Florin County Water District Orin Oct, 19, 1959 Aliforni Honorable Bunmi Awoniyi Presiding Judge Sacramento County*

Members of the FCWD Board of Directors have limited understanding of their duties and bicker among themselves as well as with staff, resulting in mismanagement and little planning for the future. (R1, R2, R3) Response: The FCWD Board agrees with the finding. Each member of the Board has received a copy of "The Water Board Bible - The handbook of modern water utility management" made available through the California Rural Water Association. No member of the Board has attended a formal class on the duties of the Board of Directors, however the President of the Board is scheduled to attend California Special District Association's 2024 Special District Leadership Academy San Rafael on November 3-6, 2024. Other Members of the Board will attend future sessions of this training. In terms of planning for the future, it is true that FCWD has made limited progress. The Board on several occasions discussed contracting for support in developing a Capital Improvement Plan and a Rate Study. Some progress has been made - for example, on April 22, 2024 FCWD entered into a contract with Bartle & Wells Associates to conduct a Rate Study, and FCWD has received 3 bids to prepare a Capital Improvement Plan for the District. The Board expects to approve a contract for preparation of the Capital Improvement Plan at its September 9, 2024 regular Board meeting.

FCWD management lacks professional executive experience in finance, water management, human resources, and climate change, so they are unprepared for the complexities of modern water district operations. (R4, R5, R6, R7) Response: The FCWD Board partially disagrees with the finding. The Board is in the process of recruiting a permanent General Manager. 7090 McComber Street P. [email protected] 916.383.0808 Sacramento, CA 95829-2055

FCWD Board of Directors, management, and legal counsel downplay the appearance of impropriety posed by employees directly supervising close family members, which raises questions about the integrity of the district. (R8) Response: The FCWD Board partially disagrees with the finding. California law does not prohibit the hiring of relatives and the FCWD has no adopted policy prohibiting this. As noted in FCWD's Response to Recommendation R8, FCWD will address the hiring of relatives as part of its Employee Handbook.

The FCWD Board of Directors fails to address the problems and financial risks identified in the delayed four-year fiscal audit dated October 27, 2022, so the district remains financially vulnerable. (R9) Response: The FCWD Board agrees with the finding. The FCWD Board has adopted several policies regarding financial risks. However, the Board agrees that much more remains to be done.

Because the FCWD Board of Directors fails to initiate annual audits as required by law, FCWD is unable to ensure public money is accounted for and controls are in place to protect against misappropriation and misuse. (R10) Response: The FCWD Board partially disagrees with the finding. FCWD agrees that it needs to ensure that annual audits are conducted and to have controls in place to protect against misappropriation and misuse. Some of the necessary policies have been adopted, but more are needed. FCWD Board does, however, carefully review annual budgets and engages in an open process during the noticed Board meetings at which the budget is discussed. In addition, Board members frequently ask questions concerning specific expenditures and encourage questions from the public.

The FCWD Board of Directors' disagreement about the salary increase given by the former General Manager only to himself, the Office Manager, and Superintendent (all close family members) contributes to Board conflict and paralysis. (R11) Response: Three FCWD Directors agree with the finding, and two Directors partially disagree with the finding. The audit completed in 2022 could not document a specific and distinct Board action approving certain pay increases. Staff were evaluated and salary increases were given all employees, not just to the three employees mentioned. The salaries of employees have been included in the annual budget and the budgets have been annually approved by the Board for the last 8 years. In March 2024, a new compensation study was completed by Bryce Consulting and is available for the Board and General Manager to use in setting salaries.

FCWD does not provide an adequate source of information about water operations and governance because its website is rudimentary and the only regular contact with ratepayers is the monthly bill, resulting in an uninformed customer base. (R12, R13) Response: The FCWD Board agrees with the finding. FCWD is initiating a process for working with its webmaster (Velocity Media Lab) to enhance the FCWD website, providing vital information be provided to all interested persons. In addition, the FCWD has initiated semi- 4878-8335-8423.4 009700.001 August 30, 2024 annual newsletters to all rate payers. Two issues of this newsletter have been sent January 2024 and July 2024.

Flat revenue and growing major expenses, including water meter installation and aging infrastructure replacement, threaten FCWD's financial viability. (R14) Response: Three FCWD Directors partially disagree with the finding, and two Directors agree with the finding. As outlined in the response to F1, a Rate Study has been contracted for with Bartle & Wells Associates. In addition, bids have been received to prepare a Capital Improvement Plan, and the Board expects to approve the contract for development of the Capital Improvement Plan by October 31, 2024. Water meters will be installed by 2032, when it is required for this small of a district.

Without a LAFCo review, FCWD has not benefited from an outside evaluation that would address governance, service capacity, infrastructure, and efficiencies. (R15) Response: The FCWD Board agrees with this finding. FCWD welcomes a review by LAFCo. A letter was sent on July 18, 2024 to LAFCo requesting a review based on this finding. At its meeting of August 7, 2024, LAFCo approved conducting a Municipal Services Review (MSR) for FCWD. The LAFCo commission asked for an extension to November 2025 to complete the MSR.