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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. 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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 F- V N Z Q N H N 0 V H Z U J H Z W V W N Z W a w Z W ~°o ~ o v W. 0 W Q ~_ H W !O ~ ~ } o ~ ~ ~ ~ m M e» ~ r N <» LL ~ ~ } c ~ ~ ~ M V M ~ ~ ~ N ~ b9 LL ~ M ~ rn rn r o ~ ~ _ } ~ ~ ffj LL M ~ r ~ c N CO ~ ~ N ~ M ~ ~ ~ ~ .~- ~ N ~ ~ } o ~ ~ ~ O M m ~ O N N LL ~ ' G ~ } ° ~ ~ M d' O a0 Efl N CO O_ d9 LL ~ } o ~ M (M ~ fyq ~ ~ ~ LL d N w N d ~ ~ v N d X W .~ a ~ ~ y ++ ~ m N_ O ~v H ~ C O O a (0 7 m N Q-' V1 d C a O ., a ti E ~ W -° ~ m 'O ~> C w ~ O C y ~ U d ~ J C O :° U '~ a~ E O ~ n > ~ O W ~ ~ ` C ~ (9 ~. ~ T L m V N ~ ~ ~ ~ ~ ~ N a ~ ~ U a c E W c N L_ N ~ ~ ~ ~ ~ U N C VI ~ 41 .~+ N fA ~ ~ .~ '~ a ~ U N .~-~ (~D o ~ v N 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 r Y N U ca +~ Q U _- i ' -~-' a ~, ' ~ ~ ~ ~ E c ~ m a ;QEQ O U L ,Pn ++ V C m ~ o V '; > O O ~ N 3 .~ ~ ~ = V Q1 .~ _ ~ ~ Y. m o- 0 ~ ~ c o C1 N C .~ N m ~ ~ ~ C it Ca (4 ~ L ~ ~ N a O ~_ C~ cfl U a~ c m ~ ~ ~ y o ~. ~ o U °o o °o °o °o °o o °o 0 0 0 0 0 0 0 0 ~ ° °o °o °0 0 0 0 0 0 0 0 ui v ~ ~ ~ ~ ~ ~ ~ ~ ~ N ca = w c c O ~' ~ ~ m ~, .` L ~ ~--~ ~ ~ U f~ ~ U N ~ a ~ E 0 U c E 7i l.i c m i o_ O N O 0 N ~ I m rn 0 0 N c0 O 0 N m ~I U ~~ U I 47 O~~ ^, ~~~ 0 N ' ao p ~I N Qf ~I i ~ ii m 5' J• 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 $3.325.42 7/30/2009 ~I~: 0 ~`` 1 Z V Q U g l~ O ~. : C/~ 0 0 w 0 U b i ~ . ~ R a y ` `~ i ~ ~ S N ~ ~ N ~ ~ _ _ C § ~ ~ ~ j ~ i! ~ ~ M r cJ In U ~ a IT y 7 °' 3 a ~ ~ ID _ _ _ _ R ~.b M O M ` Y Y g~g 5 8 0 0 ~8 ~o f S ~ cP ~ ~~ ~ G t ~ ~ o ~ o J ~ V ~ Q -t'~ a ~ ~a8ga ~~~ ~$gq8. ~~a~ ~$ mp a m~£~ 3 ~ m 8gs8g~gE~ m~g gig ~~~8 m~~=qg~` >~~gg5~$ 8S, 3 S a m~ p~ a r $g~°.~q ~ ~mm8~m~~ E S v~EB_e.8 4+E m~aE .~a~ ~~a~d-~m ~ m ~ ~ ~ 3 a~~m~a,„ r ~ ~ ~ ~ G Um~bO~~c 7 a s 3 3 a s w ~ gg~ $ c3 O 1 N 44 0 r u C V J v ~~ o ~~ Eo a 0 Y p ~ Q C j U U i a gh ~ ~ ~~~~~ $~~~~~ ~~m. ,t~~ ~~3~~~ ~°~~~ m~~Y~g~~ ~ ~~ a ~~~~~a~~ u8~8~~~~ g m a A q ~Ei9~E.1a8 q~E~Eg ~m s~~~g~~~ ma"~.5e~~ 9~~~gg~~ U ~~'b0 Gov a s 5 a N O a J Z ~~ H U Q Z F- Q U r z W W U a H U H y } 0_' Q F- Z Q or ~ o Q d F ~ N ~ 0 1 U o ~Q o {L T H d Z ~ 0 U J Q `~ L r Z .i W U ~ 4 U LL O C7 Z O a c N c m c O ~. c a O N 0 i w Q 0 F 4QL K O J 0 0 f a N O o~ 2F ° i - , a a a a °' W - G~ f 1") ~ (~I 0 (7 0 17 0 J ~ o 0 0 0 0 ' ~ N N N N O p va vy Va U yy O tl O O O o 0 0 o O o 0 W Q= r ' N ~ ~ ~ 2 J ~C tp N < N OI N N JQ a d W O m ~ ~ ~ N N N ~ O Uf W J ~ n ~ ~ KZ Z - O N z KO W ~ d d d m ~~ ` JU Zm 0 0 0 ~ d y N N w m ~ c c c pO y N N m °o ~ 0 0 0 f o ~ ~ a 2 =_ ~ `o -~ U ~ o ~^ ~ d m ~ W N ~ = d' H o E ~' N y V _ d Z g ' x N ~ ~ o o o rc w v ~ o ~ ~ ¢ o= f ~ ~ U U C7 W o o - f U a ~ z - ~ ~ ~ 7 ~ d Z U N d (n W ~ F > ~ d b ~ d N N Y N ~ m a Y a o x a = W Q $ ~ o O m ~o ~ ~o W m N N N a 5. 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