2021_05_06_specialThursday, May 6, 2021
Board of Directors Special Meeting
Time: 5:30 P.M.
IMPORTANT NOTICE REGARDING MAY 6, 2021 SPECIAL MEETING
This meeting is being conducted utilizing teleconferencing and electronic means consistent
with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-
19 pandemic.
***
The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which
will be made available at the start of the meeting) or by visiting
www.youtube.com/CostaMesaSanitary. In accordance with Executive Order N-29-20, the
public may only view the meeting online and not in the District's Board Room.
***
To participate in the meeting by computer:
1. Copy and paste the following into your browser - https://us02web.zoom.us/join
2. Enter the Meeting ID number - 857 0005 5196
3. Click "Join."
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To join the meeting with a mobile device:
1. Download the Zoom app at the Google Play Store (for Android devices) or the App Store
(for Apple devices)
2. Open the Zoom app. Select "Join a Meeting."
3. Enter Zoom Meeting ID. Select "Join Meeting."
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To join the meeting by phone:
1. Call 1-669-900-6833.
2. You will be asked to enter the Meeting ID number. Dial 857 0005 5196#
3. Lastly, you will be asked to enter your Participant ID. Press the # symbol again to bypass
this step.
***
Public Comments: Members of the public can submit any comments in writing for the Board
of Directors' consideration by sending them to the District Clerk, Noelani Middenway, at
nmiddenway@cmsdca.gov. Those comments will be made part of the official public record of
the meeting.
***
Obtaining Agenda Materials: The public is entitled to copies of all documents that are made
part of the agenda packet. If any document or other writing pertaining to an agenda item is
distributed to all or a majority of the Board after the packet is prepared, a copy of that
writing may be obtained from the District Clerk's Office.
***
In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48
hours prior to meeting if assistance is needed (28 CFR 35.102.35.104 ADA Title II).
A. Opening Items
1. Call to Order
2. Roll Call - (If absences occur, consider whether to deem those absences excused based on facts
presented for the absence – such determination shall be the permission required by law.)
B. Public Comments
1. Public Comments - This time has been set aside for persons in the audience to make the Board of
comments on items within the subject matter jurisdiction of the Costa Mesa Sanitary District that are
not listed on this agenda. Members of the public will have the opportunity to address Directors about
all other items on this agenda at the time those items are considered. Under the provisions of the
Brown Act, the Board of Directors is prohibited from taking action on oral requests but may refer the
matter to staff or to a subsequent meeting. The Board of Directors will respond after public comment
has been received. Please state your name. Each speaker will be limited to four (4) continuous
minutes.
C. Discussion Items
1. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23
D. Closing Items
1. Oral Communications & Director Comments
2. Adjourn
Thursday, May 6, 2021
Board of Directors Special Meeting
Time: 5:30 P.M.
IMPORTANT NOTICE REGARDING MAY 6, 2021 SPECIAL MEETING
This meeting is being conducted utilizing teleconferencing and electronic means consistent
with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-
19 pandemic.
***
The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which
will be made available at the start of the meeting) or by visiting
www.youtube.com/CostaMesaSanitary. In accordance with Executive Order N-29-20, the
public may only view the meeting online and not in the District's Board Room.
***
To participate in the meeting by computer:
1. Copy and paste the following into your browser - https://us02web.zoom.us/join
2. Enter the Meeting ID number - 857 0005 5196
3. Click "Join."
***
To join the meeting with a mobile device:
1. Download the Zoom app at the Google Play Store (for Android devices) or the App Store
(for Apple devices)
2. Open the Zoom app. Select "Join a Meeting."
3. Enter Zoom Meeting ID. Select "Join Meeting."
***
To join the meeting by phone:
1. Call 1-669-900-6833.
2. You will be asked to enter the Meeting ID number. Dial 857 0005 5196#
3. Lastly, you will be asked to enter your Participant ID. Press the # symbol again to bypass
this step.
***
Public Comments: Members of the public can submit any comments in writing for the Board
of Directors' consideration by sending them to the District Clerk, Noelani Middenway, at
nmiddenway@cmsdca.gov. Those comments will be made part of the official public record of
the meeting.
***
Obtaining Agenda Materials: The public is entitled to copies of all documents that are made
part of the agenda packet. If any document or other writing pertaining to an agenda item is
distributed to all or a majority of the Board after the packet is prepared, a copy of that
writing may be obtained from the District Clerk's Office.
***
In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48
hours prior to meeting if assistance is needed (28 CFR 35.102.35.104 ADA Title II).
A. Opening Items
Subject 1. Call to Order
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type
A. Opening Items
Robert Ooten, President
Michael Scheafer, Vice President
Arlene Schafer, Secretary
Arthur Perry, Director
Brett Eckles, Director
Subject 2. Roll Call - (If absences occur, consider whether to deem those
absences excused based on facts presented for the absence – such
determination shall be the permission required by law.)
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type Procedural
B. Public Comments
Subject 1. Public Comments - This time has been set aside for persons in the
audience to make the Board of comments on items within the subject
matter jurisdiction of the Costa Mesa Sanitary District that are not
listed on this agenda. Members of the public will have the opportunity
to address Directors about all other items on this agenda at the time
those items are considered. Under the provisions of the Brown Act, the
Board of Directors is prohibited from taking action on oral requests but
may refer the matter to staff or to a subsequent meeting. The Board of
Directors will respond after public comment has been received. Please
state your name. Each speaker will be limited to four (4) continuous
minutes.
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type
C. Discussion Items
To: Board of Directors
Via: Scott Carroll, General Manager
From: Kaitlin Tran, Finance Manager
Date: May 6, 2021
Subject: Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23
Summary
On April 13, 2021, staff presented to the Board the Preliminary Biennial Budget Review for Fiscal Year 2021-22 and
Fiscal Year 2022-23. In the Analysis section of this report, you will find staff’s response to the comments and
questions from the Board at the Study Session Meeting. In addition, attachments A, B, C and D have been updated
after the Study Session Meeting.
General Fund Revenue:
Beginning of FY 2019-20 budget, the District created a General Fund to account for the unrestricted financial
resources of the general government. These unrestricted resources consist primarily of general property taxes
and investment earnings. Staff is assuming a 2% increase in property tax revenue each year. The proposed
preliminary property tax revenues are $333,000 and $340,000 for FY 2021-22 and FY 2022-23, respectively.
Property tax revenues are unrestricted revenues previously recorded in the Solid Waste Fund for rate
stabilization. Staff is proposing the Board to continue to transfer this revenue to the Solid Waste Fund through
this budgetary process. If more revenue is received than the budgeted amount at fiscal year-end, staff
recommends the Board of Directors transfer the revenue, as per the District goal, to either the Solid Waste or
the Wastewater Fund.
Preliminary Budget FY 2021-22:
The total preliminary budget for FY 2021-22 is $13,214,400. The Solid Waste Fund preliminary budget of
$6,604,400 assumes that expenses will exceed revenues by $357,800 creating a deficit requiring the use of
reserves to balance the budget. Deficit spending has been a practice of the District for the last seven years.
The Board approved lowering the trash rate in 2013 and 2014 to reduce the solid waste reserve balance. Using
funds from the reserve balance helped stabilize the trash rate after implementing the Organics Recycling
Program in 2015.
CR&R submitted a 5.6% CPI rate increase request on March 29, 2021. The District is in the process of auditing
the hauler's revenue to verify CR&R’s profit margin prior to having the Board of Directors approve or reject the
request. The preliminary budget does not reflect the 5.6% CPI request from CR&R.
The Wastewater Fund preliminary budget of $6,277,000 assumes that expenses will exceed revenues by
$313,200 creating a deficit requiring the use of reserves to balance the budget. The FY 2017-18 was the final
year of the five year 2%rate increase from the 2012 Sewer Rate Study adopted by the Board The District is
Subject 1. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and
Fiscal Year 2022-23
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type Discussion
Goals 8.2 Finance - Adopt a balanced budget
8.0 Finance
year of the five-year 2% rate increase from the 2012 Sewer Rate Study adopted by the Board. The District is
planning to conduct a wastewater rate study in FY 2021-22.
Preliminary Budget FY 2022-23:
The total preliminary budget for FY 2022-23 is $13,395,300. The Solid Waste Fund preliminary budget of
$6,779,900 assumes that expenses will exceed revenues by $136,300 thus creating a deficit requiring the use
of reserves to balance the budget. According to the Solid Waste Rate Study, dated February 2019 by the
consulting firm, NBS, revenue would exceed expenditures by the fifth year (FY 2023-24) of the five-year rate
adjustment. The study projected the District would have a deficit spending of $10,400 in FY 2022-23; however,
staff is estimating the deficit will be much higher due to the COVID-19 pandemic, reduced investment earnings,
and the 5.8% CPI increase CR&R received in FY 2019-20.
The preliminary Wastewater Fund budget of $6,275,400 assumes that expenses will exceed revenues by
$203,400 thus creating a deficit which will require the use of reserves to balance the budget. As mentioned
previously, a wastewater rate study will be conducted in FY 2021-22 to determine an appropriate rate
adjustment starting FY 2022-23 that could make up the deficit. The preliminary budget does not include two
additional wastewater maintenance workers and new equipment as presented to the Board on March 9, 2021.
Capital Improvement Projects:
Staff is requesting $1,802,000 and $1,767,000 for Capital Improvement Projects (CIP) for fiscal years 2021-22
and 2022-23, respectively. Incomplete projects in FY 2020-21 will be requested to be carried forward into FY
2021-22.
Recommendation
That the Board of Directors provide feedback to staff regarding the proposed preliminary Biennial Budget for the
Fiscal Years 2021-22 and 2022-23.
Analysis
The following information is in response to the Board of Directors inquiries and comments from the April 13, 2021
study session meeting and updates staff made after the meeting.
1. Under Professional Services, Staff reduced the Solid Waste Consulting Services budget from $45,000 to
$30,000 in FY 2021-22 and FY 2022-23.
2. Compensated Absences: A term used in accounting that refers to employees' time off with pay for vacations,
holidays, and sick days. Companies that are obligated to pay for these days off are required by the matching
principle to record the expense for these fringe benefits when the employees are working, since the benefits
are a part of the employees' compensation.
The expense is recorded at the end of each fiscal year by debiting compensated absences expense and
crediting a liability account, compensated absences payable. When an employee leaves District employment or
retires they are paid for the benefits not used while employed, which reduces the compensated absence liability
account balance.
The District’s full-time employees with an average workweek of 40 hours shall receive vacation. The maximum
amount of vacation time a full-time employee may accrue is based on years of service. The compensated
absences will increase due to an employee’s longevity and additional staff. The longer the employee works with
the District, the higher vacation accrual the employee receives. Due to the Covid-19 restrictions, staff have
deferred vacation days resulting in higher vacation hours accrued as of the third quarter of FY 2020-21. As staff
begins to take vacations and reduce their vacation bank, the compensated absences liability will be reduced
and be reflected in the FY 2021-22 and FY 2022-23 budget.
How are compensated absences calculated?
The compensated absences are the accumulated unpaid vacation amounts that employees accrued. At the
end of each fiscal year, staff calculate the compensated absences liability amount and posts the current liability
in the financial records. The amount will be charged to compensated absences payable. This information can
be found in the Comprehensive Annual Financial Report (CAFR)CAFR FY 2019-20 page 28
be found in the Comprehensive Annual Financial Report (CAFR), CAFR FY 2019 20 page 28.
To compute the amount, take the accumulated unused hours at year-end and multiply by the pay rate of each
employee as shown below:
How are the compensated absences distributed among Solid Waste and Wastewater Funds?
Compensated absences are distributed based on the employee payroll distribution percentage. For example,
Wastewater Staff compensated absences are charged 100% to the Wastewater Fund. Code Enforcement
Officer is charged 100% to the Solid Waste Fund. The Accounting Clerk is charged 20% to the Solid Waste and
80% to the Wastewater Fund. Staff considers recent events and past employee behavior to project the District’s
compensated absences liabilities for FY 2021-22 and FY 2022-23 to be $43,000 and $43,700; respectively.
3. Staff at their top salary range: Currently all staff are within their salary ranges. Assuming staff will get the
maximum merit increase of 5% and no promotion or reclassification. Three staff members will be at their top
salary range in FY 2021-22, six staff members in FY 2022-23 and the same six staff members in FY 2023-24.
4. What are the District’s actual expenditures in the past three years? The Board of Directors requested to
see the actual expenditures of the last three fiscal years. Staff attached the actual spending for FY 2017-18 to
FY 2019-20, year-to-date current FY 2020-21, and preliminary budget FY 2021--23 for comparison (Reference
Attachment E).
5. CR&R and Employee’s Consumer Price Index (CPI) Calculations:
Employee’s CPI - Based on the District’s policy, employees receive a salary adjustment equal to the February-
to-February Consumer Price Index (CPI) for Los Angeles, Long Beach, and Anaheim (reference Exhibit 1.1, 1.2
and 1.3).
Step 1. 281.347/278.657 = 1.009653
Step 2. 1.009653 - 1 = 0.009653
Step 3. 0.009653 x 100 = 0.97 (round up = 1%)
Exhibit 1.1
Exhibit 1.2
Exhibit 1.3
CR&R CPI - CR&R also uses the February to February Los Angeles-Long Beach-Anaheim area index as
employee’s CPI. However, there are two differences:
a) CR&R uses a 24-month period.
b) CR&R uses a different method to compute. They are using the average of the 24 months to
compute.
If CR&R uses the same method as employee’s CPI Calculation (same as the Bureau of Labor) it would
be as follows and the CPI should be 4.35%.
6. How much in monetary value did the 5.8% CR&R CPI increase cost the District? As a result of the 5.8%
increase in CR&R rates, the District paid an additional $307,206 in FY 2019-20 and an additional $227,954 FY
2020-21 (July-March 2021). (Reference Exhibit 1.4 and 1.5)
7. Solid Waste/Recycling tonnage- The proposed Preliminary Budget for FY 2021-22 and FY 2022-23 Staff
assumes CR&R rates remain the same.
Trash Hauler- Staff assumes a 0.2% increase in occupancy account from FY2020-21 to FY 2021-22,
resulting in 23,028 accounts. Also, a 0.5% increase in occupancy account in FY 2022-23, will result in 23,143
accounts. Therefore, the preliminary budgets for the Trash Hauler account are $2,863,800 and $2,878,100 for
FY 2021-22 and FY 2022-23, respectively.
If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new hauler rate will be
$10.9439 per occupancy account and the FY 2021-22 and FY 2022-23 estimated costs will be $3,024,200
and $3,039,300, respectively. (Reference Exhibit 1.6)
Recycling/Disposal - In FY 2019-20 the Recycling tonnage increased 3.9% from the previous FY with the
total tonnage of 34,062 (Exhibit 1.4). Staff assumes the FY 2020-21 tonnage overall will increase 3% by the
fiscal year-end and a 4% increase in the next two fiscal years. Therefore, the preliminary budgets for the
Recycling Tonnage account are $2,006,800 and $2,089,200 for FY 2021-22 and FY 2022-23, respectively
(Exhitbit 1.6).
If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new Recycling Disposal rate
will be $58.06 per ton and the FY 2021-22 and FY 2022-23 estimated costs will be $2,119,200 and
$2,206,300, respectively. (Reference Exhibit 1.6)
Organics Disposal- In FY 2019-20 the Recycling tonnage increased 8.6% from the previous FY with the total
tonnage of 10,608 (Exhibit 1.4). Staff assumes the FY 2020-21 tonnage overall will increase 8% by the fiscal
year-end and will continue the 8% increase in the next two fiscal years. Staff anticipates the implementation of
the SB1383 will continue to increase the organics disposal tonnage. Therefore, the preliminary budgets for the
Organics Disposal are $938,100 and $1,013,700 for FY 2021-22 and FY 2022-23, respectively (Exhibit 1.6).
If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new Organics Disposal rate
will be $79.89 per ton and the FY 2021-22 and FY 2022-23 estimated costs are $990,600 and $1,070,500,
respectively (Exhibit 1.6).
If the 5.6% CPI rate increase is approved, the estimated total costs for the Trash Hauler, Recycling Disposal
and the Organics Disposal will increase $325,300 and 335,100 in FY 2021-22 and FY 2022-23, respectively
(Exhibit 1.6).
8. Shredding and Cardboard Recycling events- The Board requested to see the cost's breakdown of the
Shredding and Cardboard Recycling events The Management Analyst estimated the costs for the two events
Shredding and Cardboard Recycling events. The Management Analyst estimated the costs for the two events
below (Exhibit 1.7). While waiting for these events to take place, residents can drop-off cardboard at the
Orange Coast Recycling Center year-round free of cost. The costs below are based on information obtained
from the City of Newport Beach for conducting a shredding event in the city. Staff believes the location rental
fee and labor costs could be reduced and/or eliminated because the City of Costa Mesa has agreed to partner
with CMSD on both events. The events will be held at the City's Corporate Yard, and they have agreed to
provide staffing, at city costs, to the events. Partnering with the City of Costa Mesa was suggested by the
Citizens Advisory Committee after staff presented concept of both events to the Committee on March 10, 2021.
9. Board Membership Dues and Development- The California Special District Association Annual Conference
and Leadership Summit are budgeted for five Board members to attend. Staff will remove the budget amount
accordingly if the Board of Directors opt out on attending the conference, see Attachment A, page 11 and
Attachment B, page 11 for details. Board members are members of the Solid Waste Association of North
America (SWANA), which is a national organization that focuses on solid waste and recycling trends nationally.
The membership cost is $1,500. Staff believes the District can cancel SWANA membership and still receive
important solid waste and recycling information by being a member of the California Resource Recovery
Association (CRRA) and attending the Southern California Waste Management Forum (SCWMF). Membership
to CRRA is $250 and attending SCWMF is $100 annually.
10. What are the costs for each future item staff would like to budget?
Total Solid
Waste
Waste
Water
2 new Wastewater Staff $ 265,300 $ -$ 265,300
Combo Cleaning Truck 450,000 -450,000
Additional Work Stations (2) with AutoCAD (1)4,000 -4,000
Pickup Truck 75,000 -75,000
Additional County Radios (2)12,000 -12,000
Additional Nozzles with Camera (1)10,000 -10,000
Risk & Resilience Assessment (RRA)25,000 -25,000
Integrate CMMS into the CCTV setup 56,000 -56,000
Boardroom AV Upgrades - Camera Upgrades 40,000 4,000 36,000
Employee Engagement Survey 25,000 2,500 22,500
Full-time Code Enforcement 66,000 66,000 -
Promotion Administrative Staff 5,000 4,000 1,000
Springbrook Cloud Upgrade 40,000 4,000 36,000
Sustainability Checklist Program 5,000 5,000 -
$
1,078,300 $ 85,500 $ 992,800
Legal Review
File Attachments
Attachment A FY 2021-22 Preliminary Budget.pdf (1,048 KB)
Attachment B FY 2022-23 Preliminary Budget.pdf (862 KB)
Attachment C - Solid Waste- General Fund- Wastewater Fund Balance Projections.pdf (893 KB)
Attachment D - Fund Balance Projects If CRR 5.6 and Add't Staff Equip Added.pdf (735 KB)
Attachment E - Actual Expenditures FY 2017-18 -FY 2020-21.pdf (720 KB)
Attachment F - CR&R Costs History.pdf (666 KB)
Attachment G - CR&R Occupancy & Tonnage History.pdf (659 KB)
Not applicable.
Environmental Review
Subject activity is exempt from the requirements of the California Environmental Quality Act (CEQA) (Public
Resources Code Section 21000 et. seq.). Section 15300.4 of CEQA allows an agency while establishing its own
procedures “to list those specific activities which fall within each of the exempt classes”, and the District has adopted
“CEQA Guidelines and Implementing Procedures” that state on page 6 “”Projects” does not include …. C. Continuing
administrative or maintenance activities.”
Financial Review
The report attachments include details for the following:
1. Attachment A - FY 2021-22 Preliminary Budget
2. Attachment B - FY 2022-23 Preliminary Budget
3. Attachment C - Solid Waste- General Fund- Wastewater Fund Balance Projections
4. Attachment D - Fund Balance Projects CRR 5.6 and Add't Staff Equip
5. Attachment E - Actual Expenditures FY 2017-18 -FY 2020-21
6. Attachment F - CR&R Costs History
7. Attachment G - CR&R Occupancy & Tonnage History
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the May 6, 2021
Board of Directors Special Meeting at District Headquarters and on District website at
www.cmsdca.gov.
Alternative Actions
1. Refer the matter back to staff for additional information.
D. Closing Items
Subject 1. Oral Communications & Director Comments
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type
D. Closing Items
Subject 2. Adjourn
Meeting May 6, 2021 - Board of Directors Special Meeting
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Type Procedural