HomeMy WebLinkAbout2006-11-08MINtJTES OF THE REGULAR JOINT MEETING OF THE
FINANCE, ADMINISTRATION AND
HUMAN RESOURCES COMMITTEE & STEERING COMMITTEE
Orange County Sanitation District
Wednesday, November 8, 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 November 8, 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:
James W. Silva
Jim Ferryman, Board Chair
STAFF PRESENT:
Jim Ruth, Interim General Manager
Bob Ghirelli, Acting Assistant General Manager
Lorenzo Tyner, Director of Finance and
Administrative Services
Jeff Reed, Human Resources Manager
Mike White, Controller
Lilia Kovac, Committee Secretary
Denise Martinez, Sr. Human Resources Analyst
Rich Spencer, Human Resources Supervisor
Paul Loehr, Human Resources Supervisor
Norbert Gaia
Bob Geggie
Juanita Skillman
OTHERS PRESENT:
Brad Hogin, General Counsel
Jennifer Christian, Mayer Hoffman Mccann P.C.
Ken Al-Imam, Mayer Hoffman Mccann P.C.
(2) .APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no public comments.
IN TH FILED
ORANGEE g:,~!'?_: ~~ .'.~ SECRETARY
,-,"•' l"JISTAICT
NOV 15 2006
(4) REPORT OF THE COMMITTEE CHAIR
Chair Miller did not give a report.
BY f . .;::, ---.1.-_:___::...:..__~=--.o
(5) REPORT OF THE GENERAL MANAGER
Jim Ruth, Interim General Manager, did not give a report.
'Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
November 8, 2006
Page 2
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance, reported further research of APIA insurance may offer a
viable alternative for insurance, and will present options to the FAHR committee in December.
(7) REPORT OF GENERAL COUNSEL
Brad Hogin, General Counsel, reported that he will be responding to a letter from Bob Lockhart,
president of Revenue Enhancement Group. Mr. Lockhart alleges in the letter that the Sanitation
District's fee ordinance does not comply with Proposition 218.
General Counsel also reported that he will be reporting to the FAHR Committee in December on
2006 legal fees.
(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 October 11, 2006 joint meeting of the Finance, Administration
and Human Resources Committee and Steering Committee meeting.
b. FAHR06-76 Receive and file Employment Status Report as of October 13, 2006.
c. FAHR06-77 Receive and file OSHA Incidence Rates and Workers' Compensation
Claims and Costs Report.
d. FAHR06-78 Recommend to the Board of Directors to receive and file the FY 2006-07
First Quarter Financial Report for the period ended September 30, 2006.
e. Item pulled for discussion.
Motion: It was moved, seconded, and duly carried to approve the recommended action
for the items specified as 8(a) through 8(d).
END OF CONSENT CALENDAR
f. FAHR06-79 Recommend to the Board of Directors to approve Amendment No. 1 to
Motion:
the Real Property Lease Agreement, Specification No. L-018, with Village
Nurseries Wholesale, LLC, providing for a lease extension effective
December 1, 2006 through November 30, 2011, with option to renew for
three additional 5-year periods.
It was moved, seconded, and duly carried to approve the recommended
action.
(9) ACTION ITEMS
'Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
November 8, 2006
Page 3
a. FAHR06--80 Recommend to the Board of Directors to receive and file the
Motion:
Comprehensive Annual Financial Report (CAFR) for the year ending
June 30, 2006, prepared by staff and audited by Mayer Hoffman Mccann
P.C., Certified Public Accountants.
It was moved, seconded, and duly carried to approve the recommended
action.
b. FAHR06-81 Recommend to the Board of Directors to approve the reclassification of
four OCSD positions affecting incumbents
Motion: It was moved, seconded, and duly carried to approve the recommended
action.
(10) INFORMATIONAL ITEMS
a. FAHR06-82 Information on industry, county and state trends related to OCSD's
Succession Management Program
Jeff Reed, Human Resources Manager, presented the current status of
the Succession Management Program, as well as statistics that indicate
the future shortage of qualified staffing resources due to competition for
skilled personnel.
(11) CLOSED SESSION
The Committee convened in Closed Session at 6:05 p.m. pursuant to Government Code Section
54957(b)(1) to: (1) Confer with designated representatives, Jeff Reed, Human Resources
Manager; Richard Spencer, Human Resources Supervisor; 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). Supervisors, Professional Management Team (part of Peace Officers Council
of California), Government Code Section 54957.6. 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 Clerk
of the Board in the Official Book of Confidential Minutes of Board and Committee Closed
Meetings.
(12) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
There were none.
,, Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
November 8, 2006
Page4
(13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
There were none.
(14) FUTURE MEETING DATES
The next regular FAHR Committee meeting is scheduled for December 13, 2006, at 5 p.m.
(15) ADJOURNMENT
The Chair declared the meeting adjourned at 7:15 p.m.
Submitted by:
6,A~
Lilia Kovac
Committee Secretary
H:\dept\agenda\FAHR\FAHR2006\1106\110806 draft FAHR Minutes.doc
ROLL CALL
JOINT FINANCE, ADMINISTRATION AND HUMAN RESOURCES AND
STEERING COMMITTEES
Meeting Date: November 8, 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, Acting Assistant General Manager
Lorenzo Tyner, Director of Finance and --Administrative Services
David Ludwin, Director of Engineering
Jim Herberg, Director of Operations & Mgmt.
Patrick Miles, Director of Information Technology
Nick Arhontes, Director of Regional Assets --and Services
Ed Torres, Acting Director of Technical Services
Bret Colson, Public Information Manager
Jeff Reed, Human Resources Manager
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, NOVEMBER 8, 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 October 11, 2006 Joint Meeting of the Finance, Administration and
Human Resources Committee and Steering Committee.
b. FAHR06-76 Receive and file Employment Status Report as of October 13, 2006. Book Page 10
c. FAHR06-77 Receive and file OSHA Incidence Rates and Workers' Compensation Claims
and Co$ts Report. Book Page 16
Book Page 1
November 8, 2006 Page2
d. FAHR06-78 Recommend to the Board of Directors to receive and file the FY 2006-07
First Quarter Financial Report for the period ended September 30, 2006.
Book Page 19
e. FAHR06-79 Recommend to the Board of Directors to approve Amendment No. 1 to the
Real Property Lease Agreement, Specification No. L-018, with Village
Nurseries Wholesale, LLC, providing for a lease extension effective
December 1, 2006 through November 30, 2011, with option to renew for
three additional 5-year periods. Book Page 21
END OF CONSENT CALENDAR
f. Consideration of items deleted from Consent Calendar, if any.
(9) ACTION ITEMS
a. FAHR06-80 Recommend to the Board of Directors to receive and file the Comprehensive
Annual Financial Report (CAFR) for the year ending June 30, 2006,
prepared by staff and audited by Mayer Hoffman Mccann P.C., Certified
Public Accountants. Book Page 23
Mike White -30 Minutes
b. FAHR06-81 Recommend to the Board of Directors to approve the reclassification of four
OCSD positions affecting incumbents Book Page 30
Lorenzo Tyner - 5 Minutes
(10) INFORMATIONAL ITEMS
a. FAHR06-82 Information on industry, county and state trends related to OCSD's
Succession Management Program Book Page 35
Jeff Reed - 5 Minutes
(11) CLOSED SESSION
j During the course of conducting the business set forth~ on this age~da 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, l pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, l 54957 or 54957.6, as noted.
: Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c)
[ employee actions or negotiations with employee representatives; or which are exempt from public disclosure l under the California Public Records Act, may be reviewed by the Committee during a permitted closed session
\ and are not available for public inspection. At such time as final actions are taken by the Committee on any of .
L the~~. subje_c!s, the. minutes, will_ reflect f'III re.quired disclosures of info,rmation .... ·-···--.. · ...................................................................... _!
H:\dept\agenda\FAHR\FAHR2006\ 1106\03.110806 FAHR Agenda.doc
Book Page 2
November 8, 2006 Page 3
a. Convene in closed session.
Conference with designated representatives Lorenzo Tyner, Director of Finance and
Administrative Services; 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). Supervisors, Professional
Management Team (part of Peace Officers Council of California) (Government Code
Section 54957(b)(1 ).
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 AGEN"DA
FOR ACTION AND STAFF REPORT
(14) FUTURE MEETING DATES
The next regular FAHR Committee meeting is scheduled for December 13, 2006, at 5 p.m.
(15) ADJOURNMENT
H: \dept\agenda\F AHR\F AH R2006\ 1106\03. 11 0806 FAH R Agenda. doc
Book Page 3
November 8, 2006 Page4
Agenda Posting: In accordahce with the requirements of California Government Code Section 54954.2, this agenda
has bee11 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 subsequent to the
posting of ~genda, 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: Any 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 uliitil the sp-eclfic 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 Calendar: All matters placed on the consent calendar are considered as not requiring discussion or further
explanation, and unless a pa-rticular 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 th.e consent calendar.
All items removed from the consent calendar shall be considered in the regular order of 'busines,s.
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).
Meeting 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 (p0sted within 24 hours).
Accomm0aati0ns 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 dis_ability and the type of accommodation requested.
Notice to Committee Members:
For any questions oh the agenda or to place any items on the agenda, Committee members should contact the Committee Chair
or Secretary ter;i days in advance of the Committee meeting.
Committee Chair:
Committee Secretary:
Interim General Manager:
Acting Assistant General Manager
Director of Finance and
Administrative Services
Acting Human Resources and
Employee Relations 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\1106\03.110806 FAHR Agenda.doc
Book Page 4
lk0vac@ocsd.com
jruth@ocsd.com
bqhirelli@oesd.c0m
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, October 11, 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 October 11, 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:
James W. Silva
Jim Ferryman, Board Chair
STAFF PRESENT:
Jim Ruth, Interim General Manager
Bob Ghirelli, Acting Assistant General Manager
Lorenzo Tyner, Director of Finance and
Administrative Services
David Ludwin, Director of Engineering
Jeff Reed, Human Resources Manager
Mike White, Controller
Lilia Kovac, Committee Secretary
Norbert Gaia
Juanita Skillman
OTHERS PRESENT:
Brad Hagin, General Counsel
Brian Gruber, Lance, Soll & Lunghard
Richard Kikuchi, Lance, Soll & Lunghard
Shirish Patel, Lance, Soll & Lunghard
Ed Soong, Public Resources Advisory Group
Lori Koh
(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 did not give a report.
(5) REPORT OF THE GENERAL MANAGER
Jim Ruth, Interim General Manager, did not give a report.
Book Page 6
Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
October 11, 2006
Page2
(6) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES
Lorenzo Tyner, Director of Finance, did not give a report.
(7) REPORT OF GENERAL COUNSEL
Brad Hagin, General Counsel, informed the Committee members that he would be conducting Ethics
training in-house, as required by Assembly Bill AB1234. He also asked those directors that have
already completed their Ethics training submit a copy of the certificate of completion to the Board
Secretary's office of the Sanitation District for the files.
(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 September 13, 2006 joint meeting of the Finance, Administration
and Human Resources Committee and Steering Committee meeting.
b. FAHR06-67 Receive and file Employment Status Report as of September 18, 2006.
c FAHR06-68 Receive and file OSHA Incidence Rates and Workers' Compensation
Claims and Costs Report.
d. FAHR06-69 Recommend to the Board of Directors to Approve Amendment No. 1 to
Motion:
the agreement with the State of California, Department of Parks and
Recreation, providing for a change to the billing methodology for sewer
services for Balsa Chica State Beach.
It was moved, seconded, and duly carried to approve the recommended action
for the item specified as 8(a) through 8(d).
Director Freschi abstained from voting on Item B(a).
END OF CONSENT CALENDAR
e. Consideration of items deleted from Consent Calendar, if any.
(9) ACTION ITEMS
a. FAHR06-70 Recommend to the Board of Directors to authorize extension of a service
contract with Public Resources Advisory Group (PRAG) for financial
advisory services for an additional five-year period effective November
2006.
Motion: It was moved, seconded, and duly carried to approve the recommended
action.
Book Page 7
Minutes of the Regular Joint meeting of the Finance, Administration and Human
Resources Committee and Steering Committee Meeting
October 11, 2006
Page3
(10) INFORMATIONAL ITEMS
a. FAHR06-71 Independent Accountant Report on the Capital Improvement Program's
Procurement Procedures and Internal Controls
Lorenzo Tyner introduced Richard Kikuchi of Lance, Soll and Lunghard
who presented their independent report and findings of the District's
Capital Improvement Program's Procurement Procedures and Internal
Controls. Director of Engineering, David Ludwin, presented a response to
the recommendations made on the auditors report.
b. FAHR06-72 Retirement and benefits program review
Lorenzo Tyner presented a verbal report on Bartel Associates, LLC's
Benefits Review. A follow up meeting was scheduled for Thursday,
October 26, 2006.
c. FAHR06-73 Succession Management Program Update
Jeff Reed presented the major components of the Succession
Management program, and will be periodically reporting progress to the
committee.
d. FAHR06-74 Management of Property and Liability Insurance Programs
Mike White briefly presented facts on the different joint insurance
programs available to the Sanitation District for the various needs of the
agency this size. Staff will prepare a comparative analysis of joint powers
insurance authority and report back to the committee in November with
options.
(11) CLOSED SESSION
There was no closed session.
(12) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
There were none.
(13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA
FOR ACTION AND STAFF REPORT
There were none.
Book Page 8
FAHR COMMITTEE Meeting Date To Bel. of Dir.
11/08/06
AGENDA REPORT Item Number Item Number
FAHR06-76
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 OCTOBER 13, 2006
GENERAL MANAGER'S RECOMMENDATION
Receive and file the Employment Status Report.
SUMMARY
The number of full-time equivalent (FTE) employees at OCSD is 594; 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.
1:8'.1 Not applicable (information item)
ADDITIONAL INFORMATION
NEW HIRES: 3 Total
Job Title Division Business Need
Associate Engineer Ill Mechanical Maintenance & Power 2 -Important Production
Maintenance Worker Collection Facilities O & M 2 -Important
Intern Environmental Sciences Lab 3-Normal
H:ldept\agenda\FAHRIFAHR2006\1106\08.06-76.Employment Status Report.doc Page 1
Book Page 10
SEPARATIONS: 2 Total
Job Title Division Reason
Safety & Health Specialist Safety & Health Resignation
Information Tech Analyst Ill Electrical & Instrumentation Maintenance & Retirement Process Controls
PROMOTIONS: 2 Total
Current Pay Former Job Pay Name Division Job Title Grade Title Grade
Laboratory 69 Laboratory 57 McMullin, Ryan Environmental Sciences
Analyst Assistant Lab
Accountant 70 Accounting 58 Stanford, Cristina Accounting Assistant 11
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
ALTERNATIVES
N/A
CEQA FINDINGS
N/A
ATTACHMENTS
1. Employment Status Report
2. FY 2006/07 Staffing Report
3. Recruitments in Process
Date Days
Posted Open
2/6/2006 252
H:ldept\agenda\F AHRIFAHR2006\1106108.06--76. Employment Status Report~doc
Book Page 11
Division Status
O&M Process Reposted to attract
Engineering additional applicants
Page 2
to 0 0 :,,;--
'i:I ~ (C -N
EMPLOYMENT STATUS REPORT
DIVISION/DEPARTMENT AUTHORIZED FTE ACTUAL FTE VACANCIES
110 General Management Administration 2.50 2.50 -
150 Assistant General Manager Administration 3.50 2.50 1.00
151 Board Services 7.50 5.00 2.50
152 Public Information Office 7.00 7.00 . -
153 Safety & Health 8.00 8.00 -
General Management Totals 28.50 25.00 3.50
210 Finance Administration 2.00 2.00 -
220 Accounting 19.00 17.00 2.00
230 Contracts, Purchasing & Materials Management 29.50 27.50 2.00
240 Human Resources 19.00 16.00 3.00
Administrative Services Totals 69.50 62.50 7.00
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 17.00 2.00
Regional Assets & Services Totals 51.00 45.00 6.00
610 Technical Services Administration 2.00 2.00 -
620 Environmental Assessment 16.00 15.00 1.00
630 Environmental Sciences Laboratory 38.00 37.50 0.50
640 Source Control 39.00 38.00 1.00
660 Environmental Compliance Services 21.50 19.50 2.00
Technical Services Totals 116.50 112.00 4.50
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 9!f.25" 92.25 6.00
810 O&M Administration 4.00 4.00 -
820 O&M Process Engineering 14.50 10.50 4.00
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 69.00 4.00
860 Electrical & Instrumentation Maintenance 68.00 61.00 7.00
Operations & Maintenance Totals 249.2"5 229.25 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 FTE ACTUAL F1E VACANCIES
644.00 594.00 50.00
# ofVa~ncies Nt:it In Recruitment
RECRUITMENTS
-
-
1.00
-
-
1.00
-
1.00
2.00
-
3.00
-
4.00
-
4.00
-
1.00
-
-
-
1.00
-
-
-
1.00
1.00
-
3.00
2.00
2.00
4.00
5.00
16.00
-
-
1.00
1.00
2.00
lnJfecruilment
28.00
22.00
o:i 0 0 :;,;-
"'ti ~ ..... w
700.00
680.00
660.00 -
640.00 -•
620.00 -
600.00 •
580.00
560.00 -
540.00 -
520.00 -
500.00
DEC
Authorized FTE* 644.00
Actual FTE** 598.50
Difference*** 45.50
In Recruitment 36.50
Vacancies 9.00
*Authorized FTE as of August
*' Actual FTE as of August
* .. Difference= Recruitments+ Vacancies
•
•
FEB
644.00
601.00
43.00
16.50
26.50
STAFFING REPORT
• • • • • • • •
• • • • • • • •
'
MAR APR MAY JUN JUL SEP OCT NOV
644.00 644.00 644.00 644.00 644.00 644.00 644.00 644.00
598.50 596.50 591.50 593.50 590.50 591.50 593.00 594.00
45.50 47.50 52.50 50.50 53.50 52.50 51.00 50.00
24.00 21.00 22.00 17.50 18.00 28.00 30.00 28.00
21.50 26.50 30.50 33.00 35.50 24.50 21.00 22.00
. I-+--Authorized FTE* ---Actual FTE** j
IJj
0 0 ;,;-
'tj
cffl (1) -~
DIV
151
220
230
420
420
420
620
620
760
820
820
820
830
840
850
860
860
860
860
HC FTE
1 1.00
1 1.00
2 2.00
2 2.00
1 1.00
1 1.00
1 0.50
1 0.50
1 1.00
1 1.00
1 1.00
1 1.00
2 2.00
2 2.00
4 4.00
1 1.00
1 1.00
1 1.00
1 1.00
POSITION DIVISION
Clerk of the Board Board Services
Principal Financial Analyst Accounting
Contracts Administrator Purchasing
Regional Assets & Services
Maintenance Worker Admin
Regional Assets & Services
Engineering Manager Admin
Regional Assets & Services
Lead Mechanic Admin
Environmental Assessment
Intern -Biosolids Division
Environmental Assessment
Intern -Ocean Monitoring Division
Engineering & Construction
Planner/Scheduler Management
Engineer -Mechanical O & M Process Support
Associate Engineer 11/111 O & M Process Support
Engineer 0 & M Process Support
OIT/Plant Operator Plant 1 Operations
OIT/Plant Operator Plant 2 Operations
Mechanic/Sr. Mechanic Mechanical Maintenance
Instrumentation & Electrical
Instrumentation Tech II Maintenance
Instrumentation & Electrical
Maintenance Supervisor Maintenance
Instrumentation & Electrical
Electrical Tech II Maintenance
Instrumentation & Electrical
IT Analyst 111 Maintenance
1.UILO/LUUO RECRUITMENTS IN PROCESS
NEW/ CLOSING INTERNAL/ JOB
REPLACEMENT STATUS DATE EXTERNAL NUMBER POSTING DATE
New Scheduling interviews. Closed Internal 398 9/13/2006
New Offer in process. Closed External 409 7/31/2006
Interviews scheduled 10/23 &
New 10/24 Closed External 411 8/16/2006
Position reposed to attract Open Until
Replacement additional applicants. Filled External 412 8/24/2006
New Posted internal 10/12. 10/26/2006 Internal 418 10/12/2006
Replacement Posted internal 10/6. 10/20/2006 Internal 422 10/6/2006
Replacement Offer in process. Closed External 414 8/23/2006
Open Until
Replacement Interviews scheduled 10/18. Filled External 417 9/8/2006
Open Until
New Posted external 9/6. Filled External 408 8/17/2006
Position reposed to attract Open Until
Replacement additional applicants. Filled External 355 2/6/2006
Replacement Offer in process. Closed External 404 7/19/2006
Replacement Posted external 10/6. 10/20/2006 External 420 9/21/2006
Agustin Nieto, Jr. will start
10/23. Bruce Thompson will
Replacement start 10/30. Closed External 397 7/6/2006
Kwen Tjen will start 10/23.
Offer in process on the
Replacement remaining candidate. Closed Internal 401 7/31/2006
New Posted internal 10/5. 10/19/2006 Internal 407 10/5/2006
Reviewing applications for Open Until
Replacement external position. Filled Internal/External 406 8/17/2006
Replacement Posted internal 10/9. 10/23/2006 Internal 421 10/9/2006
Replacement Reviewing applications. Closed External 419 9/13/2006
Replacement Posting in development. Internal 423 Post Pending
t:c
0 0 ;,;--
'"C
Jil (1) ......
V,
DIV HC
860 1
930 1
940 1
RECRUITMENTS IN PROCESS
NEW/
FTE POSITION DIVISION REPLACEMENT STATUS
Instrumentation & Electrical
1.00 Engineer Maintenance Repl.acemenl Posted internal 10111 .
Applications forwarded to
1.00 IT Analyst I Customer & Network Support Replacement Patrick Miles for review.
1.00 Principal IT Analyst Programming & Databases New Posted external 10/5.
28.00 FTE's
29.00 Actual Recruitments (Headcount)
1..;•~--~..!'..JO
CLOSING INTERNAL/ JOB
DATE EXTERNAL NUMBER POSTING DATE
10/25/2006 Internal 424 10/11/2006
Closed External 382 9/13/2006
10119/2006 External 415 8/29/2006
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.
11/08/06
Item Number Item Number
FAHR06-77
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-September 2006 are
shown in the table below:
OCSD DART Cases
OCSD DART Rate\LJ
OSHA Recordable Accidents District
OCSD Total Injury Frequency Ratel"'
NOTES:
(1) Days Away, Restricted or Transfer
(2) Industry Average for DART is 2.80
(3) Industry Average for TIFR is 6.00
Revised: 06/04/03
January-
Sept 2006
8
1.84
14
3.23
Book Page 16
September Change
2006 (August to
Data September)
2 1
4.17 2.09
2 1
4.17 2.09
Page 1
Injuries
The two recordable injuries for this reporting period are as follows:
• On September 18, a Plant Operator tripped and fell back on hand resulting in a
sprained wrist. She was on restricted duty for two days. This injury is classified
as a DART case.
• On September 22, an OIT felt pain in his shoulder after opening a valve. He
sustained a right shoulder strain. He is currently working with restrictions. This
injury is classified as a DART case.
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-September Change
September 2006 Data (August to
2006 September)
OCSD Workers' Compensation
Claim Count (report period) 7 2 0
OCSD Workers' Compensation
Claim Cost (report period) $39,784 $6,000 $2,000
Total Open Claims 28
Total OCSD Workers' $1,783,207
Compensation Claim Cost
Closed Cases
The four closed cases for this reporting period are as follows:
• A claim involving a Senior Environmental Specialist who sustained a wrist and
forearm strain from repetitive computer work on April 1 closed with a total
incurred cost of $1,578.
• A claim involving an Environmental Technician who sustained a low back strain
after moving equipment on truck on August 1 closed with a total incurred cost of
$912.
• A claim involving a Source Control Inspector II who sustained a low back strain
after removing sampler from manhole on June 1 closed with a total incurred cost
of $1,069.
• A claim involving a Plant Operator who sustained a sprained wrist after tripping
on September 18 closed with a total incurred cost of $170.00.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
PROJECT/CONTRACT COST SUMMARY
N/A
Revised: 06/04/03
Book Page 17
Page2
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.
[Zl Not applicable (information item)
ADDITIONAL INFORMATION
The reporting period ends September 30.
ALTERNATIVES
N/A
CEQA FINDINGS
N/A
ATTACHMENTS
N/A
Revised: 06/04/03
Book Page 18
Page 3
FAHR COMMITTEE
AGENDA REPORT
Orange County Sanitation District
FROM: Mike White, Controller
SUBJECT: FIRST QUARTER FINANCIAL REPORT FOR
THE PERIOD ENDED SEPTEMBER 30, 2006
GENERAL MANAGER'S RECOMMENDATION
Meeting Date To Bd. of Dir.
11/08/06 11/15/06
Item Number Item Number
FAHR06-78
Receive and file the FY 2006-07 First Quarter Financial Report for the period ended
September 30, 2006.
SUMMARY
Attached in a separately bound document is the First Quarter Financial Report for the
period ended September 30, 2006 that includes the quarterly operating and capital
budget-to-actual report, the quarterly investment report, the quarterly swap (interest rate
exchange agreement) report, and the quarterly certificates of participation report.
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.
IZI Not applicable (information item)
ADDITIONAL INFORMATION
None.
ALTERNATIVES
N/A
H:\deptlagenda\FAHRIFAHR2006\1106108.06-78.1 st Qtr Fin Rpt.doc
Revised: 8/20/98
Book Page 19
Page 1
CEQA FINDINGS
N/A
ATTACHMENTS
Attached in a separately bound document is the First Quarter Financial Report for the
period ended September 30, 2006
H:\depllagenda\FAHRIFAHR200611106108.06-78.1 st Qtr Fin Rpt.doc
Revited: 8120198
Book Page 20
Page2
FAHR COMMITTEE Meeting Date To Bet of Dir.
11/08/06 11/15/06
AGENDA REPORT Item Number Item Number
FAHR06-79
Orange County Sanitation District
FROM: Mike White, Controller
Originator: Angela Brandt, Accounting Supervisor
SUBJECT: EXTENSION OF COMMERCIAL LEASE WITH VILLAGE NURSERIES
GENERAL MANAGER'S RECOMMENDATION
Approve Amendment No. 1 to the Real Property Lease Agreement, Specification
No. L-018, with Village Nurseries Wholesale, LLC, providing for a lease extension
effective December 1, 2006 through November 30, 2011, with option to renew for three
additional 5-year periods.
SUMMARY
The Sanitation District entered into a 10-year lease agreement with Village Nurseries
effective December 1, 1996 in connection with real property located across Garfield
Street from Plant No. 1 that will expire on November 30, 2006. This property is being
held by the Sanitation District for potential expansion of Plant No. 1 should new
governmental treatment regulations be adopted that would require the Sanitation District
to build additional facilities. The terms of the lease provides for lease extensions in four,
five-year, mutually negotiable increments, or up to 20 additional years. This proposed
Amendment No. 1 would be for the first five-year lease extension with Village Nurseries
that would run through November 30, 2011.
A Provision is contained within the original lease that would allow the Sanitation District
to terminate the lease upon six months written notice should an event occur that would
require the use of the premises. At the request of Village Nurseries, a provision that
would allow them to terminate the lease upon six months written notice has been .
included within the proposed Amendment No. 'l. This request was made by Village
Nurseries due to the possibility that Southern California Edison may, at some point,
terminate their lease on an adjacent property.
PRIOR COMMITTEE/BOARD ACTIONS
On December 18, 1996, the Board approved a 10-year lease agreement with Village
Nurseries in connection with real property, including buildings and other improvements
located thereon.
Form No. ow-102-4
Dept. 320
Page 1
Book Page 21
Agenda Report -FAHR
Revised: 11/1/2006
PROJECT/CONTRACT COST SUMMARY
The proposed Amendment No. 1 specify annual lease payments that increase
approximately five percent per year over the life of this amendment and will generate
lease income in the amount of $32,550 over the five year period at no additional out-of-
pocket cost to the Sanitation District.
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.
IZI Not applicable (information item)
ATTACHMENTS
None
Form No. DW-102-4
Dept. 320
Page2
Book Page 22
Agenda Report -FAHR
Revised: 11/1/2006
FAHR COMMITTEE Meeting Date To Bel. of Dir.
11/08/06 11/15/06
AGENDA REPORT Item Number Item Number
FAHR06-80
Orange County Sanitation District
FROM: Mike White, Controller
SUBJECT: ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL
FINANCIAL REPORT (CAFR) FOR THE YEAR ENDED JUNE 30, 2006
GENERAL MANAGER'S RECOMMENDATION
Receive and file the Comprehensive Annual Financial Report (CAFR) for the year ending
June 30, 2006, prepared by staff and audited by Mayer Hoffman Mccann P.C., Certified Public
Accountants.
SUMMARY
The Sanitation District's independent auditors, Mayer Hoffman Mccann P.C. (MHM), have
completed their examination of the Sanitation District's financial statements for the year ended
June 30, 2006 and have issued an unqualified opinion. Each year, the FAHR Committee
reviews the results of the audit and the corresponding Auditor's report to the Committee. During
the audit performed by MHM, no matters involving the internal control over financial reporting
and its operations that the auditors consider to be material weakness were noted. Ken Al-
Imam, Partner, will attend the meeting to respond to any questions of Directors.
This year, staff has again prepared the Comprehensive Annual Financial Report that includes
the audited financial statements. For the last twelve years, the Sanitation District has earned
the Certificate of Achievement for Excellence in Financial Reporting from the Government
Finance Officers Association (GFOA). This year's report will again be submitted to GFOA for
their review in anticipation of another award.
The Comprehensive Annual Financial Report, including the Auditor's opinion letter, the Auditor's
Report to the Committee, the Auditor's Report on Compliance and Internal Control Over
Financial Reporting, the Auditor's Appropriations Limit Report, and the Auditor's Single Audit
Report are attached.
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.
[ZI Not applicable (information item)
H:\dept\agenda\FAHRIFAHR2006\1106I09.06-80. CAFR 06 ,doc
Revised: B/20/98
Book Page 23
Page 1
ATTACHMENTS
1. Comprehensive Annual Financial Report for the year ended June 30, 2006.
(Separately bound document).
2. Single Audit Report on Federal Awards (Separately bound document).
3. Report on Compliance and Internal Control Over Financial Reporting.
4. Independent Accountants' Report on Agreed-Upon Procedures Applied to
Appropriations Limit Worksheets.
5. Independent Accountant's Report on Applying Agreed-Upon Procedures
H:\dept\egende\FAHRIFAHR200611106109.06-80.CAFR 06.doc
Revised: 8/20/98
Book Page 24
Page2
Mr. Dean Gallagher
QF Resources
Southern California Edison Company
August 31, 2006
Page2
Mr. Lorenzo Tyner
Director of Finance and
Administrative Services
Orange County Sanitation District
We were not engaged to, and did not, perform an examination, the objective of which would
be the expression of an opinion on the specified items. Accordingly, we do not express such
an opinion. Had we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
This report is intended solely for the information and use of the specified users listed above
and is not intended to be and should not be used by anyone other than these specified parties.
Irvine, California
August 31, 2006
m,,,_.-1;6~ /nieu n,,, Ac.
Book Page 29
FAHR COMMITTEE Meeting Date
11/08/06
AGENDA REPORT Item Number
FAHR06-81
Orange County Sanitation District
FROM: Lorenzo Tyner, Director of Finance & Administrative Services
Originator: Jeff Reed, Acting Human Resources & Employee Relations Manager
SUBJECT: MID-YEAR STAFFING MODIFICATIONS: RECLASSIFICATION
ADJUSTMENTS
GENERAL MANAGER'S RECOMMENDATION
Approve the reclassification of four OCSD position affecting incumbents
SUMMARY
To Bel. of Dir.
11/15/06
Item Number
In an effort to support OCSD's staffing plan, it is necessary to review and modify job titles
and pay grades to address changes in work. This occurs in situations where staffing
requirements result in the need for higher levels of skill and knowledge. Furthermore, the
need for the higher skill and knowledge levels must be indefinite and ongoing. Board of
Directors Policy C10.10, as well as bargaining unit Memorandums of Understanding,
address this process. Both state that requests are considered twice per year, once during
the annual budgeting process and again in November.
During the current period, thirteen requests were submitted for consideration. The Human
Resources Division reviewed each request in detail and discussions ensued with the
appropriate supervisor, manager, or department head. Consequently, the Human
Resources Division recommends that four of the requests be approved (Attachment 1 ).
The four requests will result in classification changes to positions with incumbents, effective
immediately following Board approval. These four employees have met the criteria outlined
in the Reclassification Guidelines, which are summarized below:
1. The incumbent has been in the position being considered for reclassification and
performing the higher level duties for at least 6 months.
2. The incumbent meets the qualifications for the position being considered for
reclassification.
3. The incumbent's classification is not being reclassified from a non-supervisory to a
supervisory classification.
Detailed information regarding each of the requests is documented in the additional
information section.
H:ldept\agenda\FAHRIFAHR2006\1106109.06-61.Reclass AR -Nov 06.doc
Revised: 06/04/03
Book Page 30
Page 1
PRIOR COMMITTEE/BOARD ACTIONS
N/A
PROJECT/CONTRACT COST SUMMARY
The cost for the salary increases as a result of the reclassifications for the remainder of
FY 06/07 (November to June) is $7,455.
Annualized cost of the salary increases as a result of the reclassifications is $12,780 with
sufficient funds existing from already budgeted labor costs.
BUDGET IMPACT
D This item has been budgeted. D This item has been budgeted, but there are insufficient funds. IZI . This item has not been budgeted. (sufficient funds exist from budgeted labor costs). D Not applicable (information item).
ADDITIONAL INFORMATION
240 -Human Res0urces Division
Reclassify the Human Resources Manager position at PG 94 ($8,764 -$10,955) to
Human Resources and Employee Relations Manager at PG 96 ($9,207 -$11,509)
based ,on the elimination of the Director of Human Resources position, and in support of
organization-wide human resources, employee relations and labor relations programs.
Under direction of the Board of Directors, organizational changes are being
implemented to increase District effectiveness and efficiency. With the elimination of the
Director of Human Resources position, additional responsibilities for the human
resources, employee relations, and labor relations program were transferred to the
Human Resources Manager position. This increase in scope and complexity supports a
recommendation for reclassification and placement to PG 96.
This workload is indefinite and ongoing.
640 -Source Control Division
Reclassify a Source Control Inspector I position at PG 69 ($4,729 -$5,911) to Source
Control Inspector II at PG 73 ($5,217 -$6,523) based on performing the full scope of the
job functions in support of the District's source control program. When initially assigned
to the Source Control Inspector I level, the incumbent worked under close supervision ,
and received detailed instructions on tasks assigned. Over the past year, the incumbent
has performed his job responsibilities at the higher classification of Source Control
Inspector II requiring limited supervision, and complete understanding of the operating
procedures and policies of the source control department. This is demonstrated by the
incumbent handling the more difficult assigned industries including SIU metal finishers,
a significant increase in the more problem-solving inspections, and managing complex
projects such as tomato waste investigation and sampling.
H:\deptlagenda\FAHRIFAHR2006\1106\09.06-81.Reclass AR -Nov 06.doc
Revised: 06104/03
Book Page 31
Page2
The distinct differences between the Source Control Inspector I and the Source Control
Inspector II are the level of supervision received, the type of instruction on the task at
hand, and the job knowledge necessary to complete the tasks. At the Source Control
Inspector I level there is close supervision with detailed instructions given for new or
special assignments. There is an understanding of the general aspects of the job and
limited understanding of the technical phases of the job. While at the Source Control
Inspector II level or journey level, supervision is limited with no instructions needed on
routine work. General instructions are given on new or special assignments, and there
is complete understanding of the general aspects and technical phases of the job and
their practical applications to problems and situations.
This workload is indefinite and ongoing.
920 -Information Technology Customer Support Division
Reclassify the Information Technology Analyst I position at PG 71 ($4,966 -$6,207) to
Information Technology Analyst II at PG 75 ($5,483 -$6,854) based on performing the
full scope of the job functions in support of the District's information technology systems.
When initially assigned to the Information Technology Analyst I level, the incumbent
worked under close supervision, and received detailed instructions on tasks assigned.
Over the past year, the incumbent has performed the full range of duties assigned,
working independently, applying well developed information technology knowledge, and
exercising judgment and initiative. This is demonstrated by the incumbent taking on the
lead role in supporting the maintenance and upgrade of the Magic server-based
applications, as well as upgrade of the Laboratory Atlas application server and client
upgrades. Work is only reviewed on completion and for overall results.
The distinct differences between the Information Technology Analyst I and the
Information Technology Analyst II are the level of supervision received, the type of
instruction on the task at hand, and the job knowledge necessary to complete the tasks.
At the Technology Analyst I level there is close supervision with detailed instructions
given for new or special assignments. There is an understanding of the general aspects
of the job and limited understanding of the technical phases of the job. In contrast, at
the Information Technology Analyst II level or journey level, supervision is limited with no
instructions needed on routine work. General instructions are given on new or special
assignments, and there is complete understanding of the general aspects and technical
phases of the job and their practical applications to problems and situations.
This workload is indefinite and ongoing.
940 -Programming & Database Support Division
Reclassify the Senior Information Technology Analyst position at PG 83 ($6,680 -
$8,349) to Principal Information Technology Analyst at PG 87 ($7,372 -$9,216) based
on performing the highest level of professional computer and related systems support in
administering the District's Geographic Information System (GIS).
H:ldeptlagenda\FAHRIFAHR2006\1106I09.06-81.Reclass AR -Nov OS.doc
Revised: 06/04/03
Book Page 32
Page 3
ATTACHMENT 1 SUMMARY
RECLASSIFICATIONS
POSITION UPGRADES
NOVEMBER 2006
RECLASSIFICATION REQUESTS
Current Proposed
Div Classification Title i Reclassification Title
I
240 i Human Resources
j Manager
I I
Human Resources &
Employee Relations
Manager
--·---·----.J-_---------------~-----------------------
640 I Source Control lnspec I Source Control lnspec II
I I ------1----------------------------. . -
920 : IT Analyst I I IT Analyst II
______ J.. ___________________ _
940 ! Senior IT Analyst Principal IT Analyst
I I
H:\dept\agenda\FAHR\FAHR2006\1106\09.06-81.Reclass AR -Nov 06-Att 1
Book Page 34
FA ... R COMMITTEE Meeting Date To Bd. of Dir.
11/08/06
AGENDA REPORT Item Number Item Number
FAHR06-82
Orange County Sanitation District
FROM: Lorenzo Tyner, Director of Finance and Administrative Services
Originator: Jeff Reed, Acting Human Resources and Employee Relations
Manager
SUBJECT: INFORMATION ON INDUSTRY, COUNTY AND STATE TRENDS
RELATED TO OCSD'S SUCCESSION MANAGEMENT PROGRAM
GENERAL MANAGER'S RECOMMENDATION
For Information only
SUMMARY
By the year 2010, the Department of Labor predicts the United States will have 10
million more jobs than skilled workers to fill them. In the federal government, about 80
percent of senior and middle managers are eligible for retirement now. The percentage
of those eligible for retirement in the more than 80,000 state and local governments
across the nation is unknown, but it is expected to be alarmingly high. In fact, 46.3
percent of government workers are aged 45 or older. Compared with the private sector,
where just 31.2 percent are 45 years old or older, this fact indicates that the government
sector is at the forefront of this trend.
In California state government more than half of all employees will be eligible to retire
within the decade, including 3,397 executives and managers. This "brain-drain"
projection demonstrates the urgency with which local governments must begin to
systematically replace talent, as a means to sustaining and improving organizational
performance into the future. The most popular and effective approach to getting this
done is succession planning. Unfortunately, less than 22% of organizations have a
succession plan.
As reported, OCSD is in the process of putting a succession management program in
place. An initial status up~a~e on OCSD's Succession Management Program was
delivered at the FAHR Committee's meeting of October 11th. At that time, the
committee raised questions about any related meet and confer items, as well as trend
information. Information on the meet and confer items will be presented in future
meetings. The intent of this report is to provide information on trends, which can be
found in the Additional Information section of this report.
PRIOR COMMITTEE/BOARD ACTIONS
N/A
Book Page 35
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.
IZI Not applicable (information item)
ADDITIONAL INFORMATION
Trends -The following trends have been identified:
• The U.S. Bureau of Labor Statistics projects a shortfall of 10 million workers by
2010.
-,ndustry:
• Looking at all levels of government as of 2001, the public sector workforce is
older than its private sector counterpart. It also has proportionately fewer young
workers, a fact that increases the seriousness of future workforce challenges.
~ A significant percentage of employees at all levels of government are
approaching retirement eligibility.
• Multiple factors have made government one of the first sectors to bear the brunt
of an aging national workforce:
o Past employment patterns (periods of growth and downsizing, hiring
freezes, early retirement incentives or buy-outs)
o The declining appeal of public service
o Competition with the private sector for talent
o Lower retirement-eligibility criteria than most sectors offer
o Regulations that hamper jurisdictions from retaining older workers or
rehiring retirees
o Budget cutbacks in training that h·ave depleted the talent pipeline
• Some local governments enhanced the retirement benefit formula, with the early
retirement option after age 50 with reduced benefits. It is anticipated that this will
lower the age c!t which employees consider retirement. Currently OCSD's
average is 61 with 24 years of service.
Orange County:
• Overall, Orange County employment is expected to increase by 21.9% by 2012.
State and local government are expected to be one of the top ten growth
industries during that period.
• By 2025 employment in the government sector is expected to increase by 28.9%,
and employment in the utilities sector is expected to increase by 35%.
Page2
Book Page 36
• At least 33% of future jobs will need skills in Science, Technology, Engineering,
or Mathematics. Currently only 20% of undergraduate and graduate degrees
conferred are in Science, Technology, Engineering, or Mathematics.
California:
• No data available. Most likely similar to county trends.
Outliers -The following outliers have been identified:
Industry:
• Some structures require different approaches, such as can an employer ask
employees when they anticipate they will retire. Direct information is more
reliable than statistical forecasts; however, organizations need to safeguard the
information and to exercise discretion in its use to avoid potential liability.
Orange County:
• No data available. Most likely similar to industry.
California:
• No data available. Most likely similar to industry/county.
Talent Pool -The following issues have been identified:
• To close the gap between workforce supply and demand, organizations need a
coordinated action plan that includes all phases of an employee's lifecycle,
including:
o Recruitment and selection
o Performance management
o Compensation and benefits
o Training and development
o Leadership development (including succession management, coaching,
and mentoring)
o Career management
o Retention
o Retirement
• The percentage of the workforce with a college degree is expected to decline
nationally. According to the National Center for Public Policy and Higher
Education, by 2020 the share of the workforce with less than a high school
diploma is projected to increase, while the share with an associate's or a
bachelor's degree is projected to decrease.
Page 3
Book Page 37
Industry:
• Securing accurate organizational data is the essential first step in addressing the
challenges of an aging and retirement-eligible workforce. The information assists
with:
o Planning effectively
o Identifying areas needing immediate attention
o Informing policy-makers and executive management on issues
o Mobilizing individual stakeholders to action
• Proactive recruiting is already becoming increasingly beneficial. Traditionally,
government agencies have relied heavily on job postings to attract candidates.
With the projected shrinking of the labor pool, however, it will become necessary
to actively source candidates through other avenues, such as internet sourcing,
direct sourcing from other public agencies or firms, campus networking and
recruiting, networking through user groups and professional organizations,
tradeshows and conferences, and job fairs.
• Currently many candidates come from other agencies.
• Other agencies have identified some of the same recruiting trends that OCSD is
experiencing. To address the difficulty of finding environmental engineers, the
Sanitation Districts of Los Angeles County partners with several public agencies
and private engineering firms in a funding program for students in master's of
science in environmental engineering programs, funding up to $20,000 for
related expenses. Repayment is not required if the graduate then completes a
three-year employment commitment with one of the member agencies.
Orange County:
• Orange County's unemployment rate is low (4.8% in September). The county
enjoys a diverse economy that is not reliant on just one or two segments.
Orange County's unemployment rate is lower than the state's.
• High housing costs are driving young professionals to other counties (e.g. Inland
Empire) and even out of California. Families making the median family income
for Orange County are not able to afford median priced single-family homes in
the county. When compared to peer regions, median single-family home prices
in the San Francisco Bay Area are the only ones higher than in Orange County.
The median single family home price in Austin, Texas, for 2005 (seasonally
adjusted) was more than $500,000 less than in Orange County. This suggests
that employers in Orange County may have a more difficult time retaining or
attracting high quality workers than in similar communities.
California:
• The high housing costs in California deter out-of-state candidates from relocating
to California.
• California's educational system is not performing well. California is near the
bottom on the list of states' National Assessment of Educational Progress tests
and per-student spending in recent years.
Page4
Book Page 38
Higher Standards -The following issues have been identified:
• Competencies define factors (knowledge, skills and abilities, or KSA's) related to
successful job performance.
• Developing one's own competencies increases one's ability to be successful at a
job.
• Leadership development of staff will be necessary.
• There will be an expectation of more from more educated staff.
• High standards enable OCSD to be viewed as an employer of choice.
• OCSD can exceed compliance requirements of local, state, and federal
mandates by having higher standards.
Industry:
• Stricter wastewater operating permits (CWEA, WDR, NPDES, tertiary treatment)
Orange County:
• A shortfall of skilled workers in Orange County is expected. If 43% of current
O.C. 1ih graders continue to obtain advanced educational degrees, there will be
just 14,972 new graduates each year with these degrees in the workforce. Such
a rate would lead to an annual shortfall of more than 3,000 skilled workers, given
that 18,000 jobs will be created annually that require advanced degrees.
California:
• 90% of future jobs will need some kind of advanced educational degree (A.A or
above).
• At least one third of future jobs will demand skills in the STEM disciplines
(science, technology, engineering, and mathematics), according to the U.S.
Department of Labor.
Later Retirement-The following issues have been identified:
• Accurate forecasts of when employees will actually retire are more difficult to
make, since those decisions are affecte~ by environmental, organizational, and
individual factors.
• Another factor affecting the accuracy of retirement forecasts is the quality of the
data available and the analysts' tools and skills, which studies find vary
significantly across jurisdictions.
• Life expectancy continues to increase due to health care and individual wellness.
• Retirement systems/pensions and Social Security will experience shortfalls.
• Increasing housing cost require people to work longer to pay them off
• Retiree medical will keep many in the workforce.
• College tuition for children creates the need for full income.
• Shortage of Generation X and Generation Y workforce leaves job openings.
• Companies are beginning to offer flexible work programs that support older
workers.
Page 5
Book Page 39
Industry:
• The average age of a utility retiree is 56 with 24 years of service, according to a
2005 study by the American Water Works Association (AWV\/A). AWV\/A
concluded that [water utility] employees generally retire shortly after they become
eligible for retirement, especially if they have worked most of their eligible years
for one organization.
• AARP reports that 65 percent of those over 45 cited health insurance and
coverage for prescription drugs as key reasons for remaining employed.
Orange County:
• Older Orange County workers will be in demand. Less than 1 % long-term annual
growth in workforce size likely means more older workers will delay retirement to
fill jobs that a forecasted under-sized, under-educated, and under-skilled
workforce is unable to do. Their technical, experience, and employability skills
will be in demand.
• Baby Boomers at the peak of their earning potential and continuing to maintain
youthful vigor will result in an older working population as they seek to be active,
engaged, and productive.
• Pension and/ or Social Security shortfalls may force workers to continue to work
in order to maintain their current lifestyle.
California:
• 69% of people over age 45 expect to work beyond the current "normal"
retirement age of 65. Along with the need to restore their diminished savings,
however, AARP reports that 65 percent of those over 45 cited health insurance
and coverage for prescription drugs as key reasons for remaining employed.
Eligibility/ Hiring Requirements -The following issues have been identified:
Industry:
• At least 33% of future jobs need skills in Science, Technology, Engineering, or
Mathematics. Currently only 20% of undergraduate and graduate degrees given
in Science, Technology, Engineering, or Mathematics.
• 90% of jobs will require some advanced degree by 2025.
• All OCSD employees will be eligible for the Succession Management Program.
• Volunteer participation in the program to receive personalized career-tailored
training and development.
• Skills inventories can be used to understand one's own skill.
• Competencies will show required KSA's.
• Pre-assessments can gauge gaps between competencies and current KSA's.
• Use of skill assessments (testing) during the staffing process can ensure that
internal applicants possess the needed KSA's.
Page6
Book Page 40
• Key competencies (KSA's) are necessary to perform the job successfully.
• Public sector hiring process is lengthy, which may affect the industry's ability to
recruit due to the time required to hire new staff.
• Public sector systems impose strict and complex rules governing compensation,
job classifications, and work descriptions.
Orange County:
• No data available. Most likely similar to industry.
California:
• No data available. Most likely similar to industry/county.
ALTERNATIVES
N/A
CEQA FINDINGS
N/A
ATTACHMENTS
N/A
Page?
Book Page 41
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
-.
1
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A company of Allianz@
Global Investors
Investment Management Program
Orange County Sanitation District
Strategy Review for the Period
June 30, 2006 -September 30, 2006
Biographical Information
John M. Miller, CFA
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.
Agenda
I. Performance & Market Review
11. Economic Outlook & Strategy
Ill. Organizational Update
Portfolio Strategy: Diversified Set of Price Return Strategies During a Period of
Unattractive Yields
Price Return
Strategies
Yield
Strategies
• Anticipate continued slowing of U.S. economy and steeper yield curve
-Focus on short and intermediate maturities
• Corporates: Underweight as credit spreads remain tight
• Mortgages: Overweight and emphasize coupon selection
• TIPS: Retain modest exposure as an inflation hedge
12 PIM C 0
•
., 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
Di\ersified Income
CBO/CLO
Broad U.S. Market
Large Cap U.S.
Small Cap U.S.
International:
Japan, Europe
Global, International
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, Stocks PLUS® 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-th roughs
Non-U.S. and global multiple currency formats
Focus on solid credits with improving economic fundamentals
Tax-efficienttotal return management
$13,089
12,674
169
38,381
13,391
6,549
6,628
32,742
32,222
292,377
50,692
32,404
17,322
64,867
16,248
9,241
2,690
Total Assets Under Management: $641,693 M
Assets as of September 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 September 30, 2006, total Stable Value
assets equal $18,904MM.
15 PIM C 0
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Callan Associates Inc.
Investment Measurement Service
Quarterly Review
Orange County Sanitation District
September 30, 2006
The following report was prepared by Callan Associates Inc. ("CAI") using information from sources that
include the following: fund trustee(s); fund custodian(s); investment manager(s); CAI computer software;
CAI investment manager and fund sponsor database; third party data vendors; and other outside sources
as directed by the client. CAI assumes no responsibility for the accuracy or completeness of the
information provided, or methodologies employed, by any information providers external to CAI.
Reasonable care has been taken to assure the accuracy of the CAI database and computer software. In
preparing the following report, CAI has not reviewed the risks of individual security holdings or the
compliance/non-compliance of individual security holdings with investment policies and guidelines of a
fund sponsor, nor has it assumed any responsibility to do so. Copyright 2006 by Callan Associates Inc.
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CHI< 1(,0
Ile .I l'l\
October 31, 2006
Mr. Michael D. White
Controller
Orange County Sanitation Districts
10844 Ellis A venue
Fountain Valley, California 92728
RE: September 30, 2006 Quarterly Performance Report
Dear Mike,
The September 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
The long-awaited Fed pause finally came in August -and coupled with a sharp decline in oil
prices -ignited a rally in U.S. equities that continued through the end of the quarter.
Prior to the third quarter, the Fed had increased short-term interest rates at 17
consecutive meetings, dating back to June 2004.
All major equity indices posted strong returns for the third quarter. The Dow closed
the quarter 44 points shy of its all-time high set in 2000. The S&P 500 is still about
12% below its peak. The tech-laden NASDAQ is more than 55% off its high, reached
in March of 2000, when the bubble burst.
The fixed income market, as measured by the Lehman Aggregate Bond Index, ended
the quarter positively (+3.8%), the first time this year and its best quarterly showing in
four years. A string of reports showing the economy is slowing boosted Treasurys,
which experienced their biggest quarterly gain in four years. For the three-month
period, corporates (+4.5%) led all sectors of the bond market due to a tight supply,
strength in equities and expectations that the Federal Reserve is near the end of its
tightening cycle. The federal funds rate began and ended the quarter at 5.25%. After the
second consecutive meeting in which rates were left unchanged, the Federal Open
Market Committee left the door open by saying "some inflation risks remain."
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.
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Mr. Michael White
October 3 I, 2006
Page2
Manager Results
The two underlying portfolios totaled $279 million as of September 30, 2006. Both are
managed by PIMCO. The Liquid Operating portfolio is approximately 20% of the
assets, while the Long Term Operating portfolio is 80%.
The Liquid Operating Money account produced a 1.34% return for the quarter, slightly
better than the return on the 90-day Treasury bill (1.33%), and higher than the prior
quarter. For the trailing twelve months, the portfolio gained 4.67%, which is, again,
above the 90-day Treasury bill return (4.50%), and higher than the return on the Long
Term fund .. Over longer time periods, the portfolio ranks in the top decile of Callan's
Money Market Mutual Funds Database, on an after-fee basis. As of September 30, the
portfolio's yield is over 5%, up from 4.75% in the prior quarter. Over 60% of the
Liquid Operating fund is invested in commercial paper. When combined with the
second portfolio, the exposure to commercial paper is only 15% of the operating assets.
The Long Term Operating Fund produced a 2.58% return for the quarter, out
performing the Merrill 1-5 Year Gov/Corp index at 2.48%. The portfolio is very high
quality, and is somewhat defensively positioned. A small position in TIPS (Treasury
Inflation Protected Securities) is held. 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,. For the most recent quarter, the longer duration was advantageous, and
the ranking is in the top decile. Over the longer term, the Districts have been rewarded
for taking on this duration risk.
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%. All
securities are rated investment grade.
Please do not hesitate to call me if you have any questions.
Yours truly,
Ruthann C. Moomy, Ph.D., CFA
Senior Vice President
U.S. FIXED INCOME
Style Median and Index Returns* for Periods ended September 30, 2006
Last Last 3 Last Last3 Last 5 Last 10
Quarter Quarters Year Years Years Years
Core Bond Style 3.81 3.21 3.90 3.67 5.12 6.66
Core Bond Plus Style 3.89 3.47 4.20 4.43 5.60 6.90
LB Aggregate 3.81 3.06 3.67 3.38 HI 6.42
LB Govt/Credit 3.91 2.71 3.33 3.08 4.96 6.47
LB Govt 3.54 2.61 3.30 2.76 4.34 6.23
LB Credit 4.51 2.88 3.39 3.52 5.80 6.78
Citi Broad Investment Grade 3.85 3.04 3.71 3.48 4.85 6.45
Extended Maturity Style 6.60 2.05 2.82 5.44 7.31 8.27 r LB Gov/Credit Long 6.82 1.65 2.60 5.04 7.14 8.10
LB Gov Long 6.48 1.48 2.51 4.91 6.59 8.15
LB Credit Long 7.23 1.85 2.70 5.24 7.95 7.86
Intermediate Style 3.14 3.27 3.87 2.90 4.47 6.14
LB Intermediate Aggregate 3.41 3.27 3.84 3.15 4.45 6.11
LB Gov/Credit Intermediate 3.20 3.02 3.55 2.56 4.34 5.95
LB Gov lnlermediate 2.92 2.93 3.54 2.25 3.70 5.63
LB Credit Intermediate 3.67 3.18 3.58 3.02 5.18 6.43
Defensive Style 2.07 3.44 4.18 2.58 3.34 5.19
Acti1•e Cash Style 1.51 3.59 4.59 2.84 2.91 4.62
Money Market Funds ( net of fees) 1.19 3.26 4.15 2.28 1.83 3.46
ML Treasury 1-3 Year 1.97 3.04 3.74 1.91 2.79 4.79
90-Day Treasury Bills 1.33 3.55 4.50 2.73 2.30 3.81
High Yield Style 3.60 6.22 7.53 8.95 10.15 7.30
LB High Yield 4.07 7.34 8.07 9.08 10.51 6.52
ML High Yield Master 4.05 7.20 7.90 8.92 10.13 6.83
Mortgages Style 3.65 3.72 4.39 4.14 4.94 6.67
LBMBS 3.63 3.57 4.19 3.95 4.53 6.30
LB ABS 2.85 3.56 4.16 2.99 4.22 6.10
LBCMBS 4.11 3.55 4.06 3.17 5.66
LB Muni 3.41 3.69 4.45 4.37 5.17 5.90
LB Muni 1-I0Year 2.76 2.99 3.48 2.74 3.99 5.01
LB Muni 3 Year 1.93 2.40 2.69 1.63 2.92 4.14
U.S. Fixed Income Index Characteristics as of September 30, 2006
Yield Modified Adj. Average %of %of
Lehman Brothers Indices toWorst Duration Maturity LBG/C LB Aggregate
LB Aggregate 5.32 4.61 7.07 100.00% 100.00'k·
LB Govt/Credit 5.10 5.11 7.70 100.00?r 59.18%
Intermediate 5.02 3.63 4.43 79.70% 47.17%
Long-Term 5.44 10.91 20.57 20.30% 12.01%
L LB Govt 4.81 4.59 6.46 60.93% 36.06%
LB Credi! 5.57 5.91 9.64 39.07% 23 .12%
LB Mortgage 5.68 3.81 6.30 34.93%
LB Asset-Backed 5.24 2.77 3.18 1.18%
LB Commercial Mo1tgage 5.30 4.77 5.86 4.71%
LB Corp High Yield 8.17 4.52 7.91
,:, Returns less than one year are not annualized. :_':1pit:ii ".Ltd-·.,,, !{:•,i,>:. • ·,1111,I (J,uru :.'ili;1j
INTERNATIONAL EQUITY
Style Median and Index Returns* for Periods ended September 30, 2006
Last Last 3 Last Last3 Last5 Last 10
Quarter Quarters Year Years Years Years
r-
Global Style 4.81 11.04 14.93 16.96 10.63 9.23
Non-U.S. Style 4.10 14.51 20.09 22.63 15.41 9.81
Core Style 4.01 14.64 19.43 22.11 15.33 9.81
MSCI EAFE-Unhedged 3.93 14.49 19.16 22.32 14.26 6.82
MSC! EAFE-Local 5.02 8.80 16.54 20.00 9.20 6.59
MSC! EAFE Growth -Unhedged 2.31 11.82 16.68 19.38 12.38 4.18
r MSC! EAFE Value-Unhedged 5.53 17.15 21.63 25.23 16.12 9.30
C MSCI World-Unhedged 4.47 10.79 14.18 16.72 10.01 7.26 ( MSC! World-Local 4.99 7.99 12.77 15.56 7.76 7.27
MSCI AC World ex-U.S.-Unhedged 3.9S 14.34 19.36 23.92 16.38 7.61 r-MSC! AC World-Unhedged 4.60 11.33 15.14 18.01 11.37 7.70 I
Pacific Basin Style 0.79 5.27 15.67 19.06 15.51 3.75 r-Japan Style -1.35 -0.56 12.81 17.80 12.20 5.31
Pacific Rim Style 6.50 15.87 23.77 25.04 23.22 5.22
MSCI Pacific-Unhedged 0.41 3.95 12.89 18.52 13.61 1.66
r.-MSC! Pacific-Local 2.79 3.58 16.66 19.31 11.79 1.95
MSC! Japan-Unhedged -0.72 1.18 13.17 16.83 11.04 0.42
MSC! Japan-Local 2.54 1.21 17.89 19.00 10.84 1.01
Europe Style 5.10 20.00 23.00 24.23 14.89 12.25
MSCI Europe-Unhedged S.63 19.96 22.30 24.07 14.58 10.28
MSC! Europe-Local 6.11 11 .42 16.49 20.34 8.15 9.82
Emerging Markets Style 5.64 13.85 22.75 32.91 31.27 10.83
MSC! Emerging Markets-Unhedged 5.01 12.71 20.82 31.04 28.85 7.58
I MSCI Emerging Markets-Local 5.54 12.40 20.27 27.87 25.47 11.45
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Small Cap Style 2.00 13.45 20.13 28.49 23.39 13.41
L MSC! EAFE Small Cap-Unhedged 0.40 6.81 15.16 26.21 22.79
Return Attribution for EAFE Countries
L Third Quarter 2006
Country Total Local Currency Weighting
Australia 2.59% 2,14% 0.44% 5.23% I Austria 3.36% 4.34'7o -0.93% 056%
Belgium 11.34% 12.39'70 -0.93'70 1.24% l_ Denmark 8.71% 9.?0'lo -0.90% 0 76%
Finland 1.20% 2.15% -0.93% 1.43%
France 4.87% 5.85% -0.93% 9%%
Germany 4.84% 5.82% -093% 7.10%
l, Greece 5.10% 6.09% -0.93% 0.63%
Hong Kong 6.34% 6.68% -0.32'70 1.69%
Ireland 8.70% 9.73% -0.93% 0.83'7o
Italy 4.46% 5.44% -0.93'7e 3.85%
Japan -0.72% 2.54% -3.18% 23.64%
L Netherlands 10.75% 11.79% -0.93% 3.50%
New Zealand 8.30% 1.21% 701 % 0.15%
Norway -6.20% -1.74% -454% 0,81%
L Portugal 7.17% 8.17% -0.93'10 0.34%
Singapore 6.86% 7.20% -0.32'70 0.84%
Spain 1220% 13.26% -0.93% 4.02%
Sweden 6.88% 8.74% -1.71% 2.43%
Switzerland 7.44% 9.98% -2.31% 708%
UK 4.24% 3.22% 0.99% 13.90%
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Global Bonds Follow U.S. Rates
r The Citigroup Non-U.S. Government Bond Index gained 2.53%, in
local terms, during the third quarter, as long-term yields fell in nearly
all major international bond markets. Lowered growth expectations,
r partially due to the housing exposed U.S. consumer and sharply
declining oil prices, fueled the bond market rally.
Even after the impressive bond rally in the United Stales, during the
,..--quarter U.S. bonds still offered a yield advantage over most major
developed markets. This yield advantage, as well as the surging U.S.
stock market, continued to attract foreign investment, supporting the
U.S. dollar. The strengthening U.S. dollar eroded the return of the ,--
r·-
unhedged Citigroup Non-U.S. Government Bond Index, which
returned only 88 bps in the quarter.
While many European and Asian markets witnessed an increase in
short-term rates and a decrease in long-term rates, the Bank of Canada
ended a tightening regime and held overnight rates steady at 4.25%.
Canadian l 0-year yields fell 58 bps to 4%, rn unison with
r -U.S. long rates.
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Country
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Japan
Netherlands
Norway
Poland
Portugal
Singapore
Spain
Sweden
Switzerland
UK
Return Attribution for Non-U.S. Govt Indices
Third Quarter 2006
Total
2.69'7c
l.91'7c
1.75%
-I 72'7c
1.51%
ll?'k
1.91'7c
I. 75'7c
l.85'7c
I 79'7c
2-17'70
-I-Wk,
I 73'7o
-'l.?5C,'c
3 69'7o
I 65'7o
l.82'if,
I .84'7c
0.29'7o
0.82%
3.86%
Local
2 24,./r
2.86%
2.70'7r
5.0S'k
244'7c
2 12ck
2.87'7c
2 70'7o
2 SJ<;,
2 75'7o
34-Vlc
I 79'7o
2 69'7<
I 88'7c
201'7,
2.60%
2.JS'A
2.80%
2.03'7'c
3_21%
2 84%
Currency••
0,44';!•
-0,93'7o
-0.93Cfr
-0.32¼
-0.9(JC/c
-0.93'7c
-0.93'k
-0.93%
-0.9Wr
-0.93%
-0.9Wc
-3.IS'i'c
-0.9W
-4.54¼
l.65'7c
-0.93</o
-0.32%
-0.93'7c
-1.?l'ii
-2.31'7c
0.99%
Weighting
0.41%
l9W
3 33'7o
2 44"«
097%
0.61'if
1032%
11.73°/c
2.41 '7c
0.52'7c
11 23~•;,
35.S3Ck
2.70'7r
0.26'7,
084'7c
1.on
038%
4()5Ck
0.89~0
0 93'7c
715%
In the United Kingdom, I 0-year rates fell by 19 bps to 4.52'lo.
However, the short end of the curve increased by as much as 40 bps,
in response to the Bank of England increasing rates by 25 bps to
4.75%. The two-year to 30-year part of the curve remained inverted by
82 bps, due largely to corporate pension funds' demand for long
maturity bonds. The pound gained 1 % against the U.S. dollar.
The European Central Bank raised rates by 25 bps to 3¼, as economic
orowth forecasts remained mildly positive. The gradual increase in 0
short-term rates is expected to continue through the balance of the year
in order to suppress building inflationary pressures. Nevertheless,
Iono-tenn rates oenerally fell around the continent. The German O 0
l 0-year bund declined 36 bps to 3.7 I%. The euro fell 0.9% against a
strong U.S. dollar.
The Bank of Japan ended its zero interest rate policy, increasing
overnight rates to 0.25%, but assured investors monetary policy would
remain accommodative. Prospects for economic growth became more
questionable and JO-year bond yields fell 25 bps to 1.68%. The U.S.
dollar gained 3.2% against the yen as the Japan versus U.S. interest
rate differential remained significant.
Emerging debt markets shook off their second quarter jitters, with the
JPMorgan EMBI Plus advancing 6.89¼. Ten percent growth rates in
China and India led to tightening in both countries. Brazil cut rates as
growth faltered. Rates were increased in South Africa and Turkey,
where local cutTency markets continued to show vulnerability.
Callan Style Group Returns -Third Quarter 2006
20%
LO%
00%L----------'---------~
GJub.iJ Fixed
Sl)le
10th Pcrccnt..ile 1.74
25th Perc_cnUJc-1 38
Median 1.28
75th PerccnLilc 1 25
901.h PcrccnHk O 79
Cill World Gov Unhcdµ,cd
Denchmark • 1 '14
l'\an-U S Fixed
Style
1.28 o.~s
O.BG
O.GS
0,38
Cm N"nn-U.S. World Gov Unhcdµ,cd
0,88
INTERNATIONAL FIXED INCOME
L'._ Style Median and Index Returns* for Periods ended September 30, 2006
Last Last 3 Last Last 3 Last 5
Quarter Quarters Year Years Years
"--
Global Style 1.28 4.14 2.20 4.52 7.96
Citi World Govt-Unhedged 1.44 4.23 2.22 4.06 7.32
i Citi World Govt-Local 2.76 0.61 0.94 3.03 3.93
Non-U.S. Style 0.86 4.62 2.03 4.58 8.70 I Citi Non-U.S. World Govt-Unhedged 0.88 4.76 2.02 4.41 8.17 i'... Citi Non-U.S. World Govt-Local 2.53 0.17 0.39 3.10 3.81
Citi Euro Govt Bond-Unhedged 1.95 7.36 4.91 7.21 12.71
Citi Euro Govt Bond-Local 2.91 -0.03 -0.15 4.18 5.48
JPM Emerg Mkts Bond Plus 6.89 6.12 8.35 11.79 14.13
" Returns less than one year are not annualized.
''' Derived from MSC! EAFE data.
(;;p,lcil f,b1 kL'I r-;, \ Itel". 0 Tl!i1d (_)u,1; fl'J ::'.(J(J(i
Last 10
Years
5.86
5.30
5.27
5.29
4.70
4.92
11 .33
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The table below details the rates of return for the Sponsor's investment managers
over various time periods ended September 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 September 30, 2006
Last Last Last
Last Last 3 5 10
uarter Year Years Years Years
Domestic Fixed-Income
Long Term Operating Fund 2.58% 4.27% 2.80% 3.92% 5.61%
Liquid Operating Monies 1.34% 4.67% 2.82% 2.46% 4.09%
Net of Pees 1.30% 4.52% 2.67% 2.31% 3.94%
Market Indicators
LB 1-5yr Govt/Credit 2.51% 3.77% 2.19% 3.64% 5.40%
ML 1-3yr Govt/Corp 2.04% 3.88% 2.14% 3.15% 5.04%
ML 1-5yr Govt/Corp 2.48% 3.79% 2.18% 3.57% 5.43%
ML 1-5yr G/C excl. BBBs 2.44% 3.77% 2.10% 3.46% 5.37%
Treasury Bills 1.33% 4.50% 2.73% 2.30% 3.81%
Total Fund 2.35% 4.41% 2.79% 3.74% 5.46%
Orange County Sanitation District
II
Investment Manager Returns
The table below details the rates of return for the Sponsor's investment managers
over various time periods. Negative returns are shown in red, positive returns in black.
Returns for one year or greater are annualized. The frrst set of returns for each asset class
represents the composite returns for all the fund's accounts for that asset class.
12/2005-
9/2006 2005 2004 2003 2002
Domestic Fixed-Income
Long Term Operating Fund 3.40% 2.47% 2.31% 3.26% 8.17%
Liquid Operating Monies 3.66% 3.21% 1.35% 1.18% 2.11%
Net of Pees 3.55% 3.06% 1.20% 1.03% 1.96%
Market Indicators
LB 1-5yr Govt/Credit 3.18% 1.44% 1.85% 3.35% 8.12%
ML l-3yr Govt/Corp 3.20% 1.74% 1.21% 2.74% 6.10%
ML 1-5yr Govt/Corp 3.21% 1.43% 1.76% 3.30% 7.91%
ML 1-5yr G/C excl. BBBs 3.16% 1.48% 1.60% 2.69% 8.09%
Treasury Bills 3.55% 3.07% 1.33% 1.15% 1.78%
Total Fund 3.51% 2.59% 2.08% 3.02% 7.44%
Orange County Sanitation District
Ill
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LONG TERM OPERATING FUND
PORTFOLIO CHARACTERISTICS DETAIL
SEPTEMBER 30, 2006
Weighted Average Portfolio Characteristics
Total Fund, By Asset Class and By Sector
Ending Percent
Market of Effective Effective OA OA
Sector
Total Fund
A~ncies C Os Credit
Mortgages
Treasunes
Non-Convertible Bonds
Cash Equivalents
Name
U.S. Treas Nts 00042
United States Treas Nt Fede.ral Home Ln Bks
Value
$296,536,488
$90,520,445
$4,422,931
$27,548,886 $33,163,032
$128,732,921
$284,388,215
$12,148,273
Unitcd S1ate TrensNts Dtd00132
U.S. Treas Nts 3.5% 12/15/2009
Name
Flodda Pwr COIJl
l:lcwlett Packard Co
ConocoPhillips
Bellsouth Corp
Sim Corp Medium Term Nts Book Entry
Name
Portfolio Cou11on Maturity
100.0% 4.26
30.5% 4.25
1.5% 4.14
9.3% 5.49 11.2% 5.08
43.4% 3.71
95.9% 4.22
4.1% 5.22
5 Largest Holdings
Ending
Market
Sector
Treasuries Treosurics
Agencies
Treasuries
Treasuries
Value
$45,963,360
$23,809,687
$18,249,990
$12,921,283 $10,386,656
2.50
2.84
1.26
1.99 5.46
1.86
2.60
0.25
Percent
of
Portfolio
15.5%
8.0%
6.2%
4.4%
3.5%
5 Lowest Rated Holdings (Quality Rating)
Tranche # Tr 0
Sector
Credit
Credit Credit Credit
Credit
Ending
Market
Volue
$908.366 $1.4I0,120
$607,620
$706.073
$1 ,82.'i,537
Percent
of
Portfolio
03% 0.5% 0.2% 0.2%
0.6%
5 Longest Duration Holdings
Sector
Ending
Market
Value
Percent
of
Portfolio
Federal Home Ln Bks Cons Bd Did 07/02/2003
Fnma Pool # 879906
Agencies
Mortgages Treasunes
Agencies Treasuries
$1,015,732 $341,773
$2,093,490
$2,872,723
$390,565
0.3% 0.1%
0.7%
1.0%
0.1%
United States Treas Nts
Fed Home Ln Bks Cons Bd 06/19/2003 United States Treas Nts
5 Holdings with Highest Effective Yield
Ending Percent
orne
FnrnaPool # 823358 Fnrn
Fhlmc Mbs Passthru #78-6064
Gnrna Pool # 80965 Mpt Gnrna Ii Arm Mbs Passthru #803956.500% 04/20/2030
Gnma Ii Arm Mbs Passthru #80408 6.50% 05/20/2030
Sector
Mortgages
Mortgages
Mortgages
Mortgages
Mortgages
Market of
Voloe
$2.524.170
$30,9]9
$767.590 $93,670
$812,383
.Portfolio
0.9%
0.0%
0.3% 0.0%
0.3%
Yield Duration Convexity Quality
5.02 1.94 (0.19) AGCY
5.03 2.33 (0.41) AGCY
5.43 1.12 (0.11) AGCY
5.52 1.80 0.00 AA-
5.56 3.05 (0.68) AGCY 4.72 1.60 0.04 TRSY
5.01 2.01 (0.19) AGCY
5.22 0.25 0.00 AAA
Effective OA OA
Yield Duration Convexitv Oualitv
4.65 2.07 0.05 TRSY
5.00 0.64 0.01 TRSY
4.95 3.34 0.13 AGCY
4.73 1.72 0.04 TRSY 4.60 2.96 0.10 TRSY
Effective
Yield
5.37 5.59 5.47 5.60
5.54
OA OA
Duration Convexitv Oualitv
0.11 0.01 888-
0.61 0.01 A-O.SO 0.00 A-1.73 0.00 A
1.67 0.00 A
Effective OA OA
Yield Duration Convexitv Ouolitv
5.19 4.80 tU?.J AGCY 5.95 3.75 rt.07J AGCY 4.59 3 ,66 0. L6 TRSY
5.08 3,62 (0 54) AGCY
4.58 3,61 0.15 TRSY
Effective
Yield
6.25
6.13
6.05
6.00
6.00
OA
l>uration
2.43
0.31
1.35 1.04
1.04
OA
onvexity Quolity
(0 51) AGCY
0.00 AGCY
(0.67) AGCY
(0 96) AGCY
(0.96) AGCY
* All Statistics shown on the page are dependent on the securities in the portfolio being recognized (by their Cusip)
and priced. In this case 99% of the securities in the portfolio (by market value) were recognized and priced.
Orange County Sanitation District
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List of Managers We Do Business With as of 9/30/06
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 September 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
Sarina Asset Manaaement
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
Clear Bridae Advisors
Columbia Manaaement Advisors. LLC
Columbus Circle Investors
Cramer Rosenthal McGlvnn. LLC
Credit Suisse Asset Manaaement
Davis Advisors
Davis Hamilton Jackson & Associates
Page 1 of 5
Educational Services
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List of Managers We Do Business With as of 9/30/06
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 September 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
DE Shaw Investment Manaaement. L.L.C.
Dean Investment Associates
Delaware Investment Advisers
Delta Asset Manaaement
Denali Advisors LLC
DePrince. Race & Zollo. Inc.
Deutsche Asset Manaaement/Deutsche Bank
Denver Investment Advisors LLC
DSM Caoital Partners
DuPont Caoital Manaaement
Dwioht 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
GlobeFlex 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 Investments LLC
ING Clarion
ING Investment Manaaement
Page 2 of 5
Educational Services
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List of Managers We Do Business With as of 9/30/06
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 September 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
INVESCO
IXIS Asset Manaaement
Janus Caoital Corooration
Jensen Investment Manaaement
John Hancock Advisers
JPMoraan Asset Manaaement
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
Leader Caoital Coro.
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. flea Mellon Institutional Asset Manaaement
Mellon Private Wealth Manaaement
Merrill Lvnch
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 (NYLIMl
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.
Page 3 of 5
Educational Services
y
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Consulting Services
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List of Managers We Do Business With as of 9/30/06
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 September 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
Post Advisorv Grouo
Princioal Global Investors
Prooress Investment Manaaement Comoanv. LLC
Provident Investment Counsel
Prudential Investment Manaaement
Prudential Retirement
Putnam Investments
Pvramis Global Advisors
Ranaer Investments Manaaement. L.P.
RCM
Record Currencv Manaaement
Rice Hall James & Associates. LLC
RiverSource Investments. LLC
Robeco USA
Rorer Asset Manaoement
Rosewood Manaaement Coro.
Rothschild Asset Manaaement. Inc.
RREEF Funds (The\
Russell Investment Groo
Schroder Investment Manaaement North America Inc.
SEI Investments
Selioman (J. & W.\ & Comoanv. Inc.
Seneca Caoital Manaaement LLC
Shenandoah Asset Manaaement
Sinooia Asset Manaaement
Sit Investment Associates. Inc.
Smith Grouo Asset Manaaement
Southeastern Asset Manaaement. Inc.
Standish Mellon Asset Manaaement Comoanv
State Street Global Advisors
Sterne Aaee Asset Manaaement
Stone Harbor Investment Partners. L.P.
Stone Ridae Investment Partners
Stratton Manaaement
Svstematic Financial Manaaement
T. Rowe Price Associates. Inc.
Taolin. Canida & Habacht
Texas Pacific Grouo
Thomoson 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)
Vauahan Nelson Investment Manaaement
Victorv Caoital Manaoement Inc.
Vontobel Asset Manaoement
Waddell & Reed Asset Manaaement Grouo
Washinaton Caoital Manaaement
WEDGE Caoital Manaaement
Page 4 of 5
Educational Services
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Consulting Services
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list of Managers We Do Business With as of 9/30/06
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 September 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
Wellinaton Manaaement Comoanv. LLP
Wells Caoital Manaaement
Western Asset Manaaement Comoanv
Westwood Manaaement Corooration
William Blair & Co .. Inc.
William D. Witter. Inc.
Educational Services
y
y
y
y
y
Consulting Services
y
y
In addition, under the terms of the Services Agreement, Callan is obligated through 2008 to advise all of its plan sponsor 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 cl ients 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 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)
(3)
(4)
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 Callan for such services and will pay invoices submitted to it by Callan for such services.
By selecting any brokerage operation of its choice as a means to pay Callan's fees; although the use of a broker other
than BNY by an investment manager may not be consistent with the Section 28(e) safe harbor.
Page 5 of 5
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The Callan Investments
Institute, the educational
division of Callan Associates
Inc .. has been a leading
educational forum for the
pensions and investments
indust1y since 1980
The Institute offers continuing
education on key issues
confronting fund sponsors
and investment managers
Please contact the Callan
Investments Institute for more
information, or visit our
website at www.callan com
CAlLAN ASSOCIATES ..
knowledge for investors
I 01 (',\l !FOi/NI,\ 'i r
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 slide'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.
2006 June Regional Breakfast Workshop Presentation:
GTAA, 130/30, and Other Return-Enhancing Strategies
2006 Spring Defined Contribution Workshop Presentation:
Finding That Perfect DC Investment Manager
2006 National Conference Workshop Presentations:
Fiduciary Responsibilities for an Investment Committee
Portable Alpha: Seek the Holy Grail or Run Away?
DC Trends Roundtable
The Role of Commodities in Institutional Portfolios
EVENT SUMMARIES
2006 Regional Breakfast Workshop Summary (June 2006):
Global Tactical Asset Allocation, 130/30, and Other Return-Enhancing Strategies
2006 Defined Contribution Workshop Summary (April 2006):
Finding That Perfect DC Investment Manager
2006 National Conference Summary (January 2006)
UPCOMING EDUCATIONAL PROGRAMS
DC Institute Fourth Annual Conference
San Francisco, October 23 -25, 2006
Charter Institute October Regional Workshop
Chicago, October 23, 2006
San Francisco, October 26, 2006
The Charter Institute Twenty-Seventh National Conference
San Francisco, January 29 -31, 2007
• Vicente Fox -President of Mexico
• 2007 Capital Markets Panel
• Peter Ricchiuti -Assistant Dean at Tulane University's AB Freeman School of
Business, and former CIO of the State of Louisiana
• Robert Arnott -Chairman, Research Affiliates and Editor, Financial Analysts Journal
• Reza Asian -Middle East Commentator for NPR's "Marketplace;" Muslim Affairs
Analyst for CBS News; and author of No god but God
Further speakers, workshops, and details to be announced soon!
Callan InvPslmcnts l nstitutc
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CAILAN s
Atlanta Consulting Office
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Atlanta, Georgia 30339
Phone: (770) 618-2140
Chicago Consulting Office
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Denver Consulting Office
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Phone: (973)593-8050
San Francisco Consulting Office
101 California Street, Suite 3500
San Francisco, California 94111
Phone: (415) 974-5060
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ORANGE COUNTY SAN1TATIONDISTRICT
Single Audit Report on Federal Awards
Year ended June 30, 2006
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ORANGE COUNTY SANITATION DISTRICT
Single Audit Report on Federal Awards
Year ended June 30, 2006 .
TABLE OF CONTENTS
Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards
Report on Compliance with Requirements Applicable to Each
Major Program, Internal Control over Compliance and on the
Schedule of Expenditures of Federal Awards in Accordance
with O:MB Circular A-133
Schedule of Expenditures of Federal Awards
Notes to Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Summary Schedule of Prior Audit Findings
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Board of Directors
Orange County Sanitation District
Page Two
Our consideration of the internal control over compliance would not necessarily disclose all
matters in the internal control that might be material weaknesses. A material weakness is a
reportable condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that noncompliance with applicable
requirements of laws, regulations, contracts and grants caused by error or fraud that would be
material in relation to a major federal program being audited may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over compliance and its operation that we
consider to be material weaknesses.
Schedule of Expenditures of Federal Awards
We have audited the basic financial statements of the Orange County Sanitation District, as of
and for the year ended June 30, 2006, and have issued our report thereon dated August 31, 2006.
Our audit was performed for the purpose of forming an opinion on the basic financial statements
taken as a whole. The accompanying schedule of expenditures of federal awards is presented for
purposes of additional analysis as required by O:rvtB Circular A-133 and is not a required part of
the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a whole.
This report is intended solely for the information of the Orange County Sanitation District's
management, federal and selected state awarding agencies and pass-through entities and is not
intended to be and should not be used by anyone other than these specified parties.
;l'n?-"/;I>~.,,. ~~,pe. ~I':
August 31, 2006
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ORANGE COUNTY SANITATION DISTRICT
Schedule of Expenditures of Federal Awards
Year ended June 30, 2006
Federal Grantor/
Pass-through Grantor
Program Title
U.S. Department of Agriculture
Direct assistance:
Natural Resources Conservation Service:
Watershed Protection and Flood Prevention
Total U.S. Department of Agriculture
U.S. Department of Homeland Security
Direct assistance:
Disaster Grants -Public Assistance
Program
Identification
Number
69-9104-5-263
FEMA-1577-DR-CA
Total U.S. Department of Homeland Security
Total Federal A wards
* Major Program
Catalog of
Federal
Domestic
Assistance
Number
10.904
97.036
The accompanying notes are an integral part of this schedule.
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Federal
Financial
Assistance
Expenditures
$ 1,538,038 *
1,538,038
705,742 *
705 ,742
$ 2,243,780
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ORANGE COUNTY SANITATION DISTRICT
Notes to Schedule of Expenditures of Federal Awards
Year ended June 30, 2006
Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures
of Federal Awards
(a) Scope of Presentation
The accompanying schedule presents only the expenditures incurred (and related
awards received) by the Orange County Sanitation District ("District") that are
reimbursable under federal programs of federal agencies providing financial
assistance. For purposes of this schedule, financial assistance includes federal
financial assistance received directly from a federal agency or federal funds received
indirectly by the District from non-federal entities. Only the portion of program
expenditures reimbursable with such federal funds are reported in the accompanying
schedule. Program expenditures in excess of the maximum federal reimbursement
authorized and the portion of program expenditures that were funded with other state,
local or other non-federal funds are excluded from the accompanying schedule.
(b) Basis of Accounting
The expenditures included in the accompanying schedule were reported on the
modified accrual basis of accounting. Under the modified accrual basis of
accounting, expenditures are recognized when the District becomes obligated for
payment as a result of the receipt of the related goods and services. Expenditures
reported include any property or equipment acquisitions incurred under the federal or
selected state program, as required by these agencies.
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ORANGE COUNTY SANITATION DISTRICT
Schedule of Findings and Questioned Costs
Year ended June 30, 2006
(A) Summary of Auditors' Results
(B)
(C)
1.
2.
3.
4.
5.
6.
7.
8.
9.
An unqualified report was issued by the auditors on the financial statements of the
auditee.
There were no material weaknesses or reportable conditions in internal control over
financial reporting based upon our audit of the financial statements of the auditee.
The audit disclosed no noncompliance which is material to the financial statements of
the auditee.
There were no material weaknesses or other reportable conditions in internal control
over major programs of the auditee.
An unqualified report was issued by the auditors on compliance for major programs.
The audit disclosed no audit findings required by the auditors to be reported under
paragraph .510(a) of 0MB Circular A-133.
The major programs of the auditee were the U.S. Department of Agriculture -
Watershed Protection and Flood Prevention, CFDA No. 10.904 and U.S. Department
of Homeland Security-Disaster Grants -Public Assistance, CFDA No. 97.036.
The dollar threshold used to distinguish Type A and Type B programs was $300,000.
The auditee was not considered to be a low risk auditee for the year ended June 30,
2006.
Findings Related to the Financial Statements which are Required to be Reported in
Accordance with GAGAS
There are no findings required to be reported in accordance with GAGAS.
Findings and Questioned Costs for Federal Awards as Defined in Paragraph .510(a) at
0MB Circular A-133
There are no findings or questioned costs required to be reported in accordance with
paragraph .510(a) of O:MB Circular A-133.
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ORANGE COUNTY SANITATION DISTRICT
Summary Schedule of Prior Audit Findings
Year ended June 30, 2006
There were no prior audit findings from previous audit reports requiring follow-up during the
year ended June 30, 2006.
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