Loading...
HomeMy WebLinkAbout04-18-24 F&A Committee Packet1 OTAY WATER DISTRICT FINANCE AND ADMINISTRATION COMMITTEE MEETING and SPECIAL MEETING OF THE BOARD OF DIRECTORS 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA BOARDROOM THURSDAY April 18, 2024 11:30 A.M. This is a District Committee meeting. This meeting is being posted as a special meeting in order to comply with the Brown Act (Government Code Section §54954.2) in the event that a quorum of the Board is present. Items will be deliberated, however, no formal board actions will be taken at this meeting. The committee makes recommendations to the full board for its consideration and formal action. AGENDA 1.ROLL CALL 2.PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD’S JURISDICTION INCLUDING AN ITEM ON TODAY’S AGENDA DISCUSSION ITEMS 3.ADOPT RESOLUTION NO. 4441 AMENDING BOARD OF DIRECTORS POLICY NO. 8, DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS: SECTION C, REIMBURSEMENT OF EXPENSES; EXHIBIT A, APPROVED FUNCTIONS LIST; EXHIBIT C, BOARD OF DIRECTORS TRAVEL REQUEST FORM; AND GRAMMATICAL AND STYLISTIC EDITS (JOSE MARTINEZ) [5 minutes] 4.RECEIVE THE DISTRICT’S INVESTMENT POLICY, POLICY NO. 27 OF THE DIS- TRICT’S CODE OF ORDINANCES, FOR REVIEW AND RE-DELEGATE AUTHORITY FOR ALL INVESTMENT RELATED ACTIVITIES TO THE CHIEF FINANCIAL OFFICER, IN ACCORDANCE WITH GOVERNMENT CODE SECTION 53607 (KEVIN KOEPPEN) [5 minutes] 5.ADJOURNMENT 2 BOARD MEMBERS ATTENDING: Tim Smith, Chair Jose Lopez All items appearing on this agenda, whether or not expressly listed for action, may be de- liberated and may be subject to action by the Board. The agenda, and any attachments containing written information, are available at the Dis- trict’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 attachments are also available by contacting the District Secretary at (619) 670-2253. If you have any disability which would require accommodations to enable you to participate in this meeting, please call the District Secretary at 670-2253 at least 24 hours prior to the meeting. Certification of Posting I certify that on April 12, 2024, 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 24 hours in advance of the meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on April 12, 2024. /s/ Tita Ramos-Krogman, District Secretary STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 1, 2024 SUBMITTED BY: Jose Martinez, General Manager W.O./G.F. NO: DIV. NO. APPROVED BY: Joe Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Adopt Resolution No. 4441 Amending Board of Directors Policy No. 8, Directors Compensation, Reimbursement of Expenses and Group Insurance Benefits GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 4441 amending the following Sections and Exhibits of the Board of Directors Policy No. 8, Directors Compensation, Reimbursement of Expenses and Group Insurance Benefits: (a) Section C, Reimbursement of Expenses (b) Exhibit A: Approved Functions List(c) Exhibit C: Board of Directors Travel Request Form(d)Grammatical and stylistic edits. PURPOSE: To amend Board of Directors Policy No. 8, Directors Compensation, Reimbursement of Expenses and Group Insurance Benefits Section C, Reimbursement of Expenses; Exhibit A, Approved Functions List; Exhibit C, Board of Directors Travel Request Form; and grammatical and stylistic edits to comply with the current needs of the District. ANALYSIS: The District routinely reviews its various policies to ensure alignment with industry best practices and cohesion with the District’s Code of Ordinances. Policy 8 outlines provisions for reimbursing Board members for travel expenses associated with authorized meetings and other District-related business activities, encompassing appropriate transportation, meals, and lodging expenses. AGENDA ITEM 3 During the most recent review, it was identified that Policy 8 necessitates updates to Section C to achieve closer alignment with Policy 34 which was revised in May 2023, the Staff Travel and Business-Related Expenses Policy, as well as the pre-approved meetings list, and other minor updates. Specifically, recommendations include adjustments to promote the utilization of ride-sharing or other public transportation alternatives over car rentals when appropriate. Additionally, it is proposed to include gratuities as a reimbursable expense within meal reimbursements. The proposed changes are discussed in more detail below: 1. Section C, Reimbursement of Expenses: The recommended amendments encourage Directors to utilize ride- sharing or other public transportation whenever possible and further clarify that if a rental car is necessary, then the gasoline expenses required for District business travel will be eligible for reimbursement. The amendment also stipulates that meal expenses, including associated gratuities, can be submitted for reimbursement. Meal expenses, including gratuity, remain reimbursable based on the Meals and Incidental Expenses (M&IE) rates as updated by the U.S. General Services Administration, unless otherwise authorized by the Board President as a reasonable expense amount for the occasion or circumstance. The recommended amendments to Section C also expand on reimbursable and non-reimbursable incidental expenses. Conference and hotel parking fees, as well as reasonable gratuities, should be considered necessary and reasonable authorized expenses. Conversely, any expenses incurred by spouses, family members, or guests are not reimbursable. 2. Exhibit A, Approved Functions List: The recommended amendment removes the regular quarterly meetings of the Water Agencies Association of San Diego County as these meeting are no longer occurring. 3. Exhibit C, Board of Directors Travel Request Form: The recommended amendment specifies that it is the Board President, not the Board of Directors, who is required to approve the Travel Request Form. Though the full Board can vote to approve or reject the travel request, that is not the specified requirement. 4. Grammatical and stylistic edits as shown on the Redlined document. FISCAL IMPACT: The fiscal impact of the proposed amendments is projected to be less than $1,000 per year. LEGAL IMPACT: None. Attachments: Attachment A – Committee Action Attachment B - Resolution No. 4441 Exhibit 1: Strike-through Copy of Policy 8 Attachment C – Proposed Copy of Policy 8 ATTACHMENT A SUBJECT/PROJECT: Adopt Resolution No. 4441 Amending Board of Directors Policy No. 8, Directors Compensation, Reimbursement of Expenses and Group Insurance Benefits COMMITTEE ACTION: This item was presented to the Finance and Administration Committee on April 18, 2024. The following comments were made at the Committee meeting: Attachment B RESOLUTION NO. 4441 RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING BOARD OF DIRECTORS POLICY NO. 8, DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS. WHEREAS, the Otay Water District Board of Directors Policy No. 8 provides for Board members to be compensated a per diem in the amount of $173 (effective July 1, 2024) each day of attendance at meetings of the Board or for each day of service rendered as a Director by request or authorization of the Board; WHEREAS, amendments to Policy No. 8 are proposed to encourage Directors to utilize ride-sharing or other public transportation whenever possible, to expand reimbursable expenses to include gasoline expenses required for District business travel when utilizing a rental vehicle; WHEREAS, amendments to Policy No. 8 are proposed to expand reimbursable meal expenses within the U.S. GSA M&IE guidelines to include gratuities, to clarify that the Board or Board President can determine reasonable reimbursement for full-day meals and lodging based on occasion or circumstance, and to specify that reimbursable parking fees only apply to the location of the conference or registered lodging; WHEREAS, the list of pre-approved meetings for which Directors may receive per diem compensation and expense reimbursement following attendance has been updated and is presented in Exhibit A of Policy 8; and such attendance is beneficial to the District; and WHEREAS, the Board of Directors Travel Form has been updated to reflect that the Board President must approve the travel request and to include the requested dates of travel, updates reflected in Exhibit C of Policy No. 8; WHEREAS, certain revisions to Policy No. 8 are required to provide for grammatical and stylistic edits; and WHEREAS, the amendments to Policy No. 8 clarify the President’s approval authority, to expand reimbursements to include gratuities for meals, authorize gasoline reimbursements for applicable circumstances, to modify the list of pre-approved meetings for which Directors may receive per diem compensation and expense reimbursement, to encourage the use of ride-sharing Attachment B and public transportation whenever possible, and to provide for grammatical and stylistic edits, are in the interest of the District, and it is in the District’s interest to adopt the amended Policy No. 8; and WHEREAS, the strike-through copy of the proposed policy is attached as Exhibit 1 to this resolution; and WHEREAS, the Board has reviewed and considered the proposed amendments to Policy No. 8. NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED by the Board of Directors of the Otay Water District that the above stated recitals are incorporated herein by reference. BE IT RESOLVED FURTHER that the proposed amendments to Policy No. 8, incorporated herein as Exhibit 1, is hereby adopted. FINALLY BE IT RESOLVED that this resolution shall be in full force and effect immediately after its passage and approval. PASSED, APPROVED AND ADOPTED by the Board of Directors of the Otay Water District at a regular meeting held this 1st day of May, 2024. Ayes: Noes: Abstain: Absent: President ATTEST: District Secretary OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 1 of 7 Purpose To provide guidelines for payment of compensation and reimbursement of expenses to Directors in connection with their attendance at meetings or the performance of other authorized business, and for group insurance benefits for Directors. Background Members of the Board of Directors (“Directors”) attend regular, adjourned or special meetings of the Board of Directors (“Board”). In addition, Directors attend other District meetings, committee meetings, association meetings, and educational seminars on behalf of the District. These meetings and seminars are related to District business, water and wastewater, water and wastewater related issues, and California special districts. State statutes authorize District payments for attendance at meetings and reimbursements of expenses incurred. State law also authorizes the District to provide health and welfare benefits for active Directors and, in limited circumstances, retired Directors if they served 12 years and were first elected prior to January 1, 1995. The District is also authorized to offer health and welfare benefits for retired Directors who commenced office on or after January 1, 1995, if the recipient participates on a self-pay basis. Policy The District will compensate Directors on a per diem basis for attendance at authorized meetings or functions and will reimburse Directors for reasonable expenses incurred while traveling on District business to include, lodging, dining, transportation and related incidentals. A. Directors’ Per Diem As provided in Section 1.01 C. of the District Code of Ordinances,each Director shall receive a per diem in the amount of $173(effective July 1, 2024) for each day of attendance at meetings ofthe Board or for each day of service rendered as a Director byrequest or authorization of the Board, not to exceed a total often (10) days in any calendar month. Attendance at any meetingshown on Exhibit A to this Policy shall be deemed a meetingrequested or authorized by the Board. Attendance at meetings shallbe in accordance with Exhibit A. The President of the Board or theBoard may authorize a Director to attend meetings not listed inExhibit A when the President or the Board determines that it is inthe interest of the District that a Director attend, and that suchattendance be compensated, and expenses reimbursed. Director’sclaims for per diem amounts shall be made on a “Board of DirectorsPer Diem and Mileage Claim Form” (Exhibit B). The President of theBoard or the Board may approve reimbursement of expenses outsidethe per diem limit for a Director if the Director submits receiptsfor all of the related District business expenses. EXHIBIT 1 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 2 of 7 The Board President or the Board of Directors may restrict a Director’s ability to receive a per diem for meeting attendance if the Director engages in misconduct. Said restriction may apply to pre-approved meetings as listed on Attachment A of this policy. (Please see Board Policy 40: Ethics.) Attendance at a meeting that is not authorized by this policy (pre-approved meetings) or pre-approved by the President may be approved by the Board for per diem compensation. Director’s seeking per diem compensation for these meetings shall request that the item be presented to the Board at its next regularly scheduled meeting for consideration. The decision of the Board shall be final. When travel arrangements require a day earlier arrival or a day later departure, Directors will be eligible for the $173 per diem and reasonable expenses associated with the extended stay will be reimbursed as specified below. B. Pre-payment of Otherwise Reimbursable Expenses The Director may request pre-payment of registration, transportation, and lodging, using the “Board of Directors Travel Request Form” (Exhibit C). Pre-payments shall be limited to the Director’s expenses only. No advances shall be made on travel expenses. C. Reimbursement of Expenses Each Director shall be reimbursed for travel expenses to and from the meetings described in Exhibit A or for any other authorized District business as follows: 1. Authorization Travel associated with the attendance of meetings or functions for Directors shall be approved in advance by the Otay Water District Board President. To request approval of travel, the Director should complete a “Board of Directors Travel Request Form” (Exhibit BC) in order to be eligible for compensation and/or reimbursement. Travel requests will be reviewed and approved by the Board President or the Board. 2. Transportation a. Air Transportation The District will endeavor to purchase airline tickets in advance, taking advantage of discounts and low airfares. b. Automobile 1. Personal Auto: Directors may use their personal vehicle. The District will reimburse Directors at the current rate/mile as established by the IRS, plus tolls, parking, etc., provided, however, if Formatted: Font: 11 pt OTAY WATER DISTRICTBOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 3 of 7 air transportation is available, the total amount of expense paid shall be limited to the cost of coach air travel between points traveled by personal vehicle. Gasoline, collision and liability insurance, and maintenance will be provided by the Director and is deemed covered in the rate/mileage reimbursement. Directors using personal vehicles on District business must maintain a valid California driver’s license and the automobile insurance coverage required by the State of California, or make arrangements for a driver who meets the above requirements. 2.Rental Cars: Directors shall endeavor to usepublic transportation, taxi, or a ride-sharingservice whenever possible. In the event that arental car is needed for District business, TtheDistrict will provide a rental car when needed.the District will pre-pay or reimburse Directorsfor the rental car expenses. Gasoline expensesrequired for District business travel will beeligible for reimbursement. Such rental car shallbe a compact or mid-size class, unless upgradesare offered at no additional cost to the District. c.Miscellaneous TransportationWhenever practicable, bus, taxi, rail, shuttle, or ride-sharing service etc. transportation may be used in lieuof, or in conjunction with, the modes above. 3.Meals and Lodging a.Meals and BeveragesWhenever travel requires meals, the meals, excludingincluding gratuity, shall be reimbursable, provided theDirector presents a receipt along with the “Board ofDirectors Expense Claim Form” (Exhibit D) for all meals.Reimbursements for expense items where a receipt hasbeen lost will not be paid until the President or theBoard has reviewed and approved the expense item. Mealsare reimbursable based on the Meals and IncidentalExpenses (M&IE) as updated by the U.S. General ServicesAdministration: 1.Full Day ReimbursementWhen a Director is traveling for a full day and nomeals are provided for by other sources, such aspre-paid registration, the Director may be OTAY WATER DISTRICTBOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 4 of 7 reimbursed for meal expenses at the rate provided by the M&IE per day, or amounts determined by the President or the Board to be reasonable for the occasion or circumstances. This amount is exclusive of any gratuities. 2.Single Meal ReimbursementWhen a Director requires reimbursement for asingle meal while traveling, the maximum mealreimbursement amount shall be at a rate providedby the M&IE for Breakfast, lunch, and/or dinner, or amounts determined by the President or the Boardto be reasonable for the occasion orcircumstances. These amounts and any amountapproved by the President or Board shall excludegratuities. 3.Partial Day ReimbursementWhen a Director will be traveling for a partialday or where a single meal is provided for by othersources such as pre-paid registration, the maximumreimbursement amount shall be at the rate providedby the M&IE per meal, or such other amounts as maybe determined by the President or the Board to bereasonable for the occasion or circumstances. Inany event all amounts to be reimbursed shallexclude any gratuities. 4. TaxesThe maximum meal reimbursement amounts areinclusive of and assume expenses for taxes. Themaximum meal reimbursements shall exclude any andall gratuities. b. LodgingThe District will reimburse Directors or pre-payaccommodations in single rooms at conference facilitiesor in close proximity when applicable. Or, in theabsence of conference accommodations, normal single-room business, government or commercial classaccommodation may be obtained. Under normalcircumstances, lodging will not be reimbursed for thenight before a conference starts and the night after itends. However, in situations where available travelschedules would require the Director to leave homebefore 6:00 AM or return to home after 12:00 AM, lodgingfor the night before or the night after will bereimbursable. OTAY WATER DISTRICTBOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 5 of 7 4. Entertainment The District shall not cover any expenses incurred forrecreation or entertainment. 5.Incidental Expenses Unavoidable, necessary, and reasonable authorized expenseswill be fully reimbursed by the District. Some examples ofallowable expenses are: a.Reasonable transportation to local restaurants and tooptional functions that are a part of conference events. b.Conference and hotel Pparking fees. b.c. Reasonable gratuities. c.d. The following expenses are not reimbursable: 1.Alcoholic beverages 2.Parking or traffic violations 3.In-room movies or laundry services 3.4. Expenses incurred by spouses, family members, orguests. 6. Directors’ Responsibility a.Directors must submit a detailed “Board of DirectorsExpense Claim Form” (Exhibit D) for reimbursement.Claim forms should be supported by vouchers and itemizedreceipts of expenditures for which reimbursement isbeing requested. Receipts must be attached for allexpenses. If a receipt is lost, the lost receipt mustbe noted on the “Board of Directors Expense Claim Form”(Exhibit D) and approved by the President or the Boardbefore any payment can be made. Claim forms shall besubmitted within 45 calendar days after the expense wasincurred. Expense claims requiring reimbursement to theDistrict, which are not reconciled within 45 calendardays, shall be deducted from the next month’sreimbursement. b.Expenses will not be reimbursed for meetings that havebeen pre-paid and not attended. The President or theBoard may excuse an absence for a meeting. The absentDirector shall provide a verbal or written report atthe next regularly scheduled Board meeting stating thereason for the absence and, if appropriate, request thatit be excused.Directors will be required to reimbursethe District for any pre-paid expenses for any unexcusedabsence. This reimbursement will be made by deduction OTAY WATER DISTRICTBOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 6 of 7 from future expenditures. c.When two (2) or more Directors combine an expense onone receipt, the Director requesting reimbursementshould indicate, on or attached to the Director’s “Boardof Directors Expense Claim Form” the identity of theother persons sharing expenses. This will facilitateappropriate allocation of expenses to each participant. d.Expenses incurred by a Director, other than reimbursableexpenses, including, but not limited to expenses of theDirector’s spouse, family members, or guests are theresponsibility of the Director. e.Each Director shall provide a brief report on meetingsattended at the expense of the District at the nextregular meeting of the Board of Directors [GovernmentCode Section 53232.3(d)]. The report may be providedverbally during the “Directors Reports” section of themeeting or submitted in writing to the DistrictSecretary on the “Board of Directors Meetings AttendedForm” (Exhibit E). Written reports will be filed withthe minutes of the meeting and become part of the boardrecords. f.All documents related to reimbursable Districtexpenditures are public records subject to disclosure under the California Public Records Act. [Government Code Section 53232.3(d)]. g.The District shall, at least annually, provide a reportto disclose any reimbursement paid by the Districtwithin the immediately preceding fiscal year of at least$100 for each individual charge for services or productreceived. “Individual charge” (as defined in CaliforniaGovernment Code Section 53065.5) includes, but is notlimited to, one meal, lodging for one day,transportation, or a registration fee. D.District Group Insurance Benefits 1.Each Director, while serving as a member of the Board ofDirectors, shall be entitled to the health and welfare andlife insurance benefits set forth in the Schedule of Benefitsin the District Group Insurance Plan Booklet, which benefitsare furnished by the District at District cost, withapplicable contributions, for active District employees andDirectors. Each active Director shall also be entitled to a$65,000 term life and accidental death and dismembermentinsurance policy (subject to policy requirements and anystandard age reduction schedule), a $100,000 travel Formatted: Font color: Auto OTAY WATER DISTRICTBOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 54/13/24 Page 7 of 7 accidental death and dismemberment policy. In addition to the foregoing, the District will pay premiums for additional individual life insurance coverage in an amount of up to $250,000 for a 20 year term for those active Directors who apply for such coverage with the District’s provider and meet the provider’s standard underwriting guidelines and policy requirements. If coverage at higher amounts or for a longer term is made available by the provider, each Director may purchase such additional coverage on a self-pay basis. 2.Each former member of the Board of Directors, who served inoffice after January 1, 1981, who was elected to a term ofoffice that began before January 1, 1995, who is at least 60years of age, and whose total service at the time oftermination is not less than 12 years, shall be entitled tothe health and welfare and life insurance benefits set forthin the District Group Insurance Plan Booklet, which benefitsare furnished by the District, at District cost, for retiredDirectors. E.Miscellaneous 1.The General Manager shall submit the District’sorganizational membership list, which the Board shall reviewannually in January following reorganization of the Board andelection of a new President. 2.Cell Phone expenses are not considered areimbuseablereimbursable expense. Attachments Exhibit A: Approved Functions List Exhibit B: “Board of Directors Per Diem and Mileage Claim Form” Exhibit C: “Board of Directors Travel Request Form” Exhibit D: “Board of Directors Expense Claim Form” Exhibit E: “Board of Directors Meetings Attended Form” EXHIBIT A Approved Functions List Board Policy for payment of per diem compensation and expenses for Director attendance at District meetings: The Board reviews its authorization and policy for payment of per diem compensation for pre-approved meetings annually, in January following reorganization of the Board and election of a new President. Below is the current Board policy: 1.The following meetings are pre-approved for all Directorsto attend and receive per diem compensation and expensereimbursement: a)Otay Water District Regular and Special Board Meetingsb)Otay committee meetings for committee members onlyc)Otay business meetings called by the General Manager orthe Board President, or authorized by the BoardPresident where individual Directors are requested toattendd)Except as otherwise specifically excluded in thispolicy, official District functions that take placeduring normal business hours where Directors arerequested to attend by either the Board President orthe Boarde)District sponsored events or events where the Districtsponsors a table and the Board President or the GeneralManager extends invitations to Directors to attend theeventf) Semi-annual conference of the Association of CaliforniaWater Agencies g)Regular quarterly meetings of the Water AgenciesAssociation of San Diego Countyh)g)Regularly monthly meeting of Council of Water Utilities i)h)Business meetings and conferences of the California Special District Association held in San Diego County j)i)Up to four (4) board meetings of the San Diego County Water Authority per calendar year k)j)Up to one (1) board meeting of the Metropolitan Water District per calendar year l)k)Business or Board Meetings of regional and/or local Chambers of Commerce, where the District maintains a membership or whose geographical area includes the District’s service area, and the meeting includes discussions that are water and wastewater-industry related EXHIBIT A All other meetings not listed here require pre-approval by the President or Board for Directors to receive per diem compensation and/or expense reimbursement. 2.The following meetings are pre-approved for designated OtayDirector representatives or designated alternate. TheDistrict Secretary will maintain an updated list ofdesignated Director representatives. Any other Director whowishes to attend these meetings and receive a per diem musthave approval from the President or Board prior to the eventor be designated by the President or Board, as an alternate.The pre-approval shall include the attendance of theDirector at the commission, committee, board or meeting andany committee, subcommittee or other official or postedmeeting of the agencies, commissions, committees or boardslisted below: a)Planning Group and government agency meetings thatfall within the boundaries of each Directors district(when issues impacting OWD are discussed)b) Inter-Agency Committee Meetingc)METRO (TAC/AFFORD) Commissiond)ACWA or CSDA meetings/conferencese)Water Conservation Gardenf) WateReuse Associationg)South County Economic Development Council 3.The Board President or his designee is pre-authorized toattend District business meetings with cities and otheragencies to represent Otay Water District and may claim aper diem and expenses. Any other Director desiring to attendthe same meeting of this nature would require approval toattend from the President or the Board in order to receivea per diem and expense reimbursement. 4.When the President or the Board appoints a Director(s) to acommittee, the meeting(s) shall be considered pre-approvedfor per diem and expense reimbursement. 5.The following meetings are not eligible for pre-approved perdiem claims:a)Attending other Districts’ Board meetings, unless thereis a matter on their agenda that is related to Otaybusinessb)Otay employee appreciation breakfast, luncheons ordinnersc)Retirement receptionsd)Otay picnics or dinner-dances or other purely socialevents EXHIBIT A e)If a per diem reimbursement is offered by anotheragency (i.e. San Diego County Water Authority and theMetro Commission)f)First Friday Breakfasts unless presenting Otay officialbusiness to the assemblyg)Any political campaign event or function 6.In order to submit a per diem/travel reimbursement themember must attend at least 50% of the meeting (per day)and the reimbursement request must be submitted within 45days of the occurrence, otherwise it may be consideredattended without per diem. The President of the Board willmake the final determination. 7. All other meetings/conferences/tours/seminars/workshops/functions not listed in this policy must be pre-approved by the Board President or the Board. EXHIBIT B (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ INSTRUCTIONS ON REVERSE OTAY WATER DISTRICT BOARD OF DIRECTORS PER -DIEM AND MILEAGE CLAIM FORM Pay To: Period Covered: Employee Number: From: To: ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS Total Meeting Per Diem: $ ($173 per meeting) Total Mileage Claimed: miles Commented [FM1]: Amount not effective until July 1, 2024. EXHIBIT B INSTRUCTIONS FOR PREPARATION OF BOARD OF DIRECTORS PER DIEM CLAIM FORM 1.Record the date, and name or purpose/issues discussed of meetingattended on behalf of the District. Note: The District will pay Director's per -diem for one meeting/function per day and the maximum of 10 meetings/functions per month.If a Director attends more than 10 meetings/functions (10 days), theDistrict will reimburse for the mileage and any reimbursable out-of-pocket expenses incurred for these additional meetings. 2.Record number of miles (round trip) driven to attend meeting/function. The use of personal vehicles in the conduct of official District business shall be reimbursed at the current Internal Revenue Service rate. The Director's expense claim should indicate the nature of the trip. If a trip begins at home, the District will reimburse the mileage from home to destination and return mileage. District insurance does not cover personal vehicles while they are being driven on District business. The reimbursement rate is inclusive of an allowance for insurance costs. The District will reimburse Directors for the deductible under their personal insurance policy should they be involved in an accident while on District business. To be eligible for reimbursement, each Director shall maintain a current California driver’s license and at least the minimum vehicle liability insurance required by State law or shall arrange for a driver who meets said standards. The District will not reimburse the cost of travel of a personal nature taken in conjunction with travel on official business. Claim forms shall be submitted within 45 calendar days after the meeting date. Expense claims requiring reimbursement to the District which are not reconciled within 45 calendar days, shall be deducted from the next month’s reimbursement. No information on the Per Diem Claim Form may be designated as confidential in nature. All expenses must be fully disclosed on the form. OTAY WATER DISTRICT BOARD OF DIRECTORS TRAVEL REQUEST FORM Director: Date of Request: Name and Location of Function: Date(s) function to be held: - Date(s) of travel (flight & lodging): - Sponsoring Organization: Request for Prepayment of Fees Related to the Function: Expense Type Not Needed Pre-Payment Requested Registration Airline Auto Rental Mileage N/A Taxi/Shuttle N/A Lodging Meals N/A Other Expenses – Explain Below Lodging PreferenceComments: Explanation of Other Expenses: Signature of Director Date of Request For Office Use Only Below This Line Date of Board President Approval: Expense Type Description Amount Pre-Paid (Estimate) Registration Airline Auto Rental Mileage N/A Taxi/Shuttle N/A Lodging Meals N/A Other Expenses District Secretary Date Processed EXHIBIT C Formatted Table Formatted: Left Formatted: Left Formatted Table Formatted Table Formatted Table Formatted Table OTAY WATER DISTRICT BOARD OF DIRECTORS EXPENSE CLAIM FORM Pay To: Period Covered: Employee Number: From: To: ITEMIZED REIMBURSEMENT CLAIMED Date Type of Reimbursement Amount TOTAL Reimbursement Claimed: $ Director Signature: Date: GM Receipt: Date: INSTRUCTIONS ON REVERSE EXHIBIT D INSTRUCTIONS FOR PREPARATION OF BOARD OF DIRECTORS EXPENSE CLAIM FORM The necessary expenses incurred while traveling on District business including common carrier fares (economy class), automobile rental charges, District business telephone calls, lodging, baggage handling, parking fees, meals, etc. will be reimbursed when documented on the Director's Per Diem and Expense Claim Forms. Receipts must be attached for all meal expenses. If a receipt is lost, the lost receipt should be noted next to the expense and submitted to the President before any reimbursement can be made. Receipts are required for the reimbursement of all expenses. All receipts must have the nature of the expense and the business purpose noted on the receipt. The District will not reimburse the cost of travel of a personal nature taken in conjunction with travel on official business. Meals shall be reimbursed as per section 3, Meals and Lodging, of this policy (Policy 8). Any receipts that include costs of personal travel (e.g., hotel receipt for employee and spouse) should identify what the cost would have been without personal travel (e.g., single room rate as opposed to double room rate). Claim forms shall be submitted within 45 calendar days after the expense was incurred. Expense claims requiring reimbursement to the District which are not reconciled within 45 calendar days, shall be deducted from the next month’s reimbursement. No information on the Expense Claim Form may be designated as confidential in nature. All expenses must be fully disclosed on the form. The following expenses are not reimbursable: a. Alcoholic Beverages d. Laundry service b. Parking or traffic violations e. Entertainment or recreation c. In-room movies f. Expenses incurred by spouses, family members, or guests. ND: 4840-9653-1715, v. 2 EXHIBIT D Formatted: Left, Right: 0" Formatted: Font: Not Bold Formatted: Font: Not Bold Exhibit E Board of Directors Meetings Attended Form Director Name: Period Covered: From: To: Item No. Date Meeting Attended Description 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. -Instructions on Reverse - Exhibit E Instructions for the Preparation of the Board of Directors Meetings Attended Form 1.Enter the period (dates) of the meetings that will be reported on the form. 2.Record the date, name/purpose of meeting, and issues discussed at the meeting(s) attended on behalf and expense of the District. Board of Directors Meetings Attended Forms shall be submitted to the District Secretary prior to or on the date of the next regular board meeting that follows the dates of the meetings reported on this form. No information on the form may be designated as confidential in nature. This form will be filed with the minutes of the meeting and become part of the board records. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 1 of 7 Purpose To provide guidelines for payment of compensation and reimbursement of expenses to Directors in connection with their attendance at meetings or the performance of other authorized business, and for group insurance benefits for Directors. Background Members of the Board of Directors (“Directors”) attend regular, adjourned or special meetings of the Board of Directors (“Board”). In addition, Directors attend other District meetings, committee meetings, association meetings, and educational seminars on behalf of the District. These meetings and seminars are related to District business, water and wastewater, water and wastewater related issues, and California special districts. State statutes authorize District payments for attendance at meetings and reimbursements of expenses incurred. State law also authorizes the District to provide health and welfare benefits for active Directors and, in limited circumstances, retired Directors if they served 12 years and were first elected prior to January 1, 1995. The District is also authorized to offer health and welfare benefits for retired Directors who commenced office on or after January 1, 1995, if the recipient participates on a self-pay basis. Policy The District will compensate Directors on a per diem basis for attendance at authorized meetings or functions and will reimburse Directors for reasonable expenses incurred while traveling on District business to include, lodging, dining, transportation and related incidentals. A. Directors’ Per Diem As provided in Section 1.01 C. of the District Code of Ordinances,each Director shall receive a per diem in the amount of $173(effective July 1, 2024) for each day of attendance at meetings ofthe Board or for each day of service rendered as a Director byrequest or authorization of the Board, not to exceed a total often (10) days in any calendar month. Attendance at any meeting shown on Exhibit A to this Policy shall be deemed a meetingrequested or authorized by the Board. Attendance at meetings shallbe in accordance with Exhibit A. The President of the Board or theBoard may authorize a Director to attend meetings not listed inExhibit A when the President or the Board determines that it is inthe interest of the District that a Director attend, and that suchattendance be compensated, and expenses reimbursed. Director’sclaims for per diem amounts shall be made on a “Board of DirectorsPer Diem and Mileage Claim Form” (Exhibit B). The President of theBoard or the Board may approve reimbursement of expenses outsidethe per diem limit for a Director if the Director submits receipts for all the related District business expenses. ATTACHMENT C OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 2 of 7 The Board President or the Board of Directors may restrict a Director’s ability to receive a per diem for meeting attendance if the Director engages in misconduct. Said restriction may apply to pre-approved meetings as listed on Attachment A of this policy. (Please see Board Policy 40: Ethics.) Attendance at a meeting that is not authorized by this policy (pre-approved meetings) or pre-approved by the President may be approved by the Board for per diem compensation. Director’s seeking per diem compensation for these meetings shall request that the item be presented to the Board at its next regularly scheduled meeting for consideration. The decision of the Board shall be final. When travel arrangements require a day earlier arrival or a day later departure, Directors will be eligible for the $173 per diem and reasonable expenses associated with the extended stay will be reimbursed as specified below. B. Pre-payment of Otherwise Reimbursable Expenses The Director may request pre-payment of registration, transportation, and lodging, using the “Board of Directors Travel Request Form” (Exhibit C). Pre-payments shall be limited to the Director’s expenses only. No advances shall be made on travel expenses. C. Reimbursement of Expenses Each Director shall be reimbursed for travel expenses to and from the meetings described in Exhibit A or for any other authorized District business as follows: 1. Authorization Travel associated with the attendance of meetings or functions for Directors shall be approved in advance by the Otay Water District Board President. To request approval of travel, the Director should complete a “Board of Directors Travel Request Form” (Exhibit C) in order to be eligible for compensation and/or reimbursement. Travel requests will be reviewed and approved by the Board President or the Board. 2. Transportation a. Air Transportation The District will endeavor to purchase airline tickets in advance, taking advantage of discounts and low airfares. b. Automobile 1. Personal Auto: Directors may use their personal vehicle. The District will reimburse Directors at the current rate/mile as established by the IRS, plus tolls, parking, etc., provided, however, if OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 3 of 7 air transportation is available, the total amount of expense paid shall be limited to the cost of coach air travel between points traveled by personal vehicle. Gasoline, collision and liability insurance, and maintenance will be provided by the Director and is deemed covered in the rate/mileage reimbursement. Directors using personal vehicles on District business must maintain a valid California driver’s license and the automobile insurance coverage required by the State of California, or make arrangements for a driver who meets the above requirements. 2. Rental Cars: Directors shall endeavor to use public transportation, taxi, or a ride-sharing service whenever possible. In the event that a rental car is needed for District business, the District will pre-pay or reimburse Directors for the rental car expenses. Gasoline expenses required for District business travel will be eligible for reimbursement. Such rental car shall be a compact or mid-size class, unless upgrades are offered at no additional cost to the District. c. Miscellaneous Transportation Whenever practicable, bus, taxi, rail, shuttle, or ride-sharing service transportation may be used in lieu of, or in conjunction with, the modes above. 3. Meals and Lodging a. Meals and Beverages Whenever travel requires meals, the meals, including gratuity, shall be reimbursable, provided the Director presents a receipt along with the “Board of Directors Expense Claim Form” (Exhibit D) for all meals. Reimbursements for expense items where a receipt has been lost will not be paid until the President or the Board has reviewed and approved the expense item. Meals are reimbursable based on the Meals and Incidental Expenses (M&IE) as updated by the U.S. General Services Administration: 1. Full Day Reimbursement When a Director is traveling for a full day and no meals are provided for by other sources, such as pre-paid registration, the Director may be reimbursed for meal expenses at the rate provided OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 4 of 7 by the M&IE per day, or amounts determined by the President or the Board to be reasonable for the occasion or circumstances. 2. Single Meal Reimbursement When a Director requires reimbursement for a single meal while traveling, the maximum meal reimbursement amount shall be at a rate provided by the M&IE for Breakfast, lunch, and/or dinner, or amounts determined by the President or the Board to be reasonable for the occasion or circumstances. 3. Partial Day Reimbursement When a Director will be traveling for a partial day or where a single meal is provided for by other sources such as pre-paid registration, the maximum reimbursement amount shall be at the rate provided by the M&IE per meal, or such other amounts as may be determined by the President or the Board to be reasonable for the occasion or circumstances. 4. Taxes The maximum meal reimbursement amounts are inclusive of and assume expenses for taxes and gratuities. b. Lodging The District will reimburse Directors or pre-pay accommodations in single rooms at conference facilities or in close proximity when applicable. Or, in the absence of conference accommodations, normal single-room business, government or commercial class accommodation may be obtained. Under normal circumstances, lodging will not be reimbursed for the night before a conference starts and the night after it ends. However, in situations where available travel schedules would require the Director to leave home before 6:00 AM or return home after 12:00 AM, lodging for the night before or the night after will be reimbursable. 4. Entertainment The District shall not cover any expenses incurred for recreation or entertainment. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 5 of 7 5. Incidental Expenses Unavoidable, necessary, and reasonable authorized expenses will be fully reimbursed by the District. Some examples of allowable expenses are: a. Reasonable transportation to local restaurants and to optional functions that are a part of conference events. b. Conference and hotel parking fees. c. Reasonable gratuities. d. The following expenses are not reimbursable: 1. Alcoholic beverages 2. Parking or traffic violations 3. In-room movies or laundry services 4. Expenses incurred by spouses, family members, or guests. 6. Directors’ Responsibility a. Directors must submit a detailed “Board of Directors Expense Claim Form” (Exhibit D) for reimbursement. Claim forms should be supported by vouchers and itemized receipts of expenditures for which reimbursement is being requested. Receipts must be attached for all expenses. If a receipt is lost, the lost receipt must be noted on the “Board of Directors Expense Claim Form” (Exhibit D) and approved by the President or the Board before any payment can be made. Claim forms shall be submitted within 45 calendar days after the expense was incurred. Expense claims requiring reimbursement to the District, which are not reconciled within 45 calendar days, shall be deducted from the next month’s reimbursement. b. Expenses will not be reimbursed for meetings that have been pre-paid and not attended. The President or the Board may excuse an absence for a meeting. The absent Director shall provide a verbal or written report at the next regularly scheduled Board meeting stating the reason for the absence and, if appropriate, request that it be excused. Directors will be required to reimburse the District for any pre-paid expenses for any unexcused absence. This reimbursement will be made by deduction from future expenditures. c. When two (2) or more Directors combine an expense on one receipt, the Director requesting reimbursement OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 6 of 7 should indicate, on or attached to the Director’s “Board of Directors Expense Claim Form” the identity of the other persons sharing expenses. This will facilitate appropriate allocation of expenses to each participant. d. Expenses incurred by a Director, other than reimbursable expenses, including, but not limited to expenses of the Director’s spouse, family members, or guests are the responsibility of the Director. e. Each Director shall provide a brief report on meetings attended at the expense of the District at the next regular meeting of the Board of Directors [Government Code Section 53232.3(d)]. The report may be provided verbally during the “Directors Reports” section of the meeting or submitted in writing to the District Secretary on the “Board of Directors Meetings Attended Form” (Exhibit E). Written reports will be filed with the minutes of the meeting and become part of the board records. f. All documents related to reimbursable District expenditures are public records subject to disclosure under the California Public Records Act. [Government Code Section 53232.3(d)]. g. The District shall, at least annually, provide a report to disclose any reimbursement paid by the District within the immediately preceding fiscal year of at least $100 for each individual charge for services or product received. “Individual charge” (as defined in California Government Code Section 53065.5) includes, but is not limited to, one meal, lodging for one day, transportation, or a registration fee. D. District Group Insurance Benefits 1. Each Director, while serving as a member of the Board of Directors, shall be entitled to the health and welfare and life insurance benefits set forth in the Schedule of Benefits in the District Group Insurance Plan Booklet, which benefits are furnished by the District at District cost, with applicable contributions, for active District employees and Directors. Each active Director shall also be entitled to a $65,000 term life and accidental death and dismemberment insurance policy (subject to policy requirements and any standard age reduction schedule), a $100,000 travel accidental death and dismemberment policy. In addition to the foregoing, the District will pay premiums for additional individual life insurance coverage in an amount of up to OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised DIRECTORS COMPENSATION, REIMBURSEMENT OF EXPENSES AND GROUP INSURANCE BENEFITS 08 2/20/91 5/1/24 Page 7 of 7 $250,000 for a 20 year term for those active Directors who apply for such coverage with the District’s provider and meet the provider’s standard underwriting guidelines and policy requirements. If coverage at higher amounts or for a longer term is made available by the provider, each Director may purchase such additional coverage on a self-pay basis. 2. Each former member of the Board of Directors, who served in office after January 1, 1981, who was elected to a term of office that began before January 1, 1995, who is at least 60 years of age, and whose total service at the time of termination is not less than 12 years, shall be entitled to the health and welfare and life insurance benefits set forth in the District Group Insurance Plan Booklet, which benefits are furnished by the District, at District cost, for retired Directors. E. Miscellaneous 1. The General Manager shall submit the District’s organizational membership list, which the Board shall review annually in January following reorganization of the Board and election of a new President. 2. Cell Phone expenses are not considered a reimbursable expense. Attachments Exhibit A: Approved Functions List Exhibit B: “Board of Directors Per Diem and Mileage Claim Form” Exhibit C: “Board of Directors Travel Request Form” Exhibit D: “Board of Directors Expense Claim Form” Exhibit E: “Board of Directors Meetings Attended Form” EXHIBIT A Approved Functions List Board Policy for payment of per diem compensation and expenses for Director attendance at District meetings: The Board reviews its authorization and policy for payment of per diem compensation for pre-approved meetings annually, in January following reorganization of the Board and election of a new President. Below is the current Board policy: 1. The following meetings are pre-approved for all Directors to attend and receive per diem compensation and expense reimbursement: a) Otay Water District Regular and Special Board Meetings b) Otay committee meetings for committee members only c) Otay business meetings called by the General Manager or the Board President, or authorized by the Board President where individual Directors are requested to attend d) Except as otherwise specifically excluded in this policy, official District functions that take place during normal business hours where Directors are requested to attend by either the Board President or the Board e) District sponsored events or events where the District sponsors a table and the Board President or the General Manager extends invitations to Directors to attend the event f) Semi-annual conference of the Association of California Water Agencies g) Regularly monthly meeting of Council of Water Utilities h) Business meetings and conferences of the California Special District Association held in San Diego County i) Up to four (4) board meetings of the San Diego County Water Authority per calendar year j) Up to one (1) board meeting of the Metropolitan Water District per calendar year k) Business or Board Meetings of regional and/or local Chambers of Commerce, where the District maintains a membership or whose geographical area includes the District’s service area, and the meeting includes discussions that are water and wastewater-industry related All other meetings not listed here require pre-approval by the President or Board for Directors to receive per diem compensation and/or expense reimbursement. EXHIBIT A 2. The following meetings are pre-approved for designated Otay Director representatives or designated alternate. The District Secretary will maintain an updated list of designated Director representatives. Any other Director who wishes to attend these meetings and receive a per diem must have approval from the President or Board prior to the event or be designated by the President or Board, as an alternate. The pre-approval shall include the attendance of the Director at the commission, committee, board or meeting and any committee, subcommittee or other official or posted meeting of the agencies, commissions, committees or boards listed below: a) Planning Group and government agency meetings that fall within the boundaries of each Directors district (when issues impacting OWD are discussed) b) Inter-Agency Committee Meeting c) METRO (TAC/AFFORD) Commission d) ACWA or CSDA meetings/conferences e) Water Conservation Garden f) WateReuse Association g) South County Economic Development Council 3. The Board President or his designee is pre-authorized to attend District business meetings with cities and other agencies to represent Otay Water District and may claim a per diem and expenses. Any other Director desiring to attend the same meeting of this nature would require approval to attend from the President or the Board in order to receive a per diem and expense reimbursement. 4. When the President or the Board appoints a Director(s) to a committee, the meeting(s) shall be considered pre-approved for per diem and expense reimbursement. 5. The following meetings are not eligible for pre-approved per diem claims: a) Attending other Districts’ Board meetings, unless there is a matter on their agenda that is related to Otay business b) Otay employee appreciation breakfast, luncheons or dinners c) Retirement receptions d) Otay picnics or dinner-dances or other purely social events e) If a per diem reimbursement is offered by another agency (i.e. San Diego County Water Authority and the Metro Commission) f) First Friday Breakfasts unless presenting Otay official business to the assembly g) Any political campaign event or function EXHIBIT A 6. In order to submit a per diem/travel reimbursement the member must attend at least 50% of the meeting (per day) and the reimbursement request must be submitted within 45 days of the occurrence, otherwise it may be considered attended without per diem. The President of the Board will make the final determination. 7. All other meetings/conferences/tours/seminars/ workshops/functions not listed in this policy must be pre-approved by the Board President or the Board. EXHIBIT B (Director’s Signature) GM Receipt: Date: FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $ INSTRUCTIONS ON REVERSE OTAY WATER DISTRICT BOARD OF DIRECTORS PER DIEM AND MILEAGE CLAIM FORM Pay To: Period Covered: Employee Number: From: To: ITEM DATE MEETING PURPOSE / ISSUES DISCUSSED MILEAGE HOME to OWD OWD to HOME MILEAGE OTHER LOCATIONS Total Meeting Per Diem: $ ($173 per meeting) Total Mileage Claimed: miles EXHIBIT B INSTRUCTIONS FOR PREPARATION OF BOARD OF DIRECTORS PER DIEM CLAIM FORM 1. Record the date, and name or purpose/issues discussed of meeting attended on behalf of the District. Note: The District will pay Director's per diem for one meeting/ function per day and the maximum of 10 meetings/functions per month. If a Director attends more than 10 meetings/functions (10 days), the District will reimburse for the mileage and any reimbursable out-of-pocket expenses incurred for these additional meetings. 2. Record number of miles (round trip) driven to attend meeting/function. The use of personal vehicles in the conduct of official District business shall be reimbursed at the current Internal Revenue Service rate. The Director's expense claim should indicate the nature of the trip. If a trip begins at home, the District will reimburse the mileage from home to destination and return mileage. District insurance does not cover personal vehicles while they are being driven on District business. The reimbursement rate is inclusive of an allowance for insurance costs. The District will reimburse Directors for the deductible under their personal insurance policy should they be involved in an accident while on District business. To be eligible for reimbursement, each Director shall maintain a current California driver’s license and at least the minimum vehicle liability insurance required by State law or shall arrange for a driver who meets said standards. The District will not reimburse the cost of travel of a personal nature taken in conjunction with travel on official business. Claim forms shall be submitted within 45 calendar days after the meeting date. Expense claims requiring reimbursement to the District which are not reconciled within 45 calendar days, shall be deducted from the next month’s reimbursement. No information on the Per Diem Claim Form may be designated as confidential in nature. All expenses must be fully disclosed on the form. OTAY WATER DISTRICT BOARD OF DIRECTORS TRAVEL REQUEST FORM Director: Date of Request: Name and Location of Function: Date(s) function to be held: - Date(s) of travel (flight & lodging): - Sponsoring Organization: Request for Prepayment of Fees Related to the Function: Expense Type Not Needed Pre-Payment Requested Registration Airline Auto Rental Mileage N/A Taxi/Shuttle N/A Lodging Meals N/A Other Expenses – Explain Below Comments: Explanation of Other Expenses: Signature of Director For Office Use Only Below This Line Date of Board President Approval: Expense Type Description Amount Pre-Paid (Estimate) Registration Airline Auto Rental Mileage N/A Taxi/Shuttle N/A Lodging Meals N/A Other Expenses District Secretary Date Processed EXHIBIT C Exhibit E OTAY WATER DISTRICT BOARD OF DIRECTORS EXPENSE CLAIM FORM Pay To: Period Covered: Employee Number: From: To: ITEMIZED REIMBURSEMENT CLAIMED Date Type of Reimbursement Amount TOTAL Reimbursement Claimed: $ Director Signature: Date: GM Receipt: Date: INSTRUCTIONS ON REVERSE EXHIBIT D Exhibit E INSTRUCTIONS FOR PREPARATION OF BOARD OF DIRECTORS EXPENSE CLAIM FORM The necessary expenses incurred while traveling on District business including common carrier fares (economy class), automobile rental charges, District business telephone calls, lodging, baggage handling, parking fees, meals, etc. will be reimbursed when documented on the Director's Per Diem and Expense Claim Forms. Receipts must be attached for all meal expenses. If a receipt is lost, the lost receipt should be noted next to the expense and submitted to the President before any reimbursement can be made. Receipts are required for the reimbursement of all expenses. All receipts must have the nature of the expense and the business purpose noted on the receipt. The District will not reimburse the cost of travel of a personal nature taken in conjunction with travel on official business. Meals shall be reimbursed as per section 3, Meals and Lodging, of this policy (Policy 8). Any receipts that include costs of personal travel (e.g., hotel receipt for employee and spouse) should identify what the cost would have been without personal travel (e.g., single room rate as opposed to double room rate). Claim forms shall be submitted within 45 calendar days after the expense was incurred. Expense claims requiring reimbursement to the District which are not reconciled within 45 calendar days, shall be deducted from the next month’s reimbursement. No information on the Expense Claim Form may be designated as confidential in nature. All expenses must be fully disclosed on the form. The following expenses are not reimbursable: a. Alcoholic Beverages d. Laundry service b. Parking or traffic violations e. Entertainment or recreation c. In-room movies f. Expenses incurred by spouses, family members, or guests. EXHIBIT D Exhibit E Board of Directors Meetings Attended Form Director Name: Period Covered: From: To: Item No. Date Meeting Attended Description 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. -Instructions on Reverse - Exhibit E Instructions for the Preparation of the Board of Directors Meetings Attended Form 1. Enter the period (dates) of the meetings that will be reported on the form. 2. Record the date, name/purpose of meeting, and issues discussed at the meeting(s) attended on behalf and expense of the District. Board of Directors Meetings Attended Forms shall be submitted to the District Secretary prior to or on the date of the next regular board meeting that follows the dates of the meetings reported on this form. No information on the form may be designated as confidential in nature. This form will be filed with the minutes of the meeting and become part of the board records. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 1, 2024 SUBMITTED BY: Kevin Koeppen, Assistant Chief of Finance PROJECT: DIV. NO.All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Jose Martinez, General Manager SUBJECT: Annual Review of the Investment Policy (Policy No. 27) of the District’s Code of Ordinances and the Re-delegation of Authority for All Investment Related Activities to the Chief Financial Officer GENERAL MANAGER’S RECOMMENDATION: That the Board receives the District’s Investment Policy (Policy No. 27) of the District’s Code of Ordinances for review and re-delegate authority for all investment related activities to the Chief Financial Officer, in accordance with Government Code Section 53607. COMMITTEE ACTION: See Attachment A. PURPOSE: Government Code Section 53646 recommends that the District’s Investment Policy be tendered to the Board on an annual basis for review. In addition, Government Code Section 53607 requires that for the Board’s delegation of investment responsibilities to the Chief Financial Officer to remain effective, the governing board must re- delegate authority over investment activities on an annual basis. ANALYSIS: The primary goals of the Investment Policy are to assure compliance with the California Government Code, Sections 53600 et seq. The primary objectives, in priority order, of investment activities are: AGENDA ITEM 4 1. Protect the principal of the funds. 2. Remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. 3. The District’s return is a market rate of return that is commensurate with the conservative investments approach to meet the first two objectives of safety and liquidity. The government code restricts local agency investment options to a conservative list of investments, including Federal Treasuries, Federal Agencies, Callable Federal Agencies, the State Pool, the County Pool, high-grade corporate debt. Each year, staff reviews legislative updates to ensure our Investment Policy reflects the most recent and relevant updates approved by the California State Legislature. During this year’s policy review, there were no relevant legislative changes that affect our Investment Policy. On an annual basis, staff submits the Investment Policy to our list of Broker/Dealers for their professional review and to ensure they acknowledge and understand the District’s Investment Policy. This year, District Brokers/Dealers did not recommend any changes be made to our Investment Policy. Because of the District’s adherence to a conservative range of authorized investments, we have been able to maintain a healthy and diversified portfolio that meets our overall investment objectives and supports our long-term financial plans. The current policy is consistent with the current law and the overall objectives of the policy are being met; therefore, there are no recommended changes to the District’s Investment Policy at this time. FISCAL IMPACT: Joe Beachem, Chief Financial Officer None. STRATEGIC GOAL: Demonstrate financial health through formalized policies, prudent investing, and efficient operations. LEGAL IMPACT: None. Attachments: A) Committee Action B) Policy No. 27 C) Presentation Slides ATTACHMENT A SUBJECT/PROJECT: Annual Review of the Investment Policy (Policy No. 27) of the District’s Code of Ordinances and the Re-delegation of Authority for All Investment Related Activities to the Chief Financial Officer COMMITTEE ACTION: The Finance and Administration Committee recommend that the Board review the Investment Policy (Policy No. 27) of the District’s Code of Ordinances and re-delegate authority for all investment related activities to the Chief Financial Officer. NOTE: The “Committee Action” is written in anticipation of the Finance and Administration 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. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 1 of 17 1.0 POLICY It is the policy of the Otay Water District to invest public funds in a manner which will provide maximum security with the best interest return, while meeting the daily cash flow demands of the entity and conforming to all state statues governing the investment of public funds. 2.0 SCOPE This investment policy applies to all financial assets of the Otay Water District. The District pools all cash for investment purposes. These funds are accounted for in the District’s audited Comprehensive Annual Financial Report (CAFR) and include: 2.1) General Fund 2.2) Capital Project Funds 2.2.1) Designated Expansion Fund 2.2.2) Restricted Expansion Fund 2.2.3) Designated Betterment Fund 2.2.4) Restricted Betterment Fund 2.2.5) Designated Replacement Fund 2.2.6) Restricted New Water Supply Fund 2.3) Other Post Employment Fund (OPEB) 2.4) Debt Reserve Fund Exceptions to the pooling of funds do exist for tax-exempt debt proceeds, debt reserves and deferred compensation funds. Funds received from the sale of general obligation bonds, certificates of participation or other tax-exempt financing vehicles are segregated from pooled investments and the investment of such funds are guided by the legal documents that govern the terms of such debt issuances. 3.0 PRUDENCE Investments should be made with judgment and care, under current prevailing circumstances, which persons of prudence, discretion and intelligence, exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. Attachment B OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 2 of 17 The standard of prudence to be used by investment officials shall be the “Prudent Person” and/or "Prudent Investor" standard (California Government Code 53600.3) and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 4.0 OBJECTIVE As specified in the California Government Code 53600.5, when investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in priority order, of the investment activities shall be: 4.1)Safety: Safety of principal is the foremost objective of the investment program. Investments of the Otay Water District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, the District will diversify its investments by investing funds among a variety of securities offering independent returns and financial institutions. 4.2)Liquidity: The Otay Water District’s investment portfolio will remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. 4.3)Return on Investment: The Otay Water District’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the District’s investment risk constraints and the cash flow characteristics of the portfolio. 5.0 DELEGATION OF AUTHORITY Authority to manage the Otay Water District’s investment program is derived from the California Government Code, Sections 53600 through 53692. Management responsibility for the investment program is hereby OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 3 of 17 delegated to the Chief Financial Officer (CFO), who shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and their procedures in the absence of the CFO. The CFO shall establish written investment policy procedures for the operation of the investment program consistent with this policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the CFO. 6.0 ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the District. 7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Chief Financial Officer shall maintain a list of District selected financial institutions and security broker/dealers authorized and approved to provide investment services in the State of California. Investment services include the buying or selling of permissible investments such as treasuries, government agencies, etc. for delivery to the custodian bank. These may include “primary” dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3- 1 (Uniform Net Capital Rule). No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the District with the following, as appropriate: OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 4 of 17 Audited Financial Statements. Proof of Financial Industry Regulatory Authority (FINRA) certification. Proof of state registration. Completed broker/dealer questionnaire. Certification of having read the District’s Investment Policy. Evidence of adequate insurance coverage. An annual review of the financial condition and registrations of qualified bidders will be conducted by the CFO. A current audited financial statement is required to be on file for each financial institution and broker/dealer through which the District invests. 8.0 AUTHORIZED AND SUITABLE INVESTMENTS From the governing body perspective, special care must be taken to ensure that the list of instruments includes only those allowed by law and those that local investment managers are trained and competent to handle. The District is governed by the California Government Code, Sections 53600 through 53692, to invest in the following types of securities, as further limited herein: 8.01)United States Treasury Bills, Bonds, Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity limitation is applicable. 8.02)Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, may be used up to the maximum permitted by State Law (currently $75 million). The District may also invest bond proceeds in LAIF with the same but independent maximum limitation. 8.03)Bonds, debentures, notes and other evidence of indebtedness issued by any of the following government agency issuers: OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 5 of 17 Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Federal National Mortgage Association (FNMA or "Fannie Mae") Government National Mortgage Association (GNMA or “Ginnie Mae”) Federal Farm Credit Bank (FFCB) Federal Agricultural Mortgage Corporation (FAMCA or “Farmer Mac”) There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity from the settlement date limitation is applicable. Government agencies whose implied guarantee has been reduced or eliminated shall require an “A” rating or higher by a nationally recognized statistical rating organization. 8.04)Interest-bearing demand deposit accounts must be made only in Federal Deposit Insurance Corporation (FDIC) insured accounts. For deposits in excess of the insured maximum of $250,000, approved collateral shall be required in accordance with California Government Code, Section 53652. Certificates of Deposit (CD) will be made only to the FDIC-insured limit of $250,000. Investments in CD’s are limited to 15 percent of the District’s portfolio. 8.05) Commercial paper, which is short-term, unsecured promissory notes of corporate and public entities. Purchases of eligible commercial paper may not exceed 2 percent of the outstanding paper of an issuing corporation, and maximum investment maturity will be restricted to 270 days. Investment is further limited as described in California Government Code, Section 53601(h). Purchases of commercial paper may not exceed 10 percent of the District’s portfolio. 8.06)Medium-term notes defined as all corporate debt securities with a maximum remaining maturity of five years from the settlement date or less, and that meet the further requirements of California Government Code, Section 53601(k). Investments in medium-term notes are limited to 10 percent of the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 6 of 17 District’s portfolio and no more than 2 percent of the outstanding medium-term notes of any single issuer. 8.07)Money market mutual funds that invest only in Treasury securities and repurchase agreements collateralized with Treasury securities, and that meet the further requirements of California Government Code, Section 53601(l). Investments in money market mutual funds are limited to 10 percent of the District's portfolio. 8.08)The San Diego County Treasurer’s Pooled Money Fund, which is a County managed investment pool, may be used by the Otay Water District to invest excess funds. There is no percentage limitation of the portfolio which can be invested in this category. 8.09)Under the provisions of California Government Code 53601.6, the Otay Water District shall not invest any funds covered by this Investment Policy in inverse floaters, range notes, interest-only strips derived from mortgage pools, or any investment that may result in a zero-interest accrual if held to maturity. Also, the borrowing of funds for investment purposes, known as leveraging, is prohibited. 9.0 INVESTMENT POOLS/MUTUAL FUNDS A thorough investigation of the pool/fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed which will answer the following general questions: A description of eligible investment securities, and a written statement of investment policy and objectives. A description of interest calculations and how it is distributed, and how gains and losses are treated. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. A description of who may invest in the program, how often, and what size deposits and withdrawals are allowed. A schedule for receiving statements and portfolio listings. Are reserves, retained earnings, etc., utilized by the pool/fund? OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 7 of 17 A fee schedule, and when and how is it assessed. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 10.0 COLLATERALIZATION Collateralization will be required on certificates of deposit exceeding the $250,000 FDIC insured maximum. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest. Collateral will always be held by an independent third party with whom the entity has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and retained. The right of collateral substitution is granted. 11.0 SAFEKEEPING AND CUSTODY All security transactions entered into by the Otay Water District shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third-party custodian designated by the District and evidenced by safekeeping receipts. 12.0 DIVERSIFICATION The Otay Water District will diversify its investments by security type and institution, with limitations on the total amounts invested in each security type as detailed in Paragraph 8.0, above, so as to reduce overall portfolio risks while attaining benchmark average rate of return. With the exception of U.S. Treasury securities, government agencies, and authorized pools, no more than 50% of the District’s total investment portfolio will be invested with a single financial institution. 13.0 MAXIMUM MATURITIES To the extent possible, the Otay Water District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities maturing more than five years from the settlement date of the purchase. However, for time deposits with banks or savings and OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 8 of 17 loan associations, investment maturities will not exceed two years. Investments in commercial paper will be restricted to 270 days. 14.0 INTERNAL CONTROL The Chief Financial Officer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. 15.0 PERFORMANCE STANDARDS The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The Otay Water District’s investment strategy is passive. Given this strategy, the basis used by the CFO to determine whether market yields are being achieved shall be the State of California Local Agency Investment Fund (LAIF) as a comparable benchmark. 16.0 REPORTING The Chief Financial Officer shall provide the Board of Directors monthly investment reports which provide a clear picture of the status of the current investment portfolio. The management report should include comments on the fixed income markets and economic conditions, discussions regarding restrictions on percentage of investment by categories, possible changes in the portfolio structure going forward and thoughts on investment strategies. Schedules in the quarterly report should include the following: A listing of individual securities held at the end of the reporting period by authorized investment category. Average life and final maturity of all investments listed. Coupon, discount or earnings rate. Par value, amortized book value, and market value. Percentage of the portfolio represented by each investment category. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 9 of 17 17.0 INVESTMENT POLICY ADOPTION The Otay Water District’s investment policy shall be adopted by resolution of the District’s Board of Directors. The policy shall be reviewed annually by the Board and any modifications made thereto must be approved by the Board. 18.0 GLOSSARY See Appendix A. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 10 of 17 APPENDIX A: GLOSSARY ACTIVE INVESTING: Active investors will purchase investments and continuously monitor their activity, often looking at the price movements of their stocks many times a day, in order to exploit profitable conditions. Typically, active investors are seeking short term profits. AGENCIES: Federal agency securities and/or Government-sponsored enterprises. BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BROKER/DEALER: Any individual or firm in the business of buying and selling securities for itself and others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes trades for his/her firm's own account. Securities bought for the firm's own account may be sold to clients or other firms, or become a part of the firm's holdings. CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing, FDIC insured debt instrument offered by banks and savings and loans. Money removed before maturity is subject to a penalty. CDs are a low risk, low return investment, and are also known as “time deposits”, because the account holder has agreed to keep the money in the account for a specified amount of time, anywhere from a few months to several years. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: An unsecured short-term promissory note, issued by corporations, with maturities ranging from 2 to 270 days. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 11 of 17 COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the Otay Water District. It includes detailed financial information prepared in conformity with generally accepted accounting principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 12 of 17 FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures deposits in member banks and thrifts. FEDERAL FARM CREDIT BANK (FFCB): The Federal Farm Credit Bank system supports agricultural loans and issues securities and bonds in financial markets backed by these loans. It has consolidated the financing programs of several related farm credit agencies and corporations. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FAMC or Farmer Mac): A stockholder owned, publicly-traded corporation that was established under the Agricultural Credit Act of 1987, which added a new Title VIII to the Farm Credit Act of 1971. Farmer Mac is a government sponsored enterprise, whose mission is to provide a secondary market for agricultural real estate mortgage loans, rural housing mortgage loans, and rural utility cooperative loans. The corporation is authorized to purchase and guarantee securities. Farmer Mac guarantees that all security holders will receive timely payments of principal and interest. FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A stockholder owned, publicly traded company chartered by the United States federal government in 1970 to purchase mortgages and related securities, and then issue securities and bonds in financial markets backed by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is regulated by the United States Department of Housing and Urban Development (HUD). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 13 of 17 FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or Fannie Mae): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly. It is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): A government owned agency which buys mortgages from lending institutions, securitizes them, and then sells them to investors. Because the payments to investors are guaranteed by the full faith and credit of the U.S. Government, they return slightly less interest than other mortgage-backed securities. INTEREST-ONLY STRIPS: A mortgage-backed instrument where the investor receives only the interest, no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows vary between interest periods. Also, the maturity date may occur earlier than that stated if all loans within the pool are pre-paid. High prepayments on underlying mortgages can return less to the holder than the dollar amount invested. INVERSE FLOATER: A bond or note that does not earn a fixed rate of interest. Rather, the interest rate is tied to a specific interest OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 14 of 17 rate index identified in the bond/note structure. The interest rate earned by the bond/note will move in the opposite direction of the index. An inverse floater increases the market rate risk and modified duration of the investment. LEVERAGE: Investing with borrowed money with the expectation that the interest earned on the investment will exceed the interest paid on the borrowed money. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase/reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. MUTUAL FUNDS: An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 15 of 17 various investment vehicles, such as stocks, bonds, and money market instruments. MONEY MARKET MUTUAL FUNDS: An open-end mutual fund which invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. PASSIVE INVESTING: An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance, and typically don’t actively attempt to profit from short term price fluctuations. Also known as a buy-and-hold strategy. PRIMARY DEALER: A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria, including capital requirements and participation in Treasury auctions. These dealers submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission registered securities broker/dealers, banks, and a few unregulated firms. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state—the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. PUBLIC SECURITIES ASSOCIATION (PSA): A trade organization of dealers, brokers, and bankers who underwrite and trade securities offerings. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 16 of 17 RANGE NOTE: An investment whose coupon payment varies and is dependent on whether the current benchmark falls within a pre-determined range. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REGIONAL DEALER: A securities broker/dealer, registered with the Securities & Exchange Commission (SEC), who meets all of the licensing requirements for buying and selling securities. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding securities issues following their initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FAMCA, etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 09/15/93 05/05/21 Page 17 of 17 TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. INVESTMENT POLICY No. 27 April 18, 2024 Attachment C Kevin Koeppen Assistant Chief of Finance POLICY REVIEW Purpose: ➢Annual Investment Policy Review California Government Code Section 53646 ➢Delegation of Investment Authority Chief Financial Officer California Government Code Section 53607 INVESTMENT OBJECTIVES To safeguard principal, maintain liquidity, and to achieve a market investment return. ➢Fund Objectives (in order of priority) Safety Liquidity Yield POLICY CHANGES ➢Annual Legislative Review No Recommended Changes ➢California State Treasurer No Changes in LAIF Limit, currently set at $75M. DELEGATION OF INVESTMENT AUTHORITY ➢Re-delegate authority for all investment related activities to the Chief Financial Officer in accordance with Government Code Section 53607. BOARD ACTION ➢The action we are requesting today is to review and receive the 2024 Investment Policy No. 27 and to request the Re-delegation of authority for all investment activities to the District’s Chief Financial Officer. Questions?