MEETING OF THE WQA ADMINISTRATIVE/FINANCE COMMITTEE

MEETING OF THE WQA ADMINISTRATIVE/FINANCE COMMITTEE TO BE HELD ON TUESDAY, MARCH 12, 2013 AT 12:00 P.M. AT 1720 W. CAMERON AVE., SUITE 100, WEST COVINA, CA 91790 AGENDA WQA Committee Members: Watermaster Liaison Member: Louie Aguiñaga, Mike Whitehead and Jim Byerrum Dave Michalko I. Discussion Regarding Board of Directors Cost of Living Adjustment ( COLA ) for Fiscal Year 2013/2014 [enc] II. Discussion Regarding Investment Policy [enc] III. Discussion Regarding Annual Membership to the SGVEP [enc] IV. Discussion Regarding Draft Budget for FY 2013/2014 [enc] V. Executive Director s Report

AGENDA SUBMITTAL To: Administrative Finance Committee From: Kenneth R. Manning, Executive Director Date: March 12, 2013 Subject: Board of Directors Cost of Living Adjustment ( COLA ) for Fiscal Year 2013-14 Each Board Member receives a fee for each day of service rendered, subject to the procedures and policies of San Gabriel Basin Water Quality Authority Administrative Procedure No. 23. Ordinance No. 2006-1 established that Board member compensation shall automatically be increased annually by the lesser of: (i) the January Consumer Price Index (CPI) for the Los Angeles- Riverside-Orange County area; or (ii) five percent (5%). This increase is effective July 1st of each year. The Consumer Price Index for All Urban Consumers ( CPI-U ), Los Angeles-Riverside-Orange County is attached to this staff report. It indicates that the CPI for January 2013 is 2.0%. As this is less than 5%, the Board member compensation shall be increased by the January CPI of 2.0%. Accordingly, the Board member compensation shall be increased from $148.24 to $151.20 effective July 1, 2013 unless the Board specifically takes action to decline the increase. Please note that the last time the Board accepted a COLA increase was July 2008; the Board has waived the COLA increases for 2009, 2010, 2011 and 2012.

Table 10. Consumer Price Index for All Urban Consumers (CPI-U): Selected areas, all items index (1982-84=100, unless otherwise noted) All items Area Pricing schedule 1 Oct. 2012 Nov. 2012 Indexes Dec. 2012 Jan. 2013 Percent change to Jan. 2013 from Jan. 2012 Nov. 2012 Dec. 2012 Percent change to Dec. 2012 from Dec. 2011 Oct. 2012 Nov. 2012 U.S. city average... M 231.317 230.221 229.601 230.280 1.6 0.0 0.3 1.7-0.7-0.3 Region and area size 2 Northeast urban... M 247.564 247.097 246.456 247.277 1.8.1.3 1.8 -.4 -.3 Size A - More than 1,500,000... M 249.046 248.964 248.239 249.154 2.0.1.4 2.0 -.3 -.3 Size B/C - 50,000 to 1,500,000 3... M 148.210 147.246 147.004 147.337 1.3.1.2 1.3 -.8 -.2 Midwest urban... M 220.375 219.483 219.033 219.282 1.3 -.1.1 1.8 -.6 -.2 Size A - More than 1,500,000... M 220.767 219.795 219.314 219.667 1.3 -.1.2 1.7 -.7 -.2 Size B/C - 50,000 to 1,500,000 3... M 141.651 141.236 140.949 140.784 1.4 -.3 -.1 2.0 -.5 -.2 Size D - Nonmetropolitan (less than 50,000)... M 217.467 216.253 215.962 217.217 1.7.4.6 1.6 -.7 -.1 South urban... M 224.504 223.404 223.109 223.933 1.6.2.4 1.7 -.6 -.1 Size A - More than 1,500,000... M 225.302 224.274 223.994 224.763 1.6.2.3 1.7 -.6 -.1 Size B/C - 50,000 to 1,500,000 3... M 142.927 142.219 142.009 142.543 1.5.2.4 1.6 -.6 -.1 Size D - Nonmetropolitan (less than 50,000)... M 230.724 229.346 229.182 230.182 1.4.4.4 1.9 -.7 -.1 West urban... M 234.966 233.206 232.029 232.759 1.7 -.2.3 1.7-1.2 -.5 Size A - More than 1,500,000... M 239.901 237.673 236.364 237.450 1.9 -.1.5 1.8-1.5 -.6 Size B/C - 50,000 to 1,500,000 3... M 140.847 140.287 139.768 139.865 1.0 -.3.1 1.3 -.8 -.4 Size classes A 4... M 211.082 210.086 209.422 210.150 1.7.0.3 1.8 -.8 -.3 B/C 3... M 142.995 142.332 142.044 142.336 1.4.0.2 1.5 -.7 -.2 D... M 225.966 224.730 224.204 224.979 1.6.1.3 1.9 -.8 -.2 Selected local areas 5 Chicago-Gary-Kenosha, IL-IN-WI... M 223.227 222.425 221.838 222.251 1.2 -.1.2 1.7 -.6 -.3 Los Angeles-Riverside-Orange County, CA... M 240.111 237.675 236.042 238.015 2.0.1.8 1.9-1.7 -.7 New York-Northern N.J.-Long Island, NY-NJ-CT-PA... M 254.277 254.285 253.555 254.807 2.2.2.5 2.1 -.3 -.3 Boston-Brockton-Nashua, MA-NH-ME-CT... 1-249.929-249.957 1.7.0 - - - - Cleveland-Akron, OH... 1-214.661-215.102 1.5.2 - - - - Dallas-Fort Worth, TX... 1-212.901-213.696 2.1.4 - - - - Washington-Baltimore, DC-MD-VA-WV 6... 1-150.646-150.845 1.8.1 - - - - Atlanta, GA... 2 212.996-211.040 - - - - 1.2 -.9 - Detroit-Ann Arbor-Flint, MI... 2 218.104-216.569 - - - - 1.4 -.7 - Houston-Galveston-Brazoria, TX... 2 204.139-202.477 - - - - 1.0 -.8 - Miami-Fort Lauderdale, FL... 2 236.793-235.023 - - - - 1.4 -.7 - Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD... 2 240.537-238.492 - - - - 1.8 -.9 - San Francisco-Oakland-San Jose, CA... 2 242.834-239.533 - - - - 2.2-1.4 - Seattle-Tacoma-Bremerton, WA... 2 241.355-237.993 - - - - 1.4-1.4-1 Foods, fuels, and several other items priced every month in all areas; most other goods and services priced as indicated: M - Every month. 1 - January, March, May, July, September, and November. 2 - February, April, June, August, October, and December. 2 Regions defined as the four Census regions. See map in technical notes. 3 Indexes on a December 1996=100 base. 4 Indexes on a December 1986=100 base. 5 In addition, the following metropolitan areas are published semiannually and appear in Tables 34 and 39 of the January and July issues of the CPI Detailed Report: Anchorage, AK; Cincinnati-Hamilton, OH-KY-IN; Denver-Boulder-Greeley, CO; Honolulu, HI; Kansas City, MO-KS; Milwaukee-Racine, WI; Minneapolis-St. Paul, MN-WI; Phoenix-Mesa, AZ; Pittsburgh, PA; Portland-Salem, OR-WA; St. Louis, MO-IL; San Diego, CA; Tampa-St. Petersburg-Clearwater, FL. 6 Indexes on a November 1996=100 base. - Data not available. NOTE: Local area indexes are byproducts of the national CPI program. Each local index has a smaller sample size than the national index and is, therefore, subject to substantially more sampling and other measurement error. As a result, local area indexes show greater volatility than the national index, although their long-term trends are similar. Therefore, the Bureau of Labor Statistics strongly urges users to consider adopting the national average CPI for use in their escalator clauses. NOTE: Index applies to a month as a whole, not to any specific date. 61 CPI Detailed Report-January 2013

WQA Board Members February 20, 2013 Agenda Submittal Investments Page 2 of 2 AGENDA SUBMITTAL To: Administrative Finance Committee From: Kenneth R. Manning, Executive Director Date: March 12, 2013 Subject: Investments Discussion WQA currently holds its investment funds in the Local Agency Investment Fund (LAIF). At both the February Administrative Finance Committee Meeting and the February Board Meeting staff reported to the Members regarding WQA s investments and available options. At the February Board Meeting, the Board instructed staff to survey local water districts to determine how other water districts are investing their funds. Attached is a survey of 13 local water districts. Many districts have most if not all of their funds in LAIF, while other districts have diversified their investment portfolios. Some districts use investment brokers, whose fees are paid through the investment side, not by the district. Other districts use asset management firms, whose fees appear to range from 10 to 20 basis points, depending on the size of the portfolio these fees are paid by the district. Recommendation / Proposed Action Staff requests that the Committee make a recommendation to bring this item to the full Board for further discussion.

SAN GABRIEL BASIN WATER QUALITY AUTHORITY SURVEY OF INVESTMENTS HELD BY LOCAL WATER DISTRICTS March 7, 2013 Percentage of Agency Name Funds in LAIF Other Investments / Comments Main San Gabriel Basin Watermaster 100% Don t usually invest in anything except LAIF unless funds are available that can be locked into a CD, T-Bill, or Gov t Agency Bond for a set term. Once a year funds are reviewed to see if anything is available for investing, but lately funds have been kept in LAIF to have it available for pre-purchases of water. Upper San Gabriel Valley Municipal Water District 100% Currently looking into getting investment management services Three Valleys Municipal Water District 0% 84% of funds are invested through Chandler Asset Management; investments are split based on the Government code and laddered out at 2 to 3 year ranges. Yield is approximately 1.1% 15% of funds are in sweep accounts in bank; the return is.3%, which is higher than LAIF's return. District is withdrawing from LAIF San Gabriel Municipal Water District 33% Short Term CDs (12-18 month terms) and Short Term Treasuries, return is slightly higher than LAIF. The District uses an investment broker - UBS Financial (Richard Ebert) Valley County Water District 91% SCE Federal CU - $250k rate is.0450% Previously used an investment broker - UBS Financial (Richard Ebert). May start using broker again Walnut Valley Water District 25% Remainder of funds are invested through Chandler Asset Management; invested in government securities, corporate notes, US Treasuries - purchase yield to maturity is 1.26% Page 1 of 3

SAN GABRIEL BASIN WATER QUALITY AUTHORITY SURVEY OF INVESTMENTS HELD BY LOCAL WATER DISTRICTS March 7, 2013 Percentage of Agency Name Funds in LAIF Other Investments / Comments Investments in the near future - Trabuco Canyon Water District $15M Bank of the West - $1.2M in bank to take advantage of earnings credit of 48 basis points (recently changed to this bank); MMA 5 basis points about LAIF: may commit about $8m over next few years Citizens Business Trust = may be able to get as high as 90 basis points if commit to long term CA-NV Section AWWA 100% MWD of So Cal 4.36% US Treasuries 18.12% Federal Agencies 48.19% Commercial Paper 6.71% Negotiable CDs 2.27% Mid Term Notes 6.77% Asset & Mortg Back Securities 5.78% Monism 7.77% Shares of Beneficial Interest 0.03% Return on Short-term =.23% Return on Long-term = 2.9% up to 12 months 13 months to 5 years Laguna Beach County Water District 20% CDs 30% Corporates 25% Agencies 10% Munis 15% Term is all between 2-5 years; return is approximately 2% Page 2 of 3

SAN GABRIEL BASIN WATER QUALITY AUTHORITY SURVEY OF INVESTMENTS HELD BY LOCAL WATER DISTRICTS March 7, 2013 Percentage of Agency Name Funds in LAIF Other Investments / Comments Irvine Ranch Water District 30-35% US Agency funds including bullets, callables and step ups B of A Treasury fund for overnight sweep of funds Eastern Municipal Water District 15% (50M) CalTrust - 15% of portfolio (both short and long term) Agencies - approximately 70% of portfolio East Orange County Water District 75% Laddered CDS - average maturity of 3 years, structured so that about $100,000 matures every 2-3 months, return approx. 1.5% overall Hired a funds manager to handle Page 3 of 3

AGENDA SUBMITTAL To: From: Administrative/Finance Committee Kenneth R. Manning Executive Director Date: March 12, 2013 Subject: San Gabriel Valley Economic Partnership Annual Renewal Discussion It is time to renew the WQA s annual membership to the San Gabriel Valley Economic Partnership (SGVEP). The WQA holds a Leader Level Membership with the annual renewal amount of $20,000. This membership has been beneficial in putting the WQA s issues out in front of the community by allowing the WQA to participate in local events with local and State legislators. Recommendation Staff recommends that the annual renewal for the San Gabriel Valley Economic Partnership go to the full Board for discussion and approval. Attachments 1. Renewal Letter and Invoice

Administrative Finance Committee March 12, 2013 Agenda Submittal - Draft Budget FY 13/14 Page 2 of 2 AGENDA SUBMITTAL To: Administrative Finance Committee From: Kenneth R. Manning, Executive Director Date: March 12, 2013 Subject: Draft Budget for FY 13/14 Discussion The budget for FY 13/14 involves the participation of several interested parties the WQA Board of Directors, the Water Producers, the Cooperating Respondents (CRs), the Water Rights Holders and the public. Attached to this memorandum is the first version of the draft budget for FY 13/14. Three (3) additional options of the same budget will be presented to help the Committee understand the implications of this draft budget and the determination of the annual assessment. One of the notable changes in this budget from the previous year is the assumption that the BPOU CRs will reimburse WQA for 25% of the costs related to The Monares Group. Last year the CRs did not contribute to these costs which are related to obtaining federal and state funding. However, staff believes that 25% would be an appropriate level of reimbursement given WQA s current effort to secure direct access energy legislation to benefit the CRs. A second updated presentation will be held at the April Administrative Finance Committee on April 9, 2013. This will be followed by a Budget Workshop/Special Board Meeting in which the budget is presented to Interested Parties and Producers. A second Budget Workshop is scheduled for the regular WQA Board Meeting on April 17, 2013. After the presentation of the draft budget on April 17, any additional comments and changes received by WQA may result in a fourth version of the budget draft. If a fourth version is necessary, it will be presented and discussed at the regular Administrative Finance Committee scheduled for May 14, 2013. At that meeting, the draft budget should be in its final version and it is anticipated that the Administrative Finance Committee will recommend submittal to the full board for approval.

Administrative Finance Committee March 12, 2013 Agenda Submittal - Draft Budget FY 13/14 Page 2 of 2 Recommendations / Proposed Actions Approve the draft budget, subject to any revisions, to be submitted to the April Administrative Finance Committee and presented at the April Informal Budget Workshop Attachments FY 12/13 Budget Draft V1, dtd 3/12/2013