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Home My WebLink AboutADMINISTRATION ACTION SUMMARY 11-26-1430.pd.1)d� Jl Central Contra Costa Sanitary District Protecting public health and the environment 5019 Imhoff Place iii DAVID R. WILLIAMS President REGULAR MEETING OF THE MICHAEL R. MCGILL CENTRAL CONTRA COSTA President Pro Tent SANITARY DISTRICT PAUL HCAUSEY JAMES A. NEJEDLY ADMINISTRATION COMMITTEE TADJPILECKI PHONE: (925) 228 -9500 ACTION SUMMARY FAX: (925) 372-0192 www.centralsan.org Chair McGill Member Williams Wednesday, November 26, 2014 8:00 a.m. Executive Conference Room 5019 Imhoff Place Martinez, California PRESENT: Chair Mike McGill, Member Dave Williams, Director of Administration David Heath, Director of Engineering Jean -Marc Petit (left during Item 3.), Finance Manager Thea Vassallo (left after Item 3.), Human Resources Manager Teji O'Malley, Secretary of the District Elaine Boehme, Safety & Risk Administrator Shari Deutsch, Finance Administrator Todd Smithey, Human Resources Analyst Twila Mullenix, LAFCO Executive Officer Lou Ann Texeira (left after Item 3.), and Assistant to the Secretary of the District Donna Anderson Call Meeting to Order Chair McGill called the meeting to order at 8:05 a.m. 2. Public Comments None. *3.' Receive report on July 1, 2015 to June 30, 2016 Contra Costa County Employees' Retirement Association ( CCCERA) contribution rate packet and the five -year projection of employer contribution rate changes Finance Administrator Todd Smithey explained that the District receives a letter from CCCERA each January indicating its estimated earnings and /or losses for the previous calendar year and its effect on employer contribution rates for the next five years. The information presented in the Segal Consulting letter Administration Committee Action Summary November 26, 2014 Page 2 included with the agenda packet is an update to that letter and intended to provide projections of estimated future contribution rate changes based on the entire 2013 valuation. Chair McGill introduced Lou Ann Texeira, Executive Officer of the Local Area Formation Commission (LAFCO), who was in attendance to help assimilate the information from CCCERA on behalf of LAFCO, also a CCCERA member. Mr. Smithey distributed a chart (attached) prepared by Segal Consulting indicating the market value, actuarial value and valuation value investment returns for all CCCERA member agencies for the years ended December 31, 2004 through 2013. He said the most important numbers were those related to market value investment retum, for which the five -year average return was 12.41%. He said the investment mix for CCCERA is roughly 50% equities and 25% bonds, with the remaining 25% split fairly evenly between real estate and other investments. Mr. Smithey noted that CCCERA utilizes a five -year smoothing approach to determine employer contribution rates. While this approach can make it more difficult to interpret investment results, smoothing is utilized to minimize volatility in employer contribution rates. In response to a question from Chair McGill, Mr. Smithey clarified that when the District makes prepayments on its unfunded actuarial accrued liability (UAAL), an immediate reduction is realized on the overall UAAL balance. However, from CCCERA's perspective, any prepayment is amortized over 18 years in terms of its effect on the District's employer contribution rate. Mr. Smithey also noted that continual prepayments on the UAAL conceivably could lead to the District becoming superfunded in 10 to 12 years. Director of Administration David Heath noted that possibility is still years in the future, and the District lags behind many of the other CCCERA pooled agencies in terms of funding percentage. He said General Manager Roger Bailey would recommend discontinuing further prepayments if it appeared the District were approaching a superfunded status. The Committee Members generally agreed with that approach. Mr. Smithey explained the charts on page 2 of the Segal Consulting letter included with the agenda packet and responded to questions from the Committee Members. The Committee Members and Ms. Texeira thanked Mr. Smithey for his succinct and clear explanation of the complex material. COMMITTEE ACTION: Received the report. Administration Committee Action Summary November 26, 2014 Page 3 4. Receive report on benchmarking on turnover data Human Resources Manager Teji O'Malley noted that at the last Committee meeting she presented historical information on the District's employee turnover rates and the reasons for separation. The information contained in the agenda packet for this meeting included comparison information with the District's sister agencies, including retirement versus non - retirement separations. She said the District is below the median and the mean in both categories. She said this information will be presented annually to the Committee from now on, and that she intended to share the information with the District's labor groups. COMMITTEE ACTION: Received the report. 5. Receive report on overtime over 100 hours Ms. O'Malley stated that the report included with the agenda packet indicated how overtime is spread out among the various work groups and the reasons for its incurrence. She said most overtime is on a rotational or volunteer basis since the issue is not specifically addressed in the labor contract provisions. Chair McGill said he views this information from two perspectives: (1) how the District is managing overtime, (2) why overtime is incurred. In order to be sure the District is not utilizing overtime to avoid hiring new employees, he said it would be helpful to obtain benchmarking information on appropriate ratios for overtime to see how the District compares. Ms. O'Malley said she would gather that information and report back to the Committee. COMMITTEE ACTION: Received report and requested benchmarking data on overtime be presented to the Committee at a future meeting. V Standing Items a. Receive update on ongoing Contra Costa County Employees' Retirement Association (CCCERA) audit Ms. O'Malley said the draft report is still pending. COMMITTEE ACTION: Received the update. b. Planning for 2017 Labor Negotiations, including Gantt chart that was requested at a previous meeting Member Williams said he would support early outreach to the managers and labor groups as to what the issues are and to specifically try to address matters that have been frustrating in terms of the Memoranda of Administration Committee Action Summary November 26, 2014 Page 4 Understanding (MOUs). Ms. O'Malley agreed, stating that process will begin in 2015. All such issues should be fully vetted prior to negotiations, and it was her intention to begin codifying some of the current unwritten practices. She stated that she wanted to uncover any work rules that hinder the work process and compare them to the industry so research can be done ahead of time. Member Williams said it is important that the employees know that as a management team, the Board wishes to be very involved in the negotiation process. Chair McGill said, while that is true, it is important to note that the Board is not looking to negatively impact employees by being so involved in the process. There will be pros and cons for both sides. COMMITTEE ACTION: None. C. Risk Management (Loss Control Report; discuss outstanding claims; New Claims, if any) Safety and Risk Management Administrator Shari Deutsch reviewed the Loss Control Report included with the agenda packet. COMMITTEE ACTION: Reviewed the report and discussed outstanding claims. d. Review existing policies and procedures, with a view toward separating out the procedures included in many previously- adopted Board policies Mr. Heath said the new Security policy and the revised Travel Expense Reimbursement policy will be presented to the Board on December 4, 2014 for approval. With regard to recycled water, Chair McGill said that if no formal policy exists at this point, any such references to a policy should cease. Instead, references should be to "past practice." Member Williams said he appreciated staff's ongoing efforts to systematically revise existing Board policies and develop new Board policies. COMMITTEE ACTION: Received the information. e. Receive update on pending litigation re AB 197 (Public Employers Pension Reform Act of 2013) (PEPRA) Administration Committee Action Summary November 26, 2014 Page 5 Ms. O'Malley said the first meeting in the Appellate Court is scheduled for January 2015. COMMITTEE ACTION: Received the update. f. Biennial review of Board - Approved Policies Secretary of the District Elaine Boehme explained that the difference between this item and Item 6.d. is that this one is open ended and the other item will be concluded at some point once all the procedures have been removed from the existing Board policies. COMMITTEE ACTION: Received the update. 7. Announcements a. Future scheduled meetings: Tuesday, December 2, 2014 at 8:00 a.m. (Special meeting) Monday, December 15, 2014 (Special meeting) COMMITTEE ACTION: Received the announcements. 8. Suggestions for future agenda items None. 9. Adjournment — at 9:40 a.m. * Attachment Standing item Deferred Return Recognised in each of the next 5 years: / �Q (a) Amount Recognised during 2014 $173,544,421 (b) Amount Recognised during 2015 127,574,660 (c) Amount Recognised during 2016 97,279,290 (d) Amount Recognised during 2017 101,385,107 (e) Amount Recognised during 2018 36, 084,926 (n Subtotal $'535,868,404 Note: Results may not add due to rounding. Note: Each year's yield is weighted by the average asset value in that year -r"r" Segal Consulting 11 Market Value Investment Actuarial Value Valuation Value Return Investment Return Investment Return Year Ended Percent Percent Percent December 31 Amount of Assets Amount of Assets Amount of Assets 2004 $406,427,237 12.27% $136,674,234 3.85% $135,741,405 3.84% 2005 331,400,271 8.71% 216,618,073 5.74% 215,737,484 5.74% 2006 603,899,378 14.23% 353,776,306 8.63% 352,838,472 8.64% 2007 294,694,885 6.03% 522,206,583 11.63% 521,211,436 11.64% 2008 (1,477,705,765) (28.35 %) 238,397,117 4.73% 237,402,129 4.72% 2009 736,956,891 19.68% 18,226,933 0.34% 17,021,116 0.32% 2010 594,637,090 13.35% 95,918.913 1.82% 94,835,030 1.80% 2011 88,042,268 1.76% 148,058,548 2.78% 146,988,614 2.77% 2012 668,138,997 13.31% 121,921,302 2.25% 120,826,177 2.24% 2013 870,984,744 15.50% 492,503,802 9.01% 491,324308 9.02% Total $3,117,475,996 $2,344,301,811 $2,333,926,171 Five -Year Average Return 12.41% 3.27% 3.26% Ten -Year Average Return 6.88% 4.90% 4.90% Note: Each year's yield is weighted by the average asset value in that year -r"r" Segal Consulting 11