Statement of Meetings Attended & Claim for Directors Compensation*

0 ISD directors perform valuable service at minimal cost. However, this survey reveals inconsistent behaviors regarding compliance with sound management practices.

0 Some ISDs grant monetary awards for education and training; many have inadequate evaluation of employees' degrees and certificates.

0 ISD pension awards and Other Post Employment Benefits (OPEB) have increased markedly in the last decade. Some of these awards are unfair and unsustainable. <b>Recommendation 3.1</b> All ISDs should adopt pension and OPEB plans that are fair, affordable and sustainable. CHWD Response: Agree A pension plan for CHWD employees is provided through the California Public Employee Retirement System. CHWD's CalPERS plan with a 2% at 55 (highest 12 months) retirement benefit formula was adopted in February 2001. Management will recommend that the Board of Directors evaluate providing a CalPERS plan with a 2% at 55 (highest 36 months) retirement benefit formula for new hires. CHWD Insurance Benefits for Retirees Policy No. 4831 provides OPEB benefits for retirees with a minimum length of service of 20 years. Four retirees and one surviving spouse currently receive this benefit and nine current employees meet the minimum 20-year qualifying requirement. The District's current financial participation under this Policy is dependent upon the length of employment with the District as follows: Length of Employment Maximum Monthly District Participation 20.00 years $287.00 25.00 years $323.00 30.00 years $359.00 The District has in place an Employment Related Benefits Reserve to fund this benefit. <b>Recommendation 3.2</b> To minimize unfair pension boosting, all ISDs should ensure that calculations of employees' base pension awards are on actual base salary earnings over their highest 36 months of earnings and urge CalPERS to promote this standard. <b>CHWD Response:</b> Neutral CHWD concurs that spiking of base salary earnings over a year or multiple of years prior to retirement in order to achieve a higher pension is not proper. Spiking of compensation, whether within the highest 12 months or highest 36 months of base earnings, in order to unfairly boost a retirees pension has not occurred at CHWD and is not likely to occur due to the compensation setting practices of the District. A historical accounting of salary adjustments attributed to CHWD's most recent six retirees for the three years prior to their retirement shows that the average salary increase per retiree (cost-of-living adjustments plus merit adjustments) over the three years prior to retirement was 2.79% annually and over the final year prior to retirement was 0.38%. Clearly, this level of adjustment at CHWD does not suggest a practice of increasing final years' salaries to boost pensions. CHWD conducts a salary survey at a maximum of every three years to assure or reaffirm that District base salaries and benefits are competitive within the Sacramento region. The upper end of salary ranges are pegged to the 75^th percentile of the region for all positions including executive management. Unless there were to be a significant increase in comparative salaries regionally, it would then be very unlikely for the Board of Directors to adopt (in Open Session at a Regular Meeting) a spiking of salary ranges that would lead to a pension boost for retirees. District personnel are not classified as public safety employees and, as unrepresented workers, salaries and benefits are not subject to contract negotiations. <b>Recommendation 3.3</b> All ISD pension/OPEB changes should be made only after analysis and full disclosure to all parties of the fiscal ramifications. CHWD Response: Agree All CHWD pension and OPEB policies and changes to these policies have been made by action of the Board of Directors in Open Session following analysis and full disclosure to all parties of the fiscal ramifications. <b>Recommendation 3.4</b> All ISD pension/OPEB benefits should have an employee contribution component. <b>CHWD Response:</b> Neutral The District's CalPERS Retirement Plan has an employee contribution component of 7%. The District pays the entire employee amount per CHWD Public Employees' Retirement System Policy No. 4820. Pick-up of the employee's contribution is typical of those agencies in the region with which the District benchmarks its salaries and benefits. CHWD Health Insurance Policy No. 4210 sets the upper limit on the District's contribution for employee healthcare. The maximum monthly District participation for employee health insurance premiums is typically reviewed annually by the Board of Directors. When the premium cost exceeds the limit, the employee contributes the difference. Inasmuch as the District's OPEB benefits, specifically retiree healthcare, begin to vest only after 20 years of service, requiring all employees to contribute to this benefit is not practical or equitable. As noted in the above response to Recommendation 3.1, the District sets upper limits on the agency's contribution for employee retiree healthcare. When the District's contribution exceeds the limit, the employee pays the difference.

0 The majority of the ISDs surveyed in this study are neglecting their fiduciary responsibility to taxpayers and ratepayers by excessive use of no-bid purchasing.

0 ISDs have not consistently conducted and reported required Independent Financial Audit Reports and management audits. <b>Recommendation 5.1</b> All ISDs must complete and file the required annual Independent Financial Audit. CHWD Response: Agree CHWD conducts an Independent Financial Audit annually and files copies with the State Controller's Office and the County of Sacramento Auditor- Controller's Office. Copies of the annual audit are also made available on CHWD's website. <b>Recommendation 5.2</b> All ISDs should commission a thorough periodic management audit. These audits should be completed by a multi-disciplinary team qualified to examine a district's management practices. This audit should be done in fiscal year 2011, and every four years thereafter. <b>CHWD Response:</b> Agree, with qualifications CHWD supports the concept of retaining outside consultants to provide expertise to supplement that of District personnel. To that end, the District commissioned the following two plans with direct bearing on the District's management practices: Human Resources Master Plan (2000, EMA Services, $60,000) Technology Improvements Master Plan (2001, Westin • Engineering, $89,067) These important endeavors come at a significant cost for consulting services and with a corresponding similar commitment of District employee resources. In these economic times, coupled with the intent to minimize rate increases to our customers, the District is facing choices of where to commit its financial resources and has deferred several capital infrastructure replacement projects. Continuing to defer needed improvements in favor of a management audit in 2011 is not likely. Management will recommend that the Board of Directors consider budgeting to retain a consulting firm to perform a management audit in in the future as fiscal resources and needs permit. - -