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Home My WebLink About05. Adopt proposed revision to Board Policy BP 015 - Asset ManagementItem 5. BOARD OF DI RECTORS POSIT ION PA PER M E E T ING D AT E:F E B R UA RY 22, 2024 S UB J E C T: A D O P T P R O P O S E D C HA NG E S TO B O A R D P O L I C Y (B P ) 015 - ASSET MANAGEMENT S UB M I T T E D B Y: G E O F F MI C HA L C Z YK, MA NA G E ME NT A NA LYS T I NI T I AT I NG D E PART M E NT: E NG I NE E R I NG A ND T E C HNI C A L S E RV I C E S- P D S-R AT E S A ND F E E S RE V IE WE D B Y:D A NE A G E MME L L , P L A NNI NG & D E V E L O P ME NT S E RV I C E S MA NA G E R K E V I N MI Z UNO, F I NA NC E MA NA G E R G R E G NO R B Y, D E P UT Y G E NE R A L MA NA G E R - O P E R AT I O NS R oger S . B ailey General Manager IS S UE Staf f is directed to take existing B oard Policies to the Administration Committee every two years for review. I f changes are proposed by staf f or the Committee, the changes are scheduled for consideration by the Board. T his item is a review of the proposed changes to Board P olicy No. B P 015 - A sset Management. B AC K G RO UND At its meeting on August 2, 2022, T he Administration Committee reviewed B oard Policy No. B P 015 - Asset Management. Chair P ilecki inquired about the capitalized asset value of $5,000 or greater and requested staff look into the rationale f or this amount and to also include additional language in the policy on the asset management program. Staf f made the following changes: 1) redefine asset pursuant to the Policy; 2) A dd language describing the Asset Management Plan; and 3) A dd language describing how assets will be handled for accounting and financial reporting purposes. February 22, 2024 Special Board Meeting Agenda Packet - Page 33 of 128 Page 1 of 6 A strikeout version of the P olicy showing the proposed revisions is attached. ALT E RNAT I V E S /C O NS I D E RAT IO NS T he B oard may elect not to adopt the proposed revisions to Board P olicy No. B P 015 – Asset Management. T his is not recommended, however, as the revisions will provide greater guidance to staf f for asset management purposes and will enhance transparency. T he Board may direct modif ications to the revisions being proposed to Board P olicy No. B P 015 – Asset Management or may direct other revisions. Should other revisions be requested that are not specif ied in this position paper, it is recommended that the B oard, via motion, direct specific revisions to be made to the attached draft policy document. F I NANC IAL I M PAC T S Adoption of the proposed revisions to B oard Policy No. B P 015 – Asset Management are not expected to have any immediate or direct f iscal impacts to C entral San. C O M M I T T E E RE C O M M E ND AT IO N T he Administration Committee reviewed this item at its A ugust 2, 2022 meeting and F ebruary 6, 2024 meeting and recommended approval. RE C O M M E ND E D B O ARD AC T I O N Adopt the proposed revisions to Board P olicy No. B P 015 – Asset Management, revising the definition of an asset, providing a description of the Asset Management Plan, and providing a description of how assets will be handled for accounting and financial reporting purposes. Strategic Plan Tie-I n G O A L O N E: Customer and C ommunity Strategy 1 – Deliver high-quality customer service AT TAC HM E NT S : D escription 1. Revised P olicy with markup 2. Revised P olicy without markup February 22, 2024 Special Board Meeting Agenda Packet - Page 34 of 128 Page 2 of 6 Number: BP 015 Authority: Board of Directors Effective: November 20, 2014 Revised: November 3, 2016 Reviewed: July 21, 2020, December 6, 2022 Initiating Dept./Div.: Engineering/ Planning & Development BOARD POLICY ASSET MANAGEMENT PURPOSE The purpose of this Board Policy is to recognize that the District •has invested significant resources in its assets, and •aims to optimize the management of these assets to deliver high quality and reliable services in a sustainable manner with an acceptable level of risk. DEFINITION An asset pursuant to this Policy refers to both physical and software intangible assets (i.e., software, easements, etc.) and is defined as having a replacement value greater than $5,000 and a useful life of at least two years. , that are (A) used for and or critical to operations, regulatory, or safety requirements and (B) have an initial useful life equal to or greater than two years. POLICY Asset management is a broad strategic framework that encompasses many disciplines involving the entire District. In support of its Mission, Vision, and Strategic Plan, the District sets forth the following directives related to asset management: Data and Knowledge The District will maintain a comprehensive asset register to facilitate management over the assets’ lifecycle. Information Systems The District will make capital and ongoing investments sufficient to own, operate, and maintain a reliable and state-of-the-art security-protected information management system that supports timely, evidence-based decision making at all levels of the organization. Processes and Practices The District will develop processes, procedures and practices for staff in support of this Policy ATTACHMENT 1 February 22, 2024 Special Board Meeting Agenda Packet - Page 35 of 128 Page 3 of 6 Number: BP 015 ASSET MANAGEMENT Page 2 of 2 using industry accepted guidelines and practices to provide consistency across the organization. People The District will implement education, training, and mentoring programs to ensure that asset management practices are widely communicated, understood, and implemented throughout the organization. Organization The District will establish organizational responsibility to lead and manage a comprehensive asset management program. Asset Management Plan An asset management plan shall be prepared and adopted by the District and then updated at least once every five years. The objectives of the plan will include: • Demonstrate Central San’s approach to optimizing the lifecycle management of the asset portfolio; • Describe how asset management will deliver the organizational objectives to implement and comply with the Asset Management Policy; and • Describe initiatives and plans of asset level activities for the next 5 years including asset valuation. • To maximize the remaining useful life of the assets Accounting and Financial Reporting The District shall establish procedures to ensure assets, particularly capital assets, are properly accounted for and reported on in the annual audited financial statements to achieve the following objectives: • Establish internal controls to reduce the risk misappropriation of capital assets to an acceptable level; • Compliance with generally accepted accounting procedures as issued by the Government Accounting Standards Board; • Ensuring reasonable capitalization thresholds and methods are applied to ensure the cost of capitalization does not exceed the benefit; and • Standardize the categories of capital assets to be reported on and their estimated useful lives. • [Original Retained by the Secretary of the District] February 22, 2024 Special Board Meeting Agenda Packet - Page 36 of 128 Page 4 of 6 Number: BP 015 Authority: Board of Directors Effective: November 20, 2014 Revised: November 3, 2016 Reviewed: July 21, 2020, December 6, 2022 Initiating Dept./Div.: Engineering/ Planning & Development BOARD POLICY ASSET MANAGEMENT PURPOSE The purpose of this Board Policy is to recognize that the District •has invested significant resources in its assets, and •aims to optimize the management of these assets to deliver high quality and reliable services in a sustainable manner with an acceptable level of risk. DEFINITION An asset pursuant to this Policy refers to both physical and intangible assets (i.e., software, easements, etc.) that are (A) used for and critical to operations, regulatory, or safety requirements and (B) have an initial useful life equal to or greater than two years. POLICY Asset management is a broad strategic framework that encompasses many disciplines involving the entire District. In support of its Mission, Vision, and Strategic Plan, the District sets forth the following directives related to asset management: Data and Knowledge The District will maintain a comprehensive asset register to facilitate management over the assets’ lifecycle. Information Systems The District will make capital and ongoing investments sufficient to own, operate, and maintain a reliable and state-of-the-art security-protected information management system that supports timely, evidence-based decision making at all levels of the organization. Processes and Practices The District will develop processes, procedures and practices for staff in support of this Policy using industry accepted guidelines and practices to provide consistency across the organization. ATTACHMENT 2 February 22, 2024 Special Board Meeting Agenda Packet - Page 37 of 128 Page 5 of 6 Number: BP 015 ASSET MANAGEMENT Page 2 of 2 People The District will implement education, training, and mentoring programs to ensure that asset management practices are widely communicated, understood, and implemented throughout the organization. Organization The District will establish organizational responsibility to lead and manage a comprehensive asset management program. Asset Management Plan An asset management plan shall be prepared and adopted by the District and then updated at least once every five years. The objectives of the plan will include: • Demonstrate Central San’s approach to optimizing the lifecycle management of the asset portfolio; • Describe how asset management will deliver the organizational objectives to implement and comply with the Asset Management Policy; and • Describe initiatives and plans of asset level activities for the next 5 years including asset valuation. • To maximize the remaining useful life of the assets Accounting and Financial Reporting The District shall establish procedures to ensure assets, particularly capital assets, are properly accounted for and reported on in the annual audited financial statements to achieve the following objectives: • Establish internal controls to reduce the risk misappropriation of capital assets to an acceptable level; • Compliance with generally accepted accounting procedures as issued by the Government Accounting Standards Board; • Ensuring reasonable capitalization thresholds and methods are applied to ensure the cost of capitalization does not exceed the benefit; and • Standardize the categories of capital assets to be reported on and their estimated useful lives. [Original Retained by the Secretary of the District] February 22, 2024 Special Board Meeting Agenda Packet - Page 38 of 128 Page 6 of 6