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08-10-11 Board Packet (Part 1)
OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY,CALIFORNIA WEDNESDAY August 10,2011 3:30 P.M. AGENDA 1.ROLL CALL 2.PLEDGE OF ALLEGIANCE 3.APPROVAL OF AGENDA 4.APPROVE THE MINUTES OF THE REGULAR MEETINGS OF MARCH 2,2011 AND APRIL 6,2011 5.PUBLIC PARTICIPATION -OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA RECESS TO CLOSED SESSION 6.CLOSED SESSION a)CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES:AD HOC UNREPRE- SENTED EMPLOYEE COMPENSATION COMMITTEE EMPLOYEE ORGANIZATION:OTAYWATER DISTRICT EMPLOYEES' ASSOCIATION b)CONFERENCE WITH LEGAL COUNSEL -EXISTING LITIGATION [GOVERNMENT CODE §54956.9(a)] (I)INFRASTRUCTURE ENGINEERING CORP.v.OTAY WATER DISTRICT,COUNTY OF SAN DIEGO,SUPERIOR COURT,CASE NO.37-2008-00093876-CU-BC-CTL 1 (II)MULTIPLE CASES RELATED TO THE FENTON BUSINESS CENTER AND FILED WITH THE SUPERIOR COURT OF THE COUNTY OF SAN DIEGO CONSOLIDATED UNDER CASE NO. 37-2007-00077024-CU-BC-SC c)CONFERENCE WITH LEGAL COUNSEL -ANTICIPATED LITIGATION [GOVERNMENT CODE §54956.9] 1 CASE RETURN TO OPEN SESSION 7.ADOPT RESOLUTION NO.4185 TO INCREASE THE REPRESENTED EM- PLOYEES'CONTRIBUTIONS TO THE CALPERS PENSION PLAN BY SEVEN (7)PERCENT AND RESOLUTION NO.4186 TO AMEND THE MEMORANDUM OF UNDERSTANDING WITH THE OTAY WATER DISTRICT EMPLOYEES' ASSOCIATION BY SIDE LETTER AGREEMENT REGARDING RETIREE HEALTH BENEFITS AND AN ADDITIONAL THREE-QUARTERS-OF-A- PERCENT (.075%)CALPERS CONTRIBUTIONS IN EXCHANGE FOR EN- HANCED RETIREE HEALTH BENEFITS (WILLIAMSON/BEACHEM) 8.APPROVE AN INCREASE TO THE FISCAL YEAR 2012 BUDGET FOR THE JAMACHA PIPELINE PROJECT FROM $20,300,000 TO $20,800,000 (KAY) 9.REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION.THE BOARD MAY ALSO TAKE ADDITIONAL ACTIONS ON ANY ITEMS POSTED IN CLOSED SESSION CONSENT CALENDAR 10.ITEMS TO BE ACTED UPON WITHOUT DISCUSSION,UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: a)AWARD A CONSTRUCTION MANAGEMENT AND INSPECTION SER- VICES CONTRACT TO SAIC IN AN AMOUNT NOT-TO-EXCEED $359,013.32 FOR THE RALPH W CHAPMAN WATER RECLAMATION FACILITY UPGRADES PROJECT b)APPROVE A PROFESSIONAL AS-NEEDED LAND SURVEYING SER- VICES AGREEMENT WITH ALTA LAND SURVEYING,INC.IN AN AMOUNT NOT-TO-EXCEED $175,000 FOR FISCAL YEARS 2012 AND 2013 (ENDING JUNE 30,2013) c)APPROVE AN AGREEMENT WITH LOGICALIS INTEGRATION SOLU- TIONS,INC.,IN THE AMOUNT OF $69,454 FOR REDUNDANT CORE NETWORK SWITCHING GEAR 2 d)ADOPT RESOLUTION NO.4181 TO REVISE AND UPDATE VARIOUS DISTRICT BOARD OF DIRECTORS POLICIES ACTION ITEMS 11.ADMINISTRATION,FINANCE AND INFORMATION TECHNOLOGY a)RECEIVE BOARD OF DIRECTORS POLICY NO.27,INVESTMENT POLICY,FOR REVIEW AND ADOPT RESOLUTION NO.4184 AMEND- ING THE POLICY AND RE-DELEGATING AUTHORITY FOR ALL IN- VESTMENT RELATED ACTIVITIES TO THE CHIEF FINANCIAL OFFIC- ER IN ACCORDANCE WITH GOVERNMENT CODE SECTION 53607 (CUDLlP) 12.BOARD a)DISCUSSION OF 2011 BOARD MEETING CALENDAR INFORMATIONAL ITEMS 13.THIS ITEM IS PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOS- ES ONLY.NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEM: a)NORTH DISTRICT AND SOUTH DISTRICT INTERCONNECTION SYS- TEM PROJECT UPDATE REPORT (MARCHIORO) REPORTS 14.GENERAL MANAGER'S REPORT a)SAN DIEGO COUNTY WATER AUTHORITY UPDATE 15.DIRECTORS'REPORTS/REQUESTS 16.PRESIDENTS REPORT/REQUESTS 17.ADJOURNMENT 3 All items appearing on this agenda,whether or not expressly listed for action,may be deliberated and may be subject to action by the Board. The Agenda,and any attachments containing written information,are available at the District's website at www.otaywater.gov.Written changes to any items to be considered at the open meeting,or to any attachments,will be posted on the District's website. Copies of the Agenda and all attachments are also available through the District Secretary by contacting her at (619)670-2280. If you have any disability which would require accommodation in order to enable you to participate in this meeting,please call the District Secretary at (619)670-2280 at least 24 hours prior to the meeting. Certification of Posting I certify that on August 5,2011,I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District,said time being at least 72 hours in advance of the regular meeting of the Board of Directors (Government Code Section §549542). Executed at Spring Valley,California on August 5,2011. '''1 \<::'\/"i,/'7>'---)1./'1'//:;,_~;_"/-'\"/',:?',,._::,f,/ \Susan Cruz,District Secr~tary 4 AGENDA ITEM 4 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT March 2,2011 1.The meeting was called to order by President Bonilla at 3:30 p.m. 2.ROLL CALL Directors Present:Bonilla,Croucher,Gonzalez and Robak Directors Absent:Lopez (due to a work commitment) Staff Present:General Manager Mark Watton,Asst.General Manager of Administration and Finance German Alvarez,Asst.General Manager of Engineering and Water Operations Manny Magana,Attorney Richard Romero,Chief of Information Technology Geoff Stevens,Chief Financial Officer Joe Beachem,Chief of Engineering Rod Posada,Chief of Operations Pedro Porras,Chief of Administration Rom Sarno, District Secretary Susan Cruz and others per attached list. 3.PLEDGE OF ALLEGIANCE 4.APPROVAL OF AGENDA A motion was made by Director Croucher,seconded by Director Gonzalez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Croucher and Robak None None Lopez to approve the agenda. 5.APPROVE THE MINUTES OF THE REGULAR MEETING OF AUGUST 4,2010 A motion was made by Director Croucher,seconded by Director Robak and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Croucher and Robak None None Lopez to approve the minutes of the regular meeting of August 4,2010. 1 6.SAN DIEGO COUNTY WATER AUTHORITY PRESENTATION REGARDING THEIR WATER RATES AND THEIR LAWSUIT WITH METROPOLITAN WATER DISTRICT (MWD)CHALLENGING MWD RATES Mr.Dennis Cushman,Assistant General Manager of the San Diego County Water Authority (CWA),reviewed CWA's history,rates and its lawsuit with Metropolitan Water District (MWD)with regard to their rates.He indicated that back in 1991 the State was experiencing water shortages due to drought.This was a very pivotal time in CWA's history and from that experience,CWA embarked on a long term multi-decade investment program to diversify this region's water supplies.He stated that in 1991,95%of the region's water supply came from MWD.Today,the region's water supply is very diversified with only 48%of the water supply coming from MWD and the remaining from various sources that include the liD transfer agreement,conservation,the All American &Coachella Canal Lining project, recycled,local surface and groundwater.He stated that the goal is that by 2020, the supply from MWD would be reduced to 23%of the region's water supply. He noted that CWA currently charges $1,026 per acre foot (AF)of water and reviewed the breakdown of where the $1,026 is used in CWA's budget.He noted that 55%of the $1,026 is paid to MWD for water and for the transportation of water, through the Quantification Settlement Agreement (QSA),to San Diego.He noted that MWD's rate increases are the major driver of CWA's rate increases to its member agencies and that MWD's rate will increase 55%from 2008-2012 (during this five-year period).He stated that MWD's rate structure is flawed in that it misallocates its costs between its transportation and water supply rate.He noted that 90%of all revenues collected by MWD,is collected on the sale of water.As water sales decline,rates are increased.CWA's representatives on MWD's board are focused on advocating cost containment,persuading them to charge appropriately for their services,opposing unnecessary supply project expenditures and the misallocation of its rates.CWA's board voted in June 2011 to file a lawsuit against MWD to challenge how it allocates its costs in its rates.He stated that the misallocation of costs translates into an overcharge of $31 million in 2011 and,over a 45 year period,an overcharge of approximately $2.1 billion to CWA.Mr. Cushman reviewed MWD's rate structure (reference attached copy of presentation), the status of the litigation and indicated that it is estimated that the court decision would be made in late 2011 or early 2012.It is expected,as a large amount of money is at stake ($1.3 to $2.1 billion),that whichever party loses,the case would be appealed and the matter will be in the appellate court for the next several years. Mr.Cushman also reviewed CWA's budget and 2011 rate increase in detail (reference attached copy of presentation).Director Croucher thanked Mr.Cushman for his presentation.He asked if he could also update Otay's board on the San Vicente Reservoir and Lake Hodges projects.Mr.Cushman indicated that Lake Hodges is overflowing,which is rare and only occurs once or twice a decade.He stated Lake Hodges is the largest watershed in San Diego County and fills very quickly in wet years and,in multiple dry years,it can turn into a forest.CWA is currently building a pump station at Lake Hodges and a pipeline to connect it to the Olivenhain Reservoir.This will allow CWA to maximize the efficient use of the 2 available storage capacity in Lake Hodges during dry years and the County will gain 20,000 AF storage capacity for emergency storage.The San Vicente Reservoir project consists of a pipeline and the raising of the reservoir's wall 117 feet.The raising of the wall will increase the reservoirs storage capacity by 152,000 AF (additional storage),of which,52,000 AF will complete the emergency storage needs for the County.The remaining 100,000 AF will be carryover storage that may be captured in wet years and utilized during dry years.It is expected that the project will be completed in 2013.Lake Hodges and the San Vicente Reservoir represent a portion of CWA's emergency storage program.The entire program cost is approximately $1.5 billion. 7.PUBLIC PARTICIPATION -OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA No one wished to be heard. CONSENT CALENDAR 8.ITEMS TO BE ACTED UPON WITHOUT DISCUSSION,UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: A motion was made by Director Croucher,seconded by Director Gonzalez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Croucher and Robak None None Lopez to approve the following consent calendar items: a)APPROVE THE ISSUANCE OF A PURCHASE ORDER TO HAAKER EQUIPMENT COMPANY IN THE AMOUNT OF $305,511.87 FOR THE PURCHASE OF ONE (1)NEW CLASS 8 HYDRO-EXCAVATOR b)ADOPT RESOLUTION NO.4169 AMENDING BOARD OF DIRECTORS POLICY 29,CLAIMS HANDLING PROCEDURE ACTION ITEMS 9.ADMINISTRATION,FINANCE AND INFORMATION TECHNOLOGY a)AUTHORIZE THE GENERAL MANAGER TO NEGOTIATE AND ENTER INTO AGREEMENTS WITH:1)SAGE DESIGN,INC.IN THE AMOUNT OF $243,792,PLUS APPLICABLE TAXES AND SHIPPING CHARGES,FOR FIRETIDE RADIOS AND RELATED HARDWARE;2)PRIME ELECTRIC IN 3 AN AMOUNT NOT-TO-EXCEED $63,838 FOR THE INSTALLATION OF ELECTRICAL AND WIRELESS HARDWARE AT MULTIPLE SITES THROUGHOUT THE CENTRAL AND SOUTH DISTRICT;AND 3)HENRY BROTHERS IN AN AMOUNT NOT-TO-EXCEED $183,873 FOR CAMERA HARDWARE AND INSTALLATION AT ALL NORTH DISTRICT SITES CONNECTED TO THE DISTRICTS WIRELESS NETWORK Chief of Information Technology Geoff Stevens indicated that this project is the final phase for the installation of wireless backbone communications systems at District facilities to carry video and data information,including SCADA,in a highly secure and high bandwidth environment.This final phase of the project includes the installation of wireless facilities at 60 sites and will complete the wireless backbone project.The project is scheduled to be finished by the end of the year and when complete it will provide for wireless communications at all District facilities.He recognized Mr.Gene Palop,Reclamation Plant Supervisor,and Mr.Bruce Trites, Network Engineer,for their work on the project.Mr.Trites demonstrated the video capability of the new wireless facilities which would provide efficiency.One such enhanced efficiency is that staff could "visit"District facility sites via live video surveillance without having to visit the site physically.It was noted that the cameras will record when motion is detected and the images are retained for three (3)to six (6)months depending on the activity at the site.It was shared that a lighting plan for each facility is being developed to assure video clarity at night,and also to help deter vandalism/theft.There was a discussion of increased visibility/safety by utilizing infrared cameras.It was requested that staff identify two critical sites where infrared cameras may be tested. A motion was made by Director Robak,seconded by Director Gonzalez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Croucher and Robak None None Lopez to approve staffs'recommendation. INFORMATIONAL ITEMS 10.FISCAL YEAR 2011 SECOND QUARTER CAPITAL IMPROVEMENT PROJECT UPDATE REPORT Associate Civil Engineer Daniel Kay presented the second quarter CIP update in which he highlighted the status of CIP expenditures,significant issues and progress milestones on major projects. He noted that the Fiscal Year 2011 CIP consists of 82 projects totaling $28.5 million.He stated that overall expenditures through the second quarter of Fiscal 4 Year 2011 totaled approximately $8 million,which is approximately 28%of the District's fiscal year budget He presented a slide depicting a map showing the District's major CIP projects,their status and their location within the District's service area.He stated,of the 24 projects depicted,three are in the planning stage,sixteen are in design,three are in construction and two have been completed and are in service during the fiscal year. He reviewed the status of the District's flagship projects which included the 1296-1 and 2 Reservoirs Coating and the Otay Lakes Road 12-inch Recycled Water Pipeline and Potable Utility Relocation Project Associate Civil Engineer Kay also presented slides which provides the status of the various consultant contracts for planning,design,public services, construction/inspection and environmental.He also presented slides providing a listing of all CIP projects planned in Fiscal Year 2011 and the status of each. 11.REPORT ON DIRECTORS'EXPENSES FOR THE 2ND QUARTER OF FISCAL YEAR 2011 Payroll and Accounts Payable Supervisor,Sean Prendergast,indicated that Policy 8 of the District Code of Ordinances requires that staff present a quarterly update of Directors'expenses and per diems.He indicated that this item was also reviewed by the Finance,Administration and Communications Committee at a meeting held on February 16,2011. He presented slides showing in detail each director's expenses for the second quarter of fiscal year 2011 (October 1 to December 31,2010)and total expenses for each.He indicated that the total board of directors'expenses and per diems for the second quarter was $3,025.50.The total expenses and per diems to date for fiscal year 2011 is $5,972.Staff projects that the total expenditure at the end of fiscal year 2011,July 1,2010 through June 30,2011,to be $11,944. General Manager Watton indicated that Director Croucher has been assigned to serve on many of the District's board committees and future presentations will include information reflecting the number of committee assignments and the number of meetings attended by each director during the quarter reported. 12.OCEAN DESALINATION OPINION SURVEY REPORT Drs.Richard Parker and Lou Rea,Rea and Parker Research,presented the findings of the Ocean Desalination Opinion Survey that they completed on behalf of the District Dr.Parker indicated that his firm performed a random sample telephone survey in November 2010.Four hundred (400)District customers were contacted and were asked their opinion about the desalinated ocean water as an alternate source of potable water.He indicated that a few months earlier,his firm conducted two (2)focus groups to begin to discuss some of the issues/concerns with regard to a possible desalination water source.The focus groups were very enthusiastic,not only about desalination in general,but about the possible location 5 at Rosarito Beach.He stated that the District wished to follow the focus group survey with a scientific sample to see how the findings would compare.Mr.Parker reviewed in detail the findings of the telephone survey (see attachment A to staffs' report for details of the findings)and indicated that a substantial portion of the District's customers supported the development of desalinated water.They felt that it was a good way to serve the District's customers and they also felt that it was important that the desalinated water reduce our dependence on imported water. They preferred that the desalinated plant be located in the United States as it would bolster the local economy,but they did not oppose the plant being located in Mexico. It was noted that the margin of error for the survey is ±5%.There was discussion that the cost for desalinated versus imported water was converging.There was further discussion that the survey did not explore how customers felt about the cost versus the time to develop the plant (plant could take many years to complete),but that the topic was discussed with the focus group.Dr.Parker did not have the information with him on the focus groups'position on the issue,but indicated that he would provide the information following the board meeting. 13.BOARD a)DISCUSSION OF 2010 AND 2011 BOARD MEETING CALENDAR There were no changes to the meeting calendar. REPORTS 14.GENERAL MANAGER'S REPORT SAN DIEGO COUNTY WATER AUTHORITY UPDATE General Manager Watton indicated that CWA is focused on rates and developing their budget for the upcoming fiscal year. GENERAL MANAGER'S REPORT General Manager Watton indicated that each year the District's water system is inspected by the California Department of Public Health.He stated that their report was positive and read a sentence from their report which indicated,"Otay's water system is well maintained and operated."He stated that this is a real tribute to the folks that operate and maintain our systems. He presented his report which included an update on Water Conservation contests and programs available to District customers,the status of the District's new bill format,an update on the progress of the District's AMR program,information on new alternative payment types and an update on the City of San Diego Recycled Water Study. 6 15.DIRECTORS'REPORTS/REQUESTS No reports were provided. 16.PRESIDENTS REPORT President Bonilla reported on meetings he attended during the month of February 2011 and indicated that on February 8 he met with General Manager Watton to discuss items that are scheduled to be presented at the February committee meetings.On February 19 he met with General Manager Watton and General Counsel Daniel Shinoff to review the March board meeting agenda.He stated on February 28 he attended an Ad Hoc Legal Matters Committee where issues related to the IEC matter were discussed. Chief Financial Officer Beachem read an excerpt from an article into the record,at President Bonilla's request: "Each year we make a conscious effort to improve the quality of financial documents to make them easier to read and understand,"said Jaime Bonilla, President of the District's Board of Directors."This national award reflects the board's ongoing commitment to public accountability and transparency." It was indicated that the District has received the Distinguished Budget Presentation Award from the Government Finance Officers Association of the US and Canada for the past seven (7)years.President Bonilla congratulated and thanked staff on the receipt of the award. 17.CLOSED SESSION The board recessed to closed session at 5:10 p.m.to discuss the following matters: a.CONFERENCE WITH LEGAL COUNSEL -EXISTING LITIGATION [GOVERNMENT CODE §54956.9(a)] (I)INFRASTRUCTURE ENGINEERING CORP.v.OTAY WATER DISTRICT,COUNTY OF SAN DIEGO,SUPERIOR COURT,CASE NO.37 -2008-00093876-CU-BC-CTL (II)MULTIPLE CASES RELATED TO THE FENTON BUSINESS CENTER AND FILED WITH THE SUPERIOR COURT OF THE COUNTY OF SAN DIEGO CONSOLIDATED UNDER CASE NO.37- 2007-000n024-CU-BC-SC 18 REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION.THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION The board reconvened from closed session at 5:50 p.m.Attorney Richard Romero reported that there were no reportable actions taken in closed session. 7 19.ADJOURNMENT With no further business to come before the Board,President Bonilla adjourned the meeting at 5:50 p.m. President ATTEST: District Secretary 8 AGENDA ITEM 4 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT April 6,2011 1.The meeting was called to order by President Bonilla at 3:35 p.m. 2.ROLL CALL Directors Present: Directors Absent: Staff Present: Bonilla,Gonzalez,Lopez and Robak Croucher General Manager Mark Watton,Asst.General Manager of Administration and Finance German Alvarez,Asst.General Manager of Engineering and Water Operations Manny Magana,General Counsel Daniel Shinoff,Chief of Information Technology Geoff Stevens,Chief Financial Officer Joe Beachem,Chief of Engineering Rod Posada, Chief of Operations Pedro Porras,Chief of Administration Rom Sarno,District Secretary Susan Cruz and others per attached list. 3.PLEDGE OF ALLEGIANCE 4.MOMENT OF SILENCE IN MEMORY OF MR.FRANK BIEHL,LEE &RO,INC. Ron Ripperger,District Manager of Engineering,Design and Construction spoke in memory of Frank Biehl and provided the following: "Frank Biehl was the Manager of Lee &Ro's San Diego office.Frank died on March 10,2011.Frank was a Professional Civil Engineer and Land Surveyor and spent most of his work life here in the San Diego Region.Frank was responsible for overseeing the design of some of the District's most successful Pipeline Projects including the Recyled Supply Link and the Jamacha Pipeline.For those who knew him,he was cheerful,had a wonderful smile and sense of humor,was a vibrant, feisty,fun loving person who could not help but bring a smile to your face.Frank was always in attendance at District Board meetings and interested in getting the latest information.He could also be found handing out his trademark "Tide Tables" booklets at the District,hence one of his many nicknames "High Tide".Frank gained many good friends here at the District because of his honesty,integrity,and commitment to getting the work done.He was truly one of a kind and one of the last true "gentlemen"left who personified "style".He will be missed." A moment of silence was held in memory of Mr.Frank Biehl. 5.APPROVAL OF AGENDA 1 President Bonilla recommended pulling Agenda Item 13,Closed Session - Conference with Legal Counsel -Existing Litigation [Government Code §54956.9(a)],as Director Croucher was unable to attend today's meeting.Director Croucher sits on the Ad Hoc Legal Matters Committee and President Bonilla would like to consider the item at a later date when Director Croucher is present. A motion was made by President Bonilla,seconded by Director Lopez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Lopez and Robak None None Director Croucher to approve the agenda as amended by President Bonilla. 6.APPROVE THE MINUTES OF THE REGULAR MEETING OF SEPTEMBER 1, 2010 A motion was made by Director Lopez,seconded by Director Gonzalez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Lopez and Robak None None Director Croucher to approve the minutes of the regular meeting of September 1,2010. 7.PUBLIC PARTICIPATION -OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA No one wished to be heard. CONSENT CALENDAR 8.ITEMS TO BE ACTED UPON WITHOUT DISCUSSION,UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: Director Mark Robak requested that Item 7f,Approve a One-Year Agreement with Brownstein,Hyatt,Farber and Schrek (BHFS)for an Amount Not-to-Exceed $160,000 for Comprehensive State and Federal Legislative Issues Advocacy,be pulled for discussion. President Bonilla presented item 7f for discussion.In response to an inquiry from Director Robak regarding the services of BHFS,General Manager Mark Watton 2 indicated that attorneys,Ms.Chris Frahm and Mr.David Bernhardt,from BHFS will be the primary contacts for State and Federal issues respectively.The proposed BHFS agreement will cover the continuance of legislative advocacy in Sacramento and the scope of work will be expanded to include legislative advocacy for the Rosarito Desalination Project.General Manager Watton stated that Ms.Frahm has worked with the District on State issues (i.e.health,environmental protection,water quality)and indicated that the proposed one-year agreement would expand her firm's services to provide Federal representation.Mr.Bernhardt is a partner in the firm and works in their Washington D.C.office.He has worked with the Bureau of Reclamation,has experience with Presidential Permits and is familiar with its process.His services are also required to assist with regulatory issues associated with the project.General Manager Watton indicated that the project will require signatures from both the United States'and Mexico's Presidents and may involve a Minute Order under the Mexican Water Treaty between the United States of America and Mexico that was established in 1944. After receiving General Manager Watton's report,Director Robak withdrew his recommendation to pull Item 7f from the consent agenda. A motion was made by Director Robak,seconded by Director Lopez and carried with the following vote: Ayes: Noes: Abstain: Absent: Directors Bonilla,Gonzalez,Lopez and Robak None None Director Croucher to approve the following consent calendar items: a)APPROVE THE ISSUANCE OF A PURCHASE ORDER TO CUMMINS CAL PACIFIC,LLC IN THE AMOUNT OF $63,125.38 FOR THE PURCHASE OF ONE (1)REPLACEMENT EMERGENCY STANDBY GEN-SET FOR THE RALPH W.CHAPMAN WATER RECYCLING FACILITY b)ADOPT ORDINANCE NO.529 AMENDING SECTION 36.03, ENCROACHMENT IN DISTRICT EASEMENTS,OF THE DISTRICT'S CODE OF ORDINANCES c)APPROVE THE FISCAL YEAR 2011 LEGISLATIVE PROGRAM d)ADOPT ORDINANCE NO.528 AMENDING SECTION 34,ISSUANCE AND PAYMENT OF WATER BILLS,AND SECTION 53,FEES,RATES, CHARGES AND CONDITIONS FOR SEWER SERVICE,OF THE CODE OF ORDINANCES e)ADOPT RESOLUTION NO.4170 DESIGNATING SPECIFIC STAFF POSITIONS TO BE AUTHORIZED AS AGENTS TO DEAL WITH THE STATE OF CALIFORNIA,OFFICE OF EMERGENCY SERVICES,ON THE 3 DISTRICTS BEHALF IN ALL MATTERS PERTAINING TO DISASTER ASSISTANCE f)APPROVE A ONE-YEAR AGREEMENT WITH BROWNSTEIN,HYATT, FARBER AND SCHREK FOR AN AMOUNT NOT-TO-EXCEED $160,000 FOR COMPREHENSIVE STATE AND FEDERAL LEGISLATIVE ISSUES ADVOCACY g)APPROVE AN AGREEMENT FOR PROFESSIONAL AS-NEEDED HYDRAULIC MODELING SERVICES WITH NARASIMHAN CONSULTING SERVICES,INC.IN AN AMOUNT NOT-TO-EXCEED $175,000 DURING FISCAL YEARS 2011,2012 AND 2013 (ENDING JUNE 30,2013) h)APPROVE THE WATER ASSESSMENT REPORT DATED FEBRUARY 2011 FOR THE RABAGO TECHNOLOGY PARK PROJECT AS REQUIRED BY SENATE BILL 610 i)ADOPT RESOLUTION NO.4171 ANNEXING PROPERTY OWNED BY DAVID L.AND SUZANNE M.DUKE (APN:519-281-07-00)TO THE OTAY WATER DISTRICTS IMPROVEMENT DISTRICT NO.18 j)APPROVE A CONSTRUCTION CONTRACT TO SEPULVEDA CONSTRUCTION FOR THE 944-1R PUMP STATION UPGRADE PROJECT IN AN AMOUNT NOT-TO-EXCEED $1,162,423 k)APPROVE REVISIONS TO THE COOPERATIVE AGREEMENT FOR THE UNITED STATES BUREAU OF RECLAMATION TITLE XVI FUNDING FOR THE OTAY WATER DISTRICT RECYCLED WATER INFRASTRUCTURE PROGRAM I)APPROVE AMENDMENTS TO TWO (2)UTILITY AGREEMENTS (NOs. 31755 AND 31926)WITH THE CALIFORNIA DEPARTMENT OF TRANSPORTATION m)APPROVE A PROFESSIONAL SERVICES CONTRACT WITH TETRA TECH,INC.FOR THE DESIGN OF PHASE 2 OF THE RANCHO DEL REY WELL PROJECT IN AN AMOUNT NOT-TO-EXCEED $724,493.50 n)APPROVE THE ISSUANCE OF A PURCHASE ORDER TO SLOAN ELECTROMECHANICAL SERVICE &SALES FOR THE PROCUREMENT OF FIVE (5)PUMPS,MOTORS AND DISCHARGE HEADS FOR THE 711-1 PUMP STATION IMPROVEMENT PROJECT IN AN AMOUNT NOT-TO- EXCEED $204,934.45 INFORMATIONAL ITEMS 9.ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY.NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS. 4 a)2011 RESIDENTIAL CUSTOMER OPINION AND AWARENESS SURVEY REPORT (REA AND PARKER RESEARCH INC.) Rea and Parker Research presented the findings of the Residential Customer Opinion and Awareness Survey in detail (see attachment A to staffs'report for details of the findings).It was indicated that 308 respondents participated in the survey that was conducted from January 6-11,2011. In response to a question from Director Robak,Rea and Parker Research stated that in 2005 and 2006 there was a slight increase in the number of respondents who favored the use of recycled water for residential front yards,but overall the respondents opinion on such use has remained fairly consistent over the years. Director Robak suggested that the District include a question that asks customers their opinion of the use of recycled water on both residential front and backyard landscapes after they are made aware that it is already occurring in the state of Florida. Director Robak inquired if the survey included questions about "Potable Re-use." Rea and Parker Research indicated that it only inquires about respondents'opinion of its use as drinking water.However,the City of San Diego is currently conducting a customer survey that inquires more pointedly about respondents opinion on "Potable Re-Use."He stated that he would happy to share the results of the City's survey if the Board has interest.General Manager Watton indicated that the District's survey shows a downward trend in respondents'opinion on supplementing drinking water with potable re-use. Director Robak indicated that he was encourage by the survey's result regarding respondents'interest in Social Media where 61 %of respondents believe that it is important for the District to have a social media presence.Director Robak recommended that the next survey inquire about customers'opinion of videotaping or streaming meetings on the District's website. President Jaime Bonilla thanked Rea and Parker Research for their work on the Residential Customer Opinion and Awareness Survey and recommended in future that they provide an analysis of the report that indicates what has been learned from the survey findings;areas where the District can focus or make improvements in relation to the findings. b)FISCAL YEAR 2011 STRATEGIC PLAN AND PERFORMANCE MEASURES UPDATE REPORT Chief of Information Technology Geoff Stevens provided a detailed update on the Fiscal Year 2011 Strategic Plan and Performance Measures (see attachment A to staffs'report for details of the update). The Board commended Chief of Information Technology Stevens for his assistance in accomplishing and implementing the District's Strategic Plan.The board believes 5 the plan is a very important and viable tool for monitoring and tracking the District's progress,especially in our current economic situation.The Strategic Plan also motivates staff to execute the objectives and goals of the plan as it provides a visual of the District's progress. General Manager Watton indicated that on May 9,2011,an economist will provide a presentation on the local and state economy.The information presented will help develop the Strategic Plan for Fiscal Years 2012 to 2014 and the Fiscal Year 2012 budget which will be presented at the May 16,2011 special board meeting. General Manager Watton noted that the Strategic Plan and Performance Measure Report is available on the District's intranet and can be reviewed in more detail. 10.BOARD a)DISCUSSION OF 2011 BOARD MEETING CALENDAR It was discussed that several Directors would be out-of-town during the week of the August board meeting.The board suggested that the meeting be rescheduled to the following Wednesday,August 10,2011,and asked District Secretary Cruz to poll the members to determine a new date for the August meeting. REPORTS 11.GENERAL MANAGER'S REPORT GENERAL MANAGER'S REPORT General Manager Watton provided the Board a copy of a letter from the International Boundary and Water Commission (IBWC)United States and Mexico, dated March 25,2011.The letter indicated that Mexico has informed the IBWC that they will no longer require the May and June water deliveries and canceled water deliveries for the two months. General Manager Watton presented his report and indicated that staff of the Water Conservation Division provided a presentation at Cuyamaca College's 3rd Annual Sustainable Urban Landscapes Conference,that staff partnered with Sweetwater Authority and the Water Education Foundation to hold a Project WET (Water Education for Teachers)Educator Workshop,revised Summary Plan Descriptions have been distributed and that a Mexico Network for has been added to the dental plan,new alternative payment types are available to District customers,a new bill format is being developed by staff,the District has retained Mr.Alan Nevin,an economist and the Director of Economic Research at Marketpointe Realty Advisors, and the District's budget workshop is scheduled for May 16. SAN DIEGO COUNTY WATER AUTHORITY UPDATE There were no CWA updates to report. 6 12.DIRECTORS'REPORTS/REQUESTS Director Lopez indicated that he and Director Gonzalez attended a Delta Tour and stated that the tour was very informative.He indicated that he gained a better understanding of why local agencies stress the importance of conserving water.He noted that the tour included several presentations that provided information about the Rosarito Desalination Project.Director Lopez lastly shared that the project was also included in several presentations at the WateReuse Conference that he attended. Director Robak discussed the format of the Accounts Payable Demands List attached to the GM's Report and requested that staff add a time frame for each disbursement on the list as it would clarify if disbursements are for monthly or annual expenses.Director Robak indicated that he and Directors Lopez and Gonzalez attended a WateReuse Conference in Dana Point,California.He discussed the District's photo contest and indicated that the deadline to submit photos is April 18,2011.And lastly,Director Robak shared some of his memories of Frank Biehl and indicated his condolences to the Biehl family. 13.PRESIDENTS REPORT President Bonilla reported on meetings he attended during the month of March 2011 and indicated that on March 15 he attended an Ad Hoc Redistricting Committee meeting to discuss and begin the reapportionment of the District's divisional boundaries as required following a census.On March 16 he met with General Manager Watton to discuss items to be presented at the March committee meetings,and also attended the City of Chula Vista's Board of Ethics Committee to discuss the District's complaint filed with the committee.On March 17 he met with representative of Banco Popular to discuss possible services that the bank may provide to the District.On March 22 he met with Will Gustafson to discuss issues concerning the Salt Creek Golf Course lease.Lastly,on April 1 he met with General Manager Watton and General Counsel Dan Shinoff to discuss the April board agenda. President Bonilla shared that the District submitted a complaint to the City of Chula Vista's Board of Ethics Committee concerning the unethical demeanor of one of its members.He provided details of the complaint and shared his thoughts about the matter and indicated that as President of the Otay Water District,he feels that it is his duty to protect the reputation of the District and its employees and Board of Directors.He noted that if litigation is pursued in this matter,it would be handled through his own resources. General Manager Watton presented to the board a Distinguished Budget Award from the Governor's Finance Office Association (GFOA)that was awarded to the District's Chief Financial Officer Beachem and his staff.General Manager Watton noted that it was very nice to see Chief Financial Officer Beachem and his staff receive an award for their work.He noted that it is a great honor for staff to be recognized by peers as it is an indication that staff is looked upon as a role model. 7 President Bonilla and General Manager Watton congratulated Chief Financial Officer Beachem and his staff on their receipt of the award. 14.ADJOURNMENT With no further business to come before the Board,President Bonilla adjourned the meeting at 5:12 p.m. President ATTEST: District Secretary 8 AGENDA ITEM 7 STAFF REPORT TYPE MEETING:Regular Board Meeting SUBMITTED BY:Mark Watton General Manager APPROVED BY: (Chief) APPROVED BY: (Asst.GM): MEETING DATE: W.O.lG.F.NO: August 10,2011 DIV.NO.All. SUBJECT:ADOPT RESOLUTION #4185 AND RESOLUTION #4l.86 TO APPROVE ALLOWING REPRESENTED EMPLOYEES TO PAY AN ADDITIONAL 7.75%OF SALARY,FOR A TOTAL EMPLOYEE CONTRIBUTION OF 8.75%FOR CALPERS,IN EXCHANGE FOR ENHANCED RETIREE HEALTH BENEFITS GENERAL MANAGER'S RECOMMENDATION: That the Board of Directors adopt Resolution #4185 to increase the Represented Employees'contribution to the CalPERS Pension Plan by seven (7)percent and Resolution #4186 to amend the Memorandum of Understanding with the Otay Water District Employees'Association (OWDEA)by Side Letter Agreement regarding Retiree Health Benefits and an additional three- quarters-of-a-percent (0.75)CalPERS Contributions in exchange for enhanced Retiree Health Benefits. COMMITTEE ACTION: Please see Attachment "Au. PURPOSE: To allow Represented Employees to increase their Employees' contributions to CalPERS in exchange for enhanced Retiree Health Benefits,which will be effectively cost-neutral for the District. ANALYSIS: Background Since 1993,the District has had three Tiers of employees with regard to retiree health coverage for all regular full-time employees.Tiers I and II (those employees hired before July I, 1993)receive a lifetime Retiree Health Benefit if they meet certain age and service requirements.Prior to 2007,Tier III employees (those hired on or after July I,1993)who are age 55 and have 15 years of continuous service,had the ability to buy into the medical plan,at the employees'own expense,and stay on the plan until the employee was Medicare-eligible as long as the health plan allowed for participation. In 2007,when the District negotiated a six-year collective bargaining agreement with the Otay Water District Employees' Association (OWDEA),the Tier III benefit level was amended and provided that the District pays a monthly amount of $157.86 or the minimum required by the plan,which ever is greater for the District-selected (lowest cost)plan until the employee is Medicare-eligible.It was understood that few Tier III employees would begin retiring in the near future and that Retiree Health Benefits would again be the subject of future discussions with various employee groups. On July IS,2011,The Board of Directors met and approved an action that allowed Unrepresented Employees to exchange 7%of salary for enhanced Retiree Health Benefits with a 15 year eligibility period (Attachment B). On July 26,2011,the Represented Employees met and voted to make a proposal similar to that of the Unrepresented Employees except that the Represented Employees proposed an exchange of 7.75%of salary for a 20-year eligibility period for the Retiree Health Benefits. Proposal for Represented Employees The Represented Employees are represented by the Otay [!'Jater District Employees'Association.The Employees negotiate in good faith with the District and the results of the negotiations are documented in a collective bargaining agreement called a Memorandum of Understanding (MOU).In 2007,the District entered into a six-year MOU with the Represented Employees. Pursuant to Resolution #4110 and the Memorandum of Understanding that was negotiated in good faith with the OWDEA in 2007, employees received a 3.5%Cost of Living Adjustment (COLA) effective July 1,2011 and will receive a 3.5%COLA effective July I,2012. 2 be the It is proposed that the Represented Employees'contribution to CalPERS be increased by the same amount of the COLA (3.5% effective 7/1/11 and 3.5%effective 7/1/12).By July 1,2012, all Represented Employees will be contributing the full eight (8)percent employees'contribution.In exchange for the Represented Employees contributing the full employees' contribution to CalPERS,it is recomrnended that the District level the Tiers of Retiree Health Benefits so that all Represented Employees receive the same level of benefit at retirement.This would also change the contribution percentage for all newly hired Represented Employees.The Represented Employees propose a 20-year eligibility period.Employees would begin contributing 4.25%on August 15,2011,and the remaining 3.5%percent on July 1,2012,for a total of 7.75%.This is in addition to the 1%the employees already contribute for a total of 8.75%employees'contribution. Advantages Advantages to implementing this program include Represented Employees contributing the full employee portion of the CalPERS Pension Plan,8%plus an additional 0.75%of the employer portion,employees funding their Post Retirement Health Benefits,savings to the District on a long-term basis,and providing a leveled benefit for all Tiers of Represented Employees. Resolution #4185 (Attachment C) This Resolution is required by CalPERS in order to change the contribution percentage that the District is contributing on behalf of the Represented Employees for the employees' contribution of the Pension Plan. Resolution #4186 (Attachment D) This Resolution outlines the changes in the employees' contribution to the Pension Plan and Retiree Health Benefits that will be provided to the Represented Employees that would remain in force unless modified in subsequent collective bargaining agreements. Key provisions of this Resolution include: At age 55 and 20 years of continuous full-time service, Represented Employees will receive Retiree Health Benefits (paid by the District at 100%for employee coverage and 88% for dependent coverage)for health and dental coverage for life and this contribution will remain at this level of coverage throughout the retirement of the employee. Revised language clarifying that this benefit will guaranteed for life;however,the District reserves 3 right to make changes related to the overall administration of the plan (e.g.,changing health care providers)that do not have a major impact on the overall plan structure. Expand the survivor benefit from ending when the spouse reaches Medicare eligibility to a lifetime benefit. A hardship provision where an employee has 20 years of service,and is between the ages of 50 and 54,the employee would have the option to retire early through CalPERS and the District's retiree health provision at a reduced level of benefits.Hardships may include the serious and prolonged illness of a spouse where the employee is required to care for the spouse and other similar extraordinary circumstances. Summary of Employees in each Tier Prior to Board action on July 15,2011,to amend the Retiree Health Coverage for Unrepresented Employees,these employees were in three Tiers based on hire date.A breakdown has been provided of all the Unrepresented Employees,prior to the July 15 Board action,and current Represented Employees by Tier for reference (Attachment E). As part of the District's Succession Plan,the District attempts to anticipate vacancies at least six years ahead of time for planning purposes.It is noted by an asterisk in the tables when the District is a\oJare that employees will likely be retiring prior to reaching the required age and service requirements to be eligible for the Retiree Health Benefit. Actuarial Study Actuaries are skilled in mathematics,economics,computer science,finance,probability,statistics,and business to help businesses assess the risk of certain events occurring and to formulate policies that minimize the cost of that risk.The District is required to hire an Actuary every two years to perform a study that determines the cost of the District's Other Post Employment Benefit (OPEB)plan.The Actuary not only determines the current liability earned by the employees' service to date,but also looks at the unfunded liability and determines the annual funding required to bring the fund back to a fully funded status.This unfunded portion is called the Unfunded Actuarial Accrued Liability (UAAL)and is one of the two parts of the Annual Required Contribution (ARC).The remaining portion of the ARC is the portion of the future benefits which is earned from service in the current year.Each actuarial study looks at the various assumptions,updates them as needed,and then generates the various costs. 4 FISCAL IMPACT: The proposed changes result in an estimated net savings to the District of $28,700 per year.The Annual Required Contribution, or ARC,is the actuarially determined plan cost of the current year plus the amount needed to fund any shortfall in the trust. The total increase in the ARC,resulting from the proposed changes for Represented Employees,is $599,500.The total savings to the District of the additional 7.75%CalPERS funding by employees is $628,200 per year.The projected annual savings will be fully realized beginning in the second year as the employee contribution is phased in over two years. The attached table (Attachment F)shows the overall annual savings for both Represented and Unrepresented Employees to be $74,400 beginning in the second year,and continuing until the savings rate increases to $414,400 per year when the ARC payments are reduced.This table shows the savings based on the current year's salaries for both the Represented and Unrepresented Employees.The cumulative savings over 35 years is projected to be $5,150,500.The staff report presented at the July 15,2011 Board meeting regarding the Unrepresented Employees was prepared in fiscal year 2010 using 2010 salaries. The attached table updates this data with the current year salaries which is more reflective of the expected saving. STRATEGIC GOAL: Retain a Results-Oriented Workforce;Succession Planning for Key District Employees. LEGAL IMPACT: None. General Manager Attachment A -Committee Action Attachment B -Staff Report -Board Meeting on July 15,2011 Attachment C -Resolution #4185 Attachment D -Resolution #4186 5 Attachment E -Summary of Employees in each Tier of Retiree Health Coverage Attachment F -Annual Savings for Represented and Unrepresented Employees Attachment G -District Facts &Accomplishments Attachment H -June 3D,2011 GASB45 Actuarial Valuation Preliminary Results Attachment I -Power Point Presentation 6 SUBJECT/PROJECT: ATTACHMENT A ADOPT RESOLUTION #4185 AND RESOLUTION #4186 TO APPROVE ALLOWING REPRESENTED EMPLOYEES TO PAY AN ADDITIONAL 7.75% OF SALARY,FOR A TOTAL EMPLOYEE CONTRIBUTION OF 8.75%FOR CALPERS,IN EXCHANGE FOR ENHANCED RETIREE HEALTH BENEFITS COMMITTEE ACTION: The Ad Hoc Unrepresented Employee Committee met on August 4,2011 to review the proposal for the Represented Employees.A presentation was made to the Committee that included a review of the Other Post Employment Benefits (OPEB)Chronology,summary of the 2011 Retiree Health Actuarial Study,and a review of the proposal made by the Represented Employees. The Committee requested input from the Association to ensure that it was the Association's request that the District take action regarding the matter at hand.The Association Representatives confirmed that the Represented Employees'intent was clear from the overwhelmingly positive vote,with two employees voting favorably for everyone employee voting non-favorably. The Committee expressed appreciation of employees'willingness to give up salary now and moving forward.They commended the employees for thinking long-term by considering their future and being responsible for their families instead of focusing on their immediate financial needs. There was discussion about the District's financial soundness and that this proposal saves the District money over the long-term.During the presentation,the analogy was used that this proposal is similar to that of refinancing a home mortgage.While there are some upfront costs,the savings over the long-term outweigh the initial implementation costs.As referenced in Attachment F,while in the first year of the program the District will incur modest initial costs,when this action is fully initiated,the annual savings that the District will realize,beginning in 2013,quickly makes up for that initial cost with cost-savings that could be approximately 5.1 million dollars over a 35-year period. There was discussion about all of the District's accomplishments, including the high employee morale and strong work ethic.Some of the District's many accomplishments are attached to the Staff Report (Attachment G).The District employees are continually working to streamline functions and are working very efficiently.It was discussed that the District has reduced the staffing level by a total of 10.9%over the last five years (18.75 full-time equivalent positions),even as it delivers more services to a customer base that has grown by 9%in just the past five years.The reduction in staffing level has resulted in a cumulative savings through FY12 of 6.8 million dollars and the savings will continue to grow.The Committee expressed that they are very proud of the employees and the District's accomplishments and appreciate the employees'hard work and dedication to the District. The Cormnittee stated that it supports bringing the proposal to the full Board for consideration at the August 10,2011 meeting.They requested Staff to include in the presentation a surru:nary of the District's accomplishments,as well address some of the misinformation that has been in the media. The Committee also requested meeting 'Nith the Board in closed session to receive any further direction for employee negotiations on this matter. NOTE: The "Committee Action"is written in anticipation of the Committee moving the item forward for Board approval.This report will be sent to the Board as a Committee approved item,or modified to reflect any discussion or changes as directed from the Committee prior to presentation to the full Board. ATTACHMENT B STAFF REPORT TYPE MEETING: SUBMITTED BY: APPROVED BY: (Chief) " Regular Board Mif7;)ng Mark ~latton itVt'; General Manager'.' MEETING DATE: W.O.lG.F.NO: July 15,2011 DIV.NO.All APPROVED BY: (Ass!.GM): SUBJECT:ADOPT RESOLUTION #4182 TO INCREASE UNREPRESENTED EMPLOYEES' CONTRIBUTIONS TO THE CALPERS PENSION PLAN BY SEVEN (7) PERCENT TO PURCHASE ENHANCED RETIREE HEALTH BENEFITS AND RESOLUTION li4183 TO AMEND RETIREE HEALTH BENEFITS FOR UNREPRESENTED EMPLOYEES . GENERAL MANAGER'S RECOMMENDATION: That the Board of Directors adopt Resolution #4182 to increase the Unrepresented Employees'contribution to the CalPERS Pension Plan by seven (7)percent to purchase enhanced Retiree Health Benefits and Resolution #4183 to amend the Retiree Health Benefits for Unrepresented Employees. COMMITTEE ACTION: See Attachment "A". PURPOSE: To allow Unrepresented Employees to purchase enhanced Retiree Health Benefits by increasing the Unrepresented Employees' contributions to CalPERS,which will be cost-neutral for the Di.strict. ANALYSIS: Background Since 1993,the District has had three Tiers of employees with regard to retiree health coverage for all regular full-time employees.Tiers I and II (those employees hired before July 1, 1993)receive a lifetime Retiree Health Benefit if they meet certain age and service requirements.Prior to 2007,Tier III employees (those hired on or after July 1,1993)who are age 55 and have 15 years of service,had the ability to buy in to the medical plan,at the employees own expense,and stay on the plan until the employee was Medicare-eligible as long as the health plan allowed for participation. In 2007,when the District negotiated a collective bargaining agreement with the Employee Association,the Tier III benefit level was amended and provided that the District pays a monthly amount of $157.86 or the minimum required by the plan,which ever is greater for the District-selected (lowest cost)plan until the employee is Medicare-eligible.This benefit was also provided to Unrepresented Employees.It was understood that few Tier III employees would be retiring in the near future and that Retiree Health Benefits would be the subject of future discussions with various employee groups. Today,over 80%of the District's employees are Tier III employees and have a modest Retiree Health Benefit.The Unrepresented Smployees support a proposal to use the pending Cost of Livings Adjustments to increase their contribution to CalPERS Pension Plan to purchase enhanced Retiree Health Benefits. Proposal for Unrepresented 8mployees Pursuant to Resolution 114110,Regular District Employees received a 3.5%Cost of Living Adjustment (COLA)effective July 1,2011 and will receive a 3.5%COLA effective July 1,2012.It is proposed that the Unrepresented Employees'contribution to CalPERS be increased by the same amount of the COLA (3.5% effective 7/1/11 and 3.5%effective 7/1/12).By July 1,2012, all Unrepresented Employees will be contributing the full 8% employees'contribution.In exchange for the Unrepresented Employees contributing the full employees'contribution to CalPERS,it is recommended that the District level the Tiers of Retiree Health Benefits so that all Unrepresented Employees receive the same level of benefit at retirement.This would also change the contribution percentage for all newly hired Unrepresented Employees.Staff has met with all Unrepresented 2 Employees and they understand the need to contribute to the Pension Plan and are supportive of the proposal being presented. Board Committee Recommendation The Ad Hoc Unrepresented Employee Compensation Committee was assigned by the Board President to review and discuss Unrepresented Employee compensation and benefits.This staff report outlines a proposal for the Board's consideration for Unrepresented Employees. The Ad Hoc Unrepresented Employee Compensation Committee met on June 27,2011 (Attachment B).A presentation detailing the proposal for Unrepresented Employees was made to the Committee. The Conunittee stated that they supported the proposal but asked the General Manager to bring back additional information for the Committee,and that the Committee would reconvene prior to the next July Board meeting tentatively scheduled for Friday,July 15.The Committee also directed Staff to meet with Represented Employees and provide a similar proposal for their consideration. The Committee met again on Tuesday,July 5,as a follow up to the June 27 meeting.Staff reported back to the Committee that the Employee Representatives were presented with a similar proposal and they are scheduled to meet with the Represented Employees on Thursday,July 7,to consider the proposal,but that they may need additional time due to it being a holiday week.The Committee again expressed the appreciation of the hard work and dedication of the Distt'ict's employees and the Committee supported bringing the item for [Jnrepresented Employees forward to the full Board for presentation at the July 15 Board meeting,even if the Represented Employees may need a little mot'e time to consider the proposal. Represented Employ~e~ A similar proposal was provided to Represented Employees for their consideration.The Represented Employees met on July 7, 2011,and requested through July 20,2011,to consider the proposal.Should they decide to move forward,that proposal will be brought forward for consideration by the Board at its August 2011 meeting. Advantages Advantages to implementing this program are that Unrepresented Employees would contribute the full employees'portion of the CalPERS Pension Plan and it would level all the Tiers of Retiree Health so t.hat all Unrepresented Employees ,·/ill be in one Tier. 3 This will also be consistent with Succession Planning by ensuring the ubility to uttract und retain key employees, especially as the economy recovers. Resolution #4182 (Attachment C) This Resolution is required by CalPERS in order to change the contribution percentage that the District is contributing on behalf of the Unrepresented Employees for the employees'portion of the Pension Plan. Resolution it4l83 (Attacpment D) This Resolution outlines the changes in the employees' contribution to the Pension Plan and Retiree Health Benefits that \;ill be provided to the Unrepresented Employees. Key provisions of this Resolution include: -At age 55 and 15 years of service,Unrepresented E:mployees will receive Retiree Health Benefits (paid by the District at 100%for employee coverage and 88%for dependent coverage)for health and dental coverage for life and this contribution will remain at this level of coverage throughout the retirement of the employee. Revised language clarifying that this benefit will be guararlteed for life;however,the District reserves the right to make changes related to the overall administration of the plan (e.g.,changing health care providers)that do not have a major impact on the overall plan structure. Expand the survivor benefit from ending when the spouse reaches Medicare eligibility to a lifetime benefit. - A hardship provision where an employee has 15 years of service,and is between the ages of 50 and 54,the employee would have the option to retire early through CalPERS and the District's retiree health provision at a reduced level of benefits.Hardships may include the serious and prolonged illness of a spouse where the employee is required to care for the spouse and other similar extraordinary circumstances. FISCAL IMPACT: The proposed changes rosult in an estimated net savings to the District of $33,900 per year.The Annual Required Contribution, or ARC,is the actuarially determined plan cost of the current year and the amount needed to fund any shortfall in the trust. The total increase in the ARC,resulting from the proposed 4 changes,is $316,400.The total savings to the District of the additional 7%CalPERS funding by employees is $350,300 per year. STRATEGIC GOAL: Retain a Results-Oriented Workforce;Succession Planning for Key District Employees. LEGAL IMPACT: None. Attachment A -Committee Action Attachment B -Staff Report Presented to the Ad Hoc Committee Attachment C -Resolution #4182 Attachment 0 -Resolution #4183 Attachment E -Powerpoint Presentation 5 ATTACHMENT A ADOPT RESOLUTION #4182 TO INCREASE UNREPRESENTED EMPLOYEES' CONTRIBUTIONS TO THE CALPERS PENSION PLAN BY SEVEN 17) SUBJECT/PROJECT:PERCENT TO PURCHASE ENHANCED RETIREE HEALTH BENEFITS AND RESOLUTION #418 3 TO At1END RETIREE HEALTH BSNEFITS FOR UNRE PRES ENTE D EMPLOY:..:E:.:E~S:.._,..l COMMITTEE ACTION: The Ad Hoc Unrepresented Employee Compensation Committee met on June 27,2011.A presentation detailing the proposal for Unrepresented Employees was made to the Committee.The Committee stated that they supported the proposal but asked the General Manager to bring back additional information for the Committee,and that the Committee "ould reconvene prior to the next July Board meeting tentatively scheduled for Friday,July 15.The Committee also directed Staff to meet with Represented Employees and provide a similar proposal for their consideration. The Committee met again on Tuesday,July 5,as a follow up to the June 27 meeting.Staff reported back to the Committee that the Employee Representatives were presented "ith a similar proposal and they are scheduled to meet with the Represented Employees on Thursday,July 7, to consider the proposal,but that they may need additional time due to it being a holiday week.The Committee again expressed the appreciation of the hard work and dedication of the District's employees and the Committee supported bringing the item for Unrepresented Employees forward to the full Board for presentation at the July 15 Board meeting,ev~n if the Represented Employees may need a little more time to consider the proposal. The Committee requests meeting with the Board in closed session to I'eceivc any further direction for employee negotiations on this matter. NOTE: The \\Committee Action"is lNritten in anticipation of the Committ.ee [Goving the item forward for Board approval.This report will be sent to the Board as a Committee approved item,or modified to reflect any discussion or changes as directed from the Committee prior to presentation to the full Board. Attachment C RESOLUTION NO.4185 RESOLUTION OF THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT FOR EMPLOYER PAID MEMBER CONTRIBUTIONS TO CalPERS REGARDING REPRESENTED EMPLOYEES WHEREAS,the governing body of the Otay Water District has the authority to implement Government Code Section 20691; WHEREAS,the governing body of the Otay Water District has a written labor policy or agreement which specifically provides for the normal member contributions to be paid by the employer; WHEREAS,one of the steps in the procedures to implement Section 20691 is the adoption by the governing body of the Otay Water District of a Resolution to commence said Employer Paid Member Contributions (EPMC); WHEREAS,the governing body of the Otay Water District has identified the following conditions for the purpose of its election to pay EPMC: •This benefit shall apply to all Local Miscellaneous Members. •This benefit shall consist of the District paying 3.5%of the normal member contributions as EPMC effective August IS,2011 and 0%effective July I,2012. •The effective date of this Resolution shall be August 10, 2011. NOW,THEREFORE,BE IT RESOLVED that the governing body of the Otay Water District elects to pay EPMC,as set forth above. President Attachment C ATTEST: Secretary APPROVED AS TO fORM: District Counsel I HEREBY CERTIfY that the foregoing Resolution No.4185 was duly adopted by the BOARD Of DIRECTORS of the OTAY WATER DISTRICT at a regular meeting thereof held on the 10'·day of August,2011 by the following vote: Ayes: Noes: Abstain: Absent: District Secretary Attachment D RESOLUTION NO.4186 RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT TO CHANGE THE EMPLOYEES' CONTRIBUTION TO CALPERS PENSION PLAN AND THE LEVEL OF RETIREE HEALTH BENEFITS FOR REPRESENTED EMPLOYEES WHEREAS,the Otay Water District ("District ff )endeavors to recruit and retain the most qualified and talented employees to serve its customers;and WHEREAS,the salary and benefits offered by District to its employees are designed to aid in the District's recruitment and retention efforts;and WHEREAS,the District currently provides compensation and benefits for its represented employees ("Represented Employeesff ) pursuant to a Memorandum of Understanding (MOU)between the District and the Otay Water District Employees'Association for the period of July 1,2007 to June 30,2013 ("MOU ff );and WHEREAS,when the Board adopted a modest retiree health benefit in 2007 for Tier III employees (employees hired on or after July 1, 1993),the Board did so with the understanding that few employees would be retiring from Tier III in the near future and that retiree health benefits would be the subject of future discussions;and Attachment D WHEREAS,this Resolution proposes adoption of a change to the level of contribution by Represented Employees to the CalPERS Pension Plan,from the current one II)percent to four-and-a-half (4.5) percent effective August IS,2011,and to eight (8)percent effective July 1,2012,to be paid toward the employees'contribution to CalPERS;in addition to three-quarters-of-a-percent 10.75)salary toward the Employer Contribution effective August 15,2011;and WHEREAS,in exchange for the increase in the Represented Employees'contribution to CalPERS,Represented Employees will be provided an enhanced retiree health plan substantially similar to that offered to the District's Unrepresented Employees,to be memorialized through a Side Letter Agreement to the MOU as attached in Exhibit 1;and WHEREAS,because of the increased contributions by the Represented Employees to their contribution to the CalPERS Pension Plan,the aforementioned enhanced retiree health plan is cost-neutral for the District;and WHEREAS,this Resolution is intended only to identify the above changes to the Represented Employees'CalPERS contribution and to the retiree health plan and is in no way intended to,nor shall it affect,all other compensation and benefits for Represented Employees,as documented in the MOU,other policies,procedures, resolutions and other documents which specifically identify such compensation and benefits,and which compensation and benefits shall Attachment D remain in full force and effect unless specifically set forth herein; and NOW,THEREFORE,BE IT RESOLVED by the Board of Directors of the Otay Water District as follows: 1.That the Board of Directors directs the General Manager to amend the Memorandum of Understanding by Side Letter Agreement to memorialize the change to the Retiree Health Plan and Pension Plan changes,with the changes to the Retiree Health Plan being substantially similar to those offered to the District's Unrepresented Employees;and 1.That the Board of Directors hereby approves the changes to retiree health and employees'contribution to the CalPERS Pension Plan for all Represented Employees,as referenced in Resolution No. 4185 and the Side Letter Agreement,subject to General Counsel's review and approval of the Side Letter Agreement;and 3.That the effective date of the Side Letter Agreement shall be the date of full execution of said agreement;and 4.The effective date of this resolution shall be August 10, 2011. BE IT FURTHER RESOLVED that the Board authorizes and directs the appropriate staff of the District to take any and all actions necessary to implement the above-referenced changes. Attachment D PASSED,APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting held this lOt"day of August, 2011. President ATTEST: Secretary APPROVED AS TO FORM: District Counsel I HEREBY CERTIE'Y that the foregolng Resolution adopted by the BOARD OF DIRECTORS of the OTAY regular meeting thereof held on the lOth day of following vote: Ayes: Noes: Abstain: Absent: No.4186 was duly WATER DISTRICT at a August,2011 by the District Secretary Attachment D -Exhibit 1 Draft SIDE LETTER AGREEMENT The current five-year Memorandum of Understanding (MOU)for the period from July 1,2007 through June 30,2013,between the Otay Water District (District) and the Otay Water District Employees Association (Association)is hereby amended as set forth herein,District Management and Association Employee Representatives have met and agreed to the following additional provisions which shall constitute an amendment to the MOU effective August 10,2011,as follows: 1,The District and the Association hereby enter into this side agreement, which shall be considered an amendment to the Memorandum of Understanding in effect from July 1,2007 to June 30,2013.This side agreement shall expire with the Memorandum of Understanding, 2,Summary: a,Update the Pension Retirement Plan contributions;and b,Update Group Health Insurance for retired employees, 3,The District submits the following proposal for Article 7,Section,1: PENSION (RETIREMENT PLAN)and Article 7,Section,4:GROUP HEALTH INSURANCE:RETIRED EMPLOYEES, 4.Except as modified herein,all other terms and conditions of the MOU shall remain unchanged and in full force and effect. ARTICLE 7 -EMPLOYEE BENEFITS ARTICLE 7.SECTION 1:PENSION (RETIREMENT PLAN) Retirement benefits and the Pre-retirement Option 2 Death Benefit are provided to eligible regular employees under the California Public Employees Retirement System (PERS), A,Retirement Fonnula,For employee that retires on or after December 29,2003 the basis for computing employee retirement compensation shall be two point seven (2,7) percent at age 55 PERS Supplemental Formula based on the employee's single highest year annual compensation, B.Employer Contribution,The Employee shall pay point seventy five (0,75)percent of the employer contribution effective August 15,2011 and the District shall pay the remainder ofthe employer contribution. Attachment 0 -Exhibit 1 Draft C.Emulovee ContrIbution.The employee shall pay four-and-one-half (4.5)percent of the employee's scrvice contribution effective August 15,2011,and eight (8)percent etfective July 1,2012. ARTICLE 7.SECTION 4:GROUP HEALTH AND DENTAL INSURANCE: RETIRED EMPLOYEES A.Retiree Health Insurance Guaranteed.The proVIsIon of health insurance and access to mcdical and dental insurance for employees retiring who hcld full-time status during their employment and their eligible dependents (as set torth below) are guaranteed tor the life of thc rctiree and spouse.However the District reservcs the right to make changes related to the overall administration ofthe plan (e.g.changing health care providers)that do not have a major impact on the overall plan structure. B.Eligibility.Retirement through the District's Pension Retirement Plan (currently CaIPERS)is requircd to be eligible to receive Retiree Health Insurance in addition to any other provisions set forth herein. Additionally,Medicare-eligible retirees and retiree's spouse are required to sign up for Medicare Parts A and B at the retiree's and/or spouse's own expense,ifeligible,to be eligible for District retiree health coverage. C.Eligible Dependents.Eligible dependents include those dependents who were covered by thc District's health insurance on the date the employee ceased active service with the District.Dependents acquired after the employee retires are not eligible [or coverage.If the retiree dies,or an active employee dies,and such employee was eligible to be covered by health insurance as a retiree on the date of death,then such employee's dependent(s)will be eligible tor District-paid continuation of health insurance coverage at 88%[or the life of the retiree's spouse.If there are dependent children eligible for coverage,such unmarried children are eligible for District-paid continuation ofhealth insurance coverage at 88%up to age 19.Plan requirements shall be set forth in a separate booklet furnished to all eligible retirees,is referenced only to provide additional information and is not incorporated into the MOU.Dependent children may be allowed to remain on the plan at the retiree's own expense beyond age 19 as required by law. D.Health and Dental Insurance Premium Contributions.District contributions towards health and dental insurance premiums for retired employees who held full-time status during their employment,shall be as follows;and medical and dental plan requirements shall be as set fOIih in separate booklets furnished to all eligible retirees,are referenced only to provide additional information,and are not incorporated into the M0 U: L REGULAR RETfREMENT I.Oualifications lor represented employee coverage are: The employee has attained age 55;and The employee has completed twenty (20)years of continuous full-time servIce. Attachment D -Exhibit 1 Draft 100%ofthe premium paid by the District. 88%of the Disttiet-selected premium paid by the District;12%paid by the employee. 88%of the District-selected premium paid by the District;12%paid by the employee. percentage and shall not change after the employee Employee+2 or more: This shall be a fixed retires. 2.District/retiree contribution: District and retiree health and dental insurance contributions shall be based on the following fonnula: Employee Only: Employee+I: II.EARLY RETIREMENT 1.Early Retirement Due To Employee Disability. An employee may retire between the ages of 50 and 54,if(I)the employee is disabled and unable to work the usual duties of the employee's position on a pennanent basis or long tenn basis (subject to District approval),(2)has a minimum of ten (10)years of continuous full-time District service,and (3) also takes an early retirement through the District's retirement pension plan (CaIPERS).The District will makc the tinal dctennination of disability eligibility.The Disttict has sole discretion to detennine whether the employee is disabled to qualify for this benefit and to adopt policies,regulations,and or guidelines to aid in this detennination.Thc Association waives for the life of this agreement its right to negotiate the District's ability to detennine who is disabled and to detennine the polices,regulations and or guidelines. 2.Early Retirement Due To Employee Hardship. An employee may retire between the ages of 50 and 54,if (1)the employee experiences a severe hardship (subject to Distlict approval),(2)has a minimum oftwenty (20)years of continuous full-time Disttict service,and (3) also takes an early retirement through the District's retirement pension plan (currently CalPERS).A severe hardship may include a spouse who sutTers from a serious and prolonged illness or disability where the employee is required to care for the spouse or other similar extraordinary circumstances. The District will make the final detennination of hardship eligibility.The District has sole discretion to determine whether the employee has a qualified hardship to be eligible tor this benetit and to adopt policies,regulations,and or guidelines to aid in this detennination.The Association waives for the life of this agreement its right to negotiate the District's ability to detennine who qualifies for this benefit and to determine the policies,regulations and or guidelines. 3.Benefit Level. If an employee is pennanently disabled or has a severe hardship as defined above,the employee may be eligible for retiree health benefits provided they are an active employee who has attained age 50 and has years of continuous service as defined above.The employee and eligible dependents would Attachment D -Exhibit 1 Draft receive a reduced contribution level toward the District's current retiree medical and dental benefit plans as follows: Early Retirement Due to Disability or Hardship Age at Time of Retirement Dishict Fixed Percentage Contribution Level 50 70% 51 76% 52 82% 53 88% 54 94% If disability retirement or hardship is approved by the District,the percentage of the retiree's health benetlt premium to be paid by the District will be detetmined based on the retiree's age at the time the retirement becomes effective,as demonstrated in the above table.The District's tlxed percentage contribution will not increase over time.The same fixed percentage will be applied to calculate the Disttict's pOliion tor any qualitled dependent(s). Association: Patrick Newman,Association President Gtay Water District Employees Association Gtay Water District: Mark Watton,General Manager Gtay Water District Attachment D -Exhibit 1 Draft ARTICLE 7 -EMPLOYEE BENEFITS ARTICLE 7,SECTION I:PENSION (RETIREMENT PLAN) Retirement benefits and the Pre-retirement Option 2 Death Benefit are provided to eligible regular employees under the California Public Employees Retirement System (PERS). A.Retirement Formula.For employee that retires on or after December 29,2003 the basis for computing employee retirement compensation shall be two point sevenJ21} percent (2.7%)at age 55 PERS Supplemental Formula based on the employee's single highest year annual compensation. B.Employer Contribution.The Employee shall pay point seventy five (0.75)percent of the employer contribution effective August 15,2011 and the District shall pay the remainder ofthefult employer contribution. C.Employee Contribution.The employee shall pay four-and-one-half (4.5)percent of the employee's service contribution effective August 15,2011,and eight (8)percent effective July 1,2012.The District shall pay up to seven percent (7.0%)of the employee's service contrieution. ARTICLE 7,SECTION 4:GROUP HEALTH AND DENTAL INSURANCE: RETIRED EMPLOYEES A.Retiree Health Insurance Net-Guaranteed.The provision of health insurance and access to medical and dental insurance for employees retiring who held full-time status during their employment and their eligible dependents (as set forth below) is subject to the discretion of the District and is not are guaranteed for the life...Qf the retiree and spouse,or fur any specific time period.However the District reserves the right to make changes related to the overall administration ofthe plan (e.g.changing health care providers)that do not have a major impact on the overall plan structure.HO'Never,the District will endeavor to 'Rake health insurance availaele to employees who retire,sul3ject to the conditions noted in the rest of Article 7.In addition,retirees may only remain as participants in the District's plan as long as the terms of the plan peRRit such participation. Retirement through the District's Pension RetiFement Plan (CaIPERS)is required to ee eligible to receive Retiree Health Insurance in addition to the provisions set below.Medicare eligible retirees are required to sign up fur Medicare Parts A and B at the retiree's O'Nn e)(pense,in order to qualify fur the Medicare enrolled premium rates.For Medicare eligiele retirees who choose not to enroll fur eoth Medicare Parts A and E,the District will pay up to the Medicare supplement pre'Riu'R rate and the retiree will pay the difference in the higher premium rate. B.Eligibility.Retirement through the District's Pension Retirement Plan (currently CaIPERS)is required to be eligible to receive Retiree Health Insurance in addition to any other provisions set forth hereinthe provisions set eolow.Additionally, Medicare-eligible retirees and retiree's spouse are required to sign up for Medicare Parts A and B at the retiree's and/or spouse's own expense,if eligible, 100%of the premium paid by the District. Attachment D -Exhibit 1 Draft to be eligible for District retiree health coverage.lA order to qualify fur the Medieare enrolled J'lremiuFfl rates CB.Eligible Dependents.Eligible dependents include those dependents who were covered by the District's health insurance on the date the employee ceased active service with the District.Dependents acquired after the employee retires are not eligible for coverage.If the retiree dies,or an active employee dies,and such employee was eligible to be covered by health insurance as a retiree on the date of death,then such employee's dependent(s)will be eligible for District-paid continuation of health insurance coverage at 88%for the life of the retiree's spouseuntil the surviving sJ'louse is Medieare eligible.If there are dependent children eligible for coverage,such unmarried children are eligible for District- paid continuation of health insurance coverage at 88%up to age 19.Plan requirements shall be set forth in a separate booklet furnished to all eligible retirees,is referenced only to provide additional information and is not incorporated into the MOU.Dependent children may be allowed to remain on the plan at the retiree's own expense beyond age 19 as required by law. DG.Health and Dental Insurance Premium Contributions.Effeetive January I, ~,District contributions towards health and dental insurance premiums for retired employees who held full-time status during their employment,shall be as follows;and medical and dental plan requirements shall be as set forth in separate booklets furnished to all eligible retirees,are referenced only to provide additional information,and are not incorporated into the MOU: LREGULAR RETIREMENT I.Qualifications for represented employee coverage are: The employee has attained age 55;and The employee has completed twenty (20)years ofcontinuous full-time servIce. 2.District/retiree contribution: District and retiree health and dental insurance contributions shall be based on the following formula: Employee Only: Employee+1: Employee+2 or more: 88%of the District-selected premium paid by the District;12%paid by the employee. 88%of the District-selected premium paid by the This shall retires. District;12%paid by the employee. be a fixed percentage and shall not change after the employee I.TIER I:Oualifieations fur Tier I eoverage are: a.The employee v,as hired before January I,198 I;and b.The emJ'lloyee has attained age 55;and e.The emJ'lloyee has eomJ'lleted five (5)eontinuous years ofserviee. e.Oistriet/retiree eontributiew. Oistriet and retiree health and dental insuranee eontrilJutions shall be based on the formula implemented fur aetive employees as set forth in Artiele 7,Seetion 3(0)and Artiele 7,Seetion 5 of this Memorandum of Understanding. Attachment D -Exhibit 1 Draft 2.TIER II:OHalifieations for Tier II eo\'erage are: a,The employee was hired on or after JanHary I,1981 Imt eefore JHI)'I, 1993 and; 13.The employee has attained age 55 eHt has not attained age 60;and e.The SHm of the employee's age plHS eontinHoHs years ofserviee eqHals 70 OR d.The en'lployee was hired on or after JanHary I,1981 eHt eefore JHly I, 1993 and; e,The employee has attained age 60;and f.The SHm of the employee'sage plHS eontinHOHS years ofserviee eqHals 70, g.Distriet/retiree eontribution: Distriet and retiree health inSHranee eontrieHtions for employees eligiele Hnder a),b)and e)ilfllflediatel)'above shall ee eased on the formula implemented for aetive employees as set forth in Artiele 7,Seebon 3(D)of this MemorandHm of Understanding. Distriet and retiree health and dental insuranee eontrieutions for employees eligiele under d),e)and f)il11l11ediately aeove shall be eased on the formula implemented for aetive employees as set forth in Artiele 7, Seetion 3(0)and Artiele 7,Seetion 5 of this Memorandulfl of Understanding. 3.TIER lIJ:Oualifieations for Tier III eoverage are: a.The employee was hired on or after July I,1993;and 13.The employee has attained age 55;and e.The employee has eompleted fi fteen (15)years of eontinHoHs serviee. d,Distriet'retiree eontrieHtion: At the time of retirement,an eligiele retiring employee will ee eligiele to reeeive $157.86 monthly or the minilflHm required ey the Distriet seleeted plan,whiehever is greater,to ee paid towards employee only health premiums,If there is no minimum eontrieHtion required ey the plan,then the payment amoHnt toward health inSHranee premiHm will ee the last eHfFent dollar alfloHnt paod toward premiums at the time the Distriet moves to a new plan. Distriet eoverage will end ",..hen the employee eeeomes Medieare eligiele Hnless the Distriet seleeted health insHranee plan requires the Distriet to eontinue to make a eontrieHtion toward the retiree health premiHm. The retiree may eleet to provide eoverage to his/her eligiele dependents after retirement provided the employee pays 100%of the Distriet seleeted plan eosts at the l','TOHp plan rate.This eleetion is not available onee the retiree eeeomes Medieare eligiele, The retiree will not have aeeess to purehase the Distriefs groHp dental p-liur. n.EARLY RETIREMENT I.Early Retirement Due To Employee Disability. Effective January I,2008,aAn employee may retire between the ages of 50 and 5:±~, ifQlthe employee is peFffianently disabled and unable to work the usual duties of the employee's position on a permanent basis or long tenn basis (subject to District approval),J2.L--Mlfi-has a minimum of ten (IOJ years of continuous full-time District service,and QLalso takes an early retirement through the District's retirement pension plan (CaIPERS).The District will make the final determination of disability eligibility.The District has sole discretion to determine whether the employee is disabled to qualify for this benefit and to adopt policies,regulations,and or guidelines to aid in this determination.The Association waives for the life ofthis agreement its right to negotiate the District's ability to determine who is disabled and to determine the polices,regulations and or guidelines. 2.Early Retirement Due To Employee Hardship. An emolovee may retire between the ages of 50 and 54,if (I)the employee experiences a severe hardship (subject to District approval),(2)has a minimum of twenty (20)years of continuous full-time District service,and (3)also takes an early retirement through the District's retirement pension plan (currently CaIPERS).A severe hardship may include a spouse who suffers from a serious and prolonged illness or disability where the employee is required to care for the spouse or other similar extraordinary circumstances.The District will make the final determination of hardship eligibility.The District has sole discretion to determine whether the employee has a qualified hardship to be eligible for this benefit and to adopt policies, regulations,and or guidelines to aid in this determination.The Association waives for the life of this agreement its right to negotiate the District's ability to detennine who qualifies for this benefit and to determine the policies,regulations and or guidelines. 3.Benefit Level. If an employee is permanently disabled or has a severe hardship as defined above,the employee may be eligible for retiree health benefits provided they are an active employee who has attained age 50 and has years of continuous service as defined above.The employee and eligible dependents would receive a reduced contribution level toward the District's current retiree medical and dental benefit plans as follows: The early retirement benefit is aeterminea basea eR eligible Tier (hire aate)as folle'...·s: 1.Tier I ana Tier II:If an emflleyee is permaReRtly aisablea,tAe emflleyee may be eligible fer Tier I er Tier II retiree health benefits previaea they are aR active empleyee 'Vihe has attainea age 50 ana has 10 years ef ceRtiRueus service.The empleyee ana eligible aepenaents 'Neula receive a reaucea centributien level tewara tAe District's current retiree beReHt t'Heaical plan ana ifeligible for aeRtal as follevis: Early Retirement Due to Disability or Hardship Age at Time ofRetirement District Fixed Percentage Contribution Level <;5(l ()-% 50 70% 51 76% 52 82% 53 88% 54 94% If disability retirement or hardship is approved by the District,the percentage of the retiree's health benefit premium to be paid by the District will be determined based on the retiree's age at the time the retirement becomes effective,as demonstrated in the above table.The District's fixed percentage contribution will not increase over time.The same fixed percentage will be applied to calculate the District's portion for any qualified dependent(s). 6 Tier Ill:If an em[Jloyee is [Jermanently disabled,the em[Jloyee may be eligible fur Tier III em[Jloyee only retiree Aealth benefits [Jrovided they are an active em[Jloyee wAo has attained age 50 and Aas 10 years of continuous sePo'ice.The em[Jloyee would receive tAe same level of benefit as if the em[Jloyee Aad retired at normal age described in Article 7,Section 4(C 3). Represented Employees Eligible to retire with 20 Years of Service at age 55 Tier I Tier II Tier III Now 3 2011 2 2012 2 2013 2014 2015 1 2016 1 2017 1 2018 2 1 2019 1 2020 1 4 ell' 2021 2 (1 )' 2022 5 (3)' 2023 6 (2)' 2024 5 (2)' 2025 6 2026 15 (4)' 2027 14 (3)' 2028 13 (1)' 2029 6 (1 ). 2030 3 (1)' 2031 2 2032 2 2033 2 2034 1 2035 1 2036 2 2037 1 2038 1 2039 2040 2041 2042 1 Attachment E Total 11 95 *Note:Based on inputrelated to ourSuccession Plan,employees listed in parenthesis have indicated that they will be retiring before eligibility for the Retiree Health Benefit. Unrepresented Employees Eligible to retire with 15 Years of Service at age 55 Tier I Tier II Tier III Now 4 2011 1 2012 1 1 2013 1 1 2 2014 1 2015 2016 1 3 (1)' 2017 1 2018 2 4 (1)' 2019 1 2020 2 (2)' 2021 1 2022 2 2023 2 (1)' 2024 2 (1 )' 2025 1 2026 1 2027 1 1 2028 2029 2030 1 2031 2032 2033 2 2034 2035 1 2036 2037 2038 2039 2040 1 Attachment E Total 2 11 29 ~Note:Based on input related to our Succession Plan,employees listed in parenthesis have indicated thatthey will be retiring before eligibility for the I~etiree Health Benefit. Annual Savings for Represented and Unrepresented Employees Attachment F Savings Cost PERS OPES ARC Annual Cumulative Contribution Increase Savings Savings Year 1 FY 2012 476,800 915,900 (439,100)(439,100) Year 2 FY 2013 990,300 915,900 74,400 (364,700) Year 3 FY 2014 990,300 915,900 74,400 (290,300) Year 4 FY 2015 990,300 915,900 74,400 (215,900) Year 5 FY 2016 990,300 915,900 74,400 (141,500) Year 6 FY 2017 990,300 915,900 74,400 (67,100) Year 7 FY 2018 990,300 915,900 74,400 7,300 Year 8 FY 2019 990,300 915,900 74,400 81,700 Year 9 FY 2020 990,300 915,900 74,400 156,100 Year 10 FY 2021 990,300 915,900 74,400 230,500 Year 11 FY 2022 990,300 915,900 74,400 304,900 Year 12 FY 2023 990,300 915,900 74,400 379,300 Year 13 FY 2024 990,300 915,900 74,400 453,700 Year 14 FY 2025 990,300 915,900 74,400 528,100 Year 15 FY 2026 990,300 915,900 74,400 602,500 Year 16 FY 2027 990,300 915,900 74,400 676,900 Year 17 FY 2028 990,300 915,900 74,400 751,300 Year 18 FY 2029 990,300 915,900 74,400 825,700 Year 19 FY 2030 990,300 915,900 74,400 900,100 Year 20 FY 2031 990,300 915,900 74,400 974,500 Year 21 FY 2032 990,300 915,900 74,400 1,048,900 Year 22 FY 2033 990,300 915,900 74,400 1,123,300 Year 23 FY 2034 990,300 915,900 74,400 1,197,700 Year24 FY 2035 990,300 915,900 74,400 1,272,100 Year 25 FY 2036 990,300 915,900 74,400 1,346,500 Year 26 FY 2037 990,300 915,900 74,400 1,420,900 Year 27 FY 2038 990,300 575,900 414,400 1,835,300 Year 28 FY 2039 990,300 575,900 414,400 2,249,700 Year 29 FY 2040 990,300 575,900 414,400 2,664,100 Year 30 FY 2041 990,300 575,900 414,400 3,078,500 Year 31 FY 2042 990,300 575,900 414,400 3,492,900 Year 32 FY 2043 990,300 575,900 414,400 3,907,300 Year 33 FY 2044 990,300 575,900 414,400 4,321,700 Year 34 FY 2045 990,300 575,900 414,400 4,736,100 Year 35 FY 2046 990,300 575,900 414,400 5,150,500 Note:This chart does not inflate the savings or the cost for the expected increases in payroll, nor does this chart discount the savings or cost to a present value.These numbers have been updated to use the July 1,2011 salaries. Attachment G The Ad Hoc Unrepresented Employee Compensation Committee requested that StatT include a summary of District accomplishments with the StatTReport.Staff will present a summary ofthe District accomplishments as well as clarify some ofthe misinfonnation that is being disseminated in the media at the Board Meeting. Otay Water District Facts and Accomplishments General OWD facts •The Otay Water District is the second largest water district in Southern California.It serves more than 206,000 customers in a more than 125 square-mile area. OWD water rates: •Otay prides itself on having water rates that are among the lowest ofSan Diego County's 24 water agencies.For a typical customer using 15 units per month,Otay's water rates are the lowest third of water rates in San Diego County.In a UT Watchdog survey Same amount of water,some pay 70 percent more (Feb.23,2011),it reported Otay having among the lowest rates in San Diego County.For insights on the factors driving water rates,please see the attached 2010 Grand Jury Report,San Diego County Water Rates:High Today,Higher Tomorrow. OWD efficiency and innovation •The District's Operation and Maintenance (O&M)costs are also in the lowest third ofwater agencies in San Diego County (see attached).This means Otay is one of the most efficiently operated and managed local water agencies.This analysis includes power,labor,materials, maintenance,and administrative costs. •Otay's capital improvement projects are completed on schedule,on budget,and with a minimum amount of change orders.For instance,the 5-mile Jamacha Road Pipeline Projectwas not only the largest capital improvement project in the District's 55-year history,but also one ofthe most challenging.Despite the challenges,the project was completed on-time and more than $1 million under budget. •Otay is a recognized leader in the use of recycled water and the District's efforts have resulted in many benefits to its customers.For instance,in its 2005-2006 budget,the District invested nearly $30 million to extend a 30-inch pipeline to connect with the city of San Diego's South Bay Water Treatment Plant in order to obtain recycled water that was at the time being discharged into the ocean.When the pipeline came online,recycled water used for landscape irrigation reduced the District's purchases of imported potable water by approximately 13%. This happened just as the drought and supply disruptions forced other water agencies into adopting mandatory water conservation measures.Due in part to this foresight,Otay customers only faced voluntary conservation measures and the District never moved to a Level II drought. •The District has been committed to using technology to enhance customer service and utilize staffefficiently.Through the innovative and practical use oftechnology,Otay has reduced the number of full-time employees by 10.9 %(18.75 full time positions),even as it delivers more services to a customer base that has grown by 9%in just the past five years. Customer satisfaction and recognition •Customers continually report high levels of satisfaction and trust in the District as their service provider.In the most recent customer survey,93%of customers rated the District as good,very good,or excellent. •Customers also report a substantial amount oftrust in the ability ofthe District to provide them with clean,safe water,and they view water service as one of the best values for their dollar: above gas and electricity,telephone service,cable TV,and Internet access. Otay Water District Facts and Accomplishments •Otay is continually recognized by third party,national and international organizations as a leader in the water industry.When compared with similar-sized public agencies,Otay consistently ranks among the very best.In just in the past five years,Otay has received more than 35 awards on subjects such as its budget management,capital improvement projects,safety,IT service and support,and water and energy conservation. This year,Otay received the Distinguished Budget Presentation Award from the Government Finance Officers Association ofthe United States and Canada for the seventh year in a row. Getting the award just once is an accomplishment for any public agency. Stability ofthe District •The District has a AA credit rating from the rating agencies Standard and Poor's,and Fitch.This is an excellent credit rating for a public agency of its size and reflects on Otay's high credit worthiness.Otay also received two credit rating increases in less than nineteen months.Bond rating agencies look at a number of factors when assigning ratings including financial strength, management,and operational efficiency.For the average customer the high bond rating means they pay less interest on bonds issued for future capital improvement projects,which helps to keep water rates down. $120 $100 $80 $60 $40 $20 $- SURVEY OF MEMBER AGENCY WATER RATES Rates effective January 1,2011 for residential customer with 15 HCF water use and 3/4 inch meter Same amount of water,some pay 70 percent more I SignOnSanDiego.com Page lof4 I SAN ©N DIE G 0 ~Click to get this special offer! G~PRINTTHIS Same amount of water,some pay 70 percent more Comments 1115> tDo!s_stmya:rlover" {coior:#2c2c2c ! impoI'l,'.1l"1l Share: ')\vo households usc the S,-lll1C cllllUlllll (JC \\:,-tLt'l"til (l gi\'l'll llHJuth. One is inR'-lllllHl'l and the other is in Lakeside. The Ramona family \vill pa)'70 percent more for the sank'10,5°0 gallons. Follow Also see The difference is not necessarily'a scandal or even an injustice,so mllch as a demonstration of hmv capital costs and terrain can affect the price ofan CV(1)'c!ay commodity. As rates go up ,ILTOSS the region. The \Valchdog lS l["ying to help rcadeTs ulH!crslancl \Vh,v "Inc! therefore slllTeycc!2;)providers to determine what the.\'charge,llsing the industry standard for a typical fUlllily.RdllWlla toppvd llJl~iist dt 885·54. 011 the lenv end.the tiny farlll- based agency YUlmtl and the Lakeside district each charge ahout $50 for the sallle lllonthly delivery. A fe\v large agencies,such as Helix and Ota)',also arc ncar the bottorn of the price range. \'Vater managers attribute the Rates compared Charge in 8ach jurisdiction for 10,500 gallons of W;:lter.incluclillg rate incre;:lses approved for Ule COining monttls.Rates do not include additional pumping charges in some areas for high-elevation zones. \jlJaler'district Typical monthly bill Ramona 585.54 Rainbow 5132.45 Padn0 Dcll1l S77.87 Vista S76.09 Sweetwater S74,24 Del Mar 573.84 Scm Diego $"12.03 Fallbrook $69.56 Vallecitos $69.09 Poway S67.62 http://signonsandiego.printthis.cliekabiIity.com/pt/ept?expire~&title~Same+amollnt+of+wat...8/l/20 l 1 Same amount ofwater,some pay 70 percent more!SignOnSanDiego.com Page 2 of4 Also of interest differing rales to variations in infrastructure,loau p,lyrncnls,t,-\X revenues,pumping cost.c.;,the number IA customer,,,and othe[' factors. Bob Cook,l,akcsidc's general mannger said his district's prices \\'(,1'e the result of streamlining \vo1'k tlmv,staff reductions and creative approaches such as llsing college students for meter reading. Lakeside has about 7,000 customers and 14 employees.a ratio that Cook said is partly' responsible for controlling costs. In addition,Cook has one of the smallest compensation packages among his peers counlywide al about S227,clOO a year,Clnel be said the Lakeside board is cautious about other expenses. "[fs definitd)"a culture."he said, Santa Fe S66.33 Oceansicle $65.85 Rincon SG5.44 Scm Oieguito S65.43 Olivenhain S65.0B Escondido 562.25 Car'lsbad $62,06 OIC1Y S61.50 Helix S61 ,37 Cal-Am (Imperial Beach/CorOllddo) S53.99 Lakeside S50.66 Yuima S49.93 Sour'ce:Watchdog survey Note:Rates 81'e based on a 3i4-inch r'esiclentiai cOrlllection,except in Sweetwater,Rincon and Yuirna.which lise 5i8-inch III San Diegu ciLy',by far Lhe largest \\'aLcr rctaikr ill the region \vilh about 270,000 connections,the most recent rate increase \vill take effecti\Tarch 1.'fypical residcnti,tl customers will pay $72.03 per month.Similar price hikes were adopted across the region in recent months as agencies'costs to huv \vatcr increased. San Diego's current rates arc the result ofa decision in 2007.The City Council approved four consecutive yei.H'S of \\'ater rate increases at that LiIlle to prlY Cor major upgrades l:o its treatment and delivery syslem under orders from state health oefleials.The cost was estimated at $;)85 million. Tbe l)--Vlcal residential bill in Sail Diego has .iurnpecl 67 percent over four years,a !lumber that critics said could be Imvcr ifSan Diego had done more to cap personnel expenses and ellminate a controversial bonus program for utility clepartment clnp]o."('('s.The ma.vor lS trying to end that program 11OW. P.oger Bailey,director of the S,lll f)iego Public Utilities Dcpartrnent,said comparing water raLes is like cOlllparing rnortgages between neighbors - tilc\'can he drrlSticet!iv diffl~]"l'nt hclscclull \\'lll~n the lluu>;es \vcre built. their condition,lot sizes emel otl1el'factors. \\"<11:('1'agencies var.\,'dramaticall):across the county,from San Diego \vith three major trcatHlcnt plants to others that buy'I'lllly lrcatccl \valer and still others that l:ap local groundwater that doesn't ha\"e to be pumped fro111 Northern California or the Colorado IZiver. http://signonsandiego.printthis.cIickabiIi ty .com/pt/cpt?expire=&title=Same+amount+of+wat...8/1/20 I1 Same amount ofwater,some pay 70 percent more ISignOnSanDiego.eom Page 301'4 Comments Share: "Our goal intcrnalJ.'/is to find \V,ly'S to minimize those costs,but at the end of the day,the costs that .you sec arc the costs that \ve truly need to recover Ul llH_:cL our obllgaLions financially,"1:~ailcy'said. San Diego is hardly (!lone in failing to control \vaLCl"rates.\vhich are.likely to continue rising to covcr higher costs rl..lated to drought-construction pmjecls,enlplo,vce pensions,en\'irOlll1lClll,t!restrictions and other items. The combination 01'factors Illeans l,vpicall"csidcnts ill the Ramona \lullicipal \VatcrDistrict j)<.l)·far l1lurc than they \vould in other parts of the county.That doesn't slll'j)risc Ri.ll1lO11'l rcal estate clgent Thad Clendenen, "'Yuu talk to people \yho live in other areas and fell'almost everyone.their wilter r,xtes arc !cnvcr,"he said."There is not a real good feeling in to\Yll when you bring up the Ramona \vater dislricl." David Barnulll,a top official atlhe Ramona water district.said priccs are driven by the district's elevation,which requires pumping \\',Iter uphi11 about 1,OO()feet from Po\Y,lY.Plllnping cosh add about 88 to a lypical residential bill.'fhe district has about 9,500 customers, Ramona relies entirely on imported \valcr,\vhich is generally'a more expensive source than \vells or large rain-fed reservoirs.Lakeside has gn)UIHhvatcr \vells ,md SiHl Diego collecls runofr in several lakes, narnull1 alse)linked !{ilmolla's r~ltC's lo ils large service area,\vhich covel'S about 75 square miles.By comparison,the Lakeside district covers just 14 squ,lrc miles. Instcad of having 10 hC)llleS per acrc like SOllle urban \valer districts,"Here in Ramo!lcL you mel)'have acres in between houses,"Barnum said."There is a [olmorc pipe in the ground." Ramona c<lsil.v lead lhe region in \valer conservation between 2(J09 and 2010,\vhen districl cllslorncrs cul back nearly 22 percent.Going b<lck five years.sales have plumrncted b.v aboul50 percent as farm \vater lise shriveled and conservation initiatives took holel. "The overhead has to be applied to the base."Bamum said. The Rainbow rdunicipal \Vater District in Fallbrook is second to Ramon,] in what typical residential cllstomers pay,General ?\Janager Dave Sey't1lour attributed the ranking to the agency's capilal projccls and efforts to <lvoid debt. "\VC arc in the process of completing about 8:::;0 million in !ll<llHlaled reservoir upgrades and all of thal has to come directly from \vater r"llc;:; and charges."he said,adding that many districts \vould finallce similar investments over l\vO decades. mikeJee((j:'uniontrib.com (619)293-:2.0::)4 'l\viltcr (i/;,sdutiec http://signol1sancliego.printthis.cIickability.com/pt/cpt?expire=&title=Same+amount+of+wat...8/1/2011 Same amount of water,some pay 70 perccnt morc I SignOnSanDiego.com Find this article at: http://www,signonsandiego_com!news/2011iIeb/23/water-rates Check the box to include the list oflinks referenced in the article. Pa"c 4 of4b http://signonsanclicgo.printthis.elickability .com/pt/cpt?expire=&title=Same+amount+oft-wat...8/I/20 I I SAN DIEGO COUNTY WATER RATES: HIGH TODAY,HIGHER TOMORROW INTRODUCTION Most ofSan Diego's water mnst be transported to the Connty from distant sources,a fact that significantly drives up water rates.Only about 20%of our water comes from local sources with the balance transported from the Colorado River (50%)and northern California (30%). The 2010/2011 San Diego County Grand Jury (Grand Jury)sought to understand this vast water supply system and the inherent pricing pressures that produce water rate increases. INVESTIGATION Water rates continue to increase throughout southern Califomia's water distribution system;the Grand Jury studied major reasons for water rate increases by the 24-member water agencies (retailers)of the San Diego County Water Authority (CWA).No investigation ofour region's water rates would be complete without understanding our primary souree of wholesale water,and the fundamental pricing power that the Metropolitan Water District (MET)wields on our local water rates. As local media reported water rate increases in the summer of 20 I0,complaints flowed into the Grand Jury.In addressing the complaints,the Grand Jury interviewed complainants,reviewed a multitude ofmaterials and conducted in fOlmationalinterviews with water officials from both wholesale and retail agencies.The Grand Jury also reviewed official docnments,conducted physical site tours,reviewed related websites and attended pnblic meetings. The Grand Jury investigated the contributing factors associated with the rate hikes.The Grand Jury's attention was focused on the following questions: •What does the overall distribution system look like? •How many agencies touch our water and tack on costs? •Why do water rates increase despite increased conservation? •What will be the new 'normal'for water rates in the future? •When will water rates level off? DISCUSSION Billions ofdollars have been spent on California's vast water distribution system,and billions more are planned.As water continues to be imported,the costs ofeapital improvements needed for the distribution system will be reflected in increased rates. The CWA is the San Diego county water wholesaler.CWA manages supply relationships with MET and sells wholesale water to CWA member agencies.These retailers then deliver water to our homes and businesses.The board ofdirectors of CWA is eomprised I SAN DIEGO COUNTY GRAND JURY 2010/2011 (filed May 31,2011) ofrepresentatives ofthese 24 retailers.Today,CWA relies on MET to supply 53%of its water;it is projected to decline to 29%by 2020. During the 1990 drought,CWA was fully dependent on water deliveries from MET. Citing the drought,MET reduced the amount ofwater delivered to CWA by one-third. Related mandatory conservation and increased costs during this period forced many local famlers out ofbusiness.San Diego County was dependent on MET,but MET couldn't deliver. After these drastic cuts,CWA embarked on a mission to lessen its dependence by diversifying the County's water supply.In the process,CWA embarked upon a Capital Improvement Program (CIP)to build reservoirs and upgrade its current storage infrastmcture.This diversification plan did not come without a cost:CWA will spend nearly $3.8 billion over the period of 1989-2030.Further rate increases may result from these expenditures. CWA's strategy is to change the relationship with MET from a sole supplier to a supplier and transport partner.The transport comes from the conveyance ofCWA-controlled water from sources such as the Imperial Irrigation District through MET's system to CWA facilities. CWA is MET's largest customer,but is under-represented on MET's board of directors. This disproportionate representation on MET's board suggests that MET will continue to levy a hefty fee to convey CWA water,regardless of source,since CWA has little influence on that decision. MET was sued by CWA June 11,2010.The lawsuit claims that MET adopted rates and charges on April 13,201 0 that will overcharge CWA by $30M annually,and that the overage uniquely mischaracterizes certain water supply costs as water transportation costs,thus stabilizing other MET members at CWA expense. CWA's ongoing investment in a diversification program has been successful in securing supplies from the Imperial Inigation District.There have been efforts in recycling, desalination,ground water exploration and development to diversify San Diego County's water supply and distance CWA from MET.MET's loss ofwater sales,along with the state's 20%conservation target,means a significant loss ofrevenue to MET. MET is not immune to pricing pressures ofits own;as a result,the price increases will flow directly down to ratepayers.Some examples are: •Substantial reductions in MET's lowest cost supplies from the Colorado River as a result ofMET's loss ofpast Arizona and Nevada surplus water now being used by a growing population in those states. •Substantial increases in MET's higher water cost from the State Water Project as a result ofcourt rulings limiting the amount of water which may be delivered 2 SAN DIEGO COUNTY GRAND JURY 201012011 (filed May 31,2011) through its facilities because ofenvironmental eoncerns such as river smelt protection. •State-mandated water conservation targets of20%. •MET can restructure water rates such that CIP and various reserves are not funded through water rates.For instance,some CIP have 40-year life spans that could be funded by borrowing. •CWA,the largest customer,is buying less water from MET. The CWA board recently approved an ordinance,effective January I,2011,to increase treated water rates by 11.3%.Gfthe increase,45.5%is a pass-through from MET,47% represents its CIP,and the balance is for operations and other expenses.The CIP includes over $1.5 billion in contracts and subcontracts to administer and finish its infrastructure building vision. Water conservation adds costs to our rates in a perverse cause-and-effect relationship.By conserving water,ratepayers will pay more per gallon used.Additional revenue reductions will result from implementation ofCalifornia's Water Conservation Act of 2009 due to its requirement to conserve 20%by 2020.By eonserving water,the CIP debt must be spread over fewer gallons ofwater,thus increasing the per-gallon price ofwater. CWA wholesale water rates increased by 11.3%to local retailers this year,but the Grand Jury found that less than 11.3%has been passed on to ratepayers.Local water retailers' capital reserves have been absorbing as much of CWA's pass-through markup as their distribution costs,capital improvements,financing,operations,and political will can accommodate.This is unsustainable.Retailers do not have enough cash reserves to absorb these cost increases for long.Customers in the County will eventually get the bill for these continuing costs. In 1996,California voters passed Proposition 218,requiring sellers to meet strict noticing procedures to infornl ratepayers before instituting an increase in water rates.A sampling ofthese Prop 218 notices by the Grand Jury shows how water professionals are infoTU1ing the public.The notices produced a blizzard ofdata including laboratory chemistry, engineering logic,charts and graphs,all in technical language not easily understood by the average citizen.While the notices are professionally produced,the mailers seem to hinder rather than help ratepayers'fundamental understanding ofthe reasons and impending financial impact ofwater rate increases. The Grand Jury found that CWA and its retailers have a public relations challenge.They must communicate effectively with a public who is weary ofcontinued rate increases. Is there good news for San Diego water users on the horizon?As imported water rates increase,technologies such as reclamation and desalination become economically more viable.Each ofthese technologies cost more to produce than buying imported water; however,as rates rise,the differences become negligible.San Diego County could finally be in an enviable water supply position,with more than 70 miles ofcoastline and access to literally an ocean ofwater.Even these technologies will require CIP infrastructure 3 SAN DIEGO COUNTY GRAND JURY 201012011 (med May 31,2011) Sllpport.Desalination,reclamation,and ground water recovery are each unique technologies requiring specialized processing and testing prior to releasing water they generate into the delivery system. These technologies are expected to provide San Diego County a diversified water source free from MET control which will potentially provide a plateau in water rates as these systems corne online.CWA has reduced dependence from MET since 1990 from 90%to 53%and new local CIP projects are under construction or planned.As imported water rates continue to increase,local sources ofwater will become a much more significant factor. County water ratepayers will continue to look for the payback from CWA's diversification program when new local sources ofwater produce the majority ofour water needs that will stabilize rates for our region into the future. FACTS AND FINDINGS Fact:San Diego County began importing water in 1940. Fact:CWA was organized in 1944 to support wholesale distribution ofimported water in San Diego County. Fact:Today imported water comprises 79%ofour water supply,of which 53%is purchased jrom MET. Fact:The County Water Authority is its largest customer yet is under-represented on the Metropolitan Water District's Board ofDirectors.Only four ofthe 24 members are fl'om San Diego County. Fact:The estimated annual impact ofMET conveyance charges to CWA ratepayers, which are considered by CWA to be excessive,is: • 2011:$30M •2013:$39.6M •2015:$45.6M •2019:$74.4M • 2021:$230.4M Fact:In June 2010,CWA filed a lawsuit against MET challenging high conveyance fees. Fact:CWA is sensitive to member agencies'needs,and is aggressively representing their member agencies'pricing concerns to MET. Fact:California instituted a 20%mandated water conservation requirement to be reached by 2020. Fact:Conserving water increases the cost per unit. 4 SAN DIEGO COUNTY GRAND JURY 2010/2011 (med May 31,2011) Fact:San Diego County is a semi-arid environment without enough rainfall in most years to support the County's population. Fact:CWA has a plan to diversify sources ofwater for San Diego County which relies less on MET for imported water. Fact:CWA's FY2010/2011 budget includes 47%for CIP and debt service,46%for water purchases and treatment and 7%for its operating departments. Fact:CWA's $3.8 billion CIP (1989-2030)includes the Twin Oaks Valley water treatment plant,Olivenhain Dam and Reservoir,Lake Hodges Projects and San Vicente Pipeline. Fact:San Diego county retailers received an 11.3%increase in 2010 from wholesaler CWA effective January I,2011. Finding 01:CWA is under represented on MET's board of directors. Finding 02:CWA member agencies havc not communicated clearly to their customers about the reasons for water rate increases. Finding 03:Water rates will undoubtedly continuc to increase because ofa combination ofexpanding needs in the region,debt from ClP and conservation measures. RECOMMENDATIONS The 201012011 San Diego County Grand Jury recommends that the San Diego County Water Authority: 11-61: 11-62: 11-63: 11-64: 11-65: Evaluate and improve public outreach efforts to edncate the ratepayers about efforts to diversify and stabilize rates in the future. Aggressively explore and advocate for fair representation on the board of the Metropolitan Water District. Establish a digital outreach and communication program that incorporates social media on County Water Authority and member agency websites that enhances their ability to reach and educate ratepayers. Consider an economic reward for conservation measures taken by ratepayers. Increase the investment in diverse technologies such as desalination and reclamation.It is imperative to bring these sources online in anticipation of higher rates in San Diego County. 5 SAN DIEGO COUNTY GRAND JURY 201012011 (filed May 31,2011) REQUIREMENTS AND INSTRUCTIONS The California Penal Code §933(c)requires any public agency which the Grand Jury has reviewed,and about which it has issued a final report,to comment to the Presiding Judge ofthe Superior Court on the findings and recommendations pertaining to matters under the control ofthe agency.Such comment shall be made no later than 90 days after the Grand Jury publishes its report (filed with the Clerk ofthe Court);except that in the case ofa report containing findings and recommendations pertaining to a department or agency headed by an elected County official (e.g.District Attorney,Sheriff,etc.),such comment shall be made within 60 days to the Presiding Judge with an information copy sent to the Board ofSupervisors. Furthennore,Califomia Penal Code §933.05(a),(b),(c),details,as follows,the manner in which such comment(s)are to be made: (a)As to each grand jury finding,the responding person or entity shall indicate one ofthe following: (I)The respondent agrees with the finding (2)The respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion ofthe finding that is disputed and shall include an explanation of the reasons therefor. (b)As to each grand jury recommendation,the responding person or entity shall report one ofthe following actions: (I)The recommendation has been implemented,with a summary regarding the implemented action. (2)The recommendation has not yet been implemented,but will be implemented in the future,with a time frame for implementation. (3)The recommendation requires further analysis,with an explanation and the scope and parameters of an analysis or study,and a time frame for the matter to be prepared for discussion by the officer or head ofthe agency or department being investigated or reviewed,including the goveming body ofthe public agency when applicable.This time frame shall not exceed six months from the date of publication ofthe grand jury report. (4)The recommendation will not be implemented because it is not warranted or is not reasonable,with an explanation therefor. (c)Ifa finding or recommendation ofthe grand jury addresses budgetary or personnel matters ofa county agency or department headed by an elected officer,both the agency or department head and the Board ofSupervisors shall respond ifrequested by the grandjnry,but the response of the Board of Snpervisors shall address only those budgetary or personnel matters over which it has some decision making authority.The response ofthe elected agency or department head shall address all aspects ofthe findings or recommendations affecting his or her agency or department. 6 SAN DIEGO COUNTY GRAND JURY 2010/2011 (filed May 31,2011) Comments to the Presiding Judge of the Superior Court in compliance with the Penal Code §933.05 are required from the: Responding Agency San Diego County Water Authority Recommendations 11-61 through 11-65 Date 8/29/11 7 SAN DIEGO COUNTY GRAND JURY 201012011 (filed May 31,2011) CWA vs Otay Water District Rate Increases (with Recycled Savings) 61.7% 75.3% 0%-t"----,------.,.------.------,----......------r 40% 20% 60% 80% 2007 2008 2009 2010 2011 2012 •CWA Water Cost Increase Otay Water Rate Increase 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Historic Water Rate Increases 2009 through 2011 -v> I -v> 1I1oo -v> I-'~ooo -v> I-'~ 1I1oo -v> N~ooo -v> N~ 1I1oo Lakeside Oceanside Vallecitos Olivenhain San Dieguito Otay Rincon Helix Ramona Fallbrook Carlsbad San Diego Poway Del Mar Vista Escondido Padre Rainbow Sweetwater Valley Center Santa Fe Yuima o RO S no '"r+ "'C to., no ::J ::J tonr+-.o ::J Staffing Reduction 180 -,----------------------------------, Projected FTEs {!! !!1----1 1---1 1-------------------1 Historic FTEs I---f n---I~I---l~l-------------------------j...E I70 -+-----0__--1 140 150 120 160 130 2004200520062007200820092010 2011201220132014201520162017 Efficiency Savings Total Position Salary Savings by Year FY08 Total 'FY09a 'FY10a "2011 a "2012 a Grand Total Salary &Total Salary Total Salary Total Salary Total Salary through FY Dept Position Benefits &Benefits &Benefits &Benefits &Benefits FY2012 2008 Engineering Chief,Development Services (230,954)(241,348)(252,209)(263,55B) (27B,054) 2008 Engineering Assistant Civil Engineer (126,154)(131,831)(137,762)(143,962)(151,B80) 2008 Engineering Engineering Tech (95,965)(100,2B3)(104,796) (109,512) (115,535) (361,678) (377,954) (394,961) (412,735) (435,436)(1,982,764)Net 2 positions 2009 Operations $r.Utility Equip Operator (9B,B45)(103,293) (107,941) (113,878) 2009 Engineering Associate Civil Engineer (161,007)(16B,253)(175,825) (185,495) 2009 Engineering Assistant Civil Engineer (126,154) (131,831) (137,763)(145,340) 2009 Engineering ConstrucHon Inspector I (B3,759) (87,52B)(91,467)(96,49B) (469,765)(490,905)(512,996) (541,211)(2,014,877)Net 4 positions (847,719) 2010 Engineering Sr.Civil Engineer (1B2,672) (190,B92)(201,391) 2010 Engineering Construction Inspector II (101,B10)(106,391)(112,243) 2010 Engineering Construction Inspector I (83,759)(B7,528)(92,342) (347,301) (362,929)(382,B90)(1,093,120)Net 2.75 positions (1,233,167) 2011 Admin Warehouse Delivery Worker (90,586) (95,568) 2011 Admin Facilities Maintenance Asst (70,977)(74,BB1) 2011 Finance Customer Service Rep II (92,293) (97,369) 2011 Finance Customer Service Field Rep I (7B,251 )(82,555) 2011 Finance Customer Service Field Rep II (B6,272)(91,017) 2011 Operations Utility Crew Leader (115,614)(121,973) 2011 Operations Laboratory Technician II (110,107) (116,163) (644,100) (679,526)(1,323,626)Net 7 positions (1,932,760) 2012 Finance Accountant (133,B65) 2012 Finance Customer Service Field Rep I (86,269) 2012 Finance Customer Service Supervisor (154,964) (375,118)(375,118)Net 3 positions Grand Total FY12 Total $(2,414,1B1)$(6,789,505)Total Net 18.75 positions *Net Labor Savings and prior year Total Salary and Benefits include the effect of an average 4.5%annual increase in salary costs due to Cost of Living and Merit increases. **Positions noted in are those that have been added rather than deleted in that year.For example in FY08 Finance added a Sr.Customer Service Representative position. 45,000 Historic and Projected Potable Water Purchases from CWA and the CWA Allocation 30,000 - CWA Base -43,162 AF Olay High Demand·41,909 AF 25.8% - 2.0% More >22% CWA A1locatlof -39,832 AF Same 11.1%Il Less 34,971 ::-CWA 8%Cutback 38,045 9.2% Less 38,836 41,909 II" WMNMtT \ \.r-...-..,. ~'»--------, 8.1%\Less 'r.---, 40,946 37,898 37,678 35,394 40,000 _35,000 ~ ~ ~ ~ """u-< 25,000 31,098 31,088 31,722 20,000 , FY05 FY06 FY07 FY08 FY09 Projected Budget 2011 2010 Projected 2012 ,------,I Otay Purchases --CWABase hM~!i\i¥1Supplement to Recycled System Otay High Demand CWA Allocation Recycled-water facility tops fiscal plans for Otay district IThe San Diego Union-Tribune Page I of2 SIGN~N SAN DIEGO @c2J PRINTTHIS Recycled-water facility tops fiscal plans for Otay district By Amy Oakes $TAFF WRITER June 6,2005 SPRING VALLEY -The Otay Water District will spend most ofits capital improvement funds in the coming fiscal year ou its recycled-water facility. The district's fiscal 2005-06 budget calls for uearly $30 million oHhe $36 million in capital improvement funds to be used for the project.The district is laying six miles of 30-inch pipeline and building a 12 million-gallon storage tank and pump station north ofMain Street in Chula Vista. <The facility will supply recycled water to the growing communities iu eastern Chula Vista.The water can be used in parks,sports fields and landscaped areas. "These are big projects for Otay,"said Mark Watton,the distriet's general manager."They are the premier." The district can fund such projects because it has a healthy budget.Ithas revenue to support operations and fees from growth to fund future projects.On May 23,the district's board approved an $88 million budget for the next fiscal year. Watton said the operations portion ofthe budget,about $52 million,will be offset by revenue.Revenue is projected to be $220,000 more than expenses. That money can be used for unplanned expenses throughout the year or be folded into the district's reserves,Watton said.The district has about $100 million in reserves,with most of that earmarked for future projects,Watton said. The district serves "73,000 people in the southeastern partoHhe county.The 125.5-square-mile serviee area encompasses eastern Chula Vista,southern EI Cajon and La Mesa,Jamul,Spring Valley,Bonita and the San Diego neighborhood of Otay Mesa. Watton said the board opted to approve the budget at a workshop rather than wait until its June general meeting.The board had adopted a strategic plan before the workshop,and that was incorporated into the proposed budget. "Usually,there's a lot more questions,"Watton said."They (the board)had a good understanding ofwhat the staff wanted to do." The budget is a 15 percent increase over the current year's spending plan.The district needs to spend more because of higher water prices charged by wholesalers,the need for more water,higher energy costs and an expansion of the recyded-water system. In November,the board approved a 3.9 percent rate increase for customers,which will take effect in January.The increase will partially offset the San Diego County Water Authority's 9.7 percent rate increase. The district has been able to absorb the authority's rate increases with costs savings and revenue. httn:1lsi "nons"nrli""o nrintthis"li"bhilitv."om/nt/cnt?exnire=&title=Recvcled-water+facilit...8/1/2011 Recycled-water facility tops fiscal plans for Otay district I The San Diego Union-Tribune Page 2 of2 Watton said the district did benefit from the city ofSan Diego's troubles and its decision to delaysome maintenance projects.The recycled-water pipeline project was estimated to costthe district $19 million.The district ended up awarding a contract for $14.7 million,Watton said. "Contractors are out there desperately looking for work,"Watton said."We are the (beneficiaries)ofthat." BAmy Oakes:(619)498·6633;all}\.oakes(tUllliontrib.com Find this article at: http://www.signonsandiego.com/uniontrib/20050606!new5_1 m60tay.hlml Check the box to include the list of links referenced in the article. ©Copyright 2011 The San Diego Union-Tribune LLC. httD:IIsi£!nonsandie£!o.Drintthis.cIickabilitV.COm/DtlCDt?eXDirc=&title=Rcc vc led-water+facili t...81 I120 II Chart 1 Overall Satisfaction with Otay Water District as Water Service Provider (2.21 =mean on 1-6 scale where 1 =Excellent) •Excellent •Very Good .Good Fair •Poor eVery Poor 2006200820092010 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 Chart 3 Trust Otay Water District to Provide Clean,Safe Water (1.90 =mean on 1-5 scale where 1 =Great Deal of Trust) •Great Deal of Trust .Good Amount of Trust .Some Trust [J Not Much Trust •No Trust at All 200820092010 100% 90% 80% 70% 60%/50% 40% 30% 20% 10% 0% 2011 In 2006 and 2005,respondents were asked about their confidence in Otay Water District to prevent contamination of water supply.In 2006, 29%had "not much"or "no"confidence.In 2005,that percentage was 22%.It should also be noted that there was only one clearly positive option in those surveys,skipping from "great deal of confidence"to "some confidence." •Trash Collection •Water 0 Gas &Electric DTelephone 0 Cable TV II Internet Access •Sewer Chart 38 Best Value Among Utilities 12%19% 2011 2009 17%10% 2008 15%7% ~1.%.% 0%10%20%30%40%50%60%70%80%90%100% The American Public Works Association (APWA),San Diego-Imperial Counties Chapter,gave its 20 II Honor Award to the Otay Water District's 1296-3 (2 million gallon)water reservoir.The 1296 Reservoir complex serves portions ofthe Jamul community in San Diego's East County. The San Diego Section ofthe American Society ofCivil Engineers presented its 201 IAward of Excellence to the Otay Water District for the 1296-3 Reservoir. The San Diego Section of the American Society of Civil Engineers gave its Award ofExcellence to the Otay Water District and Lee &Ro Inc. for the Jamacha Pipeline Project. The Jamacha Road Pipeline Project was one element ofthe East County Regional Treated Water Improvement Program. The American Public Works Association (APWA),San Diego-Imperial Counties Chapter,awarded the Otay Water District's Jamacha Pipeline Project its Project ofthe Year Award for 2011.One ofthe most challenging in the District's 55-year history, it was completed on schedule and more than $1 million under budget. The Otay Water District was selected by the Irrigation Association's Awards and Honors Committee to be a recipient of its 2010 National Water and Energy Conservation Award. The annual awards program honors organizations throughout the country that are committed to promoting efficient irrigation and long-term sustainability of water resources for future generations. The award recognized the District for its significant achievement in the conser- vation ofwater and energy related to irrigation procedures,equipment, methods and techniques. The Otay Water District was the recipient ofthe Government Finance Association of the United States and Canada's (GFOA)Certificate of Achievement for Excellence in Financial Reporting in 20 II for its comprehensive annual financial report (CAFR). The CAFR was judged by an impartial panel to meet the high standards ofthe program including demonstrating a constructive "spirit offull disclosure"to clearly communicate its financial story and motivate potential uses and user groups the read the CAFR. GFOA is a nonprofit professional association serving approximately 17,500 government finan- cial professionals. Awards I The Public Works Association (APWA) presented Otay Water District and Infrastructure Engineering Corporation the 2010 Project Ofthe Year Awardfor the 640-1 alld 640-2 (10 MG) Reservoirs. The two IO-million gallon capacity reservoirs are part ofthe East County Regional Treated Water Improvement Program The Public Works Association (APWA) presented Otay Water District the 2010 the HOlloI'Awardfor the 850-4 (2.2 MG)Reservoir.The 850-4 Reservoir serves the unincorporated La Presa community in San Diego's East County. ~Tbe Governmeot Finance Officers AssociationG~of tbe United States and Caoada AWARD OF FINAl'lCIAL REPORTING ACHIEVEMENT Finance Department Otay Water District.California n.._..-d"f"FI..-c/ClJhpON'''I/''''......._''_.,.,.,;b1 ~0"'-.,......Fi_.CiIf"," ..",...",,,,,,I.,...","'·,I.JM""ft.'.t",,_<d'"i«1""",...~1'",f"iF",.,.._'"u.",di.,,"11u C"'v""""'Arm...""",pr 1'.><.11.<..,m fj'Oi»rial1Ir,..tJ;ll..,AC"'lftN~'qfA<.........'u "1"....oI.J,I>'Oon1>"__'"""I"~'A{J~"~~oaif_.d,,1"f"'£""...jvq..llo"'~I. 1""11""'"._kvJs.-t''1'''''''''''/11,h'j"'''....I'd".1"""'--'''jl",,,.,,,,,I..pon,,,, l.l~May 16.2Ol1 The Award of Financial Reporting Achievement was presented by the Government Finance Officers Association to the Otay Water District for excellence in Financial Reporting.It is presented to those governmental units whose annual financial reports are judge to adhere to program standards and represents the highest award in government Financial reporting. The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District the Certificate of Award for Excellence in Capital Budgetingfor Fiscal Year 2009-2010. Awards ~***~**~*~*~~****.****~:$:California Society of'Municipal'Finance Offiars )~~ ~b-~Cl'nificaleof,hurd ~~:-*hr *~,:t,::Excellencein Capital Budgeting :....~,;'-.;~'•. :";':,1 ~-Fiscal Year 1009-2010*M.~~"-("__'!t",,,_,,_,_._,,,~.,,,,,__....,__..:~;~ ~;v.j r~, :'~~~Olay WateT 1>151rh:t ~/~: .~~~"__""""__"""""_""'H~C....·It:'''''.I>''''''''''·''-'L.''DGnr::''Hi_r.;4~~ ;,~.'-".~••~_1.-,_""-ry''''''~~~~r ~.I..2...-.4-18-~j '\,/f "~'D~_~~:.=;:;.- ~****~~****~~~~***~***~ The Construction Management Association of America (CMAA)presented Otay Water District and Valley Construction Management the 2010 Project Achievement The 1296-3 Reservoir is located in Jamul, California Financial Awards The Government Finance Officers Association ofthe United States and Canada (GFOA)presented a Distinguished Budget Presentation Award to Otay Water District, California for its annual budget for the fiscal year beginning July I, 2009. In order to receive this award,a governmental unit must publish a budget document that meets program criteria as a policy document,as an operations guide, a financial plan,and as a communications device. The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District the Certificate of Award for Excellence in Operating Budgetingfor Fiscal Year 2009-2010. The Government Finance Officers Association of the United States and Canada (GFOA)presented a Distinguished Budget Presentation Award to Otay Water District, California for its annual budget for the fiscal year beginning July I,2008. The GFOA is a nonprofit professional association serving 17,600 government finance professionals throughout North America.The Distinguished Budget Presentation Awards program is the only national award in governmental budgeting. The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District the Certificate ofAward for Excellence in Operating Budgeting (or Fiscal Year 2008-2009. The American Society ofCivil Engineers (ASCE)presented Otay Water District and Infrastructure Engineering Corporation the 2008 Outstanding Civil Engineering Projectfor Water Supply/Waste Water Treatment &Reuse for the 640 Reservoirs. --_._.-.- '-.J1T.1.-'"'.-'"'. The Construction Management Association of America (CMAA)presented Olay Water District the 2008 Client ofthe Year Award. The Otay Water District's Information Technology and Strategic Planning Department was awarded the Center for Digital Government's Best ofCalifornia, Excellence in IT Operations Support and Service,Award for 2008. ,,r 'Jp<f~"""''-""Pf<[1 .:.J ,. ......\.....O'U':ltJ.-.:ISlJ~~~..- The Otay Water District's Information Technology and Strategic Planning Department was awarded the Municipal Information Systems Association of California's (MISAC)Excellence in IT Practices Award. "'...!!--_._--lJllii\i\ The Construction Management Association ofAmerica (CMAA)presented Otay Water District the 2009 Project Achievement Awardfor the outstanding achievement in the practice of construction management. The California Highway Patrol presented the Otay Water District a Certificate ofAchievement for its motor vehicle carrier safety compliance inspection program,which has achieved consecutive satisfactory compliance ratings. This is a meritorious achievement and recognizes the commitment to highway safety demonstrated by the District personnel. FINANCIAL AWARDS GOVEIl:~I.4ENTI'IN....NCE OFFICERS....SSOClAHON o istiIIgIIisiled Blldget Presentation Award Ollll)'Waler l)ijlrkl C.lifurnill The Government Finance Officers Association ofthe United States and Canada (GFOA)presented a Distinguished Budget Presentation Award to Otay Water District,California for its annual budget for the fiscal year beginning July 1,2007. This award is the highest form of recognition in governmental budgeting.Receiving the award represents a significant accomplishment by a governmental entity,its financial staff,and its management. The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District the Certificate of Award for Excellence in Operating Budgeting for Fiscal Year 2007 -2008. FINANCIAL AWARDS I The California Society of Municipal Finance Officers (CSMFO) presented Otay Water District the Certificate of Award for Meritorious in Public Communications for Fiscal Year 2007 -2008. The California Society of Municipal Finance Officers (CSMFO)presented Otay Water District the Certificate of Award for Excellence in Capital Budgetingfor Fiscal Year 2007-2008. California Society of JUlLnicipal JinlL/lCe Officers Certificate orAward For £xullence ill Capital Budge/ing Fiscal Year 1007·1008 Ola)'Willer Ili$frici '...._f.....·._.._.."'~_~,~.-~._.....c.,,,,,II(If;I."",,,;eu.r.. , FINANCIAL AWARDS California Sociely of ~ J\tlllllicipal JillllllCC Officers CtrtWcatt or Award F.r .\Ieritorioll$in Budget/nnom/iolls Fiscal Yt"ur 1007-1008 ''''__'''~<f''_'''''_'_''''''''''_'' The California Society of Municipal Finance Officers (CSMFO)presented Otay Water District the Certificate of Award for Meritorious in Budget Innovations/or Fiscal Year 2007-2008. AWARDS The San Diego Taxpayers Association awarded the Otay Water District's Supply Link project with its 2007 Golden Watchdog Award. The Supply Link project redirects millions of gallons of recycled water that was released each day into the ocean,and instead uses it to irrigate golfcourses,freeway landscapes,and parks in eastern Chula Vista. r~..--.,•-a-,. AWARDS a-I'. 1 The American Society of Civil Engineers (ASCE) presented Otay Water District and Lee &Ro,Inc. the 2007 Outstanding Civil Engineering Project for 30"Recycled Water Pipeline,Dairy Mart Road to 450-1 Reservoir. The Construction Management Association ofAmerica (CMAA)presented Otay Water District the 2008 Project Achievement Awardfor the Recycled Water Pipeline to recognize outstanding achievement in the practice of construction management. FINANCIAL AWARDS The Government Finance Officers Association ofthe United States and Canada (GFOA)presented a Distinguished Budget Presentation Award to Otay Water District for its annual budget for the fiscal year beginning July 1,2006. The California Society of Municipal Finance Officers (CSMFO)presented Otay Water District the Certificate of Award Excellence in Operating Budgeting/or Fiscal Year 2006 -07. FINANCIAL AWARDS The California Society of Municipal Finance Officers (CSMFO)presented Otay Water District the Certificate of Award Excellence in Public Communications Budgeting for Fiscal Year 2006 -07. The California Society ofMunicipal Finance Officers (CSMFO) presented Otay Water District the Certificate ofAward Excellence in Capital Budgeting/or Fiscal Year 2006 -07. AWARDS The Otay Water District was named the Recycled Water Agency ofthe Year for 2006 by the WateReuse Association of California.This prestigious award recognized the District's commitment to recycled water use,its extensive recycled water network,and the Supply Link Project that connected to the City ofSan Diego's South Bay Water Reclamation Plant. FINANCIAL AWARDS The Government Finance Officers Association of the United States and Canada (GFOA)presented a Distinguished Budget Presentation Award to Otay Water District for its annual budget for the fiscal year beginning July 1,2005. AWARD FINANCE AWARDS Operating &Capital Budget Distinguished Budget Presentation Award Fiscal Year 2010-11 -Received 11'om GFOA Distinguished Budget Presentation Award r:iscal Year 2009-10 -Received l1'om GFOA Distinguished Budget Presentation Award Fiscal Year 2008-09 --Received from GFOA Distinguished Budget Prescntation Award Fiscal Year 2007-08 -Received from GFOA Distinguishcd Budget Presentation Award Fiscal Year 2006-07 -Received ti'om GFOA Distinguished Budget Presentation Award Fiscal Year 2005-06-Received hom GFOA Distinguished Budget Presentation Award Fiscal Ycar 2004-05 -Received from GFOA Excellence in Operating Budgeting Award Fiscal Year 2010-11 ....Received trom CSMFO Excellence in Operating Budgeting Award Fiscal Year 2009-10 -Received hom CSMFO Excellence in Operating Budgeting Award Fiscal Year 2008-09 -Received ti'om CSMFO Excellence in Operating Budgeting Award Fiscal Year 2007-08 -Received trom CSMFO Excellence in Operating Budgeting Award Fiscal Year 2006-07 .....Rcceivcd hom CSMFO Meritorious in Public Communications Fiscal Year 2007-08 -Received n'om CSMFO Excellence in Public Communications Fiscal Year 2006-07 -Received from CSMFO Excellence in Public Communications Fiscal Year 2005-06 Received hom CSMFO Meritorious in Innovation in Budgeting Fiscal Year 2007-08 -Received hom CSMFO Meritorious in Innovation in Budgeting Fiscal Year 2005-06 -Received li'om CSMFO CIP Budget Excellence in Capital Budgeting Award Fiscal Year 2010-11 -Receivedli'om CSMFO Excellence in Capital Budgeting Award Fiscal Year 2009-10 ....Received fi'om CSMFO Excellence in Capital Budgeting Award Fiscal Year 2008-09 -Received hom CSMFO Excellence in Capital Budgeting Award Fiscal Year 2007-08 -Received li'om CSMFO Excellence in Capital Budgeting Award Fiscal Year 2006-07 -Received from CSMFO Excellence in Capital Budgeting Award Fiscal Year 2005-06 -Received hom CSMFO CAFR Certitlcate ofAchievement for Excellencc in Financial Reporting Fiscal Year ended June 30. 2010-Received ti'OlD GFOA Certilicate ofAchievement for Excellencc in Financial Reporting Fiscal Year ended June 30, 2009 -Rcceived hom GFOA Certiticate ofAchievement for Excellence in Financial Reporting Fiscal Year ended June 30, 2008-Receivedli'om GFOA Certitlcate of Achievement for Excellence in Financial Reporting Fiscal Year ended June 30, 2007 -Received ti'om GFOA Certi!lcate ofAchievement for Excellence in Financial Reporting Fiscal Year ended June 30, 2006 -Received Ji'om GFOA Certificate ofAehievemcnt for Excellence in Financial Reporting Fiscal Year cnded June 30, 2005 -Received tram OFOA Certificate ofAchievement for Excellence in Financial Reporting Fiscal Year ended June 30, 2004 -Received fi'om OFOA CAFR,continued Outstanding Financial Reporting for the year Ended June 30,2005 -Received fi-om CSMFO Outstanding Financial Reporting for the year ended June 30,2004 -Received Ii'om CSMFO Debt Policv Debt Policy Certificate ofExcellence Award received Ii-om Association of Public Treasurer's of United States &Canada (APT-US&C)received in December 2006, Investment Policv Investment Policy Certificate of Excellence Award (Received Ii'om Association of Public Treasurer's ofUnited States &Canada (APT-US&C)received in August 2006, 2554 SWEETWATER SPRINGS BOULEVARD,SPRING VALLEY,CALIFORNIA 91977-7299 TELEPHONE:670·2222,AREA CODE 519 FOR IMMEDIATE RELEASE For More Information,Contact: Armando Buelna (619)670-2256 Office (619)987-6360 Mobile abuclna@otaywater.gov May 25,2010 Otav Water District Nationally Recognized for Financial Reporting District Receives Award/or Sixth Year Spring Valley,CA -The Otay Water District announced today it has received the Certificate of Achievement for Excellence in Financial Reporting for its 2009 comprehensive annual financial report (CAFR).The District has now received thc award ii·om the Government Finance OfIicers Association ofthc United States and Canada (GFOA)for the sixth year in a row.This certificate is the only national award for public sector financial reporting. "The Ccrtificate ofAchievement 1\.11'Excellence in Financial Reporting is the highest form ofrecognition in thc area of government accounting and tinancial reporting,and its attainment represents a significant accomplishment by a government agency and its management,"stated Stephen Gauthier,spokesperson for GFOA. The CAFR has been judged hy an impartial panel to meet the high standards ofthe program including demonstrating a constructive "spirit of full disclosure"to clearly communicate thc District's financial story and motivate customers and user groups to read the CAFR. The GFOA is a nonprofit professional association serving 17,600 govemmcnt finance professionals throughout North America.The 2009 report can be viewed or downloaded by highlighting the Home tab,then clicking on Publications,located in the upper len hand corner ofthis screen. ### 2554 SWEETWATER SPRINGS BOULEVARD,SPRING VALLEY,CALIFORNIA 91977-7299 TELEPHONE 670·2222,AREA CODE 619 FOR IMMEDIATE RELEASE Contact: Armando Buelna Otav Water District, 619-987-6360 mobile abuclna@)otay\vater.gov November 25,2008 Otay Water District Receives Bond Rating Upgrade Upgrade rrjleets commitment to economic (md mClrwgementfundamentals SPR]NG VALLEY,CA -The creclit rating agency Standarcl and Poor's has upgraded the bond rating of the Otay Water Distt-ict from AA -to AA.This higher rating reflects the increased credit \vorthiness of the district,and 111eans it \-vill pay less interest on bonds it \vill issue for capital in1prOVe111ent projects. The bond ratings for public agencies are based on a variety of factors,including the health of the local econOIllY1 stability of an ag·ency's custolner base,financial strength,management,and_j <-_'-c operational efficiency.\;Vhile considering the downturn in the local econolny,Stanclard and Poor's,nevertheless,u])f!racled the district's bond rating:a tcstan1cnt to the district's ability to<-'C j nlanage its assets through difficult eco110111ic conditions.Agencies that demonstrate strong financial n1etrics,good econonlic fundamentals,and solid management receive upgrades froIn Standard and Poor's. "This is the second credit rating upgrade \ve have received in just the last nineteen n1onths,"said Gary Coucher,President of the Board of Directors."This uf)gracle further ret1ects,~ the district's strong 111anage111cnt and our c0111n1itn1cnt to busincss funcla111cntals on behalf of our cust0111ers.)} 'rhc upgrade \vi11 help keep the district's \vater rates extrernely con1petitive.For a typical customer,the district's \vater rates are the sixth !cnvest in San Diego County.L , "The combined alleet ofthese rating upgrades will save the Otay Water District's custorners Inilliol1s of dollars on the costs to build needed water infrastructure,"added CroLlcher, The Otay Water District was founded in 1956 to serve as a public water utility.The district distributes water to more than 191,500 ratepayers within approximately 125 square miles of southeastern San Diego County including the communities of Jamul,La Presa,Rancho San Dieb<Jo,Sixing Valle\",eastern Chula Vista,and east Otav Mesa.'--'.I ,/ ### INVESCO UNIT TRUSTS Investment Grade Income Trust,10-20 Year Series 4 (IGLM4) Delivering quality research driven fixed income products for more than three decades. A taxable fixed income unit trust t Reflects the minimum mdit quality of underlying securities in the portfolio as rated by S&P and Moody's,when available.Not all bonds are rated by both services.Although the bonds in the portfolio arc rated at or above the minimum credit quality as of date of deposit,each bond's raring may change after its inclusion in the trust. Objective The:trust seeks to provide a high level of current income and to preserve capital. The trust invests in a portfolio of corporate bonds and taxable municipal bonds maturing approximately 10-20 years from the date of deposit,including Build America Bonds and Qualified School Construction Bonds,Qualified Energy Conservation Bonds and Clean Renewable Energy Bonds (collectively "Qualified Bonds"). lnvesco Van Kampen helped pioneer the tax-exempt unit trust in 1976.Since then,we have consistently offered fixed income trusts and now boasts a large family of tax-exempt and taxable income trusts. Corporate bonds 31% •Telecommunication services 12% •Financials 12% •Consumer discretionary 4% Energy 3% Portfolio diversification (010 of par value) As ofthe opening of business on the deposit date Over 4,700 fixed income unit trusts have deposited -with over $40 billion in initial deposits. Municipal bonds 69% •General obligation 28% •Transportation 11% •General purpose 9% •Retail electric/gas/telephone 7% •Health care 5% •Waterand sewer 4% Higher education 2% Certificate of participation 2% Public building 1% Monthly 5.55% 5.03% $3.09 $4.64 $55.79 $1004.92 $870.58 18 years 8BB-/Baa3 3.900fo Trust specifics Series information I As of the close of business on the deposit date Public offering price Par value Average weighted maturity Minimum credit rating of underlying securities+ Sales charge Payment Estimated current return' Estimated long-term return' Initial interest distribution Subsequent interest distributions1 Estimated net annual income 46136E-16-6 46136E-17-4 IGLM4 VKGFUX 06/15/11 25th ofeach month beginning 07/25/11 10th of each month beginning 07/10111 Monthly CUSIP Wrap CUSIP Symbol NASDAQ Symbol Deposit date Distribution date monthly Record date monthly Breakpoint information Transaction amount· Fewer than 100 units 100 -249 units 250 -499 units 500 -999 units 1,000 -2,999 units 3,000 -4,999 units 5,000 or more units Wrap fee Sales charges 3.90% 3.50 3.30 3.00 2.80 2.30 1.60 0.60 Est.CurrentReturn! 5.55% 5.57 5.59 5.60 5.61 5.64 5.68 5.74 Est.long-TermReturnI 5.03% 5.06 5.08 5.11 5.13 5.18 5.24 5.34 Why consider the Investment Grade Income Trust, 10-20 Year Series? Take advantage of a portfolio of taxable bonds through a convenient and efficient way of purchasing a professionally selected and diversified portfolio of quality bonds. • Adefined and diversified portfolio of quality corporates and taxable municipals •Low minimum investment of approximately $',000 •Suitable for tax sheltered vehicles like IRAs •Yields may be higher than U.s.treasury bonds with comparable maturities' •Provides diversification of taxable bonds ~The breakpoint disLOunts are also applied on a dollar basis using a breakpoint equivalent of $1,000 per unit and are applied on whichever basis is more favorable to the investor.Diversification dot's not guarantee a profit or eliminate the risk of less. 1Tht'st'estimates art'calculated as of the dose of business on tht'dt'posit date and will vary thereafter.Estimated current return shows the estimated interest distributions you are scheduled to rw~:ive each year divided by the unit price.Estimated long term return shows the estimated return over the estimatffi life of tht'trust We bast'this estimate on an average of the bond yields over their t'stimated life,This estimate also reflects the sales charge and estimated ex.penses.The average yield for the portfolio is derivt'd by weighting each bond's yield by its value and estimated life.Unlike estimated (wrent return,estimated long term return accounts for maturities,drscounts and premIUms of the bonds.These estimates show a comparison rather than a prediction of returns,No return calculation can predict your actual return.Your actual return may vary from these estimates.Current estimates are available at www.invesco.comfunittrust ,The amount is based on estimated cash flows per Unit,and the amount will vary with changes in ex.penses,interest rates and the maturity,tall or sale of bonds. J Unlike Treasury bonds,the bonds the trust invests in are not guaranteed by the US.government as to the timely payment of principal and interest,and therefore are subjectto greater risk, NOT FDiC INSURED MAY LOSE VALUE NO BANK GUARANTEE Invesco 11 Greenway Plaza,Suite 2500 Houston,TX 77046-1188,www.invesco.com (2022 @ 100 SJ.) (2025 @ 100 S.F.l (2027 @ 100 S.F.) (2026 @ 100 S.F.) (2028 @ 100 SJ.) (2024 @ 100 S.F.) (2026 @ 100 S.F.1 Redemption Feature 2020 @ 100 (2024@ 100 S.F.) (2024 @ 100 SJ.) 2019 @ 100 (2028 @ 100 S.F.) 2019 @ 100 (2023 @ 100 SJ.] (2026 @ 100 S.F.) 2019 @ 100 (2025 @ 100 S.F.) 2019 @ 100 (2022 @ 100 S.F.) (2026 @ 100 S.F.) 2020 @ 100 (2026 @ 100 S.F.) (2024 @ 100 S.F.l 2020 @ 100 2019@ 100 2020 @ 100 2020 @ 100 03/01/2024 2019 @ 100 08/01/2025 07/01/2026 2020 @ 100 07/01{2029 07/01/2029 07/01/2029 11!01{2029 06/15/2028 12/15/202B 01/01/2029 01/01/2029 04/01/2029 04/01/2027 /2025 @ 100 SJ.) 05/01/2027 2020 @ 100 12026 @ 100 S.F.) 08/01/2028 2019@ 100 (2025@ 100 S.F.1 05/15/2029 (2021 @ 100 S.F.) 06/01{2029 2019 @ 100 (2028 @ 100 S.F.] 09/01/2030 11/01/2030 11/15/2030 11/15/2030 12/01/2030 05/15/2031 12/01/2031 11/01/2029 04/01/2030 06/15/2030 07/15/2031 03/30/2029 08/09/2026 06/01/2028 03/15/2032 09/15/2030 10/15/2031 5.8Ql1b 5.93% 6.40'1b 5.536% 7.281%6._ 8.253% 6.642% 6.543% 5.7350f0 6.458% 6.05% 6.377% 7.7Ql1b 6.587% 6.734% 7.5Ql1b 6,27% 6.646% 6.104% 6.23% 7.0Ql1b 6.72% 5.755% 7.045% 6.71% 6.319% 7.00% 7.00% 6.25% 6.75% 6.75% 8.25% 6.875% A" AI AI NR A,) A' NR "') A,)"') A" AI "" ""NR A' AI A' A' ""Baal A' NR AI A' A' NR """" AA NR AA- AA- A AA- AA AA- AA AA- AA- AA- AA AA- AA A- A A A. A. AA- AA AA A- A- M A A A Credit Ratings Interest S&P Moody's Rate (%)Maturity Portfolio holdings Securities (010 of par value as of the opening of business on the date of deposit) Municipal bonds-69% Michigan,Board of Trustees of Oa~land University General Revenue Bonds,Taxable Build America Bonds California,las Virgenes Unified School District,Taxable General Obligation Bonds.Election of 2006,Series C-l, QIJalified School Construction Bonds Nevada.Clark County Sales and Excise Tax Revenue Improvement Bonds,Streets and Highway Projects,Series C. Taxable Build America Bonds Florida,Lee Memorial Health System Hospital Revenue BOl1ds,Series A.BLliid America Bonds Mkhigan,Belding Area Schools,Urilimited Tax School Buildin~and Site;General Obligation Bonds,Se;rie:s A, Qualified School Construction Bonds California,San Francisco City and County,San Francisco General Hospital !mprovement General Obligation Bonds,Series C, Ta~able Build America Bonds California Community College Financing Authority Revenue Bonds,West Valley-Mission Community College District, Series A-l,Taxable Build America Bonds New Jersey Transportation Trust Fund Authority,Transportation System Revenue Bonds, Series C,Taxable Build America Bonds A+ California,Walnut Energy Center Authority Revenue Refunding Bonds.Series B A+ Illinois,Community College DistrictNumber 525 Taxable Genera!Obligation Bonds,Joliet Junior College,Series B,Build America Bonds AA Florida,Miami-Dade County Capital Asset Acquisition,TaKable Special Obligation Revenue Bonds,Series B,BuildAmerica BoMs AA+ (Assured Guaranty Insured) California,Regents of the University ofCalifornia Medical Center Pooled Revenue Bonds,Series F,Ta~able Build America Bonds lIlinois,Champaign County Community UnitSchool District Number 4General Obligation Bonds,Alternate Revenue Source,Series 8, Taxable Build America Bonds California,Los Angeles Unified School District General Obligation Bonds,Series KRY,Ta~able Build America Bonds Florida,Department of Environmental Protection,Florida Forever Revenue Bonds,Series B,Taxable Build America Bonds Florida,Miami-Dade County,Transit System SalesSurta~Revenue BOflds,Series B,Ta~able Build America Bonds Illinois,Chicago Board ofEducation,Unlimited Tax General Obligation Bonds,Dedicated Revenues,Series C. Ta~able Qualified School Construction Bonds Illinois,City of Chicago Second Lien Water Revenue Bands,Taxable ProjectSeries C,Qualified Energy Conservation Bonds Florida,Miami-Dade County Capital Asset Acquisition Taxable Special Obligation Revenue Bands,Series S,Build America Bonds California,San Francisco Unified School District General Obligation Bands,Proposition A,Election of 2006.Series D, Taxable Build America Bonds California,Otay Wate;r District Rnancing Authority,Water Revenue Bands,Series 8,Taxable Build America Bonds California,State Various Purpose General Obligation Bonds,Taxable Build America Bonds New York,Metropolitan Transportation Authority,Transportation Revenue;Bonds,SeriesC-l,Taxable;Build America Bonds New York,Metropolitan Transportation Authority,Transportation Revenue Bonds,Series E,Ta~abJe Build America Bonds Colorado,Grand Junction Certificates of Participation,Taxable Series B,Build America Bonds California,Regents of University ofCalifornia General Revenue Bonds,Series R,Build America Bonds New York,City of New York General Obligation Bonds,Fiscal 2011 •Subseries F·l,Build America Bonds Corporate bonds -31% Target Corporation ConocaPhillips Morgan Stanley Merrill Lynch &Company General Electric Capital Corporation Telcfonica Europe B.V. BeliSouth Corporation ·NR·indicates that the rating agency did not rate:that particular issue:. ·S.F."indic<Jtcs asinking fund is est'Jblished with respect to an issue of bonds. The trust portfolio is provided for informatioflal purposes only and should not bC'deemed as a recommendation to buy or sell the individual securities shown abovC'.Irwesco Van Kampen unit investmenttrusts;ire distributed by the sponsor,Van Kampen Funds Inc"and IJro(er dealers includiflg Iflvesco Distributors,Inc,Both firms are wholly owned,il'ldirectsubsidiaries of Invesco Ltd. www.invesco.com/u nittrust Invesco 11 Greenway Plaza,Suite 2500 Houston,rx 77046-11SS www.invesco.com Inv",co D'stribu;cr$.I~c, U-IGLM4-FCT-1 06.11 ~Invesco Before investing,investors should carefully read the prospectus and consider the investment objectives,risks, charges and expenses.For this and more complete information about the trust,investors should ask their advisers for a prospectus or download one:at invesco,com/unittrust. Risk considerations There is no assurance that a unitinve:stme:nt trust will achieve its investment objective.An investmentin this unittrLlstis subject to market risk,wr,ich is the possibility that the market values of securities owned by the trust will decline and that the value of trust units may therefore be less than what you paid for them.This trust is unmanaged.Accordingly,you can lose money investing in this trust. An investment in the trust should be made with an understanding of the risks associated therewith,such as the inability ofthe issuer or an insurer to pay the principal of or interest on abond whe;n due,volatile interest r:ltes,early call provisions and change:s to the tax status ofthe bonds.In particular,Qualified Bonds may be redeemed approximately three years after issuance to the extent an issue:r has unexpended bond sale proceeds. Investments in atrust may be subjectto interestrate risk.Ifinterestrates rise,the value of the bonds in a trUst may dedine and ifintw'.st rates decline the value of the bonds may increase.Also,the longer the period to maturity,the greater the sensitivity to interest rate changes tends to be. Should the issuer of a Build America Bond or Qualified Bond fail to continue to meet the applicable requirements imposed on the bonds as provided by the American Re:covery &Re:investment Act of 2009,it is possible that such issuer may not receive federal cash subsidy payments,impairing the issuer's ability to make scheduled interest payments. The trust may cuncentrate in bonds ofa particular type of issuer.This makcs the trust less diversified and subject to greater risk than a more diversified portfolio. The trust is more susceptible to political,economic.regulatory,or other factors affecting issuers of California municipal securities than an investment that does not limit its investments to such issuers. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO)of the creditworthiness of an issuer with respect to debt obligations,including specific securities,money mar~et instruments or other debts.Ratings are:measured on a scale that generally ranges from MA/Aaa (highest)1:0 D/C (lowest):ratings are subject to change without notice.For more information on Standard and Poor's rating methodology,ple:ase visit www.standardandpoors.comand select ·Unde:rstanding Ratings·under Rating Resources on the homepage or Moody's at www.moodys.com and select "Rating Methodologies"under Research and Ratings on the homepage. Invesco and its representatives do not provide tax advice,Individuals should consult their personal tax advisors before making any tax-relate;d investme:nt decisions. Small businesses face declining employee loyalty ISignOnSanDiego.com hA.'!)"',:GOC SIGt"©N SAN DIEGO Page I of2 FOR f,,'tORE SP~:CIA!_S AND YOUR COUPON Gc2J PRINTTHIS Small businesses face declining employee loyalty Comments Ih5> tools,story a:hover {colDl"'ii2c2c2c ! important:} Also see I',! Also of Interest Share: Small business job growth has slmved,and nmv a ll('\V study suggests that small business crnployecs aren't feeling as much loyalty to their employers. l':mploycc loyalty in small businesses has dropped from 62 percent in 2008,to 44 percent last year,according lo:\letLife's 9th Annual Study of r':mploycc BCI1Cfils "l'rellds,releasecl:\'Iond<:lY. 'l'hat's signifil'antly'lmYcr than the 50 percent employee loyalLy rat\';at ]argc bus!ncssc.s,according to ,J effre~''I'll!lodl,vice president of U.S. business atl\lc:lLifc. Addilionali)',34 percent of small business employees surveyed \vould like to viork for a different employer. The SLllVCj-'found that the quality of enlployel:::'benefit::;is a major indicator of loyalty.Some 72 llelTcnt of small business cmplo).'"l::,cswho arc VCI)' satisfied \vith their benefits feel a ver,Y strong sense of lo:'alty to their employer,\vhile 50 percent ofsmall business emplo.'ices \vho are not vcr.\-' satisfied \-\ith their benefits \vant to be \vorking elsewhere. "'fhe stud}'is a reality check for smaller emp10yers \vho may still be vie\ving their \vorkforce through rose-colored glasses,"saicll'ulloch. "Economic recovery \vill not only present opportunilics for employers but also for top performers.One area small businesses nJ<l~'overlook is \vbethel'tlH:ir benefits programs arc designed as strategically as they could bE::." pellni.cI'uht!'ceG]:uIIiOlltrib.colJI (619)293-226.:/ http://signonsandie,go.printthis.clickability.co1111ptlcpt?expire=&title=Small+businesses+fac...8/4/20 II Small businesses face declining employee loyalty I SignOnSanDiego.com Page 2 of2 Comments Share: FOR YOUR ADS. ONLINE,MOBILE,OR VIDEO. Find this article at: http://www.signansandiego.com/news/2011/ju1/25/smaII-business-grappies-deelining-employee-Ioyalty Check the box to include the list oflinks referenced in the article. Cop/right 20'1 '1 Tile Sclll DiqjO Uniol1-Tribunf~LLC {i/,iM~DISCOVER http://signonsandiego.printthis.clickability.com/pt/cpt?expire=&title=Small+businesses+fllC...8/4/20 II Private industry pay hikes top government's -Handling Hard Times -The Orange County...Page I of? tlU '."I""t "ISTOi\'EGATE Discowr 4 new Irvine Pacinc:lY neighbur] from the 5300,000s to uver $7oo,OC REAL ESTATE JOBS CARS DEALS CLASSIFIEDS PLACE AN AD SUBSCRIBE I SURF REPORT/C, HOME NEWS SPORTS BUSINESS ENTERTAINMENT LIFE TR. Automotive news I Blogs I Columns I Economy I National Business I Photos I Real Estate News I Retail I Small Business 1St, HARD TIMES Understanding and coping with the economic slowdown by Mary Ann Milbourn Private industry pay hikes top government's August 1st,2011,1:00 am'19 Comments'posted by Mary Ann Milbourn I 9 Recommend Share Increases in private industry wages and benefits outstripped those in state and local government in June for the fifth quarter in a row as budget cuts hit public employees, the U.S.Bureau of Labor Statistics reports. In June,total private industry compensation -pay and benefits -increased 2.3% over the previous 12 months.State and local government compensation rose 1.7% over the same time.State and local government cut 305,000 jobs nationwide from June 2010 to this June. Increases in just benefits provided by private employers -previously a major plus for those on government payrolls -also topped those for public employees.Benefits in the private sector rose 4%while those in state and local government were up 3%. (Pay typically makes up 70%of compensation and benefits 30%.)(Click on chart to enlarge.) - T E J A Me http://economy.ocregister.com/20II/08/0 I/private-industry-pay-hikes-top-govemments/642...8/1/2011 Private industry pay hikes top government's -Handling Hard Times -The Orange County...Page 2 of7 J6% Renet :, s:J:t"r d 1':.1 qc,·.~T'~;>l\ Private v.government compensation The year-over- year percentage increase in total pay and benefits for private workers outpaced state and local government compensation in June. Sl)j~':':'lL"l,))i)_,)t-r ~·:t s~i,~~ MOLLY ZISK I The Register Wages and benefits were up overall for both groups of workers this June compared to a year ago.In June 2010,private sector compensation grew at a 1.9%annualized pace as businesses continued to hunker down after the recession.State and local workers saw their total compensation increase 1.7%during that period. The last time state and local government compensation topped private industry's was in March 2010,when year-over-year private worker pay and benefits rose 1.6%while public employees'saw a 2%increase. State and local government have cut 305,000 jobs nationwide since June 2010. Compensation increases by occupation ranged from 1.8%for the selVice industry to 2.7%for production,transportation and material moving work. Leisure and hospitality workers - a major sector in Orange County -saw their pay and benefits rise 1.1 %while manufacturing grew 3.3%. Want the latest on C.C.jobs?Text CCRJCBS to 56654 to get free C.C.job news alerts. Did you miss these other recent stories onjobs and the economy: Pay raises go to top performers this year C.C.weekly pay hits $1,112 Recession whacks middle-wage jobs most Only 10%expect a pay raise this year EI Polio Loco lays off 5 at O.C.headquarters Does $250,000 make you rich? Messy desk could cost you a promotion Apple stores may be hiring $11,000 -plus bacon -for tech talent? C.C.help wanted ads tick down in June Google hangs out C.C.help wanted sign C.C.high-tech manufacturing at 6-year high Cisco lays off 60 in C.C. Which job is most in demand? C.C.-L.A.No.2 in clean economy jobs Scariest unemployment chart ever? Which C.C.city has the most job openings? 730,000 unemployed a year or more Next new thing - a promotion but no raise? http://economy.ocregister.com/20 11/0810 IIprivate-industry-pay-hikes-top-governments/642...8/1 12011 Manager of small water district makes $299,005 I SignOnSanDiego.com Page 1 of5 Save upto rent when you Of"..--~.Budget SIGN©N SAN DIEGO @L2J PRINTTHIS Manager of small water district makes $299,005 < ,J; Comments Share:F.aceboo!,Emai!PrinT Save Written by Mike Lee/h5> Serving cnstomers at 350 meters, the Yuima Nlunicipal Water District is among the smallest public water agencies in San Diego County. Updated 12:02 a.m..Oct 10,2010 .tools_storya:hover {color:#2c2c2c ! important:} Follow}} FaC~!JCi0k:U-T-Science- It also offers one ofthe richest compensation plans in the region to its general manager,"vho runs a staff of eight employees in North County's Pauma Valley. Linden Burzell has held Yuima's Click tile chart to enlarge R/l nOll Manager of small water district makes $299,005 ISignOnSanDiego.com Page 2 of 5 and-Environment Twitt",,··@sdutLee Watchdog }} Journalism that upholds the public trust,regularly Call:619-293-2275 Fax:619-260-5094 'Natchdog@unionlJib.com Twitter:@sdutWatchdog Visit Facebook Also see }) Radio ad warns of petition drives,draws critics Sweetwater scholarship fund sat dormant GOP officer paid people to attend council meeting Also of interest Pension idea in line with oHler agencies VI/aiel'agencies to be tapped in big money grab 'vVater districts rush to replace slall~funding losses top post since 2004 and this year will be paid $299,005 in salary and benefits to manage a $6.9 million budget.That's slightly more than Jim Sandoval gets for salary and benefits as city manager ofChula Vista, where he manages 972 employees and a $326 million budget serving 210)000 residents. Burzel1's compensation package is the second-highest among the 16 indcpendent,,vater providers surveyed by The Watchdog as part of an ongoing examination ofpublic administrator pay. "I can only te11 you that I get up every day trying to figure out a way to earn it,"said Burzell,63."1 look to my board of directors to tell me what theywant and whatthey think they are getting....They need to look at what I bring to the table and what the district needs to achieve,and they have to look at how well they think 1have discharged the duties that they have assigned to me." At $301,506,Otay Water District chiefMark 'Watton has the largest overall pay and benefits package among the surveyed districts,along \\ith the most paid time off.He is entitled to np to 71 days a year,or about 11 quarter ofthe work year. \Vatton runs one ofthe region's largest water agencies,\vhich handles more than 53,000 accounts with a total budget of $105 million.Based in Spring Valley,it covers an urbanized swath ofsoutheastern San Diego County. Water district leaders said their salaries are reasonable for the amount of work they do and the critical nature of theirjobs.They know that residents are chafing under rapidly rising 'water rates,and they feel the pressure from ratepayers who blame the cost ofwater on them. Rick Rhoads of Rancho San Diego is among those steamed about the salaries.He looked into compensation in the Otay district after getting what he considered an oversized water bill this summer.He filed a public records request to see the district managers'salaries. "It \vas kind of a shock to me,"Rhoads said."That seems to be double what they should gel." Hehas lobbied his neighbors to oppose more rate increases until the district's salary structure is reduced to "a reasonable level.'" vVatton said he and his employees are running the equivalent of a large business and are controlling costs while providing a reliable flow of\·vater. He said the district staffhas shrunk and he has outsourcecl some work. "The real question is how efficiently are we operating and how does the district deliver the services,"vVatton said,"I have to think we do a pretty good job." Concerns about salaries also have enlergecl in Pauma Valley,\vhere retired airline pilot Ron Peterman in 2006 helped the Rancho Estates Mutual Water Co.break away from relying on the YHima district for R/1!?01 1 Manager of small water district makes $299,005 I SignOnSanDiego.com Page 3 of 5 Otay water boal-d OKs S160,OOO for lobbyists First-year costs of water agency benefit revealed administrative and engineering services.He has letthe Yuima board knm,v that. "We said,'Your costs are too high,'''said Peterman,a board member of the mutual company."They are elected to watch the till for the taxpayers, but they are not fulfilling their obligations." Bill Knutson,president ofthe Yuima board,doesn't make any apologies for Burzell's pay package,which includes a base salary of $203,885 and more than $75,000 in retirement contributions paid bythe district. "I suppose ifyou looked at the number of customers we serve,you'd say, 'Ob,gee.He's really overcompensated,'"Knutson said."Ifyou are just getting a Gl'vl to serve the eustomers you have,then you probably\vQuldn't need the level ofthe guy that we have. "But there are a lot of 118\V things in the \-vater business,"he said."\Ve need more than just a manager \-vho keeps the books." Burzell's duties include advocating for the district on several fronts, including agricultural \vater programs offered by v1,rholesale agencies,the potential for a Hew pipeline and etIorts to reintroduce endangered steelhead into North County -a move that could affect water deliveries. Burzell's roots in the water industry run deep.His father speut decades in various local positions,including general manager of the San Diego County \,\later Authority -the region's vvholesale water consortium. The younger Burzel1 workt~d for decades in private industry -everything from commercial aquaculture in Havvaii to business development in the Far East -before settling into the Yuima district,first as an interim manager,then in a permanent role.Ninetyseven percent of his water is delivered to farmers. "There is a lot of multitasking and a lot ofthings that ratepajrers are able to ask of me and the board is able to ask ofme because ofthe experience I have -31 years of experience in the private sector,"Blll"Zell said. He said he saves the district money by doing lots ofenvironmental analyses and legal work himself,Burzell also said the basic demands on a general manager are similar no matter the size ofthe ageney. ''If I had 55,000 customers,I'd need a whole lot more meter readers,"he said."I wouldn't need more general managers," Robert Cook,general mauager ofthe Lakeside Water District,saiel public resentment of his salary is the product ofthe recession combiued with the spiraling cost of water county\vide, "I elon't think ifyou were to do this (compensation)surveyfive years ago -when the private sector was extremely profitable and people were highly compensated -there would be the resonance it is having right now,"he said. Cook was one oftwo general managers in the county who reported httn'//C';CJ11 "t1C''.lt1rliPolfA t'w-i ntthic ,...1;,...lr'lhil-ihr """111/nt/,...nt')pvn;rp.=Rrt-itlp=l\!fqnq op,--I-nf-+-C'n"1'.l11-l-ur Q/I 17m 1 Manager ofsmall water district makes $299,005 I SignOnSanDiego.com Page 4 of5 receiving a bonus this year.In his case,it vvas $20,040.He said he hadn't received a raise in about six years and the aclclon was to revvard him for several cost-saving moves. GaryArant,general manager ofthe VaHey Center Municipal Water District,reported a bonus of$8,000 granted this year by bis board members. "That \vas the recognition of ajob 'well done in their minds,"Arant said. "Hopefully the ratepayers feel that way,too." StaJrwriter Lily Leung contributed to this report. httno /I'C..iannn,:1nrlif"O"n nr-intth-i.;::("11('In=!hilitv ('ml1/ntlrnt?Pynirp=Xrtitlp=M:1n:::lCTpr-l--nf-l-c:m:111+w ~/ll?01 I Water district manager pay In San Diego County ACfe-feet2 Total anftual 2010-11 Meters sold in Gerleral rn;;mager Dislrid cortlpens.atiort 1 B<lse salary O\H!raU budget served £mplr:l'/eE!$FY2010 ~.tar~.'Nattor Otllj'$]01..505.63 5ZlSZl300 5105.441.900 ~~3.t,m 1'0 :n.5{)J; lindcp 8ur;:erl '(uirn;J $299.005.49 $203.884.-56 $6.800.620 350 9 5..3~1 ~~;-ilh Ll::',·,'lr:s/'r Fal',bt.:X)i.$27:;''322.17 Sl~I2.2]2.s0 ~.35.26:~.J66 9.065 m 12,3<00 l,1,c"rlJr,;!Bardi:1 S,1tltJ Fe $277.260.00 Sl'L5CO.OO $34,603.721 noo 48 11.147 Gary Arant Valley C!.:!1t~r 5273,73100 5194.670.00 $41.875.596 1O.5S~1 7',2i:900 D~f1r1I:;L;;rntJ V:~lleclt(:t)S272.38:,8'')S19L354QO $95.87!.OOO "GAOO 10).16,3C~S !.\z:r~.R0r:,~rs~S,',e.ct·.·.',}to:;,$255245.00 520iU04.o0 SS4,216.300 32.5:60 14':.19.982 ~.~Jrk '''iest~ln Hcli;t,$2:15.123.00 $199.120.00 $61':004500 55.529 169 33.211 Dcuf,'.\11:.>011 pjd'B Orill)S25<~.045.:)S S!9G.l4000 S!)lU7j4-~1 2,I,Sl:l l56 L]$::6 Kiml~r~fI~'fhtJft1I:Y Gli'.t2nhrllil $253.172.00 $1!.,={)382,DO $70.594,000 UEI n 21.157 DJ'.'e 5C'/'rr:)u~F~Jlnbc','"$.250.828.00 $180.TiO.oO $t,O.5.~L8-50 7./91 56 21.b5 RO:.1 Co':ox \"l:ita $237239,00 $200.096-00 5:,8£,.\5.010 21896 102 18.273 R;-ll(li-~t"'I~lnto',I'R;.]n~'::l11<l S23tiOD3,~"~S17],433.50 $2~95g.32S 9500 53.5 (1550 Rob~ft ex;·:L,lKC-'sicC'$22/.048.00 $155.004.00 Sl,562.tH 6,.&50 13 3.M7 RICh;;lrd !;',lii!iC!m':;Cf1 8,:yr;~go $209.903J2 $185.000,00 $4.:75.os 4 2,125 16 3.004 ~,li!clldl 81(;n Rln:;()r,dtd D:;;!()k)S203.2l;0,00 S170.20LOO $17,729,000 8.CJ15 205 &.560 .';'.'era.ge 5,2S5.981.6]S190.4iJ281 S41GGiJ,G26 18.955 80 1.1.947 j Ll,.cJ'udes bJ';('~:uy:!..,~!:,rfsrJ:'li ':G.'r~.'~'f!:;.a liOlr).."eli'EWI€!7r-COnli!tl!d!Ofl:>.!1\C.:J.'th/},I!£-in$L\"JfK.c'pn:-fl'!ILHI:>:"i\kJ.;ciJrc?·gytr'('-n!s.f-~io;;ne o1,',IOI'I<J,'i'~12 Jr,'tJ '-{',JtoJ ,JII'tW,',?IlC'_'f.lduO-]s!.:')!;'(,9::~Z,111 t·:",'.f.:ti:.J.)/I)Qr:('.X'C·C<)l.'('r~'d I),i',1 foc~oJ "'..).~(.{J R'}ll-,.:'.:;1 $ro;3,:] Page 1of 1 Q/l/)()l 1 FY 2011 Budget Report by Department ]200 -General Manager 5212 11-1211-5212 TraVel 8,000.00 8,000.00 1,320.11 1,32011 0.00 0.00 17 % FY 2012 Budget Report by Department 1200 -General Manager Account No Title Budget Expenditure Encnmbrances Pet 135212 11-1211-5212 Travel 6,000.00 6,000.00 0.00 0.00 0.00 0.00 0% 0% MARKW.WATTON 2554 Sweetwater Springs Blvd. Spring VaHey,CA 91978 (619)670-2210 FAX (619)660-0829 Mark Watton is the General Manager ofthe Otay Water District.His duties include responsibility for the day-to-day operations ofthe District and overseeing a $100 million annual budget and 156 employees. Mr.Watton is well known in the water industry serving on elected and appointed boards covering every aspect of water management lor local government and at the regional and state levels.He served on the Otay Water District's board of directors for eighteen years,including four terms as its president.He is a past chairman and vice chairman of the San Diego County Water Authority's (SDCWA)board of directors,and served on the board of directors of the Metropolitan Water District of Southem California.Mr.Watton was a Governor Pete Wilson appointment to the Colorado River Board ofCalifornia,and is a former president ofthe Water Agencies Association of San Diego. Mr.Watton currently represents the Otay Water District on the SDCWA serving as the chairman of the Imported Water Committee.He also serves on SDCWA's Water Planning Committee. As a chairman ofthe board for SDCWA in 1995,Mr.Watton initiated the San Diego-Imperial Irrigation District water transfer agreement.The water transfer will provide 200,000 acre-feet of water a year through water conservation measures in Imperial Valley.The transfer is the cornerstone of the Colorado River Quantification Settlement Agreement (QSA),which increases access to highly reliable supplies ofColorado River water.The Agreement has also been critical to the region's efforts to diversify its water supply and reduced the severity ofthe recent drought to San Diegans.Mr.Watton's other former chaim1anships include serving as chairman ofthe Colorado River Programs Ad Hoc Committee and the QSA Implementation Ad Hoc Committee. The Otay Water District is a public agency distributing water to more than 206,500 residents within approximately 125.5 square miles ofsoutheastern San Diego County,including Spring Valley,La Presa,Rancho San Diego,Jamul,eastern Chula Vista and Otay Mesa. SurSan Diego County Water Authority Member Agencies Summary of Residential and Commercial Irrigation Restrictions' August 1,2010 Mandatory Prohibned DayslWeek Sprinkler , Member Agency orVoluntary Hours Irrigation Assigned Watering Days Station Time :Exemptions Permitted Limit 1 Carlsbad MWD 10 a.m.to Odd addresses:Sun,Tues,Thur Assigned watering days do not apply to commercial growers or nurseries.Sprinkler time limit (760)438-2722 Mandatory 6 p.m.3 Year Round Even addresses:Sat,Mon,Wed 10 Minutes does not apply to water~fficient irrigation devices,including weather-based controllers, Apartments,condos,businesses:Mon,Wed,Fri drip/micro-irrigation,and stream rotor sprinklers. Del Mar,City of Voluntary 9 a.m.to Not Specified Not Specified(858)755-9313 4 p.m.Not Specined Not Specined Escondido,City of 10 a.m.to 3 in June-Oct&Sprinkler time limit does not apply to systems that use micro-emission devices with a flow rate (760)839-4658 Mandatory 6p.m.1 in Nov-May Customers will determine which day(s)to water 10 Minutes equal to or less than 2 gallons per hour,orto stream rotor sprinklers.New plantings including grass may be watered as needed until established. Fallbrook PUD 10 a.m.to Odd addresses:Man,Wed,Fri Assigned watertng days do not apply to water-efficient irrigation devices,including weather- (760)728-1125 Mandatory 6 p.m.3 Year Round Even addresses:Tue,Thur,Sat 10 Minutes based controllers,drip/micro-irrigation,and stream rotor sprinklers.During extreme Santa Ana conditions,one additional day of watering is allowed. HelixWD 10 a.m.to 3 in June-Oct &Assigned watering days do not apply to commercial growers or nurseries.Sprinkler time limit (619)466-0585 Mandatory 6p.m.2 in NOV-May Customers will determine which days to water 10 Minutes does not apply to water-efficient irrigation devices,inclUding weather-based controllers, drip/micro-irrigation,and stream rotor sprinklers. Lakeside WD Mandatory 10 a.m.to Assigned watering days do not apply to commercial growers or nurseries.Sprinkler time limit (619)443-3805 6p.m.3 Year Round Customers will determine which days to water 10 Minutes does not apply to water-efficient irrigation devices,including weather-based controllers, drip/micro-irrigation,and stream rotor sprinklers. Oceanside,City of Mandatory 10 a.m.to Assigned watering days do not apply to commercial growers or nurseries.Sprinkler time limit (760)435-5800 6p.m.3 Year Round Customers will determine which days to water 10 Minutes does not apply to water-efficient irrigation devices,including weather-based controllers, drip/micro-irrigation,and stream rotor sprinklers. Olivenhain MWD 8 a.m.to Nurseries and commercial growers may water any time with a hand-held hose with a positive (760)753-6466 Voluntary 6 p.m.Not Specified Not Specified Not Specified shut-off nozzle,bucket,or drip/micro-irrigation system.Irrigation of nursery propagation beds is Suggested permrtted any time.Watering of livestock is permitted at any bme New plantings and newly seeded areas are exempt for 30 days.Nurseries and commercial OtayWD 10 a.m.to 3 Year Round Customers are encouraged to water no more than growers may water any time with a hand-held hose with a positive shut-off nozzle,bucket,or Voluntary 6 p.m.15 Minutes drip/micro-irrigation system.Irrigation of nursery propagation beds is permitted any time.(619)670-2222 Suggested three days per week.SuggestedSuggested Suggested sprinl~lertime limit does not apply to water-efficient irrigation devices,including weather-based controllers,drip/micro-irrigation,stream and rotating sprinkler nozzles. Padre Dam MWD Mandatory 10 a.m.to 3 in JUly-Nov &Assigned watering days do not apply to commercial growers or nurseries.Sprinklertime limit (619)448-3111 6p.m 2 in Dec-Mar Customers will determine which days to water 10 Minutes does not apply to water-efficient imgaticl')devices,including weather-based controllers, dripfmicro-irrigation,and stream rotor sprinklers. Poway,City of Odd addresses:Sun,Tues,Thur Nurseries and commercial growers may water any time with a hand-held hose with a positive Mandatory 10 a.m.to 3 Year Round Even addresses:Sat,Mon,Wed shut-off nozzle,bucket,or drip/micro-irrigation system.Irrigation of nursery propagation beds is(858)668-1215 6p.m.10 Minutes pennitted any time.Sprinkler time limit does not apply to drip,micro-irrigation,or stream rotorApartments,condos,businesses:Man,Wed,Fri systems. *Most ordinances require use ofa hand-heldhose with a positiveshut·offnozzle or bucket when watering areas lMthout an irrigation system.For more detailed and up-ta-date information,refer to individual member agency ordinances. ....,..San Diego County WaterAuthority Member Agencies Summary ofResidential and Commercial Water Use Restrictions' August 12010 -* /,mPlementatiOnIMandatory or tlTigation Restrictions WaterFeatures TIme Umfttol StopWashing Stop Runofffrom Iuse a H..ewfth a Serve WaterOnlyI OfferHolel GuestsMemberAgencyNewMeterStatusVoluntaryProhlbttedNoofDayslWeekSprinklerRestrictedorR • l ks PedS rfac I ffi i t I'ti JPositlve Shutoff on Request In Optionto NotlaunderRestrictionsHoursIrrigationPennlttedTirneUmtrProhibitedRestrictionsepalreaavuesneeenmgaonNozzleRestaurantsUnensDaily, Carlsbad MWD level 2 Mandatory(760)438·2722 10 a.m.- 6 p.m.3in June--Oct.10 Minutes Yes No 72 Hours Yes Yes Yes Yes Yes Del Mar,City of Stage 2 Voluntary 9 a.m.- 4 p.m.Not Specified Not Specified(858)755-9313 Not Specified Yes No PromptlV Yes Yes Yes Yes Escondido,City of Level 2 Mandatory 10 a.m.- 6 p.m.3 in June·Oct.&1 in Nov-May(760)839-4658 10 Minutes No No Reasonable Yes Yes Yes Yes Yes Fallbrook PUO level 2 Mandatory(760)728-1125 10 a.m.- 6 p.m.3 Year Round 10 Minutes Yes Yes 72 Hours Yes Yes Yes Yes Yes HelixWD Level 2(619)466-0585 Mandatory 10 a.m.- 6 p.m.3 in June.Oct.&2 in Nov-May 10 Minutes Yes No 72 Hours Yes Yes Yes Yes Yes Lakeside we Level 2(619)443-3805 Mandatory 10 a.m.- 6 p.m.3 Year Round 10 Minutes Yes Yes 72 Hours Yes Yes Yes Yes Ye, Oceanside,City of Level 2 Mandatory 10 a.m.~6 p.m.3 Year Round 10 Minutes Yes(760)435-5800 No No 72 Hours Yes Yes Yes Yes Oli'lenhain MWD Levell 8 a.m.- 6 p.rn.I(760)753~6466 Voluntary Suggested Not Specified NotSpecified No No 5 Days Yes Yes Yes Not Specified Not Specified OtayWO Level 1 VOluntary 10 a.m.- 6 p.m.15 Minutes(619)670-2222 Suggested 3 Year Round Suggested Suggested No No 48 Hours Yes Yes Yes Yes Yes Padre Dam MWD Level 2 I(619)448-3111 Mandatory 10 a.m.- 6 p.m.3 in Apr-NoV.& 2 in Dec-Mar 10 Minutes Yes No 72 Hours Yes Yes Yes Yes Yes Poway,City of Level 2 Mandatory 10 a.m.- 6 p.m.3 Year Round(858)668-1215 10 Minutes Yes No 72 Hours Yes Yes Yes Yes Yes RaInbow MWD Level 2(760)728-1178 Mandatory 10 a.m.- 6 p.m.3 Year Round -to Minutes Yes Yes 72 Hours Yes Yes I Yes Yes Yes, RamonaMWD Level 1 10 a.m.- 6 p.m.15 Minutes(l60)789-1330 VOluntary Suggested 3Year Round Suggested Suggested No No 5 Days Yes Yes Yes Yes Yes Rincon Del Diablo MWD level 2 Mandatory Under Cenain(760)745-5522 9a.m.- 7 p.rn.3 Year Round NotSpecified flo Conditions 72 Hours Yes Yes Not Spedfied Not Spedfied Not Specified San Diego,City of Level 2 Mandatory 10 a.m.- 4 p.m.;n 3Year Round 7 Minutes in(619)515-3500 Nov-May Nov-May Yes No 72 Hours Yes Yes Yes Yes Yes San Oiegulto WD Level 2 MandatofY 8 a.m.-6 p.m.3 Year Roun()(760)633-2650 10 Mll"utes I Yes Yes 72 Hours Yes .....es Yes.Yes Yes -Most ordinances require use ofa "and-"eld"ose with apositive shut-Offnozzle orbucketwhen watering areas without an irrigation system.For moredetailed alld up-.-to.date information,refer to individual merroeragency ordinances Page1of2 OTAY WATER DISTRICT RETIREE HEALTHCARE PLAN June 30,2011 GASB 45 Actuarial Valuation Prcliminary Results Bartel Associates,LLC Revised May 5,2011 CO:'\TENTS I ........_...-.---I(l[J"'ic'--_ Benefit Summary Data Summary Funding Policy Assets Actuarial Assumptions Highlights Results Benel!ts Study Results Bartel Associates GASB 45 Database Other Issues Exhibits 7 12 13 17 21 37 46 49 52 ____................__I BENEFIT SVMMARY !I ,I I Current Plan Tier I Tier II Tier III Retired Directors 11II1vIedicai •Retire directly from District under CalPERS (age 50 and 5 years ofservice or disability) Benetlt •Full-time employees Eligibility Hired <lII/81 clired 2:111181 Hired>7/1/93 Elected <1/1/95 •Ret 55 &5 Hired <711193 •Ret 55 &15 •Ret 60 &12 I •Ret Age 55 and •Elected 2:111/95 not •Ret Age -+-Svc2:70 covered •Includes General Manager BENEFIT SUMMARY I I , I I Current Plan Tier I I Tier II Tier III Retired Directors III Medical •100%>of retiree premium for life •50%of retiree o 100%of family Benefit •Ret <12/29/03:100%spouse premium for premium to age 65 premium for life life &100%eligible dependent premium •Can cover spoLise by ,.Ret 2:12129/03:88%ofspollse premium for paying the full life &88%eligible dependent premium premium to retiree age 65 •Can cover eligible dependents by paying the full premium to retiree Medicare eligibility •Not covered under District medical plan after retiree fvledicare eligibility lIII Medical I.EPO,PPO,and HMO available before •Only PPO available •EPO,PPO,and Plan Medicare eligibility before Medicare HMO available •Only PPO available alter Medicare eligibility before Medicare eligibility It No coverage after •Only PPO available Medicare eligibility after Medicare eligibility 2 BENEFIT SUMM<l-RY I I I I I Current Plan Tier I Tier II Tier III Retired Directors I •Dental &•Same as Medical •Same as l\/Iedical •Not covered under •Same as Medical Life but must retire 2:60 District dental plan Insurance I Eligibility iii Dental •100%of retiree premium for life •Not covered under •100%of family Benefit •Ret <12/29/03:100%spoLlse premium for District dental plan premium tor life life &100%eligible dependent premium •Ret 2:12/29/03:88%Ofspollse premium for life &88%)eligible dependent premium ,II Surviving •Ret <12/29/03:[00%ofspollse &eligible •Not covered under •100%ofspouse & Medical &dependent premium District medical eligible dependent Dental $Ret2:12/29/03:88%ofspOllse &eligible plan premium Benefit dependent premium •Coverage for 12 i e Spollse and dependent benefit of 88%of months after retiree !premium fot'12 months after retiree death death but not past but not past age 65 age 65 •Spouse and dependents can participate after !2 months of coverage until spouse age 65 or dependent age 19 by paying full premium ] BENEFIT SUMMARY I I I I I Current Plan Tier I Tier II I Tier III Retired Directors 11II Disability •Early retirement adjustment for disability •Ret 50 &10 e None Retirement retirements.?:1/l/08:\)Same as medical i Age Percent benefit <50 0% 50 70% 51 76% 52 82% 53 88%, 54 94%, :>55 100% lIII Life •Ret <12/29/03 •Ret <12/29103 It Not covered under •Not covered under insurance IIt Retiree:S3,000 to It Retiree:S3,000 to District life District life i age 70 age 70 insurance plan insurance plan •Spouse:$1,000 to o Spouse:None retiree age 70 •Pay-As-2009/10 $597,631 CAFRYou-Go Costs 2008/09 608,069 CAFR I May 5,2011 " BENEFIT SUMMARY 1'-1-- Supervisors Tie..III Alt Executives Manaoers &Confidential Represented ..Eligibility 855&!O/l5years .55 &lOllS years .55 &10/15/20 .55&10/15/20125 of District service of District service years ofDistrict years of District service service IIIiI Medical •100%of retiree premium for life Benefit .88%ofspouse premium for life •88%ofeligible dependent premium III Medical Plan It EPO,PPO,and HtvlO available before Medicare eligibility i I•Only PPO available alter Medicare eligibility -- III Dental Benefit .100%ofretiree premium for life .88%ofspouse premium for life •88(%ofeligible dependent premium IIlII Survivor •88%ofspOLlse premium for life Medical &CIl Spouse can cover eligible dependents to age 19 by paying the full premium Dental Benefit I.Disability •Ret 50 &10 Retirement o Same as medical benefit II Life Insurance ..Not covered under District life insurance plan - B/l\'I -)011./lvay),_5 BENEfIT §VvLVIARY Scenario Benefit Study l1li Alternative Benefits •Current plan wilh 88%medical and dental surviving spouse benetit for Future Retirees for life rather than 12 monlhs for Tier [&Tier II •CUITent plan with age 55 dental eligibility for Tier II I•Current plan for Directors •Tier III Alternative for Tier III 5'17·'May5,2011 6 DATA SUMMARY Participant Statistics June 30,2011 Ir-I-- Participants Tier I Tier II Tier III Directors Total III Actives I •Count 52.~I 22 125 n/a 150 •Average Age 53.5 45.1 n/a 46.5 •Average District Service 31.5 23.1 7.4 n/a 10.2 •Average PERS Service 32.1 25.4 10.1 n/a 12.8 •Average PERS Pay $83,793 $102,151 $76,951 n/a $80.784 •Total PERS Pay (OOO's)251 2,247 9,619 n/a 12.118 III Retirees ;;..COllnt <65 18 13 1 0 "7.J~ ;;..COllnt:::65 ..,"12 Q .f.37~.J ;;..Total 41 ..,-1 2 69 I~)I •Average Age 69.7 66.1 64.3 83.4 68.71 •Average Retirement Age 58.2 58.5 57.9 63.9 58.5 7 DATA SUMMARY Participant Statistics June 30,2009 Participants Tier I Tier II Tier III Directors Total III Actives I •COllnt 3 25 127 n/a 155 i •Average Age 50.6 51.5 43.1 n/a 44.6 •Average District Service 29.5 21.0 5.5 n/a 8.4 •Average Base Pay $80.527 $96.210 I $72.688 n/a $76.634 •Total Base Pay (OOO's)242 2.405 9.231 n/a 11.878 l1li Retirees »COllnt <65 22 13 0 0 35 »COllnt:::65 7",-'2 ...Q 2 ..l1....::::2 I ;;..Total 45 22 0 2 69 •Average Age 68.3 65.2 nla 81.4 67.7 I •Average Retirement Age 58.9 58.7 nla 63.9 59.0 I iBI'Y 'May 5,20 I I 8 ...........-._....------------ r -----,I DATA SUMMARY Ir----L==~I::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~!I=== Active Participant Reconciliation June 30,2011 Active Participants I Tier I Tier II TierIH Directors Total III June 30,2009 ,y 127 0 I 155-'~) ! •Terminations 0 (I)(4)0 I (5) I •Retirees 0 (2)0 0 7)l~ •New Hires 0 0 2 0 2 III June 30,2011 ,22 125 0 150-' /Bl\f May 5,2011 DATA SUMMARY Retiree Participant Reconciliation June 30,20U I Retired Participants Tier I Tier II TierIH Directors Total II1II June 30,2009 I 45 22 0 2 69 ! •Deaths (2)0 0 0 (2) •New Retirees 0 2 0 0 2 •Contraet Employees (2)1 1 0 0 - IIiII June 30,201 1 I 41 25 1 2 69 Bil,fll MayS,2011 10 i I I I,DATA SUMMARY I I Active Participant Groups June 30,20ll Active Participants Tier I Tier II Tier III Directors Total l1li Executives 0 3 5 0 8 iii Managers 0 4 5 I 0 9II II1II Supervisors &Contldential'2 4 19 I 0 25 I I l1li Represented'III 11 96 0 108 III Total 3 22 125 0 ISO I I Includes 12 Supervisors,10 Confidential cmployl;(;s.and 3 Confidential Management employees. 2 Includes 54 Administrative employees and 54 Field employees. II ASSETS District Funding Policv District Funding Policy Ir-i-- •Fund full ARC with CERBT. •Additional contribution of$5 million for 2007/08. •Pay cash and implied subsidy benefit payments in addition to ARC from District funds until funding percentage reaches 100%and then pay cash and implied subsidy benefit payments from CERBT thereafter. •Funding percentage is Actuarial Value ofAssets (AVA)divided by Actuarial Accrued Liability (AAL). •ARC VAAL amortization period is the remaining years of the initial30-year period from GASB 45 implementation for 2007/08 (26 years for 2011/12). 12 ASSETS Market Value of Plan Assets (Amounts in OOO's) 2009/10 Projected 2010/11 3 Market Value of Assets CERBT District Total CERBT District Total III Market Value Beg of Year i $5,228 $0 $5228 $6,372 $0 $6,372I I •Contributions 345 689 1,034 289 719 1,008 •Investment Earnings 805 0 805 1,490 0 1,490 •Benefit Payments 0 (689) (689)-(719)(719) •Administrative Expenses (6)0 (6)(2)0 ?)(- II Market Value End ofYear 6,372 0 6,372 8.149 0 8.149 - III MVA Est Net Return 15,1%22,9% ill CERBT Net Return 15,9%27,1%4 Retlects actual CER8T assets on 12/3 1110,expected1010111 contributions (S289,OOO ARC plus expected benefit payments), expected 2010111 bendit payments of$719,(lOO ($620,000 cash subsidy plus $99,000 implied subsidy),and I;':xpcctcd net earnings at an annual rate {)f7_75~--o for the period!2/31/10 through 6/30/I!. I Published CERBT return of24JW(}for 7/1/10 through 2/28/11 and expected return on.750ft,from 3/1/11 through 6/30/11 13 ASSETS Actuarial Value of Piau Assets (Amounts in OOO's) I~I-- Pro,jected Pro,jccted Actuarial Value of Assets 2009110 2010/11 20ll/12 ill Actuarial Value at Beginning of Year $6,273 $6,962 $7,870 •Contributions 1.034 1,008 1,249 I •Expected Net Earnings 491 550 544 I •Estimated Benefit Payments (689)(719)(756) ill Expected AVA at End of Year 7,109 7,801 8,907 III Market Value at End ofYear 6,372 8,149 9,206 ill MVA -Expected AVA (737)348 299 ill 1/5 of (MVA -Expected AVA)(147)69 60 I, ill Preliminary AVA 6,962 7,870 8,967 ill Maximum AVA (80%of MVA)5,098 6,519 7,364 1 ill Minimum AVA (120%of MVA)7,647 9,779 10,047 ill Actuarial Value at End Year 6,962 7,870 8,967 .. 5.//[·· /May 5,2011 14 ASSETS Historical Plan Assets (Amounts in OOO's) lie--- Market Actuarial Plan Assets Value Value AVAIMV l1li 6/30/11 Projected $8,149 $7,870 97% ! !III 6/30/1 0 i 6,372 6,962 109%i ,IIII6/30/09 I 5,228 6273 120%,,iIII6/30/08 5,611 5,861 104% III 6/30/07 0 0 n/a lv!ay 5.2011 II 10 I 9 ~ ! 8 7 15 ASSETS Actuarial Value ofAssets (Mi lIiol1s of Dollars) Ie-,-- 6 ~j5 ! 4 3 2 I----------_--------~------I 6/30108 6/30/09 E,pAVA --AVA- 16 6/30/10 80%MVA 6/30/11 I I ACTUARIAL ASSUMPTIONS HIGHLIGHTS III II Assumption June 30,2009 Valuation June 30,2011 Valuation III Valuation Date •June 30,2009 •June 30,2011 •2009/1 0 &2010/11 ARCs •2011/12 &2012/13 ARCs •ARC calculated as of •ARC calculated as of beginning ofthe year with beginning ofthe year with !interest to end of year interest to end ofyear I l1II Discount Rate I·7.75%-Pre-funded with •7.25%-Pre-funded with i CalPERS CERET CalPERS CERET Fund #1 •CalPERS allows a maximum 7.61%discount rate •7.25%includes a margin of conservatism III Mortality,•CalPERS 1997-2002 •CalPERS 1997-2007 Tennination,Experience Study Experience Study Disability l}l\May 5.2011 17 II ACTUARIAL ASSUMPTIONS HIGHLIGHTS II I I Assumption June 30,2009 Valuation June 30,2011 Valuation 1111 CalPERS •District service plus y,years •CalPERS Service provided by Service between age 30 and District District hire date l1li Medical Trend Increase from Prior Ycar Increase trom Prior Ycar EPO &HMO PPO All Plans Non Non Non iVIed 1'vlcd NIce!ivied Med ivied Year Eli!!iblc Eligible Eli!!ib1e Eligible Year Elioible llllUble--lOI I 8.40%8.70%9.00% 9.30%2011 Premiums 2012 7.75%)S.OO'};)8.25~<)8.50'}o 2012 9.50%10.00% 2013 7.10%7.30%7.50%1 7.70%2013 9.00%9.40% 2014 6,45'};)6.6m·o 6.75%6.90%2014 8.50%8.90% 2015 5.80%5.90~--o 6.00~·-o 6.1O~-o 2015 8.00~1"8.30~/o 2016 5.15'Yo 5.20%5.25%5.30%2016 7.50%7.80% lOt7+4.50%4.50%4,50%4.50%2017 7.00%7.2(Wo 2018 6.50'};)6.70"l() 2019 6,()O~''O 6.10% 2020 5.50%5.60% 20l1-+-5.00%5.00% III Dental Trend •4.0%annually •Same Bit·/'':Ma:y 5,201 I 18 II ACTUARIAL ASSUMPTIONS HIGHLIGHTS III I I Assumption June 30,2009 Valuation June 30,2011 Valuation III Service •CalPERS 1997-2002 •CalPERS 1997-2007 IRetirementExperienceStudyExperienceStudy PERS Benefit 2.7%@65 PERS Benetit 2.7%@55 IServiceBasedNoServiceBasedYes Exp Ret Age 60 fvI CalPERS Hire Age 34 Exp Ret Age 59 F Exp Ret Age 58 , 1l1li Medical •Actives cunently covered and •Actives currently covered and,,Participation at waived:waived: Rctirement ;.-Tiers l,II.Directors -100%}..Tiers I,ll,Dircctors -100% "Tier III -75%,Tier III -75%(100%for alternative benefit study) l1li Dental •Actives cunently covered and •Actives cunently covered and Participation at waived:waived: Retirement ,Tiers I,ll,Directors -80%),;.Tiers l,II.Directors -80%.,.Tier !II -n/a ;.-Tier!!l -n/a (80%for alternative benetit study) Bl'.y t\.:lay 5,2011 19 This page intentionally blank Bit/.'.tvlay 5,20 I 1 20 RESULTS Actuarial Obligations (Amounts in OOO's) Actual Actual Projected Actuarial Oblioations 6/30/09 6/30/11 6/30/12 l1li Discount Rate 7,75%7,25%7,25% III Present Value ofBenefits •Actives $3,372 $5,167 $5,528 •Retirees 7,442 9,101 8,990 I •Total 10,814 14,268 14,518 III Actuarial Accrued Liability •Actives 2,628 4,248 4,687 •Retirees 7,442 9,101 8,991 •Total 10,070 13,349 13,678 ill Actuarial Value of Assets 6,273 7,870 8,967 III Unfunded Actuarial Accrued Liability 3,797 5,479 4,711 III AVA Funded Percent 62%59%66% III Normal Cost 100 144 148 III Pay-As-You-Go Cost 711 756 795 ,,'S__, B/I'\,Vlay 5,2011 21 RESULTS 1'-1-- Estimated Actuarial Gains &Losses 1May),~011 Actuarial Gains &Losses (OOO's)NCO/O AAL (AVA)VAAL III 6/30/09 Actual 0.84%$10,070 $(6,273)$3,797 III 6/30/11 Expected _0.84%10.370 (5,965)4.405 III Experience Losses (Gains): •Actual versus expected payroll 0.02% •Demographic &other (0.0 I%)137 0 137 •Actual versus expected premiums (0.01%)13 -13 •Contribution loss (gain)--(1,557)(1,557) •Investment loss (gain)--(348) (348) III Assumption Changes: •Medical trend 0.11%1,257 -1.257 •CalPERS demographic assumptions 0.15%934 -934 •Dental claims cost 0.00%(10)-(10) •CalPERS service (0.03%)20 -20 •Discount rate 0.12%651 -651 III Plan Clarifications: •Tier I &11 surviving spouse coverage 0.00%4 -4 •Tier III spouse coveraGe (0.03%)(27)-(27) III Total Chanues 0.320/0 ,2.979 (1,905)1.074 IIiI 6/30/11 Actual 1.16%13,349 (7,870)5.479 (B/" •-0 n I,t; RESULTS Annual Required Contribution (ARC) (Amounts in OOO's) Ie-I-----, Annual Required 6/30/09 Valuation 6/30/11 Valuation Contribution 2009/10 2010111 2011112 2012/13 I-Discount Rate 7.75%7.75%7.25% 7.25% I l1li ARC-S •Nonnal Cost $100 $103 $144 $148 •UAAL Amortization 245 186 349 307 •ARC 345 789 493 456 III Projected Payroll 11,878 12,264 12,4295 12,833 III ARC-% •Normal Cost 0.8%0.8%1.2%1.2% •UAAL Amortization 2.1%1.5%2.8%2.4% •ARC 2.9%2.3%4.0%3.6% l1li VAAL Amortization Years 28 Various 26 25 .i Reported 3!lJ/l1 payroll increased lor 9.5 months to 11l!l2,the middle oCthe 2011/12 tiscal year.using the aggregate pay increase assumption of3.25%. B/l\.f May 5,201 1 RESULTS Benefit Payment Proiection (Amounts in OOO's) Fiscal Cash Implied Total Year Subsidv Subsidv Pavment 2011112 $665 $91 $756 2012/13 709 86 795 2013/14 771 97 868 2014/15 821 97 918 2015/16 872 104 976 I I2016/17 921 III 1,032 2017/18 I 978 110 1.088 2018/19 1.029 119 1,148 2019/20 1.064 116 1,180 2020/21 1,127 110 1,237 'N, iBt'Ii'May 5,2011 24 RESULTS Actuarial Obligations June 30,2011 -7.25%Discount Rate (Amounts in OOO's) Cash Implied Actuarial Oblil!:ations Subsidy Subsidy Total III Present Value of Benefits •Actives $4,532 $635 $5.167 •Retirees 8.634 467 9.101 •Total 13,166 1.102 14.268 1l1li Actuarial Accrued Liability i •Actives 3,750 498 4.248 •Retirees 8.634 467 9.101 •Total 12,384 965 13,349 III Actuarial Value of Asscts6 7.301 569 7.870 III Unfunded Actuarial Accrued Liabilitv 5.083 396 5.479 III Normal Cost I 124 20 i 144 III Pay-As-You-Go Cost 665 91 i 756 "Allocated in proportion to the Actuarial Accrued Liability for this illustration. 6/1\"1 -7011/,ay ),_2.5 RESULTS Annual Required Contribution (ARC) 2011112 Fiscal Year -7.25%Discount Rate (Amounts in OOO's) 1'-1-- Annual Required Cash Implied Contribution Subsidy Subsidy Total ill ARC-$ •Nonnal Cost $124 $20 $144 •UAAL Amoliization 324 25 349 •ARC 448 45 493 III Projected Payroll 12.429 12,429 12,429 III ARC-% •Normal Cost 1.0%0.2%1.2% •UAAL Amortization 2.6%0.2%2.8% •ARC 3.6%0.4%4.0% 26 RESULTS Actuarial Obligations .June 30,2011 -7.25%Discount Rate (Amounts in OOO's) 1'-1-- Actuarial Obligations Tier I Tier II Tier III Directors Total Ie PVB Ii•Actives $612 $3,876 $679 $$5.167- •Retirees 5.243 3.582 176 100 9.101 •Total 5,855 7,458 855 100 14,268 III AAL I •Actives 578 3339 331 -I 4,248 •Retirees 5243 3.582 l76 100 9.101 i •Total 5,821 6.921 507 100 13,349 III AVA?3.432 4.080 299 59 7.870 l1li VAAL 2,389 2.841 208 41 5.479 l1li Normal Cost I 6 I 104 34 I n/a 144 III PayGo Cost I 436 I 290 15 15 756 7 Allocated in proportion to the Actuarial Accrued Liability for this illustration. [?/1'"May 5,2011 27 RESULTS Annual Required Contribution (ARC) 2011112 Fiscal Year -7.25%Discount Rate (Amounts in OOO's) Annual Required IContribution Tier I Tier II Tier III Directors Total III ARC-$ •Normal Cost $ 6 $104 $34 $-$144 •VAAL Amortization 1-7 181 n ,349)~.2 •ARC 158 285 47 ,493J III Projected Payroll 257 2.305 9,866 n/a 12,429 III ARC - % i •Normal Cost 2.5%4.5%0.3%n/a 1.2% •VAAL Amortization 59.1%7.9%0.1%n/a 2.8% •ARC 61.6%12.4%0.5%n/a 4.0% t?/1"May 5,20I I RESULTS Per Participant Obligations June 30,2011 -7.25%Discount Rate (Amounts in OOO's) 1'-1-- Obligations Tier I Tier II Tierm Directors Total III Actives "22 17-n/a 150J~) -rVEIActive 204 176 5 n/a 34 •AALIActive 193 152 3 n/a 28 -NC/Active 2.0 4.7 0.3 n/a 1.0 -AALIPVB 94%86%49%n/a 82% eAve Age 52.6 53.5 45.1 n/a 46.5 •Ave Svc 31.5 23.1 7.4 n/a 10.2 •Ave Hire Age 21.1 30.4 37.7 n/a 36.3 1l1li Retirees 41 25 1 2 69 II •AAL/Retiree 128 143 176 50 132 I •PayGo/Retiree 11 12 15 8 I1 •AALIPayGo 12.0 12.4 11.7 6.7 12.1 •Ave Age 69.7 66.1 64.3 83.4 68.7 Bl"f···May!5.20J I 29 RESULTS This page intentionally blank 30 RESULTS Actuarial Obligations June 30,2011 -7.25'10 Discount Rate (Amounts in OOO's) 1 r-I-------, Obligations Executive Manager Sup/Conf Rep i Retirees Total III PVB , I •Actives $591 $745 $1.192 $2,639 $5,167 I •Retirees 9,101 9,101 I •Total I 14,268 l1li AAL •Actives 429 669 1,039 2,III 4,248 •Retirees 9,101 9,101 •Total 13,349 ill AVA8 7,870 ill VAAL 5,479 III Normal Cost 26 17 23 78 144 ~Allocated in proportion to the Actuarial Accrued Liability. B.J/[··· /May 5.2011 ......------------ 31 RESULTS 1,,-----, Annual Required Contribution (ARC) 2011112 Fiscal Year -7.25%Discount Rate (Amounts in OOO's) ,Annual Required Contribution Executive Manauer SUD/Conf Rep Total III ARC-$ •Normal Cost $26 $17 $23 $78 $144 I •UAAL Amortization 349 •ARC 493 l1li Projected Payroll 1,441 1.154 2,339 7,495 I 12,429, l1li ARC-% •Normal Cost 1,8%1.5%1.0%1.0%1,2% •UAAL Amortization 2,8% •ARC 4,0% 32 RESULTS Estimated Net OPEB Obligation (NOO)Projection (Amounts in 000'5) I~I-- I CAFR Estimate Estimate Estimate Estimated Net OPEB Oblio-ation (Asset)i 2009/10 2010111 20W12 2012/13 l1li Discount Rate i 7,75%7.75%7.25%7,25% l1li NOO (Asset)at Bel!innino-ofYear $(6,205)$(6,783)$(7,383)$(8,204) III Annual OPEB Cost •Annual Required Contribution 345 289 493 456 •Intercst on NOO (481) (526)(535)(595) •NOO Adjustmcnt 591 646 -fZ.Q 535 •Annual OPEB Cost 455 409 478 396 III Contributions •Cash Benefit Payments Outside Trust (598)(620)(665)(709) •Implied Subsidy Benefit Payments (91)(99)(91 )(86) •Trust Funding (345) (289) (493)(456) i •Total Contributions (1,034) (1,008)(1,249)(1,251)I l1li NOO (Asset)at End of Year (6,783) (7,383)(8,204)(9,059) III NOO Amortization Years IS 15 26 7-_J l1li NOO Amortization Factor 10,50 10.50 15,69 15,33 B/l":'vlay),2011 33 RESULTS Funding Projection (Amounts in 000'5) I Annual ! Fiscal Begin I OPEB Contribution I Contrib AVA ,Year Year Cost Benefit Pre-Total %of Fnnded Endino-NOO ARC (AOC)Pmts Funding Contrib Pavroll Pavroll % 2012 $(7,383)$493 $428 $(756)$(493)$(1,249)$12,429 10,1%59% 2013 (8.204)456 396 (795)(456)(1,251 )12,833 9,7%66% 2014 (9.059)414 363 (868)(414) (1.282)13,250 9,7%72% 2015 (9,979)365 326 (917)(365)(1.282)13,681 9.4%79% 2016 (10,935)309 288 (976) (309)(1,285)14,125 9,1%86% 2017 (11.932)246 249 (1,032)(246)(1,278)14.584 8,8%93%I, 2018 (12,961 )(174) , 174 208 0 (174)15,058 1,2%.'00%]2019 (12,927)180 248 0 (180)(180)15,548 1.2%100% 2020 (12,859)186 291 0 (186)(186)16,053 1.20/0 100% 2021 (12,753)192 339 0 (192)(192)16,575 1,2%100% ..'Bi!1"'MaY5,2011 34 RESULTS 1"-1-- 2011/12 Medical Benefit Implied Subsidy Transfer Illustration? (Amounts in 000'3) Before GASB 45 Actives Retirees Total III Total Premium10 $2,017 $626 $2,643 III Employee ContributionI I __0 (22)(22) III District Contribution 2,017 604 2,621 After GASB 45 I Actives Retirees Total III Total Premium $2,017 $626 $2,643 III Employee Contribution 0 (22)(22) III Implied Subsidy Transfer ---.i2.ll 21 --- III District Contribution 1,926 695 2,621 'J Illustration includes medical benefit only'.No implied subsidy val11t;;d f(x dental and Ide insurance benefits. HI Estimated premium based on the 6/30/I I participant data,20 Ii medical premiums,and 2012 e:-:pected medical premiums il Assllmes District pays full active participant premium. ~/(i May 5,2011 35 RESULTS Discount Rate Sensitivity June 30,2011 (Amounts in OOO's) 1"-1-- l1li Discount Rate 7.25%7.61 %" II Present Value ofBenefits $14,268 $13,712 l1li Funded Status •Actumial Accrued Liability 13.349 12,875 •Assets 7,870 7,870 •Unfunded AAL 5,479 5,005 III Projected Payroll 12,429 I 12,429 i!II ARC 2011112 i •Normal Cost 144 135 •UAAL Amortization 349 331 •ARC 493 466 •ARC %ofPavroll 4,0%3,7% 12 7.61 %is the highest discount rale allowed by CalPERS tor agencies funding the full ARC with ('ERBT Fund it 1. B1·)"'May 5,2011 36 BENEFIT STUDY RESULTS I~I-- Current Plan -Tiers [&n 7.25%Discount Rate (Amounts in 000'5) Exec Mgr ISup/Conf Rep Retirees Total 18 Elioibilitv 5 Years 5 Years 5 Years I 5 Years l1li Coullt ,4 50.~I 12 66 91,) •Average Age 51.3 56.6 54.4 68.3 •Average Svc 20.7 27.9 27.1 I ')5.0 III PVB $568 $7/4 $1,087 $2,110 $8,8')4 $13,313 III Funded Status •AAL 413 658 988 1.858 8,824 12,742 •Assets ----2.----2.---.Q __0 7.512 7,512 •Unfunded AAL 413 658 988 1,858 1.312 5.230 l1li Projected Pay 559 537 581 885 -2,562 l1li Ave Pro!Pav 186 134 97 74 -103 l1li 2011/12 ARC •Normal Cost ')-16 17 -')-110~))~ •UAAL Amort 26 42 63 118 84 333 •ARC 51 58 80 170 84 443 •ARC%9.1%10.8% 13.8%19.2%-17.3% !?/1:'May 5.2011 37 BENEFIT STUDY RESULTS Alternative Plan -Tiers I &n 7,25%Discount Rate (Amounts in 000'5) Exec Mor Sup/Conf Rep Retirees Total l1li Eligibilitv 5 Years 5 Years 5 Years 5 Years l1li Count 3 4 6 I 12 66 91 II •Average Age 51.3 56.6 I 50.3 54.4 68.3 •Average Svc 20,7 27.9 27.1 ')5.0 l1li I'VE $64')$807 $L?27 $2,364 $8,824 $13,864 l1li Funded Status •AAL 467 734 1,115 2,080 8,824 13,219 •Assets ---.Q ---.Q __0 _0 7,512 7,512 •Unfunded AAL 467 734 1,115 2,080 1,312 5,707 III Projected Pay 559 537 581 I 885 -2,563 l1li Ave Pro!Pay 186 134 I 97 74 -103 l1li 2011112 ARC •Normal Cost 29 18 19 58 -124 •UAAL Amort -47 11 133 84 364 •ARC 59 65 90 190 84 488 •ARC%10,5%]').1%15.6%I 21.5%-19.0% 38 I I I BENEFIT STUDY RESULTS III I Current Plan -Tier HI 7.25%Discount Rate (Amounts in OOO's) I Exec M!!r Suv/Conf Rev Retirees Total l1li Elioibilitv 115 Years 15 Years 15 Years 15 Years ill!Count 5 5 19 96 1 126 •Average Age 58.7 51.0 43.6 44.4 64.3 •Averaae Svc 20.1 19.1 9.8 8.8 III PVB $14 PI $106 $529 $176 i $8551 IBlI Funded Status I1 1 •AAL 16 11 51 253 176 507 •Assets -.2 -±-.l.2 94 176 299 •Unfunded AAL 10 7 32 159 0 208 l1li Projected Pay 882 616 1,759 6,609 -9,866 III Ave Proi Pav 176 123 93 69 -79 Ill!2011/12 ARC •Normal Cost 1 1 6 27 -35 •UAAL Amort 1 1 ~1Q Q 14 i-I •ARC 2 2 8 37 0 481 •ARC%0.2%0.3%0.5%0.6%-0.5%1 39 BENEFIT STUDY RESULTS Alternative Plan -Tier IU 7.25%Discount Ratc Irl-----. (Amounts in OOO's)----i Exec Ml!r Suv/Conf Reo Retirees I'Total ~igibility 10 Years 10 Years 10 Years 10 Years i, iii Count 5 5 19 96 1 126 •Average Age 58.7 51.0 43.6 44.4 64.3 .,Average Svc 70.1 19.1 9.8 8.8 iii rVB $985 $630 $2,114 1$10,783 $176 $14,688 Ill!Funded Status i i •AAL 719 290 995 4,991 176 7,171 •Assets --.2 -..1 ....l2 -...2:!.176 ,299 •Unfunded AAL 713 286 976 4,897 0 6,877 III Projected Pay 882 616 1,759 6,609 -9,866 i III Ave Proi Pav 176 123 93 69 -79 III 2011/12 ARC •Normal Cost 59 41 1"'-644 870~)- •lJAAL Amort 45 .lli 62 312 ..Q 438 I •ARC 104 59 188 955 0 1,308 •ARC%11.8%9.6%10.7%14.5%-13.3% B[.y "May 5,2011 40 ~II, 51\y MayS,2011 BENEFIT STUDY RESULTS Alternative Plan -Tier HI -Executives 7.25%Discount Rate (Amounts in OOO's) l1li Eligibility 10 Years 15 Years l1li Count 5 5 !II I'VE $985 $791 l1li Funded Status •AAL 719 591 •Assets ---2.---2. •Unfunded AAL 713 586 III Projected Pay 882 882 l1li Ave Proj Pay 176 176 l1li 2011112 ARC •Normal Cost 59 44 •UAAL Amort 45 37 •ARC 104 81 •ARC%11.8%9./% 41 BENEFIT STUDY RESULTS Alternative Plan -Tier III -Managers 7.25%Discount Rate (Amounts in OOO's) l1li Eligibility 10 Years 15 Years l1li Count 5 5 ill I'VE $630 $588 l1li Funded Status •AAL 290 259 •Assets -=1:-=1: •Unfunded AAL 286 i 255I III Projected Pay 616 616 III Ave Proj Pay P'123-,) iii!2011112 ARC •Normal Cost 41 39 •UAAL Amort lQ .lQ •ARC 59 55 •ARC%9.6%I 8.9% 42 Ir-I-- Ir-I------, BENEFIT STUDY RESULTS 1,,--------, Alternative Plan -Tier HI -Supervisor &Confidential 7.25°;')Discount Rate (Amounts in OOO's) III Eligibility 10 Years 15 Years 20 Years III Count 19 19 19 III PVE $2.114 $1,879 $1,519 III Funded Status •AAL 995 901 751 •Assets I -l2 -l2 -l2 •Unfunded AAL 976 882 737 III Projeeted Pay I 1.759 1,759 1.759 III Ave Proj Pay !93 93 93 III 2011/12 ARC I•Normal Cost 125 109 85 •UAAL Amort 62 56 47 •ARC 188 166 131 •ARC%10.7%9.4%7.5% /"8/1/Mav 5.2011 43 BENEFIT STUDY RESULTS Alternative Plan -Tier HI -Represented 7.25%Discount Rate (Amounts in OOO's) 1,1---- l1li Eligibility 10 Years 15 Years 20 Years 25 Years l1li Count 96 96 I 96 96 iii PVE $10.783 $9,411 I $7,288 $5,068 1111 Funded Status I I, •AAL 4,991 4,417 3,447 2,440 •Assets -----.21 -----.21 -----.21 -----.21 •Unfunded AAL 4,897 4,323 3,353 7.346 III Pro.iected Pay 6.609 6,609 6,609 6,609 III Ave Proj Pay !69 69 69 69 l1li 2011112 ARC 1 I •Normal Cost 644 539 I 400 267 •UAAL Amort 312 275 214 149 •ARC 955 815 614 417 •ARC%14.5%P.3%9.3%6.3% B/l'I .,May 5,20 I I 44 BENEFIT STUDY RESULTS Alternative Plan 2011112 ARC Increase 7.25%Discount Rate (Amounts in OOO's) Tier Exec Mgr Sup/Conf Rep Total l1li Tiers I &n $8 $7 $10 $20 $45 III Tier III •10-Yr Eligibility 102 57 180 918 - •15-Yr Eligibility 79 53 158 778 - •20-Yr Eligibility - -123 577 - .25-Yr Eligibility -- -380 - fBi·Y \jyray 5,2011 45 BARTEL ASSOCIAUS GASE 45 DATABASE Irl _ GASB 45 Retiree \Icdical Benefits Comparison Sample i'crccntilc Graph E)/l'May 5,20 [1 §JI)'~o ~d::25% \5% 0% r -I ii II-I t d .....lllOth PCI"centil" .....95th P"rtentill- .....75th I·crcentil.... 5(1"/.,of 9(1'%of lOW\"סof reslIlts r"s"lt,r....Stllts --50th Pencnlile <\I"e ,n-e are within within wilhin lhis this this range ra,,~e range .....25th Percentile .....5th I'ereent;l.... 46 l<'" "" "" ~~ '; ~~ " BARTEL ASSOCIATES GASB 45 DATABASE GASH~5 Retiree \Icdical Benefits Comparison \ormal Cost &Annual Required Contrihution .\lisccll:lI1COUS ARC (),h Percentile 75th I'crccnuk 50\11 P",rcentJi", ::'5[0 Percentile 5th Pcrccntlle "'~r':,-'lI ».",,-c-i,k 104% 0."°.',, -'Y'.'" 13%. 17 S'% 33% 47 BARTEL ASSOCIATES GASB 45 DATABASE GASH 45 Retiree \lcdical Benefits Comparison Actuarial Accrued Liability ~,>----------------i I--------~---------~I e-------------------------------------,f-------l---Wi1-~I------I "'"L-----l==L-...J Miscell:lneous 95th Pcrcenllk 75th !'crccnttlc 50th Percentile 25th Percentile 5th Percentile (:)/1';May 5,2011 48 OTHER ISSUES Ir-I-- III Next Steps •Final valuation results -Wait for plan changes and 6/30/11 assets? •CERBT actuarial forms III New CERBT funds available for 6/30/11 valuation III GASB Preliminary Views ilIlI Timing •Present preliminary results B'l\j'May 5.2()J I May 4,2011 49 III CERBT Funds for 6/30/11 Valuation: Asset Class Equity Fixed Income Intlation Linked Bonds REITs Commodities CERBT #1 CERBT #2 CERBT #3 66.0%50.1%31.6% 18.0%23.9%42.4% 5.0%15.0%15.0% 8.0%8.0%8.0% 3.0%3.0%3.0% Maximum Discount Rate 7.61%7.06%6.39% [}1 May 5,2011 50 III GASS OnlER ISSUES I~!- ! •Pension Accounting: -Preliminmy Views issued in June 2010 -Exposure draft expected in June 2011 and final statement expected in June 2012 •OPES Accounting: -GASS will consider OPES changes in fa112011 -Exposure draft expected in June 2012 and final statement expected in May 2013 •Major issues: Unfunded liability on balance sheet Discount rate if ILlUding less than ARC Amortization ofactive AAL changes over future working lifetime Immediate recognition for retiree AAL changes Deferral of investment gains/losses within 15%ofexpected return and immediate recognition ofaccumulated deferred investment gains/losses outside 15%corridor Entry age normal cost method ~'l\May 5,2011 Topic Premiums Participant Statistics Actuarial Assumptions Actuarial Methods GASB 45 Summary /B,/l' /MayS.2011 51 EXHiBITS 52 Page E-l E-5 E-15 E-22 E-24 PREMIUMS 2010 Healthcare Monthly Premiums Non-Medicare Eligible Medicare Eligible , Healthcare Plan Single 2-Party I Family Single 2-Party Family I, EPO $509.66 $1.019.33 $1.325.13 n/a n/a n/a EPO (OOS)583.99 1,167.98 1,518.37 n/a !n/a n/a PPO 437.71 875.43 1.138.07 $346.07 $692.14 $1.153.56 PPO (OOS)501.54 1.003.10 1.304.02 346.07 692.14 1.153.56 HMO 489.60 980.22 1,273.981 n/a n/a n/a iDental (selt~insured)41.11 98.65 151.101 41.11 98.65 151.10 , Participant Premium Employee 19¢per $1,000 Spouse 60¢per $1.000 2010 Life Insurance Monthly Premiums 'I}l i'vlay 5,2011 1'-1 PREMllJMS 2011 Healthcare Monthly Premiums Non-Medicare Eligible Medicare Eligible Healtbcare Plan Single 2-Party I Family Single I 2-Party Family EPO $559.08 $1.118.18 $1,453.64.n/a n/a n/a EPO (OOS)640.62 128124 1.665.61 I n/a n/a n/a1---. ,PPO 480.16 960.32 1248.43 $384.48 $768.96 $1.203.08 PPO (OOS)550.18 1,100.37 1,430.47 384.48 768.96 1.203.08 HMO 540.46 1.082.05 1,406.32 n/a n/a n/a Dental (self·insured)41.11 98.65 151.10 41.11 98.65 151.10 2011 Life Insurance Monthly Premiums Participant Premium I Employee 19¢per $1.000 Spouse 60¢per $1.000 Bit May 5.2011 [-2 1,....__.J PREMIUMS Monthly Premium Increases 2010 to 2011 Non-Medicare Eligible Medicare Eligible I Healthcare Plan Single 2-Party Family Single 2-Party Family, EPa 9.7% 9.7%9.7%nla nla I nla I EPa (OOS)9.7%9.7%9.7%nla nla n/a PPO 9.7%9.7%9.7%11.1%11.1%4.3% i PPO (OOS)I 9.7%9.7%9.7%ll.l%11.1%4.3% IHMO I I I 10.4%10.4%10.4%n/a nla nlai Dental (selt:insured)0.0%0.0%0.0%0.0%0.0% 0.0% /B/[/May 5.2011 Bit'May 5.2011 E-3 PREMIUMS This page intentionaUy blank E·4 PARTICIPANT STATISTICS Medical Plan Participation Non-Waived Participants 1'-1-- Retirees Medical Plan Actives <65 I ~65 EPO 63%4l%n/a PPO I 15%56%100%I HMO 22%3%nla Total 100%100%100% /B ..\.ri May 5.2011 1.::-5 PARTICIPANT STATISTICS Active Medical Coverage 1,------,- Medical Plan Single I 2-Party Family Waived Total EPO 15 24 50 -89 PPO 6 6 9 -21 HMO 10 7 I 14 -31 I Waivedl]- - -9 9 Total 31 37 73 9 150 IElection %22% 26%52% !Waived %6% 13 2 are spouses orcovcrcd employees B/l\.Y May 5,2011 E-6 PARTICIPANT STATISTICS Retiree Medical Coverage Under Age 65 i Medical Plan Single 2-Party I Family Waived Total EPO 4 9 0 -13 PPO 5 13 0 -18 HMO 1 0 0 -1 Waived - - -0 0 Total 10 22 0 0 32 Election %31%69%0% Waived %0%I E-7 PARTICIPANT STATISTICS Retiree Medical Coverage Over Age 65 1'--1-- Medical Plan Single i 2-Party Family Waived Total i IIEPOnfan/a nfa -n/a PPO 7 29 I 0 -36 I HMO n/a n/a n/a -nfa Waived ---1 1 ITotalI 7 29 0 1 37 Election %19%81%i 0%I Waived %3% iB/t May 5.20 II E-8 PARTICIPANT STATISTICS Dental Coverage Participant Group Single 2-Party Family Waived I Total Actives 35 40 75 0 150 Retirees <65 6 14 0 12 32 Retirees::::65 7 26 0 4 37 [-9 PARTICIPANT STATISTICS Actives bv Age and Service , District ServiceI Age <1 1-4 I 5-9 10-14 15-19 20-24 >25 Total <25 t I 1 25-29 2 2 i 4 30-34 8 3 I 11 35-39 10 10 5 2 27 40-44 5 8 5 I 1 19 45-49 1 8 10 I 6 "4 3 I 35j 50-54 6 9 2 I 4 5 i 26i 55-59 3 6 I 1 2 3 15 60-64 2 4 2 1 1 1 11 >65 1 I 1i Total 1 46 52 21 7 I It 12 150 "., /B/[./May 5,2011 [-10 PARTICIPANT STATISTICS Ir-I-- 40 Active Age Distribution ."I _____________________J 006/30109 Valuation IJII 06/30/11 Valuation i I,..! 15 r 10 T 5 ell··o .... <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 2:65 30 35 ~.. 25 -. ~".0 IE20,:::> ;Z Age B[\Y May 5.201 I [-II PARTICIPANT STATISTICS I '-1------, Active Se rvice Dis tribution >2520-2415-1910-14 - 5-9 - 70 ~ 60 ~.. 50 ~.. ~-".0 lE40:::>;z 30 , 20 10 ~.. 0 -~ 0-4 Serv ice BY[---MaYS_2011 E-12 PARTICIPANT STATISTICS Retiree Healthcare Coverage bv Age Group Ir-I-- Age Single 2-Party Family Waived Total Under 50 0 i 50-54 I 0 II 55-59 4 8 12 i 60-64 6 14 I 20 II 65-69 4 9 I 13 70-74 5 5 75-79 7 I 7 80-84 3 4 7 Over 85 4 I 1 5I Total 17 51 0 1 69 Average A0C 66.4 69.1 nfa 87.6 68.7 <65 Election %310/0 69%0% 2:65 Election %19%81%0% Total Election %25%75%0% Waived %1% Byl "May 5,2011 F-13 PARTICIPANT STATISTICS Retiree Age Distribution 1.,-- 25 20 ~151)-""6::::z:10 5 0 (B·'.yl May 5.2011 006/30109 Valuation IIil 06/30/11 Valuation IIIII <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 2:85 Age l-14 ACTUARIAL ASSUMPTIONS I I , I I Assumption June 30,2009 Valuation ,June 30,2011 Valuation ill Valuation Date •June 30,2009 •June 30,2011 •200911 0 &2010111 ARCs •2011112 &2012/13 ARCs •ARC calculated as of •ARC calculated as of beginning ofthe year with beginning ofthe year with interest to end ofyear interest to end ofyear ill Discount Rate •7.75%-Pre-li.mded with •7.25%-Pre-llll1ded with CalPERS CERBT CalPERS CERBT Fund #1 i •CalPERS allows a maximumII7.61 %discount rate 1 I •7.25%includes a margin of conservatism III General •3%annually •Same Int1ation •Basis for aggregate payroll and discount rate assumptions Bfi":vray 5,201!E-15 ACTUARIAL ASSUMPTIONS Assumption June 30,2009 Valuation June 30,2011 Valuation III Aggregate •3,25%annually •Same Payroll •Int1ation plus 0.25% Increases •For Normal Cost calculation and VAAL amo11ization, III Merit Payroll •CalPERS 1997-2002 I •CalPERS 1997-2007 Increases Experience Study I Experience Study •Added to aggregate payroll •Added to aggregate payro]] increasc assumption for increase assumption for Normal Cost calculation Nonnal Cost ealculation 1111 Mortality,•CalPERS 1997-2002 •CalPERS 1997-2007 Termination,Experience Study Experience Study Disability -. /E}[May 5,2011 '-::-16 ACTUARIAL ASSUMPTIONS I I ,I ] I Assumption June 30,2009 Valuation June 30,2011 Valuation !III Medical Trend Increase from Prior Vear Increase from Prior Year EPa &HMO PPO All Plans Non Non Non IvIed i\'kd ;Vlcd Mcd Med Mcd Year Elivihle Eligible Eligible 1ligiQl£Year Eligible Eliuible 2011 8.40~'i.l 8.70%9.00%9.30~/;-'2011 Premiums 2012 7.7Y'/o 8.00~--o 8.25%8.50%2012 9.50~/o IO.O(Wo 2013 7.10%1 7.30%7.50%7.70%2013 9.00%9.4()O/o 2014 6.45%6.60%>6.75'-'10 6.90%2014 8.5m-o 8.90% 2015 5.80%5.90%1 6.00%)6.10%2015 8.00%8.30% 2016 5.15%5.20% 5.25%5,30'Yo 2016 7.50~-'O 7.80%1 20th 4.50~/o 4.50%4.50%4.50~/o 2017 7.{)O%7.20% ,lOIS 6.50°/0 6.70% !lOl9 6_0()~/o 6.10~--;-'Ii20205.50l,'.·o 5.60% 2021+5.00%5.00~/o III Dental Trend I•4.0%annually !•Same /I}[ May 5,lOll 1'-17 ACTUARIAL ASSliMPTIONS I I ,I I Assumption June 30,2009 Valuation June 30,20B Valuation I ill Dental Claims ! •Prcmium x 2008/09 loss ratio •Premium x 2009/1 0 loss ratio I Cost >-Employee -93%".Employee -90% >-Spouse -71 %".Spouse -71% ;;.-Child-71%,.Child -71 % III CalPERS •District service plus Y2 years •CalPERS Service provided by Service between age 30 and District I District hire date III Service •CalPERS 1997-2002 •CalPERS 1997-2007 Retirement Experience Study Experience Study PERS Benelit 2.7%(fY55 PERS Benefit °7o/<@--"-.0 (~,,) Service Based No Service Based Yes Exp Ret Age 60 M CalPERS Hire Age 34 Exp Ret Age 59 F Exp Ret Age 58 B'yl May 5.2011 [-18 ACTl'\RI\L ASSl'MPTIONScc I I I I I Assumption June 30,2009 Valuation I June 30,2011 Valuation II Medical •Actives currently covered and I •Actives currently covered and Participation at waived:i waived: Retirement ..Tiers I,n,Directors -100%".Tiers I,n,Directors -100% >-Tier 111-75%..Tier III -75%(IOO%for alternative benefit study) II Dental I • Actives currently covered and •Actives currently covered and Participation at I waived:waived: Retiremeut .,.Tiers I,II,Dircctors -80%:.-Tiers I,II,Directors -80%,.Tier III -nla ,Tier III -nla (80%for I alternative benefit study)II E-19 ACTUARIAL ASSUMPTIONS I I I I I Assumption June 30,2009 Valuation June 30,2011 Valuation------ lIB Medical Plan •Actives currently eovcred:•Actives currently covered: at Retirement ..Tiers I &II:>-Tiers I &II and alternative -Same as currcnt elections benefit study: I until Medicare eligible -Same as current elections -PPO after Medicare until Medicare eligible eligible -PPO after Medicare >-Tier III -PPO until eligible , Medicare eligible "Tier III -PPO until •Waived actives -PPO Medicare eligible •Waived actives -PPO-I •II Medicare 100%eligible for Medicare at •Same Eligible age 65 •All Medicare eligibles will elect Pmi B coverage lEt--y:'May 5,2011 E-20 ACnl\RIAl ASSUMPTIONSc I I I I I Assumption June 30,2009 Valuation June 30,2011 Valuation l1li Marital Status •Cun-ently covered -based on •Same at Retirement current coverage clection •Currently waived -80% married l1li Spouse Age •Actives -males 3 years older •Same than females •Retirees -males 3 years older than females if spouse birth date not provided III Coverage •Spouse &surviving spouse -•Same Election at 100%ifassumed man-ied Retirement •10%have family coverage until age 65 ifassumed malTied 'gcl·f·····May 5,201!E-21 ACTUARIAL METHODS I I I I I Method June 30,2010 Valuation III Cost Method •Entry Age Normal •Normal Cost is a level percentage ofpayroll l1li Actuarial Value of •Investment gains and losses spread over 5-years Assets •Not less than 80%nor more than 120%of market val ue i l1li Amortization Method •Level percent ofpayroll III Amortization Period •30-year fixed (closed)period for initial UAAL as of 6/30/07 for 2007108 ARC •26-year fixed (closed)period for UAAL as of6/30/11 for 2011/12 ARC •Amortization period decreases by one year each fiscal year •When amortization period reaches 15 years,new gains and losses will be amortized over a rolling (open)IS-year! period and plan and assumption changes will be amortized over fixed (closed)20-year period. May 5,2011 E-22 ACTUARIAL METHODS I I I I I Method June 30,2010 Valuation III Life Insurance •Valuation includes the discounted value and cost for retiree life insurance premiums I III Implied Subsidy •Employer costfor allowing non-Medicare eligible I retIrees to partIcIpate at actIve rates I •Valuation includes an implied subsidy for medical but not dental or life insurance III Future New Entrants •Valuation Results -Closed group,no new hires •Projections -Simplified open group projection: >Actives -Total pay increased in accordance with aggregate payroll assumption >Retirees -no additional retirees from new hires over 10- year projection period Bilf "May 5,201 I E-2.3 GASB 45 SUMMARY I I I I I III GASB 45 •Project future employer-provided benetit cash tlows for current active Accrual employees and current retirees Accounting •Discount projected cash tlow to valuation date using discount ratc (assumed return on assets used to pay benefits)and other actuarial assumptions to determine present value of projccted futurc benetits (PVB) •Allocate PVB to past,current,and future periods using the actuarial cost method •Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Nonl1al Cost as a level percentage of payroll (same method used by CaIPERS) •Normal Cost is amount allocated to current fiscal year •Actuarial Accrued Liability (AAL)is amount allocated to prior service with employer •Unfunded AAL (UAAL)is AAL less plan assets pre-funded in a segregated and restricted trust III PayGo Cost •Cash subsidy is the pay-as-you-go employer benefit payments for retirees •Implied subsidy is the difference between the actLial cost ofretiree benetits and retiree premiums subsidized by active employee premiums E}l May 5,2011 E-24 GASB 45 SUMMARY Present Value of Benefits I'-I--, Present Value ofBenefits (Without Plan Assets) Future Normal Costs ~MaY5,2011 E·25 GASB 45 SUMMARY Present Value of Benefits (Wiih Plan Assets) Future Normal Costs ~• •Annual •"Required contribution"for the current period including: Required ..Normal Cost Contribution ,Amortization of: (ARC)-Initial UAAL -AAL for plan,assumption,and method changes -Experience gains/losses (difference between expected and actual) -Contribution gains/losses (difference between ARC and contributions) •ARC in excess of pay-as-you-go costs not required to be funded •Net OPEB •Net OPEB Obligation is the accumulated amounts expensed but not funded Obligation •Net OPEB Asset ifamounts funded exceed those expensed (NOO) •Annual OPEB •Expense for the current period including: Cost (AOC),ARC ,Interest on NOO ..Adjustment ofNOO •NOO adjustment prevents double counting ofexpense since ARCs include an amortization of prior contribution gainsllosses previously expensed ~MaY5'2011 E·26 ~~ ATTACHMENT I , August 10,2011 1 ;~v·. 2 *•Age55and 5 years of *•Age SS &continuous C'f1 •Age SS and 15 M continuousservice C'f1 service ~70.health O'l years of00O'l ------•100%employee ---coverage M continuous service M premium,88%0 •Age 60 &continuous ---•$157.86monthly---C'f1 "M dependent premium for ---service2:70,heatthand ~orthe minimum 0 retiree's life <.D dental coverage Q)required by the •health and dental ,.:t:District-selected....M •100%employeepremium, ~coverage 00 88%dependent premium '"healthplan 0 •Ifretiree predeceases ---for retiree life ~(lowestcost)until0;::M 0 Medicare-eligiblec..spouse underMedlcare----•If retiree predeceases c:eligible age,spouse may M spouse under Medicare-•No District-paid-C 0 Q)stayon plan at 88%-C eligible age,spouse may -C dependent ~District-costuntil Q)stay on plan at 88%District-coverage~Q)(Dependentsmay:I:Medicare-eligible;if :I:cost until Medicare-eligible;~ beyond Medicare.spouse ifbeyond Medicare,spouse :I:remain on the ~mayelectCOBRA for36 -mayejectCOBRA for 36 planatemployee Q)months ...months -expense until i=Q)~empJoyeeis i=Q)Medicare-eligible) i= *Retirees who retired prior to 11/29/03 orenotrequired to pay12%ofdependentpremium. Note:In oil cases,dependent children may remoin on the plan until age 19 at currentDistrictcontribution level at which point they may continue on the plan per Health Care Reform atthe retiree's own eKpense until age 26. Retirees mayselect anyplan prior to Medicare.Once employee reaches Medicare eligibility,they are required to enroll in Medicare Port A and 8 at theirown eKpense.Retirees on Medicare are enrolled in the PPO plan,where Medicare is primary and the PPO plan becomes secondary. 3 Prior to 1981 •OPEB benefits were established for District employees and were funded via the annual operating budget. January 1981 •Tier II was created with a similar OPEB benefit with longer eligibility criteria. July 1993 •Tier III was created with no OPEB benefits. 1999 •Actuarial study shows a $6.6 million liability. 4 June 2000 o Board approved Policy 35 governing the medical reserve fund. o Board also funded the reserve with $4 million. July 2003 o Actuarial study shows liability of $16.0 million.Significant assumption changes cause the majority of the increase (rate of return,medical costs). May 2004 o Board approved funding the reserve an additional $12.4 million. June ZOOS o Board directs staff to look at the establishment of a trust. "I "-",,._,..,--:.... 5 March 2008 .".. •Board approves the CERBT trust and funds it with $5.0 million. •Actuarial study shows the liability reduced to $11.4 million (including the new Tier III benefits)due to the greater return on the trust and the management of the medical program. •These actions free up $5.5 million to cover costs associated with a 6 year labor contract including moderate OPEB benefits for Tier III. •$6.4 million remains in the Otay fund to pay for OPEB benefits. February 2010 •Actuarial study shows a liability of $10.1 million.Fully funded with CERBT holding $6.2 million and Olay holding $3.9 million. 6 May 2011 •Actuarial study shows liability of $13.3 million.73%funded with the District holding $1.9 million and the trust holding $7.9 million. •Increase due to CERBT assumption changes on return and medical costs. July 2011 •Board approves the enhancement of the OPEB benefit for the Unrepresented Employees in exchange for the employees paying 7% of salary toward their pension. •This action brings the liability to $15.2 million and the funding level to 64.4%.This change being effectively cost-neutral to the District as the employees will be reducing the District's cost oftheir pensions by an equal amount. 7 As of the June 30 2009 the District's liability was· [ •$10.1 Million All governments affected in a similar fashion by the California Employers'Retiree Benefit Trust (CERBT)assumption changes.CERBT key assumption changes: •$1.3 Million -Medical trends •$0.9 Million - Demographic assumptions •$0.7 Million -Future earnings estimates As of June 30 2011 the District Liability is now projected to be' [ •$13.3 Million 73%funded after assumption changes: •Funding level clearly indicates the District's commitment to financiai health. 8 •Age 55 and 15 years of continuous service. •Ability to buy retiree health coverage at retiree's full cost and stay on the District's plan until Medicare- eligible. Tier III after 2007 /Current •Age 55 and 15 years of continuous service. •$157.86 monthly,or the minimum required by the District-selected health plan (lowest cost)until Medica re-eligible. 9 07/01/2011 3.5%Cost of Living Adjustment (COLA).. 07/01/2012 3.5%Cost of Living Adjustment (COLA).. 06/30/2013 Memorandum of Understanding Expires 10 Proposal for epresented mployees •Represented Employees (107): o Field Bargaining Unit (54) o Admin Bargaining Unit (53) o Tier 1/11 (12),Tier III (95) •Allow the Represented Employees to use the scheduled COLAs to increase Represented Employees'contributions to the CalPERS pension plan and an additional 0.75%for the employer portion of CalPERS in exchange for enhanced Retiree Health Benefits,and •Amend retiree health coverage to level Retiree Health Benefits for all Tiers of Represented Employees. 11 'Nole:Based on input related to our Succession Plan,employees listed in parenthesis have indicated that theywill be retiring before eligibility for the Retiree Health Benefit. Tier I Tier II Tier III 2027 14 (3)' 2028 13 (1)' 2029 6 (11' 2030 3 (11' 2031 2 2032 2 2033 2 2034 1 2035 1 2036 2 2037 1 2038 1 2039 2040 2041 2042 1 Tier I Tier II Tier III Now 3 2011 2 2012 2 2013 2014 2015 2016 2017 1 2018 2 1 2019 1 2020 4 1 ' 2021 2 1 ' 2022 5 3 ' 2023 6 2 ' 2024 5 2' 2025 6 2026 15 4' Total 2 11 95 12 Employee Employee PERSportionof COLA Effective Employer PERS Contribution Percentage Date Contribution From To TOTAL ~8/15/2011 0.75%1%4.5%5.25% ~7/1/2012 0.75%4.5%8%8.75% 13 roposal or epresented mployees Proposed benefit -Tier 1/11 employees Add to current benefit: •Dental coverage at age 55 (Tier II currently does not receive dental until age 60). •Survivor benefit for life for spouse. Proposed benefit -Tier III employees Replace existing benefit with a similar benefit to existing Tier 1/11: •Age 55 and 20 years of continuous service. •100%of employee premium,88%of dependent premium for life (including survivor benefit for life). •Health and dental coverage. 14 Annual Required Contribution (ARC) Of Retiree Health forAll Represented Employees: Reduction in District Contribution to CalPERS due to Employees Contributing Additional Funds to CaIPERS: Total Annual Savings to the District $28/700 15 Annual Savings for Represented &Unrepresented Employees Savings Cost PERS OPEB Annual Cumulative Contribution ARC Increase Savings Savings Year 1 (FY 2012)476,800 915,900 (439,100)(439,100) Year 5 (FY 2016)990,300 915,900 74,400 (141,500) Year 10 (FY 2021)990,300 915,900 74,400 230,500 Year 15 (FY 2026)990,300 915,900 74,400 602,500 Year 20 (FY 2031)990,300 915,900 74,400 974,500 Year 25 (FY 2036)990,300 915,900 74,400 1,346,500 Year 30 (FY 2041)990,300 575,900 414,400 3,078,500 Year 35 {FY 20461 990,300 575,900 414,400 5,150,500 16 Otay Water District Projected OPEB Funding levels 100.0 90.0 ""C 80.0 QJ""C 70.0 C::s 60.0.... ......50.0 Ce40.0.. QJ 30.0 0. 20.0 10.0 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 -New PERS Assumptions -Unrepresented OPEB Changes -Changes to All Employees 17 •Employees would be contributing the full employee portion of the CalPERS Pension,8%plus an additional 0.75%of the employer portion. •Employees will fund their Post-Retirement Health Care,taking care of their own post-retirement needs. •Savings to the District long-term,while providing a post-retirement benefit for employees. •Provide a leveled benefit for all Tiers of Represented Employees. 18 •That the Board adopt Resolution #4185 to increase the Represented Employees' contribution to the CalPERS Pension Plan by 7%,and Resolution #4186 to amend the MOU with the OWD Employees'Association regarding Retiree Health Benefits and an additional 0.75%CalPERS Contribution,in exchange for enhanced Retiree Health Benefits. 19 20