Board of Directors Agenda Report MEETING DATE: FEBRUARY 21, 2019 ITEM NUMBER: 10A

SUBJECT: Committee / Ad Hoc Committee / Liaison Reports DATE: February 22, 2019 FROM: Robert Ruiz, Board Chair PRESENTATION BY: Robert Ruiz, Board Chair ___________________________________________________________________ RECOMMENDATION Information item only. BACKGROUND To assure compliance with the Bagley-Keene Act, Committee reports are only for the purpose of the Committee chair, Ad Hoc Committee members or Liaison to provide a verbal update. Should the Board want to discuss any Committee work item not already on the agenda; those would need to be agendized for a future Board meeting.

i. Heroes Hall Veterans Foundation Board (Director La Belle, Chair; Vice Chair

Cervantes) ii. Financial Monitoring Committee (Director Pham, Committee Chair; Director

Mouet) iii. Legislative Monitoring Committee (Director Aitken; Committee Chair; Chair Ruiz) iv. Tenant Liaison Committee (Director Pham, Committee Chair; Vice Chair

Cervantes) v. Board of Directors Governing Policy Manual Review Ad Hoc Committee

(Director Bagneris, Committee Chair; Chair Ruiz) vi. Safety & Security Committee (Chair Ruiz, Committee Chair; Vice Chair

Cervantes)

Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER: 10B

SUBJECT: Discussion of Currently-budgeted 2019 Requests for Proposal (RFPs) for 2019 and Board Identification of 2019 RFPs that will Require Prior Board Review and Approval of Scope of Work

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Kathy Kramer, CEO ___________________________________________________________________ RECOMMENDATION Provide direction to staff on any of the Requests for Proposals (RFPs) for which the Board would like to review and approve the scope of work prior to staff releasing the RFP. BACKGROUND At the January, 2019 Board of Directors meeting, the Board indicated that it would like updates on upcoming RFPs for 2019. Staff has provided the attached list of all 2019 RFPs that were approved as part of the 2019 budget for the Board of Directors to review. To ensure that deadlines can be met and there is no interruption in contractor service and for flow of business in staff processing RFPs, staff requests the Board to identify any of the remaining 2019 RFPs for which they wish to review and approve the scope of work prior to release.

Contractor Type of Services 2014 2015 2016 2017 2018 2019 2020 Additional descriptionNew RFP/IFB Required Contract expires Status

UTP  Payroll $360,000.00

To provide payroll services for members of Local 504 of IATSE union performing work for the Pacific Amphitheatre during fair‐time and other events at OCFEC.  This is a pass through for all wages and all employee expenses and taxes. expired (1 yr only)

Executive Event Services  Gate security services  $590,000.00 Fair‐time gate security and operations. expired (1 yr only)

Lopez Works Inc. Janitorial‐ waste collection $2,749,080.00

Facility janitorial services of parking lot, power washing, haul refuse, trash pickup and removal.   Bid Released 2/28/2019 Bid released

CCS Orange County Janitorial, Inc.   DBA Commercial Cleaning Systems

Attendant services ‐ Janitorial $436,715.00 $487,655.00 $542,585.00 $569,726.85 $598,210.00

Restroom porters to service public restrooms during year‐round events and at all times during fair‐time hours when restrooms are provided. 9/30/2018 3/31/2019 Bid released

CR&A Custom, Inc. Banners and signs $156,500.00 $156,500.00 $156,500.00 $256,491.00 $156,491.00

Printing and installation of oversized signs/banners needed by the organization year‐round and fair‐time. 10/31/2018 4/30/2019

Waiting to award Bid

CR&R Incorporated Refuse disposal $178,800.00 $187,000.00 $192,610.00 $192,610.00 $192,610.00 Waste removal Service 2/14/2019 8/14/2019 Bid in progress

Coulter Associates LLC  Ride safety inspection $88,000.00 $89,000.00 $94,000.00 $97,500.00 $97,500.00

Fair‐time need and minimal year‐round need for any present carnival equipment.  Contract extension recently finalized.  Mostly a fair‐time service but contract should continue to have option of available services year‐round to perform inspection of any carnival ride or attraction as required by OCFEC. 6/30/2019 12/31/2019

3G Productions, Inc.Hangar/ASA/Plaza sound services $265,225.00 $265,225.00 $265,225.00 $265,225.00 $265,225.00

3G productions supplies audio for the Hangar stage, Heritage stage and the ASA during the annual Fair. These stages/areas require a higher level of quality designed audio to make sure our patrons have a great experience.  6/30/2019 12/31/2019

Production Resource Group, LLC 

Hangar/grounds video services $195,260.00 $195,510.00 $201,075.30 $206,810.00 $212,715.00

Video supplies video screens and services during fair‐time.  Exterior 20’ tall LED screens at the Hangar, video services for the Jr. Livestock Auction.  6/30/2019 12/31/2019

PRG (California), Inc.Grounds lighting, truss, & staging $340,570.00 $345,020.00 $351,628.51 $351,717.51 $358,461.08

Trussing, staging and lighting for fair‐time stages as well as Imaginology.   6/30/2019 12/31/2019

CWF, Inc. DBA A1 Event & Party Rental

Tenting, drapery, furniture rental $381,051.95 $381,051.95 $372,702.60 $473,088.43 $390,077.96

All tenting and tent structures, tables, chairs, pipe/drape to support fair‐time and Imaginology. 7/31/2019 1/31/2020

Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER: 10C

SUBJECT: Discussion of Currently-budgeted 2019 Capital Projects and Board Identification of 2019 Capital Projects that will Require Prior Board Review and Approval of Scope of Work

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Kathy Kramer, CEO ___________________________________________________________________ RECOMMENDATION Provide direction to staff on any of the 2019 Capital Projects for which the Board would like to review and approve the scope of work prior to staff approving the project to move forward. BACKGROUND CFFA, California Fairs Finance Authority which is responsible for our construction management, has changed its name to CCA, California Construction Authority. Any communications going forward will now use the CCA acronym. It was discussed during the January, 2019 Board of Directors meeting that the Board would like updates on upcoming Capital Expenditure (CAP EX) projects. Attached is the list of 2018 carry over CAP EX projects, as well as all 2019 CAP EX projects that were approved as part of the 2019 budget process. CCA works with staff to create a Letter of Understanding (LOU) for projects outlining the scope of work for staff review and approval. CCA facilitates and coordinates all bids from their approved vendor list. The two projects currently identified by the Board of Directors for review are the A4 Skyhawk project and the All Grounds Infrastructure Audit project. Staff is requesting that the Board identify any of the remaining 2019 CAP EX projects for which they wish to review and approve the scope of work.

CAP EX2018 Carry ‐forwardProperty survey 80,000Network server 80,000Wi‐Fi 30,000Property Signs 100,000Storm Water Infrastructure 300,000

Capital Expenditures FY2019Building 15 HVAC ‐ replace (2) units 35,000Costa Mesa bldg. ‐ Replace (2) units  70,000Huntington Beach bldg. ‐ Replace (2) units 60,000Hanger ‐ replace vestibule & office flooring  45,000Gate 10 landscaping renovation  40,000Pac Amp house lighting dimming system 125,000Asphalt repair action sport arena pit 50,000Parking lot maintenance (seal / Stripe) 150,000Repair parking Lot G (replace approx.. 150,000 900,000Exterior parking lot repairs 150,000Interior parking lot repairs 150,000Way Finding Signage 100,000

Major ProjectsSky Hawk relocation 100,000Storage facility rental 200,000Security Bollards  45,000All Grounds Audit 500,000Main gate canopy 45,000Rental building vestibule doors 40,000Replace rusted in‐grounds electrical boxes 30,000Repair rental bldg. floors ‐ crack fill / polish or s 30,000Storm Water Management 75,000

Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER:10D

SUBJECT: Approval of Centennial Farm Foundation Memorandum of Understanding (MOU)

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Michele Richards, VP Business Development ___________________________________________________________________ RECOMMENDATION At the Board of Directors’ discretion. BACKGROUND In April, 2018 staff brought a signed MOU from the Centennial Farm Foundation before the OC Fair & Event Center Board of Directors for final consideration. At that time, the Centennial Farm Foundation had accepted all of the Board’s changes to the MOU to-date with the exception of the item requiring the Foundation to consider an annual contribution of $45,000. The Foundation requested that this item be deleted from the MOU. At the April, 2018 meeting, the OC Fair & Event Center Board determined that a final MOU had previously been presented to the Centennial Farm Foundation, and no further changes would be considered. The Centennial Farm Foundation Board of Directors met on January 24, 2019 and agreed to accept the inclusion of the consideration of a $45,000 annual contribution to Centennial Farm. They did however request that the definition of the Foundation’s purpose in Section 4.b.ii be changed in order to reflect the purpose statement in the Foundation’s bylaws. The Foundation forwarded the attached signed copy of the MOU and it is ready for consideration by the OCFEC Board of Directors.

pass to District's annual county fair, which pass will may include an F Lot parking hang tag. The type and quantity of additional complimentary passes will be assessed by the District on an annual basis and shall comply with California law and District 's Ticket Distribution Policy. The distribution of passes under this section accomplishes the state publ ic purpose of supporting programs or services rendered by non-profit organizations benefiting Orange County residents.

VII . District will remit to the Foundation all cash and check contributions donated to the Foundation by guests, students, schools and visitors to the Centennial farm.

Vll!. District will provide Foundation with the following:

~ logo placement on District's Website with link to Foundation website; ~ Foundation presence in a mutually agreed location during District's annua l

county fair; ~space to conduct monthly Foundation meetings in the Silo Building

located at District' s Centennial Farm or another appropriate location on District's grounds. The Foundation's use of meeting space owned by District shall serve a public plll'pose, including promoting the mission of District in celebrating the communities, interests, agricultlll'e and heritage of Orange County;

~ reasonable space to store Foundation archives and records.

b. Foundation's Obligations:

i. District CEO or other designated member of District management team will serve as liaison to the Foundation Board of Directors.

ii. Tbe purpose and objectives of the Centennial Farm Foundation shall be solicitation, accumulation and disbursement of funds for the operation of Centennial Farm and other agricultura ll y and youth related educational programs and exhibits of the OC Fair & Event Center. The Foundation wi ll strive to create an environment conducive to maintaining and increasing levels of private support for the mission and priorities ofthe Foundations purpose. Foundation agrees to consider periodic andlor annual financial contributions of a minimum $45,000 per year for operational expenses of Centennial Farm including, but not limited to, educational materials, farm supplies, and exhibit components.

Ill. Pursuant to the Foundation's purpose, the Foundation will solicit grants, donations and other private contributions and resources for support of Centennial Farm; acknowledge and steward sucb contributions in accordance with tbe donor's intent and the Foundation's fiduciary responsibilities. Foundation will make fundraising for the financing and maintenance of Centennial Farm its primary objective. Notwithstanding the foregoing, District acknowledges that the Foundation may raise flUlds and engage in other activities to increase Foundation's revenue with no direct connection to a specific District purpose or objective, such as Foundation's operational and administrative costs, Foundation

3

Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER: 10E

SUBJECT: Update on Relocation of the A4 Skyhawk Aircraft from the County Facility in Santa Ana to the OC Fair & Event Center

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Director La Belle and Ken Karns, VP Operations ___________________________________________________________________ RECOMMENDATION At the Board of Directors’ discretion. Provide staff direction to vet the consultant proposals and have CCA enter into an agreement with the firm with the lowest qualifying proposal. Director Labelle has requested the Board of Directors discuss their vision for the new monument and provide direction to staff so the project team has a clear vision to move forward with. As an example, staff is recommending up-lighting be installed in the circular base pad and that portable benching be added around the monument to not only provide a rest area, but also flexibility to the space (renderings and photo attached). BACKGROUND At the January 17, 2019 meeting, the Board of Directors approved staff to work with CFFA to engage the services of ATI Architects & Engineers to work with staff and CFFA on the development of the scope of work related to the architecture, civil, structural and electrical engineering for the installation of the A4 Skyhawk at OCFEC. The Board of Directors also set a not to exceed budget of $20,000.00 for those services. CFFA, California Fairs Finance Authority which is responsible for our construction management, has changed its name to CCA (California Construction Authority). Any communications going forward will now use the CCA acronym. Staff moved forward with the direction given and coordinated a site meeting with CCA and ATI. On January 31, 2019 ATI provide a quote to carry out the requested

scope of work (document attached). The base quote to carry out the architecture and engineering work is $36,700.00. Staff requested CCA reach out to a second firm and get an additional quote. A site meeting with Bastien Architects has been coordinated and a meeting was held on Wednesday, February 12, 2019. Staff is awaiting their proposal. CCA has also reached out to Michael Merino Architects, the firm that did the original work for the Santa Ana Civic Center Plaza, to see if they are interested in supporting the project. Staff is providing updates to the two Board members that sit on the Heroes Hall Foundation, Director LaBelle and Vice Chair Cervantes. OCFEC and the County are working on the Memorandum of Understanding (MOU). The County created the first draft which was reviewed by staff and the Office of the California Attorney General, Joshua M. Caplan. The County is reviewing the revised document and we are awaiting comment.

Jan 31, 2019 Sean Slay Project Manager California Construction Authority 1776 Tribute Road, Suite 220 Sacramento, CA 95815

RE: OC Fair and Event Center – A4 Skyhawk Aircraft Memorial

88 Fair Drive Costa Mesa, CA 92626

ATI Ref. No. 19-017 Dear Mr. Slay, ATI Architects and Engineers (“Architect”) is pleased to present this proposal for design services on the above-mentioned projects to California Construction Authority (“Client”). The “Stakeholders” includes but not limited to OC Fair & Event Center. California Construction Authority (CCA) is also the Agency Having Jurisdiction (“AHJ”) and responsible for plan review and approval. Ken Karns (VP of Operations) and Jerry Eldridge are the OC Fair Representatives. This proposal is based on the project description we have received on our job walk on January 25, 2019, and the 2007 design drawings of the existing Memorial Plaza at OC Government Center in Santa Ana. The project is to design about 60’ diameter Memorial Plaza for A4 – Skyhawk Aircraft at OC Fair, the green space north of the Heroes Hall Museum. I. PROJECT SCOPE OF SERVICES:

The Architect will work with the Client and Stakeholders on programming and planning to provide the design and construction documents including the following consultants/disciplines.

1. Structural Engineering 2. Civil Engineering 3. Electrical Engineering

II. ARCHITECT’s BASIC SERVICES:

A. ARCHITECTURAL SERVICES: The Client will provide the Architect with topographic and underground utilities Surveys of the project site. 1. One rendering for a pedestrian level view in daylight conditions will be

provided. This includes 1 round of comments and revision. Changes of point of view may affect the proposed fee.

2. The Architect will meet with the Client and Stakeholders to discuss Project and AHJ requirements, scoping, and goals. This includes the construction budget, the overall Project schedule, Client/AHJ and

OC Fair and Event Center A-4 Skyhawk Aircraft Memorial Page 2

Stakeholders review benchmarks and dates, design components to be included in the Architect’s documents, selections of spotlight and pavement materials, and other parameters pertinent to the Project.

3. Field Investigation to verify dimensions of the aircraft and existing support structure; hidden existing conditions that may affect the design.

4. Verify the current design and program requirements. 5. Design in relation to field investigation findings. 6. Prepare Site Plan and Elevations for Client review. 7. Attend up to two design review meetings or Gotomeetings with the Client

and Stakeholders. 8. One Design iteration is included. 9. Select hardscape materials. 10. Prepare Construction Drawings and Sheet Specifications for California

Construction Authority (CCA) plan check and bidding. 11. Prepare curb and hardscape details as needed. 12. Support CCA in providing plan check corrections and responses to

bidding questions. 13. Review contractor submittals. 14. Prepare ASI and respond to RFI documents. 15. Attend up to two construction meetings.

B. CIVIL ENGINEERING SERVCIES:

1. Analyze CCA provided topo survey for design of grading & drainage (WQMP and SWPPP are not included).

2. Prepare Construction Drawings and Specifications for plan check and bidding.

3. Support CCA in providing plan check corrections and responses to bidding questions.

C. STRUCTURAL ENGINEERING SERVICES:

1. Analyze geotechnical soils reports, wind forces on the airplane, and design parameters for design of pier and foundation systems.

2. Field Investigation to determine the size, location and configuration of the support pier.

3. Prepare Structural design showing the location of reinforcement and size of anchorages required to meet the current building code requirements.

4. Prepare adequate details. 5. Put together a calculation package. 6. Prepare Construction Drawings and Specifications for plan check and

bidding. 7. Support CCA in providing plan check corrections and responses to

bidding questions.

OC Fair and Event Center A-4 Skyhawk Aircraft Memorial Page 3

8. Review contractor submittals. 9. Answer RFI’s during construction

D. ELECTRICAL ENGINEERING SERVICES:

1. Determine the detail design requirements for project power and outdoor lighting.

2. Prepare Construction Drawings and Specifications for plan check and bidding.

3. Support CCA in providing plan check corrections and responses to bidding questions.

4. Review contractor submittals.

III. ASSUMPTIONS:

A. One Construction Document/ Bid Set and one Client submittal for this project scopes.

B. The following surveys and services will be provided by the others under a separate contract with CCA: 1. Topographic survey. 2. Underground utilities survey. 3. Landscape and irrigation design services. 4. Bidding and Construction Management Services

C. Existing power panels at Heroes Hall will be used for spotlights at the Skyhawk Memorial, and there is no pole lighting required. If electrical loads readings are required to determine load capacity, they will be provided by others

D. If the scope of the project changes or expands, ATI’s fees may need to be adjusted.

IV. EXCLUDED SERVICES PROVIDED BY OTHERS:

The following services are not part of the Architect’s Base Services and are understood to be provided by others.

A. Demolition of existing A-4 Skyhawk Memorial at OC Government Center

Plaza in Santa Ana, or moving the aircraft from current location to OC Fair is out of ATI project scope.

B. Fire protection plans or Fire Department approval. C. CalGreen Commissioning documentation and Agent, if required by AHJ. D. All low voltage systems, audio-visual, data and security systems (if

utilized). E. Payment of all fees to AHJ. F. Obtain approvals and payment of fees through any other agencies. G. Administration of the Contract for Construction. H. Ramp, Stair, HVAC or plumbing design.

V. ADDITIONAL SERVICES UPON REQUEST AND AUTHORIZATION:

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The following services are not a part of the Architect’s Basic Services but can be provided or coordinated upon authorization for additional fees. A. CEQA planning and research, obtain a Negative Declaration. Additional

Consultants will be required if a full Environment Impact Report (EIR) is required.

B. Full AHJ Planning Commission hearing submittals, public presentations, public hearings, including variances. These are not anticipated with the AHJ.

C. Changes or revisions after completion of the Design iterations noted. Includes revisions to plaza area, elevations, pier design, materials of construction, structural systems, or similar. Fees for revisions based on services provided and are not to be based on the value (including either credits or adds) for the work being revised.

D. Changes or revisions for value engineering by the Client, after completion of the Design.

E. Foundation or other structural design requiring piles, geo-piers, dynamic compaction or other unusual site conditions.

F. Models, additional 3D renderings, marketing/leasing materials. G. Construction Phase services beyond the noted site visits and conference

calls noted above. H. Converting contractor field changes to CAD. I. General condition specifications. J. Cost estimating, BOMA calculations. K. Any other services not listed under the Architect's Basic Services.

VI. COMPENSATION:

A. ATI is proposing to perform Architect’s Basic Services on the above Scope of Services, the fee breakdown as following:

1. Planning and Design: $ 21,000 2. One 3D Rendering: $ 1.000 3. Construction Document: $ 13,200 4. Construction Supports (10 hours): $ 1,500

Basic A/E Services Total: $ 36,700

5. Geotechnical Survey and Report: $ 15,755 (1.15 x Ninyo & Moore’s Proposed fee)

In addition to labor fees, direct reimbursable expenses will be billed according to the attached ATI Standard Term and Conditions. ATI suggests a budget of $1,000 for these expenses.

VII. SCHEDULE: ATI will start As-built Conversion and Program Validation immediately after receiving the Fully Executed Task Order, all survey drawings and soil reports.

VIII. PAYMENTS:

A. Invoices to be sent monthly based on work completed.

OC Fair and Event Center A-4 Skyhawk Aircraft Memorial Page 5

B. Invoices are due and payable within 30 days of date of invoice. By signing this agreement Client agrees that payment on invoices is independent of Project financing and/or the Project moving forward.

IX. REIMBURSABLE COSTS:

A. Fee does not include reimbursables, including printing, plotting, mileage.

Client to pay reimbursables as additional cost. B. Reimbursables to be invoiced at 1.15 x direct costs. C. See attached ATI Standard Terms and Conditions.

X. AGREEMENT TO PERFORM SERVICES:

7/30/2018

___________________________________ ____________________________________

Bruce Gillings, Managing Principal Date Authorized representative Date ATI Architects + Engineers California Construction Authority Sincerely,

___________________________________ Jim Pan Principal Architect, AIA, LEED AP ATI Architects + Engineers Architectural License No. C26074

Cc: Ken Karns, Vice President, Operations, OC Fair & Event Center

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Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER: 10F

SUBJECT: Board Discussion on Video Recording of Board of Directors Meetings

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Kathy Kramer, CEO ___________________________________________________________________ RECOMMENDATION At the Board of Directors’ discretion. BACKGROUND Members of the Board of Directors and the public have expressed interest in live streaming and/or video recording the monthly Board of Directors meetings. This would allow anyone unable to physically attend the meeting to view it remotely or after the fact.

Board of Directors Agenda Report MEETING DATE: FEBRUARY 28, 2019 ITEM NUMBER: 10G

SUBJECT: California Department of Food and Agriculture Independent Auditor’s Report and Financial Statements for the Years Ended December 31, 2015 and 2016

DATE: February 22, 2019 FROM: Kathy Kramer, CEO PRESENTATION BY: Kathy Kramer, CEO and Bianca Kulback, Director of HR ___________________________________________________________________ RECOMMENDATION Information item only. BACKGROUND See attached:

2016 Audit Timeline California Department of Food and Agriculture Independent Auditor’s Report

and Financial Statements for the Years Ended December 31, 2015 and 2016

32nd DAA 2016 Audit Timeline  

April 27, 2017 

The CDFA Audit team conducted the 2016 audit in April of 2017.  As a part of their onsite audit and normal protocol in their audit procedures, they hold an audit exit meeting with staff and the current Board Chair at the conclusion of their onsite audit.  This audit exit meeting was held on April 27, 2017 with CEO, VP of Finance, Director of Finance, and Board Chair at the time, Nick Berardino. 

The employee separation agreement was discussed as part of the audit finding and the CDFA auditor indicated that this finding would remain an open item and needed to be discussed in more detail with his supervisor.   

January 16, 2018 

CEO received email from CDFA auditor indicating that CDFA auditor’s office leadership was in consultation with CDFA legal about the preliminary draft of the Management Report (audit report), and that they had a few more questions about the employee separation agreement.  

January 24, 2018  

CEO responded to CDFA auditor asking to schedule a call to discuss questions regarding the employee separation agreement.  CEO and Director of HR provided information via phone to CDFA auditor.    

February 16, 2018 

Director of HR sent an email to CDFA auditor advising that she had contacted CalHR as requested by the CDFA auditor during the January 24th call, and CalHR indicated they would not approve the separation agreement because they were not involved in negotiating the terms of the agreement and would not approve it after the fact.   In addition, the Director of HR indicated that she did not have any additional information regarding the employee separation agreement and they should move forward in closing the audit report.  

April 11, 2018  

CEO received an email from CDFA auditor indicating they were ready to move forward scheduling the 2017 audit as long as 32nd DAA agreed to have the contracting policies ( AB 2490) approved by the Board of Directors before July of 2018.  The CDFA auditor also indicated that during a meeting with his supervisor that they were going to change the status of one of the reportable 2016 audit items:  

 The reportable item initially was presented as ‐ 

  “Lack of Written Contracting Policies and Procedures”  

 They were going to change it to ‐ 

 “Internal Control Weaknesses in Contracting Policies and Procedures “ 

 

April 28, 2018 

We received MANAGEMENT REPORT #17‐018 from the CDFA auditor  

Their findings were indicated on pages 1 – 5 of the 2016 audit report 

Page 3 ‐ REPORTABLE CONDITIONS  

     Overpayment to a Fair Employee 

     Internal Control Weaknesses in Contracting Policies and Procedures  

This information was provided to Board Chair at the time Barbara Bagneris, CEO, VP of Finance and Director of HR.   

May 23, 2018 

Upon receipt of these findings, the 32nd DAA drafted and sent a letter to CDFA auditor in response to the audit report findings.  The letter was signed by the CEO and the Board Chair at the time, Barbara Bagneris.   

May 24, 2018   

At the May 2018 32nd DAA’s Board of Directors Meeting staff presented “Adoption of California State Assembly Bill/Contracting Policies and Procedures (AB2490)” as an action item to the Board of Directors.  It was approved by the 32nd DAA Board of Directors at the May 2018 meeting.   A copy of the board action item was sent to CDFA auditor for verification.   

September 13, 2018 

CEO received email from CDFA auditor to update the status of the 2016 audit report, he indicated it was being reviewed by CalHR before it could be finalized.   

October 2018  

The 32nd DAA received two copies of the 2016 audit report, one addressed to the CEO and the other to Barbara Bagneris, Board Chair at the time.  This MANAGEMENT REPORT #17‐018 contained an updated response from CDFA ‐ “CDFA EVALUATION OF RESPONSE” (page 10 in the audit report).  

1. CDFA acknowledged that the 32nd DAA in the future would follow CalHR’s rules and regulations going forward for any employee settlement agreement.   (This was highlighted by the 32nd DAA in the response letter dated May 23rd to CDFA auditor)  “In the future, the 32nd DAA will seek CalHR approval prior to entering into any employee separation agreements.”  

2.  CalHR Legal Division concluded that despite its illegality, the 32nd DAA likely cannot void the contract and recover the amount paid to the employee.  CalHR does agree that 32nd DAA should contact CalPERS to determine if an adjustment is necessary for the eight months of service accrued under the employee separation agreement. 

Upon receipt of the final MANAGEMENT REPORT #17‐018 in October of 2018, staff advised board leadership that they would contact CalPERS to discuss the audit findings and any action CalPERS would require to satisfy the audit findings.  At this time, is was only a recommendation by CDFA auditor as to contact CalPERS .  

32nd DAA’s HR Staff contacted CalPERS: 

November 13, 2018 

32nd DAA’s HR Representative contacted CalPERS Representative (left a voice message) 

November 19, 2018 

HR Representative emailed CalPERS Representative regarding audit report of employee overpayment 

November 21, 2018 

CalPERS Representative replied to HR Representative’s email  

November 28, 2018 

HR Representative spoke to CalPERS Representative regarding employee overpayment, discussed the matter and provided CalPERS with a copy of the Employee Separation Agreement

November 29, 2018 

CalPERS ordered the 32nd DAA to proceed with the employee’s payroll adjustment reversing the 8 months of service credit accrued. CalPERS representative stated that the agreement was placed on file.  

December 03, 2018 

The 32nd DAA Accounting Department was not able to proceed with adjustment in “my CalPERS” system, due to the employee’s “retirement status”  

December 04, 2018 

HR Representative changed status in “myCalPERS” system and the 32nd DAA Accounting Department proceeded with payroll adjustments. Retiree was notified by HR 

December 15, 2018 

CalPERS notified HR Representative that the adjustments were keyed into their system  

 

January 02, 2019 

Reimbursement check was issued to employee for CalPERS withholdings (employee contributions) that employee had paid into CalPERS during the 8 months of the employee separation agreement.  

 

January 03, 2019 

Reimbursement check was hand delivered to employee by HR Representative  

Background 

As a matter of background, and was included in the 32nd DAA’s response to CDFA audit findings, in the letter dated May 23, 2018; the 32nd DAA had facilitated numerous employee separation agreements dating back to 2008 to the current agreement.  Some of these agreements were approved by CalHR and some approved by 32nd DAA’s previous outside counsel.   

The 2016 audit report was the first time that an employee separation agreement had been flagged by the CDFA auditor as part of their annual audit process or findings.  The employee separation agreement template used to facilitate this agreement, was created from a previously approved CalHR separation agreement template.