Fair Oaks Water District Response To the Findings and Recommendations From the Survey of Independent Special Districts*

R1

1 Directors should review their by-laws every four years to assure compliance with applicable laws, ethical practices, and appropriate behavior. <b>FOWD Response:</b> FOWD currently complies with this recommendation. Directors at FOWD are required to complete ethics training. In addition, the District policies are updated as required to meet changes in the law or issues at the District. The District does not wait any set period to make changes that are required to ensure positive and ethical leadership at the District. Updates to District policies are reviewed by the current General Counsel for the District.

R2

2 All ISDs should recognize educational degrees and certificates only if they meet the criteria listed in Section 5.3.1. <b>FOWD Response:</b> FOWD currently complies with this recommendation. - 2 - Many positions at the FOWD have specific employment requirements that may include educational degrees and certificates. These requirements are clearly listed in the job description for all positions at the FOWD. All FOWD job descriptions can be found on the FOWD website, along with pay ranges for every FOWD job classification including the General Manager. Since 2004 FOWD has a record of enforcing the minimum requirements for working at the District, which includes litigation against two former senior managers for the misuse of $1,200 in public money to buy bachelor's degrees from an online diploma mill.

R3

1 All ISDs should adopt pension and OPEB plans that are fair, affordable and sustainable. <b>FOWD Response:</b> FOWD currently complies with this recommendation. FOWD currently participates in the PERS retirement program at the industry standard level of 2% @ 55 based on the average of the three highest paid years. FOWD does not provide any other post-employment benefits at this time.

R4

1 Every ISD in Sacramento County should establish and adhere to a goal of minimizing no-bid purchasing. Essentially all purchases except utilities and emergency construction should be by contracts awarded to the lowest responsive responsible bidders. <b>FOWD Response:</b> FOWD currently complies with this recommendation. FOWD Policy No. 5110 is titled "Procurement". The purpose of this policy is to provide FOWD with general guidelines to manage the procurement, lease and rental of equipment, supplies and services from outside suppliers. District employees are required to implement a competitive bidding program which is in the best interests of the FOWD ratepayers. The District includes professional consultant selection in the competitive selection program. FOWD has a contract for professional legal services. The award of this contract was made by competitive process. All attorneys providing services under this contract complete an FPPC Form 700 and provide a written copy to FOWD. FOWD has a contract for financial audit services. The award of this contract was made by competitive process. The principle members of the team providing services under this contract complete an FPPC Form 700 and provide a written copy to FOWD. FOWD does not have any contracts for professional services with a firm that has ownership interest with a family member of any current FOWD Director or employee. Since 2004, FOWD has never had a contract of this type.

R5

1 All ISDs must complete and file the required annual Independent Financial Audit. <b>FOWD Response:</b> FOWD currently complies with this recommendation. - 4 - FOWD completes an annual Independent Financial Audit and presents the results at a public meeting every year. In addition, a copy of the audited Comprehensive Annual Financial Report is sent to the County of Sacramento Chief of Audits and the Office of the State Controller every year. FOWD annual financial reporting has been recognized and awarded by the Government Financial Officers Association every year since 2004. Current and historic Audited Comprehensive Annual Reports are available on the District's website.

R6

1 SacLAFCo must conduct, and review as necessary, the state mandated Municipal Service Reviews for every ISD. FOWD Response: SacLAFCO has recently scheduled a Municipal Service Review of FOWD. FOWD staff is fully cooperating with the MSR process.