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HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 08-03-09Central Contra
BUDGET AND FINANCE COMMITTEE
Chair Lucey
Member Nejedly
Monday, August 3, 2009
3:00 p.m.
Executive Conference Room
5019 Imhoff Place
Martinez, California
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
District
BO.lRD OF D/RECTORS
.IAAlGS d. ,VIJIiDI.Y
Previdtnl
,I UCHdIiI. H. Alc(i/LL
President Prv~ lim
HdHNAHA D. HIX:KF.'1T
AlA1710 ,N. ,ill:NliSI,V/
PNONE: (925) 218-9500
FdX.~ (915) 676-71 / l
Ivww.cenlrnlsan. org
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no further comment permitted from the audience unless invited by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
In accordance with state law, the Committee is prohibited from discussing items not calendared on the
agenda. You may address the Committee on any items not listed on [he agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a future agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at the Reception, 5019
Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the
meeting to a majority of the Committee are also available for public inspection at the Reception. During
the meeting, information and supporting materials are available in [he Conference Room.
AMERICANS WITH DISABILITIES ACT
In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to
everyone, including those with disabilities. It' you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least d8 hours in advance of the meeting at (925)
229-7303.
® se<v~iea eaver
Budget and Finance Committee
August 3, 2009
Page 2
1. CALL MEETING TO ORDER
2. PUBLIC COMMENTS
3. OLD BUSINESS
'a. Review outstanding questions
4. CLAIMS MANAGEMENT
'a. Review new and outstanding claims
5. REPORTS/ANNOUNCEMENTS
'a State Financial Crisis -loss of property taxes
b. Public Notice Regarding Appropriations Limit (Item 3.d. in Board Binder)
c. Employee Computer Hardware Purchase Assistance Program (Item 3.e.
in Board Binder)
*d. Avalon Connection Fee Payment
*e. Computer Fraud Risk Assessment
*f. CCCERA Rates and Unfunded Liability
'g. GASB 45 Actuarial Consultant Selection
'h. Contracts with Cummins West for Particulate Filters
*i. 10 Percent O & M Budget Reductions
(Employee Suggestion Program)
'j. Litigation Cost Update
6. REVIEW EXPENDITURES
a. Review expenditures (Item 3.a. in Board Binder)
*b. Review P-Card expenditures
Budget and Finance Committee
August 3, 2009
Page 3
REVIEW JUNE 30. 2009 Financial Statements (Item 3.b. in Board Binder)
a. 0 & M Review
b. Capital Improvement Budget Review
8. ADJOURNMENT
* Attachment
Central Contra Costa Sanitary District
July 31, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
VIA: JAMES KELLY, GENERAL MANAGER '
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION
STEPHANIE KING, PURCHASING MANAGER
SUBJECT: ENVIRONMENTALLY PREFERABLE PURCHASING POLICY
Due to the lengthy agenda for the Budget and Finance Committee meeting on August 3,
2009, the Environmentally Preferable Purchasing Policy was postponed to the first
Committee meeting in September.
H:\Environmentally preferable purchasing policy.doc
3. a..
Central Contra Costa Sanitary District
July 31, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
FROM: RANDALL MUSGRAVES
DEBBIE RATCLIFF
SUBJECT: JULY 13, 2009 FINANCE COMMITTEE MEETING
There were two outstanding questions from the last Board Budget and Finance
Committee meeting which required additional staff research. The questions and
answers are provided below:
176541 Global Inshore - Provide a history of the costs associated with
inspecting the outfall.
The District's outtall has been inspected by Global Inshore in 2005, 2006, 2007
and 2009. The charges were $13,417, $12,550, $12,550 and $14,640
respectively. The year 2008 was skipped because the video of the pipe had few
changes from the prior year. For 2009, two divers and two boat tenders were
used for safety reasons. The divers looked at the hardware including the flappers
as well as the external sediment build-up to make sure the pipe was stable and
no lateral movement of the pipe was detected. Also, an internal profile is
performed periodically; however, it was not performed during this dive. A copy of
the report and the video is available for viewing and will be brought to the Budget
and Finance Committee meeting.
There are other divers that could provide the same service, however, Global
Inshore is trusted by staff and is experienced with the District's outtall.
2. 176244 Alfa-Laval Inc. -Provide information regarding the repair of a
rotating assembly.
Attached is an explanation provided by Doug Craig, Director of Operations,
regarding the repair of a rotating assembly in one of the plant's centrifuges.
Central Contra Costa Sanitary District
July 20, 2009
TO: DEBBIE RATCLIFF
FROM: DOUGLAS J. CRAIG ~P~
SUBJECT: CENTRIFUGE MAINTENANCE REQUIREMENTS
Four Sharpies centrifuges were installed in 1990 to dewater a blend of primary and
secondary sludge. Two of the four centrifuges operate continuously. At times, three
centrifuges are required, due to high sludge production or to process accumulated
sludge after a maintenance shutdown.
After approximately ten years of service, the centrifuges experienced extensive wear to
the extent that their performance declined significantly. The centrifuge wear is caused
by the abrasive nature of the sludge, which contains fine grit and lime, and a high
rotating speed of 2,500 revolutions per minute. Each centrifuge required a major repair,
which included a new bowl extension at a cost of $60,000 per unit. Additional repairs
necessary to complete the reconditioning resulted in a total repair cost per centrifuge of
approximately $150,000.
At the same time as the major repairs were being made, a spare rotating assembly was
purchased to allow the availability of four centrifuges, while one rotating assembly was
sent out for reconditioning.
A carbide coating has been added to the bowl extensions, which has reduced the wear
and deferred the need for additional bowl extension replacements. Internal wear
continues to be the primary focus of the current repair efforts. These efforts ensure that
the centrifuges operate at peak performance. The consequences of not making timely
repairs include high polymer costs, wetter sludge cake solids (requiring more landfill or
natural gas use), and greater electrical power use due to recycled solids.
Our experience indicates that each centrifuge can operate between 9,000 and
12,000 hours before reconditioning is required. Since we operate two centrifuges
continuously, we generally have to recondition one or two per year. The internal wear is
mainly in the conveyor and the sludge feed area. All internal wear is built up by welding
and machining to precise specifications, followed by balancing to ensure smooth
operation.
N:\POSUPWdministrative\Craig\2009\Centrifuge Memo.doc
Debbie Ratcliff
Page 2
July 21, 2009
The cost of reconditioning each centrifuge averages around $80,000, but the average
cost depends on the actual wear of the rotating assembly. The current cost of a new
rotating assembly is approximately $750,000. At the end of this year, the centrifuges
will be 20 years old. In the next few years, the District will begin design of new
dewatering equipment (probably centrifuges). New technology provides improvements
in performance and state-of-the-art controls.
DJC:dk
cc: A. Farrell
R. Grieb
J. Kelly
R. Musgraves
N:\POSUP\Administrative\Craig\2009\Centrifuge Memo.doc
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5 . a, .
CAL/fORN/A AssOC/AT/ON Of sAN/TAT/ON AGENC/Es
1215 K Street, Suite 2290, Sacramento, CA 95814 PH: (916) 446-0388 - FX: (916) 231-2141 www.casaweb.org
VIA ELECTRONIC MAIL
July 30, 2009
TO: CASA Member Agencies
CASA Associates
CASA Legislative Committee
CASA Executive Board
CASA Attorneys
FROM: Mike Dillon, Lobbyist
Christina DiCaro, Lobbyist
RE: News From the Capitol
ADDITIONAL DETAIL ON PROPOSITION 1A
Our memo to you last Friday, July 24th, provided information on AB 15(4X) Gaines,
which was signed by the Governor this past Tuesday. It authorizes almost $2 billion
($1.935 billion), to be borrowed from local governments through the suspension of
Proposition 1A (2004). AB 15(4X) directs county auditors to reduce 2009-10 property
tax allocations to cites, counties, and special districts by an amount equal to 8% of the
total property tax revenues received by these entities in 2008-09 (excluding G.O. Bond
debt service). The funds would be shifted through a local mechanism to schools and
other services within each county, thereby saving the state a like amount to help
balance the Budget.
In an effort to lessen the impact on cash strapped local agencies, the bill also provides
for astate-financed "securitization" of the Proposition 1A suspension reduction
amounts, wherein local agencies that choose to participate, will sell their Proposition 1A
"receivables," (the state's repayment obligation to them), to a joint powers authority
(JPA) that will then sell Bonds to investors backed by the "receivables." As the
"securitization" occurs, cash strapped local agencies would be made whole, rather than
having to wait until June 2013 to be repaid. The state will pay all of the costs of the
securitization, which is likely to be significant, given the state's terrible credit rating.
Those agencies that are able to take their property tax reduction in 2009-10, and then
wait to be repaid by the state directly in 2013, will be repaid, with interest, at a rate to be
set by the Department of Finance, subject to a cap of 6%. As the floor analysis points
out, "This option is intended to provide an incentive for local agencies that have
adequate resources of their own, or that have better credit than the state, to fnance
their suspension on their own, rather than as part of the joint securitization." The bottom
line is that agencies that will have a difficult time balancing their budget, will have their
funds restored through the JPA, as soon as funds are available, while agencies that
have sufficient cash flow, can earn up to 6% on funds the state has borrowed, until the
amount is repaid.
Lastly, AB 15(4X) also includes an "extreme hardship" provision that would allow local
agencies in danger of bankruptcy, or unable to provide core services, to apply to the
Department of Finance for a reduction or elimination of their property tax suspension.
The total suspension in any county could not exceed 10%, and any hardship amounts
would be reallocated to all other agencies in the county. However, at least according to
the committee consultant's analysis, hardships would at best be only temporary, as
these entities, along with other entities that choose to participate in the new JPA, would
have their property taxes reimbursed from the bond proceeds as soon as the
securitization is completed.
CASA SPEAKER FRED KEELEY TO ADDRESS TAX COMMISSION ISSUES
Yesterday, Governor Arnold Schwarzenegger announced that he will calla "special
session" of the legislature, to commence late September, to address findings of the 14
member "Governors Commission on the 21st Century Economy," (also known as the
"Governors Tax Commission.") In January, the bi-partisan commission was appointed
by the Governor and two Democrat leaders in the Legislature, and was charged with
looking at issues of tax volatility and revenue stability. The Tax Commission was not
able to complete its work by the earlier deadline provided by the Governor, of July 31st,
and they asked for an extension to continue its task. Concurrent with the
announcement yesterday by the Governor, regarding the special session, he also
issued an Executive Order, extending the life of the Commission until September 20.
Former Assemblyman Fred Keeley, one of only two members to serve on both
"California Forward," and the "Governor's Tax Commission," will be a keynote speaker
at the CASA Conference, Friday, August 14th at 11:30 AM. While the focus of Mr.
Keeley's remarks will be on "California Forward's" proposals to reform state
government, he will also spend a portion of his speech addressing the work of the Tax
Commission. His remarks will be quite timely given the Governor's announcement, and
you will not want to miss his presentation.
5.d.
Central Contra Costa Sanitary District
August 3, 2009
TO: BUDGET AND FINANCE COMMITTEE
FROM: JAMES M. KELLY, GENERAL MANAGER ~/
SUBJECT: CONNECTION FEE REVENUE RECEIVED FROMOOOOAVALON
DEVELOPMENT
The District recently received $2,259,025 in connection fee revenue from the Avalon
Development Company for three buildings that are part of the Avalon Walnut Creek
Transit Development near the Pleasant Hill Bart Station. There will be a written
announcement in regards to this issue at the August 6, 2009 Board Meeting.
5.~.
Central Contra Costa Sanitary District
August 3, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION I"-'~
SUBJECT: COMPUTER FRAUD RISK ASSESSMENT FOR FINANCIAL
ACCOUNTS
District Staff was notified of the Novato Sanitary District bank account theft by District
Counsel, Kent Alm. Staff reviewed the Novato experience and performed a risk
assessment for all District bank accounts in an effort to prevent theft to District funds.
Attached is a comprehensive report identifying the bank account and level of risk. Of
interest to the Committee, the District's relationship with the County as the District's
Treasurer, is outlined on page five of the report.
Overall, staff's assessment is that there is minimal exposure to computer fraud losses to
the District due to the County's responsibilities as District Treasurer as stated in the
Sanitary District Act of 1923. However, staff is concerned that the County's coverage is
for employee theft and would not cover the loss experienced by Novato Sanitary
District. Staff obtained quotes for and then purchased crime insurance coverage for the
District costing $3,173 for $1,000,000 limit with a $25,000 deductible. Attached is a
summary of the insurance coverage.
District staff believes that prudent and responsible action has been taken to minimize
financial loss due to computer fraud of District bank accounts by employees or a third
party.
CCCSD
Crime Policy Coverage Summary
7/1/09 -10
Coverage Type Description Limit
Provides coverage for loss resulting from
forgery or alteration of checks or similar
B -Forgery or Alterations instruments. Coverage is extended to $1,000,000
include credit, debit or charge card
forgery.
C -Theft, Disappearance, Provides coverage for loss of money and
Destruction of Money and securities resulting from theft, $1,000,000
Securities disappearance of destruction.
Provides coverage from loss or damage
D1 -Other Property on to property other than money and $1
000
000
Premises securities resulting from robbery or ,
,
burglary of a safe.
Provides coverage for loss of money,
F -Computer Fraud securities and other property resulting
(including fund transfer) from the fraudulent use of any computer. $1,000,000
Includes coverage for loss of money and
securities through fund transfer fraud.
O -Public Employee Provides coverage for loss of money,
Dishonesty securities and other property resulting $1,000,000
from employee dishonesty.
Provides coverage for loss caused by the
R -Money Order and acceptance in good faith of money orders
Counterfeit Currency that are not paid upon presentation or $50,000
counterteit United States or Canadian
paper currency.
Coverages Deductible Premium
Bthrough O above $25,000 $3,173
R $1,000 Included
H/SKD 7/29/2009
Central Contra Costa Sanitary District
July 9. 2009
TO: Jim Kelly, General Manager
VIA: Randy Musgraves, Director of Administration ~~'~
FROM: Shari Deutsch, Safety & Risk Management Administrator
Debbie Ratcliff, Controller /.Jib
SUBJECT: Computer Fraud Risk Assessment
This memo reviews the District's exposure to computer fraud and other forms of
financial wrongdoing. The first section summarizes all District financial transactions and
instruments. The second section discusses the risks associated with these items and
identifies countermeasures in place to prevent or minimize any losses arising from
computer fraud.
Summary of Findings
The District itself has only a minor risk of loss from computer fraud. Bank accounts
holding District funds are in the County's name and the District does not make on-line
transactions to transfer money.
However, as the District's Treasurer, the County has a much greater exposure to loss
from computer fraud. The County has statutory liability for performing the District's
Treasury function and -has insurance coverage to respond to losses arising from the
dishonesty of its own employees.
Since the County's coverage does not include fraudulent acts of non-County
employees, the District has purchased a crime insurance policy that does provide
coverage for computer fraud and improper funds transfers.
Section One -Financial Instruments and Relationships
Money Under Direct District Control -The District maintains control over two sources of
incoming revenue and four sources of expenses and financial obligations. Incoming
revenue arrives from either credit card receipts collected at the permit counter or checks
collected from customers and other parties. Expenses are paid via petty cash, check, P
Card or investment instructions to the County.
Incoming Revenue
Credit cards are swiped at the time of payment. Permit staff receive a confirmation
number from the funding agency and forward daily receipts to accounting. The
accounting division reconciles these receipts with funds transferred to the Wells Fargo
Bank account to ensure collection of all funds due.
Checks are collected at the permit counter as well as via delivery and regular mail.
Checks received at the permit counter are forwarded to accounting. Accounting staff
logs in received checks, credits any payee accounts in the financial management
system and prepares a deposit to Wells Fargo Bank. Checks received by mail are
collected by the addressee and fowarded to accounting for logging, application and
deposit. Checks delivered to employees are forwarded to accounting for the same
processing. Accounting staff endorse checks upon receipt and store them in the vault
for safekeeping. Checks are generally deposited twice a week. However, accounting
staff will make additional deposits for large checks or receipts in excess of $500,000.
Total check receipts are reconciled monthly with bank statements.
Expense Payments
Petty cash is kept in a lockbox inside a separate wall safe inside the vault. Only one
accounting staff person may access this lockbox. That employee will only distribute
cash to employees with authorized and supervisor-approved expenses totaling $90 or
less. Employees must acknowledge receipt of cash with their signature. Petty cash is
reconciled as part of the weekly cash worksheet.
Checks are printed by Accounts Payable staff to cover a variety of expenses including
approved invoices, payment authorizations and payroll distributions. In addition to the
printed signatures, all checks over $1,000 are initialed by the Secretary of the District
before submission to the Countyfor an original signature. Once signed by the
designated County official, checks are returned to the District for distribution.
All checks are drawn on a Wells Fargo Bank account held by the County. When checks
are drawn on District funds, the County credits the District's fund in its own accounting
system. The County provides transaction reports to the District's accounting division
monthly. District accounting staff reconciles these reports to the cash accounts
monthly.
Authorized employees may make certain types of purchases with District credit cards,
called P Cards or Purchasing Cards. These cards are issued to the individual and the
District. Employees are responsible for using the cards within program guidelines.
Employees must reconcile their monthly P Card statements within one week.
Supervisors must review their employees' P Card statements and approve the
reconciliation before forwarding them to Accounts Payable. Accounts Payable prints a
check to pay all P Card balances according to the procedures noted above.
2
All other transfers of money into and out of District accounts held by the County are
initiated through investment instructions to designated personnel at the County. In
some cases, (i. e. payroll) investment instructions precede issuance of a District check.
All investment instructions are provided in writing via fax and are followed up with a
confirming phone call from District accounting staff. Investment instructions authorize
the County to perform transactions on the District's behalf. Additional information on
District procedures for investment instructions can be found in Attachment 1 entitled
Temporary Investments -Accounting System Documentation.
Money Under Control of Contra Costa County
Since the County serves as the District's Treasurer, the County tracks District fund
balances and executes financial transactions on the District's behalf. The District
reconciles its fund balances with the County to ensure the accuracy of the various
transactions. However, actual District dollars are commingled in Wells Fargo Bank
accounts with County and other special districts' funds.
The County collects money for the District in two ways; via sewer service charges and
property tax receipts which are allocated to District funds in the County's accounting
system and from deposits made by District staff into its Wells Fargo Bank account.
The County spends District money in two ways; via payment of District checks drawn off
the County's Wells Fargo Bank account and by investment instructions received from
the District:
District Monev Held Outside of Contra Costa County
The District uses two custodial banks to hold certain funds; US Bank and the Bank of
New York. US Bank is the trustee for the 1998 refinancing of the 1994 Wastewater
Facilities Improvement Project Bonds and the 2002 Revenue Installment Bonds. The
Bank of New York is the Custodian of District money in its investment account. In both
cases, investment instructions are sent from the District to the County for execution.
The County then transmits District investment instructions to the appropriate bank. Both
outgoing and incoming funds go through the County bank accounts. The two trust
agreements with US Bank and the Custody Agreement with the Bank of New York limit
the liability and responsibilities for losses arising out of services they provide under
contract. These restrictions are further detailed in section two of this memo.
Section Two -Exposures and Risk Assessment
Money Under Direct District Control
Incoming checks and credit card receipts, outgoing
petty cash and checks.
P card purchases
• Internal Procedural Controls
• Budget & Finance
Committee review
• Annual Financial Audit
• Insurance for Employee
Dishonesty
• Insurance for Robbery and
Safe Burglary
• Insurance for Theft,
Disappearance and
Destruction
Insurance for forgery or
alteration including credit, debit
or credit card forgery.
Distributions to trusts holding funds not owned by the District has Fiduciary Liability
District (money purchase plan, deferred insurance.
compensation, etc.)
Investment Instructions executed by County
• County's statutory liability
for performance of Treasury
function.
• County's crime policy
covering their employees'
dishonesty.
• District's crime policy
includes coverage for
computer fraud including
funds transfer coverage.
4
Contra Costa County as District's Treasurer
As part of the Sanitary District Act of 1923, Section The District could recover
6799 of the Health and Safety Code states that "the losses of its funds arising from
county treasurer and sureties upon his official bond the improper actions or
are liable for the due performance of the duties , inactions of the County while
imposed on him by this part". serving as the District's
Treasurer.
The County maintains a government crime insurance
policy with Fidelity and Deposit Insurance Company
with limits of $10 million per occurrence. The County
has a $50,000 deductible for losses caused by
employee theft and a $2,500 deductible for losses
caused by forgery or alteration.
The County's computer fraud coverage is a part of
their employee dishonesty coverage and applies only
to County employees using computers both inside
their premises and off-site.
This insurance would cover
District losses arising from the
improper actions of a County
employee. The County would
be the named insured and
would file the claim.
The County has no insurance
someone outside their
employment sends fraudulent
instructions to the bank, or to
any other financial entity with
which it works to conduct the
District's business.
The District's crime policy
includes funds transfer
coverage.
Bank of New York -Custodian of District Investment Fund
NOTE: "Customer" is defined as the County, not CCCSD
Oral Instructions are defined as "verbal instructions received
by Custodian from an Authorized Person or from a person
reasonably believed by Custodian to be an Authorized
Person." Written Instructions are defined as "any notices,
instructions, or other instruments in writing received by
Custodian from an Authorized Person or from a person
reasonably believed to be an Authorized Person by letter,
telex, facsimile transmission, Custodian's on-line
communication system, or any other method whereby
Custodian is able to verify with a reasonable degree of
certainty the identity of the sender of such communications
or the sender is required to provide a password or other
identification code.
Customer agrees to hold Custodian harmless from and
against any loss, damage, or expense incurred as a result of
errors or omissions with respect to pricing information [of
complex financial instruments, e. g. derivatives] utilized by it
hereunder. (111.8)
Upon receipt of Oral or Written Instructions, Custodian may
use any broker or agent in connection with such
transactions. Custodian shall not be liable for the acts or
omissions of any such broker or agent, other than a BNY
affiliate. (IV.4)
Except as otherwise expressly provided herein, Custodian
shall not be liable for any costs, expenses, damages,
liabilities or claims including attorneys' and accountants' fees
(collectively "losses") incurred by or asserted against
Customer, except those losses arising out of the negligence
or willful misconduct of Custodian. In no event shall
Custodian be liable to Customer or any third party for
special, indirect, or consequential damages, or lost profits or
loss of business, arising in connection with this Agreement.
(VI.1(a))
All CCCSD investment
instructions are given to
the County in written
form with verbal
confirmation. County
staff forwards the
District's written
instructions to the bank.
CCCSD doesn't
purchase derivatives or
other complex financial
instruments.
County can make a
claim against the
offending broker/agent.
Coverage provided by
agent's E&O policy.
This limits BNY's liability
to its negligence or
willful misconduct.
California law will not
allow contractual waiver
of those liabilities.
Customer agrees to indemnify Custodian and hold Custodian The County indemnifies
harmless from and against any and all Losses sustained or BNY for everything except
incurred by or asserted against Custodian by reason of or as a negligence or willful
result of any action or inaction, or arising out of the Custodian's misconduct. California law
performance hereunder, including reasonable fees and expenses will not allow contractual
of counsel incurred by Custodian in a successful defense of claims transfer of these liabilities.
by Customer; provided, that Customer shall not indemnify
Custodian for those Losses arising out of Custodian's negligence
or willful misconduct. This indemnity shall be a continuing
obligation of Customer, its successors and assigns,
notwithstanding the termination of this Agreement. (VI.1(b))
Without limiting the generality of the foregoing, Custodian shall be The District's crime
under no obligation to inquire into, and shall not be liable for, any insurance includes
losses incurred by Customer or any other person as a result of the coverage for receipt of
receipt or acceptance of fraudulent, forged, or invalid US ~ fraudulent securities.
Securities, or US Securities which are otherwise not freely
transferable or deliverable without encumbrances. (VI.2)
Custodian shall be entitled to rely upon any Written or Oral The County only forwards
Instructions actually received by Custodian and reasonably the faxed written
believed by Custodian to be duly authorized and delivered. instructions received from
Customer agrees to forward Custodian Written Instructions the District and only after
confirming Oral Instructions by the close of business of the same oral confirmation of those
day that such Oral Instructions are given to Custodian. Customer instructions by a District
agrees that the fact that such confirming Written Instructions are representative.
not received or that contrary Written Instructions are received by
Custodian shall in no way affect the validity or enforceability of
transactions authorized by such Oral Instructions and effected by
Custodian
Custodian shall not be responsible or liable for any failure or delay Since BNY is 3,000 miles
in the performance of its obligations under this Agreement arising away, we might not know if
out of or caused, directly or indirectly, by circumstances beyond its any of these events
reasonable control, including without limitation, acts of God; occurred.
earthquakes; fires; floods; wars; civil or military disturbances; However, loss of
sabotage; epidemics; riots, interruptions, loss or malfunctions of communication from a
utilities, computer (hardware or software) or communications local disaster would also
service; accidents; labor disputes; acts of civil or military authority preclude the ability to
or governmental actions; it being understood that Custodian shall execute investment
use its best efforts to resume performance as soon as practicable instructions.
under the circumstances. (VI.11)
US Bank -Trustee of 2002 Bonds
The Trustee is not responsible or liable for any loss suffered
in connection with any investment of funds made by it in
accordance with Article VI hereof. (7.02(d)) [Article VI
covers moneys in funds, authorized investments, allocation
of earnings and valuation and disposition of investments.]
The Trustee is not liable for any error of judgment made by a
responsible officer of the Trustee unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent
facts relating thereto (7.02(q)).
Amounts paid by the Certificate Insurer [Financial Security
Assurance, Inc.] shall not be deemed paid for purposes of
this Trust Agreement and shall remain Outstanding and
continue to be due and owing until paid by the District in
accordance with the Installment Sale Agreement (9.06(g))
The Trustee does not
guarantee a return on
investment or protection
of invested assets.
"shall be proved" means
this is a finding of a
court. It requires us to
litigate such disputes
before the Trustee will
accept any liability.
Claims paid by the bond
insurer do not relieve the
District of any liability.
The bond insurer only
protects the bond
holders.
The Certificate Insurer shall, to the extent it makes any This is a standard
payment of principal or interest represented by the Insured transfer of subrogation
Certificates, become subrogated to the rights of the rights to the insurer if ii
recipients of such payments in accordance with the pays any claims.
Certificate Insurance Policy. (9.06(i)).
No indemnification will be made under this Section or Liability for negligence
elsewhere herein for willful misconduct or negligence by the and willful misconduct
Trustee or Authority, or their respective officers, agents, cannot be transferred
employees, successors or assigns. The District's obligations under California law.
under this Section 10.03 shall remain valid and binding
notwithstanding the maturity and payment of the Certificates
or the resignation or removal of the Trustee. (10.03)
US Bank -Trustee of 1998 Bonds
The Escrow Bank shall not have any liability hereunder
except to the extent of its gross negligence or willful
misconduct (which shall include failure to give any notice of
prepayment as required by Section 8).
The Escrow Bank shall not be liable for any loss from any
investment or substitution of Federal Securities made by it in
accordance with the terms of this Agreement.
Liability for negligence
and willful misconduct
cannot be transferred
under California law.
The Escrow Bank does
not guarantee a return
on investment or
protection of invested
assets.
5.~.
Central Contra Costa Sanitary District
August 3, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER ~~'~`/
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION ~~~
DEBBIE RATCLIFF, CONTROLLER p/L
SUBJECT: CCCERA RATES AND UNFUNDED LIABILITY
Staff has discussed with the Board that a significant increase in employer contributions
could be required in order to address the loss in market value of the Contra Costa
County Employees' Retirement Association (CCCERA) investments, approximately $1.5
billion or 26.5%. The District recently received notification that the employer rate for
2009 would increase 1.1 %. There is an eighteen month lag in reflecting the impact of
the market loss in the employer contribution rate.
The District received copies of two letters from The Segal Company, actuaries for
CCCERA, which discuss the Unfunded Actuarial Accrued Liability for December 31,
2008 and estimated future retirement rates based on investment returns for 2008.
Segal calculated the District's unfunded liability for December 31, 2007 to be
$36,483,000 increasing to $39,779,000 for December 31, 2008. This projected increase
is related to the market loss sustained in 2008. The 2007 Unfunded Actuarial Accrued
Liability (UAAL) of $36,483,000 will be amortized over the next fourteen years.
The CCCERA Board recently adopted a new amortization method to smooth the
employer contribution rate for the UAAL increase due to market valuation loss. The
UAAL increase for 2008 of $3,296,000 will be amortized over eighteen years. In
addition, the market loss of $1.5 billion will be spread or "smoothed" over five years with
the resulting UAAL increase amortized over eighteen years.
Segal provided estimated rates for July 2010 through 2015 for employers based on
several loss scenarios. Using the estimates provided by the actuary fora 25% loss for
2008 (actual loss was 26.5%), staff calculated the dollar impact to the District (see
attachment). Estimated rates increase from 36.77% to 60.62% (of payroll). This would
result in District contributions increasing from $9,866,000 for fiscal year 2009-2010 to
$21,183,000 for fiscal year 2015-2016. The calculated increases are the result of
H:\Board Position Papers\CCCERA RATES AND UNFUNDED LIABILITY 8 3 09.doc
increased payroll and increased UAAL from market value loss (26.5%). Of the
$21,183,000, $16,266,000 is the increase for market value loss and $4,917,000 is for
payroll increases (assumed at 4.5% increase annually).
Should the investment market continue to make significant gains-over the next few
years, these estimates could substantially be reduced. Staff will continue to monitor
market returns and their effect on the District's retirement contribution and will inform
the Board of any significant changes.
H:\Board Position Papers\CCCERA RATES AND UNFUNDED LIABILITY 8 3 09.doc
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5. g.
Central Contra Costa Sanitary District
August 3, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES KELLY, GENERAL MANAGER~.(~ D
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION ~~~
DEBBIE RATCLIFF, CONTROLLER
SUBJECT: GASB 45 ACTUARIAL CONSULTANT SELECTIONS
GASB 45 requires an actuarial calculation of Other Post Employment Benefits (OPEB)
every two years. It is currently time to seek proposals for a new GASB 45 study.
Staff sent a Request for Proposal to six actuarial firms for GASB 45 actuarial services.
Three of the six responded with proposals. Of those three, only two firms, Public
Pension Professionals, Inc. and Bartel Associates included all information that was
requested. Staff spoke with references that were provided by each firm. All calls were
met with very positive information regarding each actuary. Fees ranged from $17,500 to
$19,000.
Staff recommends hiring the firm of Public Pension Professionals, Inc. to familiarize the
District with an additional actuary, as John Bartel is currently working for the District to
analyze costs with CCCERA and CALPers. Staff also recommends using the actuary for
the current year's analysis and again in 2011, if staff and the Board are pleased with the
actuary's performance.
Ira Summer, Public Pension Professionals, has been contracted in the past by the
County to review their issues with the Contra Costa County Employees' Association
(CCCERA). Like Mr. Bartel, Mr. Summer has detail knowledge of both CCCERA and
CaIPERS. Mr. Bartel was selected to look at CCCERA vs. CaIPERS for the District due
to his assistance with the Delta Diablo Sanitation District and the City of Pittsburg in
moving from CCCERA to CaIPERS. Staff actually had Mr. Summer provide a summary
review of the two retirement systems at the April 10, 2003 District Board meeting.
Staff's intent is to have two consultants the District can utilize in the future for GASB 45
actuary services and to help staff address retirement issues in the future.
H:\BOard Position Papers\Memo to Finance Comm re GASB 45 Actuary 8 3 09.doc
5.h.
Central Contra Costa Sanitary District
August 3, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER p
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION ~AM
SUBJECT: PARTICULATE FILTER INSTALLATION CONTRACTS
The District has identified twenty-one (21) vehicles that must be retrofitted with
particulate filters by 2011. A retrofit schedule has been developed to ensure
compliance. Two retrofits were budgeted for in 2008-2009 and an additional two in
2009-2010.
In April 2009, the District requested quotes for particulate filter installation for two
District Vehicles (237 and 243). The District received three quotes. Ironman, A to Z
Bus, and Cummins West all submitted pricing. Cummins West was the low quote and
Contract 0345826 was executed for a completion date of June 30, 2009 for
approximately $28,000. The work was performed and that contract was then closed.
Installation of two more particulate filters (District vehicles 186 and 220) are planned
and budgeted for in this fiscal year. I authorized the Senior Buyer to create a separate
contract with Cummins West for the additional filters due to closing out the previous
contract. Cummins West is honoring its price that was quoted in the original contract
($28,000) and the warranty for the filters are the same.
This memo is to inform the Budget and Finance Committee of my direction because I
was concerned that the creation of two separate contracts might be viewed as contract
splitting. The two contracts combined would exceed the $50,000 General Manager
authorization limit. However, because these filters are a requirement, Cummins West
honored their previous proposal cost (lowest of all received), and I believe it is in the
best interest of the District to standardize the particulate filters for cost effectiveness and
maintenance familiarity, I authorized the contract.
As the Committee knows, the Purchasing Division, Controller and I watch to ensure that
contract splitting does not occur.
.l.
Central Contra Costa Sanitary District
July 31, 2009
TO: BUDGET AND FINANCE COMMITTEE
FROM: JAMES M. KELLY, GENERAL MANAGER
SUBJECT: HOW TO REDUCE EXPENDITURES BY 10%
Introduction/Summary
At the request of the Budget and Finance Committee, Staff has analyzed what steps
would be necessary to reduce O&M expenditures by 10% of the FY 2009-10 Budget.
This budget already has a 3% vacancy factor for salaries and a 4% vacancy factor for
benefits; the vacancy factors have moved the District from under running the salary and
benefit budget to overrunning it the past two years. Salaries and benefits are 67% of
the remainder of the budget (see Chart Attachment 1). Since the District overran the
Salaries & Benefits budget last year, to get a 10 % reduction, we must either devise a
way to reduce Salaries & Benefits or try to achieve a 30% reduction in all other costs to
achieve a 10% budget reduction.
This memo summarizes Staff's review of program Budget line items. Programs are
reviewed first, followed by Non-Salary and Berefits line items, and concluding with
Salaries and Benefits. Staff tried to find reductions that would not significantly increase
the potential for regulatory violations because regulatory compliance is a key goal for
the District. Moreover, violations due to an agency reducing cost and taking risks could
lead to higher fines.
Based on this review, if the Board were willing to reduce or eliminate a number of
current programs, the District has the potential to reduce program spending by
$580,000 t0 $600,000. In addition, Staff has a goal to reduce line item Non-Salary and
Benefit costs by approximately $1,700,000, and by approximately $2,400,000 if a full
10% reduction is required. This leads to a total potential reduction of Non-Salary and
Benefit costs of $3,000,000. Reduction beyond $2,000,000 would result in a substantial
erosion of the District's ability to provide services if the reduction were sustained for
more than one year. This leaves approximately $3,000,000 that would need to be
saved from Salaries and Benefits to meet a 10% reduction.
Regarding Salaries and Benefits, if a 10% reduction were required, $2,838,200 could be
saved. Most of this is what should be a one-time deferral of cost by not funding the
OPEB Trust. Sustained savings for non-voluntary reductions would have to be in
accordance with the MOU or be bargained for.
H:\General Managers Directory\Memos\2009\Ideas on Reducing Expenditures by 10%.doc
In summary, Staff has set a goal to come in $1,500,000 to $1,700,000 under the O&M
budget through measures described in the O&M line item section of this memo. Staff
has identified how the O&M Budget could be reduced by 10% on a one-time basis,
using cost deferral to accomplish about $2,900,000 of the reduction. Sustained 10%
reduction would need the District to change its goals or reduce salary costs as allowed
by the MOU or bargained for it.
PROGRAMS
The following is a menu of options the Board could consider to reduce operating costs
by changing some existing programs. In general, we can provide good service, fast
service, and lower costs, but not all three at once. If the District needs to cut costs, we
need to consider how to reduce or eliminate programs. The Programs are listed by
department and then by order of assumed cost savings from most to least (the only
exception is that all HHW Programs are listed together).
Administration Programs:
Security: The security guard contract totals $237,000. We could reduce security
guards to two shifts, eliminating day shift guard, saving $70,000. We would have to
have a Plant Day Shift Supervisor fill in. Assumed Savings: $70,000.
Emergency Response: We could eliminate disaster program consultant for a savings
of $25,000. Assumed Savings: $25,000.
Employee Computer Purchase Program: There is currently only -$8,000 in the
program. Very minor savings could be realized because the District is repaid in two
years. Assumed Savings: $8,000.
Safety: We could eliminate safety consultant services for a savings of $40,000 which
would include electrical safety training at $30,000. Another $10,000 of the reduction
includes eliminating the safety picnic for $5,000 and other training for $5,000.
Assumed Savings: $8,000.
Employee Suggestion Program: Staff is initiating an employee suggestion program in
an effort to save costs, streamline work, and provide better customer service. We
cannot estimate the potential savings at this time.
Outreach Program: See O&M line item for potential savings.
Summer Student Program and Co-Op Program: These are discussed under the
Salary and Benefits section.
H:\General Managers DirectoryWiemos\2009\Ideas on Reducing Expenditures by 10%.doc
Collection Systems Office Program:
Add GPS to CSO and Inspector Trucks: Agencies who have added GPS to their
CSO trucks have reported 10-20% increase in productivity. This is conceptual; no
savings assumed.
Engineering Programs:
Rotation Program: Suspension of the rotation program for Senior and Associate
Engineers would result in the need for fewer Contract Inspectors and would increase
the amount of time charged to capital. This could reduce O&M salary cost by 200 000
and reduce use of consultants. Assumed Savings: $200,000.
Recycled Water: The Districts pursuit of a large scale recycled water program includes
lobbyists, legal costs, consultant effort, and staff time. Direct O&M costs are more than
$100,000/year. Assumed Savings: $100,000.
HHW: Potential changes in the HHW Program that could net cost reductions are:
Reducing Operating Days at HHWCF: By reducing the number of days that the
HHWCF is open to the public to four, the District could save from $22,000 to $85,000.
The savings would be achieved through the reduction of the use of temporary labor and
lower disposal fee. Assumed Savings: $85,000.
Mobile HHW Collection Events: The District's share of the cost of a mobile event in
San Ramon is based on the number of participants and the operating cost per car for
the HHWCF. This year the District's cost share was approximately $42,000. By
canceling the mobile event and assuming that half of the mobile event participants do
not travel to the HHWCF, the District could save $21,000. Assumed Savings:
$21,000.
Close HHW Facility: The HHWCF would be operated by contract one day a week
instead of five days perweek by District staff. This could save $700,000 per year or
more. We could not close the facility for a year because we have committed to have a
HHW facility in our Pretreatment Program for this year. No Savings Assumed.
Permit Counter: The Permit Counter is now open to the public 45 hours per week (8:00
am to 5:00 pm). By reducing the operating hours to 40 hours per week (8:00 am to 4:00
pm), the District could save $20,000 in overtime costs annually. Some Cities are only
open half days. This could also be considered. Assumed Savings: $20,000.
Six-Day Operation of HHWCF: The estimated cost of operating HHWCF six days per
week is $71,000 per year. By returning to five days per week operation after the 3-
month pilot period, the District could save this amount. Also, Concord has declined to
participate in funding the sixth day at this time. Six days a week was not budgeted. No
Savings Assumed.
H:\General Manager's DirectoryWlemos\2009\Ideas on Reducing Expenditures by 10%.doc
Pharmaceutical Collection Program: The estimated cost of continuing the County
and Walnut Creek pharmaceutical collection programs is $6,000 to $12,000 per year.
The estimated cost of an expanded pharmaceutical collection and disposal program is
up to an additional $50,000 to $110,000 annually. The District could save $50,000 or
more by deferring expansion of the pharmaceutical collection program. This savings
was included in the line item savings for Hauling and Disposal.
Deferral of Connection Fees: The Capital Budget Scenarios assumed that the
connection fees could be reduced by approximately $3 million in 2009/10. The District
should recover these connection fees split evenly over the following two fiscal years.
No O&M Savings Assumed.
Don't Restart CAD's: Restarting the CAD Program that is financed by District funds
would further reduce our Sewer Construction Fund. No O&M Savings Assumed.
Inspection Response: If we reduced our number of development services inspectors
from five to four, the District could save a full salary plus benefits for one inspector
estimated to be $124,000. This staff reduction would reduce the response time for
inspections from one to two or three days. It would also shorten the time available for
each inspection visit, and consequently inspections would not be as thorough. No O&M
Savings Assumed.
Reduce Inspector Presence on Job Sites: This would eliminate the need for Contract
Inspectors for all projects except for the new CSO Facility which would require a
specialty inspector. Staff has budgeted $600,000 (excluding CSO) for Rent Inspectors
for FY 2009/10. This could reduce capital cost about $400,000. No O&M Savings
Assumed.
LINE ITEMS (NON-SALARY & BENEFITS)
The dollar figure in parenthesis after the Budget line is the FY 2009-10 budget amount.
These items are listed in the order they are in the budget.
Directors Fees And Expenses
No suggestions
Chemicals ($1,609,000) Goal: Reduce by $140,000.
FY 2009-2010 Budget is -$150,000 greater than last year's actual expense. If we leave
PS chemical program at its current level, the estimated savings is $80,000. Additional
expense reductions or deferral of future expenses could be accomplished by lowering
use of chemicals used for hydrogen sulfide control in the pump stations. The
H:\General Manager's DirectoryVNemos\2009\Ideas on Reducing Expenditures by 10%.doc
consequences would be of some damage to concrete pipe in the gravity sections
downstream of the force mains and structures that would have to be repaired at some
time in the future..There is also the possibility of odor complaints and simply moving the
problem to the treatment plant where there would be additional expense for hydrogen
sulfide control. This is not recommended.
The plant has a goal of reducing its chemical expense by $60,000, which would make
this years expense the same as last years. No further reduction is recommended, as
further cuts could jeopardize regulation compliance, cause odor complaints, or cause
increased future repair costs.
In sum, staffs goal is to reduce expenditures by $140,000.
Utilities ($5,295,400) Goal: Reduce by $100,000
For FY 2008-09, the District spent approximately $6,000,000 on utilities. The lower
budget for FY 2009-10 is due to a significant drop in natural gas prices. Staff has a goal
of reducing Utility Costs by $100,000 through carefully monitoring power use and
reinstituting the "Flex Your Power" Program that successfully reduced our electrical use
in the early 2000's. If we have a wetter than normal winter, staff does not anticipate any
savings will be realized.
Repairs and Maintenance ($3,331,511) Goal: Reduce by $300,000
Staff has a goal of reducing Repairs and Maintenance cost by $300,000. We plan to
eliminate Crown Spraying for 2009-2010 fiscal year and root control chemicals for a
savings of $178.250. For crown spraying, the future scope for 2010-2011 should be
evaluated after a small engineering study of the locations where crown spraying has
been done in these last few years. Root control could be deferred perhaps indefinitely
because to date the chemical products have not been very successful.
Hauling and Disposal ($1,030,460) Goal: Reduce by $150,000
This cost could be less than budget if there is a normal winter and the pharmaceutical
drop off program is not expanded. Engineering could save up to an additional $50,000
through increased recycling, reuse, and improved packaging, handling and disposal of
household hazardous wastes at the HHWCF.
H:\General Manager's DirectoryWlemos\2009\Ideas on Reducing Expenditures by 10%.doc
Professional and Legal Services ($690,960)
Goal: Reduce by $65,000, $100,000 of 10% needed.
Professional ($157,860) Goal: Save $10,000, $44,500 if 10% needed.
Admin could reduce professional services by not providing:
-ADA training- $10,000 (only if 10% needed)
-Internal Audit- $14,500 (only if 10% needed)
-Not having independent OPEB investment adviser 20 000
10,000/$44,500
Legal Services-Board ($62,000)
No Change.
Legal Services-Staff ($471,100) Goal: Save $55,000
Maximize use of office hours. Strictly enforce that work not authorized will not be
compensated. If there are no major claims or if we don't have high legal expenses with
recycled water, and with these control measures, legal cost could be $55,000 less.
Outside Services ($2,278,410)
Goal: Save $271,000; $279,000 if 10% needed.
Outside Safety Services ($126,200) Goal: Save $14,000
CSO could save $14K by no Commercial Driver training.
Tech Services ($1,612,710)
Goal: Save $157,000, $165,000 if 10% reduction needed
Admin could not have
-cultural diversity training
-reduce use of Temps
-not have a warehouse consultant
$8,000 (only if 10% needed)
$32,000
25 000
$65,000
Engineering: Save 50 000 by use of Planet Bid (This savings is achieved by not hiring
temporary secretaries during peak workload periods.)
CSO can avoid technical services costs of 2$ 0,000 by no use of temporary help
charged to this account, no use of consultants and reduced district wide training, and
benchmarking efforts.
Data Processing ($507): no savings
H:\General Manager's DireIXOry\Memos\2009\Ideas on Reducing Expenditures by 10%.doc
Other public Agency Services ($395,400) Goal: Save $80,000
Expect could be $80,000 less based on prior year's expenses.
Reprographic services ($42,600) Goal: Save $30,000
Estimate savings based on prior years experience
Recruitment ($101,000) Goal: Save $60,000
Recruitment cost could be reduced $60,000 (this would leave the expected expenditure
$10,000 less than spent last year).
Self Insurance ($1,383,007)
Goal: No Change, shift $500,000 only if 10% cut needed.
The amount shifted into the self insurance fund could be reduced by $483,000 or more.
This would be essentially a paper savings, money shifted next year will be based on this
year experience and expenses.
Materials And Supplies ($1,887,625)
Goal: Reduce by $81,000, reduce by $100,000 if full 10% needed.
Office Equipment supplies ($199,810): Assume spend 67% now and cut to 50% if
10% cut required. This would save $66,000; $100,000 if a full 10% cut required.
Gasoline, oil and fuel ($185,000) no savings
Operating Supplies ($1,188,850) no savings
Operating Fuel ($58,000) no savings
Still need to build fuel oil supply at plant.
Laboratory Supplies ($133,000) no savings
Safety supplies ($122,965) Goal: Save $15,000
Admin. Reduce by $15,000 by not buying additional AED's
Other Expenses ($1,802,958)
Goal: Reduce by $528,000, reduce by $656,000 if full 10% needed
Rent and Leases ($339,850) Goal: Reduce by $122,000
Not renting REW tanks and truck delivery saves $100,000. Also, only allow for one
month vactor rental and taking a savings of $22,000.
H:\General Manager's DirectoryVNemos\2009\Ideas on Reducing Expenditures by 10%.doc
Public Agency Fees ($286,473) Goal: Reduce by $60,000
Based on prior years experience, assume $60,000 could be saved.
Public Information ($347,000): Reduce by $100,000+ with Board concurrence
Could reduce by $100,000+ with the Outreach Committee's and Board's concurrence
Reductions would include reducing Pipeline to two issues saving $48,000: eliminating
new outreach saving $10,000; reducing Delta Discovery saving $40,000; and reducing
HHW advertising saving $2,000; and reducing other activities.
Tuition Reimbursement ($19,250): Leave Unchanged
Tech Training ($304,555)
Goal: Reduce by $150,000, reduce by $225,000 if full 10% needed.
Expect to spend 50% of budget, or - 75% of last year:
If 10% cut is required, expect to spend 25% of budget.
Claims ($10,000) Goal: Reduce by $5,000
Subscriptions ($33,323) Goal: Reduce by $5,000; $20,000 if full 10% needed.
Mileage Reimbursements ($7,630): No savings
Public Notices ($4,700) Goal: Reduce by $2,000
Could be $2000 less based on FY 2008-09 expenses.
Outside Organization Fees ($318,600) Goal: Reduce by $36,000
These can be reduced by $36,000 due to lower BACWA contribution this year and
eliminating contingency.
Employee Memberships ($33,890) Goal: Reduce by $10,000; $20,000 if full 10%
needed.
Miscellaneous ($37,800) Goal: Reduce by $18,000; $28,000 if full 10% required
Election Expense ($0)
Professional Exp Reimbursement ($38,271)
Goal: Reduce by $20,000, eliminate if full 10% needed
Summary of Program Review and Salary 8 Benefit Line Items
Staff has a goal to reduce line item non-salary and benefit costs by approximately
$1,700,000, and by approximately $2,400,000 if a full 10% reduction is required. If the
Board were willing to reduce a number of current programs the District has the potential
to reduce spending an additional $580,000 to $600,000, for a total potential reduction
of $3,000,000. Reduction beyond $2,000,000 would result in a substantial erosion of
the District's ability to provide services if the reduction were sustained for more than one
H:\General Manager's DirectoryWlemos\2009\Ideas on Reducing Expenditures by 10%.doc
year. This would leave approximately $3,000,000 that would need to be saved from
Salaries and Benefits.
SALARY AND BENEFITS LINE ITEMS ($40,326,750)
Save $2,838,000 if 10% required.
At $40,326,750, Salaries and Benefits are 67.5% of the Districts O&M Budget. No
request for changes in staffing were made in the FY 2009-10 budget year. A salary
survey adjustment for Local 1 was not added to the FY 2008-09 budget, which along
with the vacancy factors and rotation program resulted in Salary and Benefits budget
being overrun by $1,463,498 last year. A salary increase of 3.5 was assumed for a
negotiated increase, while the actual increase was 3.0%. The Budget has a Salary
vacancy for FY 2009 -10 of $763,000 and benefit vacancy of $830,000, for a total
vacancy budget of $1,593,000.
A hiring freeze was instituted July 2, 2009. Staff will request that some critical positions
be filled. This should provide savings as retirements occur and the resulting vacancy is
not filled. Based on the current vacancies, approximately $850,000 will not be spent.
However, the budget has already assumed $1,593,000 of vacancies. So another
$743,000 would need to be saved before the Salaries and Benefits would show a cost
reduction. Even with ten potential retirements in FY 2009-10, only one is expected to
occur before March. This leads staff to conclude that even with the hiring freeze the
Salaries and Benefits will be over budget. Also, a vacancy may result in a backlog of
work that must be done; in these cases, staff may recommend use of temporary
employees, contract workers, or possibly retirees to keep the backlog at a manageable
level. Of course, the Board would be informed before retiree would be brought back.
There could be ten additional retirees in FY 2010-11.
The major Salary and Budget items are reviewed below for potential savings.
Salaries ($23,423,000): Save $377,000 if 10% reduction required
The District could reduce or suspend the seasonal and Co-Op Programs. Together
they are Budgeted at $754,000. Only half of the Budget could be saved, as the 2009
seasonal employees have been hired and some are already returning to school and the
fall Co-Ops are hired.
The District could allow voluntary furlough days, encourage early retirement, or offer a
voluntary severance program. The savings these programs would accrue are not
known, and their implementation would take time so they could be developed to
minimize unintended consequences. For example, voluntary furlough days would need
to be structured so that an employee would not use furlough days to accumulate
vacation for spiking.
Non-voluntary reductions would have to be in accordance with the MOU's or be
bargained for.
H:\General Managels DirectoryVdemos\2009\Ideas on Reducing Expenditures by 10%.doc
Overtime ($908,862) Goal: Reduce $50,000.
Approximately half of the overtime is premium pay for holidays. Staff would hope to
reduce the overtime more, but a hiring freeze could make it difficult to further reduce
overtime.
Standby Pay ($224,498) Goal: Save $30,000.
$30,000 could be saved based on past year's experience.
Benefits ($14,070,000) No Savings Assumed.
Savings in Benefits would be realized only if salary savings are realized. Benefits could
be reduced if salary capital cost increases (see discussion of rotation program).. Little
benefit would be saved through suspension of the seasonal and Co-Op Programs.
OPEB Contribution ($2,381,200) Reduce $2,381,200 only if 10% required.
The OPEB contribution could be deferred. This may raise some concerns from the
bond rating agencies if and when the District pursues debt financing. This should be
done only if we have a major tax take that we expect to be paid back; funds could be
directed to the OPEB trust when paid back.
Salaries and Benefits Summary
If a 10% reduction were required, $2,838,200 could be saved. Most of this is what
should be a one-time deferral of cost by not funding the OPEB Trust. Sustainable
savings non-voluntary reductions would have to be in accordance with the MOU or be
bargained for.
H:\General Manager's DirectoryUAemos\2009\Ideas on Reducing Expenditures by 10%.doc - 10
Chart Attachment 1
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Central Contra Costa Sanitary District
August 3, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES KELLY, GENERAL MANAGER~~~
FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION /QMN
DEBBIE RATCLIFF, CONTROLLER Q/L
SUBJECT: LITIGATION EXPENSE SUMMARY
Attached is the updated spreadsheet displaying the legal litigation expense. Legal
charges should have concluded for the Scanlan vs. Kaufman and Kramer court
cases/litigation. The remaining costs with the Talada lawsuit is representation by Kim
Colwell (Meyers Nave) for the deposition of the Director of Administration. Staff
believes that there are no further charges for the condemnation of property at Strenzel
Lane. Legal charges/costs will begin for the Parkinen lawsuit. There will also be legal
time and costs to address a landslide at Zander Drive. The Board/Committee will be
briefed on the specifics on Zander Drive in closed session at the August 6, 2009 Board
meeting.
Staff is attempting to submit this on a monthly basis to minimize surprises for the Board.
H:\Board Position Papers\Memo to Finance Comm re Litigation Costs 8 3 09.doc
Meyers, Nave
2007
January
February
March
April
May
June
July
August
September
October
November
December
2008
January
February
March
April
May
June
July
August
September
October
1 1 /25/08
November
12/03/08
12/22/08
December
2009
January
February
02/27/09
March
April
May
June
July
August
September
October
November
December
CCCSD V
Scanlan V CCCSD V Talada V City Strenzel
Kaufman Kramer of Mtz., ET AL Lane, Mtz
261.62
1,277.20
3, 360.30
2, 975.67
4,003.34
4,239.45
2.264.51
1.188.36
1,199.44
2,659.02
5,844.20
2,673.28
31,946.39
815.76
856.96
3,532.31
5,172.07
5,673.69
5,505.68
13,277.10
5,311.10
8,467.49
16,663.81
2,974.77
41,166.24
7,478.79
2,307.55
9,239.17
128.442.49
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
8,160.69
2,253.98
1,559.73
11,974.40
3,152.37
1,824.48
2, 900.63
1,538.95
665.90
878.57
824.00
181.28
1,532.64
2,137.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
21,135.60
144.20
0.00
728.00
3.363.09 14,293.69 2,590.60
19.143.13 36,157.29 2,590.60
19,487.85 237.18 1,573.84 734.82
15,194.77 3,216.22 0.00 0.00
1,316.97 0.00 0.00 0.00
1.569.90 2,821.51 0.00 0.00
1.993.83 498.64 0.00 0.00
1,434.79 0.00 317.24 0.00
0.00 0.00 921.85 0.00
40,998.11 6.773.55 2,812.93 734.82
Totals
$202,029.71 $37,891.08 $38.970.22 $3.325.42
7/30/2009
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