Santa Clara County Grand Jury
• 2005-2006
2005-2006 Santa Clara County Civil Grand Jury Report the Santa Clara Valley Water District – What’s Beneath the Surface?
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 9 findings
F1
The District generally does a commendable job of providing water, protecting watersheds, and implementing flood control in Santa Clara County.
No recommendations for this finding
F2
Voters fail to participate actively in SCVWD director elections. Many directors run unopposed and many directors serve for multiple consecutive terms. The elected directors may not represent a broad cross-section of the population.
Related Recommendations (1)
R2
Independent voter advocacy organizations, such as League of Women Voters, public forums such as the Commonwealth Club, chambers of commerce, and news media should encourage, educate, and energize the public about the importance of participating in the electoral process. This may also provide a forum for explaining and vetting SCVWD programs for a broader set of stakeholders. 23
F3
The current statutory basis of the SCVWD includes a provision for annual Board of Supervisors review of the SCVWD budget. There is an effort under way (AB 2435) to terminate this relationship between the SCVWD and the BOS.
Related Recommendations (1)
R3
The Grand Jury firmly believes that the current oversight arrangement should not be terminated. The effective management of a service as vital to the County as water cannot be improved by reducing oversight. The reality of limited voter involvement argues all the more for retaining the relationship between the SCVWD and BOS. The BOS currently plays an active role with representatives on the Board of the Valley Transportation Authority and the Grand Jury believes the SCVWD demands similar commitment. Furthermore, the Grand Jury believes this relationship should be a model for oversight of other independent special districts in the County.
F4
Currently two SCVWD directors are appointed by the BOS and yet participate in decisions about rate setting, eminent domain, taxation, and debt issuance, without direct mandate from County voters.
Related Recommendations (1)
R4
No District Board members should be appointed. The two Board positions that are currently appointed should be converted to be filled directly by County Supervisors, who are already elected by the people. Currently two BOS members serve on the Water Commission and two on the Valley Transportation Authority Board. Participation of BOS members would serve to strengthen the link between the SCVWD and the BOS to perform the budget oversight function as well.
F5
There are strongly held diverse opinions concerning the proper role of the SCVWD and its spending. Actions by the District Board have led to projects and expenditures that are not always supported by the public or by retail distributors. These have led to heated public debates about the scope and efficiency of SCVWD operations.
Related Recommendations (1)
R5
The District needs to better communicate and vet its activities with the various stakeholders and the public. Program goals should be selected through procedures that are more responsive to these views. The District has recently begun to take steps in this direction. 24
F6
Water rates have increased significantly over time. Part of this increase is caused by higher costs and part is due to Board policies regarding future projects and allocation of costs. There are rate differentials between North and South County which raise contentious issues that are not well understood.
Related Recommendations (1)
R6
The District should clarify the reasons for rate differentials and trends among users to ensure that stakeholders, including the public, have an understanding of and confidence in the equity of rate setting practices. The District should carefully prioritize its capital projects and other costs to ensure that rate increases are fully justified by needs vetted with the Water Commission and the public.
F7
Outside auditors question some financial practices of the District. Concerns include financing the unfunded balance of the District CalPERS benefits accounts, managing year-end cash balance, and controlling cash flow. Some of these issues could save the District between $800,000 and $1.6 million per year. Critics believe the District could safely increase its return on investments.
Related Recommendations (1)
R7
The District should consult outside financial advisors to be sure it is using best practice to prudently, but optimally, manage the large amount of resources it controls.
F8
There have been substantial criticisms that reserves are excessive and inadequately justified. During the last three years, reserves have dropped significantly from $580 to $320 million. The District is currently reviewing its reserve management policy.
Related Recommendations (1)
R8
The District should clearly document its reserve management policy and justify its reserve levels to stakeholders and the public. It should also reconsider and justify the balance between pay-as-you-go and debt funding of capital projects to reduce the requirements for large reserve holdings. 25
F9
The District is implementing a number of performance measurement and improvement programs that impose extra workload on the staff. The Office of Performance Excellence had a 2005 budget of over $1.2 million.
Related Recommendations (1)
R9
The District needs to refine and coordinate its various performance measurement efforts into a smaller number of focused, cost-effective programs that can offer the most useful and tangible results to influence District operational efficiency and to define objectives. PASSED and ADOPTED by the Santa Clara County Civil Grand Jury on this 26th day of May, 2006. ________________________________ Thomas C. Rindfleisch Foreperson 26
Conclusions 98
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CL1 Page 23The District generally does a commendable job of providing water, protecting watersheds, and implementing flood control in Santa Clara County.
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CL2 Page 23Voters fail to participate actively in SCVWD director elections. Many directors run unopposed and many directors serve for multiple consecutive terms. The elected directors may not represent a broad cross-section of the population.
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CL3 Page 24The current statutory basis of the SCVWD includes a provision for annual Board of Supervisors review of the SCVWD budget. There is an effort under way (AB 2435) to terminate this relationship between the SCVWD and the BOS.
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CL4 Page 24Currently two SCVWD directors are appointed by the BOS and yet participate in decisions about rate setting, eminent domain, taxation, and debt issuance, without direct mandate from County voters.
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CL5 Page 24There are strongly held diverse opinions concerning the proper role of the SCVWD and its spending. Actions by the District Board have led to projects and expenditures that are not always supported by the public or by retail distributors. These have led to heated public debates about the scope and efficiency of SCVWD operations.
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CL6 Page 25Water rates have increased significantly over time. Part of this increase is caused by higher costs and part is due to Board policies regarding future projects and allocation of costs. There are rate differentials between North and South County which raise contentious issues that are not well understood.
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CL7 Page 25Outside auditors question some financial practices of the District. Concerns include financing the unfunded balance of the District CalPERS benefits accounts, managing year-end cash balance, and controlling cash flow. Some of these issues could save the District between $800,000 and $1.6 million per year. Critics believe the District could safely increase its return on investments.
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CL8 Page 25There have been substantial criticisms that reserves are excessive and inadequately justified. During the last three years, reserves have dropped significantly from $580 to $320 million. The District is currently reviewing its reserve management policy.
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CL9 Page 26The District is implementing a number of performance measurement and improvement programs that impose extra workload on the staff. The Office of Performance Excellence had a 2005 budget of over $1.2 million.
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CL10 Page 27Access to Meetings: The Brown Act-Introduction to Open Government, California First Amendment Coalition, http://www.cfac.org/ (last visited May 18, 2006).
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CL11 Page 27Amending the California Water Code Appendix, Chapter 60, Memo, Member California Assembly, January 25, 2006.
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CL12 Page 27California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions are Questionable, California State Auditor, Bureau of State Audits, June 2004, 2003- 137.
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CL13 Page 27Countywide Water Service Review, Santa Clara County LAFCO, March 2005.
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CL14 Page 27Dollars and Sense: Financial Guidelines for Public Water Agency Officials, Assoc. of California Water Agencies, July 2005.
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CL15 Page 27Farrell, Harry, The San Felipe Story, Santa Clara Valley Water District, 1986.
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CL16 Page 27Graham, Wade, A Hundred Rivers Run Through It, Harpers Magazine, June 1998.
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CL17 Page 27History Of Water In Santa Clara County, Teacher’s Activity Guide, Santa Clara Valley Water District, Public District Education Program, November 2002
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CL18 Page 27Water in the Santa Clara Valley: A History, Second Edition, Santa Clara Valley Water District, 2005.
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CL19 Page 27Integrity and Accountability: Exploring Special District Governance, California Legislature Senate Committee on Local Government, November 24, 2003.
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CL20 Page 27Recommendations for Improving Public Water District’s Accountability, Sacramento County Grand Jury, June 30, 2003.
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CL21 Page 27Santa Clara Valley Water District, Organization and Leadership Profile, June 2004.
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CL22 Page 27Special Districts: Relics Of The Past Or Resources of the Future, Little Hoover Commission, May 2000.
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CL23 Page 27Trends In California Water Management, Robert Shibatani & Mark Horne, EIP Association, Cal LAFCO Conference, Monterey, California, September 9, 2005.
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CL24 Page 27Water Special Districts, State of California Legislative Analyst’s Office, Chapter 107, Statutes of 2001 (AB 38, Strom-Martin). 27 Documents - Continued Background:
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CL25 Page 28What Is LAFCO? California Association of Local Agency Formation Commissions, August 4, 2005.
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CL26 Page 28Mizany K and Manatt A, What’s So Special about Special Districts? A Citizens Guide to Special Districts in California, 3rd edition, February 2002.
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CL27 Page 28Reisner, Marc, Cadillac Desert, Penguin Books, New York, 1986.
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CL28 Page 28Santa Clara County Board of Supervisors, Agenda Item 12, September 15, 2005, Draft Legislation To Sever Oversight Over Santa Clara Valley Water District.
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CL29 Page 28Santa Clara County Board of Supervisors, Agenda Item 6, October 4, 2005, Potential Legislation to Delete the Requirement that the BOS Hear and Adopt the Budget of the Santa Clara Valley Water District.
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CL30 Page 28Superior Court of the State of California, County of Santa Clara, Case No. 1-05- CV-053242, First Amended Complaint For Damages, Refund, Declaratory Relief (CCP Sec 1060), Injunction And Petition For Writ Of Mandate (CCP Sec 1084), January 19, 2006.
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CL31 Page 28Santa Clara County Civil Grand Jury Final Report, 1993-1994, Review of the Santa Clara Valley Water District, June 1994. Governance:
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CL32 Page 28Boards That Make a Difference: A New Design for Leadership in Nonprofit and Public Organizations, Jossey-Bass, 1990, 1997.
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CL33 Page 28Governance Policies of the Board of Directors, Santa Clara Valley Water District, July 2005.
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CL34 Page 28Inquiry Into Santa Clara Valley Water District Public Hearings Notices Policy, 2003- 2004 Santa Clara County Civil Grand Jury, June 2004.
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CL35 Page 28Santa Clara Valley Water District Annual Summary of Executive Limitations, August 17, 2004.
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CL36 Page 28Santa Clara Valley Water District Annual Ends Report FY 2004.
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CL37 Page 2Santa Clara Valley Water District Act, California Water Code Appendix, Chapter 60 (1968).
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CL38 Page 28Santa Clara Valley Water District Act, January 2002 Amendments. 28 Documents - Continued Governance:
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CL39 Page 29Santa Clara Valley Water District Quarterly Monitoring Report FY 2006 - Quarter One. Financial:
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CL40 Page 29Santa Clara Valley Water District, Comprehensive Annual Financial Report, June 2000.
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CL41 Page 29Update on County Special Study, Santa Clara Valley Water District, July 19, 2005, Board Agenda Memo
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CL42 Page 29Santa Clara Valley Water District Reserve Summary FY 2002-03.
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CL43 Page 29Special Districts Annual Report, Senate Bill 282 – Top 250 Special Districts FY 2001-2003, Santa Clara Valley Water District, California State Controller’s Office.
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CL44 Page 29Special Districts Annual Report 2001-2003, Taxes Allocated and Levied for FY 2003-4. California State Controller’s Office.
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CL45 Page 29Retailers OH (Over Head) Cost Breakdown Analysis of SCVWD General, Equipment and Risk Funds – FY05 Operating Budget and Positions, December 10, 2004.
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CL46 Page 29Santa Clara Valley Water District Reserve Summary FY 2005.
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CL47 Page 29Santa Clara Valley Water District, Report Back On Revised State Tax Shift, Board Agenda Memo, January 18,2005
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CL48 Page 29Santa Clara Valley Water District, Midyear Water Rate Review for FY 2005-06, Water Utility Enterprise, Board Agenda Memo, October 31, 2005.
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CL49 Page 29Santa Clara Valley Water District, Water Utility Business Plan, FY 2006; September 30, 2005.
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CL50 Page 29California Governance Code, § 2900, Budget and Tax Levy.
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CL51 Page 29Proposed Memorandum County Board of Supervisors in Response to the Harvey M. Rose Accountancy Corporation’s Review of the Santa Clara Valley Water District’s FY 2005-06 Operating and Capital Budget, Santa Clara Valley Water District Board Agenda Memo, July 25, 07 [sic].
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CL52 Page 29Santa Clara Valley Water District Fiscal Year 2006 Budget, to Honorable Board of Supervisors, Santa Clara County from Chairperson, Santa Clara Valley Water District Board of Directors, July 27, 2005. 29 Documents - Continued Financial:
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CL53 Page 30Recommendations Regarding Santa Clara Valley Water District Budget 2005- 2006, Letter to the Honorable Board of Supervisors, Santa Clara County from a water retailer, August 3, 2005.
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CL54 Page 30Santa Clara Valley Water District, 2005-2006 Operating Capital Budget, District Overview.
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CL55 Page 30California State Controller’s Office, Water Activity Revenues and Expenses Section of Special Districts Annual Report 2002-03, http://www.sco.ca.gov/ard/local/locrep/districts/02-03/0203specialdistricts.pdf (last visited May 24, 2006).
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CL56 Page 30Worksheet Comparing Reserve and Bond Funding for California Water Districts with Assets over $1 Billion, Board of Supervisors, Santa Clara County Management Audit Division, January 2006.
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CL57 Page 30Comparisons Of Net Assets 2001-2004, Santa Clara County Board of Supervisors Management Audit Division, January 2006.
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CL58 Page 30Comparison Of Santa Clara Valley Water District Financial Statistics 2001-2003, Santa Clara County Board of Supervisors Management Audit Division, January 2006.
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CL59 Page 30CalPERS Prepayment Benefit, Santa Clara County Board of Supervisors Management Audit Division, January 2006.
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CL60 Page 30Municipal Bonds Learning Center, http://municipalbonds.com (last visited May 19, 2006).
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CL61 Page 30Santa Clara Valley Water District, Investment Chart: Historic yield performance of District, County and LAIF, April 17, 2006.
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CL62 Page 30Santa Clara Valley Water District, Water Rate components for North and South County, for FY 06 and proposed FY 07.
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CL63 Page 30Santa Clara Valley Water District, Summary of Revenue/Sources/Outlays/Uses, and Restricted and Unrestricted Net Assets for Water Utility fund: F 03-FY-06. Santa Clara Valley Water District:
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CL64 Page 30Government Auditing Standards, GAO-03-673G, 2003, (Yellow Book). 30 Documents - Continued Santa Clara Valley Water District:
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CL65 Page 31Letter, Santa Clara Valley Water District Cost To Produce Water On A Per Acre Foot And A Per Capita Basis, Response To Santa Clara County Civil Grand Jury Request, October 14, 2005.
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CL66 Page 31Water Utility Enterprise Final Report, September 2004.
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CL67 Page 31Water Utility Enterprise Final Report, September 2005.
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CL68 Page 7Clean Safe Creeks and Natural Flood Protection Program, Independent Oversight Report 2003-2004, no date.
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CL69 Page 7Clean Safe Creeks and Natural Flood Protection Program, Independent Oversight Report 2004-2005, no date.
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CL70 Page 31Final Water Utility Enterprise Report, August 1, 2004.
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CL71 Page 31Santa Clara Valley Water District, Santa Clara County Board of Supervisors, Joint Public Hearing On Proposed District Act Revisions and Potential Legislative Language, December 13, 2005.
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CL72 Page 31Santa Clara Valley Water District, Discussion and Strategies for State Property Tax Shift Staff Report, December 21, 2004.
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CL73 Page 31Santa Clara Valley Water District, Urban Water Management Plan 2005.
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CL74 Page 31Santa Clara Valley Water District, Administrative Policies & Procedures, February 1, 2006.
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CL75 Page 31Property Ownership Study, Santa Clara County Board of Supervisors Management Audit Division, September 1, 2005.
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CL76 Page 31Santa Clara Valley Water District, Expense Account Records 2003, 2004.
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CL77 Page 31Organizational Functions and Responsibilities, Administrative, Watershed Operations, Water Utility Enterprise, Capital Program Services, Office of Performance Excellence and CEO Support Operations, Santa Clara Valley Water District, February 10, 2006.
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CL78 Page 31Santa Clara Valley Water District, Board Monitoring of Capital Projects through Formal Board Action, February 2, 2006.
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CL79 Page 31Santa Clara Valley Water District, District Advisory Committee Profiles, February 7, 2006. 31 Documents - Continued Santa Clara Valley Water District:
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CL80 Page 32Santa Clara Valley Water District, Capital Program Process flow chart, March 20, 2006.
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CL81 Page 32Santa Clara Valley Water District, Schedule of Contracts for Personal, Professional, and Consultant Service: Procurement Service contracts, April 10, 2006.
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CL82 Page 32Santa Clara Valley Water District, Letter, Response to 2005-2006 Santa Clara County Civil Grand Jury Questions, April 10, 2006.
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CL83 Page 32Santa Clara Valley Water District, Draft Reserve Policy, Revised April 10, 2006.
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CL84 Page 32Santa Clara Valley Water District, Draft Debt Policy, Revised April 10, 2006.
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CL85 Page 32Santa Clara Valley Water District, Water Commission Report, April 12, 2006.
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CL86 Page 32Santa Clara Valley Water District, Budget Process, April, 12, 2006. Audits and Reviews:
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CL87 Page 32Santa Clara Valley Water District, Comprehensive Performance Audit of Santa Clara Valley Water District Request for Proposals (RFP), September 17, 2004.
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CL88 Page 32Santa Clara County Board of Supervisors Summary Proceedings, October 19, 2004, Item 32.
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CL89 Page 32Management Auditor’s Review of Santa Clara Valley Water District 2006 Budget Item on June 7, 2005 Agenda to the Honorable Board of Supervisors from Chairman, Santa Clara Valley Water District Board of Directors, June 6, 2005. 32 Documents - Continued Audits and Reviews:
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CL90 Page 33Santa Clara Valley Water District Budget Review Matrix, District Response to Santa Clara County Board of Supervisors Audit, August 5, 2005.
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CL91 Page 33Letter to the Santa Clara County Board of Supervisors, from The Chairman, Santa Clara Valley Water District Board of Directors, Management Auditor’s Review of Santa Clara Valley Water District FY 2006 Budget, Item on June 7, 2005 Agenda.
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CL92 Page 33Review FY 2005-2006 Santa Clara Valley Water District Operating and Capital Budget. Santa Clara County Board of Supervisors, Management Audit Division, July 12, 2005.
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CL93 Page 33Santa Clara County Board of Supervisors, Supervisorial District 3, Santa Clara Valley Water District Budget Review Matrix, Board of Supervisors Agenda, August 2005, BOS-05-106.
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CL94 Page 33Santa Clara Valley Water District Final Performance Audit Report, August 12, 2000, Malcolm Pirnie Co.
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CL95 Page 33Santa Clara Valley Water District Budget Review Matrix, Aug 5, 2005
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CL96 Page 33Santa Clara Valley Water District, Audit Committee Meeting No. 1, Red Oak Consulting, October 11, 2005.
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CL97 Page 33Santa Clara Valley Water District Comprehensive Audit, Detailed Schedule with Base Lines, Red Oak Consulting, October 17, 2005.
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CL98 Page 33Red Oak Consulting, Preliminary Draft of Santa Clara Valley Water District Comprehensive Performance Audit, Audit committee Meeting No.1; Board and CEO activities, March 24, 2006. Interviews
No Responses Found 2
Government entities assigned to respond to this report. No response documents have been linked in our database.
Santa Clara County Board of Supervisors
Elected County Office
Santa Clara Valley Water District
Special District