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Home My WebLink About08.a. Committee Minutes - Finance 06-25-24Page 1 of 8 Item 8.a. LCENTRAL SAN July 11, 2024 FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: JUNE 25, 2024 - FINANCE COMMITTEE - MEMBER PILECKI AND MEMBER HOCKETT (ALTERNATE) Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Finance Committee minutes 06-25-24 2. (Handout) Loss Control Report July 11, 2024 Special Board Meeting Agenda Packet - Page 34 of 41 Page 2 of 8 110ENTRAL SAN REGULAR MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FINANCE COMMITTEE MINUTES Tuesday, June 25, 2024 2:30 p.m. Committee: Chair Tad Pilecki Member Barbara Hockett (Alternate) Guests: Lesley Murphy, PFMAM (left after Item 3.c.) Justin Resuello, PFMAM (left after Item 3.c.) Attachment 1 BOARD OF DIRECTORS: MARIAHN LAURITZEN President MICHAEL R. MCGILL President Pro Tent BARBARA D.HOCKETT TAD J PILECKI FLORENCE T WEDINGTON PHONE: (925) 228-9500 FAX.• (925) 372-0192 www.centralsan.org Staff. - Roger S. Bailey, General Manager Katie Young, Secretary of the District Greg Norby, Deputy GM — Engineering & Operations (joined during Item 3.c.) Philip Leiber, Deputy GM — Administration Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Stephanie King, Contracts & Procurement Administrator (left after Item 4.b.) Diana Diaz, Provisional Accounting Supervisor (left after Item 3.b.) Shari Deutsch, Risk Management Administrator Stacey Durocher, Administrative Services Assistant Karen DeLong, Administrative Services Assistant Call Meeting to Order Chair Pilecki called the meeting to order at 3:18 p.m. 2. Public Comments None. As requested by staff in advance of the meeting, Chair Pilecki announced that Item 3.c. would be heard as the first order of business. July 11, 2024 Special Board Meeting Agenda Packet - Page 35 of 41 Page 3 of 8 Finance Committee Minutes June 25, 2024 Page 2 3. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred May 10, 2024 through June 13, 2024 Item 3.a. and the balance of the agenda were heard at the conclusion of Item 3. c. The Committee had no questions. COMMITTEE ACTION: Reviewed and recommended Board approval. b. Receive Budget -to -Actual Expenditure overview through the month of May 2024 Mr. Mizuno provided an overview of the Fiscal Year (FY) 2023-24 Budget -to - Actual Expenditures for the Operations and Maintenance (O&M) and Sewer Construction Fund (SCF) through the month of May 2024. Operations & Maintenance (O&M): Total year-to-date expenditures through May 2024 were $78.3 million and were lower than the year-to-date budget estimate of $84 million resulting in a $5.7 million or eight percent favorable variance. Mr. Mizuno stated that the main contributor to this variance was a full-time employee (FTE) vacancy rate of 5.7 percent rate in May, which has been higher than budgeted throughout the year. One main driver for this large vacancy factor was that four new FTEs were added in the FY 2023-24 budget. Other noteworthy vacancies included four out of five budgeted General Manager (GM) specials that were not filled during the fiscal year as well as the Director of Engineering position remaining vacant throughout FY 2023-24. Mr. Leiber also clarified that the new Limited Duration Employee (LDE) program was also delayed despite being budgeted for six LDE positions. Sewer Construction Fund: Total expenditures through May 2024 were $66.9 million and were less than the year-to-date target amount of $107.4 million. The actual spending projection for the end of the current Fiscal Year (FY) was approximately $80.7 million and is slightly less than the proposed 2024-25 FY Budget amount of $92.1 million. Chair Pilecki expressed his concern that the dotted line (projected spend) is less than what was previously presented to the Finance Committee, lower by approximately $12 million. Mr. Lopez stated that there are still two months' worth of expenditure's that are not accounted for in the projections. July 11, 2024 Special Board Meeting Agenda Packet - Page 36 of 41 Page 4 of 8 Finance Committee Minutes June 25, 2024 Page 3 There was a discussion regarding being too optimistic in making projections. Mr. Bailey stated that rates are being set based on higher production and if not met it appears that rates are being raised prematurely. COMMITTEE ACTION: Reviewed and recommended Board receipt. C. Review draft Position Paper to authorize the General Manager to execute a contract with PFM Asset Management (PFMAM) for investment management and advisory services for a five-year term This Item was heard as the first order of business. Mr. Mizuno provided an overview of the draft Position Paper included in the agenda materials. He stated that with the assistance of Eide Bailly, staff developed a Request for Proposal (RFP) for the investment management and advisory services. The RFP was issued on March 20, 2024, and six proposals were received on May 1, 2024. Three firms were considered finalists and invited to participate in the interview process, and ultimately PFMAM was selected. Mr. Mizuno pointed out that PFM and PFMAM are separate entities, after the asset management branch of PFM was acquired by U.S. Bank a few years ago. PFMAM is an independent subsidiary that is a separate division of U.S. Bank and is subject to different regulations and managed separately from the banking and custodial services of U.S. Bank. Mr. Mizuno stated that it was important to note that of the six firms, PFMAM was the second lowest in terms of overall cost. He stated that while cost was important to consider, it was not the ultimate driver in the selection process. PFMAM was selected for meeting multiple criteria such as understanding the unique needs of the District, their experience working with other public entities like Central San, and their understanding of relevant government investments. Other criteria such as the qualifications of the proposed team and the quality of their references were also considered. It was also noted that PFMAM had the largest governmental investment portfolio of all the firms that participated in this process. Member Hockett asked what a basis point standard fee was. Mr. Leiber explained that it is just terminology that is used. A basis point is 11100th of one percent. Chair Pilecki referenced prior communication regarding Central San possibly leaving the investment function with the County but did not see that option listed as an alternative. Mr. Leiber stated that the County did not offer that as an option again after Russell Watts' retirement. July 11, 2024 Special Board Meeting Agenda Packet - Page 37 of 41 Page 5 of 8 Finance Committee Minutes June 25, 2024 Page 4 In response to Chair Pilecki's question about the unavoidable perception that non -independence may exist, Mr. Leiber stated this was discussed and was not considered to be a red flag. He stated that this was more of a theoretical risk. The Committee was pleased that staff mentioned the possible perception of a conflict because it provided a high level of transparency for the public. Mr. Mizuno stated that Government Finance Officers Association (GFOA) Best Practice recommendations provided specific language and guidance regarding this issue. Ms. Murphy added that aside from being a separate division and under separate management from U.S. Bank, PFMAM is subject to different regulatory procedures than the U.S. Bank International Trust & Custody (IT&C) group. Following this item, the agenda reverted to the original order hearing Item 3. a. COMMITTEE ACTION: Reviewed and recommended Board approval. 4. Other Items *a. Review Risk Management Loss Control Report as of June 6, 2024 Ms. Deutsch provided an overview of the report included in the agenda materials. She stated that the Loss Control Report has been updated since it was posted in the agenda. Ms. Deutsch mentioned that the claim for D&D Jewelers was denied based on the work permit hours that were allowed by the City of Walnut Creek. Mr. Bailey stated that the District needs to be sensitive to the business owners in that area. Member Hockett suggested circling back with D&D Jewelers. Ms. Deutsch stated she would do so. COMMITTEE ACTION: Reviewed and provided input to staff. b. Review annual contracts and blanket purchase orders (BPO's) older than five years with an annual spend greater than $25,000 Ms. King provided an overview of the report included in the agenda materials. Chair Pilecki asked about the RFP for Security services. Ms. Deutsch explained that the RFP has been delayed. She added that the District's security consultant, Guidepost Solutions, Inc. has reviewed and expanded the scope of work as well as the criteria needed in the RFP to include costs July 11, 2024 Special Board Meeting Agenda Packet - Page 38 of 41 Page 6 of 8 Finance Committee Minutes June 25, 2024 Page 5 for services that are currently being provided as well as the ability of the company to handle additional services that the District may want to add or enhance when there is a better understanding of the District's overall security master plan. In response to Chair Pilecki's question whether the expanded services include coverage for two entry gates, Ms. Deutsch stated that the entry gates are included. Member Hockett thanked staff for monitoring the contracts. COMMITTEE ACTION: Reviewed and provided input to staff. 5. Announcements Mr. Bailey announced that the Central San Academy will take place June 25, 2024, at 6:00 p.m. in San Ramon. 6. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items None. COMMITTEE ACTION: Received the list and provided input to staff. 7. Future Scheduled Meetings Tuesday, July 23, 2024 at 2:30 p.m. Tuesday, August 27, 2024 at 2:30 p.m. Tuesday, September 17, 2024 at 2:30 p.m. 8. Adjournment — at 4:19 p.m. * Attachments July 11, 2024 Special Board Meeting Agenda Packet - Page 39 of 41 CCCSD 2023-24 Loss Control Report Attachment 2 (Handout) New Incident OVERFLOWS 0 Ongoing Incident 0 Prior FY 0 Litigated Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to I Ck # Type Paid * Paid ** Closed 1 2024002 SSO 9/21/23 Ron Coleman 512 Moraga Way Moraga $ $ $ 397.00 Claimant / 100140 Closed Louis & Susan Meunier 516 Moraga Way Moraga $ 4,944.38 $ - $ 5,341.38 ServiceMaster / 100153 Closed 2 2024003 SSO 9/29/23 Erling Horn 1029 Windsor Dr Lafayette $ $ 3,801.69 $ - $ 3,801.69 ServiceMaster / 100153 Closed 3 2024005 SSO 10/2/23 Roesbery Car Care 3099 N Main Walnut Creek $ $ 88,342.44 Business Loss / Various $ 28,688.29 ServiceMaster / 100151 $ 34,157.56 Claimant / 100150 Pool & Spa Supplies 3099A N Main Walnut Creek $ $ 329.18 $ 10,213.75 $ 161,731.22 Claimant / 100152 Closed 4 2024008 SSO 2/19/24 Dana Nadel 164 Lucinda Lane Pleasant Hill $ $ 5,064.61 $ 1,276.00 $ 6,340.61 Claimant / 100165 Total - SSO 1 $ $ 42,828.15 $ 134,386.75 1 $ 177,214.90 OTHER LIABILITY CLAIMS Status # ID# Loss Type DOL Other Party Address City Reserve Expenses Paid * Claim Paid ** Incident Total Paid to I Ck # Pending A 2019014 GL 7/26/18 Jane Kappel 25 Arlene Lane Walnut Creek $ - $ 6,000.00 $ $ 6,000.00 Inverse -Under Submission Open B 2021015 GL 12/14/20 A R Johnson (GAL) M73, 205 Alamo View Walnut Creek $ 25,000.00 $ - $ $ 25,000.00 PI: In Discovery Open C 2021024 GL 2/1/17 EBMUD 17-29 Chapel Drive Lafayette $ 25,000.00 $ $ $ 25,000.00 2017+ slide, served 5/25 Open E 2023002 GL 2/1/22 Weldon's Xcompl 644 Vallecito Ln Walnut Creek $ 10,000.00 $ $ $ 10,000.00 Tendered to Contractor Open F 2023010 GL 9/30/22 Frederick Hagen Sycamore Vly Rd. Danville $ 25,000.00 $ $ $ 25,000.00 Bike Injury - Suit Filed Closed 1 2024010 GL 4/1/24 Emily St. John Herald's Cleaners 1527 Cypress Street 1525 Cypress Street Walnut Creek Walnut Creek $ - $ 1,500.00 $ $ $ 912.60 $ - $ 2,412.60 H2O Break -Business Loss H2O Break -Business Loss Open 2 2024012 GL 5/1/24 D&D Jewelers 1343 Locust St Walnut Creek $ - $ $ - $ - Business Loss -Denied Total - Liab $ 86,500.00 $ 6,000.00 $ 912.60 $ 93,412.60 PLUMBING REIMBURSEMENTS Loss Expenses Claim Status # ID# DOL Other Party Address City Reserve Incident Total Paid to I Ck # Type Paid * Paid ** Closed 1 2024009 PL 3/15/2024 Shannon Gruber 55 Ocean Pines Ln Alamo $ 249.00 $ 249.00 Claimant / 100169 Total - PL I $ - I $ - I $ 249.00 I $ 249.00 I July 11, 2024 Special Board Meeting Agenda Packet - Page 40 of 41 CCCSD 2023-24 Loss Control Report AUTO INCIDENTS Status # INLoss Type DOL Other Party Location Veh# Reserve Expenses Paid * Loss Paid ** Incident Total Paid to 1 Ck # Closed 1 2024001 AL 7/5/23 Kemal Gunel 1273 Locust Street, W 288 $ $ $ 3,222.20 $ 3,222.20 Claimant/ 100132 Closed 2 2024006 APD 12/5/23 Mohamed Radwan Akky 94 Muth Dr. 290 $ $ $ 4,229.89 $ (4,299.89) $ - $ - $ (70.00) Laf Auto Body / 100160 Subro. State Fund Open 3 2024007 APD 12/20/23 Elodia Urbina Olympic Blvd, WC 314/M232 $ $ - $ 8,075.91 $ 8,075.91 NAF, Seeking Recovery Open 4 2024013 AL 2/27/24 Sergey Arutyunyan Diamond @ Willow P 309 $ 15,000.00 $ 15,000.00 AF Rearend, BI/PD Total -Auto I $ 15,000.00 I $ (70.00) I $ 11,298.11 I $ 26,228.11 I CENTRAL SAN'S PROPERTY LOSSES Status # IN Loss DOL Other Party Address City Reserve Expenses Loss Cost Incident Total Paid to 1 Ck # Type Paid * Closed 1 2024004 PD 9/26/23 HOB3 Boiler Leak 5019 Imhoff Martinez $ - $ 28,916.76 $ - $ 28,916.76 ServiceMaster / 100153 I Total - Prop I $ $ 28,916.76 I $ - I $ 28,916.761 Notes: Prior year closed claims have been removed from report. Prior year active claims show a letter in the # column to distinguish them from current year claims. 6125124 July 11, 2024 Special Board Meeting Agenda Packet - Page 41 of 41