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HomeMy WebLinkAbout04.a. Review draft to consider adopting new Board Policy No. 040 - Electronic Signatures and Approvals Page 1 of 8 Item 4.a. CENTRAL SAN July 7, 2020 TO: ADMINISTRATION COMMITTEE FROM: DONNA ANDERSON, ASSISTANT TO THE SECRETARYOF THE DISTRICT KATIE YOUNG, SECRETARY OF THE DISTRICT REVIEWED BY: JOHN HUI E, INFORMATION TECHNOLOGY MANAGER AND KEVIN MIZUNO, FINANCE MANAGER PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION KENTON L. ALM, DISTRICT COUNSEL ROGER S. BAILEY, GENERAL MANAGER SUBJECT: REVIEW DRAFT POSITION PAPER TO CONSIDER ADOPTING NEW BOARD POLICY NO. BP 040 - ELECTRONIC SIGNATURES AND APPROVALS Attached is a draft Position Paper and proposed new Board policy regarding the use of electronic signatures and approvals at Central San. The purpose of bringing this to the Committee is to (1) invite a discussion as to any concerns the Committee may have about the use of electronic signatures on District documents, and (2) ultimately seek the Committee's recommendation to sanction the use of electronic signature technology at Central San by adopting a new Board policy, and (3) adopt a formal policy prior to the planned go-live of the District's new enterprise resource planning (ERP) system, Oracle Cloud Fusion, which is being configured to use electronic approvals in-lieu of approval stamps with wet signatures on physical invoices. As is more fully explained in the attached draft Position Paper, several divisions at Central San have been using electronic signature technology (DocuSign)for approximately two years. Once the COVI D-19 pandemic surfaced, other divisions requested access to the technology so they could continue to function efficiently while staff was teleworking. Much like the use of Microsoft Teams increased after the shelter-in- place orders took effect, so did the use of DocuSign. Staff has quickly become very proficient with DocuSign, which is secure, meets legal requirements, and is fully supported by the Information Technology Division. Below is a list of some of the pros and cons the Committee may wish to consider: Pros Cons Saves staff time for routing documents for approval Annual licensing fees Reduces paper records Concerns about security Reduces costs for processing, tracking and storing certain Cannot be used for all types of physical documents documents July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 4 of 17 AMENDED AGENDA Page 2 of 8 Pros Cons DocuSign is a secure, cloud-based platform that meets the legal Lacks the formality of wet-signed requirements for electronic signatures documents Accessible to users 24/7 Meets several Strategic Plan Goals/Strategies Use is optional, not mandatory(unless being used for approvals within the new Oracle ERP, where electronic approval is required) Policywill be supported by Administrative Procedures ATTACHMENTS: 1. Draft Position Paper and Draft BP 040 - Electronic Signatures July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 5 of 17 AMENDED AGENDA Page 3 of 8 ATTACHMENT 1 CENTRAL SAN BOARD OF DIRECTORS = POSITION PAPER Board Meeting Date: TBD Subject: Review draft Position Paper to adopt new Board Policy No. BP 040 — Electronic Signatures and Approvals Submitted By: Initiating Dept./Div.: Donna Anderson, Assistant to the Administration/Secretary of the District Secretary of the District Katie Young, Secretary of the District REVIEWED AND RECOMMENDED FOR BOARD ACTION: John Huie, Information Technology Manager Kevin Mizuno, Finance Manager Philip Leiber, Director of Finance and Administration Kenton L. Alm, District Counsel Roger S. Bailey, General Manager ISSUE: Adoption of new Board policies requires approval of the Board of Directors. Staff is proposing adoption of a new Board policy accepting the use of electronic signature and approval technology at Central San. BACKGROUND: Central San has invested in and continues to improve district-wide business processes. In moving forward with the following goals established by the Board, staff has drafted a new Board policy sanctioning the use of electronic signatures and approvals as a standard practice at Central San, whether during a pandemic or otherwise: • Reducing the use of paper, • Embracing the use of technology to improve and modernize operations through technology and efficiency measures, and • Being agile and adaptable to address unforeseen scenarios affecting the work environment. Legal Framework The Federal Electronic Signatures in Global and National Commerce Act enacted in 2000 permits but does not require parties to use electronic signatures. Two state laws govern the use of electronic signatures for public agencies. The Uniform Electronic Transactions Act (Civil Code section 1633.1 et seq.) governs "electronic signatures" and Government Code Section 16.5 governs "digital signatures." An "electronic signature" is "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record." (Civ. Code, § 1633.2(h).) A "digital signature" Page 1 of 6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 6 of 17 AMENDED AGENDA Page 4 of 8 is an electronic identifier, created by a computer, intended by the party using it to have the same force and effect as the use of a manual signature. (Gov. Code, § 16.5(d).) A digital signature is a subset of an electronic signature and is more secure and reliable than other forms of electronic signatures. The Secretary of State has adopted regulations concerning the two acceptable forms of technology— "public key cryptography" and "signature dynamics" - for use by public entities for digital signature transactions. The use of electronic signatures on legally binding documents is prevalent in the private sector and is becoming more widely used among public agencies. Use of Electronic Signatures at Central San A couple of years ago, staff in the Plant Operations Division began using a cloud-based platform called DocuSign to approve and submit regulatory reports and other time- sensitive documents. DocuSign is an electronic signature software that is approved by the California Secretary of State. The Purchasing Division began routing contracts via DocuSign last year, greatly expediting the approval process. In late 2019, the Capital Projects Division began circulating project bid advertisement documents in-house using DocuSign, with excellent results. Since the onset of the COVID-19 pandemic, the use of electronic signatures at Central San has expanded to the Finance Division to facilitate invoice processing and procurement card approvals, and to the Secretary of the District's office to enable execution of Board minutes, resolutions and ordinances. With DocuSign, staff has been able to continue to efficiently process a wide variety of documents while much of staff has been sheltering in place. Electronic Approvals Integrated with ERP System The District's new state-of-the-art enterprise recourse planning (ERP) system, Oracle Cloud Fusion, is planned to go-live on September 1, 2020 and largely relies on electronic approvals in-lieu of signatures on physical documents. The new ERP system, which has been configured and tested heavily by District staff and the implementation consultant (Emtec) over the past year, will necessitate electronic approvals in order to issue payment on invoices, procurement card statements, and travel reimbursement requests. Unlike the current legacy system, the new ERP is being configured with logical computer automated internal controls that will prevent obligations from being paid absent approval by the appropriate employee. Computer controls are more reliable than manual internal controls, which rely on individual judgment to verify the legitimacy of approval signatures and agree the approving employee's credentials to the approval matrix currently in place. Given the importance of this process, it is recognized that a policy outlining expectations for electronic signatures/approvals is warranted. Benefits of Electronic Signatures The use of electronic signatures improves efficiency and productivity by facilitating signatures among parties in different locations. A contributing factor to this improved efficiency is that it is available to approvers 24/7. That aspect has become increasingly important because many approvers are apt to sign documents quite often outside of normal business hours. This technology also reduces the generation of paper records (and Central San's environmental impact), and the staff time and costs associated with N:\ADMINSUP\ADMIN\DIST-SEC\Policies&Procedures Board&Administrative\Board Policies(BP)-Drafts\BP xxx-Electronic Signatures DRAFT)\Att 1 to 7-7-20 Admin Comm Item(PP&Draft Policy).doc Page 2 of 6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 7 of 17 AMENDED AGENDA Page 5 of 8 transmitting, approving, tracking and ultimately storing physical documents. Any electronic documents generated and executed electronically are subject to the District's records management program and records retention periods as if they existed in paper form. Documents for Which Electronic Signatures are Prohibited Some documents are not suitable for electronic signatures; for instance, signatures that require notarization. At Central San, that would include documents related to real property transactions, including but not limited to quitclaim deeds and real property agreements. There may be other instances where electronic signatures would not be desirable, including those where a certain level of formality is appropriate. District Counsel has opined that the use of electronic signatures on minutes, ordinances and resolutions during the pandemic or other emergencies, where obtaining wet signatures is difficult or may lessen social distancing, is practical and justified; however, he would prefer to return to wet-signatures for those types of documents once the Board Members and staff are available to sign in person. It is also conceivable that wet signatures may be desired for certain inter-agency documents, such as memoranda of understanding with outside agencies, unless the use of electronic signatures is agreed to by all parties. Central San's current arrangement with the Contra Costa County Treasury-Tax Collector acting as the District's treasurer necessitates wet signatures being physically delivered to County offices for certain transactions such as journal entries, investment purchases, ACH/EFTs, and checks. While addressing logistical challenges at the onset of COVID- 19, deviations were temporarily granted to this strict policy for journal entries and ACH/EFTs. However, the County has since reverted to the old method of requiring physical documents with wet signatures. Staff will continue to monitor this matter and request the County consider adopting more modern business practices allowing for acceptance of electronic documents and approvals. Nothing in the proposed policy requires the use of electronic signatures, but it is the intention that the use of electronic signatures be authorized to the fullest extent of the law for those categories of documents deemed of a more routine nature, and where the convenience and time savings of doing so increases efficiencies and/or results in a reduction in the use of paper. Proposed Policy/Administrative Procedures Central San desires to benefit from the efficiencies of electronic signatures and approvals, while using technology approved by the Secretary of State. The attached proposed Board policy would formalize the Board's stance on electronic signatures and approvals as a standard practice. If the policy is approved, staff will develop related administrative procedures to operationalize the use of electronic signatures and approvals in accordance with best industry practices, which would include addressing security issues such as a prohibition against users sharing their unique User ID and password with others and requiring digital signature certificates accompany documents with electronic signatures. N:\ADMINSUP\ADMIN\DIST-SEC\Policies&Procedures Board&Administrative\Board Policies(BP)-Drafts\BP xxx-Electronic Signatures DRAFT)\Att 1 to 7-7-20 Admin Comm Item(PP&Draft Policy).doc Page 3 of 6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 8 of 17 AMENDED AGENDA Page 6 of 8 Concludinq Remarks Staff has drafted the new Board policy to encompass both electronic signatures on District documents and electronic approvals as part of the ERP system. As to the latter, the Board, as part of its commitment to the new ERP system, has already endorsed the use of the new signature approval process. The comments in this Position Paper with regard to electronic approvals are to brief the Board Members as to the electronic approvals that are a part of the ERP system and insure they are comfortable with that process. Regarding electronic signatures, the Board has heretofore given no such endorsement This is an area for which the Board is being asked to use its discretion at this time by adopting the proposed policy. Staff drafted the policy to encompass both electronic signatures and electronic approvals because it makes sense to have a single policy governing both electronic processes. ALTERNATIVES/CONSIDERATIONS: The Board of Directors may choose not to adopt a policy in support of electronic signatures and approvals, or the Board could ask staff to provide more information related to electronic signature options. FINANCIAL IMPACTS: The costs for implementing electronic signatures, presently through the use of DocuSign, are about $850 per annual license. The costs for 37 licenses (approximately $31,400) have been paid during Fiscal Year (FY) 2019-20 and run through April 2021. These 37 licenses accommodate nearly all Administrative Support staff. Twenty-five of those licenses were added since the COVID-19 pandemic so that staff could process documents using this technology during the shelter-in-place orders. The FY 2020-21 Budget provides $12,000 for this software. Staff will, over the course of the next year, determine whether to: (1) potentially extend the current arrangement funding the gap between the currently budgeted amount of $12,000 and the $31,400 licensing costs from the Operating and Maintenance budget savings; (2) consider a lower cost alternative to DocuSign; or (3) reduce the number of licenses to keep within the budgeted amount. The number of licenses may be reduced in the future once the Oracle ERP system is fully implemented and once staff has fully returned from teleworking. It may be that some licenses can be consolidated among staff within the same workgroup. COMMITTEE RECOMMENDATION: This matter was reviewed by the Administration Committee on July 7, 2020. The Committee recommended RECOMMENDED BOARD ACTION: Adopt new BP No. 040 — Electronic Signatures and Approvals, effective immediately. Attached Supporting Document: N:\ADMINSUP\ADMIN\DIST-SEC\Policies&Procedures Board&Administrative\Board Policies(BP)-Drafts\BP xxx-Electronic Signatures DRAFT)\Att 1 to 7-7-20 Admin Comm Item(PP&Draft Policy).doc Page 4 of 6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 9 of 17 AMENDED AGENDA Page 7 of 8 1. Draft BP No. 040—Electronic Signatures and Approvals Strategic Plan Tie-Ins: GOAL ONE— Customer and Community •Strategy 1 — Deliver high-quality customer service GOAL SIX— Innovation and Optimization •Strategy 2— Improve and modernize operations through technology and efficiency measures GOAL SEVEN—Agility and Adaptability •Strategy 1 — Maintain a safe working environment for employees and the public during the COVID-19 pandemic •Strategy 2— Plan ahead for scenarios of direct adverse impacts N:\ADMINSUP\ADMIN\DIST-SEC\Policies&Procedures Board&Administrative\Board Policies(BP)-Drafts\BP xxx-Electronic Signatures DRAFT)\Att 1 to 7-7-20 Admin Comm Item(PP&Draft Policy).doc Page 5 of 6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 10 of 17 AMENDED AGENDA Page 8 of 8 DRAFTAttachment 1 Number: BP 040 Related Admin. Procedure: AP 040 Authority: Board of Directors Adopted: �] Revised: Reviewed: CENTRALSAN Initiating Dept./Div.: Administration/SOD BOARD POLICY ELECTRONIC SIGNATURES AND APPROVALS PURPOSE To establish a policy on the use of electronic signatures and approvals on District documents. POLICY In furtherance of its objectives to embrace innovation, increase efficiencies, and encourage the use of paperless electronic documents, it is the policy of the Board of Directors to support the use of electronic signatures on District documents and to support the use of electronic approvals as part of the District's enterprise resource planning (ERP) system. To the fullest extent permitted by law, Central San accepts electronic signatures on District documents as legally binding and equivalent to handwritten signatures to signify an agreement in accordance with California Government Code Section 16.5. For authorized documents under this policy where state or federal laws, regulations, or rules require a handwritten signature, that requirement is met if the document contains an electronic signature, unless otherwise prohibited by such laws, regulations or rules. The General Manager or designee is responsible for determining acceptable technologies and vendors for electronic signatures to ensure the security and integrity of any data and signatures, and shall comply with all applicable regulations, including but not limited to ensuring that the level of security used to identify the signer of a document and transmit the signature are sufficient for the transaction being conducted. In addition, to the extent necessary, the General Manager or designee shall ensure that any certificate involved in obtaining a digital signature by the signer is sufficient for the District's security and interoperability needs. The use, or Central San's acceptance, of an electronic signature is at the option of Central San and the signer(s). Nothing in this policy requires Central San to use or accept the submission of a document containing an electronic signature. [Original retained by the Secretary of the District] Pa e6of6 July 7, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 11 of 17 AMENDE�AGENDA