Minutes of the ISD May 24, 2016 Budget Workshop Special Meeting

MINUTES OF THE BUDGET WORKSHOP

 SPECIAL MEETING OF THE BOARD OF DIRECTORS

 OF THE IRONHOUSE SANITARY DISTRICT

May 24, 2016

 

The Ironhouse Sanitary District (ISD) Board of Directors met in Special Session to hold a Budget Workshop on Tuesday, May 24, 2016.

The place of meeting was the Ironhouse Sanitary District Office at 450 Walnut Meadows Drive, Oakley, California. 

 

1.         Call to Order  

President Contreras called the meeting to order at 9:05 a.m.

 

2.         Roll Call:

 

Members present:                    David Contreras, Chris Lauritzen, Susan Morgan, Michael Painter and Doug Scheer

 

Members absent:                     None

 

Staff/Consultants present:      Chad Davisson, General Manager

Susan Walde, District Secretary

Michael Welty, Utonomy, Inc.

Dave Dal Porto, Ranch and Levee Superintendent

Chris Christean, Plant Manager

Louis Solana, Maintenance Supervisor

 

Interested parties present:       None

 

 3.        Approval of the Agenda

M/S M. Painter, C. Lauritzen and the Board voted to approve the agenda.

 

 4.        Public Comment – There were no comments from the public in attendance.

 

 5.        BUSINESS BEFORE THE BOARD

 

            A.  ISD DRAFT BUDGET WORKSHOP FOR YEAR 2016/2017

 

Mr. Chad Davisson stated that the FY 16/17 Operating Budget would be reviewed.  The Capital Improvement Plan (CIP) will be prepared and presented to the Board at a later date after the Board adopts the budget in June.  Staff is also preparing a FY 17/18 Operating Budget to bring back to the Board in July or August for review. 

Director Contreras thanked staff for the great layout and presentation given for the Board to review.  The documents and lay out were very helpful in reviewing the budget. 

 

Mr. Welty gave a presentation to the Board and staff reviewing each category with detail on each item.  The following are items with significant change that were discussed with the Board.

 

Revenue Significant Items and Assumptions:

 

Sewer Service Charge:

The budget assumes no increase in the existing rate of $658 and 51,110 EDUs to begin FY 16/17 with 150 estimated new connections in FY 16/17.

Capacity Fees:

The budget assumes 150 new connections and an increase of 2.9% in the plant capacity and Trunkline capacity fee.  These fees were approved at the May 3, 2016 Board meeting and will be go into effect July 5, 2016.

Grant Revenue:

FY 15/16 had $284,000 for grant revenue provided by the Bay Area Air Quality Management District for purchase of a JD8370 RT tractor.  Grant funds are not expected in FY 16/17.  Grant Revenue budget for FY 16/17 is zero.  Mr. Davisson informed the Board that staff is pursuing grant funding opportunities and will bring them back to the Board for approval as they are identified.

Director Contreras is very interested in continuing to pursue grant revenue.  Board discussion was held on the possibility of collecting revenue from dirt received on Jersey Island.

 

Expenses Significant Items and Assumptions:

 

Salaries and Related Expenses:

Mr. Davisson reported that the budget reflects the salary for the new position of Assistant General Manager and a vacancy for an Operator 3 at the WRF.  Staff is working with HR consultant to review options for compensation.  The current CPI is 2.7% and staff is proposing a one-time “supplemental compensation” of 3%.  This would not be an increase to employees’ base salary but would be a one-time supplemental payment only in FY2016/17.  Last year, in FY2015/16, COLA’s were given July 1, 2015 of 3% and January 1, 2016 of 2%.  It is Mr. Davisson’s understanding that this was an agreement between interim General Manager, Phil Batchelor and the Board, and was intended to address multiple years where there were no COLA increases.  Mr. Welty reported that for every 1% COLA given, there is a cost of roughly $31,000. 

Mr. Davisson reported that it is the overall vision of the GM to get to a core of highly efficient employees, and provide commensurate compensation.   

Director Scheer asked the GM if we have employees that deserve more compensation and others that are over compensated.  Mr. Davisson reported that he plans to complete a comprehensive study to determine compensation levels using appropriate comparators, etc.  He will have organizational goals, performance goals and compensate staff commensurate with their level of ability.  Director Contreras supported the General Manager’s concept.  Director Contreras stated that he does not want to invest money in a study such as the Koff study.  He supports, for FY2016/17, the General Manager’s proposed one-time supplemental compensation.  Director Contreras further stated that he thinks staff is deserving and recognizes their work. 

Director Scheer is supportive of suggested increases if the amounts are given for performance.

Director Lauritzen stated he is supportive of a system that the BOD and staff understand.  He has asked staff to remind managers to complete performance reviews.  He understand the one time compensation adjustment.  He stated that the District has not increased the cap on medical coverage for employees for a few years.  He is in favor of a 4% increase because everyone has worked hard.  He would like to consider increasing the medical coverage when it is reviewed again.  He also would like to consider having an option for staff who can get medical coverage through their spouse.

Mr. Davisson responded to the Board that the issue of the medical insurance cap and dual medical coverage has not been brought to him as a concern, as of yet, and would like the opportunity to complete the compensation analysis and work with employees to best understand the areas of compensation that are the most significant to them.  Mr. Davisson also requested that the Board support the General Manager’s recommendations related to compensation. 

Director Contreras stated he wants to compensate and recognize the hard working employees.  He made a recommendation to move forward with the recommendation made by the General Manager, fund a three percent supplemental compensation and authorize the General Manager to work with staff to give as a one-time payment while conducting a comprehensive compensation study.

Mr. Davisson thanked the Board and appreciates the Board for their support recognizing staff. 

 

Election Expense:

The budget estimates an expense of $22,000 for election of three Board of Directors.

 

Service Agreements:

The budget reflects a decrease of $39,000 for pond management.

 

Office Telephone and Internet:

The budget is reduced by $25,800 principally due to change of internet carrier.

 

Fuel:

The budget reflects a decrease of $22,900 due to actual costs.

 

Collection System and Trouble Spot Repair:

The collection system repair and trouble spot repair line items will now be combined and reflected only as collection system repair.  The combined items will be reduced by $100,000 but showed in the CIP as these expenses require capitalization.

 

Ground Maintenance:

FY 16/17 is being reduced by $35,000; FY 15/16 included a one-time Jersey Island clean-up cost of $40,000.

 

Road Repair:

Reduced by $50,000 due to Jersey Island road repair scheduled every other year.

 

WRF Maintenance and Repair:

Increased by $20,000 to reflect repair costs due to equipment aging.

 

Accounting Services:

The budget is being increased by $12,000 for special projects similar to the Jersey Island cost analysis.

Mr. Welty reminded the Board that services for RD830 are billed separately.

Director Contreras thanked Mr. Welty and stated he does a great job and brings value to the District.  He reminded the Board that the services provided by Mr. Welty were initially intended to be “temporary”.  He also stated that he would like travel and lodging expenses to be included in the total fee.

Mr. Davisson stated the financial management of the District is essential for a $10 million dollar business.  He recognizes the value Mr. Welty brings to the District and pointed out the cost savings to the District for the services provided by Mr. Welty, as compared to full-time benefitted staff.

 

Engineering Services:

This is a new line item to reflect contract services.

 

Geotechnical Services:

Budget is reduced by $15,000 to reflect actual costs.

 

Grant Development:

Costs not budgeted

 

HR Analysis and Services:

The budget for HR services is being increased by $25,000 to reflect the estimated cost as using Regional Government Services for contracted HR services.

 

Information Technology:

Budget is being increased by $28,500 to reflect additional services, which included website maintenance series.

 

Other Contracted Services:

This item is reduced by $35,000.  In FY 15/16, $50,000 was budgeted for assessment items.

 

Legal Counsel:

The budget is being reduced by $135,000, which is reflective of the District’s effort to better manage projects assigned to legal counsel and minimize the usage of attorneys.

 

Other Income Significant Items and Assumptions:

 

Cattle Sales:

Budget is being reduced by $65,000 to reflect current market prices.

 

Interest and Dividend Income:

Budget reflects an anticipated increase of $73,000 for interest and dividend income to reflect investment of cash reserves in CalTrust and fixed income securities.

 

Director Scheer stated that in the four years he has been on the Board of Directors the budget has come leaps and bounds.

 

Mr. Davisson will be bringing a 1-year budget back to the BOD in June and then in July or August a Capital Improvement Plan (CIP) budget and a second year budget to adopt.  Staff will also be developing a 5-year rate study and bring back to the Board at a later date within the Fiscal Year.

 

 6.        Adjournment

President Scheer adjourned the Workshop meeting at 11:45 a.m. to Tuesday, June 7, 2016 at 7:00 p.m. for the next scheduled regular meeting, in the Ironhouse Sanitary District offices at 450 Walnut Meadows Drive, Oakley, California.