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HomeMy WebLinkAboutAdministration MINUTES 09-08-20 Page 2 of 9 A016i CENTRAL SAN CENTRAL CONTRA COSTA SANITARY DISTRICT 5019 IMHOFF PLACE, MARTINEZ, CA 9,4553-A392 SPECIAL MEETING OF THE BOARD OF DIRECTORS: MICHAEL R.MCGILL CENTRAL CONTRA COSTA President SANITARY DISTRICT TAD JPILECKI President Pro Tem ADMINISTRATION COMMITTEE PAUL CAUSEY M I N U T E S JAMES A.NEJEDLY DAVID R, WILLIAMS Tuesday, September 8, 2020 PHONE: (925)228-9500 FAX. (925)372-0192 8:30 a.m. www.centralvan.org Executive Conference Room 5019 Imhoff Place Martinez, California (All attendees participated via videoconference) Committee: Chair David Williams Member Mike McGill Staff. Roger S. Bailey, General Manager Kent Alm, District Counsel Katie Young, Secretary of the District Phil Leiber, Director of Finance and Administration Jean-Marc Petit, Director of Engineering and Technical Services (left after Item 4.d.) Stephanie King, Purchasing and Materials Manager (left after Item 4.d.) Kevin Muzino, Finance Manager Teji O'Malley, Human Resources and Organizational Development Manager Tim Potter, Environmental Compliance Superintendent and President, Management Support/Confidential Group (MS/CG) (joined during Item 4.a.; left after Item 4.d.) Todd Smithey, Finance Administrator (joined during Item 4.a.; left after Item 4.d.) Christina Gee, Management Analyst Donna Anderson, Assistant to the Secretary of the District 1. Public Message Regarding COVID-19 This meeting was held in accordance with the Brown Act as in effect under the State Emergency Services Act, the Governor's Emergency Declaration related to COVID-19, and the Governor's Executive Order N-29-20 issued on March 17, 2020 that allowed attendance by Board Members, District staff, and the public to participate and conduct the meeting by teleconference, video- September 18, 2020 Special Board Meeting Agenda Packet- Page 147 of 154 Page 3 of 9 Special Administration Committee Minutes September 8, 2020 Page 2 conference, or both. The agenda included instructions for options in which the public could participate in the meeting. 2. Call Meeting to Order Chair Williams called the meeting to order at 8:36 a.m. 3. Public Comments — None. 4. Items for Committee Recommendation to Board a. Follow-up Strategy for District Counsel Kenton L. Alm's Succession Ms. O'Malley reviewed the two options described in the agenda material, including projected recruitment timelines and a comparison of how sister agencies procure their legal services. Mr. Bailey said that, fundamentally and beyond just the recruitment process, the Committee and Board need to advise which of the two options they prefer: (1) a sole proprietor supplemented by a law firm, or(2) an outside law firm. He acknowledged that the current arrangement with Mr. Alm is somewhat unique in that he has been exclusive to Central San since he retired from Meyers Nave. It may be difficult to find another individual willing to be exclusive to Central San, and be available to the extent that Mr. Alm has, and at his current rates. Chair Williams agreed that the situation is somewhat unique but there might be other attorneys in similar situations who would be interested in such an arrangement. Mr. Bailey said the question becomes whether that is a path the Board wishes to follow, knowing it may have to plan for succession every few years because the attorney may be retired. Member McGill said he understood that the Board would be open to considering an individual who may not be exclusive to Central San, adding that his impression from the California Association of Sanitation Agencies (CASA) attorneys`conference was that most attorneys serve more than one firm. Mr. Bailey said that was something the Board must decide. Mr. Alm said he would be willing to reach out to several contacts to see if it might yield any potentially qualified candidates. He was hopeful the Board was open to the idea, adding that it would be impossible to know at this point if anyone is available and what their conditions might be. September 18, 2020 Special Board Meeting Agenda Packet- Page 148 of 154 Page 4 of 9 Special Administration Committee Minutes September 8, 2020 Page 3 A lengthy discussion took place during which the following were addressed: 1) Timing Considerations: Noting that the estimated recruitment timeframe for Option 1 was 22 weeks and that it could be longer depending on the approach taken, Chair Williams asked Mr. Alm how long he expected to remain with Central San, absent any unforeseen circumstances. Mr. Alm said he intended to work through 2021 and was unwilling to commit to anything beyond that at this time. Given his response, the Committee agreed that it would be prudent to take Mr. Alm up on his offer to begin seeking potential candidates through his network of contacts sooner rather than later and to refrain from issuing any Request for Proposal (RFP) until the outcome of Mr. Alm's solicitation efforts is known. 2) Dissecting Option 1: The original Option 1 was to perform an executive recruitment and contract with an individual attorney as an independent contractor who is not a member of a larger public law firm, with backup and supplemental services provided by an independent legal firm. This would be similar to the current arrangements with Mr. Alm and Meyers Nave. However, as the discussion progressed, this option was parsed into three pre-steps (before any executive recruitment and before considering proceeding with Option 2 (an RFP)), with Mr. Alm conducting the following searches: • Option 1A — For a sole proprietor who would be exclusive to Central San • Option 1B— For a sole proprietor with Central San as the primary client, but not the only client • Option 1 C— For a small law firm with five or fewer attorneys Mr. Bailey offered that he and Mr. Alm could begin coordinating an approach utilizing information similar to what would be included in an RFP to identify the scope of the position to aid Mr. Alm in his solicitation efforts. Ms. O'Malley said she could provide that information. 3) Other Considerations: It was noted that the Committee had held two discussions on this topic, and it was desirable to seek direction from the full Board before proceeding. Mr. Bailey said he would agendize the matter for the next Board meeting to see if there was consensus to proceed with the types of candidates described in Options 1A, 1B, and 1 C above. Chair Williams agreed but added that he did not favor issuing an RFP at this time. Member McGill agreed, acknowledging that a general solicitation could be commenced at any time, depending on the outcome of Mr. Alm's efforts. September 18, 2020 Special Board Meeting Agenda Packet- Page 149 of 154 Page 5 of 9 Special Administration Committee Minutes September 8, 2020 Page 4 Mr. Bailey also pointed out that whatever approach is taken, it was important to keep in mind sustainability and the importance of having backup counsel available in the event of an unforeseen occurrence. Chair Williams agreed that any of the three subcomponents under Option 1 would require backup legal counsel services. COMMITTEE ACTION: The Committee recommended seeking Board direction/consensus to authorize District Counsel Kent Alm to proceed with conducting an informal search for legal services as described in the three subcomponents to Option 1 listed below, before conducting any executive recruitment (previous Option 1) or issuing any Request for Proposal for legal counsel services (Option 2): • Option 1A — Search for a sole proprietor who would be exclusive to Central San; • Option 1 B — Search for a sole proprietor with Central San as the primary client, but not the only client; and • Option 1 C — Search for a small law firm with five or fewer attorneys. b. Receive Draft Fiscal Year 2019-20 Strategic Plan Annual Report Ms. Gee reviewed the presentation included with the agenda material, noting that all goals were fulfilled for the second year of the two-year Strategic Plan. She reviewed all six goals and highlighted some of the primary accomplishments. During her presentation, Ms. Gee noted that the savings from switching to Ca1PERS healthcare just over a year ago yielded $6.1 million in savings, which exceeded the amount indicated on slide 6. She also outlined the objectives for the first year of the Fiscal Years 2020-22 Strategic Plan. Member McGill expressed a great deal of satisfaction with the District's strategic planning efforts, nothing that when one stops and takes stock of the numerous achievements in the report, it is very impressive. Chair Williams echoed those sentiments, stating that this type of strategic planning effort has been in place at Central San for approximately six years. The quarterly progress reports are essential for keeping everything on track and monitoring progress, and the end results are notable. He said he found no other agencies with a strategic planning program that is better than Central San's. He thanked staff for doing an excellent job. COMMITTEE ACTION: Recommended Board receipt. September 18, 2020 Special Board Meeting Agenda Packet- Page 150 of 154 Page 6 of 9 Special Administration Committee Minutes September 8, 2020 Page 5 C. Review draft Position Paper to adopt two new Board Policy Nos.: 1) BP 041 — Pension Funding; and 2) BP 042 — Other Post-Employment Benefits (OPEB) Funding Mr. Leiber stated that the concept of adopting these two new Board policies, which provide roadmaps for achieving 100% funding for both the pension and OPEB funding obligations, was discussed at two workshops held in November 2019 and March 2020. Pension Fundinq Policy: Based on the workshop discussions, staff developed a pension funding policy which, at its core, indicates the action to be taken if funding falls below 100%. That action is guided by a matrix. During the previous workshop presentations, the matrix specified the number of years to achieve fully-funded status if the funding ratio fell within specific ranges. However, the matrix in the proposed pension funding policy has been modified to use a formula for restoring funding to 100%. The advantage of a formula- based matrix is that it involves a linear approach as opposed to a stair-step approach, which staff believes to be more beneficial. Bartel Associates (the District's independent actuarial advisor) ran some models on the effectiveness of the formula-based matrix to assess its effectiveness relative to Contra Costa County Employees' Retirement Association's (CCCERA's) standard approach. It was determined that, in certain circumstances, additional contributions beyond those required by CCCERA would be specified by the matrix. Mr. Leiber reiterated that the core of the pension funding policy is a formula- based matrix that indicates how to close the gap if the District's pension funding is less than 100%. However, nothing in the proposed policy would require rates to be raised to cover funding shortfalls beyond the contributions required by CCCERA. The proposed policy provides a framework, not a mandate. For this reason, staff recommends Board adoption of the proposed pension funding policy. OPEB Funding Policy: Unlike the pension funding policy, Mr. Leiber said there is no matrix for the OPEB funding obligations if they fall below specific targets. The reason is that the funding level for the OPEB obligations is currently very good. An updated valuation was received within the past week indicating that the current funding level is a very healthy 87%. If the pension matrix works as intended, staff could potentially recommend incorporating a matrix in the OPEB policy at a later date. Member McGill opined that the draft Position Paper was lengthy, but very well written. Given the progress the District has made toward reducing its September 18, 2020 Special Board Meeting Agenda Packet- Page 151 of 154 Page 7 of 9 Special Administration Committee Minutes September 8, 2020 Page 6 unfunded liabilities over the past six to eight years, he suggested that CASA and/or the California Special Districts Association (CSDA) might be interested in learning more about the District's approach and how it has worked. Chair Williams pointed out that perhaps reaching out to them more generally to gauge their interest might be the best approach. COMMITTEE ACTION: Recommended Board approval. d. Review draft Position Paper to approve proposed revisions to: 1) Board Policy No. BP 005 - Statement of Investment Policy; and 2) Investment Guidelines Documents (IGDs) related to the Public Agencies Post-Retirement Health Care Plan Trust, which includes both of the following: • IGD for the existing Government Accounting Standards Board 45 Other Post-Employment Benefits Trust (GASB 45 OPEB Trust), and • IGD for the Pension Prefunding Trust Kevin Mizuno reviewed the information included with the agenda material. Member McGill said he appreciated receiving the update and was glad that staff is following up on the possibility of utilizing the California Asset Management Program (CAMP) as an alternative to the State's Local Agency Investment Fund (LAIF). Mr. Leiber noted that further information about CAMP would be provided to the Board when Contra Costa County allows voluntary treasury pool participants like Central San to participate in CAMP. COMMITTEE ACTION: Recommended Board approval. 5. Other Items a. Receive update on employee benefits for calendar year 2021 Ms. O'Malley briefly recapped the information contained in her memo included with the agenda material. This report is the first time the benefits update covers a calendar year because Ca1PERS`rates are adjusted based on the calendar year. For 2021, the first full year under Ca/PERS, the overall increase in employee benefits premiums was 6.1% or about $500,000 annually. That increase is approximately$80,000 less than the 7.25% projected increase included in the FY 2020-21 budget. In response to a question from Chair Williams, it was explained by Ms. O'Malley and Mr. Smithey that the District's projected premiums are September 18, 2020 Special Board Meeting Agenda Packet- Page 152 of 154 Page 8 of 9 Special Administration Committee Minutes September 8, 2020 Page 7 governed by assumptions provided every two years by Bartel Associates, based on OPEB valuation actuarial reports. Member McGill said he was pleased with the budgeting and the estimates, which illustrate that staff has been appropriately conservative. Chair Williams agreed and said it was nice to see that the savings from transitioning to Ca1PERS were a bit better than estimated. COMMITTEE ACTION: Received the update. b. Hold follow-up discussion on District Counsel opinion with respect to Shelter-In-Place order for essential workers aged 65 and older This discussion was requested at the July 21, 2020 Committee meeting where Mr. Alm was asked to update his opinion as to whether Board Members aged 65 and older have the option, as essential workers, to attend meetings in person at the District offices if required safety measures are taken. Mr. Alm said the real question was whether those aged 65 and older or those with underlying health conditions are prohibited from attending meetings in person, or whether they are essentially warned not to attend based on being in a higher risk category. He said the simple answer was there is no prohibition under any state or county orders preventing them from attending in-person meetings as long as the required safety measures are in place. Mr. Alm said the same question was asked of the District's labor counsel, Daniel Clinton of Hanson Bridgett, LLP, in terms of employees aged 65 and older and those with underlying health conditions returning to the workplace. His response echoed Mr. Alm's opinion that there is no prohibition under federal or state employment laws or the state%ounty orders. In terms of how other public agencies are addressing this issue, Mr. Alm stated that none of the agencies he reached out to have begun holding in- person meetings. The general thinking seems to be that until the Governor terminates the Brown Act exceptions that allow for all municipalities to conduct teleconferenced meetings during the pandemic, they will continue to do so. Having said that, he reiterated that there is no order prohibiting Board Members over 65 or anyone with underlying conditions from attending meetings in person, as long as safety measures are in place. Member McGill said the information presented by Mr. Alm conflicted with the information given by State Senator Steve Glazer in July, reminding everyone that the shelter-in-place order remains in effect for anyone aged 65 and older. Mr. Alm admitted that as a public policy statement he did not quarrel with Mr. Glazer's interpretation. However, the language in the Governor's orders September 18, 2020 Special Board Meeting Agenda Packet- Page 153 of 154 Page 9 of 9 Special Administration Committee Minutes September 8, 2020 Page 8 does not go so far as to prohibit older individuals from going out in public. He believed Mr. Clinton would agree. Chair Williams said that, as a person over the age of 65, he would continue to shelter in place and look forward to returning to in-person meetings in the future. COMMITTEE ACTION: Held discussion. 6. Announcements - None. 7. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items COMMITTEE ACTION: Received the list. 8. Future Scheduled Meetings Tuesday, September 29, 2020 at 8:30 a.m. (Member McGill notified staff that he must leave by 10:00 a.m.) Tuesday, October 13, 2020 at 8:30 a.m. Tuesday, November 3, 2020 at 8:30 a.m. 9. Adiournment — at 10:26 a.m. September 18, 2020 Special Board Meeting Agenda Packet- Page 154 of 154