Director's Compensation and Expense Reimbursement Policy.*

R1

1 Directors should review their by-laws every four years to assure compliance with applicable laws, ethical practices, and appropriate behavior. Response: The Sacramento Suburban Water District's board adopted rules for proceedings states that these rules will be reviewed biennially or every two years. Staff and legal counsel reviews the proceedings and provides recommendations for Board approval. The Board's last review with adopted changes occurred on September 15, 2008. The next Board review is scheduled for the August 16, 2010 regular Board meeting with changes scheduled to be adopted at the September 20, 2010 regular Board meeting. <b>Recommendation 1.2</b> Directors should limit compensation to reasonable meeting stipends and necessary costs of professional activities. All ISD boards should ensure that their compensation practices conform to the principles in Section 5.1 of this report. Response: The Sacramento Suburban Water District has a policy in place, which is reviewed biennially, entitled "Director's Compensation and Expense Reimbursement Policy." The policy addresses the items noted in Section 5.1 (lines 299 through 306) of the Grand Jury report. The District's annually budgets for director's compensation, expenses and reimbursements through a public process. All compensation and expenses paid to a SSWD Director are reported for each director at the monthly regular Board meetings as a separate, stand-alone item in the financial report. These reports are also available on the District's web site.

R2

1 All ISDs should encourage education and training, but should not make direct monetary (cash) awards for educational achievement. Response: The Sacramento Suburban Water District (the "District") encourages all staff to participate in educational and training programs. One of the values stated in the District's Strategic Plan is to "Achieve high levels of staff professionalism through career development, including training opportunities, and retention of skilled staff with competitive compensation" and a specific goal is to "Attract and retain a well-qualified staff with competitive compensation, effective training, and professional development to ensure safe, efficient and effective job performance." The Strategic Plan is available at the District's website at <a href="http://sswd.org/reports/sswd">http://sswd.org/reports/sswd</a> strategic plan.html. The District does not provide "cash" awards for completing educational programs. To incent staff to obtain certification levels above the minimum required for a position, a nominal monetary amount is paid since this directly benefits the District and its customers by improving and enhancing District operations and efficiency. The District's training and career development program is governed by the following policies and procedures: 1) The District's Training and Career Development Policy (PL – HR 004) has been in effect since November 17, 2003. The policy, which is available at Sacramento Suburban Water District August 10, 2010 http://sswd.org/about_us/policies/PL%20- %20HR%20004%20Training%20and%20Career%20Development%20Policy%20- <u>%203%20(10-15-07).pdf</u> encourages employees to participate in educational activities to increase job proficiency and improve work force stability. The policy also authorizes the General Manager to establish a training program for required licenses/certificates and career development with reimbursement of fees, tuition and related expenses as determined and approved by the General Manager. 2) The Employee Certification and License Incentive Program Procedure (PR – HR 006) authorizes and establishes a method of providing incentive to employees to acquire additional certifications and licenses necessary to the operation of the water utility but not otherwise required for their positions. 3) In the District's Employee Policy & Procedures Manual (the "Manual"), Chapter 6 (Other Benefits and Services) details the requirements for on-duty and off-duty education and reimbursements. Participation in any off-duty education program requires the General Manager's prior approval.

R3

3 All ISD pension/OPEB changes should be made only after analysis and full disclosure to all parties of the fiscal ramifications. Response: All pension plan and OPEB changes were made after full-disclosure to the Board of Directors and the public in multiple meetings of the Board of Directors.

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. Response: In December of 2004, the District's Board of Directors adopted the policy entitled "Public Works Contracting Policy" (PL - Eng 002) that minimizes no-bid purchasing of all services necessary for the operation and maintenance of the District . The primary purpose of this policy is to provide the District's ratepayers the best value for contracts let by the District. The policy directs staff to utilize generally accepted methods to acquire competitive pricing to achieve this objective. In support of this policy, the General Manager has implemented the procedure entitled "Public Works Contracting Procedures" (PR – Eng 001) which provides the guidelines for implementing the policy of the Board. This procedure provides staff the definitions, guidelines, and criteria for using the District's various public works contracting methods which include Design/Build, Emergency, Force Account, Open Bid, Prequalification Bid, Request for Qualifications and Expression of Interest and/or Request for Proposal, Sole Source, and Solicitation of Price Quotes Contracting. The Public Works Contracting Policy can be viewed on the District's web site. In addition to the "Public Works Contracting Policy", in September of 2004, the Board of Directors approved the "Procurement Policy" (PL - Fin 005). The purpose of this Policy is to provide for the purchase of materials and trade services with the objective that they will be available at the proper time, in the proper place, in the proper quantity, in the proper quality, and at the best available price, consistent with the needs of the District. To support this policy, the General Manager has directed the implementation of several procedures which include but are not limited to "Delegation of General Manager Procurement and Public Works Contracting Authority Procedure" (PR - Fin 001), "Petty Cash Procedure" (PR - Fin 005), "Purchasing Card Procedure" (PR - Fin 003), and "Purchase Order Procedure" (PR - Fin 008). The "Procurement Policy" can be viewed on the District's web site.

R5

1 All ISDs must complete and file the required annual Independent Financial Audit. Sacramento Suburban Water District August 10, 2010 Response: An annual report has been filed every year with all regulatory, oversight, indenture, credit rating agencies, etc. District annual reports are also posted on the District's web site. District annual reports are also filed each year with the State Controller's Office and the County of Sacramento.