Santa Ma City of Rancho Santa Margarita January 1 August 28, 2012 Mayor L. Anthony Beall Mayor Pro Tem The Honorable*

(F3) - Content & Clarity for EMPLOYEE Compensation Cost Ratings: Twenty-nine of the thirty-four cities were rated poor non-existent for good, average, and Employee Compensation Cost Content and Clarity, all of whom could improve to excellent. Response: The City partially disagrees with this finding due to being faced with new additional "de facto" compensation reporting criteria for measuring and disclosing compensation information. Those criteria, published by the 2011-2012 Grand Jury in Appendix D of its report Transparency Breaking Up Compensation Fog - But Why Hide Pension Costs, ("Report"), were developed after the City had already posted compensation information on its website per requirements of the 2010-2011 Grand Jury. In developing City web site information dedicated to compensation, City Staff included information representative of the 2010-2011 Grand Jury's requirements; and additionally enhanced those disclosures to include all employees' applicable information, following receipt of the 2011-2012 Grand Jury's intended expansion of reporting requirements to include all employees. Furthermore, the City disclosed the same information format and content on its web site for both Executive and Employee compensation, but questions why the former disclosure was rated Excellent, while the latter was rated Poor. (F4) Finding Transparency of Employer Pension 4 Contribution Rates: Many Orange County local government web sites do not generally post their employer pension annual contribution rates prominently to their web sites as part of their compensation cost disclosure for public disclosure. Response: The City agrees with this finding and will post employer pension annual contribution rates prominently to its web site.

(F5) - Inclusion of Overtime and On-Call Pay in Employee Compensation Costs: The Orange County "de facto" standard for Compensation Cost Transparency ("CCT") in the county, cities, districts and JPA now contains all employees, including a page for executives and all elected officials. Two key categories are missing from compensation cost reporting. They are overtime pay and on-call pay. They have become important as the new "de facto" compensation cost reporting standard which now includes all employees. AUGUST 28, 2012 CHO SANTA MAR Response: The City partially disagrees with this finding due to being January 1, 200 faced with new additional "de facto" compensation reporting criteria for measuring and disclosing compensation information. Those criteria, published by the 2011-2012 Grand Jury in Appendix D of its report Transparency Breaking Up Compensation Fog - But Why Hide Pension Costs, ("Report"), were developed after the City had already posted compensation information on its website per requirements of the 2010-2011 Grand Jury. In developing City web site information dedicated to compensation, City Staff included information representative of the 2010-2011 Grand Jury's requirements; and additionally enhanced those disclosures to include all employees' applicable information, following receipt of the 2011-2012 Grand Jury's intended expansion of reporting requirements to include all employees. Furthermore, the City disclosed such information, as applicable in the "Other Pay" column of the 2010-2011 Grand Jury's Compensation Disclosure Model. RESPONSES TO RECOMMENDATIONS: