reimbursement, I agree to repay the District 66% of all funds received through this program within the twenty-four month period prior to the date of my termination. Should I terminate employment with the District 25-36 months after receiving reimbursement, I agree to repay the District 33% of all funds received through this program within the thirty-six month period prior to the date of my termination. Repayment of tuition reimbursements resulting from early employment termination is due and payable in full upon the actual termination of employment for any reason. The participant l:iereby authorizes OCSD to withhold from his/her final pay, including si~k leave, vacation leave, personal leave and compensatory time payoff, for all tuition reimbursement balances owed. Any remaining tuition reimbursement balance will be repaid to OCSD in equal installments over the following 12 months. Employee Signature: __________________ Date: ____ _ FOR OFFICE USE ONLY D Your Tuition Reimbursement Request has NOT been approved. Explanation(s) attached. D Your Tuition Reimbursement Request been APPROVED in the amount of$ ______ and forwarded to the Accounting Division on ______ , reference#: ____ _ Director of Human Resources (or designee) Signature: __________ _ Date: ____ _ ATTACHMENT B Book Page 61 4.1.1 OCSD vehicles and equipment are assigned to departments depending on their need for such vehicle(s) and/or equipment to accomplish their mission. Division supervision shall designate or assign drivers or operators to specific vehicle(s) for conducting OCSD business during working hours only. 4.1.2 Pool vehicles are assigned to and managed by the Fleet Services Division for the purpose of providing temporary assigned vehicles for OCSD business. 4.1.3 OCSD vehicles and equipment shall not be loaned to contractors, other agencies, cities, or other organizations or companies except as provided for in section 6.1. 4.2 Use of Personal Vehicles for OCSD Business 4.2.1 The use of a private vehicle to conduct OCSD business shall require the approval of the employee's immediate supervisor. 4.2.2 The use of private vehicles to conduct OCSD business shall be reimbursed in accordance with policy C110.00 (Travel) not to exceed the prevailing rate allowed by the Internal Revenue Service. 4.2.3. The employee's or Student lntern's private vehicle insurance is the primary insurance on the vehicle. OCSD shall not be responsible for the replacement, or repair of any private vehicle, not otherwise owned, rented, or leased by OCSD and used to conduct OCSD business, if said vehicle is damaged or destroyed during the course of such use. Prior to said use, the employee's private vehicle shall have automobile insurance coverage that meets or exceeds the minimum requirements of the OMV for public liability and property damage. Drivers are responsible for ensuring that their personal vehicle insurance is valid for business use. 4.3 Use of Pool Vehicles 4.3.1 Pool vehicles are maintained by Fleet Services Division for: 4.3.1.1 Use by any authorized driver requiring transportation to conduct OCSD business on a trip-by-trip or as-needed basis. 4.3.1.2 Use by any authorized driver Gf while a regularly assigned vehicle or mobile equipment is undergoing service or repairs. 4.3.2 Pool vehicles should not be used for extended out-of-town business unless all other options, least costly to OCSD, have been considered and eliminated. 4.3.3 Pool vehicles may be reserved in advance on a first come first serve basis by contacting the appropriate Fleet Services Division personnel. 4.3.4 Overnight use of an OCSD pool vehicle must have prior approval by an OCSD manager level or above. The manager should consider all options (i.e., using personal vehicle instead) and shall choose the option that is the least costly to OCSD. An employee whose OCSD business requires an early morning departure will be allowed to check-out the vehicle the night prior to the travel day. 4.3.5 Drivers should avoid parking pool vehicles overnight in a public parking facility such as an airport. Costs for airport shuttles, public transportation, or personal vehicle use shall be reimbursed in accordance with policy C110.00 (Travel). Page 2 of7 Book Page 63 4.3.6 OCSD vanpool vehicles are limited to the approved route and schedule as assigned by the vanpool coordinator. Vanpool vehicles may be used for other OCSD purposes during working hours. 4.3. 7 Vanpoolers and carpoolers may check out a pool vehicle in the event of an emergency that requires their immediate or delayed departure from work. 4.3.8 Returned pool vehicles shall be refueled when less than one-half tank of fuel remains. All trash and personal items must be removed from the pool vehicle. Any mechanical problems shall be reported immediately to Fleet Services Division. 4.4 OCSD Vehicle Parking 4.4.1 OCSD vehicles shall be parked and locked in assigned parking spaces or designated areas. 4.4.2 OCSD vehicle keys are to remain in a secured area. 4.4.3 OCSD vehicles shall not be parked in visitor, carpool, vanpool, handicapped parking spaces or red zones. 4.4.4 Employees with a Disabled Persons Parking Permit issued by the OMV shall be authorized to use handicapped parking spaces for their assigned OCSD vehicle. 4.4.5 On call employees who take OCSD vehicles home shall park OCSD vehicle in a garage, carport, or driveway if possible and not on a private or public street. 4.5 Employee Personal Vehicle Parking 4.5.1 Personal vehicles shall be parked in employee parking areas only. 4.5.2 OCSD parking permits shall be visibly displayed in personal vehicles. 4.5.3 Personal vehicles shall not park in visitor, assigned parking spaces, or adjacent to red or green curbs. 4.6 Driver Responsibility 4.6.1 License: While operating an OCSD vehicle, or driving a personal vehicle, on official OCSD business, the driver must possess a valid State of California, Department of Motor Vehicles (OMV) Driver's License, and shall comply with the requirements of the California Vehicle Code and local regulations and ordinances. The consequences for failing to comply with any law, regulation or ordinance shall be the responsibility of the driver. Drivers required to operate a commercial vehicle must possess a valid State of California, OMV Commercial Driver's License with the proper endorsements. 4.6.2 OMV Records: All employees and Student Interns operating OCSD vehicles on public roadways shall be required to participate in the OMV EPN Program. Employees with a class A or B license are automatically added to the EPN Program. 4.6.2.1 Employees and Student Interns shall complete a OMV authorization form. Those individuals who do not complete the OMV authorization form are not authorized to operate OCSD vehicles. Page 3 of7 Book Page 64 4.6.2.2 Records of class A and B licenses shall be presented to the California Highway Patrol upon request. 4.6.2.3 As part of the EPN program, OCSD shall verify that an authorized driver has a valid driver's license(s) and that the license(s) is not suspended, restricted, or revoked. Other information reported by DMV may be used to determine an authorized driver's ability to operate a vehicle. 4.6.3 Private Use: 4.6.3.1 OCSD vehicles shall be used only for purposes of OCSD business and not for personal business or pleasure by any person. This includes, but is not limited to, stopping for a meal break or running a personal errand unless such activity is during the course of official OCSD business. OCSD vehicles can not be used for the sole purpose of personal business. No one except authorized drivers and authorized passengers, as outlined in this policy, may be transported in an OCSD vehicle at anytime. 4.6.3.2 The transportation of personal property within an OCSD vehicle is prohibited with the exception of an employee's lunch or property ordinarily used by the employee while conducting OCSD business. 4.6.4 Care of Vehicles: Each employee having custody of an OCSD vehicle shall exercise due caution and prudence in the operation of such vehicle and shall minimize the risk of damage to such vehicle. Only OCSD related stickers are authorized on OCSD vehicles. 4.6.5 Smoking: Smoking is prohibited in OCSD owned vehicles. 4.6.6 Cell phones: While operating an OCSD vehicle, the driver must utilize a hands- free device and use the one touch or voice activated calling feature when using a cell phone. If a hands-free device is not available, the driver must pull over to a safe location in order to use a cell phone. Hands-free devices shall be provided in selected OCSD vehicles. 4.6. 7 Vehicles not in Use: OCSD vehicles are for use during working hours only. OCSD vehicles shall otherwise be parked and locked at assigned OCSD facilities. OCSD vehicle keys shall remain in a secured area. Keys for vehicles assigned to individuals may be kept overnight or during the weekend by the individual. OCSD vehicles shall be made available to an assigned department if the employee who is assigned the OCSD vehicle will gone for any extended period of time. 4.6.8 Stand-by Use: OCSD vehicles may be taken home by those employees on paid stand-by duty during the period of such stand-by duty. If possible, the vehicle shall be parked in a garage, carport, or driveway and not on a private or public street. Vehicles shall only be used for the express purpose of responding when called back to work and not for personal purposes. 4.6.8.1 With the permission of the employee's manager, employees may use assigned OCSD vehicles in lieu of personal vehicles for transportation to places/events to facilitate their availability during authorized stand-by. However, OCSD vehicles may not be parked at or near bars, casinos, Page 4 of7 Book Page 65 adult entertainment establishments or other locations likely to reflect poorly on OCSD. 4.6.9 Status Changes Affecting Drivers License: Drivers of OCSD vehicles are required to notify their supervisor, in writing, immediately upon the following: 4.6.9.1 If their driver's license is revoked, suspended, restricted, or expired. 4.6.9.2 If they are cited for a major moving violation, to include but not limited to the following: 4.6.9.2.1 Driving under the influence of alcohol, drugs or a combination of both. 4.6.9.2.2 Hit and run. 4.6.9.2.3 Reckless driving. 4.6.9.2.4 Leaving the scene of an accident. 4.6.9.2.5 Eluding or fleeing a police officer. 4.6.9.2.6 Speed contests or drag racing. 4.6.10 Passengers: Only OCSD authorized drivers and authorized passengers, as outlined in this policy, are allowed in OCSD vehicles. Unauthorized passengers, including but not limited to hitchhikers and family members, are prohibited in OCSD vehicles. Drivers and passengers shall use seat belts and shoulder restraints at all times while the vehicle is in motion. No driver shall allow or cause any passenger to ride in or on any vehicle other than in a proper passenger seat equipped with legal seat belts. 4.6.11 Toll Roads: Drivers are responsible for ensuring the payment of any toll road expense while operating an OCSD or personal vehicle. Toll road expenses are reimbursable if the costs were incurred while performing official OCSD business. Requests for toll road reimbursement must be submitted on a Travel Expense Reimbursement Form. 4.7 Safe Driving Habits and Vehicle Safety Practices 4.7.1 OCSD vehicles shall be operated in compliance with all applicable state and local laws and ordinances. The consequences for failing to comply with any law, regulation, or ordinance, such as speeding citations or toll road fines, shall be the responsibility of the driver. 4. 7.2 Drivers are to drive defensively and maintain control of the vehicle at all times and be aware of personal limitations, road conditions, weather, visibility, and traffic. 4.7.3 No driver shall operate a vehicle at a speed greater than is reasonable and prudent for the conditions, having due regard for weather and visibility, the traffic on, and the surface and width of, the highway and in no event at a speed which endangers the safety of persons or property. Page 5 of7 Book Page 66 4.7.4 No person will operate an OCSD vehicle while under the influence of alcohol or illegal drugs. Also, over-the-counter or prescription medications that are reasonably known to adversely influence the safe operation of a vehicle are prohibited. 4.7.5 In inclement weather, rain, fog, etc., drivers are required to turn on vehicle headlights. 4.7.6 Drivers are responsible for the secure placement and proportionate distribution therein of the load to be transported. Whenever the load extends beyond the bed or body of such vehicles, the driver will use clearance flags or signs, properly displayed, indicating a long or wide load, as required by California Vehicle Code. 4.7.7 Drivers are responsible to ensure that vehicles are not overloaded. 4.7.8 Whenever it is necessary to hook up a trailer to a truck, caution should be exercised and, if needed, the assistance of a fellow employee shall be obtained. 4.8 Accident Reports 4.8.1 OCSD requires employees and Student Interns to report a wide variety of incidents ranging from loss of OCSD property to injuries. All job related incidents or any incident involving OCSD property is to be reported no matter how slight. Drivers and/or operators of vehicles and equipment are required to complete a Vehicle Accident Report in the event of a vehicle accident, vehicle damage, vehicle theft, vehicle vandalism, property damage, and other vehicle related incidents. Reports and investigations shall be completed in accordance with SAFETY-POL-202, Accident Investigations. The drug testing requirement as described in the OCSD Substance Abuse Policy shall apply. 4.9 Responsibility Assignments 4.9.1 Employees 4.9.1.1 Employees are responsible for compliance with all provisions of this policy when using OCSD or private vehicles to conduct OCSD business. For purposes of this policy the actual driver and/or operator of the vehicle or equipment shall be the responsible employee. 4.9.1.2 Employees and Student Interns are responsible for the costs of any ticket, citation, and/or any other liability that may be imposed due to a violation of law, regulation, and/or ordinance as a result of their operation of a vehicle. 4.8.2 Directors, Managers, and Supervisors 5.0 PROCEDURES 6.0 EXCEPTIONS 4.8.2.1 It is the responsibility of supervisory personnel to ensure the policies of this document are understood by the employees under his or her immediate supervision. 6.1 Contractors who meet the requirements of this policy may, in limited situations, use an OCSD vehicle with Department Head Authorization. Page 6 of7 Book Page 67 7.0 PROVISIONS AND CONDITIONS 8.0 RELATED DOCUMENTS 8.1 DMV Employer Pull Notice Program 8.2 California Vehicle Code 8.3 Policy C110.00, Travel 8.4 Policy E80.00, Cellular Telephones 8.5 Policy F40.00, Use of District Property Page 7 of7 Book Page 68 RESOLUTION NO. OCSD 06-XX AMENDING RESOLUTION NO. OCSD 98-33 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT AMENDING THE PERSONNEL POLICIES AND PROCEDURES ********'********'******"'*'***** The Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. B10.00, Conflict of Interest Code and Code of Ethics, set forth in Attachment No. 1, attached hereto and incorporated herein by reference. Section 2: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. B150.00, Recruitment and Selection, set forth in Attachment No. 2, attached hereto and incorporated herein by reference. Section 3: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by adding Policy No. 8160.00, Nepotism, set forth in Attachment No. 3, attached hereto and incorporated herein by reference. Section 4: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. C110.00, Travel, set forth in Attachment No. 4, attached hereto and incorporated herein by reference. Section 5: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. 090. 00, Tuition Reimbursement Program, set forth in Attachment No. 5, attached hereto and incorporated herein by reference. Section 6: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by amending Policy No. F41.00, Vehicle Usage, set forth in Attachment No. 6, attached hereto and incorporated herein by reference. Section 7: That Exhibit "A" of Resolution No. OCSD 98-33 is hereby amended by re- titling the Human Resources Policies and Procedures Manual to the "OCSD Board of Directors Personnel Policies and Procedures Manual". Section 8: That all other terms and conditions of Resolution No. OCSD 98-33, as previously recommended, shall remain in full force and effect. Section 9: That all future amendments to Resolution No. OCSD 98-33 be made by Resolution. PASSED AND ADOPTED at a regular meeting held September 27, 2006. Chair ATTEST: Board Secretary Book Page 69 FAHR COMMITTEE Meeting Date 09/13/06 AGENDA REPORT Item Number FAHR06-60 Orange County Sanitation District FROM: Brad Hogin, General Counsel SUBJECT: ADOPTION OF DISTRICT'S 2006 CONFLICT OF INTEREST CODE GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 06-XX, Adoption of District's 2006 Conflict of Interest Code, and Repealing Resolution No. OCSD 04-24. SUMMARY Please see attached memorandum from General Counsel dated August 31, 2006. PRIOR COMMITTEE/BOARD ACTIONS September 22, 2004 -Board amended Conflict of Interest Code. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT • • • ~ This item has been budgeted. (Line item: ) This item has been budgeted, but there are insufficient funds. This item has not been budgeted. Not applicable (information item) ADDITIONAL INFORMATION N/A ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. General Counsel Memo 2. Proposed Resolution 3. 2006 Conflict of Interest Code H:ldept\agenda\FAHRIFAHR2006\0906\06-60.Conflict of Interest Code.doc Revised: 8120/98 Book Page 70 Page 1 To Bd. of Dir. 09/27/06 Item Number LAW OFFICES OF WOODRUFF, SPRADLIN & SMART A PROFESSIONAL CORPORATION MEMORANDUM TO: Chair and Members of the Board of Directors Orange County Sanitation District FROM: Bradley R. Hogin, Esq. DATE: August 31, 2006 RE: 2006 Conflict of Interest Code The District is required to re-adopt its Conflict of Interest Code every two years. The Resolution revises the District's list of designated employees that are required to file statements of economic interest. The changes are necessary because some positions have been deleted, some positions have been added, and certain changes have been made to classification names. General Counsel recommends that the Board adopt the 2006 Code, thus keeping the District in compliance with state law. Upon adoption, the Code will be submitted to the County Board of Supervisors as the code-reviewing body. 517636.I Book Page 71 Bradley R. Hogin General Counsel RESOLUTION NO. OCSD 06- ADOPTING DISTRICT'S 2006 CONFLICT OF INTEREST CODE A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ADOPTING THE DISTRICT'S 2006 CONFLICT OF INTEREST CODE AND REPEALING RESOLUTION NO. OCSD 04-24 WHEREAS, the Political Reform Act of 1974, Government Code Sections 81000, et seq., (the "Act"), requires a local governmental agency to adopt a Conflict of Interest Code pursuant thereto; and, WHEREAS, the Orange County Sanitation District adopted Resolution No. OCSD 04-24 on September 22, 2004, adopting such a Code by incorporating the provisions of Section 18730 of Title 2 of the California Code of Regulations pursuant to the Act, which Code was approved by the Orange County Board of Supervisors, as the Code- reviewing body; and, WHEREAS, Exhibit "A" must be amended to correct the list of Designated Employees by revising the titles of existing positions, and by deleting the titles of positions that have been eliminated. NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1 : That the Code entitled "2006 Conflict of Interest Code of the Orange County Sanitation District", a copy of which is attached hereto and incorporated herein by reference, be, and is hereby approved and adopted for the District, subject to the approval thereof by the Orange County Board of Supervisors, which is the designated Code-reviewing body pursuant to California Government Code Section 87303. Book Page 72 Section 2: That the Secretary of the District is hereby authorized and instructed to submit a copy of this Resolution and the Code hereby adopted to the Orange County Board of Supervisors, and to request said Board of Supervisors to approve said Code in accordance with California Government Code Section 87303. Section 3: That Resolution No. OCSD 04-24, adopted September 22, 2004, adopting a revised Conflict of Interest Code of the Orange County Sanitation District, is hereby repealed, effective ten ( 10) days after approval of the District's 2006 Code adopted herein by the Orange County Board of Supervisors. PASSED AND ADOPTED at a regular meeting held September 27, 2006. Chair Board Secretary H:\dept\gmo\Board Services\BS\Resolutions\2006\Conflict of Interest.doc Book Page 73 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT Section 1: Purpose. The purpose of this 2006 Conflict of Interest Code of the Orange County Sanitation District, is to comply with the requirements of the California Political Reform Act of 197 4 (California Government Code Sections 87100 et seq.), and particularly the requirement to adopt and promulgate a local Conflict of Interest Code (California Government Code Section 87300). Section 2: Designated Positions. The positions listed on Exhibit "A', attached hereto and incorporated herein by reference, are Designated Positions. Officers and employees holding those positions are Designated Employees, and are deemed to make, or participate in the making, of decisions which may foreseeably have a material effect on economic interests. Section 3: Disclosure Categories. Each Designated Employee shall disclose on Fair Political Practices Commission Form 700, all required information for the following disclosure categories, and as specified for the Designated Position: Category I Category 11 - Category Ill - Category IV - Investments Interests in Real Property Income Business Positions Section 4: Incorporation by Reference of Section 18730 of Title 2 of the California Code of Regulations. Pursuant to authority of Section 18730 of Title 2 of the California Code of Regulations, the Regulations set forth in Title 2, Division 6, Chapter 7, Articles 1-3, and any amendments thereto, duly adopted by the Fair Political Practices Commission, along with the attached Exhibit "A", in which officers and employees of the District are designated and disclosure categories are set forth, are hereby incorporated by reference and constitute the Conflict of Interest Code of the Orange County Sanitation District. Section 5: Place of Filing for Statements of Economic Interest. Persons occupying Designated Positions shall file Statements of Financial Interest with the Orange County Sanitation District Board Secretary. Upon receipt of the Statements of the Board of Directors and General Manager, the District's Board Secretary shall make and retain a copy and forward the original of these Statements to the Clerk of the Orange County Board of Supervisors. Statements for all other persons occupying Designated Positions will be retained by the District. Book Page 74 Section 6: Severability. If any article, section, subsection, paragraph, subparagraph, sentence, clause, or phrase of this Code is for any reason held to be invalid, unconstitutional, or unenforceable, such decision shall not affect the validity of the remaining portions of this Code. The District declares that it would have adopted this Code and each article, section, subsection, paragraph, subparagraph, sentence, clause, and phrase thereof irrespective of the fact that any one or more of such portions of this Code be declared invalid, unconstitutional, or unenforceable. Section 7: Effective Date: The District's 2006 Conflict of Interest Code shall take effect ten (10) days after approval by the Orange County Board of Supervisors, acting as the Code-reviewing body, pursuant to Government Code Section 87303. Book Page 75 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT EXHIBIT "A" DESIGNATED POSITIONS Designated Position General Manager Assistant General Manager Director of Engineering Director of Finance/Treasurer Director of Information Technology Director of Operations and Maintenance Director of Technical Services Director of Regional Assets & Services Accounting Manager Contract and Purchasing Manager Controller Engineering Manager Environmental Assessment Manager Human Resources Manager Information Technology Manager Public Information Manager Laboratory Manager Maintenance Manager Operations Manager Process Controls Manager Source Control Manager Accounting Supervisor Chief Plant Operator Purchasing Supervisor Contracts Supervisor Senior Construction Inspection Supervisor Construction Inspection Supervisor Engineering Supervisor Environmental Supervisor Human Resources Supervisor Information Technology Supervisor Laboratory Supervisor Maintenance Supervisor Book Page 76 Disclosure Categories I, II, Ill, IV I, II, Ill, IV I, II, 111, IV I, 11, Ill, IV I , II , 111, IV I, II, Ill, IV I , II , 111, IV I , II , 111, IV I , 11, 111, IV I , II , Ill , IV I , 11, Ill , IV I , II , Ill , IV I , II , 111, IV I , 11, Ill , IV I , II , 111, IV I , II , Ill , IV I , II, Ill, IV I, 11, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, 11, 111, IV I, II, 111, IV I, II, 111, IV I, II, Ill, IV I, 11, Ill, IV I, II, Ill, IV I, II, Ill, IV I, II, Ill, IV I, 11, Ill, IV I, 11, Ill, IV I , II , 111, IV I , II , Ill , IV 2006 CONFLICT OF INTEREST CODE OF THE ORANGE COUNTY SANITATION DISTRICT EXHIBIT "A" DESIGNATED POSITIONS Designated Position Senior Maintenance Supervisor Materials Control Supervisor Operations Supervisor Safety & Health Supervisor Secretary of the District Source Control Supervisor Principal Accountant Senior Financial Analyst Principal Financial Analyst Buyer Senior Buyer Capital Improvement Program Project Manager Construction Inspector Senior Construction Inspector Contracts Administrator Senior Contracts Administrator Principal Contracts Administrator Senior Engineer Legislative Affairs Liaison Legal and Regulatory Affairs Liaison Regulatory Specialist Senior Regulatory Specialist Senior Scientist General Counsel *Consultants Disclosure Categories I , II , 111, IV I, II , 111, IV I , II , 111, IV I, II , Ill, IV I, 11 , Ill, IV I , 11, 111 , IV I, 11 , Ill, IV I , II , 111, IV I, II , Ill, IV I , 11 , 111 , IV I, II , Ill, IV I , II , 111 , IV I, II , Ill, IV I, II , Ill, IV I , II , 111 , IV I, 11 , Ill, IV I , II , 111 , IV I, II , Ill, IV I, II , 111, IV I , II , 111, IV I, 11, 111, IV I , II , 111, IV I, II , Ill, IV I, II, Ill, IV I, II, Ill, IV *The governing body of the District shall determine on a case-by-case basis whether a particular Consultant is required to comply with the disclosure requirements in this Section. If the governing body determines that a particular Consultant must comply with the disclosure requirements of this Section, the governing body shall notify the Consultant in writing. The written notification shall include a description of the Consultant's duties, and based upon those duties, a statement of the extent of disclosure requirements. The governing body's notification is a public record and shall be retained for public inspection by the Board Secretary. Book Page 77 FAHR COMMITTEE Meeting Date To Bel. of Dir. 09/13/06 09/27/06 AGENDA REPORT Item Number Item Number FAHR06-61 Orange County Sanitation District FROM: Lorenzo Tyner, Director of Finance and Administrative Services Originator: Marc Dubois, C.P.M., Contracts/Purchasing Manager SUBJECT: GENERAL MANAGER APPROVED PURCHASES GENERAL MANAGER'S RECOMMENDATION Receive and file report of General Manager approved purchases in amounts exceeding $50,000 in accordance with Board purchasing policies. SUMMARY In May 1998, the FAHR Committee and the Board approved changes to the staff purchasing authority. One of the changes was to increase the dollar threshold before Board authority was required for purchases of goods or services, excluding public works purchases, to $100,000. When approving this change, the Committee asked for periodic reports showing purchases approved by the General Manager for amounts between $50,000 and $100,000. Subsequent to receiving the initial report, the Committee requested that future reports be placed on the Consent Calendar. Vendor Name California State University, Fullerton (CSUF) Foundation Kars Advance Materials, Inc. Frost Company RMS Engineering & Design, Inc. TMV Systems Engineering, Inc. United Pumping Service CSI Computational Systems Jamison Engineering Form No. DW-102 Dept. 320 Amount · Department $55,001 Engineering $94,000 Engineering $95,000 Engineering $60.000 O&M $60,000 O&M $60,000 O&M $72,000 O&M $72,980 O&M Page 1 Book Page 78 Description/Discussion Sole Source for demographic research memberships. Forensic analysis P2 truck loading facility. Emergency weld work P2 truck loadino facility. Document review and inspection for Project SP-117. Sole Source for Software services. Vacuum services. Quality assurance inspections. Rehab barscreens at Plant 2. Agenda Report -Board Revised: 9f7/2006 Vendor Name Amount Department Description/Discussion National Plant Service $80,000 O&M Vacuum services. Air Products & Chemicals $95,000 0 &M Oxygen for activated sludge treatment. David's Tree Service $60,000 Regional Assets & Tree Trimming services. Services Regional Assets & Sole Source for Closed Circuit DGA Consultants $70,000 Television (CCTV) Data Services Evaluation. Biomerieux Vitek, Inc. $60,000 Technical Services Sole Source for Automated Bacterial Identification System. Section 4.03.B of Resolution 04-08, the Orange County Sanitation District's Delegation of Authority Resolution, authorizes the Contracts/Purchasing Manager to purchase items that have been previously authorized by the Board as identified in the annual OCSD budget. During the budget adoption process, the lists of these items were highlighted for the Directors. For these reasons, purchases that fell into these categories are not included in this report. PRIOR COMMITTEE/BOARD ACTIONS NIA PROJECT/CONTRACT COST SUMMARY NIA BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [Z] Not applicable (information item) ADDITIONAL INFORMATION NIA ALTERNATIVES NIA CEQA FINDINGS NIA ATTACHMENTS None. Form No. DW-102 Dept. 320 Page2 Book Page 79 Agenda Report -Board Revised: 917/2006 FAHR COMMITTEE Meeting Date 09/13/06 AGENDA 'REPORT Item Number FAHR06-62 Orange County Sanitation District FROM: Michael D. White, Controller SUBJECT: QUARTERLY FINANCIAL REPORT FOR THE PERIOD ENDED JUNE 30, 2006 GENERAL MANAGER'S RECOMMENDATION Receive and file the FY 2005-06 Quarterly Financial Report for the period ended June 30, 2006. SUMMARY To Bd. of Dir. 09/27/06 Item Number Attached in a separately bound document is the Quarterly Financial Report for the period ended June 30, 2006 for the Orange County Sanitation District's investments, interest rate exchange agreement (Swap), and Certificates of Participation. The operating financial review portion of this report will be presented in October as part of the Comprehensive Annual Financial Report. At a previous Finance, Administration and Human Resources (FAHR) Committee meeting, Committee members requested information regarding the Sanitation District's rates; specifically a comparison with other agencies. When provided, this information is included with the operating financial review portion of the Quarterly Report, which will be presented in October. However, as this information is currently available, it has been included as an attachment to this report. This information indicates that the Sanitation District's rates continue to compare favorably with other agencies. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [:8'.I Not applicable (information item) H:ldept\agenda\FAHRIFAHR2006\0906\06-62.Quarterly Financial Report.doc Revised: 8/20198 Book Page 80 Page 1 ADDITIONAL INFORMATION None. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. Attached in a separately bound document is the Quarterly Financial Report covering the period ended June 30, 2006 for the District's investments, interest rate exchange agreement (Swap), and Certificates of Participation. 2. Agency Rate Comparison H:\dept\egende\FAHRIFAHR2006\0906\06-62.Quarterly Financial Report.doc Revised: 8120/98 Book Page 81 Page2 Agency Comparison Single Family Residence (SFR) User Fees 2005 2006 % Agency Svc. Trt. SFR SFR Iner. Comments 1 City of San Die!;jo B 2 $ 422 $ 422 0.0% Cu rrently developing new rates 2 City of San Francisco B 3 $ 357 $ 405 13.2% 3 Vallejo Sanitation/Flood Control District B 3 $ 358 $ 393 10.0% 4 City of Los Angeles B 4 $ 294 $ 345 17.4% 5 Dublin San Ramon Services District B 3 $ 327 $ 327 0.0% Rate discussion scheduled for Aug. 1 Board Mtg. 6 City of Oxnard B 3 $ 298 $ 298 0.0% No rate increases scheduled at this time. 7 Central Contra Costa Sanitary District B 4 $ 280 $ 289 3.2% 8 Union Sanitary District B 3 $ 216 $ 229 6.0% 9 City of Hayward B 3 $ 198 $ 227 14.9% Rate Effective January 1, 2006 10 East Bay Municipal Utility District T 4 $ 206 $ 214 3.8% 11 Sacramento County T 3 $ 204 $ 204 0.0% to 12 Oro Loma Sanitary District B 3 $ 173 $ 193 11.6% 0 $ 178 0 13 City of Fresno B 3 $ 178 0.0% Currently working on rate review ~ "'O 14 City of Visalia B 3 $ 166 $ 174 5.0% ~ 15 Modesto Municipal Sewer District No. 1 B 3 $ 171 $ 171 0.0% Currentli:'. developing new rates (1) 00 16 Orange County Sanitation District B 2 $ 151 $ 166 9.8% N 17 Irvine Ranch Water District B 5 $ 120 $ 157 30.5% 18 City of Bakersfield B 3 $ 125 $ 135 8.0% 19 Los Angeles County T 4 $ 96 $ 102 6.3% Average Increase with OCSD 7.3% Average Increase without OCSD 7.4% Legend: Services Provided B Collection and treatment services T Treatment services only Treatment Level 1 Primary treatment 2 Advanced primary or primary with some secondary 3 Secondary Treatment 4 Advanced Secondary or secondary with some tertiary 5 Tertiary treatment FAHR COMM ITTEE Meeting Date To Bel. of Dir. 09/13/06 09/27/06 AGENDA REPORT Item Number Item Number FAHR06-63 Orange County Sanitation District FROM: Robert Ghirelli, Assistant General Manager Originator: James Matte, Safety and Health Supervisor SUBJECT: SAFETY POLICY, INJURY AND ILLNESS PREVENTION PROGRAM POLICY GENERAL MANAGER'S RECOMMENDATION Approve revisions to SAFETY-POL-101, Injury and Illness Prevention Program Policy, as provided for in Resolution No. OCSD 02-5 regarding the District's Injury and Illness Prevention Program. SUMMARY OCSD staff is revising the Injury and Illness Prevention Program Policy (SAFETY-POL- 101) to update policy requirements in accordance with revised workplace procedures, and change responsibilities in light of recent organizational changes. Additional changes to the Injury and Illness Prevention Program Policy are being requested to add a new policy, Water Resource Protection (SAFETY-POL-116). The new program incorporates requirements to protect potable, recycled, plant and gap water systems at OCSD as well as require backflow prevention and is being made to due to changes mandated by the City of Fountain Valley to Plant# 1 potable water system. OCSD staff is requesting the cancellation of SAFETY-POL-115, Backflow Prevention. The requirements of this policy are being incorporated into the new SAFETY-POL-116, Water Resources Program. The cancellation of SAFETY-POL-115 eliminates duplication of requirements in multiple policies. This policy is a best management practice. There are no increased administrative costs associated with these changes. OCSD staff is requesting the cancellation of SAFETY-POL-404, Return to Work Program. The requirements of this policy are being incorporated into the existing SAFETY-POL-402, Workers' Compensation Benefits, Leave and Return to Work Program. The cancellation of SAFETY-POL-404 eliminates duplication of requirements in multiple policies. This document is presented for your review and adoption represents OCSD's revised written Injury and Illness Prevention Program that conforms to applicable regulations found in the California Code of Regulations. Book Page 83 Injury and Illness Prevention Program SAFETY-POL-101 Contents 1. Purpose ............................................................................................... 4 2. Definitions ........................................................................................... 4 3. Requirements ...................................................................................... 5 3.1 3.2 3.3 3.4 3.5 Program Responsibilities .......................................................................... 6 3.1.1 Administration ...................................................................................... 6 3.1.2 Management and Supervision ............................................................. 7 3.1.3 Employee ............................................................................................ 7 3.1.4 Employee Safety Rules ....................................................................... 8 Hazard Awareness and Analysis ............................................................ 10 3.2.1 Pre-Use Analysis ............................................................................... 10 3.2.2 Comprehensive Safety and Health Surveys ...................................... 10 3.2.3 Periodic Self Inspections of Work Areas ........................................... 11 3.2.4 Routine Hazard Analysis ................................................................... 11 3.2.5 Employee Reports of Hazards .......................................................... 11 3.2.6 Incident and Accident Investigations ................................................. 12 3.2.7 Pattern Analysis ................................................................................ 12 Hazard Prevention and Control .............................................................. 12 3.3.1 Professional Expertise ....................................................................... 12 3.3.2 Written Safety and Health Policies and Procedures .......................... 13 3.3.3 Process Controls and Personal Protective Equipment.. .................... 13 3.3.4 Emergency Preparedness and Planning ........................................... 13 3.3.5 Preventative Maintenance ................................................................. 14 Safety Training ....................................................................................... 14 3.4.1 Training Profiles ................................................................................ 14 3.4.2 Employee Training ............................................................................ 15 Safety Communication ........................................................................... 15 3.5.1 3.5.2 3.5.3 3.5.4 3.5.5 3.5.6 3.5.7 3.5.8 3.5.9 3.5.10 3.5.11 Signage ............................................................................................. 15 SafetyLine ......................................................................................... 15 Safety Awareness for Everyone (SAFE) Bulletins ............................. 15 Memorandums .................................................................................. 16 Safety Intranet ................................................................................... 17 Verbal Communication ....................................................................... 17 Safety Committee .............................................................................. 17 Safety Suggestion Box ...................................................................... 17 Rewards and Recognition Programs ................................................. 17 Post Incident Safety Stand Down ...................................................... 17 Safetygram ......................................................................................... 18 Book Page 86 Injury and Illness Prevention Program SAFETY-POL-101 3.6 Safety Policy Enforcement and Discipline .............................................. 18 3.6.1 Safety Policy Enforcement ................................................................ 19 3.6.2 Incorporation by Reference ............................................................... 19 3.6.3 Discipline for Safety Policy lnfractions ............................................... 19 3. 7 Accident and Incident Investigations ...................................................... 19 3.8 Recordkeeping ....................................................................................... 19 3.8.1 Inspection Records ............................................................................ 19 3.8.2 Training Records ............................................................................... 20 3.8.3 Exposure Monitoring and Medical Records ....................................... 20 3.9 Integration of Safety Compliance Initiatives ........................................... 20 3.10 Coordination of Contractor Programs ..................................................... 20 4. References ........................................................................................ 20 5. Attachments ...................................................................................... 23 1. Purpose ............................................................................................. 25 2. Requirements .................................................................................... 25 2.1 Written Compliance Programs ............................................................... 25 Book Page 87 Number: SAFETY-POL-101 ~ Orange County Sanitation OCSD Revision Number: 5 Injury and Illness Prevention Program Date: SeQtember 27. 2006 1. Purpose 2. Definitions CMMS Imminent Hazard Injury and Illness Prevention Plan Manager Approved by: Every California employer must establish, implement and maintain a written Injury and Illness Prevention (IIPP) Program and a copy must be maintained at each worksite. The requirements for establishing, implementing and maintaining an effective written Injury and Illness Prevention Program are contained in Title 8 of the California Code of Regulations, Section 3203 (8 CCR 3203). The purpose of this Injury and Illness Prevention Program (IIPP) is to ensure OCSD establishes implements and maintains a safety and health program. Computerized Maintenance Management System Any condition or practice in a place of employment that constitutes a hazard which could reasonably be expected to cause death or serious physical harm immediately or before the imminence of the hazard can be eliminated through regular enforcement procedures. A written program stating what the OCSD, management and employees will do with respect to safety. Employee who : • manages, plans, supervises and coordinates the operations and activities of one or more major OCSD divisions and works under general direction or administrative direction of a Department Director of the General Manager, exercising discretion in applying general goals and policy statements and in resolving organizational and service delivery problems and; • Organizes and directs the work of subordinate staff, and; • Assumes significant responsibility for a variety of personnel activities in such areas as selection, training and disciplinary actions and; Rev.~ Hard Copy Is Uncontrolled Date 09/27/06 4 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 88 Injury and Illness Prevention Program SAFETY-POL-101 Process Program Administrator Red Tag Supervisor • Assumes significant responsibility for the preparation and administration of the assigned budget(s) A series of actions or operations directed toward a result. The person assigned the task of maintaining and auditing the Injury and Illness Prevention Program A red colored tag placed by an employee prohibiting the use tools or equipment because of the belief that the use of the tool or equipment will result in an accident or injury. Employee who: • Supervises, assigns and reviews the work of subordinates in assigned sections or work units and; • Works under direction or general direction of higher level supervisory or management staff, exercising discretion in selecting appropriate resources to use in accomplishing assigned work and; • Assumes responsibility for recommending a variety of personnel actions in such areas as performance evaluation, training, selection and disciplinary measures and; • Ensures that appropriate policies and procedures are followed by subordinates and; • Monitors, coordinates and assists in developing the budget for assigned area Safety Committee A committee made up of employees representing OCSD management and represented employees who meet to set safety goals and objectives and to solve safety related issues 3. Requirements The required elements listed below are the ten elements of the Injury and Illness Prevention Program as required by the California Occupational Safety and Health Administration (Cal- OSHA). Specific details of each element may be found in specific referenced standard operating procedures, where applicable. Rev.~ Hard Copy Is Uncontrolled Date QfltWQ@ 5 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 89 Injury and Illness Prevention Program SAFETY-POL-101 3.1 Program Responsibi lities This section outlines the responsibilities for the implementation and maintenance of this Injury and Illness Prevention Program. 3.1.1 Administration 1. The Safety and Health Division (Safety) shall be responsible for maintaining the written Injury and Illness Prevention Program. A. The Safety and Health Supervisor shall be the 11 PP Program Administrator. 2. The Executive Management team (EMT) shall ensure that OCSD's safety programs have sufficient resources to maintain a safe and healthful workplace. Resources include but are not limited to: A. A competent safety staff. B. An adequate budget to maintain and improve the safety and emergency response health program. C. An adequate budget for required controls to minimize safety and health risks to OCSD personnel, suppliers and the public. D. An adequate budget for required personal protective equipment as determined by Safety. E. Time for OCSD staff to attend required safety training at a frequency and duration determined by Safety. 3. The Safety and Health Division, in coordination with affected divisions, shall be responsible for ensuring that safety policy, safety procedures, safety programs and safe work practices are developed. 4. Safety and Health Division personnel shall have the authority to ensure that unsafe operations are stopped and that unsafe tools and equipment are removed from service in accordance with SAFETY-SOP-101 .2, Red Tag Authority or if they believe, in their professional judgment, an imminent danger exists. 5. OCSD's General Manager shall be responsible for ensuring Rev. ~ Hard Copy Is Uncontrolled Date WJ2..71Qe 6 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 90 Injury and Illness Prevention Program SAFETY-POL-101 OCSD managers and supervisors comply with the provisions of this IIPP and other safety and health programs. 6. The Assistant General Manager over the Safety and Health Division shall be responsible for ensuring the IIPP and other safety and health programs are implemented. 7. A copy of this IIPP shall be available to all employees either in an electronic or hard copy format. 3.1.2 Management and Supervision 3.1.3 Employee 1. Management and supervision shall ensure employees are provided with the proper tools and personal protective equipment. 2. Management and supervision shall ensure employees follow safe work practices, including but not limited to the wearing of personal protective equipment. 3. Management and supervision shall ensure employees are appropriately disciplined for infractions of safety rules, policies, procedures and programs. 4. Management and supervision shall ensure periodic inspections of work areas are completed and documented in accordance with SAFETY-SOP-101 . 1, Periodic Workplace Inspections. 5. Management and Supervision shall ensure that unsafe operations are stopped and that unsafe tools and equipment are removed from service in accordance with SAFETY- SOP-101 .2, Red Tag Authority. 6. Management and supervision shall ensure identified hazards are reported, documented and corrected. 7. Management and supervision shall ensure that this policy and all referenced documents are enforced. 1. Employees shall comply with safe work practices, policies, Rev.~ Hard Copy Is Uncontrolled Date 00/.2-7/Q@ 7 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 91 Injury and Illness Prevention Program SAFETY-POL-101 procedures and safety programs. 2. Employees shall conduct daily inspections of their work area to check for unsafe conditions. This includes but is not limited to: A. Personal protective equipment B. Safety equipment such as fire extinguishers, safety showers and eyewashes C. Tools and equipment D. Vehicles. 3. Employees shall correct unsafe conditions as soon as possible, including the replacement of personal protective equipment. 4. Employees shall report unsafe conditions that cannot be corrected to supervision immediately and submit a CMMS request. 5. Employees shall attend safety training at the scheduled time. 6. Employees escorting contractors, vendors or visitors shall ensure that the proper personal protective equipment is used at all times and all safe work practices are observed. 3.1.4 Employee Safety Rules OCSD has established a set of generic safety rules that apply to all OCSD employees, visitors and contractors. Violators of these rules can be subject to disciplinary action, contract termination or removal from the site. 1. Maintain work area(s) in an orderly manner. 2. Obey all posted safety and traffic control signs and markings. 3. Oil, grease, paint and other slippery substances are to be cleaned up immediately. 4. Report all unsafe conditions to supervision or Maintenance (through the Computerized Maintenance Management Rev. ~ Hard Copy Is Uncontrolled Date 0912-7/QG 8 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 92 Injury and Illness Prevention Program SAFETY-POL-101 System(CMMS System)) 5. Report all accidents to your supervisor, regardless of severity of the accident. 6. Aisles and walkways are to be kept clear of tripping hazards and obstructions at all times. 7. Do not operate tools or equipment that you have not been trained to operate. 8. Engaging in horseplay or scuffling with fellow employees is prohibited at all times. 9. Pay close attention to your surroundings and do not read while walking. 10. Employees using prescription medication shall inform their supervisor of the medication use, type and possible effects when they report to work. 11 . Walk only in designated walkways and roadways. Do not take shortcuts through process or storage areas. 12. Do not block access to safety equipment, electrical panels, fire extinguishers, etc. 13. Do not disconnect or over ride any machines interlock device. 14. Do not walk around barricades, tape or other devices being used to block access to unsafe conditions. 15. Do not smoke or use open flames in any area which has been designated a "NO SMOKING" area. 16. Observe all CAUTION" and " DANGER" signs throughout the plant. 17. Ladders are to be properly secured prior to use. When a ladder cannot be secured, a fellow employee must hold it. 18. Operation of equipment or machinery without proper guards and/or signaling devices is prohibited. 19. The unauthorized removal of guards or disconnecting of signaling devices is prohibited . 20. Personal protective equipment, safety glasses, hard hats, Rev. ~ Hard Copy Is Uncontrolled Date QQ~6 9 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 93 Injury and Illness Prevention Program SAFETY-POL-101 hearing protection, etc, shall be worn in all areas where required. 21. Extension cords shall not be used for installations for periods longer than one (1) week. 22. Extension cords shall be inspected for defects prior to use. 23. Always use the proper tool for the job. 3.2 Hazard Awareness and Analysis OCSD has developed procedures for identifying and evaluating work place hazards, including scheduled periodic inspections to identify unsafe conditions and work practices. Inspection guidelines may be found in SAFETY-SOP-101.1, Periodic Workplace Inspection Procedures. 3.2.1 Pre-Use Analysis Engineering, Operation and Maintenance, Process Engineering, Facilities Maintenance, Purchasing or any other division proposing any process change that has the potential to impact the safety and health of OCSD employees, contractors or visitors shall, in coordination with Safety, conduct a pre-use analysis to determine the impact on safety. 3.2.2 Comprehensive Safety and Health Surveys The Safety and Health Division, in coordination with management and supervision, shall determine the scope and frequency for any comprehensive safety, health or industrial hygiene surveys. Survey scope and frequency shall be based upon: 1. Regulatory requirements. 2. Literature review for new information on recognized hazards. 3. Whenever new substances, processes, procedures, or equipment are introduced to the workplace that represent a new occupational safety and health hazard. Rev.~ Hard Copy Is Uncontrolled Date Q9~ 10 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 94 Injury and Illness Prevention Program SAFETY-POL-101 4. Employee input when applicable. 5. The best judgment of Safety. The frequency of inspections shall not exceed one inspection per calendar quarter. 3.2.3 Periodic Self Inspections of Work Areas 1. Division management and supervision shall be responsible for conducting periodic inspections of each work area to identify and evaluate hazards. 2. Periodic inspections shall be conducted in accordance with SAFETY-SOP-101.1, Periodic workplace Inspections. 3. Whenever new substances, processes, procedures, or equipment are introduced to the workplace that represent a new occupational safety and health hazard, supervision and/or management shall contact Safety to assist in a pre-Use Assessment. 4. Whenever a manager/supervisor is made aware of a new or previously unrecognized hazard, Safety shall be contacted. 5. Division management and supervision shall not rely on periodic inspections performed by other divisions or committees as a substitute for required inspections. 3.2.4 Routine Hazard Analysis The Safety Division routinely conducts hazard analysis of OCSD operations and construction activities for jobs the Safety Division deems hazardous and all confined space entries. 3.2.5 Employee Reports of Hazards Employees are encouraged to report known and potential safety and health hazards. Mechanisms for reporting these hazards include: 1. Reports to management and supervision 2. Reports through CMMS Rev. ~ Hard Copy Is Uncontrolled Date WJ2+tQ6 11 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 95 Injury and Illness Prevention Program SAFETY-POL-101 3. Electronic mail (e-mail) to SafetyLine or Safety and Health staff 4. Safety Suggestion boxes 5. Safety and Health committee meetings 6. Reports to an employee's bargaining unit representative 7. Face to face meetings with Safety and Health staff. 3.2.6 Incident and Accident Investigations Incident and accident investigations are conducted on all incidents requiring a Property Disposition Report, all motor vehicle accidents and all Cal-OSHA recordable injuries. Other incidents may be investigated at the discretion of Safety. Accident investigations shall be conducted in accordance with SAFETY-POL-202, Accident Investigation and Reporting. Incident and accident investigations are conducted on all incidents involving $ 1,000.00 of property damage, all motor vehicle accidents and all Cal-OSHA recordable injuries. Other incidents may be investigated at the discretion of Safety. Accident investigations shall be conducted in accordance with SAFETY-POL-202, Accident Investigation and Reporting. 3.2.7 Pattern Analysis Cal-OSHA logs and accident investigations shall be periodically reviewed by Safety to determine if any accidents or near misses have similarities. 3.3 Hazard Prevention and Control Accidents are prevented through the timely recognition and correction of hazards before someone is injured or property is damaged. 3.3.1 Professional Expertise OCSD will ensure that Safety and Health Division staff is adequately trained in the hazards inherent to a wastewater treatment plant. This includes providing staff with the resources necessary to perform assigned jobs, including but not limited to Rev. 0 Hard Copy Is Uncontrolled Date Q9Q+IQ6 12 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 96 Injury and Illness Prevention Program SAFETY-POL-101 the following: 1. Annual professional development 2. Certification maintenance as required by the certification authority. 3. Professional memberships. 4. Reference materials, such as: A Books B. Codes, laws, regulations and consensus standards C. Internet access in accordance with established OCSD policy. 3.3.2 Written Safety and Health Policies and Procedures OCSD will develop and maintain safety policies, procedures and programs to ensure compliance with applicable Federal OSHA and Cal-OSHA requirements. Safety Policies and Procedure titles may be found in SAFETY-SOP-000.1 Control of Polices, Procedures, Programs. 3.3.3 Process Controls and Personal Protective Equipment OCSD shall use engineering controls to reduce employee exposures to physical and chemical hazards. Personal protective equipment shall be used when engineering controls are not feasible, have not been installed, or when emergency situations dictate such use. OCSD shall provide all required personal protective equipment.,. 3.3.4 Emergency Preparedness and Planning OCSD has developed an Integrated Emergency Response Plan designed to prepare OCSD and employees for all types of emergencies, including but not limited to: 1. Medical emergencies 2. Fires Rev.~ Hard Copy Is Uncontrolled Date GQ/.2-7/00 13 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 97 Injury and Illness Prevention Program SAFETY-POL-101 3. Earthquakes 4. Floods 5. High water flows 6. Utility outages 7. Hazardous materials spills 8. Threatened or actual terrorist activities 9. Tsunamis 10. Workplace violence incidents 3.3.5 Preventative Maintenance The operations and facilities maintenance divisions have developed a preventative maintenance program to ensure critical equipment does not fail and that safety related equipment is properly maintained. The CMMS system tracks the scheduled maintenance of these items. 3.4 Safety Training Safety training is required for all OCSD employees. New employees shall receive a New Employee Safety Orientation to familiarize them with the hazards of a wastewater treatment plant and OCSD safety policies and procedures. Safety training is typically based on job classification, hazards that will be anticipated in a job and the employee's actual job duties. 3.4.1 Training Profiles The Safety and Health Division shall meet with the manager or supervisor of each employee to determine which safety training classes shall be attended by each employee. Once a safety training profile has been developed for an employee, the training listed on the profile is mandatory. The Safety and Health Division and manager/supervisor shall use the following criteria to determine safety training requirements: 1 . Job description 2. Actual job duties Rev.~ Hard Copy Is Uncontrolled Date 09/27/06 14 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 98 Injury and Illness Prevention Program SAFETY-POL-101 3. The anticipated job tasks of the employee 4. Anticipated future job tasks 5. Regulatory requirements 6. OCSD requirements based on : i. Previous job task requirements ii. Best industry practices. 3.4.2 Employee Training Employees shall receive safety training before they are required to perform a task and at the frequency specified in specific safety policies and procedures. 3.5 Safety Communication 3.5.1 Signage 3.5.2 SafetyLine OCSD utilizes several methods to communicate safety and health requirements, safety warnings and safety tips to all employees. OCSD posts hazard-warning signs where necessary to communicate safety and health requirements, safety warnings and safety tips to all employees. Signage is posted in accordance with Title 8 CCR §3340. Accident Prevention Signs. SafetyLine is a short tip on a variety of safety topics that affect OCSD staff both on and off the job. SafetyLine is distributed to all OCSD employees with e-mail accounts on payday. 3.5.3 Safety Awareness for Everyone (SAFE) Bulletins SAFE bulletins are issued on specific safety related items explaining how something should be done, or explaining how specific components of a safety program are to be implemented. Requirements and guidelines for developing SAFE Bulletins may be found in SAFETY-POL-103, Safety Awareness for Everyone Rev.~ Hard Copy Is Uncontrolled Date ~OO 15 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 99 Injury and Illness Prevention Program SAFETY-POL-101 (SAFE) Bulletins. 1 . SAFE Bulletins shall be considered OCSD policy for items not covered by specific policies. 2. A list of SAFE Bulletins may be found in SAFE Bulletin 000, List of SAFE Bulletins. 3. SAFE Bulletins shall be reviewed at least every 3 years. 4. SAFE Bulletins greater than three (3) years old shall not be considered OCSD policy. 3.5.4 Memorandums The Safety and Health Division will periodically issue memorandums regarding specific safety, health and hazardous waste issues. 1. Memorandums shall be limited to a single topic. 2. Memorandums may be issued for the following reasons: a. To clarify an existing policy b. To implement a new policy on an emergency basis c. Memorandums implementing new policy requirements shall only be in force until: i. A new policy has been developed; or ii. A SAFE bulletin has been developed; or iii. A Ninety (90) day time period has elapsed d. To provide information e. To offer recommendations 3. A memorandum shall not revoke or supercede an adopted policy, unless authorized by the Director of Human Resources Assistant General Manager and the General Manager by signature. 4. E-mail shall not replace a memorandum. Rev.~ Hard Copy Is Uncontrolled Date 0912+tGe 16 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page I 00 Injury and Illness Prevention Program SAFETY-POL-101 3.5.5 Safety Intranet The Safety and Health Division maintains an intranet site where employees can go to obtain information on safety and health issues. 3.5.6 Verbal Communication Safety and Health Division staff is available for contact regarding concerns over safety and health issues. 1. Verbal communication shall not be used to change OCSD policy. 3.5. 7 Safety Committee OCSD has agreed to form a labor-management safety committee to address work related safety concerns. In addition, subject specific safety sub committees may be formed at any time with the concurrence of the Labor-Management Safety Committee to address specific safety concerns. Safety Committees shall be governed in accordance with SAFETY- SOP-000. 7, Safety Committees. 3.5.8 Safety Suggestion Box There are Safety Suggestion Boxes located around both Plant 1 and Plant 2. The purpose of the boxes is to allow employees to submit suggestions to Safety either by identifying themselves or anonymously. 3.5.9 Rewards and Recognition Programs The Safety and Health Division has developed a rewards and recognition program for employees who go above and beyond safe work practices and consistently display a positive safety attitude. 3.5.10 Post Incident Safety Stand Down A Safety Stand Down is a procedure in which all managerial personnel shall order a review of pertinent safety requirements for their employees. The review shall be a minimum of 30 minutes to discuss safety issues that affect their specific work Rev.~ Hard Copy Is Uncontrolled Date OO/~ 17 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page IO 1 Injury and Illness Prevention Program SAFETY-POL-101 3.5.11 Safetygram group or to discuss an incident that may have occurred on a OCSD job site. The Safety Stand Down shall occur no later than the next work shift following an incident. A Safety Stand Down shall occur when any of the following conditions occur: 1. An injury to an OCSD employee that requires a report be made to Cal-OSHA 2. A fatality that occurred to any persons on any OCSD job site. 3. Any accident that results in the overnight hospitalization of 2 or more employees, OCSD personnel or contractor personnel. 4. OCSD's General Manager, in consultation with the Safety and Health Division determines the need for a Safety Stand Down. A Department and Division Managers and Supervisors may call for a Safety Stand Down at any time for their respective department and/or division. The Safety and Health Division shall be responsible for disseminating information regarding any incident requiring a Safety Stand Down and any additional information requested by management. Safetygrams are developed by the Safety and Health Division for use by management and supervision as safety tailgate meeting topics. The topics are designed to be approximately five (5) minutes in length. 3.6 Safety Policy Enforcement and Discipline All employees, including managers and supervisors, are responsible for complying with safe and healthful work practices. All employees are responsible for complying with safety rules, policies and procedures. Rev.§ Hard Copy Is Uncontrolled Date 09/27/06 18 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 102 Injury and Illness Prevention Program SAFETY-POL-101 3.6.1 Safety Policy Enforcement Each employee has a responsibility to ensure that work is petiormed in a safe manner. Employees shall report violations of safety rules and policies in accordance with established OCSD procedures. 3.6.2 Incorporation by Reference Documents listed in the reference section shall be considered OCSD policy. 3.6.3 Discipline for Safety Policy Infractions Employees who violate safety rules, policies and procedures are subject to disciplinary action, up to and including termination. Discipline shall be implemented in accordance with established OCSD policies, and bargaining unit MOUs where appropriate. Supervision and management shall be responsible for disciplining workers for failure to comply with safe and healthful work practices. The Safety and Health Division shall concur in writing with all disciplinary items related to any policy covered under this document or any other document enforced by the Safety and Health Division. 3.7 Accident and Incident Investigations All accidents and near misses shall be investigated promptly. Accident and incident investigation shall be conducted in accordance with Safety-POL-202, Accident Investigation and Reporting. 3.8 Recordkeeping Records shall be maintained in accordance with specific Cal- OSHA requirements. Records not mentioned below are maintained in accordance with specific policies and procedures. 3.8.1 Inspection Records Records of safety inspections shall be kept 12 months after the last item found deficient has been corrected. Copies of safety inspections shall be kept in the Safety and Health Office at Plant Rev.~ Hard Copy Is Uncontrolled Date 0012Z'.Qe 19 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page l 03 Injury and Illness Prevention Program SAFETY-POL-101 No. 1. 3.8.2 Training Records Employee safety training records shall be maintained in an electronic database. These records are retained for the length of OCSD employment, plus five (5) years. 3.8.3 Exposure Monitoring and Medical Records Exposure monitoring and medical records shall be retained in accordance with SAFETY-POL-403, Access to Employee Medical Records and Title 8 California Code of Regulations, §3204. Access to Employee Exposure and Medical Records. 3.9 Integration of Safety Compliance Initiatives One goal of OCSD's safety and health program is to ensure that safety programs are not in conflict with one another. A second goal is to ensure that OCSD's overall mission can be accomplished while providing a safe and healthful work environment and achieving overall compliance with all applicable regulations and laws. 3.10 Coordination of Contractor Programs OCSD requires all contractors that conduct business with the OCSD to have a safety program in place and conform to OCSD, state and federal requirements as required by approved purchase orders, contracts and specifications. Project Managers, Resident Engineers and Construction Inspectors who represent OCSD assigned to a project are responsible for enforcing the safety and health requirements of the contract. 4. References Title 8 California Code of Regulations, §3203. Injury and Illness Prevention Program Title 8 California Code of Regulations, §3204. Access to Employee Exposure and Medical Records Title 8 California Code of Regulations, §3340. Accident Rev. g Hard Copy Is Uncontrolled Date G9~6 20 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page l 04 Injury and Illness Prevention Program SAFETY-POL-101 Prevention Signs California Labor Code, Sections 142. 3, 4558 and 6401. 7 California Government Code, Section 11346. California Code of Regulations, Title 8, Division 1, Department of Industrial Relations California Code of Regu!ations1 Title 8 Industrial Relations California Code of Regulations, Title 13 Motor Vehicles California Code of Regulations, Title 17 Public Health California Code of Regulations. Title 19 Public Safety California Code of Regulations. Title 22, Social Security California Code of Regulations, Title 23 Waters California Code of Regulations. Title 26, Toxics California Code of Regulations. Title 27 Environmental Protection Code of Federal Regulations1 29 CFR Part 1910 Code of Federal Regulations, 29 CFR Part 1926 Code of Federal Regulations, 40 CFR. Protection of the Environment Code of Federal Regulations. 49 CFR Transportation SAFETY-SOP-000.1, Control of Polices, Procedures, Programs SAFETY-SOP-000.7, Safety Committees SAFETY-SOP-101.1, Periodic Workplace Inspections SAFETY-SOP-101.2, Red Tag Authority SAFETY-POL-102, Personal Protective Equipment SAFETY-POL-103, Safety Awareness for Everyone (SAFE) Bulletins SAFETY-POL-104, Permit Required Confined Spaces Rev. i Hard Copy Is Uncontrolled Date 09/:n-KJ@ 21 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page I 05 Injury and Illness Prevention Program SAFETY-POL-101 SAFETY-POL-105, Hazardous Energy Control SAFETY-POL-106, Hearing Conservation SAFETY-POL-107, Hazard Communication Program SAFETY-POL-108, Contractor Safety Programs SAFETY-POL-109, Respiratory Protection Program SAFETY-POL-110, Radiation Safety Program SAFETY-POL-111, Chemical Hygiene Plan SAFETY-POL-112, Integrated Emergency Response Program SAFETY-POL-113 Exposure to Pathogens Program SAFETY-POL-114 Hazardous Waste Management SAFETY-POL-116 Water Resources SAFETY POb 115 Backflow Prevention SAFETY-POL-201, Fire Prevention SAFETY-POL-202, Accident Investigation and Reporting SAFETY-POL-203, Ergonomics SAFETY-POL-204, Fall Protection SAFETY-POL-205, Electrical Safety SAFETY-POL-301, Vehicle Safety Operations (including carts and bicycles) SAFETY-POL-302, Marine Safety SAFETY-POL-303, Crane Safety SAFETY-POL-304, Forklift Operation SAFETY-POL-401, Medical Examinations SAFETY-POL-402, Workers' Compensation Benefits.1 and Leave and Return to Work Programs SAFETY-POL-403, Access to Employee's Medical Records Rev. ~ Hard Copy Is Uncontrolled Date G9127PJa 22 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 106 Injury and Illness Prevention Program SAFETY-POL-101 SAFETY POL 404 , Return to VVork Programs 5. Attachments Attachment A: OCSD Safety and Health Programs Rev.~ Hard Copy Is Uncontrolled Date 0912-71-0e 23 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page I 07 Injury and Illness Prevention Program SAFETY-POL-101 Attachment A: OCSD Safety and Health Programs Contents 2. Re uiren1ents ................................................................................................... 25 2.1 Written Compliance Programs ......................... , ..................................... 25 Rev.~ Hard Copy Is Uncontrolled Date 09/27/0e 24 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page I 08 1. Purpose To promote a safe work environment for all employees and to ensure the OCSD meets the safety-related legal requirements for written compliance programs. 2. Requirements It is the OCSD's policy to provide a safe work environment for its employees. The OCSD is committed to ensuring compliance with all safety-related legal requirements and providing the necessary training to meet these requirements. 2.1 Written Compliance Programs The written compliance programs, which are detailed in specific Safety Policies, Procedures or Safety Programs (SPs), covered by this policy are: 1. Injury and Illness Prevention Program This program is mandated by Cal-OSHA CCR Title8, §3203, Injury and Illness Prevention Program. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-101 , Injury and Illness Prevention Program and SAFETY-SP-101 OCSD Safety and Health Program. The program includes information on safety commitment and responsibilities, hazard recognition , hazard assessment and control, safety communications, safety training, accident reporting and investigation , safety committees, and recordkeeping. 2. SAFETY-POL-102, Personal Protective Equipment Program This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Section (§) 3380, Personal Protective Devices. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-102 Personal Protective Equipment. This program includes the requirements for selection, use, and care for devices designed for head, eye, body, hand, and foot protection. 3. SAFETY-POL-103, Safety Awareness For Everyone (SAFE) Rev. 4§. Hard Copy Is Uncontrolled Date 02/22/20009/27/06 25 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page I 09 Injury and Illness Prevention Program SAFETY-POL-101 Bulletins SAFE bulletins are bulletins issued on specific safety related items explaining how something should be done, or explaining how specific components of a safety program are to be implemented. SAFE Bulletins shall be considered OCSD policy for items not covered by specific policies. SAFE Bulletins shall be reviewed at least every 3 years. SAFE Bulletins older than 3 years old shall not be considered OCSD policy. The policy for the development of SAFE Bulletins may be found in SAFETY-POL-103, Safety Awareness for Everyone (SAFE) Bulletins 4. SAFETY-POL-104, Permit Required Confined Spaces This program is mandated by Cal-OSHA CCR Title 8, § 5157, Permit-Required Confined Spaces. To meet the intent of the regulation, the OCSD has developed SAFETY-POL- 104, Permit Required Confined Spaces and SAFETY-SP- 104 Permit Required Confined Spaces. This program includes the requirements for the entrant, attendant, entry supervisor, and rescue team for confined space entry activities. 5. SAFETY-POL-105, Hazardous Energy Control This program is mandated by Cal-OSHA CCR Title 8, § 3314 Cleaning, Repairing, Servicing and Adjusting Prime Movers, Machinery and Equipment. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-105, Hazardous Energy Control Programs and SAFETY-SP-105 Hazardous Energy Control. This program includes the requirements for working on or around equipment that is energized or has the potential to contain residual energy. 6. SAFETY-POL-106, Hearing Conservation This program is mandated by Cal-OSHA CCR Title 8, § 5097, Hearing Conservation. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-106, Hearing Conservation Programs and SAFETY-SP-106 Hearing Conservation. This program includes the requirements for designating areas where hearing protection is required and the selection, use, and care for hearing protection devices. Rev.~ Hard Copy Is Uncontrolled Date 0012-7/00 26 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 1 10 Injury and Illness Prevention Program SAFETY-POL-101 7. SAFETY-POL-107, Hazard Communication Program This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Section (§) 5194, Hazard Communication. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-501, Hazard Communication. This program includes the requirements for training, use, labeling, Material Safety Data Sheets (MSDS) and employee training and education. 8. SAFETY-POL-108 Contractor Safety Programs This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Subchapter 4, Construction Safety Orders. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-108, Contractor Safety Programs. This program includes the requirements for Contractor oversight for safety and health related issues by the OCSD during the completion of contracts. 9. SAFETY-POL-109, Respiratory Protection This program is mandated by Cal-OSHA CCR Title 8, § 5144, Respiratory Protection. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-109 Respiratory Protection Program. This program includes the duties of the program administrator, supervisor, and respiratory user. Also defined in the program are the requirements for the selection, inspection, use, maintenance, and storage of respiratory protection devices. 10. SAFETY-POL-110 Radiation Safety Program This program is mandated by CCR Title 17, Division 1, Chapter 5, Subchapter 4, Radiation and Cal-OSHA Title 8, § 5076, Radiation and Radioactivity, Administrative Procedures. To meet the intent of the regulation, the OCSD has developed SAFETY-POL-110 Radiation Safety Program. This program includes the requirements for nuclear gauge users, contractors, service representatives, and visitors who enter into restricted areas where radioactive materials are used or stored. 11. SAFETY-POL-111, Chemical Hygiene Plan This program is mandated by Cal-OSHA CCR Title 8, § 5191, Occupational Exposure to Hazardous Chemicals in Rev.~ Hard Copy Is Uncontrolled Date GB~ 27 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 111 Injury and Illness Prevention Program SAFETY-POL-101 Laboratories. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-111 Chemical Hygiene Plan and Appendix B of the Laboratory Operating Procedures Manual. This program includes the duties of the Chemical Hygiene Officer, supervisor, and laboratory employee. 10. SAFETY-POL-112, Integrated Emergency Response Program This program is mandated by Cal-OSHA CCR Title 8, § 3220 Emergency Action Plan, § 3221 Fire Prevention Plan, § Hazardous Waste Operations and Emergency Response; CCR Title 19, § 2620 et seq. and Health and Safety Code § 25500 et seq. Minimum Standards for Business, § 2400 et seq. Standardized Emergency Management Systems; Title 22, § 66265.30 through 37, Preparedness and Prevention Plan, § 66265.50 through 56, Contingency Plan and Emergency Procedures; 40 Code of Federal Regulations (CFR) Part 112, Spill Prevention Control and Countermeasure Plan. To meet the intent of all the regulations, the OCSD has developed SAFETY-POL-112, Integrated Emergency Response Plan and SAFETY-SP- 112 Integrated Emergency Response Plan. This plan is divided into Volumes I and 11. Volume I, Emergency Preparedness, contains the specific plans for preparing for an emergency. Volume II, Emergency Procedures, contains the specific plans and procedures to be implemented in response to an emergency. 13. SAFETY-POL-113, Exposure to Pathogens Program (Bloodborne Pathogens) This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Section (§) 5193, Bloodborne Pathogens for our Emergency Medical Team. Other aspects of the program are voluntary, but follow best industry practices. To meet the intent of the regulation referenced above, the OCSD has developed SAFETY-POL-113 Exposure to Pathogens and SAFETY-SOP-113-1 Exposure Control Plan. 14. SAFETY-POL-114, Hazardous Waste Management This program is mandated by Cal-EPA, California Code of Regulations (CCR), Title 22, Division 4.5 Hazardous Waste Management. To meet the intent of this regulation, the Rev. g Hard Copy Is Uncontrolled DateQ.9mtOO 28 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 112 Injury and Illness Prevention Program SAFETY-POL-101 OCSD has developed SAFETY-POL-502 Hazardous Substance Management. This program includes the requirements for identification, packaging, labeling and disposal of hazardous waste. Requirements for training employees are also included 15. SAFETY-POL-115 Backflow Prevention Program: CANCELLED This program is mandated California Department of Health SeNices Regulations, found in Titles 17 and 22 of the California Code of Regulations that require specific actinns and practises be performed when safeguardihg potable 'Nater systems. 16. SAFETY-POL-116 Water Resources This program is mandated California Department of Health Services Regulations, found in Titles 17 and 22 of the California Code of Regulations that require specific actions and practices be performed when safeguarding potable, recycled and plant water systems. 17. SAFETY-POL-201, Fire Prevention Programs This program is mandated by Cal-OSHA, California Code of ~egulations (CCR), Title 8, Sections (§) 3220, Emergency Action Plan, 3221 , Fire Prevention Plan and 6150-6184, Fire Protection. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-201 Fire Prevention. This program includes the requirements for the training of employees on evacuations, and fire systems maintenance, testing and upkeep. 18. SAFETY-POL-202, Accident Investigations This program is mandated by Cal-OSHA, California Code of Regulations, Title 8, Sections §330, Definitions, §3203. Injury and Illness Prevention Program; Title 8 California Code of Regulations, Chapter 7, Subchapter 1. Occupational Injury or Illness Reports and Records and Title 8 California Code of Regulations Chapter 3.2. , Subchapter 2, Article 3. Reporting Work-Connected Injuries, §342. Reporting Work- Connected Fatalities and Serious Injuries. To meet the intent of this regulation , the OCSD has developed SAFETY- POL-202 Accident Investigation. This program includes the requirements for the training of employees and supervisors Rev. §. Hard Copy Is Uncontrolled Date Q9t2-1/Ge 29 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 113 Injury and Illness Prevention Program SAFETY-POL-101 on reporting and documenting industrial near misses and accidents. 19. SAFETY-POL-203, Ergonomics This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Section (§) 5110, Ergonomics. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-203 Ergonomics. This program includes the requirements for evaluation of workstations, the selection, use, and care for devices designed to reduce hazards in the work place that can lead to repetitive motion and cumulative trauma injuries. 20 SAFETY-POL-204, Fall Protection This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Chapter 4, Subchapter 4, Construction Safety Orders and Subchapter 7, General Industry Safety Orders. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-204, Fall Protection. This program includes the requirements for use of fixed, portable and personal fall protection equipment. 21. SAFETY-POL-205, Electrical Safety This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Sections(§) 2299-2974, Electrical Safety Orders. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-205 Electrical Safety. This program includes the requirements for electrical installations, work practices when working on electrical equipment and the required personal protective equipment. 2g. SAFETY-POL-301, Vehicle Safety This program is mandated by Cal-OSHA, as a general requirement of the OCSD's Injury and Illness Prevention Program. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-301, Vehicle Safety. This program includes the requirements for vehicle inspection, vehicle maintenance and driver surveillance. 2~. SAFETY-POL-302, Marine Safety This program is mandated by Cal-OSHA, as a general requirement of the OCSD's Injury and Illness Prevention Rev. ~ Hard Copy Is Uncontrolled Date 09/27/06 30 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 114 Injury and Illness Prevention Program SAFETY-POL-101 Program. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-302, Marine Safety. 21_. SAFETY-POL-303, Crane Safety This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Chapter 4, Subchapter 7, Group 13, Cranes and Other Hoisting Equipment. To meet the intent of this regulation, the OCSD has developed SAFETY- POL-303, Crane Safety. This program includes the requirements for training of personnel, inspection and maintenance of cranes. 2§. SAFETY-POL-304, Forklift Operation This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Article 25, Industrial Trucks. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-304, Forklift Operation. This program includes the requirements for training of personnel, inspection and maintenance of forklifts. 2§. SAFETY-POL-401, Medical Programs This program is mandated by several different Cal-OSHA standards in California Code of Regulations (CCR), Title 8, Chapter 4, subchapter 7, General Industry Safety Orders. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-401, Medical Examinations. This program includes the requirements for conducting medical surveillance on employees exposed to potentially hazardous work environments. 2I. SAFETY-POL-402, Workers' Compensation Benefitsi-Leave and Return to Work Program. This program is represents the OCSD's compliance with the requirements of the California Code of Regulations, Title 8, Chapter 4.5 and 8, relating to Workers' Compensation and Occupational Injury Return to Work Programs. This program is designed to return iniured employees back to work on restricted duty. This program results in unspecified costs savings to the OCSD in terms of reduced workers compensation benefits. reduced disability payments and reduced costs associated with hiring temporary employees and overtime. Rev. ~ Hard Copy Is Uncontrolled Date OOJ2.7JQ6 31 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 115 Injury and Illness Prevention Program SAFETY-POL-101 28 . SAFETY-POL-403, Access to Employee Medical Records This program is mandated by Cal-OSHA, California Code of Regulations (CCR), Title 8, Section (§) 3204, Access to Employee Medical Records. To meet the intent of this regulation, the OCSD has developed SAFETY-POL-403, which instructs employees how to access their occupationally related medical files. 29 SAFETY-POL-404, Return to Work Programs-CANCELLED This program is a best industry practiced designed to return injured employees back to work on restricted duty. This program results in unspecified costs savings to the OCSD in terms of reduced •Norkers compensation benefits, reduced disability payments and reduced costs associated with hiring temporary employees and overtime. 2930 . SAFETY-POL-405, Administration Safety and Health Training This program is a best industry P~ractice that explains how the safety and health training program is managed and implemented. Rev.§. Hard Copy Is Uncontrolled Date 09/-2+/Q§ 32 of 32 h:\dept\agenda\fahr\fahr2006\0906\06-63.safety and health policies-att 1.doc Book Page 116 FAHR COMMITTEE Meeting Date To Bel. of Dir. 09/13/06 09/27/06 AGENDA REPORT Item Number Item Number FAHR06-64 Orange County Sanitation District FROM: Michael D. White, Controller SUBJECT: INVESTMENT STRATEGIES GENERAL MANAGER'S RECOMMENDATION Informational item. SUMMARY Attached in a separately bound document is the Strategy Review of the Investment Management Program for the quarter ended June 30, 2006, prepared by the Orange County Sanitation District's money manager Pacific Investment Management Company (PIMCO). PIMCO's account manager will make a presentation at the FAHR Committee meeting on the results of the Investment Management Program through June 30, 2006, and to discuss PIMCO's economic outlook and strategy going forward. At the September 13, 2006 FAHR meeting, we will provide the annual Investment Policy separately bound document. This document includes the Board Resolution approving the policy in July 2006, the final version of the investment policy statement, the Sanitation District's treasury management procedures and self-evaluation of internal controls, and sections of the California State Government Code pertaining to the investment of public funds. This document is provided to PIMCO to ensure that all investments are in accordance with District policy. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. [gl Not applicable (information item) H:\dept\egenda\FAHRIFAHR2006\0906\06-64.lnvestment Strei (PIMCO).doc Revised: 8120198 Book Page 117 Page 1 ADDITIONAL INFORMATION None. ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS Attached in separately bound documents are: 1. PIMCO's Strategy Review of the Sanitation District's Investment Management Program for the quarter ended June 30, 2006. H:ldepl\agenda\fAHRIFAHR2006\0906~Jn\/11Stmen1 Slrat (PIMCO),doc Revised: 8120198 Book Page I 18 Page2 FAHR COMMITTEE Meeting Date To Bet of Dir. 09/13/06 AGENDA REPORT Item Number Item Number FAHR06-65 Orange County Sanitation District FROM: Lorenzo Tyner, Director of Finance & Administrative Services Originator: Jeff Reed, Acting Human Resources & Employee Relations Manager SUBJECT: RETIREMENT AND BENEFITS PROGRAM REVIEW GENERAL MANAGER'S RECOMMENDATION Information only. SUMMARY At the May 2006 FAHR Committee meeting, Acting General Manager, James Ruth, was directed to provide an update of the OCSD retirement and benefits programs. In June, members of the FAHR committee, Mr. Ruth and staff met with consultant John Bartel of Bartel & Associates, LLC (Bartel) to discuss his proposal to review these programs. Subsequently, Bartel was engaged by the District to perform an evaluation of the following areas, focusing on providing an understanding of these programs, including costs and potential options: • Pension Plan 1111 Active Employee Medical Plan • Retiree Medical Plan In August, staff met with Bartel to obtain an update of this review. Attached is a summary of the topic areas discussed at the meeting. At the September FAHR Committee, Bartel will provide a more detailed report intended to provide a foundation for understanding the current benefits plan and alternatives for future consideration. Additional materials will be made available at that meeting. PRIOR COMMITTEE/BOARD ACTIONS The General Manager assigned the consulting contract according to the delegation of authority policy. It was approved at the July 12, 2006 FAHR Committee meeting. PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT H:ldept\agende\FAHRIFAHR200610906\CMH>5. Retirement and Benefds.doc Book Page 119 D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. 1Z! Not applicable (information item) ADDITIONAL INFORMATION N/A ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. 8/29/06 Meeting Agenda H:ldept\agenda\FAHRIFAHR2006\0906\06-65. Retirement and Benefits.doc Book Page 120 Orange County Sanitation District Agenda August 29, 2006 District's current benefits are: • Pension: • Orange County Employees' Retirement System (OCERS) 2.5% @ 55 benefit effective July 1, 2005. • District pays 3.5% of the employee contribution. • Employees do not participate in Social Security, but do participate in Medicare. • 2006/07 District Contribution rate = 20.15% of payroll ( ~$9 .3 million). • 2007/08 District Contribution rate= 20.87% of payroll (~$10.4 million). • Medical: • 3 Medical plan choices o Blue Cross California Care (HMO). o Blue Cross Point of Service and o Kaiser. • District pays 80-90% of the employee's coverage and 75-80% of dependent coverage, depending on bargaining group and plan selection. • Retiree Medical: • Hired < July 1, 1988 o District pays 2.5 months of medical premium after retirement for each year of District service, with the retiree paying any additional amount. o Retiree cost based on blended premium ( active and retiree experience). • Hired :::: July 1, 1988 o Allowed to continue to participate in District's medical program. o Retiree cost based on blended premium ( active and retiree experience). • ARBA Benefit o $250 per month o Reduced for service < 25 years o Hired < July 1, 1988 ✓ Begins after District benefit stops ✓ Survivor benefit o Hired:::: July 1, 1988 ✓ Begins immediately ✓ No survivor benefit -1 - Book Page 121 Orange County Sanitation District Agenda August 29, 2006 Alternatives: • Pension: • Current employees: o Vested Rights o District employees pay more of cost ✓ Impact of each additional 1 % of pay • Future employees: o Defined Benefit plan ✓ Sameplan ✓ Alternative plan o Defined contribution plan ✓ Fixed Employee and District contribution ✓ Fixed Employee contribution & District contribution varies based on age/service > District contribution rate increases as age and/or service increases • Medical: • TBD • Retiree Medical: • Separate members into following groups o Current retirees eligible for Medicare o Current retirees not eligible for Medicare o Active employees eligible to retire o Active employees ~ 40 o Active employees < 40 • Alternative benefits: o Eliminate entirely o Defined Contribution Plan ✓ Contribute to account that can be used after retirement to pay for medical benefits ✓ Set up account with "seed money" at retirement based on District service o Charge retirees actual (non blended) cost o Set benefit at target$ amount and target age (e.g. $10 per month beginning at 62) ✓ Decrease (e.g. 5% each year) for retirement before target age, ✓ Increase (e.g. 5% each year) for retirement after target age, and ✓ Reduce ( e.g. 50%) when/if eligible for Medicare at 65 -2 - Book Page 122 FAHR COMMITTEE Meeting Date 09/13/06 AGENDA REPORT Item Number FAHR06-66 Orange County Sanitation District FROM: Lorenzo Tyner, Director of Finance and Administrative Services Originator: Michael D. White, Controller SUBJECT: JOINT POWERS INSURANCE AUTHORITY (JPIA) FEASIBILITY ANALYSIS GENERAL MANAGER'S RECOMMENDATION: Informational item. SUMMARY To Bel. of Dir. Item Number At the June 2006 Finance, Administration, and Human Resources (FAHR) Committee Meeting, staff was requested to review the feasibility of becoming a member of a joint powers insurance authority (JPIA) for property and excess general liability insurance coverage. A JPIA provides a method for local governments to pool their funds to provide for their individual insurance needs. JPIAs allow governments to make a group purchase of insurance at an affordable cost through economies of scale. However, it requires that the entire pool share in the individual losses of each member of the pool. After an extensive search and investigation, staff has identified the following JPIAs for membership consideration: • Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA) • California State Association of Counties Excess Insurance Authority (CSAC EIA) • California Joint Powers Insurance Authority (California JPIA) • California Joint Powers Risk Management Authority (CJPRMA) • California Affiliated Risk Management Authorities (CARMA) • Public Agency Risk Sharing Authority of California (PARSAC) • Public Entity Risk Management Authority (PERMA) • Special District Risk Management Authority (SDRMA) Form No. DW-102-4 Dept. 320 Page 1 Book Page 123 Agenda Report -FAHR Revised: 9f7/2006 Based on the size and complexity of the Orange County Sanitation District, staff has determined very few of the above JPIAs can provide the insurance at the coverage amounts that are currently being held: • PARSAC and SDRMA only provide $15 million and $10 million of excess liability insurance in comparison to the Sanitation District's current limit of $25 million. • ACWA and PERMA only provide $50 million property insurance coverage while CARMA does not provide any. • The California JPIA does not provide any flood coverage, in comparison to the Sanitation District's current limit of $350 million for all perils other than flood and earthquake, and $300 million for the perils of flood. • CJPRMA only provides $20 million of boiler and machinery in comparison with the Sanitation District's coverage of $100 million. • Finally, membership into ACWA is currently limited to only water providers. Additionally, five out of the nine listed JPIAs utilize the same insurance broker as the Sanitation District. Driver Alliant and two others provide their own internal brokerage services. CSAC EIA appears to be the only viable JPIA that can meet the Sanitation District's coverage limits that are currently in place. In addition, the Sanitation District has been a member of the CSAC EIA Workers' Compensation JPIA since July 1, 2003, as recommended by Driver Alliant, as a result of the hardening of the workers' compensation insurance market. Based on the information provided above, staff does not recommend pursuing membership to a Joint Powers Insurance Authority (JPIA) at this time. PRIOR COMMITTEE/BOARD ACTIONS N/A PROJECT/CONTRACT COST SUMMARY N/A BUDGET IMPACT D This item has been budgeted. (Line item: ) D This item has been budgeted, but there are insufficient funds. D This item has not been budgeted. IZ! Not applicable (information item) Form No. DW-102-4 Dept. 320 Page2 Book Page 124 Agenda Report -FAHR Revised: 9r7/2006 ADDITIONAL INFORMATION N/A ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS None. Form No. DW-102-4 Dept. 320 Page 3 Book Page 125 Agenda Report -FAHR Revised: 9f7/2006 ORANGE COUNTY SANITATION DISTRICT (714) 962-2411 www.ocsd.com Mailing Address: P.O. Box 8127 Fountain Valley, California 92728-8127 Street Address: 10844 Ellis Avenue Fountain Valley, California 92708-7018 . [ L L L L L L L L L Callan Associates Inc. Investment Measurement Service Quarterly Review Orange County Sanitation District June 30, 2006 The following rep01t wa prepared by Callan A sociates Inc. (''CAI") using information from ource that incJude the following: fund tru tee( ; fund cu todian(s ; investment manager(s); CAI computer software; CAI investment manager and fund spon or database; third party data vendors; and other out ·ide source as directed by the client. CAJ assumes no re ponsibility for the accuracy or completeness of the information provided, or methodologies employed, by any information providers external to CAI. Reasonable care bas been taken to a ure the accuracy of the CAI databru e and computer software. In preparing the following report, CAI bas not reviewed the risks of individual ecurity holdings or the compliance/non-compliance of individual ·ecurity• holding with investment policie and guidelines of a fund sponsor nor has it a umed any responsibility to do so. Copyright 2006 by Callan A ociates Inc. r i r II • I I' \ l l'l."ll r '.I II \ Ollf ( 111( \t 111 r \rl \\.·I·\ DI ', I LI\ r- r [ r- [ L L L L L L L L L CAILAN August 1, 2006 Mr. Michael D. White Controller Orange County Sanitation Districts 10844 Ellis A venue Fountain Valley, California 92728 RE: June 30, 2006 Quarterly Performance Report Dear Mike, The June 30, 2006 Quarterly Performance Report for the District's investment portfolio is attached. This letter provides a qualitative summary of the most important points covered in the report. Market Overview Investors do not like uncertainty, especially when it comes from the new Fed Chairman Ben Bemanke. Uncertainty over inflation and the Federal Reserve's interest rate policies cast a pall over the markets. Nearly all major U.S. equity indices fell during the second quarter. The S&P 500, a broad market indicator, lost 1.4%. Technology and small caps were hit especially hard. For the first time since 1999, the fixed income market fell for two consecutive quarters. The Lehman Aggregate Bond Index (a measure of the broad fixed income market) shed 0.08% in the second quarter and has negative returns for both the trailing six and twelve months. All subsectors of the credit market were down for the quarter, except for mortgages (+0.01%), which slipped into the black. The quarter closed the same way it began with investor angst over when the Fed would end its tightening cycle. The Fed raised rates twice during the three-month period. Short-term interest rates ended the quarter at 5.25%. The fed funds rate has been increased 17 consecutive times, dating back to June 2004. In the shorter maturity portion of the yield curve in which the District invests, returns were modestly positive. The Merrill 1-5 Year Gov/Credit index posted a return of 0.52%, which is less than the quarterly coupon. Manager Results The Liquid Operating Money account, managed by PIMCO, produced a 1.20% return for the quarter, slightly better than the return on the 90-day Treasury bill (1.16%), and higher than the prior quarter. For the trailing twelve months, the portfolio gained 4.18%, which is, again, above the 90-day Treasury bill return (3.98%). Over longer [ [_ l Mr. Michael White August 1, 2006 Page2 time periods, the portfolio ranks in the top decile of Callan's Money Market Mutual Funds Database, on an after-fee basis. As of June 30, 2006, the portfolio's yield is 4.75%, up from 4.5% in the prior quarter. For the Liquid Operating account the increasing short rates from continued Federal Reserve tightening translates quickly into higher yields. The Long Term Operating Fund, also managed by PIMCO, produced a 0.43% return for the quarter, under performing the Merrill 1-5 Year Gov/Corp index at 0.52%. The mortgage strategy that added value last quarter detracted from performance this quarter. The lower allocation to Corporate debt helped the relative return. An overweight allocation to the Treasury sector, including a small position in TIPS, contributes to a defensive posture in the portfolio. Over the trailing 12 months, the portfolio has out performed the benchmark 1.84% vs. 1.12%. When comparing the returns to the Defensive Fixed Income peer group, the ranking suffers during periods of rising interest rates due to the longer duration of both the portfolio and its benchmark, relative to the majority of its peers,. Over the longer term, the Districts have been rewarded for taking on this duration risk. The Long Term Operating Fund no longer holds any securities rated below 'A', after selling the United Airlines security in April. As for sector guidelines, the Fund has less than 30% invested in corporate notes, and the combination of asset backed securities and mortgages remains below 20%. The Liquid Operating Money account out performed the Long Term Operating Fund for both the quarter and the year. Rising interest rates cause capital losses on the longer duration securities held by the Long Term fund. Conversely, the Sanitation District has benefited from higher yields on the Liquid Operating account during this period. The combined portfolios produced a return of 2.32% for the year ended June 30, 2006. Please do not hesitate to call me if you have any questions. Yours truly, Ruthann C. Moomy, Ph.D., CFA Senior Vice President [ L L L L L L L L Capital Market Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Active Management Overview Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Domestic Fixed-Income ...................................................... 16 Asset Class Risk and Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Investment Manager Asset Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Investment Manager Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Investment Manager Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Manager Analysis PIMCO-Liquid Operating Monies PIMCO-Liquid Operating Fund Bond Portfolio Characteristics Portfolio Characteristics Detail .............................................. 22 23 24 25 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Callan Research/Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 Ill U.S. EQUITY Style Median and Index Returns* for Periods ended June 30, 2006 Last Last Last Last3 Last 5 Last 10 Quarter 1/2Year Year Years Years Years Large Ca1rBroad Style -1.85 2.52 9.48 12.36 3.42 9.40 Large Cap-Growth Style -4.38 -0.95 7.30 9.48 -0.13 7.90 wrge Cap-Value Style -0.25 4.66 12.00 15.05 5.77 10.03 Aggressive Growth Style -4.79 3.74 13.65 13.73 2.21 8.00 Contrarian Style -0.50 4.71 10.32 14.86 6.64 11.01 Core Style -1.69 2.62 9.31 12.25 3.42 9.51 Yield Style 0.38 6.03 11.37 14.98 7.29 10.45 Russell 3000 -1.98 3.23 9.56 12.56 3.53 8.52 Russell 1000 -1.66 2.76 9.08 12.04 3.12 8.56 S&P Composite 1500 -1.72 3.05 9.22 12.13 3.33 8.76 S&P500 -1.44 2.71 8.63 11.22 2.49 8.32 NYSE 0.03 6.77 15.87 16.56 6.55 10.00 Dow Jones Industrials 0.93 5.22 11.08 9.85 3.44 9.14 I Mid Cap-Broad Style -3.18 4.40 13.14 18.17 9.00 12.66 Mid Cap-Growth Style -5.72 2.70 15.15 16.65 4.05 10.98 I Mid Cap-Value Style -1.62 5.13 12.00 19.95 12.39 13.73 Russell Midcap -2.58 4.84 13.66 19.87 9.92 12.06 S&PMidCap 400 -3.14 4.23 12.97 18.14 9.30 13.82 Small Cap-Broad Style -4.81 6.89 14.36 19.62 10.62 12.62 Small Cap-Growth Style -6.78 5.84 14.23 16.35 4.91 8.54 Small Cap-Value Style -3.39 7.11 14.49 21.32 14.89 15.42 Russell 2000 -5.02 8.21 14.58 18.70 8.50 9.05 S&P Small Cap 600 -4.56 7.69 13.92 20.46 11.06 11.80 NASDAQ -7.01 -1.08 6.47 10.92 0.66 6.71 Consumer Staples 2.84 4.95 8.59 9.92 6.74 7.80 Consumer Discretionary -2.68 1.19 0.83 8.89 1.34 6.92 L Industrials -0.80 9.01 19.10 17.98 6.35 10.20 Energy 4.60 12.37 24.15 32.41 16.46 15.02 Materials -1.67 8.09 21.68 20.19 10.69 7.15 Information Technology -9.48 -4.40 4.09 7.90 -4.16 5.89 I Utilities 5.38 5.31 6.01 17.55 3.02 7.95 Financials -0.49 4.35 12.83 14.13 7.13 13.73 Telecommunications -0.21 14.44 15.26 10.95 -3.58 1.95 HealthCare -5.23 -3.17 0.69 4.96 0.96 9.26 U.S. Equity Index Characteristics as of June 30, 2006 S&P1500 S&PSOO S&P400 S&P600 Rus3000 Rus 1000 RusMidcap Rus2000 Cap Range 55-371,187 502-371,187 350-14,759 55-3,674 18-390,538 227-390,538 227-27,100 18-6,093 Number of Issues 1,500 500 400 600 2,927 955 755 1,972 L %ofS&Pl500 100% 88% 8% 4% 100% 91% 27% 9% WtdAvgMktCap $75.9B $86.3B $4.0B $1.4B $71.5B $78.6B $8.2B $1.3B Price/Book Ratio 2.7 2.8 2.5 2.4 2.7 2.7 2.6 2.3 l PIE Ratio (forecasted) 14.2 14.0 15.7 16.2 14.7 14.3 16.0 20.1 Dividend Yield 1.8% 1.9% 1.2% 0.9% 1.8% 1.9% 1.5% 1.1% L 5-Yr Earnings (forecasted) 12.2% 11.8% 14.9% 16.0% 12.3% 12.0% 13.1% 16.0% * Returns less than one year are not annualized. Capitol iV!arkel Revi(,w • Second Qu:H'te, 200(i r U.S. FIXED INCOME r Style Median and Index Returns* for Periods ended June 30, 2006 Last Last Last Last3 Last5 Last 10 Quarter 1/2Year Year Years Years Years Core Bond Style -0.01 -0.53 -0.38 2.32 5.29 6.42 Core Bond Plus Style -0.07 -0.32 0.12 3.17 5.61 6.80 LB Aggregate -0.08 -0.72 -0.81 2.05 4.97 6.22 LB Govt/Credit -0.14 -1.15 -1.52 1.60 5.13 6.25 LB Govt 0.02 -0.89 -1.16 1.31 4.73 6.03 LB Credit -0.39 -1.55 -2.06 1.96 5.67 6.52 Citi Broad Investment Grade -0.11 -0.78 -0.81 2.13 5.02 6.24 Extended Maturity Style -1.32 -4.20 -5.26 2.38 6.89 7.79 LB Gov/Credit Long -1.50 -4.84 -6.47 2.08 6.81 7.57 LB Gov Long -1.22 -4.69 -6.26 1.81 6.64 7.64 LB Credit Long -1.84 -5.01 -6.71 2.48 7.05 7.33 i lntennediate Style 0.30 0.09 0.37 1.81 4.76 5.97 LB Intermediate Aggregate 0.12 -0.13 O.o2 2.06 4.66 5.96 r LB Gov/Credit Intermediate 0.21 -0.17 -0.18 1.49 4.62 5.81 I LB Gov Intermediate 0.30 O.oJ 0.07 1.22 4.11 5.50 LB Credit Intermediate 0.06 -0.47 -0.61 1.83 5.27 6.25 r Defensive Style 0.78 1.31 2.35 1.90 3.59 5.15 Active Cash Style 1.13 2.07 3.97 2.47 2.81 4.42 Money Market Funds ( net of fees) 1.08 2.05 3.67 1.92 1.75 3.46 ML Treasury 1-3 Year 0.65 1.05 1.83 1.40 3.08 4.76 90-Day Treasury Bills 1.16 2.19 3.98 2.37 2.25 3.81 High Yield Style 0.08 2.59 5.21 8.56 8.48 7.42 LB High Yield 0.25 3.14 4.80 8.63 8.69 6.51 ML High Yield Master 0.15 3.03 4.65 8.38 8.37 6.82 ! Mortgages Style 0.07 0.13 0.70 3.07 5.06 6.52 L LBMBS 0.01 -0.06 0.39 2.89 4.65 6.13 LBABS 0.44 0.69 1.19 2.13 4.68 5.99 LBCMBS -0.02 -0.54 -1.10 1.56 6.12 L LB Muni 0.03 0.28 0.88 3.23 5.05 5.79 LB Muni 1-lOYear 0.21 0.23 0.50 1.99 3.96 4.90 LB Muni 3 Year 0.34 0.46 0.88 1.35 3.01 4.08 ' U.S. Fixed Income Index Characteristics as of June 30, 2006 Yield Modified Adj. Average %of %of ' L Lehman Brothers Indices toWorst Duration Maturity LBG/C LB Aggregate LB Aggregate 5.79 4.80 7.20 100.00% 100.00% LB Govt/Credit 5.60 4.99 7.55 100.00% 59.40% Intermediate 5.51 3.62 4.39 80.37% 47.74% Long-Term 5.93 10.59 20.48 19.63% 11.66% LB Govt 5.29 4.52 6.35 61.21% 36.36% L LB Credit 6.08 5.73 9.45 38.79% 23.04% LB Mortgage 6.11 4.56 6.94 34.94% L LB Asset-Backed 5.76 2.76 3.20 1.23% LB Commercial Mortgage 5.85 4.62 5.70 4.44% LB Corp High Yield 8.58 4.61 8.02 L * Returns less than one year are not annualized. LJpitul Market Review• Second Quarter 200(i INTERNATIONAL EQUITY Style Median and Index Returns* for Periods ended June 30, 2006 Last Last Last Last3 Last5 Last 10 Quarter 1/2Year Year Years Years Years Global Style -1.13 5.54 18.11 17.08 6.29 8.78 Non-U.S. Style 0.15 10.03 27.94 23.87 11.12 9.43 Core Style 0.27 10.14 27.15 23.50 11.12 9.43 MSCI EAFE-Unhedged 0.70 10.16 26.56 23.94 10.02 6.39 MSCI EAFE-Local -4.25 3.59 23.66 20.14 3.75 6.10 MSCI EAFE Growth -Unhedged 0.26 9.29 25.98 21.05 8.11 3.89 r MSC! EAFE Value-Unhedged 1.13 11 .02 27.12 26.81 11.86 8.73 MSC! World-Unhedged -0.51 6.06 16.93 16.86 5.72 6.93 MSCI World-Local -3.04 2.86 15.21 15.09 2.96 6.92 MSCI AC World ex-U.S.-Unhedged 0.21 9.99 28.40 25.78 11.85 7.16 MSCI AC World-Unhedged -0.61 6.43 18.59 18.28 6.92 7.33 Pacific Basin Style -2.74 4.16 32.42 26.24 10.56 3.21 Japan Style -4.94 1.64 36.02 26.32 8.18 4.99 Pac/fie Rim Style 0.57 9.96 26.45 28.46 17.00 4.37 MSCI Pacific-Unhedged -2.97 3.53 30.93 25.37 9.03 1.20 MSCI Pacific-Local -5.94 0.77 34.35 22.89 6.05 1.36 MSCI Japan-Unhedged -4.56 1.91 35.85 25.08 6.82 -0.08 MSC! Japan-Local -7.53 -1.30 40.15 23.05 4.97 0.33 Europe Style 1.61 13.22 25.36 23.09 10.85 12.00 MSCI Europe-Un hedged 2.54 13.58 24.75 23.40 10.45 10.09 l MSCI Europe-Local -3.44 5.00 19.09 18.98 2.81 9.56 Emerging Markets Style -4.30 7.55 37.74 36.75 23.40 9.82 MSCI Emerging Markets-Unhedged -4.27 7.33 35.91 34.77 21.54 6.66 MSCI Emerging Markets-Local -2.88 6.51 34.12 30.51 19.17 10.57 Small Cap Style -2.08 Jl.01 31.53 33.79 18.65 12.90 MSCI EAFE Small Cai>-Unhedged -3.81 6.38 28.39 32.61 18.46 Return Attribution for EAFE Countries Second Quarter 2006 Country Total Local Currency Weighting Australia 3.71% -0.47% 4.19% 5.28% Austria -2.04% -7.29% 5.66% 0.55% Belgium 0.84% -4.56% 5.66% 1.15% Denmark 0.46% -4.96% 5.70% 0.72% Finland -2.81% -8.02% 5.66% 1.48% France 2.50% -2.99% 5.66% 9.85% Germany -0.34% -5.68% 5.66% 6.95% Greece -2,78% -7.99% 5.66% 0.65% Hong Kong -0.07% 0.03% -0.09% 1.65% Ireland -0.03% -5.39% 5.66% 0.80% Italy 4.21% -1.38% 5.66% 3.80% Japan -4.56% -7.53% 3.21% 24.52% Netherlands -0.82% -6.13% 5.66% 3.29% New Zealand -7.46% -7.30% -0.17% 0.14% Norway -0.61% -5.76% 5.47% 0.87% L Pom,gal 0.48% -4.91% 5.66% 0.32% Singapore 0.25% -2.01% 2.33% 0.83% Spain 3.30% -2.23% 5.66% 3.82% Sweden -2.03% -9.45% 8.19% 2.35% Switzerland 2.66% -3.77% 6.68% 6.82% L UK 4.92% -1.60% 6.63% 24.15% * Returns less than one year are not annualized. C.ip11;il I'vi,u kct R(:vil.:1;· • S<:cond Qua, t<:r 2006 r Inflation Hawks United r In an effort to combat rising global inflation, central banks around the world continued to drain liquidity from their economies. As a result, interest rates marched higher and the price of risk was re-appraised, r causing the Citigroup Non-U.S. WGBI to shed 0.73% over the l quarter. The dollar fell in this same period, propernng the return of unhedged bonds 4.04%, as measured by the Citigroup Non-U.S. r WGBI Unhedged. With U.S. rates believed to be approaching a cyclical peak, the current synchronization of global tightening was expected to end soon. Tue ,----quarter ended with U.S. bonds maintaining their yield advantage f relative to other large developed markets. However, with more rate hikes coming in Europe and Japan, the U.S. yield premium is expected to dwindle. This, along with an enormous U.S. current account deficit, r caused the greenback to lose ground against the major currencies including the pound (-6.4%), euro (-5.5%), Canadian dollar (-4.7%) and the yen (-2.9%). r-i Strong global growth provided cover for the central banks' inflation l hawks. Tue European Central Bank lifted rates 25 bps to 2.75% with Return Attribution for Non-U.S. Govt Indices r Second Quarter 2006 Country Total Local Currency•• Weighting Australia 3.81% -0.37% 4.19% 0.39% Austria 4.89% -0.73% 5.66% 1.92% Belgium 4.93% -0.69% 5.66% 3.29% Canada 3.64% -1.20% 4.90% 2.38% Denmark 5.30% -0.39% 5.70% 0.96% Finland 5.50% -0.16% 5.66% 0.71% France 4.84% -0.78% 5.66% 10.18% Germany 4.89% -0.72% 5.66% 11.94% Greece 5.00% -0.63% 5.66% 2.34% Ireland 4.90% -0.72% 5.66% 0.51% Italy 4.45% -1.15% 5.66% 10.95% Japan 2.73% -0.47% 3.21% 36.00% Netherlands 5.00% -0.63% 5.66% 2.82% Norway 4.64% -0.78% 5.47% 0.27% Poland 0.42% -1.54% 1.98% 0.81% Portugal 4.99% -0.63% 5.66% 1.07% Singapore 3.36% 1.01% 2.33% 0.35% Spain 4.85% -0.77% 5.66% 4.20% Sweden 7.43% -0.70% 8.19% 1.03% Switzerland 4.96% -1.61% 6.68% 0.93% UK 5.27% -1.27% 6.63% 6.94% the support of a 2.4% first quarter GDP growth rate. However, England and New Zealand, in the twilight of their economic cycles, held interest rates steady at 4.50% and 7.25%, respectively. Yields for longer dated debt followed overnight rates higher. Ten-year government bonds, issued by Germany, Canada, Australia, UK and the U.S., all advanced by approximately 30 bps. Unlike the flat yield curves in the U.S. and England, German and Japanese yield curves remained positively sloped, reflecting an expectation for future rate increases. In Japan, the withdrawal of quantitative easing and the imminent end of the zero interest rate policy nudged the 10-year JGB up 15 bps, to 1.93%. Economic growth and inflation remained moderately positive in Japan, though the country's equities faltered. Monetary tightening and the draining of global liquidity had an immediate and unforgiving impact on risky assets during the quarter. Congested carry trades, fueled by previously cheap lending rates, bore the brunt of increased prudence. Tactical investors crowded the same exits testing the true liquidity of some smaller developing markets. Emerging market debt fell 2.2%, as measured by the JPMorgan Global Diversified Index. Due to a combination of inflation concerns and investor liquidations the Turkish lira (-15.0% ), South African rand (-13.9%), Columbian peso (-11.0%) and Icelandic krona (-5.8%) plunged against the U.S. dollar. Callan Style Group Returns -Second Quarter 2006 5% 4% ...•... 3% :.:::r:::11.a:1 • 2%'---------...L...--------' 10th Percentile 25th Percentile Median 75th Percentile 90th Percentile Global Fixed Style 3.41 3.24 3.16 3.12 2.47 Non-U.S. Fixed Style 4.23 4.13 3.83 3.34 2 99 CtU Wodd Gov Unhedged CtU Non-U.S, Wodd Gov Unhedged Benchmark • 3.17 4.04 INTERNATIONAL FIXED INCOME L L L L I L L Style Median and Index Returns* for Periods ended June 30, 2006 Last Last Last Last 3 Last 5 Quarter 1/2Year Year Years Years Global Style 3.16 3.08 0.22 4.67 9.09 Citi World Govt-Unhedged 3.17 2.75 -0.36 4.24 8.51 Citi World Govt-Local -0.59 -2.09 -2.14 1.83 3.94 Non-U.S. Style 3.83 3.64 0.27 5.33 10.24 Citi Non-U.S. World Govt-Unhedged 4.04 3.84 -0.01 5.05 9.61 Citi Non-U.S. World Govt-Local -0.73 -2.30 -2.27 1.99 3.68 Citi Euro Govt Bond-Unhedged 4.81 5.31 2.98 7.07 14.65 Citi Euro Govt Bond-Local -0.81 -2.85 -2.49 3.24 5.54 JPM Emerg Mkts Bond Plus -2.39 -0.72 5.24 10.20 11.42 * Returns less than one year are not annualized. ** Derived from MSCI EAFE data. Capital Market RC>view • SL:cond Quarter 2006 Last 10 Years 6.06 5.43 5.29 5.67 4.95 5.04 11.92 r Private Equity Market r The flow of funds into new private equity partnerships continued unabated in the second quarter. The 14 7 partnerships and $96.4 billion in new capital commitments outpaced the 138 partnership and $67.5 r billion in commitments for the same period last year. We are almost at the $100 billion mark and only half way through the year. As seen in the table below, most of this capital is flowing into buyouts and r related corporate finance strategies increasing concerns of a buyout I bubble. The investment pace by funds into companies jumped significantly in the first half of 2006 compared to the same period last year. According r to Buyouts newsletter, buyout-sponsored acquisitions with announced values totaled $110 billion year-to-date, up from $82 billion a year ago. The largest deal of the quarter was a $12.9 billion buyout of the r Danish telecom company, TDC AS, by a consortium of five U.S. and I European mega-funds: Apax, Blackstone, KKR, Permira and Providence. r-Exit activity continued to be moderate in the quarter. According to Venture Economics, 19 venture-backed IPOs raised $2 billion and there were 86 venture-backed mergers, of which 34 disclosed values r totaling $3.2 billion. Buyouts newsletter reports that 16 buyout- 1 backed IPOs valued at $4.3 billion occurred this quarter bringing the year-to-date total to 32 initial offerings totaling $8 billion. r-Please see our upcoming issue of Private Markets Trends for more l in-depth coverage. Funds Closed January 1 through June 30 2006 Strategy # of Funds $ Amt (mil) [ Venture Capital 63 I 5.825 Acquisition/Buyouts 56 61,147 Subordinated Debt 12 6,626 [ Distressed Debt 2 2,603 Other 3 3,410 -Fund-of-funds 11 6,791 Totals 147 96 402 L Source: The Private Equity Analyst 16% 63% 7% 3% 4% 7% 100% Risk Appetites Brace for Liquidity Test For thrill seekers, seatbelts and airbags can be annoying constraints, but they saved a few hedge fund portfolios last quarter. At the quarter's outset, unhedged investors were enjoying a smooth ride from surging capital markets but stagflation fears suddenly jumped into view by May. The unexpected pressure of even higher rates in a slowing U.S. economy caused brakes to lock up on the market's wheels ofliquidity. Consequently, global equity markets began to skid dramatically, particularly those that had reached top speed earlier in the year. Emerging markets, other non-U.S. equity and commodity risks were particularly painful last quarter. Arbitrage and event-driven strategies generally advanced. Representing well-diversified hedge fund portfolios, the median manager in the Callan Hedge Fund-of-Fund Database inched ahead 0.06% last quarter, net of fees. For the year- to-date, the median manager has gained 4.42%. As an unmanaged universe of open and closed hedge fund managers, the CSFB/fremont Hedge Fund Index earned 0.78% last quarter. Within the broad index last quarter, the best performing peer group was the Short-Biased manager (+9.99%), which benefited from the equity market's flight to quality. In contrast, the long-biased Long- Short Equity managers not only lost ground during the quarter but also trailed the S&P 500 (-1.57% vs. -1.44%). Monthly Net Returns: CAI Hedge FoF Database 3% 2% 1% 0%1---•-A~~~~+-----• A( I -1% -2% -3% -4% 10th Percentile 25th Percentile Median 75th Percentlle 90th Percentile 3-Month T-BHI • Apdl 2006 2.24 L87 1.46 1.07 0.87 0 37 Moy 2006 0.14 -0 47 -1.21 -2.19 -2.91 0.40 _.,.! ____ A (13] June 2006 0.49 0.15 -0.33 -0.75 -1.11 0.38 ALTERNATIVE INVESTMENTS L L L L L L Style Median and Index Returns• for Periods ended June 30, 2006 Convertibles Database ML Convertible, All Qualities Hedge Fund-of-Funds Database Market Neutral Equity Style CSFBffremont Equity Market Neutral CSFBffremont Long/Short Equity CSFBffremont Event-Driven CSFBffremont Convertible Arb CSFBffremont Fixed-Income Arb 90-Day T-Bills WP/VE Post-Venture Cap GS Commodity MLM Managed Futures Dow Jones-AIG Commodity * Returns less than one year are not annualized. Capital Market Review • Second Quarter 2006 Last Last Last Last 3 Last 5 Quarter 1/2Year Year Years Years -1.41 -0.74 0.06 3.55 3.14 -1.57 2.42 1.87 3.52 1.16 -7.16 6.74 -1.46 4.87 3.35 4.54 4.43 5.19 6.80 5.20 7.35 7.48 5.65 2.19 -4.40 5.25 -0.33 1.22 10.09 9.37 10.20 5.24 11.73 14.39 12.89 11.83 7.52 3.98 11.25 13.42 2.82 13.31 8.17 5.28 9.69 5.71 7.78 6.69 4.59 4.94 7.80 7.35 12.09 8.17 13.11 10.80 3.69 5.78 5.09 6.02 2.37 2.25 14.24 -0.10 20.16 14.57 3.17 1.75 14.37 11.27 Last 10 Years 9.63 8.67 10.54 5.90 10.92 12.59 11.53 9.46 6.14 3.81 3.38 9.81 5.65 4.25 r L L L L L L L /[ Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund's investment managers as of June 30, 2006, with the distribution as of March 31, 2006. The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers II June 30, 2006 March 31, 2006 Market Value Percent Net New Inv. Inv. Return Market Value Percent Domestic Fixed Income Long Term Operating Fund 297,270,836 80.34% 50,400,698 1,216,698 245,653,440 77.36% Liquid Operating Monies 72,752.711 19.66% 0 862,879 71,889.832 22.64% Total Fund $370,023,547 100.0% $50,400,698 $2,079,577 $317,543,272 100.0% Orange County Sanitation District r [ L L L L L L L L Investment Manager Returns /I The table below details the rates of return for the Sponsor's investment managers over various time periods ended June 30, 2006. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended June 30, 2006 Last Last Last Last Last 3 5 10 uarter Year Years Years Years Domestic Fixed-Income Long Term Operating Fund 0.43% 1.84% 2.05% 4.05% 5.52% Liquid Operating Monies 1.20% 4.18% 2.46% 2.45% 4.08% Net of Fees 1.16% 4.03% 2.31% 2.30% 3.93% Market Indicators LB 1-5yr Govt/Credit 0.52% 1.07% 1.45% 3.96% 5.32% ML l-3yr Govt/Corp 0.66% 1.93% 1.62% 3.44% 5.00% ML 1-5yr Govt/Corp 0.52% 1.12% 1.46% 3.91% 5.35% ML 1-5yr G/C excl. BBBs 0.52% 1.11% 1.37% 3.81% 5.30% Treasurv Bills 1.16% 3.98% 2.37% 2.25% 3.81% Total Fund 0.59% 2.32% 2.15% 3.89% 5.39% Orange County Sanitation District Ill L List of Managers We Do Business With as of 6/30/06 Confidential -For Callan Client Use Only The list below represents those investment management organizations that purchased educational and/or consulting services from a division of Callan Associates as of June 30, 2006. Educational services include those provided by the Callan Investments Institute and/or the "Callan College." Consulting services include manager consulting services provided by our Institutional Consulting Group, financial intermediary consulting services provided by our Independent Adviser Group and/or consulting to a manager's retirement plan provided by our Fund Sponsor Consulting Group. Callan created a line of business in 2006, the Trust Advisory Group (TAG), which engages managers to manage assets in a commingled trust that is only available on a private placement basis to qualified large benefit plan investors. When Callan does business with managers through TAG, the Trust compensates the managers (as contrasted with the arrangements above). However, securities laws applicable to private placements prevent us from publicly listing these managers. If you require more information, please contact our Trust Advisory Group. In no way do any of these manager relationships affect the outcome or process by which any of Callan's services are conducted. Because Callan's client list of investment managers changes periodically, the information below may not reflect very recent changes that are not yet updated in our database.You are welcome to request a list of Callan's investment manager clients at any time. Manager Name Aberdeen Asset Manaaement ABN AMRO Asset Manaaement /USA\ LLC Acadian Asset Manaaement. Inc. Affiliated Manaaers Grouo. Inc. AIG Global Investment Grouo Alleaiant Asset Manaaement Grouo AllianceBernstein Allianz Investor Services. LLC /fka USAllianz Investor Services. LLC\ Allstate Investments LLC ALPS Mutual Funds Services. Inc. Ameriorise Financial American Centurv Investment Manaaement AmSouth/Investment Manaaement Grouo Ariel Caoital Manaaement. Inc. Ark Asset Manaaement Co .. Inc. Atalanta Sosnoff Caoital. LLC Atlanta Caoital Manaaement Co .. L.L.C. Atlantic Asset Manaaement. LLC AQR Caoital Manaaement AXA Rosenbera Investment Manaaement Babson Caoital Manaaement. LLC Baillie Gifford International LLC /fka Baillie Gifford Overseas Ltd.\ Baird Advisors Bank of America Barclavs Global Investors Barrow. Hanlev. Mewhinnev & Strauss. Inc. Battervmarch Financial Manaaement. Inc. Bear Stearns Asset Manaaement Bel Air Investment Advisors BKF Asset Manaaement. Inc. /fka John A. Levin & Co .. Inc.\ BNY Asset Manaaement -Please see Paae 5 of 5 Boston Comoanv Asset Manaaement. LLC /The\ Brandes Investment Partners. L.P. Brandvwine Global Investment Manaaement. LLC Brazos Caoital Manaaement. L.P. Brown Advisorv Brown Brothers Harriman & Comoanv Cadence Caoital Manaaement Caoital Guardian Trust Comoanv Carl Domino Inc. CastleArk Manaaement. LLC Causewav Caoital Manaaement Charles Schwab & Co. Chartwell Investment Partners Chicaao Eauitv Partners. LLC CIBC Global Asset Manaaement /USA\ Ltd. /fka TAL Global Advisors Ltd.\ Citiarouo Asset Manaaement Columbia Manaaement Grouo Inc. Columbus Circle Investors Cramer Rosenthal McGlvnn. LLC Credit Suisse Asset Manaaement Davis Advisors Davis Hamilton Jackson & Associates DE Shaw Investment Manaaement. L.L.C. Delaware Investment Advisers Page 1 of 5 Educational Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y Consulting Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y l L List of Managers We Do Business With as of 6/30/06 Confidential -For Callan Client Use Only The list below represents those investment management organizations that purchased educational and/or consulting services from a division of Callan Associates as of June 30, 2006. Educational services include those provided by the Callan Investments Institute and/or the "Callan College." Consulting services include manager consulting services provided by our Institutional Consulting Group, financial intermediary consulting services provided by our Independent Adviser Group and/or consulting to a manager's retirement plan provided by our Fund Sponsor Consulting Group. Callan created a line of business in 2006, the Trust Advisory Group (TAG), which engages managers to manage assets in a commingled trust that is only available on a private placement basis to qualified large benefit plan investors. When Callan does business with managers through TAG, the Trust compensates the managers (as contrasted with the arrangements above). However, securities laws applicable to private placements prevent us from publicly listing these managers. If you require more information, please contact our Trust Advisory Group. In no way do any of these manager relationships affect the outcome or process by which any of Callan's services are conducted. Because Callan's client list of investment managers changes periodically, the information below may not reflect very recent changes that are not yet updated in our database.You are welcome to request a list of Callan's investment manager clients at any time. Manager Name Delta Asset Manaaement Denali Advisors LLC DePrince. Race & Zollo. Inc. Deutsche Asset Manaaement/Deutsche Bank DSM Caoital Partners DuPont Caoital Manaaement Dwiaht Asset Manaaement Eaale Asset Manaaement. Inc. Eaale Global Advisors. LLC EARNEST Partners. LLC Eaton Vance Manaaement Edaar Lomax Comoanv (The\ Enhanced Inv. Technoloaies. LLC (INTECH\ Eauinox Caoital Manaaement. LLC Evercore Partners Everareen Investments Favez Sarofim & Comoanv Federated Investors Ferrell Caoital Manaaement Fidelitv Investments Fiduciarv Asset Manaaement Fiduciarv Manaaement Associates Fifth Third Asset Manaaement. Inc. First Quadrant L.P. Fischer Francis Trees & Watts Fisher Investments Fort Washinaton Investment Advisors Fortis Investments Franklin Portfolio Associates Franklin Temoleton Fred Alaer Manaaement Co .. Inc. Frolev. Revv Investment Comoanv. Inc. FX Conceots GAM USA Inc. Gartmore Riverview GE Asset Manaaement Globe Flex Caoital. L.P . GM Asset Manaaement GoldenTree Asset Manaaement. LP Goldman Sachs Asset Manaaement Grande-Jean Caoital Manaaement Grantham. Mavo. Van Otterloo & Co .. LLC Gravbeard Caoital. LLC Great Lakes Advisors. Inc. Harris Investment Manaaement. Inc. Hartford Investment Manaaement Co./The Hartford Hartford Life HSBC Investments /USA\ Inc. lndeoendence Investment LLC ING Clarion ING Investment Manaaement INVESCO IXIS Asset Manaaement Janus Caoital Corooration Jensen Investment Manaaement Page 2 of 5 Educational Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y Consulting Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y List of Managers We Do Business With as of 6/30/06 Confidential -For Callan Client Use Only The list below represents those investment management organizations that purchased educational and/or consulting services from a division of Callan Associates as of June 30, 2006. Educational services include those provided by the Callan Investments Institute and/or the "Callan College." Consulting services include manager consulting services provided by our Institutional Consulting Group, financial intermediary consulting services provided by our Independent Adviser Group and/or consulting to a manager's retirement plan provided by our Fund Sponsor Consulting Group. Callan created a line of business in 2006, the Trust Advisory Group (TAG), which engages managers to manage assets In a commingled trust that is only available on a private placement basis to qualified large benefit plan investors. When Callan does business with managers through TAG, the Trust -compensates the managers (as contrasted with the arrangements above). However, securities laws applicable to private placements prevent us from publicly listing these managers. If you require more information, please contact our Trust Advisory Group. r In no way do any of these manager relationships affect the outcome or process by which any of Callan's services are conducted. Because Callan's client list of investment managers changes periodically, the information below may not reflect very recent changes that are not yet updated in our database.You are welcome to request a list of Callan's investment manager clients at any time. John Hancock Advisers JPMoraan Asset Manaaement Manager Name JP Moraan Investment Manaaement JP Moraan Retirement Plan Services Julius Baer Investment Manaaement Kalmar Investments Kellv Caoital Manaaement. LLC Kensinaton Investment Grouo Kniahtsbridae Asset Manaaement. LLC Lazard Asset Manaaement Lehman Brothers Inc. Loomis. Savles & Comoanv. L.P. Lord Abbett & Comoanv LSV Asset Manaaement MacKav-Shields LLC Manaaers Investment Grouo LLC Marauette Asset Manaaement Marvin & Palmer Associates. Inc. McMoraan & Comoanv LLC Mellon Asset Manaaement. fka Mellon Institutional Asset Manaaement Mellon Private Wealth Manaaement Merrill Lvnch Investment Manaaers Metrooolitan Life Insurance Comoanv Metrooolitan West Caoital Manaaement. LLC MFS Investment Manaaement Mondrian Investment Partners Limited Montaa & Caldwell. Inc. Montaomerv Street Income Securities Moraan Stanlev Investment Manaaement Moraan Stanlev Real Estate New York Life Investment Manaaement LLC (NYLIM\ Nicholas-Aooleaate Caoital Manaaement Nomura Asset Manaaement U.S.A.. Inc. Northern Trust Global Investment Services Northern Trust Value Investors Nuveen Investments Institutional Services NWQ Investment Manaaement Comoanv OFI Institutional Asset Manaaement Old Mutual Asset Manaaement Oooenheimer Caoital Oriental Financial Grouo Pacific Investment Manaaement Comoanv Paradiam Asset Manaaement Co .. LLC Pareto Partners Pavden & Rvael Penn Caoital Manaaement Perearine Caoital Manaaement. Inc. Phoenix Investment Partners. Ltd. Pinnacle West Caoital Corooration Pioneer Investment Manaaement. Inc. Post Advisorv Grouo Princioal Global Investors Proaress Investment Manaaement Comoanv. LLC Provident Investment Counsel Prudential Investment Manaaement Page 3 of 5 Educational Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y Consulting Services y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y l List of Managers We Do Business With as of 6/30/06 Confidential -For Callan Client Use Only The list below represents those investment management organizations that purchased educational and/or consulting services from a division of Callan Associates as of June 30, 2006. Educational services include those provided by the Callan Investments Institute and/or the "Callan College." Consulting services include manager consulting services provided by our Institutional Consulting Group, financial intermediary consulting services provided by our Independent Adviser Group and/or consulting to a manager's retirement plan provided by our Fund Sponsor Consulting Group. Callan created a line of business in 2006, the Trust Advisory Group (TAG), which engages managers to manage assets in a commingled trust that is only available on a private placement basis to qualified large benefit plan investors. When Callan does business with managers through TAG, the Trust compensates the managers (as contrasted wfth the arrangements above). However, securities laws applicable to private placements prevent us from publicly listing these managers. If you require more information, please contact our Trust Advisory Group. In no way do any of these manager relationships affect the outcome or process by which any of Calla n's services are conducted. Because Callan's client list of investment managers changes periodlcally, the Inform ation below may not reflect very recent changes that are not yet updated in our database.You are welcome to request a list of Callan's investment manager clients at any time. Prudential Retirement Putnam Investments Manager Name Ranaer Investments Manaaement. L.P. RCM Record Currencv Manaaement Rice Hall James & Associates. LLC RiverSource Investments. LLC Robeco USA Rorer Asset Manaaement Rosewood Manaaement Coro. Rothschild Asset Manaaement. inc. RREEF Funds (The) Russell Investment Groo Schroder Investment Manaaement North America Inc. SEI Investments Seliaman (J. & W.) & Comoanv. Inc. Seneca Caoital Manaoement LLC Shenandoah Asset Manaaement Sit Investment Associates. Inc. Smith Grouo Asset Manaoement Southeastern Asset Manaaement. Inc. Standish Mellon Asset Manaaement Comoanv State Street Global Advisors Sterne Aaee Asset Manaaement Stone Ridae Investment Partners Stratton Manaaement Svstematic Financial Manaaement Educational Services y y y y y y y y y y y y y y Consulting Services y y y y y y y y y y y y y y y y -T. Rowe Price Associates. Inc. y y y y y y y y y L Taolin. Canida & Habacht Texas Pacific Grouo Thomason Sieael & Walmslev Thrivent Financial for Lutherans TIAA-CREF TimesSauare Caoital Manaaement. LLC Todd investment Advisors. Inc. Trusco Caoital Manaaement. Inc. TCW Asset Manaaement Comoanv UBS Union Bank of California U.S. Trust Asset Manaaement Vanauard Grouo. Inc. (The) Vauohan Nelson Investment Manaoement Victorv Caoital Manaaement Inc. Vontobel Asset Manaaement Waddell & Reed Asset Manaoement Grouo WEDGE Caoital Manaaement Wellinaton Manaaement Comoanv. LLP Wells Caoital Manaaement Western Asset Manaaement Comoanv Westwood Manaaement Corooration William Blair & Co .. Inc. William D. Witter. Inc. Page 4 of 5 y y y y y y y y y y y y y y y y y y y y y y y y y y y y In October 1998, Callan's affiliate, Alpha Management, Inc. ("Alpha"), a registered broker-dealer, was acquired by BNY r Brokerage, Inc. (formerly known as BNY ESI & Co), a subsidiary of The Bank of New York Company, Inc. (collectively "BNY"). In that transaction, BNY purchased for cash the assets of Alpha. BNY and Callan also entered into a Services Agreement which provided that for a period of eight years (through 2006), BNY would make an annual service fee payment in a fixed amount to Callan, 92 percent of which was conditioned upon Callan achieving gross consulting revenues in excess of r-a specified amount during the preceding calendar year, which threshold amount was determined by reference to Callan's J 1998 gross consulting revenues and remains the same throu1~hout the eight years. Essentially, payment of this 92% was conditioned upon Callan remaining in business through 2006. The remaining eight percent of the annual payment to Callan r-was conditioned upon BNY receiving gross commissions during the preceding annual period of a specified minimum amount j from Callan clients that use Callan services and pay for all or a portion of Callan services through directed brokerage and soft dollar arrangements with BNY. The minimum amount of gross commissions necessary to satisfy this obligation remains the same throughout the eight years and was determined by reference to Alpha's business with Callan clients during 1998. Both f -of these minimum thresholds have been met easily for all the years following the execution of the Services Agreement and, the amount of the annual payment does not increase regardless of how much Callan's consulting revenues or BNY's gross commissions from Callan clients might exceed the minimum threshold. Callan has been advised by BNY that since 2000, BNY has not been tracking either Callan gross consulting revenues or BNY gross commissions as they relate to the 1998 Services Agreement and, for all practical purposes, both Callan and BNY have considered these annual payments as fixed. r! ~ In addition, under the terms of the Services Agreement, Callan is obligated through 2008 to advise all of its plan sponsor 1 clients through 2008 on an annual basis, and at the outset of a new relationship, of BNY's status as its preferred broker in • those instances where the plan sponsor client chooses to pay Callan's fees through commissions paid to BNY for brokerage transactions, and to provide BNY with some of the same client information as was provided to Alpha prior to the sale. , -Notwithstanding such obligation to so advise its plan sponsor clients, all clients are advised that they are free to conduct brokerage, and to establish directed brokerage arrangements, with any broker of their choice. Callan's fees for any services provided to its plan sponsor clients are always expressed and paid in hard dollars and are the same without regard to the brokerage arrangements which may have been made between the plan sponsor client and its broker. ,.- ~ As to its investment manager clients, Callan is obligated through 2008 to advise them that if they choose to pay Callan's fees through broker's commissions, BNY is its exclusive broker for that purpose and that the use of a third party brokerage firm for ~ soft dollar arrangements may fall outside of the safe harbor under Section 28(e) of the Securities Exchange Act of 1934. In l addition, if payment for Callan services is received from a third party broker, Callan is to advise the investment manager -client of the exclusive brokerage arrangement with Callan and inform BNY of the payment. As with its plan sponsor clients, Callan receives the same payment for its services regardless of whether payment comes from BNY, from a third party brokerage firm, or from the investment manager client. { In summary, nothing in the Services Agreement affects the options available to a Callan client for payment of Callan's fees, [ which are always quoted and paid in hard dollars regardless of the method of payment selected by the plan sponsor or -investment manager client. Those options are as follows: (1) (2) By paying cash via check or wire transfer By electing to direct brokerage transactions to BNY. At the client's request, BNY will pay invoices submitted by Callan for its services to such client. By entering into a contract for services directly with BNY to acquire Callan's services from BNY. BNY will then contract with L Callan for such services and will pay invoices submitted to it by Callan for such services. i L I b t L:. Page 5 of 5 r r Callan Investments Institute r The Callan Investments Institute. the educational r division of Callan Associates Inc., has been a leading r educational forum for the I pensions and investments industry since 1980 r The Institute offers continuing I education on key issues confronting fund sponsors r and investment managers. Please contact the Callan [ -Investments Institute for more information, or visit our website at www callan com CAILAN ASSOCIATES .. knowledge for investors RESEARCH PRESENTATIONS (WITH TALKING POINTS) This research series offers a page-by-page summary of the key talking points given by Callan experts during their PowerPoint presentations at Institute programs. The module brings a "voice" to the presentation and offers a description of each s/ide's charts, tables, graphs, and the like. Research presentations are an invaluable tool when reviewing, understanding, and explaining the Institute presentations you've attended, and imparting that knowledge to colleagues. GTAA, 130/30, and Other Return Enhancing Strategies -2006 Charter Institute Regional Workshop (6/06) Finding That Perfect DC Investment Manager -2006 DC Institute Workshop (4/06) Fiduciary Responsibilities for an Investment Committee -2006 National Conference (1/06) Portable Alpha: Seek the Holy Grail or Run Away -2006 National Conference (1/06) DC Trends Roundtable -2006 National Conference (1/06) The Role of Commodities in Institutional Portfolios -2006 National Conference (1/06) Paternalism in Plan Design -2005 DC Institute Workshop (10/05) EVENT SUMMARIES June 2006 Charter Institute Regional Workshop: Summary of Presentation "GTAA, 130/30, and Other Return Enhancing Strategies" April 2006 DC Institute Workshop: Summary of Presentation "Finding That Perfect DC Investment Manager" Callan Charter Investments Institute Twenty-Sixth National Conference: Summary of Presentations, January 2006 October 2005 DC Institute Workshop: Summary of Presentation "Paternalism in Plan Design" October 2005 Charter Institute Regional Workshop: Summary of Presentation "Investing to Match Liabilities" UPCOMING EDUCATIONAL PROGRAMS October 2006 DC Institute Fourth Annual Conference: San Francisco, October 23 -25 October 2006 Charter Institute Regional Workshop: Subject to be announced Chicago, October 23 San Francisco, October 26 Information on both of these programs will be sent to you shortly. In the meantime, please contact Ray Combs if you have any questions at 415.974.5060 or ciigroup@callan.com. Callan Investments Institute 101 C',\l IFOl<NI,\ S'f SlllTI J:i0ll SAN l·Ri\NC'ISC'O C,\LJFORNJJ\ 'l 1111 111:; ')74 50G0 l ,\X -115 27 1 30-l'l m1Y, u,11,111.rom · 200G C1llan .•\ssoci""'' fnc II CAILAN ASSO IATES.,C Atlanta Consulting Office 300 Galleria Parkway, Suite 950 Atlanta, Georgia 30339 Phone: (770) 618-2140 Chicago Consulting Office 120 North LaSalle Street, Suite 2100 Chicago, Illinois 60602 Phone: (312) .346-3536 Denver Consulting Office 1660 Wynkoop Street, Suite 950 Denver, Colorado 80202 Phone: (303) 861-1900 New Jersey Consulting Office 200 Park Avenue, Suite 230 Florham Park, New Jersey 07932 Phone: (973) 593-8050 San Francisco Consulting Office 101 California Street, Suite 3500 San Francisco, California 94111 Phone: (415) 974-5060 rrrrrrrrrrrrrrrrrrrr~~~:;::777777;7777711111 A company of Allianz® Global Investors Investment Management Program Orange County Sanitation District Strategy Review for the Period March 31, 2006 -June 30, 2006 rrrrrrrrr~rrr~r~~~~~r -- Biographical Information John M. Miller, CFA --------7 ------~~~~~1 J j j ~ J . Mr. Miller is an Executive Vice President and an account manager, with a focus on institutional client servicing, and he is co-head of the public pension plan team. In addition to those responsibilities, he has management responsibilities for new investment professionals in the account management servicing group. He joined PIMCO in 1999. Prior to that, he was an officer in the U.S. Army, achieving the rank of Captain. Mr. Miller holds a bachelor's degree in economics from the United States Military Academy, West Point and an MBA from the Harvard Business School. Christine Telish, CFA Ms. Telish is a Vice President and account manager, with a focus on institutional client servicing. She is also a member of PIMCO's municipal team, providing specialized servicing for tax-sensitive accounts. She joined PIMCO in 1994, and has nineteen years of finance, accounting, and investment experience. Ms. Telish holds a bachelor's degree in finance, real estate and law from California State Polytechnic University and an MBA from the University of California, Irvine. rrr ~~rrrrr~~r~~----------------7---~--~~~~1~ I.._ I.._ l I I l I ' I j I , ) ! J ) ) } ~ j , ) . ) PIMCO Outlook: Where We Came From -Where We Are Going 2005 • Bratton Woods II System -Low goods prices from low wage cost producers -Low rates in U.S. from excess reserves invested back into the U.S. • Global growth weak -Lack of aggregate demand -Policy driven reflation ran its course • Implications -Low rates -Low inflation • U.S. consumption continued on longevity of housing boom and reciprocal strong investment in China • Export led growth in Japan, Europe, and developing economies • • Bratton Woods II framework frays as countries diversify reserves • Global growth strengthens, central banks normalize monetary policy Secular Forecasts for 2006 2006 • Global growth currently strong but vulnerable to policy reversals • Global inflation to remain moderate in a range of 1% to 3% • 10-Year U.S. Treasury yields to range from 4% to 5.5% • Riskier assets are vulnerable due to narrow yield premiums and withdrawal of global liquidity • U.S. dollar-based assets and the dollar itself will underperform global alternatives 10-Year Government Inflation Bond Averagg Average 4.0-5.5% U.S. 2.5% 3.0-4.5% Europe 1.5% 1.5-3.0% Japan 1.0% 8 PIM C 0 r r-rrrr-rrrr-r--,-..,-., ---,-...,-...,-...,-...,-... ----------7 """"---,-~----'-:.\:.~ ._~ ( ~( l l \ l . ) ) ) ) J Portfolio Strategy: Position for Slowing Economy • Anticipate end of Fed tightening cycle and steeper yield curve Interest Rate Strategies Sectors Strategies -Focus on short and intermediate maturities • Mortgages: Overweight and emphasize coupon selection • Corporates: Underweight as credit spreads remain tight • Tl PS: Retain small allocation to hedge against unexpected inflation 11 PIM C 0 11 rr rrr~rrrr-r--------------1__ l ~'' ''' i ,1 ------, ~ -, -, -) I ! ) -, -----, _,, 1 , ; ,) ; ,j ,J ) Assets Under Management by Strategy PIMCO continues to build on fixed income expertise to provide effective solutions to meet investor needs Alternative Investments: Equities: Fixed Income: Absolute Return Strategies Commodities Real Estate Real Return Tactical Allocation Diversified Income CBO/CLO Broad U.S. Market Large Cap U.S. Small Cap U.S. International: EAFE, TOPIX, EuroSTOXX50, FTSE 100, etc. Long Duration Intermediate** Cash Management** Credit Mortgages Global Emerging Markets Municipals Other LIBOR based vehicles: enhanced cash or pure alpha Commodity-linked exposures enhanced with active bond portfolios Real Estate-linked exposure backed by inflation index bonds TIPS and other inflation-hedging strategies Tactical allocation among PIMCO funds, All Asset, All Asset All Authority" Global credit combining corporate and emerging markets debt Collateralized bonds/loan obligations Stocks PLUS®, StocksPLUS®Total Return, StocksPLUS® PARS: Combines passive equity index exposure with active bond management Focus on long-term bonds; asset liability management Total Return, Moderate Duration Low Duration, Enhanced Cash, Money Market Investment Grade Corporates, High Yield Emphasis on management of mortgage pass-throughs Non-U.S. and global multiple currencyformats Focus on solid credits with improving economic fundamentals Tax-efficient total return management Total Assets Under Management: $14,175 13,856 151 36,594 12,505 6,162 6,290 31,819 26,284 284,044 50,224 32,277 14,377 60,731 16,583 9,237 2,114 $617,430 M Assets as of June 30, 2006. PIMCO now includes the assets that it manages for third-party clients of its German affiliate, Allianz Dresdner Global Investors Germany. Potential differences in asset totals are due to rounding. * All Asset strategies are invested in PIMCO Funds; these assets are not included in the individual strategies. ** Stable Value assets have not been netted from US Total Return, US Moderate Duration and US Low Duration assets. As of June 30, 2006, total Stable Value assets equal $18,478MM. 14 PIM C 0