Agenda packet, first session — Modesto City Council, April 5, 2022 (part 5 of 6)

Grantee’s knowledge of the claim. State and Grantee shall then attempt to negotiate a resolution of such claim and process an amendment to the Grant Agreement to implement the terms of any such resolution.

D.28) NONDISCRIMINATION: During the performance of this Grant Agreement, Grantee and its contractors or subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex (gender), sexual orientation, race, color, ancestry, religion, creed, national origin (including language use restriction), pregnancy, physical disability (including HIV and AIDS), mental disability, medical condition (cancer/genetic characteristics), age (over 40), marital status, and denial of medial and family care leave or pregnancy disability leave. Grantee and its contractors or subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Grantee and its contractors or subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code §12990 (a-f) et seq.) and the applicable regulations promulgated there under (California Code of Regulations, Title 2, §7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code §12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Agreement by reference and made a part hereof as if set forth in full. Grantee and its contractors or subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.

Grantee shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Grant Agreement.

D.29) NO DISCRIMINATION AGAINST DOMESTIC PARTNERS: For contracts over $100,000 executed or amended after January 1, 2007, the Grantee certifies by signing this Grant Agreement, under penalty of perjury under the laws of State of California that Grantee is in compliance with Public Contract Code §10295.3.

D.30) OPINIONS AND DETERMINATIONS: Where the terms of this Grant Agreement provide for action to be based upon, judgment, approval, review, or determination of either party hereto, such terms are not intended to be and shall never be construed as permitting such opinion, judgment, approval, review, or determination to be arbitrary, capricious, or unreasonable.

D.31) PERFORMANCE AND ASSURANCES: Grantee agrees to faithfully and expeditiously perform or cause to be performed all Project work as described in Exhibit A (Work Plan) and to apply State funds received only to Eligible Project Costs in accordance with applicable provisions of the law.

D.32) PRIORITY HIRING CONSIDERATIONS: If this Grant Agreement includes services in excess of $200,000, the Grantee shall give priority consideration in filling vacancies in positions funded by the Grant Agreement to qualified recipients of aid under Welfare and Institutions Code §11200 in accordance with Public Contract Code §10353.

D.33) PROHIBITION AGAINST DISPOSAL OF PROJECT WITHOUT STATE PERMISSION: The Grantee shall not sell, abandon, lease, transfer, exchange, mortgage, hypothecate, or encumber in any manner whatsoever all or any portion of any real or other property necessarily connected or used in conjunction with the Projects, or with Grantee’s service of water, without prior permission of State. Grantee shall not take any action, including but not limited to actions relating to user fees, charges, and assessments that could adversely affect the ability of Grantee to meet its obligations under this Grant Agreement, without prior written permission of #32..
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State. State may require that the proceeds from the disposition of any real or personal property be remitted to State.

D.34) REMEDIES NOT EXCLUSIVE: The use by either party of any remedy specified herein for the enforcement of this Grant Agreement is not exclusive and shall not deprive the party using such remedy of, or limit the application of, any other remedy provided by law.

D.35) RETENTION: Notwithstanding any other provision of this Grant Agreement, State may, for each project, withhold five percent (5.0%) of the funds requested by Grantee for reimbursement of Eligible Costs. Each project in this Grant Agreement will be eligible to release its respective retention when that project is completed and Grantee has met requirements of Paragraph 17, “Submissions of Reports”, except in the case of the last project to be completed under this Grant Agreement, in which case retention for such project will not be disbursed until the “Final Report” is submitted to and approved by State. State shall disburse retained funds to the Grantee.

D.36) RIGHTS IN DATA: Grantee agrees that all data, plans, drawings, specifications, reports, computer programs, operating manuals, notes and other written or graphic work produced in the performance of this Grant Agreement shall be made available to the State and shall be in the public domain to the extent to which release of such materials is required under the California Public Records Act., Government Code §6250 et seq. Grantee may disclose, disseminate and use in whole or in part, any final form data and information received, collected and developed under this Grant Agreement, subject to appropriate acknowledgement of credit to State for financial support. Grantee shall not utilize the materials for any profit-making venture or sell or grant rights to a third party who intends to do so. The State shall have the right to use any data described in this paragraph for any public purpose.

D.37) SEVERABILITY: Should any portion of this Grant Agreement be determined to be void or unenforceable, such shall be severed from the whole and the Grant Agreement shall continue as modified.

D.38) STATE REVIEWS: The parties agree that review or approval of project applications, documents, permits, plans, and specifications or other project information by the State is for administrative purposes only and does not relieve the Grantee of their responsibility to properly plan, design, construct, operate, maintain, implement, or otherwise carry out the projects.

D.39) SUSPENSION OF PAYMENTS: This Grant Agreement may be subject to suspension of payments or termination, or both, and Grantee may be subject to debarment if the State determines that:
a) Grantee, its contractors, or subcontractors have made a false certification, or b) Grantee, its contractors, or subcontractors violates the certification by failing to carry out the requirements noted in this Grant Agreement.

D.40) SUCCESSORS AND ASSIGNS: This Grant Agreement and all of its provisions shall apply to and bind the successors and assigns of the parties. No assignment or transfer of this Grant Agreement or any part thereof, rights hereunder, or interest herein by the Grantee shall be valid unless and until it is approved by State and made subject to such reasonable terms and conditions as State may impose.

D.41) TERMINATION BY GRANTEE: Subject to State approval which may be reasonably withheld, Grantee may terminate this Agreement and be relieved of contractual obligations. In doing #32..
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so, Grantee must provide a reason(s) for termination. Grantee must submit all progress reports summarizing accomplishments up until termination date.

D.42) TERMINATION FOR CAUSE: Subject to the right to cure under Paragraph 11, the State may terminate this Grant Agreement and be relieved of any payments should Grantee fail to perform the requirements of this Grant Agreement at the time and in the manner herein, provided including but not limited to reasons of default under Paragraph 12.

D.43) TERMINATION WITHOUT CAUSE: The State may terminate this Grant Agreement without cause on 30 calendar days advance written notice. The Grantee shall be reimbursed for all reasonable expenses incurred up to the date of termination.

D.44) THIRD PARTY BENEFICIARIES: The parties to this Grant Agreement do not intend to create rights in, or grant remedies to, any third party as a beneficiary of this Agreement, or any duty, covenant, obligation or understanding established herein.

D.45) TIMELINESS: Time is of the essence in this Grant Agreement.

D.46) TRAVEL: Travel includes the reasonable and necessary costs of transportation, subsistence, and other associated costs incurred by personnel during the term of this Agreement. Travel and per diem expenses to be reimbursed under this Agreement shall be at the same rates the State provides for unrepresented employees in accordance with the provisions of Title 2, Chapter 3, of the California Code of Regulations and shall be reimbursed consistent with the rates current at the time of travel. These rates are published at:
http://www.calhr.ca.gov/employees/Pages/travel-meals.aspx, or its successor website. For the purpose of computing such expenses, Grantee’s designated headquarters shall be: 1331 Concord Ave, Concord, CA 94520. No travel outside the San Joaquin River Funding Area shall be reimbursed unless prior written authorization is obtained from the State’s Project Manager.

D.47) VENUE: The State and the Grantee hereby agree that any action arising out of this Agreement shall be filed and maintained in the Superior Court in and for the County of Sacramento, California, or in the United States District Court in and for the Eastern District of California. The Grantee hereby waives any existing sovereign immunity for the purposes of this Agreement.

D.48) WAIVER OF RIGHTS: None of the provisions of this Grant Agreement shall be deemed waived unless expressly waived in writing. It is the intention of the parties here to that from time to time either party may waive any of its rights under this Grant Agreement unless contrary to law. Any waiver by either party of rights arising in connection with the Grant Agreement shall not be deemed to be a waiver with respect to any other rights or matters, and such provisions shall continue in full force and effect.

D.49) WORKERS’ COMPENSATION: Grantee affirms that it is aware of the provisions of §3700 of the Labor Code, which requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and Grantee affirms that it will comply with such provisions before commencing the performance of the work under this Grant Agreement and will make its contractors and subcontractors aware of this provision.
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EXHIBIT E

AUTHORIZING RESOLUTION
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EXHIBIT F

LOCAL PROJECT SPONSORS
Grantee has assigned, for each project, a Local Project Sponsor according to the roles of the participating agencies identified in the IRWM Plan. Local Project Sponsors may act on behalf of Grantee for the purposes of individual project management, oversight, compliance, and operations and maintenance. Local Project Sponsors are identified for each Sponsored Project below:

Sponsored Project Sponsor Agency Agency Address
Project 1 – Grant Proposal and
Administration Assistance
San Luis & Delta-Mendota
Water Authority
P.O. Box 2157
Los Banos, CA 93635
Project 2 – DAC Needs
Assessment
San Luis & Delta-Mendota
Water Authority
P.O. Box 2157
Los Banos, CA 93635
Project 3 – Grant Administration Contra Costa Water District P.O. Box H20 Concord, CA 94524
Project 4 – SJRFA IRWM Region
Coordination
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 5 – DAC and URC Water
Education and Improvement
Project
Regional Water Authority

Environmental Justice
Coalition for Water
5620 Birdcage St #180
Citrus Heights, CA 95610
P.O. Box 188911
Sacramento, CA 95818-8911
Project 6 – Santiago Island Village
Water Consolidation Technical
Assistance
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 7 – Evaluation of
Stormwater Management and
Groundwater Recharge projects
in Dry Creek Watershed
Stanislaus County
1010 Tenth Street, Suite 4200
Modesto, CA 95354
Project 8 – Eastern San Joaquin
Regional Planning Project
San Joaquin County P.O. Box 1810
Stockton, CA 95201-3018
Project 9 – Madera Regional
Planning Project
Madera County 200 West Fourth St.

Madera, CA 93637
Project 10 – Merced County Well
Survey and Database
Merced Irrigation District 744 W 20th St
Merced, CA 95340
Project 11 – Support for DAC
Involvement in Westside-San
Joaquin IRWM Planning
San Luis & Delta-Mendota
Water Authority P.O. Box 2157
Los Banos, CA 93635
Project 12 – SJRFA DAC Technical
Assistance
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 13 – SJRFA DAC Capacity
Building
Contra Costa Water District P.O. Box H20
Concord, CA 94524
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EXHIBIT G

REPORT FORMATS AND REQUIREMENTS
The following reporting formats should be utilized. Please obtain State approval prior to submitting a report in an alternative format.

PROGRESS REPORTS
Progress reports shall generally use the following format. This format may be modified as necessary to effectively communicate information. For each project, discuss the following at the task level, as organized in Exhibit A (Work Plan):
• Estimate of percent work complete.
• Milestones or deliverables completed during the reporting period. • Discussion of work accomplished during the reporting period and submission of deliverables per Exhibit A.
• Scheduling concerns and issues encountered that may delay completion of the task. • Work anticipated for the next reporting period.
• Updated schedule or budget inclusive of any changes that have occurred.

FINAL REPORT
The Final Report shall generally use the following format. This format may be modified as necessary to effectively communicate information on the various projects in the IRWM Program funded by this Grant Agreement, and includes the following:

Executive Summary
The Executive Summary consists of a maximum of twenty (20) pages summarizing information for the grant as well as the individual projects.

Stakeholder Summary
• General description of water management needs of DACs, Economically Distressed Areas (EDAs), and underrepresented communities at the Funding Area learned from the activities performed in this program
• General summary of DACs, EDAs, and underrepresented communities involved in IRWM efforts through this Program
• Map(s) identifying all DACs, EDAs, and underrepresented communities with IRWM regions learned from the activities performed in this program
Involvement Activity Summary
• General description of involvement activities performed in this Program, including both successful and unsuccessful involvement activities
• Identification of projects developed from the DAC involvement activities, if applicable Findings
• Needs Assessment
o Narrative summary of community characteristics identified and specific community water management needs and resources (technical, managerial, and financial) to address the needs of DACs, EDAs, and underrepresented communities o Needs Assessment template table filled in (at the community level) • Identification of ongoing barriers for DAC involvement in IRWM efforts #32..
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• Recommendations for water managers on future DAC involvement activities in IRWM efforts
Looking into the Future
• Next steps for the IRWM regions to continue DAC involvement efforts References
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EXHIBIT H

REQUIREMENTS FOR STATEWIDE MONITORING AND DATA SUBMITTAL Surface and Groundwater Quality Data
Groundwater quality and ambient surface water quality monitoring data that include chemical, physical, or biological data shall be submitted to the State as described below, with a narrative description of data submittal activities included in project reports, as described in Exhibit G.

Surface water quality monitoring data shall be prepared for submission to the California Environmental Data Exchange Network (CEDEN). The CEDEN data templates are available on the CEDEN website. Inclusion of additional data elements described on the data templates is desirable.

Data ready for submission should be uploaded to your CEDEN Regional Data Center via the CEDEN website. CEDEN website: http://www.ceden.org.

If a project’s Work Plan contains a groundwater ambient monitoring element, groundwater quality monitoring data shall be submitted to the State for inclusion in the State Water Resources Control Board’s Groundwater Ambient Monitoring and Assessment (GAMA) Program Information on the GAMA Program can be obtained at:
http://www.waterboards.ca.gov/gama/geotracker_gama.shtml. If further information is required, the Grantee can contact the State Water Resources Control Board (SWRCB) GAMA Program.

Groundwater Level Data
Grantee shall submit to DWR groundwater level data collected as part of this grant. Water level data must be submitted using the California Statewide Groundwater Elevation Monitoring (CASGEM) online data submission system. Grantee should use their official CASGEM Monitoring Entity or Cooperating Agency status to gain access to the online submittal tool and submit data. If the data is from wells that are not part of the monitoring network, the water level measurements should be classified as voluntary measurements in the CASGEM system. If the grantee is not a Monitoring Entity or Cooperating Agency, please contact your DWR grant project manager for further assistance with data submittal. The activity of data submittal should be documented in appropriate progress or final project reports, as described in Exhibit G. Information regarding the CASGEM program can be found at http://www.water.ca.gov/groundwater/casgem/.
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EXHIBIT I

STATE AUDIT DOCUMENT REQUIREMENTS GUIDELINES FOR GRANTEES State Audit Document Requirements
The list below details the documents/records that State Auditors typically reviewed in the event of a Grant Agreement being audited. Grantees should ensure that such records are maintained for each State funded Program/Project. Where applicable, this list of documents also includes documents relating to the Grantee’s funding match which will be required for audit purposes.

Internal Controls:

1. Organization chart (e.g., Agency’s overall organization chart and organization chart for this Grant Agreement’s funded project.

2. Written internal procedures and flowcharts for the following:
a) Receipts and deposits
b) Disbursements
c) State reimbursement requests
d) State funding expenditure tracking
e) Guidelines, policy(ies), and procedures on State funded Program/Project

3. Audit reports of the Grantee’s internal control structure and/or financial statements within the last two years.

4. Prior audit reports on State funded Program/Project.

State Funding:

1. Original Grant Agreement, any amendment(s) and budget modification documents.

2. A list of all bond-funded grants, loans or subventions received from the State.

3. A list of all other funding sources for each Program/Project.

Contracts:

1. All subcontractor and consultant contracts and related, if applicable.

2. Contracts between the Grantee, member agencies, and project partners as related to the State funded Program/Project.

Invoices:

1. Invoices from vendors and subcontractors for expenditures submitted to the State for payments under the Grant Agreement.

2. Documentation linking subcontractor invoices to State reimbursement requests and related Grant Agreement budget line items.

3. Reimbursement requests submitted to the State for the Grant Agreement.

Cash Documents:

1. Receipts (copies of warrants) showing payments received from the State.

2. Deposit slips or bank statements showing deposit of the payments received from the State. #32..
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3. Cancelled checks or disbursement documents showing payments made to vendors, subcontractors, consultants, and/or agents under the Grant Agreement.

Accounting Records:

1. Ledgers showing receipts and cash disbursement entries for State funding.

2. Ledgers showing receipts and cash disbursement entries of other funding sources.

3. Bridging documents that tie the general ledger to reimbursement requests submitted to the State for the Grant Agreement
Administration Costs:

1. Supporting documents showing the calculation of administration costs.

Personnel:

1. List of all contractors and Grantee staff that worked on the State funded Program/Project.

2. Payroll records including timesheets for contractor’s staff and the Grantee’s staff Project Files:

1. All supporting documentation maintained in the Program/Project files.

2. All Grant Agreement related correspondence.
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

April 5, 2022
Date: March 2, 2022
TO: Mayor & City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Approve an Increase of Purchase with Allsteel, Inc. for Modular Systems Furniture for the Sutter Plant Offices CONTACT: William Wong, Director of Utilities, [email protected], 209-571-5801 DESCRIPTION:

Consider approving an increase of purchase with Allsteel Inc., Muscatine, IA, for the procurement of modular systems furniture for the Sutter Plant Offices by $40,787 from $45,157, plus $4,078 in contingency (if needed) for a revised total amount not to exceed $90,022. (Funding Source: Wastewater Fund)
STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City’s Strategic Plan Initiatives, Goal D:

Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance and sustainability efforts.

BACKGROUND:

The City’s Primary Treatment Plant (Sutter Plant) serves as the main office for the Wastewater Division, which includes Wastewater Operations and Maintenance as well as Environmental Compliance Services. Recent staffing and organizational adjustments, along with aged office furniture that does not meet current ergonomic requirements have led to modifications and modernization of the modular systems furniture within the offices.

DISCUSSION:

On October 24, 2016 the State of California’s Department of General Services Procurement Division entered into Contract No.1-16-71-52 with Allsteel Inc. to provide Modular Systems Furniture to the State of California. Under the terms of the contract local government agencies are extended the same rights and privileges as the State.

Allsteel was initially contracted to supply the modular systems furniture for the Environmental Compliance Services Offices. Considerations for additional modular systems furniture for the SCADA and Administrative Offices were then also recommended. #33..
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Approve an Increase of Purchase with Allsteel, Inc.
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Environmental Compliance Services:

The existing cubicle configuration in the Environmental Compliance Services Office required adjustments to accommodate additional work stations. Staff coordinated with Purchasing to utilize Allsteel to provide the proposed modular system furniture layouts and configurations.

The reconfigured space allowed the expansion of the groups administrative area including a new office space for the division supervisor. Cubical walls were also raised to allow for increased privacy, noise reduction, and to address health and safety concerns.

SCADA Office:

The Supervisory Control and Data Acquisition (SCADA) Control Room provides Operations staff a 24-hour, 7 day a week location to view, control and monitor all of the City of Modesto’s collection lift stations, water system pressure zones, and treatment plants.

The existing furniture is more than 25 years old and is showing the associated signs of wear and tear. Over the years, Maintenance staff has performed repairs and periodic cleanings in an effort to extend the useful life of the items. After considering the available options, staff is proposing that the existing furniture be replaced, along with increasing the number of workstations, leading to a more ergonomic, productive, and efficient use of the space.

Administration Office:

Over the last two years, staff has been working toward a goal of greater efficiencies through cross-training and more effective leadership of the Wastewater Administration staff. A Utility Dispatch Supervisor and a Senior Administrative Office Assistant position have been hired to lead the Administrative staff. This action will help reduce silos and efficiencies will be gained through shared resources.

To facilitate the Division’s shared resource goals, Wastewater Administrative staff from Building Two at the Sutter Plant have been relocated to the administration/reception area near the entrance of Building One. There is room in that area for two additional workstations to accommodate the relocation of these staff members. The workstations selected will include partitions with built-in windows, which will provide privacy for performing confidential work while still allowing for good customer service to both internal and external customers and will meet the ergonomic needs of staff.

Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment or contractual services to be formally bid. However, exceptions to the formal bidding process are granted in MMC 8-3.204(d) “Where the Purchasing Manager, in his or her discretion, determines that a process other than the formal bid procedure set for in Section 8-3.203 will result in procurement for the City at the lowest possible cost commensurate with the desired quality.” In addition, MMC 8-3.202(d) encourages the Purchasing Manager to join with the State of California and other units of government in cooperative purchasing plans when the best cost savings interest of the City would be served.

FISCAL IMPACT:

Funds to cover the expenses associated with the modernization of the workstations at the Sutter Plant are available in the FY 2021/22 Operating Budget:
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COMMITTEE RECOMMENDATION:

This item was considered by the Finance Committee at the January 24, 2022 meeting where it was recommended that it be forwarded to Council. On March 1, 2022 the vendor implemented a price increase and provided revised quotes; there was a total impact of $6,096 or approximately 17.5%.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving an increase of purchase with Allsteel Inc., Muscatine, IA, for the procurement of modular systems furniture for the Sutter Plant Offices by $40,787 from $45,157, plus $4,078 in contingency (if needed) for a revised total amount not to exceed $90,022, and authorizing the Purchasing Manager, or her designee to execute the Purchase Order.

Approved by:

William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Vendor Quotes
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1 2022-

MODESTO CITY COUNCIL
RESOLUTION NO. 2022-XX

RESOLUTION APPROVING AN INCREASE OF PURCHASE WITH
ALLSTEEL INC., MUSCATINE, IA, FOR THE PROCUREMENT OF

MODULAR SYSTEMS FURNITURE FOR THE SUTTER PLANT OFFICES BY $40,787 FROM $45,157, PLUS $4,078 IN CONTINGENCY (IF NEEDED) FOR A REVISED TOTAL AMOUNT NOT TO EXCEED $90,022, AND AUTHORIZING

THE PURCHASING MANAGER, OR HER DESIGNEE TO EXECUTE THE

PURCHASE ORDER
WHEREAS, the City’s Primary Treatment Plant (Sutter Plant) serves as the main office for the Wastewater Division, which includes Wastewater Operations and Maintenance as well as Environmental Compliance Services, and WHEREAS, recent staffing and organizational adjustments, along with aged office furniture that does not meet current ergonomic requirements have led to modifications and modernization of the modular systems furniture within the offices, and WHEREAS, on October 24, 2016, the State of California’s Department of General Services Procurement Division entered into Contract No.1-16-71-52 with Allsteel Inc. to provide Modular Systems Furniture to the State of California, and WHEREAS, under the terms of the contract local government agencies are extended the same rights and privileges as the State, and WHEREAS, Allsteel, Inc. was initially contracted to supply the modular systems furniture for the Environmental Compliance Services Offices; and WHEREAS, considerations for additional modular systems furniture for the SCADA and Administrative Offices were then also recommended.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves an increase in purchase with Allsteel, Inc., Muscatine, IA, for the #33..
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2 2022-
procurement of modular systems furniture for the Sutter Plant Offices by $40,787 from $45,157, plus $4,078 in contingency (if needed) for a revised total amount not to exceed $90,022.

BE IT FURTHER RESOLVED that the Purchasing Manager, or her designee, is hereby authorized to execute the purchase order.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 5th day of April 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _______________________________________
JOSE M. SANCHEZ, City Attorney
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PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED

PLEASE REVIEW THIS QUOTE CAREFULLY BEFORE SIGNING
MAKE PURCHASE ORDER OUT TO:

CAMPBELL KELLER
3041 65TH STREET
SUITE 3
SACRAMENTO, CA 95820

SMALL BUSINESS
CERTIFICATION # 8541

ALLSTEEL LOS RIOS CONTRACT
2 2 TK06524W
R
STRUCTURAL RACEWAY PNL FR-NO 102.71 205.42
TOP TRIM 65HX24W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2465M 2465M 2465M 2465M
3 2 TKG46524
T
TER TACKABLE ACOUSTIC TILE 65H 66.08 132.16
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2465M 2465M 2465M 2465M
4 2 TKG46524
T
TER TACKABLE ACOUSTIC TILE 65H 66.08 132.16
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2465M 2465M 2465M 2465M
PAGE 1
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PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
5 2 TK324PT RADIUS TOP TRIM 24W 12.47 24.94
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2465M 2465M 2465M 2465M
6 2 TK06530W
R
STRUCTURAL RACEWAY PNL FR-NO 105.88 211.76
TOP TRIM 65HX30W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3065MG 3065MG 3065MG 3065MG
7 4 TKSK30 TER 30W SEGMENT KIT 6.90 27.60
Tag(s): 3065MG 3065MG 3065MG 3065MG
8 2 TK42230G
K
TER GLAZED TILE KIT 22.5H X 206.73 413.46
30W
$(P1) P1 Paint Opts
.P28 Fossil
.C Clear Glass
Tag(s): 3065MG 3065MG 3065MG 3065MG
9 2 TKG44230
T
TER TACKABLE ACOUSTIC TILE 42H 52.01 104.02
X 30W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3065MG 3065MG 3065MG 3065MG
10 2 TKG44230
T
TER TACKABLE ACOUSTIC TILE 42H 52.01 104.02
X 30W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3065MG 3065MG 3065MG 3065MG
PAGE 2
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PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
11 2 TK330PT RADIUS TOP TRIM 30W 14.86 29.72
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3065MG 3065MG 3065MG 3065MG
12 6 TK06536W
R
STRUCTURAL RACEWAY PNL FR-NO 110.14 660.84
TOP TRIM 65HX36W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665M 3665M 3665M 3665M
13 6 TKG46536
T
TER TACKABLE ACOUSTIC TILE 65H 85.19 511.14
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665M 3665M 3665M 3665M
14 6 TKG46536
T
TER TACKABLE ACOUSTIC TILE 65H 85.19 511.14
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665M 3665M 3665M 3665M
15 6 TK336PT RADIUS TOP TRIM 36W 17.78 106.68
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665M 3665M 3665M 3665M
16 2 TK06536W
R
STRUCTURAL RACEWAY PNL FR-NO 110.14 220.28
TOP TRIM 65HX36W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665MG 3665MG 3665MG 3665MG
PAGE 3
#33..
- 1035 -
PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
17 4 TKSK36 TER 36W SEGMENT KIT 7.17 28.68
Tag(s): 3665MG 3665MG 3665MG 3665MG
18 2 TK42236G
K
TER GLAZED TILE KIT 22.5H X 217.88 435.76
36W
$(P1) P1 Paint Opts
.P28 Fossil
.C Clear Glass
Tag(s): 3665MG 3665MG 3665MG 3665MG
19 2 TKG44236
T
TER TACKABLE ACOUSTIC TILE 42H 57.32 114.64
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665MG 3665MG 3665MG 3665MG
20 2 TKG44236
T
TER TACKABLE ACOUSTIC TILE 42H 57.32 114.64
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665MG 3665MG 3665MG 3665MG
21 2 TK336PT RADIUS TOP TRIM 36W 17.78 35.56
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665MG 3665MG 3665MG 3665MG
22 2 A6REC3S3
LCF
A6 3 STAGE 3 LEG RECTANGLE C 1,134.32 2,268.64
FOOT
$(P1) P1 Paint Opts
.P8L Nickel
.X Standard Glide
.PDL Paddle
PAGE 4
#33..
- 1036 -
PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

POWER SUPPLY
24 2 ALED31UJ
MP30
31IN DAISY CHAIN LIGHT 208.59 417.18
25 3 ELF842NB ESS LAT 42W 28H 2-12IN DRWS 582.40 1,747.20

BEV PULL
$(P1) P1 Paint Opts
.P28 Fossil
.OMT omt Core to Ord key Alike
26 6 L919492 DOUBLE RAIL HANGING FILE 19.95 119.70
RACKS(PACK OF 2)
27 4 OH1536FD 15H X36W FLIPPER DOOR 242.56 970.24

OVERHEAD-NO PULL
.YZ Sys:Stride-DNA-Optimize
$(P1) P1 Paint Opts
.P28 Fossil
.OMT omt Core to Ord key Alike
28 4 PM187-23
3B
ESSENTIALS MOBILE PED 298.03 1,192.12
28HX22-7/8DX15W BEVEL PULL
$(P1) P1 Paint Opts
.P28 Fossil
.OMT omt Core to Ord key Alike
29 2 T52472S PRIMARY 24DX72W FLAT EG LAM 196.91 393.82

W/GROMMETS
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
PAGE 5
#33..
- 1037 -
PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

TERRACE
$(P1) P1 Paint Opts
.P28 Fossil
32 1 T6CB24R CANTILEVER BRACKET 24D RH 20.17 20.17

TERRACE
$(P1) P1 Paint Opts
.P28 Fossil
33 4 TK365E E END TRIM RADIUS CONNKIT 65H 34.23 136.92

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
34 4 TK365L L 90-DEGREE RADIUS CONNKIT 65H 56.79 227.16

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
35 2 TKSL2429
P
TER DNA SUPPORT LEG 65.03 130.06
24DX29-1/2H
$(P1) P1 Paint Opts
.P28 Fossil
36 3 ALKF23C CORE REMOVE LOCK KIT 6.64 19.92
.X103E Key Number 103E
37 4 ALKF23C CORE REMOVE LOCK KIT 6.64 26.56
.X102E Key Number 102E
PAGE 6
#33..
- 1038 -
PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
38 4 ALKF23C CORE REMOVE LOCK KIT 6.64 26.56
.X101E Key Number 101E
39 1 APTK TOUCH UP PAINT BRUSH QTY 1 43.08 43.08
$(P1) P1 Paint Opts
.P28 CLR: Fossil
40 1 SPLA-ALT
-3672MIX
LEG
CUST ALT LAM WS W/GROM 311.04 311.04
.M490293 XMN-75555
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A White TigrisFSCDeEmp6/30/21
.EH Edg: Fossil
.GB Grommet LH-RH
P Plastic Grommet
EH CLR: Fossil
41 1 SPLA-ALT
-3672MIX
LEG
CUST ALT LAM WS W/GROM 311.04 311.04
.M490348 XMN-75565
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A White TigrisFSCDeEmp6/30/21
.EH Edg: Fossil
.GB Grommet LH-RH
P Plastic Grommet
EH CLR: Fossil
42 1 DESIGN DESIGN SERVICES 800.00 800.00
10 HRS X $80 PER HR:
$800.00
43 1 ASSEMBLY ASSEMBLY AND RELATED 3,200.00 3,200.00
SERVICES FOR:

TECH ROOM

PREVAILING WAGE, REGULAR HOURS

AREA MUST BE FREE AND CLEAR
CONTINUED...

PAGE 7
#33..
- 1039 -
PROPOSAL 114246
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED

PRIOR TO SCHEDULED

INSTALLATION DATE
***This proposal is valid for 30 days unless otherwise noted.*** ***By signing this proposal, you are acknowledging that you have reviewed the quantities, color and finish selections and are familiar with the products being ordered. All items are custom made to order and can not be returned.*** ***Delivery, Assembly and related services quoted for normal business hours with clear first floor access or access to a freight elevator (No stair carry) unless otherwise noted and quoted.***
**If wall track is included on proposal, client assumes responsibility for costs due to electrical and/or plumbing within walls.*** ***The total below is for cash/check/EFT purchases. When a credit card is used, a 3% service fee is applied to the total balance noted below. Please acknowledge by initialling if your organization will be paying by credit card _______*** PRODUCT TOTAL..: 13,273.72
ASSEMBLY.......: 3,200.00
DESIGN.........: 800.00
ACCEPTED BY____________________________ SALES TAX......: 1,360.30 ===========
DATE ACCEPTED____________ TOTAL..........: 18,634.02
PAGE 8 OF 8
#33..
- 1040 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED

PLEASE REVIEW THIS QUOTE CAREFULLY BEFORE SIGNING
MAKE PURCHASE ORDER OUT TO:

ALLSTEEL, INC.

C/O CAMPBELL KELLER
2210 SECOND AVENUE
MUSCATINE, IA 52761-5257
MSF CONTRACT # 1-16-71-52

ALLSTEEL LOS RIOS CONTRACT
3 2 TK04224W
R
STRUCTURAL RACEWAY PNL FR-NO 88.37 176.74
TOP TRIM 42 1/2HX24W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2442M 2442M 2442M 2442M
4 2 TKG44224
T
TER TACKABLE ACOUSTIC TILE 42H 45.64 91.28
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2442M 2442M 2442M 2442M
5 2 TKG44224
T
TER TACKABLE ACOUSTIC TILE 42H 45.64 91.28
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2442M 2442M 2442M 2442M
6 2 TK324PT RADIUS TOP TRIM 24W 12.47 24.94
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2442M 2442M 2442M 2442M
CONTINUED...

PAGE 1
#33..
- 1041 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
7 1 TK06524W
R
STRUCTURAL RACEWAY PNL FR-NO 102.71 102.71
TOP TRIM 65HX24W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2465M 2465M 2465M 2465M
8 1 TKG46524
T
TER TACKABLE ACOUSTIC TILE 65H 66.08 66.08
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2465M 2465M 2465M 2465M
9 1 TKG46524
T
TER TACKABLE ACOUSTIC TILE 65H 66.08 66.08
X 24W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 2465M 2465M 2465M 2465M
10 1 TK324PT RADIUS TOP TRIM 24W 12.47 12.47
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 2465M 2465M 2465M 2465M
11 10 TK04230W
R
STRUCTURAL RACEWAY PNL FR-NO 93.41 934.10
TOP TRIM 42 1/2HX30W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3042M 3042M 3042M 3042M
12 10 TKG44230
T
TER TACKABLE ACOUSTIC TILE 42H 52.01 520.10
X 30W
$(A) GRD A FAB
CONTINUED...

PAGE 2
#33..
- 1042 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3042M 3042M 3042M 3042M
13 10 TKG44230
T
TER TACKABLE ACOUSTIC TILE 42H 52.01 520.10
X 30W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3042M 3042M 3042M 3042M
14 10 TK330PT RADIUS TOP TRIM 30W 14.86 148.60
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3042M 3042M 3042M 3042M
15 2 TK04236W
R
STRUCTURAL RACEWAY PNL FR-NO 97.40 194.80
TOP TRIM 42 1/2HX36W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3642M 3642M 3642M 3642M
16 2 TKG44236
T
TER TACKABLE ACOUSTIC TILE 42H 57.32 114.64
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3642M 3642M 3642M 3642M
17 2 TKG44236
T
TER TACKABLE ACOUSTIC TILE 42H 57.32 114.64
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3642M 3642M 3642M 3642M
PAGE 3
#33..
- 1043 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
18 2 TK336PT RADIUS TOP TRIM 36W 17.78 35.56
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3642M 3642M 3642M 3642M
19 2 TK06536W
R
STRUCTURAL RACEWAY PNL FR-NO 110.14 220.28
TOP TRIM 65HX36W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665M 3665M 3665M 3665M
20 2 TKG46536
T
TER TACKABLE ACOUSTIC TILE 65H 85.19 170.38
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665M 3665M 3665M 3665M
21 2 TKG46536
T
TER TACKABLE ACOUSTIC TILE 65H 85.19 170.38
X 36W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 3665M 3665M 3665M 3665M
22 2 TK336PT RADIUS TOP TRIM 36W 17.78 35.56
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 3665M 3665M 3665M 3665M
23 2 TK04242W
R
STRUCTURAL RACEWAY PNL FR-NO 101.12 202.24
TOP TRIM 42 1/2HX42W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 4242M 4242M 4242M 4242M
PAGE 4
#33..
- 1044 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
24 2 TKG44242
T
TER TACKABLE ACOUSTIC TILE 42H 63.69 127.38
X 42W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 4242M 4242M 4242M 4242M
25 2 TKG44242
T
TER TACKABLE ACOUSTIC TILE 42H 63.69 127.38
X 42W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 4242M 4242M 4242M 4242M
26 2 TK342PT RADIUS TOP TRIM 42W 21.50 43.00
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 4242M 4242M 4242M 4242M
27 2 TK06542W
R
STRUCTURAL RACEWAY PNL FR-NO 113.32 226.64
TOP TRIM 65HX42W
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 4265M 4265M 4265M 4265M
28 2 TKG46542
T
TER TACKABLE ACOUSTIC TILE 65H 94.47 188.94
X 42W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
Tag(s): 4265M 4265M 4265M 4265M
29 2 TKG46542
T
TER TACKABLE ACOUSTIC TILE 65H 94.47 188.94
X 42W
$(A) GRD A FAB
.LC FAB: Lucy
928 Snowdrop
CONTINUED...

PAGE 5
#33..
- 1045 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
Tag(s): 4265M 4265M 4265M 4265M
30 2 TK342PT RADIUS TOP TRIM 42W 21.50 43.00
$(P1) P1 Paint Opts
.P28 Fossil
Tag(s): 4265M 4265M 4265M 4265M
31 2 ALED31U 31IN UNDERCABINET LED LIGHT W/ 347.65 695.30

POWER SUPPLY
32 2 ALKF23C CORE REMOVE LOCK KIT 6.64 13.28
.X102E Key Number 102E
33 2 ALKF23C CORE REMOVE LOCK KIT 6.64 13.28
.X101E Key Number 101E
34 1 ALKF23C CORE REMOVE LOCK KIT 6.64 6.64
.X104E Key Number 104E
35 1 ALKF23C CORE REMOVE LOCK KIT 6.64 6.64
.X103E Key Number 103E
36 1 ALKF23C CORE REMOVE LOCK KIT 6.64 6.64
.X105E Key Number 105E
37 1 ALKF23C CORE REMOVE LOCK KIT 6.64 6.64
.X106E Key Number 106E
38 1 APTK TOUCH UP PAINT BRUSH QTY 1 43.08 43.08
$(P1) P1 Paint Opts
.P28 CLR: Fossil
PAGE 6
#33..
- 1046 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

OVERHEAD-NO PULL
.YZ Sys:Stride-DNA-Optimize
$(P1) P1 Paint Opts
.P28 Fossil
.OMT omt Core to Ord key Alike
40 6 PM187-23
3B
ESSENTIALS MOBILE PED 298.03 1,788.18
28HX22-7/8DX15W BEVEL PULL
$(P1) P1 Paint Opts
.P28 Fossil
.OMT omt Core to Ord key Alike
41 2 T52430S PRIMARY 24DX30W FLAT EG LAM 103.50 207.00

W/GROMMET
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
42 2 T52442S PRIMARY 24DX42W FLAT EG LAM 130.56 261.12

W/GROMMETS
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
43 1 T53042S PRIMARY 30DX42W FLAT EG LAM W 144.64 144.64 GROM
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
44 2 T53060S PRIMARY 30DX60W FLAT EG LAM 190.28 380.56

W/GROMMETS
$(L1FSCPT) L1 FSC Pattern Lam Opts
CONTINUED...

PAGE 7
#33..
- 1047 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

W/GROMMETS
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
46 2 T53624CR CORNER 24DX36W W/RADIAL 196.65 393.30

LEADING EG FLAT W/GROMS
$(L1FSCPT) L1 FSC Pattern Lam Opts
.FSCLT2A CLR: White Tigris -FSC Certifd
.EH Edg: Fossil
.P Plastic Grommet
47 7 T6BK WORKSURFACE BRACKET KIT 17.26 120.82
$(P1) P1 Paint Opts
.P28 Fossil
48 9 T6CB24L CANTILEVER BRACKET 24D LH 20.17 181.53

TERRACE
$(P1) P1 Paint Opts
.P28 Fossil
49 6 T6CB24R CANTILEVER BRACKET 24D RH 20.17 121.02

TERRACE
$(P1) P1 Paint Opts
.P28 Fossil
50 1 TKEP3029
PR
DNA PNL MNT RH 30DX29-1/2H END 80.68 80.68

PNL SUPT
$(P1) P1 Paint Opts
.P28 Fossil
CONTINUED...

PAGE 8
#33..
- 1048 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
51 2 TK322H HIGH/LOW RADIUS CONNECTOR KIT 25.74 51.48
22H
$(P1) P1 Paint Opts
.P28 Fossil
52 4 TK342E E END TRIM RADIUS CONNKIT 42H 27.87 111.48

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
53 7 TK342L L 90-DEGREE RADIUS CONNKIT 42H 52.28 365.96

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
54 1 TK365E E END TRIM RADIUS CONNKIT 65H 34.23 34.23

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
55 1 TK365T T 3-WAY RADIUS CONNKIT 65H 56.79 56.79

BASE PNL
$(P1) P1 Paint Opts
.P28 Fossil
56 6 DWW-MHWN
O
EVO TASK MESH HIGH BACK 4D ADJ 752.31 4,513.86

ARMS NO FC
.BLK Black
.D Dusk
.L Yes
.2 Standard
.BLK Black
.H Black Hard Tread
$(3) Grd 3 Uph
CONTINUED...

PAGE 9
#33..
- 1049 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
.SX Moxie
23 Basalt
.TC00 Coordinating
57 1 DESIGN DESIGN SERVICES 15HRSX$65PER 975.00 975.00
HR:
$975.00
58 1 ASSEMBLY ASSEMBLY AND RELATED 4,267.00 4,267.00
SERVICES FOR:

PREVAILING WAGE, REGULAR HOURS

AREA MUST BE FREE AND CLEAR

PRIOR TO SCHEDULED

INSTALLATION DATE
PAGE 10
#33..
- 1050 -
PROPOSAL 114000
DATE 02/24/22
PROJECT #640-3

ADENA PETERSON
PROPOSAL FOR: INSTALL AT:

CITY OF MODESTO CITY OF MODESTO
APVENDORS@MODESTOGOV COM 1221 SUTTER ST
PO BOX 642 WATER QUALITY AGENCY
MODESTO CA 95353-0642 MODEST0 CA 95351
# QTY PRODUCT DESCRIPTION SELL EXTENDED
***This proposal is valid for 30 days unless otherwise noted.*** ***By signing this proposal, you are acknowledging that you have reviewed the quantities, color and finish selections and are familiar with the products being ordered. All items are custom made to order and can not be returned.*** ***Delivery, Assembly and related services quoted for normal business hours with clear first floor access or access to a freight elevator (No stair carry) unless otherwise noted and quoted.***
**If wall track is included on proposal, client assumes responsibility for costs due to electrical and/or plumbing within walls.*** ***The total below is for cash/check/EFT purchases. When a credit card is used, a 3% service fee is applied to the total balance noted below. Please acknowledge by initialling if your organization will be paying by credit card _______*** PRODUCT TOTAL..: 15,292.73
ASSEMBLY.......: 4,267.00
DESIGN.........: 975.00
ACCEPTED BY____________________________ SALES TAX......: 1,617.11 ===========
DATE ACCEPTED____________ TOTAL..........: 22,151.84
PAGE 11 OF 11
#33..
- 1051 -
#33..
- 1052 -

CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

April 05, 2022
Date: March 16, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Award River Trunk Realignment Shackelford Pump Station Project CONTACT: Jesse Franco, Engineering Division Manager, [email protected], 209-571-5175
DESCRIPTION:

Consider (i) accepting the plans and specifications for the River Trunk Realignment Shackelford Pump Station Project and awarding a construction contract to Mountain Cascade Inc, of Livermore, CA, in the amount of $10,156,821 plus $1,015,682 in contingency (if needed), for a total amount not to exceed $11,172,503; (ii) approving an increase in the Director’s Authority from 6% ($609,409) to 10% ($1,015,682) to issue change orders; (iii) approving an agreement with West Yost Associates for Construction Management Services in the amount of $1,495,674, plus $149,567 in additional services (if needed), for a total amount not to exceed $1,645,241; (iv) approving an agreement with Carollo Engineers for Engineering Support During Construction in the amount of $1,182,608, plus $118,261 in additional services (if needed), for a total amount not to exceed $1,300,869; and (v) amending the Fiscal Year 2021-22 Capital Improvement Project Program Budget in the amount of $14,593,613. (Funding Source: Wastewater Fund) STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City’s Strategic Plan Initiatives, Goal D:

Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance and sustainability efforts.

BACKGROUND:

The 2007 Wastewater Collection System Treatment Master Plan (WWCSMP) identified key hydraulic and condition deficiencies in the City’s wastewater collection system. These conclusions were re-evaluated as part of the 2016 WWCSMP. The River Trunk Realignment was one of the main priority projects identified in the 2016 WWCSMP and addresses deficiencies in the River Trunk, Sutter Trunks, and Beard Brook Siphon.

The River Trunk consists of a pipeline that ranges from 24-inches to 60-inches in diameter that conveys flow from the Beard Industrial Park to the Sutter Avenue Wastewater Treatment Plant.

The total length of the River Trunk is approximately five miles and conveys approximately 24 percent of the City’s domestic wastewater flow. The Beard Brook Siphon consists of a 48-inch #34..
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diameter trunk that starts at the west end of Oregon Drive, at the Gallo facility, and crosses under Beard Brook Park to Morton Boulevard. The current location of the River Trunk, adjacent to the Tuolumne River, poses access limitations to operations staff and could be subject to catastrophic damage in the event of elevated river flows. The Beard Brook Siphon also poses access limitations. As City staff evaluated these projects, consideration was given to realigning the River Trunk away from its current location to an alternate route within the public right-of-way and replacing the Beard Brook Siphon with a gravity system. Additional, consideration was given to realigning the Sutter Trunk to connect to the new River Trunk. The River Trunk Realignment will essentially combine the identified projects into one project.

On April 1, 2014, by Resolution No. 2014-121, Council approved an agreement with Carollo Engineers, Inc., (Carollo) for preparation of a Preliminary Design Report (PDR), which serves as the basis of design for the Project. The PDR evaluated improvements necessary, determined the most economical and beneficial approach, and evaluated different alternatives to address the existing deficiencies of the River Trunk.

The PDR confirmed that the existing River Trunk does not provide adequate capacity to convey peak wet weather flows, exposing the City of Modesto to the risk of public health impacts and fines from sewer system overflows (SSOs). Additional flow capacity is required for the River Trunk to prevent SSOs in highly environmentally sensitive areas, such as Dry Creek and the Tuolumne River.

On March 1, 2016 by Resolution No. 2016-125, Council approved an agreement with Carollo Engineers, Inc. (Carollo) for Final Design Services for the River Trunk Realignment Project. This scope included the design of a major lift station and force-mains, gravity sewer crossing under Beard Brook, gravity system along Colorado Avenue, and pump station for the Shackelford Crossing. Upon completion of this project, the former River Trunk will be available as a redundant system for industrial and cannery waste flows, providing increased reliability for industrial users and reduced liability in the event of a failure by preventing discharge of sewage into the Tuolumne River.

The River Trunk Realignment Shackelford Pump Station Project will pump the flow, that currently flows by gravity through the Shackelford Siphon into the existing River Trunk line, to the new River Trunk line that is going to be installed along Colorado Ave (part of the Gravity System currently in construction). The project will also incorporate a gravity line from Neece Drive to the new River Trunk and plug the line that goes into the existing River Trunk line. The Dryden Golf Course clubhouse will also be brought into the new River Trunk line under this project.

The Shackelford Pump Station phase of the River Trunk Realignment project consists of constructing a new sewer pump station, electrical building, and backup generator, approximately 1,450 lineal feet of 18-inch sewer force main through the Dryden Golf Course, approximately 1,100 lineal feet of 24-inch gravity sewer pipeline, approximately 1,200 lineal feet of 8-inch gravity sewer line, approximately 100 lineal feet of 6-inch gravity sewer line, approximately 250 lineal feet of 1.25-inch sewer force main, and all sanitary sewer manholes, junction structures, land restoration, road rehabilitation, and other appurtenances required for this project.

DISCUSSION:

The Project was advertised for bids on October 26, 2021. Bids were publicly opened on January 25, 2022, pursuant to City Charter Section 1307. A total of five bids were received and following #34..
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review of bid packages, Mountain Cascade Inc, of Livermore, CA, was the responsible bidder with the lowest responsive bid. The bid tabulation is attached.

The bid analysis is:

Number of bids received 5
Number of bids within 10% of engineer’s estimate 0
Number of bids above the engineer’s estimate 5
Number of bids below the engineer’s estimate 0
Percent of lowest responsive bid above the engineer’s estimate 26.95% The lowest responsive bid was provided by Mountain Cascade Inc, of Livermore, CA which is

26.95% above the engineer’s estimate. The next bid was 37.67% above the engineer’s estimate and the highest bid received was 61.35% above the engineer’s estimate. Bidder competition and participation were evident as the City received five bids.

Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment or contractual services to be formally bid. The award of contract for the construction of the River Trunk Realignment Shackelford Pump Station Project to Mountain Cascade Inc, of Livermore, CA, conforms to the Modesto Municipal Code, 8-3.203.

In addition, the City’s “Change Order Approval Policy”, enacted by Council Resolution No. 94- 443 on July 19, 1994, was updated by Resolution No. 2019-326 on July 9, 2019, establishing a contract change order authority of 6% for construction contracts of this dollar value. However, given the nature and complexity of this project with deep shoring and excavation for the Pump Station, additional work may be needed to address unexpected conditions that require changes in the project scope that may exceed the Director’s Authority of 6% ($609,409) of the contract amount of $10,156,821. Staff is requesting authorization to increase the contract change order budget to 10% (1,015,682) due to the size of the project and the unknown challenges.

While the contingency policy is utilized for each construction contract awarded by the City, it is not written into each contract, nor is it a guaranteed amount included in the final compensation to the contractor. Prior to bidding a project, staff works diligently to ensure that all projects and bid packages contain well-defined scopes of work and that all projects stay within budget.

Considering the size and complexity of the project, staff recommends utilizing consultants to provide Construction Management and Inspection Services. On May 29, 2020, a Request for Proposals (RFP) was issued for Projects 2 and 3, to the City’s five prequalified firms who provide Construction Management and Inspection Services. Staff received proposals from four firms.

In accordance with City’s Administrative Directive 3.1 “Selection Procedures for Professional Consultants Who Provide Architectural and Engineering Services for Capital Projects”, West Yost Associates (West Yost), Inc. was selected as the most qualified firm for Project 3 - River Trunk Realignment – Shackelford Pump Station.

Therefore, staff is requesting approval of an agreement with West Yost Associates in the amount of $1,495,674, plus $149,567 in additional services (if needed), for a total amount not to exceed $1,645,241.
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Additionally, considering the size and complexity of the project and that Carollo is the Engineerof-Record for the project, Engineering Design Support During Construction services will be needed from Carollo to ensure construction of the facilities meets the original design described in the plans and specifications. The scope of work will include reviewing submittals and requests for information and field engineering support. Therefore, staff is requesting approval of an agreement with Carollo Engineers for Engineering Support During Construction in the amount of $1,182,608, plus $118,261 in additional services (if needed), for a total amount not to exceed $1,300,869.

FISCAL IMPACT:

The total estimated cost for the construction portion of this project is $14,593,613. Funding for the construction, contingency, administration, and City staff design support, will be budgeted in the current FY 2021-22 Capital Improvement Program budget in account:
101291 – UPP Engineering Design “River Trunk Shackelford Pump Station” ANTICIPATED CONSTRUCTION EXPENDITURES:

Construction Contract (Mountain Cascade) $10,156,821
Construction Contingency (10%) $1,015,682
Construction Administration
Construction Management Services (West Yost) $1,495,674 Additional Services (10%) $149,567
City Staff $250,000
Engineering/Design/Administration
Engineering Support During Construction Services (Carollo) $1,182,608 Additional Services (10%) $118,261
City Staff $225,000
*TOTAL ANTICIPATED CONSTRUCTION EXPENDITURES: $14,593,613 *An appropriation transfer in the amount of $14,593,613 is necessary to fund the construction, contingency, construction administration, and design support during construction. Upon Council approval, this amount will be transferred into the project account from Wastewater Fund Reserves to cover these costs, thereby amending the Fiscal Year 2021-22 Capital Improvement Program Budget. This is reflected in the resolution amending the budget.

COMMITTEE RECOMMENDATION:

This project was presented to the Finance Committee November 06, 2019, as a report on upcoming Capital Improvement construction projects where it was recommended that it be forwarded to Council for future award of construction. As stated in the Committee report, as bids are received, staff will present projects directly to Council for award of construction.

CEQA/NEPA REQUIREMENTS:

Environmental review has been provided through the 2017 Wastewater Master Plan Environmental Impact Report (EIR) (SCH # 2016062033) certified by Council on January 28, 2020.
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RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving plans and specifications for the River Trunk Realignment Shackelford Pump Station Project, accepting the bid, and approving a construction contract with Mountain Cascade Inc, of Livermore, CA, in the amount of $10,156,821 plus $1,015,682 in contingency (if needed), for a total amount not to exceed $11,172,503 and authorizing the City Manager, or his designee, to execute the agreement.

Resolution authorizing an increase in the Director’s authority to issue change orders for the River Trunk Realignment Pump Station Project from 6% ($609,409) to 10% ($1,015,682) of the construction contract price of $10,156,821 with Mountain Cascade Inc., of Livermore, CA.

Resolution approving an agreement with West Yost Associates, of Davis, CA, for Construction Management Services for the River Trunk Realignment Shackelford Pump Station Project in an amount not to exceed $1,495,674 for the identified scope of services, plus $149,567 for additional services (if needed), for a total amount not to exceed $1,645,241, and authorizing the City Manager, or his designee, to execute the agreement.

Resolution approving an agreement with Carollo Engineers Inc., of Walnut Creek, CA, for Engineering Support During Construction for the River Trunk Realignment Shackelford Project, in an amount not to exceed $1,182,608 for the identified scope of services, plus $118,261 for additional services (if needed), for a total amount not to exceed $1,300,869 and authorizing the City Manager, or his designee, to execute the agreement.

Resolution amending the Fiscal Year 2021-22 Capital Improvement Program Budget in the amount of $14,593,613 to be transferred into the project from Wastewater Reserves to fully fund the construction, contingency, construction administration and design support during construction for the River Trunk Realignment Shackelford Project and authorizing the City Manager, or his designee, to implement the provisions of this resolution.

Approved by:

William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. Resolutions (5)

2. Construction Contract with Mountain Cascade Inc, of Livermore, CA & Financial Interest Disclosure Form

3. Construction Management Agreement with West Yost Associates

4. Engineering Support During Construction Agreement with Carollo Engineers

5. Bid Results
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING PLANS AND SPECIFICATIONS FOR THE RIVER

TRUNK REALIGNMENT SHACKELFORD PUMP STATION PROJECT,

ACCEPTING THE BID, AND APPROVING A CONSTRUCTION CONTRACT

WITH MOUNTAIN CASCADE INC, OF LIVERMORE, CA, IN THE AMOUNT OF $10,156,821 PLUS $1,015,682 IN CONTINGENCY (IF NEEDED), FOR A TOTAL AMOUNT NOT TO EXCEED $11,172,503 AND AUTHORIZING THE

CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE THE AGREEMENT WHEREAS, the current location of the River Trunk, adjacent to the Tuolumne River, poses access limitations to operations staff and could be subject to catastrophic damage in the event of elevated river flows, and
WHEREAS, as part of the River Trunk Realignment Project, the proposed Shackelford Pump Station will pump the flow that currently flows by gravity through the existing Shackelford Siphon into the existing River Trunk line to the new River Trunk line that is going to be installed down Colorado Ave as part of the River Trunk Realignment Gravity System, which is currently under construction, and WHEREAS, the Project was advertised for bids on October 26, 2021, and WHERAS, on January 25, 2022, bids were publicly opened, pursuant to City Charter Section 1307, five bids were received and Mountain Cascade Inc, of Livermore, CA, was the responsible bidder with the lowest responsive bid, and WHEREAS, MMC 8-3.203 states that all purchases, in excess of fifty thousand dollars ($50,000), or when directed by the City Manager for any purchase of fifty thousand dollars ($50,000) or less, shall follow formal bid procedures, and #34..
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WHEREAS, the award of bid for the River Trunk Realignment Shackelford Pump Station Project conforms to the Modesto Municipal code based on providing the overall lowest cost, while providing improved service, and
WHEREAS, the Director of Utilities has recommended that the bid of $10,156,821 received from Mountain Cascade Inc, of Livermore, CA, be accepted as the lowest responsible and responsive bid and the contract be awarded to Mountain Cascade Inc, of Livermore, CA.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the plans and specifications for the River Trunk Realignment Shackelford Pump Station Project and accepts the bid of $10,156,821 plus $1,015,682 for contingency (if needed) for a total amount not to exceed $11,172,503 and award Mountain Cascade Inc, of Livermore, CA, the contract for the River Trunk Realignment Shackelford Pump Station Project.

BE IT FURTHER RESOLVED that the River Trunk Realignment Shackelford Pump Station Project is within the scope of 2017 Wastewater Master Plan Environmental Impact Report (EIR) (SCH # 2016062033) certified by Council on January 28, 2020. No new information of substantial importance has been discovered requiring revisions to the impacts, mitigation measures or alternatives that were provide in the EIR. Additionally, there has not been any substantial changes with respect to City policies or requirements that would require additional environmental analysis. All adopted mitigation measures identified in the EIR continue to apply.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the contract, in a form approved by the City Attorney. #34..
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 5th day of April 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION AUTHORIZING AN INCREASE IN THE DIRECTOR’S

AUTHORITY TO ISSUE CHANGE ORDERS FOR THE RIVER TRUNK
REALIGNMENT SHACKELFORD PUMP STATION PROJECT FROM 6%
($609,409) TO 10% ($1,015,682) OF THE CONSTRUCTION CONTRACT PRICE OF $10,156,821 WITH MOUNTAIN CASCADE INC, OF LIVERMORE, CA WHEREAS, the City’s “Change Order Approval Policy”, enacted by Council Resolution No. 94-443 on July 19, 1994, and updated by Resolution No. 2019-326 on July 9, 2019, established a contract change order budget of 6% for projects over $10 Million, and
WHEREAS, given the nature and complexity of this project with deep shoring and excavation for the Pump Station, additional work may be needed to address unexpected conditions that require changes in the project scope that may exceed the Director’s Authority of 6% ($609,409) of the contract amount of $10,156,821, and WHEREAS, staff is requesting authorization to increase the Directors authority to issue change orders to 10% ($1,015,682) of the contract amount of $10,156,821 due to the nature of the project and the unknown challenges.

NOW, THEREFORE BE IT RESOLVED by the Council of the City of Modesto that it hereby authorizes the Director of Utilities to issue change orders for River Trunk Realignment Shackelford Pump Station Project from 6% ($609,409) to 10% ($1,015,682) of the construction contract price of $10,156,821 with Mountain Cascade Inc, of Livermore, CA.
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 5th day of April 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING AN AGREEMENT WITH WEST YOST

ASSOCIATES, OF DAVIS, CA, FOR CONSTRUCTION MANAGEMENT

SERVICES FOR THE RIVER TRUNK REALIGNMENT SHACKELFORD
PUMP STATION PROJECT IN AN AMOUNT NOT TO EXCEED $1,495,674 FOR THE IDENTIFIED SCOPE OF SERVICES, PLUS $149,567 FOR

ADDITIONAL SERVICES (IF NEEDED), FOR A TOTAL AMOUNT NOT TO EXCEED $1,645,241 AND AUTHORIZING THE CITY MANAGER, OR HIS

DESIGNEE TO EXECUTE THE AGREEMENT
WHEREAS, on March 22, 2016, by Resolution No. 2016-125, Council approved an agreement with Carollo Engineers, Inc. for the preparation of Final Design Services to complete the design and construction documents for the River Trunk Realignment project, and
WHEREAS, given the cost and different components of the overall project, staff determined the best approach was to separate the project into three separate projects, and WHEREAS, due to the size and complexity of this project, staff recommends utilizing consultants to provide construction management and inspection services as well as design support during construction, and
WHEREAS, on March 28, 2020, by Resolution No. 2020-201, Council approved a pre-qualified consultant list for Construction Management and Inspection Services for various Capital Improvement Program projects, and
WHEREAS, on May 29, 2020, a Request for Proposals (RFP) was issued for Projects 2 and 3, to the City’s five prequalified firms who provide Construction Management and Inspection Services, and
WHEREAS, staff received proposals from four firms, and
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WHEREAS, in accordance with Modesto Municipal Code 8-3.204(a) Exceptions to Formal Bidding Requirements, this agreement is for professional services and, therefore, exempt from the bid requirement. However, staff proceeded with the RFP process pursuant to Administrative Directive 3.1 and recommends approval of an agreement with West Yost Associates, for Construction Management and Inspection Services for the River Trunk Realignment Shackelford Pump Station Project.

NOW, THEREFORE BE IT RESOLVED, by the Council of the City of Modesto that it hereby approves an Agreement with West Yost Associates, in the amount of $1,495,674, plus $149,567 in additional services (if needed), for a total amount not to exceed $1,645,241 for Construction Management and Inspection Services for the River Trunk Realignment Shackelford Pump Station Project.

BE IT FURTHER RESOLVED, that the City Manager, or his designee, is hereby authorized to execute the agreement in a form approved by the City Attorney. #34..
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 5th day of April 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _______________________________________
JOSE M. SANCHEZ, City Attorney
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING AN AGREEMENT WITH CAROLLO
ENGINEERS, INC., OF WALNUT CREEK, CA, FOR ENGINEERING SUPPORT

DURING CONSTRUCTION FOR THE RIVER TRUNK REALIGNMENT

SHACKELFORD PUMP STATION PROJECT, IN AN AMOUNT NOT TO
EXCEED $1,182,608 FOR THE IDENTIFIED SCOPE OF SERVICES, PLUS $118,261 FOR ADDITIONAL SERVICES (IF NEEDED) FOR A TOTAL AMOUNT NOT TO EXCEED $1,300,869 AND AUTHORIZING THE CITY

MANAGER, OR HIS DESIGNEE TO EXECUTE THE AGREEMENT
WHEREAS, on April 4th, 2014, by Resolution No. 2014-121, Council approved an agreement with Carollo Engineers, Inc., (Carollo) for the preparation of a Preliminary Design Report, which serves as the basis of design for the Project, and WHEREAS, on March 22nd, 2016 by Resolution No. 2016-125, Council approved an agreement with Carollo for Final Design Services for the River Trunk Realignment Project, and
WHEREAS, considering the size and complexity of the River Trunk Shackelford Pump Station project, and that Carollo is the Engineer-of-Record for the project, Engineering Support During Construction will be needed from Carollo to ensure construction of the facilities meets the original design described in the plans and specifications, and
WHEREAS, Administrative Directive 3.1 allows for an accelerated selection process, if in the best interest of the City, where a consultant may be secured for specific projects to provide professional services, and
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WHEREAS, in accordance with Modesto Municipal Code 8-3.204 Exceptions to Formal Bidding Requirements, this agreement is for professional services and, therefore, exempt from the bid requirement.

NOW, THEREFORE BE IT RESOLVED by the Council of the City of Modesto that it hereby approves an agreement with Carollo Engineers, Inc., for Engineering Support During Construction for the River Trunk Realignment Shackelford Pump Station Project in an amount not to exceed $1,182,608 for the identified scope of services, plus $118,261 for additional services, if needed, for a maximum total amount of $1,300,869.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the agreement, in a form approved by the City Attorney.

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION AMENDING THE FISCAL YEAR 2021-22 CAPITAL
IMPROVEMENT PROGRAM BUDGET IN THE AMOUNT OF $14,593,613 TO

BE TRANSFERRED INTO THE PROJECT FROM WASTEWATER RESERVES

TO FULLY FUND THE CONSTRUCTION, CONTINGENCY, CONSTRUCTION

ADMINISTRATION AND DESIGN SUPPORT DURING CONSTRUCTION FOR

THE RIVER TRUNK REALIGNMENT SHACKELFORD PUMP STATION

PROJECT AND AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE,

TO IMPLEMENT THE PROVISIONS OF THIS RESOLUTION
WHEREAS, on January 25, 2022, bids were publicly opened, pursuant to City Charter Section 1307, and
WHEREAS, five bids were received, and
WHEREAS, due to the size and complexity of the project and the associated construction costs, certain budgetary transactions are necessary in the amount of $14,593,613 in order to fully fund the construction, contingency, construction administration and design support during construction for the River Trunk Realignment Shackelford Pump Station Project, and
WHEREAS, the Fiscal Year 2021-22 Capital Improvement Program Budget must be amended.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the amendment of the Fiscal Year 2021-22 Capital Improvement Program Budget in the amount of $14,593,613 to be transferred into the project from Wastewater Fund Reserves.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to implement the provisions of this resolution. #34..
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 5th day of April 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
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A-1 City of Modesto
2022-11 River Trunk Realignment Shackelford Pump Station

CONTRACT
This Agreement, made and entered into in the City of Modesto, County of Stanislaus, State of California, this ______ day of _____________, 2022, by and between the City of Modesto, a municipal corporation of the State of California, hereinafter called City, and MOUNTAIN CASCADE, INC., a California corporation, hereinafter called Contractor, R E C I T A L S :

WHEREAS, the City Manager of the City of Modesto, authorized the call for bids, approved the Plans and Specifications prepared under the direction of the Director of Utilities Department for the RIVER TRUNK REALIGNMENT SHACKELFORD PUMP STATION project and directed the City Clerk to advertise for sealed bids for doing said work and providing that bids be submitted on the ______ day of ___________ 2022; and WHEREAS, the City Clerk, thereafter duly and regularly caused a notice to be published in the manner and for the time prescribed by law; and WHEREAS, Contractor, pursuant to the provisions of said notice duly filed a bid with the City Clerk, a true copy of which is now on file in the office of the City Clerk of the City of Modesto, and is hereby referred to and by this reference made a part hereof as fully as if set forth at length herein; and
WHEREAS, all bids received pursuant to said notice were opened and examined and publicly declared at the time specified in said advertisement for bids and at a regular meeting of the City Council held on the ____ day of ____________, 2022 by Resolution 2022-____ the Council found and declared the bid of Contractor to be the lowest responsive bid and thereupon awarded a Contract to Contractor to do the Work referred to in the aforementioned Plans and Specifications.

NOW, THEREFORE, the parties hereto mutually agree as follows:
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CONSTRUCTION MANAGEMENT SERVICES AGREEMENT FOR THE

RIVER TRUNK REALIGNMENT SHACKELFORD PUMP STATION PROJECT THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2022, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and WEST YOST ASSOCIATES, INC., a California corporation, hereinafter referred to as "Consultant".

This Agreement is made with regard to the following recitals:

A. The City has determined that Construction Management Services are necessary for the Shackelford Pump Station Project.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "project". The Consultant shall perform the services as described in Exhibit "A" in a manner compatible with the standards of its profession, and shall produce a fully complete project that is acceptable to City.

2. TERM OF AGREEMENT.

This Agreement is effective as of the date first written above and will continue in effect until City's acceptance of and payment for all services authorized by City and #34..
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performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents commonly referred to as “project” attached hereto as Exhibit "A" and made a part hereof. City hereby gives Consultant notice to proceed with the preparation of the project in the manner described in Exhibit "A", as of the Effective Date of this agreement. Consultant shall diligently proceed with the preparation of the project and agrees to complete said preparation within the time period set forth in Exhibit "A".

3. COMPENSATION.

Consultant agrees to accept a sum not to exceed ONE MILLION FOUR HUNDRED NINETY-FIVE THOUSAND SIX HUNDRED SEVENTY-FOUR AND 00/100 DOLLARS ($1,495,674) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for Modesto in accordance with Exhibit "A" attached hereto and for performance by Consultant of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.

The Compensation shall be paid pursuant in the manner and at the times set forth below:

City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any out-of-pocket costs paid by Consultant in connection with work performed on this project. #34..
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Additional services may be authorized by the City Manager in an amount up to, but not to exceed ten percent (10%) of the agreed maximum compensation, or ONE HUNDRED FORTY-NINE THOUSAND FIVE HUNDRED SIXTY-SEVEN AND 00/100 DOLLARS ($149,567). In the event that additional services are deemed necessary, the Consultant shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed ONE MILLION SIX HUNDRED FORTY-FIVE THOUSAND TWO HUNDRED FORTY-ONE AND 00/100 DOLLARS ($1,645,241). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.

4. OBLIGATIONS OF CONSULTANT.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.

5. PERFORMANCE BY KEY EMPLOYEE.

Consultant has represented to City that JP Davis, will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that ten percent (10%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.

6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.

All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City.
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7. NEWS AND INFORMATION RELEASE.

Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from City through the City Manager.

8. INTEREST OF CONTRACTOR.

Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this contract if so required at the option of City.

9. AMENDMENTS.

Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services. #34..
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10. INDEPENDENT CONTRACTOR.

Consultant has no authority or responsibility to exercise any rights or power vested in the City.

No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.

Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.

Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement.

Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.
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If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.

It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.

It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

As an independent contractor, Consultant hereby indemnifies and holds City harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.

11. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.

12. PATENT/COPYRIGHT MATERIALS.

Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.
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13. NOTICES.

Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:

FOR CONSULTANT: Name: West Yost Associates, Inc.

Address: 2020 Research Park Drive
Suite 100
Davis, CA 95618
Attention: JP Davis
Phone: (530) 756-5905
Email: [email protected]
FOR CITY: Name: City of Modesto
Address: 1010 10th Street
Suite 4600
Modesto, CA 95354
Attention: Jesse Franco
Phone (209) 571-5175
Email: [email protected]

14. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of California and shall #34..
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provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the City by certified mail, return receipt requested, for all of the following stated insurance policies.

In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for non-payment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. (b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises #34..
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and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work.

If at any time any of said policies shall be unsatisfactory to the City, as to form or substance, or if a company issuing such policy shall be unsatisfactory to the City, the Consultant shall promptly obtain a new policy, submit the same to the Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated.

Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special #34..
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limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed.

CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. All endorsements referenced above must include the applicable policy number.

For any claims related to this project, the CONSULTANT’S insurance coverage shall be primary insurance as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the Entity, its officers, officials, employees, or volunteers shall be excess of the CONSULTANT’S insurance and shall not contribute with it.

15. TERMINATION OF AGREEMENT.

Termination by City for Default of Consultant
Should Consultant default in the performance of this Agreement or materially breach any of its provisions, at its option, City may terminate this Agreement by giving written notification to Consultant. The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, but not be limited to, any of the following: failure to perform required services or duties, willful destruction of City's property by Consultant, dishonesty or theft. #34..
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Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such #34..
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subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process; e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project. i. The Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain
unacceptable and/or not useful to City as of the termination date. #34..
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City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.

Authorization to Terminate Agreement
Termination of the Agreement may be invoked by the City Manager, or his/her designee, subject to the right of the Consultant to appeal the City Manager, or his/her designee’s, decision to the City Council. The Consultant shall appeal by notifying the City Clerk in writing within ten (10) calendar days of receipt of written notification from City of termination of the Agreement. In the event that termination of this Agreement is upheld by the City Council, any cessation of payment of delay claims, extended claims, Eichleay claims, or any other claims for delay shall be retroactive to the date of termination selected by the City Manager, or his/her designee.
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16. CERTIFIED PAYROLL REQUIREMENT.

For consultants performing field work on public works contracts on which prevailing wages are required: The Consultant shall comply with the provisions of Section 1776 of the California Labor Code, regarding payroll records, and shall require its subconsultants and subcontractors to comply with that section as may be required by law.

17. INDEMNITY.

The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of Consultant, or its agents, officers, employees, or volunteers relating to or during the performance of its obligations under this Agreement.

Consultant's obligation to defend, indemnify, and hold the City, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for Consultant to procure and maintain a policy of insurance.

18. DISPUTE RESOLUTION.

All claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be determined by binding arbitration in Modesto, California by one arbitrator, except as otherwise specified in this Agreement. The American Arbitration #34..
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Association shall administer the arbitration under its Arbitration Rules then in effect, subject to the modifications of those rules contained in this paragraph. This agreement to arbitrate shall be specifically enforceable under the prevailing law of any court having jurisdiction, and the award rendered by the arbitrator may be entered in any court having jurisdiction. The appropriate venue for any arbitration or court proceeding relating to or arising out of this provision shall be in Stanislaus County, California.

This paragraph is not intended to and does not waive the claim filing requirements found in California Government Code section 900 et seq. In the event that a timely and legally sufficient, arbitrable claim is filed by Consultant with City, and the claim is rejected in whole or in part by City, this paragraph shall result in the conclusive, final, and binding resolution of all the issues presented in the claim by Consultant so long as any issues presented by the claim are arbitrable. Claims rejected by City or by operation of law, shall be submitted by Consultant to arbitration pursuant to the Arbitration Rules of the American Arbitration Association within ninety (90) days after mailing of the written rejection by City to Consultant.

Otherwise, the claim or claims shall be deemed waived in their entirety.

The “fast track’ rules of the American Arbitration Association shall apply to any claim or counterclaim less than ONE HUNDRED FIFTY THOUSAND AND 00/100 ($150,000.00) DOLLARS. In arbitration not proceeding under the “fast track” rules, the arbitrator shall have the power to order that depositions be taken and other discovery be made.

Both City and Consultant shall have the right, upon written notice, to take no more than three (3) depositions of the other as a matter of right in an arbitration proceeding under the “fast track” rules.
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Whether or not City and Consultant may be engaged in interstate commerce, any controversy or dispute mentioned above shall be determined by, and the parties shall be bound by, the substantive law of the State of California, and not the Federal Arbitration Act at 9 USC Section 1 et seq.

The arbitrator may grant any remedy or relief deemed by the arbitrator just and equitable under the circumstances, whether or not such relief could be awarded in a court of law. The arbitrator shall be empowered to award monetary sanctions against a party for failure of cooperation in the arbitration. The arbitrator shall, in written award, allocate all the costs of the arbitration, including the fees of the arbitrator and the reasonable attorney fees of the prevailing party, against the party who did not prevail. The prevailing party shall be the party in whose favor the majority of the central issues in the case are resolved.

Notwithstanding anything in this provision to the contrary, the arbitrator shall have no power to award punitive damages or other damages not measured by the party’s actual damages (excluding litigation costs and fees) against any party. This limitation of the arbitrator’s powers under this Agreement shall not operate as an exclusion of the issue of punitive damages from this Agreement to Arbitrate sufficient to vest jurisdiction in a court with respect to that issue.

Consultant shall include in all subcontracts a specification whereby the subcontractor consents to being joined in an arbitration between City and Consultant involving the work of the subcontractor to be joined. Consultant’s failure to do so shall be a breach of this Agreement.
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The parties hereby waive any rights provided by Title 9.2 of the California Code of Civil Procedure, Section 1296. The arbitrator’s award shall be deemed final, conclusive and binding to the fullest extent allowed by California law.

19. ENTIRE AGREEMENT.

This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by shipment of any article or other commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.

20. PARTIAL INVALIDITY.

If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

21. WAIVER.

The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing. #34..
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22. AUDIT.

The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.

Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services. City's representative shall have the right to reproduce any of the aforesaid documents.

23. GOVERNING LAW.

This Agreement shall be governed according to the laws of the State of California.

24. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

25. COMPLIANCE WITH LAWS.

Consultant shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.

26. CITY BUSINESS LICENSE.

Consultant will have a City of Modesto business license. #34..
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IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2022- , adopted by the Council of the City of Modesto on the day of , 2022, and WEST YOST ASSOCIATES, INC. has caused this agreement to be duly executed in duplicate as of the Effective Date. #34..
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EXHIBIT A
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EXHIBIT A
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EXHIBIT A
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EXHIBIT A
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EXHIBIT A
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EXHIBIT A
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EXHIBIT A
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West Yost Associates
City of Modesto
River Trunk Realignment Shackleford Pump Station
Fee Estimate
Customization Mode Enabled (please exit out of this mode before closing workbook) Principal/Vice
President
Construction
Manager IV
Resident
Inspector
(Prevailing
Wage –
Group 2)
CM
Administrativ
e II
Technical
Specialist IV
Technical
Specialist IV
BSK
Ewing
Construction
Services
Bay Area
Coating
Consultants
Costs
West Yost Associates P/VP CM IV RI_G2 CMA II TS IV TS IV Hours Fee Technology BSK ECS BACC Sub. Other Total $300 $252 $189 $100 $227 $227 & Admin w/ markup Direct Costs PROJECT: River Trunk Shackleford PS Project K. Swazas JP Davis Jesse Shah Amy Rangel L. Brown Kenny Smith 6% KFDR 10% Task 1

1.01 Review Escrow Bid Documents 8 8 16 $ 4,416 265$ $ 1,650 $ 1,815 $ 6,496

1.02 Photo Document Existing Conditions 8 4 12 $ 1,912 115$ $ 2,027

1.03 Public Outreach 0

1.04 Preconstruction Conference 8 16 4 16 44 $ 8,788 527$ $ 9,315

1.05 Construction Management Work Plan 0

1.06 Setup Field Offices / Mobilization 16 12 24 52 $ 8,700 522$ $ 9,222 Subtotal, Task 1 (hours) 16 40 24 44 0 0 124
Subtotal, Task 1 ($) $ 4,800 $ 10,080 $ 4,536 $ 4,400 $ 23,816 1,429$ $ 1,650 $ 1,815 $ 27,060 Task 2

2.01 Public Outreach 40 40 80 $ 17,640 1,058$ $ 18,698

2.02 Site Safety 8 40 40 36 16 16 156 $ 30,904 1,854$ $ 32,758

2.03 Communications & Correspondence 60 80 140 $ 23,120 1,387$ $ 24,507

2.04 Progress Meetings 80 288 72 300 740 140,184 $ 8,411$ $ 148,595

2.05 Weekly & Monthly Reporting 304 120 424 $ 88,608 5,316$ $ 93,924

2.06 Submittals (assume 100) 200 100 300 $ 60,400 3,624$ $ 64,024

2.07 RFIs (assume 100 RFIs) 100 40 50 190 $ 37,760 2,266$ $ 40,026

2.08 PCOs and Change Orders (assume 50) 150 20 50 220 $ 46,580 2,795$ $ 49,375

2.09 Progress Payments 54 36 40 16 16 162 $ 31,676 1,901$ $ 33,577

2.10 Schedule Management 94 40 16 16 166 $ 38,512 2,311$ $ 40,823

2.11 Traffic Control 40 40 $ 7,560 454$ $ 8,014

2.12 Coordination with External Agencies 60 60 $ 11,340 680$ $ 12,020

2.13 Labor Compliance 32 40 72 $ 10,048 603$ $ 10,651

2.14 Constuction Vibration Monitoring 0

2.15 QA Inspection and Daily Reports 2200 160 160 2520 488,440 $ 29,306$ $ 10,500 $ 11,550 $ 529,296

2.16 Special Inspections 40 40 $ 7,560 454$ $ 8,000 $ 8,800 $ 16,814

2.17 Materials Testing 40 40 $ 7,560 454$ $ 45,000 $ 52,835 $ 60,849

2.18 Testing, Startup and Commissioning 160 60 160 160 540 124,300 $ 7,458$ $ 131,758

2.19 Disputes/Claims Avoidance & Resolution 40 40 20 100 $ 25,860 1,552$ $ 5,141 $ 5,655 $ 33,067

2.20 Punchlist and Final Inspection 20 60 80 $ 16,380 983$ $ 17,363

2.21 Project Closeout & Final Acceptance 20 20 40 $ 7,040 422$ $ 7,462

2.22 Project Partnering 24 48 24 96 $ 23,832 1,430$ $ 25,262 Subtotal, Task 2 (hours) 152 1618 2864 836 368 368 6206 Subtotal, Task 2 ($) $ 45,600 $ 407,736 $ 541,296 $ 83,600 $ 83,536 $ 83,536 $ 1,245,304 74,718$ $ 53,000 $ 5,141 $ 10,500 $ 1,398,862 78,840 $ Task 3

3.01 Transportation 0 $ 44,752 $ 44,752

3.02 Salary Escalations 0 $ 25,000 $ 25,000
Subtotal, Task 3 (hours) 0 0 0 0 0 0 0
Subtotal, Task 3 ($) $ 69,752 $ 69,752
TOTAL (hours) 168 1,658 2,888 880 368 368 6,330
TOTAL ($) $ 50,400 $ 417,816 $ 545,832 $ 88,000 $ 83,536 $ 83,536 $ 1,269,120 76,147$ $ 53,000 $ 6,791 $ 10,500 $ 80,655 $ 1,495,674 69,752 $ Level of Involvement 55% 96% 29% 12% 12%
Fee Estimate is based on the following assumptions/clarifications:

1. The duration for the project is 375 working days.

2. That a reasonably competent and collaborative general contractor is awarded the project.

3. The rates shown are effective through December 31, 2022. Salary escalation for all staff was factored at 3% starting in January 2023.

4. Construction inspectors' wage increases are determined by the Department of Industrial Relations. The increases for these positions could be higher than 3%.

5. The quantity of submittals and resubmittals was estimated at 100.

6. The quantity of RFIs for the project was estimated at 100.

7. The quantity of change orders was estimated at 50.

8. There is no apprentice inspector included in the estimate. The fee may need to be modified if the City requires an apprentice inspector be used for the project.

9. The proposed level of involvement for the West Yost staff is shown at the bottom of the fee table.

10. No budget was included for inspection staff overtime.

11. The Engineer's Estimate of probable construction cost: $8,000,670 Labor

EXHIBIT B
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ENGINEERING SERVICES DURING CONSTRUCTION AGREEMENT

FOR THE RIVER TRUNK REALIGNMENT SHACKELFORD

PUMP STATION PROJECT
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2022, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and CAROLLO ENGINEERS, INC., a Delaware corporation, hereinafter referred to as "Consultant".

This Agreement is made with regard to the following recitals:

A. The City has determined that Engineering Services During Construction are necessary for the River Trunk Realignment Shackelford Pump Station Project.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

2. TERM OF AGREEMENT.

This Agreement is effective as of the date first written above and will continue in effect until City's acceptance of and payment for all services authorized by City and #34..
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performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.

3. COMPENSATION.

Consultant agrees to accept a sum not to exceed $1,182,608 (ONE

MILLION ONE HUNDRED EIGHTY-TWO THOUSAND SIX HUNDRED EIGHT AND 00/100 DOLLARS) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for Modesto in accordance with Exhibit "A" attached hereto and for performance by Consultant of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.

The Compensation shall be paid pursuant in the manner and at the times set forth below:

City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any out-of-pocket costs paid by Consultant in connection with work performed on this project. #34..
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Additional services may be authorized by the City Manager in an amount up to, but not to exceed ten percent (10%) of the agreed maximum compensation, or $118,261 (ONE HUNDRED EIGHTEEN THOUSAND TWO HUNDRED SIXTY-ONE AND 00/100 DOLLARS). In the event that additional services are deemed necessary, the Consultant shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed $1,300,869 (ONE MILLION THREE HUNDRED THOUSAND EIGHT HUNDRED SIXTY-NINE AND 00/100 DOLLARS). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.

4. OBLIGATIONS OF CONSULTANT.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.

Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.
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Consultant is not responsible for damage or delay in performance caused by events beyond the reasonable control of Consultant. In the event Consultant’s services are suspended, delayed or interrupted for the convenience of the City or delays occur beyond the reasonable control of Consultant, an equitable adjustment in Consultant’s time of performance and cost of Consultant’s personnel and subcontractors may be made.

5. PERFORMANCE BY KEY EMPLOYEE.

Consultant has represented to City that Ryan Sellman, will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that ten percent (10%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.

6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

Title to Data
If, as a part of the agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this agreement will be delivered to City upon the completion or termination of services under the contract. #34..
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All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City.

7. NEWS AND INFORMATION RELEASE.

8. INTEREST OF CONTRACTOR.

9. AMENDMENTS.

Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work. #34..
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Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services.

10. INDEPENDENT CONTRACTOR.

Consultant has no authority or responsibility to exercise any rights or power vested in the City.

If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.

11. INDEPENDENT CONTRACTOR. It is understood and
agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.

It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

12. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.

13. PATENT/COPYRIGHT MATERIALS.
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Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.

14. NOTICES.

FOR CONSULTANT: Name: Carollo Engineers, Inc.

Address: 2880 Gateway Oaks Drive
Suite 300
Sacramento, CA 95833
Attention: Tim Taylor
Phone: (916) 565-4888
Email: [email protected]
FOR CITY: Name: City of Modesto
Address: 1010 10th Street
Suite 4600
Modesto, CA 95354
Attention: Jesse Franco
Phone: (209) 571-5175
Email: [email protected]
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15. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation or reduction in the policy, notices of same shall be given to the Risk Manager of the City by certified mail, return receipt requested, for all of the following stated insurance policies.

In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for non-payment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. (b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General #34..
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Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work.

Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and #34..
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Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed.

16. TERMINATION OF AGREEMENT.

Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the City to do so, assign all right, #34..
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title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process; e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project. i. The Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the #34..
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project prior to the termination date and which remain
unacceptable and/or not useful to City as of the termination date.

City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.

17. CERTIFIED PAYROLL REQUIREMENT.

18. INDEMNITY.

19. DISPUTE RESOLUTION.

All claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be determined by binding arbitration in Modesto, California by one arbitrator, except as otherwise specified in this Agreement. The American Arbitration #34..
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Association shall administer the arbitration under its Arbitration Rules then in effect, subject to the modifications of those rules contained in this paragraph. This agreement to arbitrate shall be specifically enforceable under the prevailing law of any court having jurisdiction, and the award rendered by the arbitrator may be entered in any court having jurisdiction. The appropriate venue for any arbitration or court proceeding relating to or arising out of this provision shall be in Stanislaus County, California.

Otherwise, the claim or claims shall be deemed waived in their entirety.

Both City and Consultant shall have the right, upon written notice, to take no more than three (3) depositions of the other as a matter of right in an arbitration proceeding under the “fast track” rules.
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Whether or not City and Consultant may be engaged in interstate commerce, any controversy or dispute mentioned above shall be determined by, and the parties shall be bound by, the substantive law of the State of California, and not the Federal Arbitration Act at 9 USC Section 1 et seq.

Consultant shall include in all subcontracts a specification whereby the subcontractor consents to being joined in an arbitration between City and Consultant involving the work of the subcontractor to be joined. Consultant’s failure to do so shall be a breach of this Agreement.
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The parties hereby waive any rights provided by Title 9.2 of the California Code of Civil Procedure, Section 1296. The arbitrator’s award shall be deemed final, conclusive and binding to the fullest extent allowed by California law.

20. ENTIRE AGREEMENT.

21. PARTIAL INVALIDITY.

22. WAIVER.

23. AUDIT.

24. GOVERNING LAW.

This Agreement shall be governed according to the laws of the State of California.

25. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

26. COMPLIANCE WITH LAWS.

27. CITY BUSINESS LICENSE.

Consultant will have a City of Modesto business license.

28. THIRD PARTIES.
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The services to be performed by Consultant are intended solely for the benefit of the City. No person or entity not a signatory to this Agreement shall be entitled to rely on Consultant’s performance of its services hereunder, and no right to assert a claim against Consultant by assignment or indemnity rights or otherwise shall accrue to a third party as a result of this Agreement or the performance of Consultant’s services hereunder.

IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2022- , adopted by the Council of the City of Modesto on the day of , 2022, and CAROLLO ENGINEERS, INC. has caused this agreement to be duly executed in duplicate as of the Effective Date. #34..
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02A Modesto River Trunk Project 3 ESDC Scope v1.doc Page 1 of 4

SCOPE OF SERVICES
Engineering Services during Construction
for the
River Trunk Realignment Project
Shakelford Pump Station
Improvements Project
(Project No. 3)

PURPOSE OF PROJECT
The purpose of this task order is for the Consultant to provide Bid Phase and Engineering Services during Construction (ESDC) for the City of Modesto’s (City) River Trunk Realignment Project. More specifically, the Shakelford Pump Station (SPS) Improvements Project (Project No. 3).

Bid Phase and Engineering Services during Construction for the River Trunk Pump Station Improvements Project (Project No. 1) and River Trunk Gravity Sewer Improvements Project (Project No. 2) are not included in this scope of work.

The Shakelford Pump Station Improvements Project (Project No. 3) generally includes the construction of the following:

The Shackelford Pump Station facilities including pump station wet well structure, electrical building, emergency power generator facility, connection at the upstream side of the existing double barrel 18-inch siphon facility.

Approximately 1,445 lineal feet of 18-inch single barrel forcemain (Alignment B) constructed via open cut method from the downstream side of the existing double barrel 18-inch siphon facility.

Approximately 1,104 lineal feet of 24-inch and 1,236 lineal feet of 8-inch gravity sewer pipeline (Alignment A) constructed via open cut method.

Approximately 366 of 6-inch gravity sewer pipeline (Alignment C) constructed via open cut method.

All sanitary sewer manholes, junction structures, and other appurtenances.

The estimated construction cost for the project is as follows:

SPS Improvements Project (Project No. 3) $ 10,200,000
Public construction of the project is scheduled to begin late spring of 2022. The construction is expected to be completed within the following time frame after the City has issued a Notice-toProceed (NTP) to the selected general contractor (Contractor):

SPS Improvements Project (Project No. 3) 18 months

EXHIBT A
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02A Modesto River Trunk Project 3 ESDC Scope v1.doc Page 2 of 4

SCOPE OF SERVICES
The scope of work is defined by the following tasks and the attached scope assumptions.

TASK 1.0 - PROJECT ADMINISTRATION AND MANAGEMENT
Task 1.01 - Project Administration and Management. Consultant will administer the scope of work and subconsultants to maintain schedule and budget under this task. Progress and budget status will be included in monthly progress reports that will be attached to billing invoices. The schedule for required services will also be developed and maintained under this task and will closely follow the Contractor's construction schedules.

TASK 2.0 - BID PHASE SERVICES
Task 2.01 - Attend Pre-Bid Meeting. Under this task Consultant will attend a pre-bid meeting to answer questions and discuss overall project intent. The City will facilitate this meeting and issue meeting minutes.

Task 2.02 - Answer Bidder Questions/Provide Addendums. This task includes providing assistance, to the City during the bidding period. The scope of work includes responding to bidders questions, preparing addenda to the contract documents during the advertisement period, and providing ongoing consultation and interpretation of the construction documents.

Task 2.03 - Develop Conformed Documents. Following the bid period, Consultant will prepare conformed construction documents (plans and specifications) and provide hard copies to the City for use during construction.

TASK 3.0 - ENGINEERING SERVICES DURING CONSTRUCTION (ESDC) Task 3.01 - Attend Pre-construction Conference. Consultant will attend the pre-construction conference, answer questions as directed by the City. Prepared meeting minutes (by others) will be reviewed by Consultant and review comments provided as required.

Task 3.02 - Biological Resource Surveys. Consultant will conduct pre-construction surveys for Swainson’s Hawks and other nesting birds at and near the project site, as described in Mitigation Measures BIO-10 and BIO-12, etc. It is assumed the project will start in the spring of 2022 and go through the summer of 2023. Surveys will be required each year (2022 and 2023) prior to the commencement of each phase of work.

Western Pond Turtle Surveys are also required per BIO-08. Two (2) surveys will be required prior to starting work near the river.

Elderberry shrub surveys and protection per BIO-05. Due to elderberry shrubs being in close proximity, the shrubs will need to be mapped and fenced. Worker training will also be required for workers working in the area. Besides the initial survey and flagging of shrubs, two (2) training sessions will be provided for the Contractor.

Twenty (20) Swainson Hawk Surveys (10 per year).

Nesting Bird Surveys will be completed with the Swainson Hawk Surveys.

EXHIBT A
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02A Modesto River Trunk Project 3 ESDC Scope v1.doc Page 3 of 4 Two (2) Western Pond Turtle Survey.

One (1) Elderberry Shrub Survey and marking.

Two (2) Elderberry Shrub Training Sessions.

Task 3.03 - Review Contractor’s Submittals. Review and comment on acceptability of Contractor’s submittals for the City will be provided under this task. Consultant will review and respond to product submittals and shop drawing submittals from the Contractor forwarded by the CM. Review comments will be returned to the CM for processing and distribution to the Contractor and other parties.

Task 3.04 - Respond to Requests for Information (RFI) and Design Clarifications. Consultant will respond to Contractor's RFI's and Design Clarifications (DC). This scope also assumes the CM will consider and evaluate validity of RFI's, questions, and modification requests prior to forwarding them to Consultant.

Task 3.05 - Design Engineer Oversight. Consultant will provide on-site field design support services to assist the City and CM with coordination between field construction activities and the office engineering team. This effort includes participation in the weekly progress meetings and conducting a site walk each week. The design engineer’s on-site effort is assumed to end when the project reaches substantial completion.

Task 3.06 - Review Proposed Change Orders (CO). Consultant will review changes in project scope or time, as requested by the CM. Consultant's scope of work shall include review of the CONTRACTOR furnished supporting information, discussions with Contractor and CM in the field and preparation of technical documents (supplemental drawings, specifications, etc.) to assist the CM with the preparation of the change order.

Task 3.07 - Develop Operations & Maintenance (O&M) Manual. Consultant will assemble documentation provided by equipment vendors in an Operations and Maintenance (O&M) Manual to assist City staff with the new equipment start-up and operations. Consultant will provide the City an electronic O&M Manual with all of the new equipment installed under this project for use by the City's operation staff. Consultant will use the City's existing electronic lift station O&M Manual template.

Task 3.08 - Assist with Startup and Training. When the Contractor has completed installation of all new equipment under this project and is prepared to begin start up, commissioning and testing, Consultant will assist Contractor and City staff with start-up of the pump station.

In addition, Consultant will prepare for and provide operator training for the new pump station equipment outside of vendor required training. Training will include one, 8-hour training session.

Printed training information will be provided for reference.

Task 3.09 - Prepare Punch List. When the project has reached substantial completion, Consultant's design engineering staff including the project manager, project engineer, structural engineer, mechanical engineer, and electrical engineer will walk the project site in the presence

EXHIBT A
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02A Modesto River Trunk Project 3 ESDC Scope v1.doc Page 4 of 4 of the CM, City staff, and Contractor and establish a list of items ("Punch List") to be completed.

This list will be issued as an attachment to the “Certificate of Substantial Completion.” Task 3.10 - Provide Record Drawings. The Contractor is required to provide the City and CM a final set of marked-up record (as-built) drawings. After substantial completion, Consultant will review the final version of the Contractor’s record (as-built) drawings compiled by the CM.

Consultant will then prepare a set of record drawings based on the Contractor’s mark-ups in electronic format and deliver the electronic documents to the City. Record drawings will be prepared using Consultant's standard record drawing format.

Project No. 3 - Scope Deliverables:

Monthly status reports
Meeting agendas and minutes
Addenda as required (Five (5) total)
Conformed documents (Per Assumptions list)
Biological resource survey reports (PDF electronic file) Submittal responses (PDF electronic format)
RFI and DC responses (PDF electronic format)
CO responses (PDF electronic format)
Site visit notes (PDF electronic format)
O&M Manual (PDF electronic format)
Training material (PDF electronic format)
Punch List (PDF electronic format)
Record Drawings (PDF electronic format)

TIME OF PERFORMANCE
Engineering Services during Construction are assumed to start in late spring 2020 and will continue for a period of eighteen (18) months. The eighteen (18) month duration is a based-on Notice to Proceed (NTP) through final completion of the project.

EXHIBT A
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EXHIBIT A
02B Modesto River Trunk Project 3 ESDC Scope Assumptions.doc Page A.1 of A.2

SCOPE ASSUMPTIONS
Engineering Services during Construction
For the
River Trunk Realignment Project
Shakelford Pump Station
Improvements Project
(Project No. 3)

ASSUMPTIONS
The Shakelford Pump Station Improvements Project (Project No. 3) duration is estimated to be eighteen (18) months.

City will manage all bid package reproduction and delivery to prospective bidders.

Conformed documents will include the following hard copies:
o Five (5) full size plan sets (22x34)
o Fifteen (15) half size plan sets (11x17)
o Twenty (20) specification books (8½x11)
City to perform construction inspection and construction management services for the project.

Design Engineer Oversight included for project. Design Engineer Oversight to include a project engineer for one (1) days each week and a staff engineer for three (3) days a week over the course of the eighteen (18) month construction duration.

Submittals and RFI’s are initiated, submitted and logged into the document processing system for the project by the Contractor, which are then reviewed and forwarded as necessary by the Construction Manager (CM).

Start-up and testing will be one (1) week in duration.

The CM will perform preliminary review of shop drawings to confirm format and presentation meet the requirements of the contract documents.

The CM will be responsible for review of all of the Contractor's construction management related submittals including Contractor's schedules, schedule of values, and progress payment requests.

The CM will be responsible for incorporating Consultant's technical documents into change order documents for the City's approval prior to issuing them to the Contractor.

EXHIBT A
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EXHIBIT A
02B Modesto River Trunk Project 3 ESDC Scope Assumptions.doc Page A.2 of A.2 City of Modesto
Submittal, RFI and CO Basis of Assumptions
Task Initial Revised
No. Description No. Hours No. Hours

Shackelford Pump Station Improvements Project (Project No. 3)

3.2 Review Contractor Submittals 100 6 50 4

3.3 Respond to RFI's 25 6 0 0

3.5 Review Proposed CO's 10 6 0 0

EXHIBT A
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EXHIBIT B

BUDGET ESTIMATE

BID PHASE AND ENGINEERING SERVICES DURING CONSTRUCTION
City of Modesto
River Trunk Improvements Project
SHAKELFORD PUMP STATION (PROJECT No. 3)
Struct. Elect. Civil PECE

SP SP SP PP PP PP PP PP PP AP
Rates $294 $294 $294 $264 $264 $264 $264 $264 $264 $182 $165 $120 Hours Budget $13.00
Moore
Biological
Consultants 10.0%
Column 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Task 1 - PROJECT MANAGEMENT

1.01 Project Administration and Management 18 72 0 80 0 0 0 0 0 40 0 40 250 $59,660 $3,250 $0 $0 $0 $5,500 $0 $0 $0 $5,500 $550 $0 $842 $10,142 $69,802 Task 1 Total Hours 18 72 0 80 0 0 0 0 0 40 0 40 250
Task 1 Total Budget $5,292 $21,168 $0 $21,120 $0 $0 $0 $0 $0 $7,280 $0 $4,800 $59,660 $3,250 $0 $0 $0 $5,500 $0 $0 $0 $5,500 $550 $0 $842 $10,142 $69,802 Task 2 - Bid Phase Services

2.01 Attend Pre-Bid Meeting 0 4 0 4 0 0 0 0 0 0 0 2 10 $2,472 $130 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $211 $341 $2,813

2.02 Answer Bidder Questions/Provide Addendums 4 4 0 40 16 16 16 0 16 40 16 16 184 $41,648 $2,392 $0 $0 $0 $2,500 $0 $0 $0 $2,500 $250 $0 $0 $5,142 $46,7902.03 Develop Conformed Documents 2 2 0 8 0 0 0 0 0 16 12 16 56 $10,100 $728 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $0 $3,728 $13,828 Task 2 Total Hours 6 10 0 52 16 16 16 0 16 56 28 34 250 Task 2 Total Budget $1,764 $2,940 $0 $13,728 $4,224 $4,224 $4,224 $0 $4,224 $10,192 $4,620 $4,080 $54,220 $3,250 $0 $0 $0 $2,500 $0 $0 $0 $2,500 $250 $3,000 $211 $9,211 $63,431 Task 3 - Engineering Services during Construction

3.01 Attend Pre-construction Conference 4 4 0 4 0 0 0 0 0 4 2 2 20 $4,706 $260 $0 $0 $0 $2,000 $0 $0 $0 $2,000 $200 $0 $211 $2,671 $7,377

3.02 Biological Resource Surveys 0 2 0 8 0 0 0 0 0 16 0 4 30 $6,092 $390 $0 $0 $0 $0 $0 $42,000 $0 $42,000 $4,200 $0 $0 $46,590 $52,6823.03 Review Contractor’s Submittals 4 8 0 40 24 80 24 0 40 160 0 40 420 $92,360 $5,460 $0 $0 $0 $8,000 $0 $0 $0 $8,000 $800 $0 $0 $14,260 $106,6203.04 Respond to RFI’s and DC's 4 4 0 8 32 80 16 0 80 80 0 8 312 $74,896 $4,056 $0 $0 $0 $5,500 $0 $0 $0 $5,500 $550 $0 $0 $10,106 $85,0023.05 Design Engineer Oversight 0 0 0 624 0 0 0 0 0 1872 0 624 3120 $580,320 $40,560 $0 $0 $0 $5,000 $0 $0 $0 $5,000 $500 $0 $24,640 $70,700 $651,020

3.06 Review Proposed Change Orders 4 8 0 8 8 16 8 0 0 16 8 8 84 $19,280 $1,092 $0 $0 $0 $8,000 $0 $0 $0 $8,000 $800 $0 $0 $9,892 $29,172

3.07 Develop Operations & Maintenance Manuals 4 8 0 16 0 16 0 0 16 40 16 16 132 $28,040 $1,716 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,716 $29,756

3.08 Assist with Startup and Training 2 8 0 40 4 40 4 0 40 40 8 8 194 $46,292 $2,522 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,500 $4,022 $50,314

3.09 Prepare Punch List 2 2 0 4 4 4 4 2 4 8 0 4 38 $8,920 $494 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $500 $994 $9,914

3.10 Prepare Record Drawings 2 4 0 16 4 4 4 0 4 40 40 4 122 $24,572 $1,586 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,360 $0 $2,946 $27,518 Task 3 Total Hours 26 48 0 768 76 240 60 2 184 2276 74 718 4472 Task 3 Total Budget $7,644 $14,112 $0 $202,752 $20,064 $63,360 $15,840 $528 $48,576 $414,232 $12,210 $86,160 $885,478 $58,136 $0 $0 $0 $28,500 $0 $42,000 $0 $70,500 $7,050 $1,360 $26,851 $163,897 $1,049,375 Total Hours 50 130 0 900 92 256 76 2 200 2372 102 792 4972 Total Costs $ 14,700 $ 38,220 $ - $ 237,600 $ 24,288 $ 67,584 $ 20,064 $ 528 $ 52,800 $ 431,704 $ 16,830 $ 95,040 $ 999,358 64,636$ -$ -$ -$ 36,500 $ -$ 42,000 $ -$ $ 78,500 $ 7,850 4,360$ 27,904$ $ 183,250 $ 1,182,608 Blackwater
TASK

CAROLLO OTHER DIRECT COSTS COST SUMMARY
PIC PM QA/QC PE Hydraulic Mech.

CADD Tech. Clerical
Subtotals
Northstar
Odell
Crawford
Bennett Trenchless
Exaro
Subconsultant
Subtotals Travel Total ODCs Total Cost
Misc.

Costs and
Printing
https://carolloh2o-my.sharepoint.com/personal/ttaylor_carollo_com/Documents/Documents/Data/Modesto/9551A10/Contracts/ESDC/Project No. 3/02C Modesto River Trunk ESDC Budget Project No 03.xlsx EXHIBT B #34..
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Bid Tabulation Wednesday, January 26, 2022
Project Title: River Trunk Realignment Shackelford Pump Station
Project ID #: 2022-011
Vault ID #: 12-D-0548
Account #: 101290
Bid Opening: 1/25/2022 at 11:00 AM
Basis of Award: By Base Bid Designer: Carollo
Design Manager: Cristian Ciotau
Project Description: Project consists of a Pump Station on the East Side of the Tuolumne River, a force main through Dryden Golf Course and Gravity Trunk that connects to the sewer on Colorado & Pelton Avenue.

Item # Item Description Units Quantity Unit Price Extension Apparent Low Bidder
Mountain Cascade Inc.
(925) 373-8370 555 Exchange Court, Livermore, CA 94551
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $350,000.00 $350,000.00 greater than 4% of the Total Base Bid Price)
2 Sheeting, Shoring, and Bracing LS 1 $100,000.00 $100,000.00 3 Commissioning (not to be less than 1% of LS 1 $150,000.00 $150,000.00 the Total Base Bid Price)
4 Site Safety- Barricades, Trenching, LS 1 $20,000.00 $20,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $90,000.00 $90,000.00
6 SWPPP Installation and Maintenance LS 1 $40,000.00 $40,000.00 7 Construction CPM Baseline Schedule and LS 1 $25,000.00 $25,000.00 Monthly Updates
8 Subsurface Utility Investigations LS 1 $40,000.00 $40,000.00 9 Survey Monument Preservation LS 1 $5,000.00 $5,000.00 10 Shackelford Pump Station LS 1 $5,222,181.00 $5,222,181.00 11 Grinder Pump Station LS 1 $124,000.00 $124,000.00
12 Golf Course Junction Structure LS 1 $220,000.00 $220,000.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $781.00 $886,435.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $30,000.00 $150,000.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $410.00 $594,500.00 Side of River)
16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $275.00 $330,000.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $31,000.00 $186,000.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $90,000.00 $90,000.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $178.00 $15,664.00 (West Side of River)
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Item # Item Description Units Quantity Unit Price Extension 20 1.25-inch Sanitary Sewer Force Main (West LF 270 $60.00 $16,200.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $74.00 $563,880.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $930.00 $162,750.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $42,000.00 $126,000.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $190,000.00 $190,000.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $26,000.00 $26,000.00 26 AC/AB for Pump Station Site SY 1405 $63.00 $88,515.00 27 Trench Pavement Patching SY 1950 $53.00 $103,350.00
28 Golf Course Turf (Sod) Restoration SY 9981 $11.00 $109,791.00 29 Golf Course Hydroseeding Restoration SY 1311 $5.00 $6,555.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $50,000.00 $50,000.00 Identified in This Bid Schedule
Total: $10,156,821.00
Percent From Engineer's Estimate: 26.95%
T & S Construction Co. Inc.
(916) 381-3052 6108 Hedge Ave., Sacramento, CA 95829
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $350,000.00 $350,000.00 greater than 4% of the Total Base Bid Price)
2 Sheeting, Shoring, and Bracing LS 1 $260,000.00 $260,000.00 3 Commissioning (not to be less than 1% of LS 1 $125,000.00 $125,000.00 the Total Base Bid Price)
4 Site Safety- Barricades, Trenching, LS 1 $50,000.00 $50,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $80,000.00 $80,000.00
6 SWPPP Installation and Maintenance LS 1 $70,000.00 $70,000.00 7 Construction CPM Baseline Schedule and LS 1 $5,000.00 $5,000.00 Monthly Updates
8 Subsurface Utility Investigations LS 1 $90,000.00 $90,000.00 9 Survey Monument Preservation LS 1 $5,000.00 $5,000.00 10 Shackelford Pump Station LS 1 $4,920,000.00 $4,920,000.00 11 Grinder Pump Station LS 1 $200,000.00 $200,000.00
12 Golf Course Junction Structure LS 1 $325,000.00 $325,000.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $650.00 $737,750.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $32,000.00 $160,000.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $340.00 $493,000.00 Side of River)
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Item # Item Description Units Quantity Unit Price Extension 16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $380.00 $456,000.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $25,000.00 $150,000.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $140,000.00 $140,000.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $190.00 $16,720.00 (West Side of River)
20 1.25-inch Sanitary Sewer Force Main (West LF 270 $125.00 $33,750.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $95.00 $723,900.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $850.00 $148,750.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $25,000.00 $75,000.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $230,000.00 $230,000.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $20,000.00 $20,000.00 26 AC/AB for Pump Station Site SY 1405 $85.00 $119,425.00 27 Trench Pavement Patching SY 1950 $125.00 $243,750.00 28 Golf Course Turf (Sod) Restoration SY 9981 $15.00 $149,715.00 29 Golf Course Hydroseeding Restoration SY 1311 $13.00 $17,043.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $545,000.00 $545,000.00 Identified in This Bid Schedule
Total: $11,014,803.00
Percent From Engineer's Estimate: 37.67%
Steve P. Rados, Inc.
(714) 835-4612 PO Box 15128, Santa Ana, CA, 92735
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $445,000.00 $445,000.00 greater than 4% of the Total Base Bid Price)
2 Sheeting, Shoring, and Bracing LS 1 $400,000.00 $400,000.00 3 Commissioning (not to be less than 1% of LS 1 $115,000.00 $115,000.00 the Total Base Bid Price)
4 Site Safety- Barricades, Trenching, LS 1 $20,000.00 $20,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $95,000.00 $95,000.00
6 SWPPP Installation and Maintenance LS 1 $105,000.00 $105,000.00 7 Construction CPM Baseline Schedule and LS 1 $4,000.00 $4,000.00 Monthly Updates
8 Subsurface Utility Investigations LS 1 $95,000.00 $95,000.00 9 Survey Monument Preservation LS 1 $25,000.00 $25,000.00 10 Shackelford Pump Station LS 1 $6,115,000.00 $6,115,000.00 11 Grinder Pump Station LS 1 $200,000.00 $200,000.00
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Item # Item Description Units Quantity Unit Price Extension 12 Golf Course Junction Structure LS 1 $250,000.00 $250,000.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $475.00 $539,125.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $24,000.00 $120,000.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $380.00 $551,000.00 Side of River)
16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $150.00 $180,000.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $24,000.00 $144,000.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $80,000.00 $80,000.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $110.00 $9,680.00 (West Side of River)
20 1.25-inch Sanitary Sewer Force Main (West LF 270 $75.00 $20,250.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $100.00 $762,000.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $800.00 $140,000.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $28,000.00 $84,000.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $200,000.00 $200,000.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $45,000.00 $45,000.00 26 AC/AB for Pump Station Site SY 1405 $75.00 $105,375.00 27 Trench Pavement Patching SY 1950 $30.00 $58,500.00
28 Golf Course Turf (Sod) Restoration SY 9981 $20.00 $199,620.00 29 Golf Course Hydroseeding Restoration SY 1311 $18.00 $23,598.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $10,000.00 $10,000.00 Identified in This Bid Schedule
Total: $11,216,148.00
Percent From Engineer's Estimate: 40.19%
W.M. Lyles Co.
(559) 441-1900 PO Box 4377, Fresno, CA 93744-4377
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $270,000.00 $270,000.00 greater than 4% of the Total Base Bid Price)
2 Sheeting, Shoring, and Bracing LS 1 $174,800.00 $174,800.00 3 Commissioning (not to be less than 1% of LS 1 $309,800.00 $309,800.00 the Total Base Bid Price)
4 Site Safety- Barricades, Trenching, LS 1 $10,800.00 $10,800.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $128,500.00 $128,500.00
6 SWPPP Installation and Maintenance LS 1 $80,300.00 $80,300.00 7 Construction CPM Baseline Schedule and LS 1 $32,400.00 $32,400.00 Monthly Updates
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Item # Item Description Units Quantity Unit Price Extension 8 Subsurface Utility Investigations LS 1 $131,300.00 $131,300.00 9 Survey Monument Preservation LS 1 $14,300.00 $14,300.00 10 Shackelford Pump Station LS 1 $6,174,835.00 $6,174,835.00 11 Grinder Pump Station LS 1 $240,000.00 $240,000.00
12 Golf Course Junction Structure LS 1 $393,900.00 $393,900.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $656.00 $744,560.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $40,500.00 $202,500.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $310.00 $449,500.00 Side of River)
16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $339.00 $406,800.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $33,300.00 $199,800.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $17,100.00 $17,100.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $450.00 $39,600.00 (West Side of River)
20 1.25-inch Sanitary Sewer Force Main (West LF 270 $198.00 $53,460.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $85.00 $647,700.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $1,278.00 $223,650.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $77,900.00 $233,700.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $354,200.00 $354,200.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $55,600.00 $55,600.00 26 AC/AB for Pump Station Site SY 1405 $106.00 $148,930.00 27 Trench Pavement Patching SY 1950 $48.00 $93,600.00
28 Golf Course Turf (Sod) Restoration SY 9981 $17.00 $169,677.00 29 Golf Course Hydroseeding Restoration SY 1311 $8.00 $10,488.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $381,200.00 $381,200.00 Identified in This Bid Schedule
Total: $12,468,000.00
Percent From Engineer's Estimate: 55.84%
Myers & Sons Construction, LLC
(916) 283-9950 4600 Northgate Blvd., Suite 100, Sacramento, CA 95834 Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $500,000.00 $500,000.00 greater than 4% of the Total Base Bid Price)
2 Sheeting, Shoring, and Bracing LS 1 $50,000.00 $50,000.00 3 Commissioning (not to be less than 1% of LS 1 $150,000.00 $150,000.00 the Total Base Bid Price)
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Item # Item Description Units Quantity Unit Price Extension 4 Site Safety- Barricades, Trenching, LS 1 $120,000.00 $120,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $100,000.00 $100,000.00
6 SWPPP Installation and Maintenance LS 1 $54,000.00 $54,000.00 7 Construction CPM Baseline Schedule and LS 1 $30,000.00 $30,000.00 Monthly Updates
8 Subsurface Utility Investigations LS 1 $100,000.00 $100,000.00 9 Survey Monument Preservation LS 1 $8,000.00 $8,000.00 10 Shackelford Pump Station LS 1 $6,668,956.00 $6,668,956.00 11 Grinder Pump Station LS 1 $90,000.00 $90,000.00
12 Golf Course Junction Structure LS 1 $145,000.00 $145,000.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $741.00 $841,035.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $42,420.00 $212,100.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $452.00 $655,400.00 Side of River)
16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $518.00 $621,600.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $37,370.00 $224,220.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $145,000.00 $145,000.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $150.00 $13,200.00 (West Side of River)
20 1.25-inch Sanitary Sewer Force Main (West LF 270 $65.00 $17,550.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $120.00 $914,400.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $1,529.00 $267,575.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $62,620.00 $187,860.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $294,000.00 $294,000.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $28,000.00 $28,000.00 26 AC/AB for Pump Station Site SY 1405 $92.00 $129,260.00 27 Trench Pavement Patching SY 1950 $40.00 $78,000.00
28 Golf Course Turf (Sod) Restoration SY 9981 $14.00 $139,734.00 29 Golf Course Hydroseeding Restoration SY 1311 $10.00 $13,110.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $36,000.00 $36,000.00 Identified in This Bid Schedule
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Item # Item Description Units Quantity Unit Price Extension Engineer's Estimate
Base Bid
3 Commissioning (not to be less than 1% of LS 1 $120,000.00 $120,000.00 the Total Base Bid Price)
4 Site Safety- Barricades, Trenching, LS 1 $30,000.00 $30,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
5 Traffic Control LS 1 $30,000.00 $30,000.00
6 SWPPP Installation and Maintenance LS 1 $50,000.00 $50,000.00 7 Construction CPM Baseline Schedule and LS 1 $10,000.00 $10,000.00 Monthly Updates
8 Subsurface Utility Investigations LS 1 $70,000.00 $70,000.00 9 Survey Monument Preservation LS 1 $7,000.00 $7,000.00 10 Shackelford Pump Station LS 1 $2,600,000.00 $2,600,000.00 11 Grinder Pump Station LS 1 $45,000.00 $45,000.00
12 Golf Course Junction Structure LS 1 $200,000.00 $200,000.00 13 24-inch Sanitary Sewer Gravity Pipeline LF 1135 $713.00 $809,255.00 (West Side of River)
14 48-inch MH for 24-inch Sanitary Sewer EA 5 $21,000.00 $105,000.00 (West Side of River)
15 18-inch Sanitary Sewer Force Main (West LF 1450 $625.00 $906,250.00 Side of River)
16 8-inch Sanitary Sewer Gravity Pipeline LF 1200 $266.00 $319,200.00 (West Side of River)
17 48-inch MH of 8-inch Sanitary Sewer (West EA 6 $21,000.00 $126,000.00 Side of River)
18 Sewer and Gas Line Demolition (East and LS 1 $15,000.00 $15,000.00 West Sides of River)
19 6-inch Sanitary Sewer Gravity Pipeline LF 88 $250.00 $22,000.00 (West Side of River)
20 1.25-inch Sanitary Sewer Force Main (West LF 270 $80.00 $21,600.00 Side of River)
21 Roadway Restoration on Pelton Ave, SY 7620 $120.00 $914,400.00 Roselawn Ave, and Neece Dr.
22 36-inch Sanitary Sewer Gravity Pipeline LF 175 $900.00 $157,500.00 (East Side of River)
23 60-inch MH for 36-inch Sanitary Sewer (East EA 3 $50,000.00 $150,000.00 Side of River)
24 All Yard Piping at Shackelford Pump Station LS 1 $45,000.00 $45,000.00 Site, Except 36-inch Sanitary Sewer and
Waterline
25 2-inch Water Service (East Side of River) LS 1 $40,000.00 $40,000.00 26 AC/AB for Pump Station Site SY 1405 $120.00 $168,600.00 27 Trench Pavement Patching SY 1950 $70.00 $136,500.00
28 Golf Course Turf (Sod) Restoration SY 9981 $10.00 $99,810.00 29 Golf Course Hydroseeding Restoration SY 1311 $5.00 $6,555.00 30 Allowance for Unanticipated Underground LS 1 $50,000.00 $50,000.00 Utilities
31 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
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Item # Item Description Units Quantity Unit Price Extension 32 Allowance for Golf Course Irrigation LS 1 $20,000.00 $20,000.00 Replacement
33 All Other Contract Work Not Specifically LS 1 $21,000.00 $21,000.00 Identified in This Bid Schedule
Total: $8,000,670.00
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

April 5, 2022
Date: March 9, 2022
TO: Mayor & City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Christina Alger, Director of Human Resources
SUBJECT: Agreement for Auditing Services
CONTACT: Christina Alger, Director of Human Resources, (209) 571-5126; [email protected]
DESCRIPTION:

Consider approving a Professional Services Agreement to provide auditing services on an as needed basis with Sjoberg Evashenk Consulting, Inc., Sacramento, CA, for an annual estimated amount of $130,000 for two years, not to exceed $260,000. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

In February 2008, Modesto voters approved Measure M, otherwise entitled “The Accountability in City Hall Measure of 2008” which focused on amending Modesto’s Charter in ways that served to create a more open process in Modesto City governance. It particularly served to increase the oversight capacity of the elected Mayor and Councilmembers over certain matters such as budget and City operations. One such way proposed under the measure to provide greater opportunity to review City efficiencies was the creation of a separate Office of the City Auditor, who would serve as an independent Charter Office answering directly to the Council.

The Charter amendment also specifically delineated the duties of the City Auditor, with particular emphasis on the conduct of City process, or performance audits.

One of the core functions of the City Auditor Office is to perform risk assessments to determine opportunities for greater efficiencies or employ best practices to be fiscally responsible.

Assessments are performed on all departments, reviewing policies, procedures, and practices.

DISCUSSION:

Since the creation of the City Auditor position, the City has either employed a City Auditor or has contracted with a firm to provide these services between appointments. The City Auditor position has #35..
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Agreement for Auditor Services

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been vacant since October of 2018. The most recent Charter Review Committee recommended a number of changes to the Auditor position that must be considered and approved by a majority of the voters in the next scheduled election. Given the timing of the election and the uncertainty of the outcome, staff recommends using this interim period to hire a firm to complete a Risk Assessment and other necessary auditing services as identified by staff and/or council. This will allow the City to understand needed improvements and create a much-needed roadmap for a new City Auditor upon appointment.

On October 15, 2021, the Human Resource Department solicited Request for Proposals (RFP) to 12 auditing firms who specialize in internal audit functions. Five companies choose to respond, none of which was a local vendor. Five companies provided responsive and responsible proposals. An evaluation committee comprised of three Council members chosen by the full Council and one City staff member evaluated and graded the proposals. The review panel members were the Director of Finance, Vice Mayor David Wright, Councilmember Bill Zoslocki and Councilmember Chris Ricci who reviewed all proposals and provided scoring on each proposal. The RFP evaluation categories were: ability to meet the RFP requirements, expertise and experience, references and overall cost.

Based on this evaluation review, it was determined by the committee that Sjoberg Evashenk Consulting, Inc. was ranked the highest overall.

Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment or contractual services to follow the formal bid procedures. The award of this proposal to Sjoberg Evashenk Consulting, Inc conforms to the Modesto Municipal Code because the City complied with the formal bid procedures and Sjoberg Evashenk Consulting was the overall highest ranking based on the scoring criteria.

Furthermore, Modesto Municipal Code Section 8-3.204(a) exempts contracts for professional services from the requirement for formal bidding.

FISCAL IMPACT:

The maximum cost of the contract is not to exceed $130,000 annually for a two-year term. This item will be absorbed into the budget and funded by savings from vacancies in the City Auditor’s Office.

Vacancy savings total $443,487, however, positions were frozen for six months as part of the Fiscal Year 2021-22 budget, leaving a net savings of $221,743 in cost center 06010.

COMMITTEE RECOMMENDATION:

This agenda item was not reviewed by a committee.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving Professional Services Agreement with Sjoberg Evashenk Consulting, Inc., Sacramento, Ca, to provide auditing services on an as needed basis for an annual estimated amount of $130,000 for a two-year contract in an amount not to exceed $260,000, and authorizing the City Manager, or his designee, to execute the agreement.

Approved by:

Christina Alger, Human Resources Director
Joseph P. Lopez, City Manager
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City Council, April 5, 2022
Agreement for Auditor Services

Page 3 of 3 ends

Attachments:

1. Resolution

2. Standard Agreement

3. Summary of Scoring Abstract

4. Proposal

5. Request for Proposals
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022 -

RESOLUTION APPROVING PROFESSIONAL SERVICES AGREEMENT
WITH SJOBERG EVASHENK CONSULTING, INC., SACRAMENTO, CA, TO

PROVIDE AUDITING SERVICES ON AN AS NEEDED BASIS FOR AN
ANNAUL ESTIMATED AMOUNT OF $130,000 FOR A TWO-YEAR
CONTRACT IN AN AMOUNT NOT TO EXCEED $260,000, AND

AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE

THE AGREEMENT
WHEREAS, the City Council authorized the Human Resources Department to issue a Request for Proposals (RFP) for the furnishing of Auditing Services, and WHEREAS, Human Resources sent the RFP for Auditing Services to six (6) prospective proposers, and
WHEREAS, following the request, five firms presented proposals to provide Auditing Services, and
WHEREAS, Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment or contractual services to follow the formal bid procedures. The award of this proposal to Sjoberg Evashenk Consulting, Inc conforms to the Modesto Municipal Code because the City complied with the formal bid procedures and Sjoberg Evashenk Consulting was the overall highest ranking based on the scoring criteria. Furthermore, Modesto Municipal Code Section 8-

3.204(a) exempts contracts for professional services from the requirement for formal bidding, and
WHEREAS, the award of proposal for the furnishing of Auditing Services for Citywide use to Sjoberg Evashenk, Inc., Sacramento, CA, conforms to Modesto Municipal Code 8-3.103.
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NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves Professional Services Agreements with Sjoberg Evashenk, Inc., Sacramento, CA, to provide Auditing Services on an as needed basis for an annual estimated amount of $130,000 for a two-year contract in an amount not to exceed $260,000.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the agreement, in a form approved by the City Attorney.

The foregoing resolution was introduced in a regular meeting of the Council of the City of Modesto held on the 5th day of April, 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
APPROVED AS TO FORM:

BY: _______________________________________
JOSE M. SANCHEZ, City Attorney
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STANDARD AGREEMENT

FOR CONSULTANT SERVICES
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2022 (“Effective Date”), by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and SJOBERG EVASHENK CONSULTING INC., a California corporation, hereinafter referred to as "Consultant." This Agreement is made with regard to the following recitals:

A. The City has determined that it needs City Auditor Services.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

2. TERM OF AGREEMENT.

This Agreement is effective as of the date first written above and will continue in effect for a two-year term, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement. #35..
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3. COMPENSATION.

Consultant agrees to accept a sum not to exceed TWO
HUNDRED SIXTY THOUSAND DOLLARS ($260,000) as full remuneration for performing all services and furnishing all staffing and materials called for in Exhibit "A" and for performance by Consultant of all of its duties and obligations under this Agreement.

The Compensation shall be paid pursuant in the manner and at the times set forth below:

All work to be performed under this Agreement shall be billed at the rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any out-of-pocket, reimbursable costs paid by Consultant in connection with work performed on this project.

4. OBLIGATIONS OF CONSULTANT.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business. Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further #35..
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warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.

5. PERFORMANCE BY KEY EMPLOYEE.

Consultant has represented to City that George Skiles, will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant.

6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.

All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this #35..
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7. NEWS AND INFORMATION RELEASE.

8. INTEREST OF CONTRACTOR.

9. AMENDMENTS.

Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work.
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Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services.

10. INDEPENDENT CONTRACTOR.

All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Consultant, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City. Consultant has no authority or responsibility to exercise any rights or power vested in the City. No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.

Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement.

Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement. Consultant is permitted to #35..
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03/24/22 C:\Users\amog\AppData\Local\Temp\Scrub\pw2qlr5w\3saxu3ct.docx provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.

It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

11. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.
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12. PATENT/COPYRIGHT MATERIALS.

13. NOTICES.

Any and all notices permitted or required to be given hereunder shall be deemed duly given and effective (a) upon actual delivery, if delivery is by hand; or (b) five (5) days after delivery into the United States mail if delivery is by postage paid registered or certified (return receipt requested) mail. Each such notice shall be sent to the parties at the address respectively indicated below or to any other address as the respective parties may designate from time to time.

FOR Consultant:

Name: Sjoberg Evashenk Consulting, Inc.

Address: 455 Capitol Mall, Suite 700, Sacramento, CA
95814
Attention: George Skiles, Partner
Phone: (916) 443-1300
FOR CITY:

Name: Christina Alger, Human Resources Director
Address: P.O. Box 642, Modesto, CA 95353
Attention: Christina Alger, Human Resources Director
Phone: ( 209 ) 571-5126

14. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of #35..
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03/24/22 C:\Users\amog\AppData\Local\Temp\Scrub\pw2qlr5w\3saxu3ct.docx California and shall provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the City by certified mail, return receipt requested, for all of the following stated insurance policies.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000.
(b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and $1,000,000 for property damage or $1,000,000 combined single limit. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required per-occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises and operations; broad form contractual; independent consultants and subcontractors; products and completed operations.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and $1,000,000 property damage or $1,000,000 combined single limit. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability (Errors and Omissions) Insurance with limits not less than $2,000,000 per claim, $4,000,000 aggregate. If coverage is on a #35..
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claims made basis it shall be maintained for at least three (3) years following completion of the work.

Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated. Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. The Consultant's insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with #35..
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The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed.

All endorsements referenced above must include the applicable policy number.

15. TERMINATION OF AGREEMENT.

Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its #35..
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intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.

Termination by City for Lack of Budgeted Funds
The City may terminate this Agreement effective July 1 of any given year upon the City's determination to not appropriate sufficient funds for this Agreement for the ensuing fiscal year. In such event City shall give Consultant not less than 30 days written notice of termination.

Termination by City for Change of Consultant's Tax
Status
If City determines that Consultant does not meet the requirements of federal and state tax laws for independent contractor status, City may terminate this Agreement by giving written notice to Consultant. The termination date shall be the effective date of the notice.

Post-Termination Procedures
If this Agreement is terminated pursuant to this Section, Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees,
subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as
necessary to complete any portion of the Work that is not terminated;
c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in #35..
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d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been
accumulated by the Consultant in performing the Work
whether completed or in process;
e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project.
i. The Consultant understands and agrees that City may, in #35..
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City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain unacceptable and/or not useful to City as of the termination date.

City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. If the Agreement is terminated pursuant to the subparagraph entitled Termination by City for Default of Consultant, Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain unacceptable and/or not useful to City as of the termination date. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant
agreements or contracts for materials;
b. The Agreement price allocable to the portion of the
Work properly performed or goods supplied to the work
site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.

16. CERTIFIED PAYROLL REQUIREMENT.
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17. INDEMNITY.

The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action (collectively, “Claims”), arising directly or indirectly out of any act or omission of Consultant, except to the extent such Claims are caused by the negligence or willful misconduct of the City.

Notwithstanding the foregoing, Consultant shall no obligation to indemnify or defend the City, it agents, officer, employee or volunteers from Claims arising out of the findings or content of any report produced by Consultant.

18. ENTIRE AGREEMENT.

This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement #35..
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which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by shipment of any article or other commencement of performance hereunder.

All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.

19. PARTIAL INVALIDITY.

20. WAIVER.

21. AUDIT.

Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date #35..
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22. GOVERNING LAW.

This Agreement shall be governed according to the laws of the State of California.

23. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

24. COMPLIANCE WITH LAWS.

25. CITY BUSINESS LICENSE.

Consultant shall have a City of Modesto business license. #35..
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IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2022- , adopted by the Council of the City of Modesto on the day of , 2022, and SJOBERG EVASHENK CONSULTING INC has caused this agreement to be duly executed in duplicate as of the Effective Date.
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EXIBIT A
City Auditor Services
Conduct financial, operational, and performance audits to determine compliance with laws and the appropriate utilization of resources including public funds, personnel, property, equipment, and space to ensure efficiency of operations Review system of internal controls confirming the adequacy and effectiveness of the controls and that work complies with applicable professional standards.

Identify causes of inefficiencies or uneconomical practices including inadequacies in management information systems, internal and administrative procedures, organizational structure, use of resources, allocation of personnel, purchasing polices, and equipment.

Consult with operating departments to recommend appropriate improvements to procedures, review progress on implementing the recommended improvements, and ensure action is taken.

Conduct research, analysis, and special studies on complex and sensitive administrative and policy issues; prepare reports with recommendations for appropriate action.

Provide timely information and report progress and results of audits to City Council.
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EXHIBIT B
Professional Fees
The fees for all of our work are based on the fully-burdened billing rates specified below.

For each task order, we will propose anticipated hours required to perform the work, the levels of personnel assigned, and the anticipated travel expenses, and will submit a notto-exceed proposed cost for each project.

Below, we provide hourly rates for each position, along with a brief description of the roles and responsibilities of the positions we will employ.

Classification Hourly Rate Project Functions
Partner $250 Provide overall technical expertise and guidance on the project, help draft and edit report, and
perform quality control.

Director $200 Oversee project activities including participating in planning and visioning meetings, report review,
providing quality assurance and secondary review
of work products.

Manager $170 Lead day-to-day project activities and guide lower-level staff in completing assigned tasks.

Conduct complex analyses, coordinate meetings,
write report, and provide initial review of work
products.

Senior Consultant $150 With guidance from directors and managers, senior and associate consultants conduct on-site
interviews, perform functional and operational
analyses, assist with drafting report, and lead staff
consultants.

Associate Consultants $120 With guidance, perform detailed data mining and testing, conduct benchmarking research, and
provide initial analyses on task areas.

Staff Consultant $110 Entry level to experienced consultant. Conducts all types of fieldwork and analysis under
supervision.

Administrative Support $45 Experienced administrative manager addressing all administrative operations including analysis of
data, processing reports, copying and conducting
final “fit and finish” reviews of all outgoing
products.

On a project-by-project basis, consultant will propose cost structures based on hourly rates, flat fee for service, or a combination thereof, depending on the preference of the City, and will negotiate with the City to ensure a mutually-agreeable cost structure. #35..
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Criteria Points Possible Baker
Tilly
Moss
Adams
Eide
Bailly
Macias
Gini
Sjoberg
Ability to address all RFP
Requirements
160 125 126 111 110 151
Expertise and Experience 60 50 35 26 49 54
References 60 40 43 27 40 60
Cost 120 70 95 64 100 120
TOTAL SCORE 400 285 299 228 299 385
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455 Capitol Mall • Suite 700 • Sacramento, California • 95814 • Tel 916.443.1300 • www.secteam.com Cover Letter
November 5, 2021
Kelly Rice-Ortiz Executive Assistant
City of Modesto
P. O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
[email protected]
Re: Request for Proposals (RFP) – Public Sector Consulting Firm: City Auditor Services Dear Evaluation Panel,
Sjoberg Evashenk Consulting is pleased to submit our proposal to provide City Auditor Services on behalf of the City of Modesto.

Established in January 2000 by the former California State Auditor General Kurt Sjoberg and Chief Deputy State Auditor Marianne Evashenk, Sjoberg Evashenk Consulting is a certified majority woman-owned firm and Small Business Enterprise with a team of talented and experienced professionals. In our more than 20 years of service to public sector agencies, we have conducted more than 400 engagements for approximately 220 public sector clients throughout the Western United States. Many of those projects involved assessments of operations and core functions similar to those of the City of Modesto, including extensive experience conducting internal audits at the state and local level. After you review our proposal, we believe you will find that our objectivity, experience, and qualifications make us uniquely qualified to perform this engagement.

I, George Skiles, whose signature is affixed below, am the firm’s authorized representative. Additionally, Catherine Brady, Partner, and Lynda McCallum, Partner, are also authorized and empowered to make representations for Sjoberg Evashenk Consulting, Inc., with respect to this proposal.

Sjoberg Evashenk Consulting is appreciative of the opportunity to work with the City of Modesto and will remain available to answer any questions you might have regarding our proposal. We look forward to sharing our expertise and insights working with you on this important project if selected as the successful proposer.

Respectfully Submitted,
George J. Skiles, Board Chair
Sjoberg Evashenk Consulting, Inc.
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455 Capitol Mall • Suite 700 • Sacramento, California • 95814 • Tel 916.443.1300 • www.secteam.com City of Modesto
Response to Request for Proposals
Public Sector Consulting Firm: City Auditor Services
November 5, 2021
Submitted to:

Kelly Rice-Ortiz Executive Assistant
City of Modesto
P. O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
[email protected]
Submitted by:
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Table of Contents
Firm Qualifications.........................................................................................................................................2 Professional Fees........................................................................................................................................ 18 Principal Staff Contacts & Resumes ............................................................................................................ 19 Firm Background ......................................................................................................................................... 26 Sample of Similar Projects........................................................................................................................... 28 List of Current & Prior Clients ...................................................................................................................... 29 Appendix A. Sample Reports....................................................................................................................... 31 #35..
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Firm Qualifications
As described in our cover letter, Sjoberg Evashenk Consulting was established in January 2000 by the former California State Auditor General Kurt Sjoberg and Chief Deputy State Auditor Marianne Evashenk.

In our more than 20 years of service to public sector agencies, we have conducted more than 400 engagements for approximately 220 public sector clients throughout the Western United States. Many of those projects involved assessments of operations and core functions similar to those of the City of Modesto. We have significant experience conducting financial related, operational performance, compliance, and investigative audits on behalf of local governments, state agencies, and regional districts—including nearly every aspect of municipal government.

In this section, we provide a broad overview of our experience providing internal audit and performance audit services on behalf of public sector clients, followed by an overview of our approach to conducing audit engagements.

Examples of Prior Internal Audit and Performance Audit Engagements Below, we provide many examples of projects completed by our project team. As is demonstrated by the list of projects below, our clientele is both broad and diverse, including a broad array of public sector agencies responsible for unique and differing government programs, and strongly support diversity and equitable practices, polices, and procedures.

Pierce County, WA—Countywide Risk Assessment
Completed a universal risk assessment of each of the County’s departments, elected offices, and courts, including the various responsibilities, activities, and programs administered within each. The objectives of the assessment were to determine audit areas in the form of agencies, divisions, programs, or other units; identify and rank potential adverse consequences associated with county expenditures, productivity, output, effectiveness, and outcomes; identify realized adverse consequences resulting from the COVID-19 pandemic; and develop a risking matrix that identifies potential risks. In pursuing these objectives, we interviewed each department head, obtained and analyzed a wide range of information relating to each department, identified inherent risks associated with each program and operation, assessed risks related to a dozen risk categories, developed department-specific and countywide heat maps, developed audit topics and objectives for each, prioritized the potential audit topics by considering inherent versus control risks, likelihood and impact, and vulnerability and auditability. We presented our results to the County Council.

City of Sacramento—Community Development Department
On behalf of the City of Sacramento’s Office of the City Auditor, we completed a performance audit of the City’s Community Development Department’s (CDD) permitting processes. The objectives of the audit were to assess the CDD’s general permitting activities and related permit fee calculation, assessment, and collection processes. This included a detailed review of CDD’s system of internal controls (business processes, tone at the top, monitoring activities, etc.), as well as the system controls associated with its permitting information system (Accela). We found CDD lacked an organizational #35..
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culture that supported strong internal controls; it had not developed formal policies and procedures as expected; and it lacked appropriate system safeguards and supervisory oversight, allowing for inappropriate permitting practices to occur undetected. This lack of necessary system access restrictions, logical controls, and exception reporting within CDD’s permitting system—combined with employees’ ability to make decisions without due oversight— significantly diminished management’s overall internal control environment. As a result, we found persistent practices that disregarded or circumvented state building laws and City Codes resulting in inconsistent permitting practices and loss of city revenue, including at least $2.3 million in required permit fees.

Modesto Water Agency—Evaluation of Rate-Setting Process A project conducted on behalf of ratepayers, this non-public engagement involved evaluating wastewater costs, system upgrades, cost allocation, and rate setting. We reviewed all sewage costs and identified specific capital improvements, operation and maintenance costs, and overhead allocations for each of the following classes of customers to determine if they are Prop 218 compliant rate: Residential, Industrial (major and minor), Commercial and Septage Haulers. Preliminary findings suggest major industrial customers are subsidizing residential customers.

City of Elk Grove, CA—Transit
As the contracted internal auditor for the City of Elk Grove, we conducted three projects related to its contracted transit provider, MV Transportation. These projects entailed in-depth reviews of the compliance of the vendor in meeting its contracted obligations. These projects included in part assessing staffing resources and operator qualifications and training; transit planning and service delivery; route performance including monitoring for hot and missed routes; customer service and complaint handling; all aspects of finance and accounting including fare collection, daily deposits, fare sharing (coordination with other RT providers), posting and accounting, reconciliations, required reporting and associated fiscal controls; as well as maintenance, and other contract requirements. We also reviewed non-core support activities, such as grant administration, procurement, accounts payable, etc., to identify potential workflow inefficiencies, processes that may be streamlined, and areas where workload can be shifted to better utilize Transit resources.

County of Snohomish, WA—Human Resources
We completed an evaluation of the County’s Human Resources Department. This project focused on key human resources management practices, including recruiting and hiring practices, orientation and onboarding, classification and compensation, employee development, employee relations, labor relations, and record keeping, among others. We found that the County’s human resources management activities were not always consistent with industry standards and were not sufficient to ensure compliance with federal and state law. The Department did not maintain an up-to-date compensation and classification plan, and did not consistently apply protocols that were in place; it’s record retention system was cumbersome, duplicative, and failed to ensure employee personnel files were complete; it did not provide adequate oversight or guidance for those human resources activities performed by decentralized offices, departments, and courts; and it is not structured to effectively manage a professional system of human resources management. #35..
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Port of Long Beach Federal Grant Administration Review
This project assessed a variety of operational and administration activities, functions, and responsibilities, such as purchasing, invoice review, contracting, fund availability analysis, reimbursement processing, fiscal reporting, file retention, and compliance with federal requirements. In general, we found there are several good control activities in place over the Port’s grant administrative activities such as ensuring procurements and resulting contracts comply with grant requirements, invoices are adequately reviewed, and fiscal reports are appropriately supported with fiscal records.

University of California, Office of the President—Multi-Departmental Budget Model Assisted officials in developing a comprehensive multi-departmental budget model for its headquarter operations. The two-phase project entailed recreating baseline expenditure budgets (historic, current, and future) for more than 25 departments, including position and expenditure projections, established key mission critical activities, and opportunities for efficiencies and savings. Budgets were modeled into roll-up tools to provide the UC Regents with a first-time comprehensive appropriation control proposal that provides essential data for strategic decision-making.

Los Angeles Debt Management Study
On behalf of the City Controller, we evaluated the City Treasurer’s debt and investment strategies to identify issues for consideration. The City issues short-term debt instruments known as Tax Revenue Anticipation Notes (TRANs) for cash flow purposes and general obligation and revenue bonds for capital improvements, etc. Our analysis included Interest Rate Swaps and the inherent risks, Commercial Paper’s advantages and disadvantages, and the use of fixed and variable rate bonds to mitigate risks. Moreover, we determined the credit worthiness of investments made, compliance with the City’s debt limits, and benchmarked the City against 11 comparable cities and GFOA. Finally, we reviewed the Treasurer’s organizational structure within City government and the role of the Debt Advisory Committee.

Port of Long Beach Federal Grant Administration Review
This project assessed a variety of operational and administration activities, functions, and responsibilities, such as purchasing, invoice review, contracting, fund availability analysis, reimbursement processing, fiscal reporting, file retention, and compliance with federal requirements. In general, we found there are several good control activities in place over the Port’s grant administrative activities such as ensuring procurements and resulting contracts comply with grant requirements, invoices are adequately reviewed, and fiscal reports are appropriately supported with fiscal records.

City and County of San Francisco Water System Improvement Program We audited two large construction contracts totaling over $104 million at the San Francisco Public Utilities Commission where we reviewed project management and delivery processes, progress payments, change orders, and automated tools used for construction management. #35..
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Portland Public School Bond Capital Improvement Programs We are in process of a four-year contract to perform annual audits of the $1 billion capital project bond measure where we have assessed budgets, project expenditures, financial management, project management, staffing, and record retention with in-depth work on revenue projections and cost estimation of hard and soft costs, contingency, and escalation as well as analyzing and testing planning documents, value engineering, design standards, project controls, construction management, inspections, change orders, and payment applications.

City of Los Angeles—Department of Cannabis Regulation
On behalf of the City Administrative Officer, we completed a performance audit of the information system employed by the Los Angeles City Department of Cannabis Regulation to process applications for cultivation, wholesale, retail, medial, and delivery of cannabis products. Prompted by allegations that applicants gained unauthorized, early access to the information system in order to gain an unfair advantage in the permitting process, the objective of this audit was to establish a comprehensive understanding of the Accela platform and the security measures taken to prevent early or unauthorized access to the system, assess whether there were sufficient security protocols in place to minimize risk of technical interference or breaches, and determine whether any applicant benefited unduly from any unauthorized activity. This audit found that the Department of Cannabis Regulation acted in good faith to minimize the barriers faced by Social Equity Applicants during the Phase 3 Retail Round 1 application process. However, the method used to roll out the application, including the disabling and re-enabling of user accounts, was confusing and susceptible to human error. As a result, 14 Applicants started their applications before the designated Application Window, and misperceptions regarding the application start time may have led other Applicants to wait longer than needed to sign onto the Accela Portal and begin their applications.

City of Anaheim—Anaheim Enterprise Zone Program
The City contracted with Sjoberg Evashenk to conduct a performance audit of the Enterprise Zone.

The objective of this audit is to determine whether the Enterprise Zone was implemented in compliance with: a) state statutes, regulations, and the MOU covering the Enterprise Zone; and b) the contract between the Chamber and the City to administer the Enterprise Zone. Specifically, this audit focuses on the City’s administration and monitoring of the contract between the City and the Chamber; the sufficiency of internal controls over the Enterprise Zone vouchering process; cost tracking (including time keeping and Enterprise Zone-related expenditures); compliance with bonding and insurance requirements set forth in the contract between the City and the Chamber; and conflict of interest provisions set forth in the contract relating to the issuance of vouchers.

City of Elk Grove—Fiscal Operations
The City of Elk Grove asked Sjoberg Evashenk Consulting to conduct a review of the City’s finance and accounting practices—particularly those internal controls over recording and reconciling general ledger and primary accounting activities. The objective of this review was to assess matters surrounding overall accounting practices including cash receipts, cash management, bank reconciliations for 7 separate accounts, transaction approval and recording, and related general ledger activities to #35..
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determine whether adequate controls were in place to provide reasonable assurance that financial activities were accurately reflected in City fiscal records and that City assets are appropriately safeguarded.

City of Elk Grove—Affordable Housing and Community Service Grant Programs As the City’s contracted Internal Auditor, Sjoberg Evashenk Consulting has conducted numerous internal audits for the City of Elk Grove, including audits of its Affordable Housing and its Community Service Grant programs. In these programs, the City administers numerous grants and loans amounting to tens of millions of dollars. In some cases, grants and loans administered by the City are tied to restricted federal funding sources—such as Community Development Block Grant monies. In other cases, grants and loans are tied to local funding streams such as developer-paid impact fees or unrestricted general fund appropriations. The objectives of our review were to determine whether (a) City program and grant administrators ensured that the allocation of program funds through grants and loans adhered to strict federal, state, or local program guidelines; (b) the City’s Affordable Housing and Community Service Grant programs were administered in a strategic manner that ensured limited grant funding was put to the highest and best use to achieve program goals; and (3) necessary internal controls and oversight of grant administration were established and effective.

City of Elk Grove—Police Department Administration
As part of a broad assessment of the Elk Grove Police Department that serves 160,000 residents, we evaluated its administration of numerous local, state and federal grants, including those issued by federal departments of Homeland Security, Justice, and Treasury, the Organized Crime Drug Enforcement Task Forces, Urban Areas Security Initiative, and Community Emergency Response Team training grants, among other state and local grants. Our evaluation included an assessment of the City’s compliance with selected grants and its overall grant administration activities, such as record keeping, authorizing and executing purchases against the grant, timekeeping, preparing and submitting claims, grant reporting, and the maintenance of grant-related files for performance and cost tracking as well as audit purposes. On another project we reviewed the City’s administration of its HUD Community Service Block Grants and the National Service Grant program.

City of Elk Grove—Animal Services
We conducted a performance audit of the Elk Grove Police and Animal Services. In 2009, the City moved Animal Services from the Community Enhancement Department to within the Police Department. Animal Control’s mission is to ensure that livestock and domestic animals are kept in a manner that will not endanger the health, peace and safety of either citizens or the animal. Animals, including livestock, reptiles, fowl, and domestic animals are to live in clean and sanitary conditions and not be subject to suffering, cruelty, or abuse. Our review included all aspects of animal services including animal population management (registration, licensing, and spay/neuter programs), regulation and enforcement (including investing potential incidents of animal suffering, cruelty, or abuse, controlling vicious or dangerous animals, and enforcement of regulations on pet stores, veterinary clinics, and other shelters), and pick up, impounding, and sheltering animals. Further, our review includes an operational assessment of the operations and business processes of all these activities. #35..
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City of Grants Pass—Economic Development & Tourism
We conducted a comprehensive performance audit of the structure, personnel, activities, and operations of the Economic Development and Tourism programs to provide recommendations to improve services, efficiency, effectiveness, and return on investment to the community of the resources committed. We reviewed the program’s expenditures, evaluated staffing and management, determined cost and benefit of the program in terms of return on the City’s investment in economic development, and assessed the outputs and outcomes of the program in relation to best practices and comparable entities. The Tourism Promotion Services was responsible for marketing the Grants Pass area and improving the City’s economy through encouraging and supporting tourism and visitors. We evaluated the City’s web presence in terms of tools, utility, and effectiveness for tourism; the level and use of resources—expenditures, contracting, and staffing; expertise, roles, and responsibilities of staff; Tourism’s data collection activities in terms of performance measures, usefulness, and cost and benefit; and, how Grants Pass compared to comparable entities and industry best practices.

Additionally, we analyzed the Tourism’s participation in special events, level of resources committed, and the return on these investments.

Kern County Water Agency—Feasibility Assessment:

Sjoberg Evashenk Consulting is currently conducting a study of the Kern County Water Agency (KCWA) to assess the approach and methods used to develop budgets and overhead allocation methodologies, as relates to KCWA’s operations of several water treatment plans, Cross Valley Canal facilities, as well as management of the water supply provided through the State Water Contract to residents and purveyors of the Kern County. As part of the study, we reviewed KCWA’s budget development methodology, overhead assumptions and calculation techniques. Our recommendations will also include a determination of costs and benefits of financing and operational costs of the new facilities and departmental restructuring for several specific departments.

City of Long Beach—Woman, Infant, Child (WIC) Program
We evaluated the Program’s grant administration and compliance with federal and state grant terms and conditions and to identify opportunities to improve program administration and oversight. The review included observing and testing eligibility determinations and actions, visiting WIC field offices, and conferring with staff at the California Department of Public Health, the state agency administering the California WIC grant program. We assessed the uniformity and reliability of individual offices’ recording and reporting of key performance data, evaluated eligibility and determined the value of benefits provided to ineligible parties. The project culminated in a written report detailing our objectives, methodology, analysis, results, and recommendations. We also presented the results to City leaders responsible for the program.

City of Los Angeles—Fire Department, Emergency Medical Services Billing and Collections The purpose of this audit was to determine the accuracy, efficiency, and effectiveness of the EMS billing and collection process, and how the recently implemented automated systems have affected the administrative efforts involved in providing EMS. This audit revealed numerous positive outcomes resulting from LAFD’s transition to automated data collection and billing processes. LAFD reduced the #35..
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risk of lost or inaccurate medical records; increased its ability to analyze EMS data for ongoing quality improvement; increased its collection rate by 23 percent to $64.8 million in three years since implementing the new system; improved its ability to secure Protected Health Information (PHI); streamlined the transfer of EMS records to expedite billing; and increased net collections of EMS fees.

We also found that LAFD only charged patients that it transports to a hospital, despite providing treatno-transport services to nearly 40 percent of its patients annually, significantly diminishing potential cost-recovery revenues.

City of Los Angeles—Bureau of Sanitation, Hyperion Sewage Treatment Plant Under a federal court order, the City of Los Angeles constructed the Hyperion Sewage Treatment Plant to provide secondary treatment of all of the city’s sewage using the Hyperion Energy Recovery System (HERS). Our first evaluation entailed reviewing a range of activities, including the Federal, State and City’s five-year study of sludge management alternatives, reduction of discharge of sludge into the Pacific Ocean, accidental discharges into the ocean, project cost overruns, and compliance with the decree. Later we reviewed the Bureau of Sanitation’s activities at Hyperion during a broad study of the City’s Public Works Department, of which the bureau is a part. Generally, the City of Los Angeles and State Water Resources Control Board concurred with our conclusions.

Los Angeles Unified School District—Use of Job Order Contracting in School Construction We were engaged by LAUSD to audit the 6-year old JOC program at LAUSD to assess the efficiency and effectiveness of the program and determine the best type of projects to undertake using the JOC program. Our review covered the 138 master contracts with 44 different contracting firms. As of November 1, 2011, the District issued JOC “master” contracts valued at up to $791 million—with total contract receipts ranging from $200,000 to $10 million per contractor. The JOC program has its foundation in an electronically-based set of catalogues, the chosen contractor was the Gordian Group.

At LAUSD, once approved, individual JOC projects, or Job Orders are fixed price, lump sum agreements. Any changes to add or remove scoped tasks in the initial project require that a supplemental Job Order be approved. Over the period of our review the LAUSD issued 6,058 Job Orders using JOC totaling $627.7 million.

City of Oakland—Personnel Operations
Sjoberg Evashenk Consulting has completed an audit of the City of Oakland’s (City) hiring and related personnel processes under contract with the Office of the City Auditor. Overall, we found a prevalent perception throughout the City that a lack of strong leadership and accountability has allowed the perpetuation of unfair hiring activities and inappropriate circumvention of Civil Service Rules. To determine if the City’s personnel rules and requirements were appropriately followed, we utilized a multifaceted testing strategy of the City’s various hiring and promotion practices and processes— results concluded that unfair hiring practices had occurred and appearances of favoritism were created.

City of Richmond—Neighborhood Stabilization Program
We conducted an operational performance review of the City of Richmond’s Neighborhood Stabilization Program. The City’s Neighborhood Stabilization Program receives funds from the federal #35..
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Neighborhood Stabilization Program (NSP) that was authorized under Title III of the Housing and Economic Recovery Act. This department is responsible for awarding and overseeing loans to developers to purchase and rehabilitate foreclosed homes within the City boundaries. This project is currently in progress and will assess the City’s oversight and management of NSP loans, controls employed to ensure appropriate use of HUD funds, and make recommendation to improve processes, enhance oversight of developers, and ensure appropriate controls are employed by the City to safeguard federal funds and provide accountability to the public.

City of Santa Monica—Santa Monica Airport Fixed Base Operators Conducted lease agreement reviews at three of the airport’s major FBOs. Included in each audit was testing to ensure compliance with insurance requirements set forth in the lease agreement. We recommended airport require the FBOs to submit all executed supply agreements to the City prior to initial fuel deliveries, ensure all supply agreements included required indemnification provisions, and confirm that all fuel suppliers submitted evidence of insurance requirements to the City.

Sutter County—Community Services Department
As the County’s contracted Internal Auditor we have conducted an evaluation of its Community Services Department (CSD). CSD’s activities include planning, permitting, building safety and inspection, and environmental health. It was established to create a “one-stop shop” public counter where questions are answered, plans submitted, reviews completed and permits and other approvals obtained. We assessed the department’s strategic planning efforts, management style, workload and productivity, information technology, fee setting and billing, administrative support costs, record retention and inspections. Using our past experience and best practices, we identified several areas where processes could be streamlined, activities automated, collections improved and oversight of inactive permits increased. Further, we suggested consolidating several administrative support services to reduce costs, and changes in the fee setting protocols to capture true costs.

County of Snohomish, WA—Human Resources
Sjoberg Evashenk Consulting completed an evaluation of the County’s Human Resources Department.

This project focused on key human resources management practices, including recruiting and hiring practices, orientation and onboarding, classification and compensation, employee development, employee relations, labor relations, and record keeping, among others. We found that the County’s human resources management activities were not always consistent with industry standards and were not sufficient to ensure compliance with federal and state law. The Department did not maintain an upto-date compensation and classification plan, and did not consistently apply protocols that were in place; it’s record retention system was cumbersome, duplicative, and failed to ensure employee personnel files were complete; it did not provide adequate oversight or guidance for those human resources activities performed by decentralized offices, departments, and courts; and it is not structured to effectively manage a professional system of human resources management. #35..
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City of Los Angeles, CA—Study of Labor Negotiation Practices In a joint venture with Cornell University’s School of Industrial and Labor Relations, we conducted a study of the City's labor negotiation policies, processes, and practices. We reviewed past executed and current negotiations, mapped the collective bargaining process, evaluated the fiscal impact of the negotiations, and identified areas of improvement. This study underscored the need for stronger management controls, increased transparency, ongoing compensation reviews, better succession planning, stronger risk management, and a focus on strategic plan development.

State of Colorado, Office of the State Auditor—Colorado’s Employee Group Benefits Program We conducted an evaluation of Colorado State’s Employee Benefits Program, including a review of group benefit plan selection, costs, and benefits; plan eligibility and enrollment; claims management; and administration of plan contracts. We found in general that while the type of benefits provided by the State was comparable to those provided by similarly situated employers, both the State and employees were paying more for medical benefits than was necessary. We also found that by improving the structure and design of the State’s benefit plans—including expanding its risk pool, modifying the employer contribution model for part-time employees, improving processes to verify eligibility of enrolled dependents, reconciling enrollment data and payroll records, and conducting periodic claims processing audits—could help reduce costs by as much as $16.7 million for the State and employees.

Snohomish County Sheriff’s Department—Performance Audit of Overtime The Sheriff’s Office is responsible for both law enforcement activities and operating the two County detention facilities. We conducted an evaluation of the use and control of overtime in the Snohomish County Sheriff’s Office (Sheriff’s Office). The engagement included assessing overtime trends and management’s oversight and administration of overtime, as well as identifying alternative approaches to manage overtime costs for both law enforcement and corrections. The audit identified one-time and on-going factors contributing to the use of overtime. We provided a variety of recommendations to address factors that were within and outside the control of the Sheriff’s Office.

San Diego Association of Governments Transportation and Transit Construction Program We have conducted four performance audits of the $14 billion TransNet program over the last decade looking at a variety of areas including performance, fiscal control, procurement, and contracting among others. We examined evaluation criteria, scoring matrices, scoring sheets, and ultimate recommendations for award, as well as approval processes to see where bottlenecks and delays occurred at various steps. Also, we tested contract compliance with a variety of federal and state requirements, procurement processes and manuals, board policies, directives, and bid summaries.

Additionally, we analyzed contract change requests, invoices, and payment vouchers to assess controls over contract modifications and budget adjustments as well as processes for appropriate review, justification, accuracy of payments, and compliance with statements of work.

Los Angeles World Airports Contracting Practices
We reviewed the contracting and leasing practices at the four airports comprising Los Angeles World Airports looking at controls, efficiency, and effectiveness of business cycles Specifically, we evaluated #35..
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the initial solicitation process, contact evaluation and award, and compliance with federal and state contacting/procurement laws and regulations for construction, and architect and engineering contracts.

As part of this audit, we also investigated allegations of “pay for play” and assessed possible abusive acts by high-level executives and assisted in the criminal probes. Work led to the impaneling of both a federal and county grand jury that resulted in prosecution.

General Approach to All Audit & Consulting Engagements
We understand that the City of Modesto seeks a professional services firm to plan, organize, direct, and review the activities and operations of the City Auditor Office, including:
• Coordinate Department activities with those of other departments and outside agencies and organizations; provide staff assistance to the Mayor and City Council; prepare and present staff reports and other necessary correspondence.
• Conduct financial, operational, and performance audits to determine compliance with laws and the appropriate utilization of resources including public funds, personnel, property, equipment, and space to ensure efficiency of operations
• Review system of internal controls confirming the adequacy and effectiveness of the controls and that work complies with applicable professional standards. • Identify causes of inefficiencies or uneconomical practices including inadequacies in management information systems, internal and administrative procedures, organizational structure, use of resources, allocation of personnel, purchasing polices, and equipment. • Consult with operating departments to recommend appropriate improvements to procedures, review progress on implementing the recommended improvements, and ensure action is taken. • Conduct research, analysis, and special studies on complex and sensitive administrative and policy issues; prepare reports with recommendations for appropriate action. • Provide timely information and report progress and results of audits to City Council.

In fulfilling these project objectives, we present below our overall consulting approach, our general approach to project management, and our approach to quality control in delivering internal audit services to public sector agencies.

Overall Consulting Approach
Our firm is committed to excellence and has adopted the following guiding principles that form the foundation of every project engagement our firm undertakes.

Vision: Delivering the greatest value for our clients requires that we not limit our focus to specific objectives of a given project or analysis, and the techniques we will employ to address them. We must also consider the broader context of our client’s mission and strategic vision, the organization’s culture, and the key concerns of officials, management, and stakeholders. Understanding our client and our client’s concerns is as important to providing value as is understanding the specific business processes, internal controls, and risks of a given program or operation. We believe that taking the time #35..
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to understand our client’s concerns allows us to better ensure our project work and our recommendations align with the strategic vision and direction of the City. In doing so, we will take a holistic and systemic approach in performing our work, conducting data and root cause analyses, and providing recommendations.

Balance: It is important that the results of our work not only be reasonable, understandable, and valuable to our clients and the agencies we serve, but to be credible, our results must be balanced. We take great care to ensure objectivity and independence in our work, and to obtain the views and perspectives of responsible officials, staff, stakeholders, and others. Our analyses are designed to identify both strengths and weaknesses within organizations and programs, successes and opportunities for improvement, sound business practices and those that require attention. It is our intention, in every project, to provide our clients and stakeholders with objective and balanced deliverables with practical, actionable, and future-looking recommendations that will serve as a sound basis for decision-making. In doing so, we seek to balance the diverse needs, perspectives, and opinions of the people involved.

Collaboration: We appreciate and understand the dynamic work environment that challenges executives and staff serving the public, and we believe that creating an efficient and productive relationship with our clients is essential. We will seek to minimize business disruption by efficiently scheduling interviews, requests for information, or (if applicable) on-site activities. We will coordinate our requests with key personnel in order to efficiently gather and analyze data in a manner that ensures we obtain the information we need to perform our analyses while taking all possible measures to accommodate our client’s schedules and striving to effectively and efficiently use their time. This starts during project initiation by communicating needs and expectations, and continues through project completion by keeping our clients informed of our progress in meeting established expectations. We seek a mutually beneficial relationship that allows work to progress smoothly with a minimum of rework and disruption, as well as to create a safe learning and collaborative environment based on mutual respect and trust.

Commitment: We take all schedule-related commitments seriously and have established means by which we can address and mitigate potential delays, regardless of whether the delays are the result of unforeseen circumstances. For instance, at project commencement, we collaborate with our clients to establish communication and reporting protocols that include on-going communications, including periodic progress updates in which we will discuss progress toward milestones, tasks performed during the reporting period, tasks to be performed during the next reporting period, preliminary observations or issues, challenges or barriers incurred, or other matters that may impact scheduling. Our approach to project management further requires setting internal task-level timelines and budgets where we gauge and control our progress with respect to the overall schedule, providing the information necessary to make mid-point adjustments to our project approach, task timing, or resource allocation to maximize the engagement efforts.

Inclusiveness: Our firm serves a wide range of public agencies, which in turn serve diverse communities across the Western United States. We strongly believe that in order to best serve our clients we must seek diversity within our own practice, and embrace diversity among our clients. We #35..
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foster a culture that values diverse perspectives and harbors respect, compassion, and equality, and we have built and continue to grow a robust and talented team offering a broad range of backgrounds, experience, and education. We also ensure, in conducting our project work, to seek input from and the perspectives of under-represented groups. Balanced and value-added analyses require that we proactively foster an inclusive approach to our work with clients, not just for our own employees, and a safe environment within which we all work.

Audit Standards: Unlike many other firms, a substantial portion of our work consists of performance audits conducted in accordance with rigorous government audit standards. Our intimate knowledge of the Yellow Book, as promulgated by the Comptroller General of the United States, forms the cornerstone of our firm’s culture and professional practice. In fact, one of our founding partners, Kurt Sjoberg, served for four years on the Comptroller General’s Advisory Council on Government Auditing Standards, where he chaired the Performance Audit Sub-Committee. Our other founding partner, Marianne Evashenk, also served for seven years on the National State Auditor’s Association Quality Control Committee and helped develop the comprehensive review manual it still uses today. Since forming Sjoberg Evashenk Consulting, we have successfully undergone external peer reviews every three years, the latest including the period ended December 31, 2020; in each, we earned unqualified opinions with no management letter issues.

General Approach to Project Management
Many of our clients utilize a SOC-based approach for specific audit engagements. This serves as a useful mechanism to authorize the commencement of audit work, and to clearly specify the agreed-upon audit scope, objectives, schedule, and budget. Building on our decades of experience, our team has developed the following project management framework. While the specific approach taken on any given project will be tailored to the meet the specific objectives and goals of the assigned project, as well as on the unique context and needs of the client, this general approach will serve as a guide to any management and business analysis we perform.

Entrance Conference: We will schedule a kickoff meeting with the City representative or project manager, the purpose of which is to introduce key client and Consultant team members to one another, acquaint all participants with the purpose of and expectations for the project, describe team members’ roles and responsibilities, describe Project procedures, and summarize scope and schedule. At this meeting, we will address project logistics and assure a clear understanding of the communication and reporting protocols including identification of a liaison contact, establish communication and reporting channels, and discuss challenge/conflict resolution procedures.

Project Work Plan: We will commence project planning efforts through a variety of steps. First, we will request and review basic background information to allow us to more fully integrate our team into the subject’s (program, service, or department) environment. Upon reviewing initial information, we will schedule and conduct interviews with management and personnel at all levels, perform walk-throughs of key business processes and information systems, develop an understanding of the availability and condition of information necessary to meet project objectives, and request additional information based on our interviews and observations.
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All of this allows us to efficiently and effectively develop an initial understanding of the operating environment, roles and responsibilities of key personnel, management and stakeholder concerns, and the condition and availability of information needed for our analysis.

This will culminate in a Project Work Plan, which will include key objectives, requirements, constraints, Project Schedule (showing major tasks and deliverables), a breakdown of costs for the major tasks, a list of the project team members and their roles and responsibilities, communication protocols (internal and external), document control procedures, and other administrative procedures. We will coordinate a review of this evaluation plan with the project manager.

Fieldwork & Detailed Analysis: During this phase of a project, we will execute detailed tasks to accomplish the project objectives. We will consume the majority of hours and efforts in this phase, conducting in-depth data gathering and analyses. The steps executed in this phase will vary based on the project scope, objectives, and data availability and reliability. However, we will develop a detailed project methodology and will also maintain flexibility throughout this process, refining our approach based on what we learn during the planning phase, allowing our project team to reallocate resources as we obtain more information and gain greater insights into those areas deemed most important or complex and fewer in those with less impact or priority. Throughout this process, we will obtain input, provide feedback, and ensure a collaborative learning environment through which our team performs analyses, shares results, learns from our client’s input and perspective, and fosters dialogue with the goal of developing solutions collaboratively.

Quality Control: We incorporate into this phase a rigorous system of quality control to ensure all project work is timely, closely supervised, critically reviewed, accurate, and reliable. The procedures, observations, and results of the fieldwork and analyses performed during this phase will be documented and reviewed, and will contain evidence of due diligence, planning, and supervision. Work products are cross-referenced to underlying evidence and supporting documentation. All of this provides assurances to our clients that the facts upon which our conclusions are based are indeed accurate and reliable, and that our recommendations are well thought-out and get at the root cause of identified problems. This step demonstrates due professional care in the conduct of our work.

Assessment and Update: On-going, candid communication is the cornerstone of value-added, evidence-based consulting work. We ensure that our clients are kept abreast of our progress, milestone achievement, and issues as they arise—a “no surprises” project approach. Throughout the engagement, we will maintain ongoing and open communication with the project manager, stakeholders, and the dedicated points of contact to ensure open communication. This includes routine project-specific checkpoints at which our project leadership reassesses our team’s progress toward meeting the project’s objectives and delivering the project on time and on budget. It also includes the periodic status reporting. As part of this effort, our Project Manager will provide brief updates of the team’s work activities completed within the week, the look-ahead activities, and the issues and actions that require our client’s attention, in a meeting/conference call with the project manager; frequency of these meetings and calls will be as directed by the agency. #35..
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Draft and Final Report: It is at this point when our team would draft a written report. We will begin when fieldwork analysis is approximately 75 percent complete, when we begin to outline the key observations and findings, build the framework for the draft report, and map out remaining steps needed to complete fieldwork and analyses. We will brief the project manager and key City representatives of the preliminary findings at this time, obtain feedback and input, finalize fieldwork, and complete the initial draft report or key deliverable. The draft will include an executive summary, methodology, findings and conclusions, and recommendations. The report will undergo an internal quality control review during which all facts are cross-referenced to underlying evidence and supporting documentation. We will then submit the draft to department management for review and discussion.

We will hold an exit conference with the project manager and key City representatives to discuss the draft results, conclusions, and recommendations. We will consider any additional information or concerns presented and make any appropriate amendments to our draft report. At this point, we will finalize the report, submit it to the project manager and other key representatives as deemed necessary.

These steps make up the general framework that we will use to deliver quality work on behalf of our clients.

We will also develop specific and detailed schedules mapping out key milestones relating to each of these steps, including estimated start and completion dates as well as estimated hours to complete. We will use these schedules to set client expectations, to monitor our team’s progress throughout the engagement, and to report on our progress to our clients through periodic project status reports.

Quality Control
Our firm provides a variety of internal audit and consulting services, performance and compliance audits, control and operational risk assessments, project management and oversight, process re-engineering, benchmarking, change implementation, and training. To assure quality when providing these services, we have established employment practices and systems of quality control that includes hiring and retaining exceptionally qualified employees that maintain independence and objectivity, implementing detailed policies and procedures to guide project work, providing continuing education and professional development to ensure staff continue to build professional competencies, employing a project approach and framework focused on quality, and ensuring all work is closely supervised and critically reviewed.

Hiring Requirements: Our quality control program begins with hiring and retaining competent and professional staff. Our professional staff must meet the following minimum requirements: possess at least a bachelor’s degree from an accredited college or university with major course work in business administration, public policy or administration, accounting, social science, information technology, or related field. In addition to bachelor’s degrees, our staff also have a variety of advanced degrees and industry-relevant credentials, including: Master of Business Administration (MBA), Master of Public Administration (MPA), Certified Public Accountant (CPA), Certified Internal Auditor (CIA), Project Management Professional (PMP), Certified Government Financial Manager (CGFM), Certified Construction Auditor (CCA), and Certification in Risk Management Assurance.

We hire candidates that offer work experience in positions using the competencies we seek—such as demonstrating outstanding analytical thinking; qualitative and quantitative research and analysis; working under pressure, deadlines, and challenging circumstances; communicating effectively verbally #35..
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and in writing; continuous learning and professional growth; working with a wide range of data and data sources; and showing the ability to be self-motivated, self-directed, and efficient. All employees undergo thorough background and reference checks.

Independence and Objectivity: The work our firm performs requires staff maintain professional diligence and independence. All team members individually and the firm itself must remain fully independent and free from any relationships that could—in fact or appearance—create an independence impairment. We require and expect all employees to be free from personal and external impairments to independence, and maintain an independent attitude and appearance. Annually, all employees complete a Conflict-of-Interest Statement disclosing any potential conflicts or potential impairments to independence or objectivity. Each is reviewed by firm executives to ensure the management team is informed of any known or potential independence impairments that could impact the staffing of engagements. To ensure firm independence, firm executives assess conditions related to each potential engagement, including client, nature of services, and any work we are currently conducted or have done in the past, that could potentially create a conflict of interest or an independence impairment of any kind.

Continuing Professional Education and Professional Development: To ensure our staff continue to build experience needed to produce high quality products, all professional employees must adhere to minimum of 80 Continuing Professional Education (CPE) training hours bi-annually. Our leadership team and peer coaching foster an environment of continual personal and professional growth and provides employees with a personalized path to success and continued professional development. In addition to training provided in-house to our employees, our experienced professional staff also provide training courses to both public and private entities on a variety of consulting topics.

Policies and Procedures: Our firm has established a formal Project Delivery Manual that documents firm policies, procedures, and protocols to conduct project work and to document the objectives, scope, methodology, sources, analysis, and conclusions entailed in completing such work. Further, we have adopted formal processes for supervising and reviewing work with goals to ensure efforts are efficient, effective, accurate, objective, and timely. The manual serves as a reference and guide for all staff and helps ensure that work is conducted in a consistent and professional manner.

Supervision and Quality Control: Our firm incorporates a rigorous system of supervision and quality control into every engagement to ensure all work is timely, closely supervised, critically reviewed, accurate, and reliable. Senior project team members perform ongoing on-the-job training, direction, guidance, and feedback in support of project success. The senior project team members also perform detailed reviews of completed work to ensure that the results are accurate and reliable, that the work addressed the project objectives, that the conclusions are logical and substantiated by appropriate evidence. Depending on the complexity of a project, a secondary review may be performed by one of the firm’s directors or partners to ensure that a “knowledgeable third-party” or “prudent, informed person” is able to follow the methodology and analysis. This process ensures the integrity of all our work.
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Annual Self-Assessment and External Peer Reviews: Our firm employs an annual internal selfassessment and monitoring process to assess compliance with professional standards and ensure quality control policies and procedures are in place and working as intended. This includes assessing whether staff are receiving appropriate training to build competency and perform work and are conversant with firm policies, procedures, and protocols; identifying any new professional standards and any legal or regulatory provisions impacting the firm’s practice; and evaluating a selection of projects to determine adherence to our firm’s policies and procedures. To ensure the adequacy of and compliance with our internal quality control system, our firm engages a qualified independent CPA firm every three years review cycle to assess our conformity with professional standards. #35..
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Professional Fees
The fees for all of our work are based on the fully-burdened billing rates specified below. For each task order, we will propose anticipated hours required to perform the work, the levels of personnel assigned, and the anticipated travel expenses, and will submit a not-to-exceed proposed cost for each project.

Below, we provide hourly rates for each position, along with a brief description of the roles and responsibilities of the positions we will employ.

Classification Hourly Rate Project Functions
Partner $250 Provide overall technical expertise and guidance on the project, help draft and edit report, and perform quality control.

Director $200 Oversee project activities including participating in planning and visioning meetings, report review, providing quality assurance and secondary review of work products.

Manager $170
Lead day-to-day project activities and guide lower-level staff in completing assigned tasks.

Conduct complex analyses, coordinate meetings, write report, and provide initial review of work products.

Senior
Consultant $150
With guidance from directors and managers, senior and associate consultants conduct onsite interviews, perform functional and operational analyses, assist with drafting report, and lead staff consultants.

Associate
Consultants $120 With guidance, perform detailed data mining and testing, conduct benchmarking research,and provide initial analyses on task areas.

Staff
Consultant $110 Entry level to experienced consultant. Conducts all types of fieldwork and analysis under supervision.

Administrative
Support $45
Experienced administrative manager addressing all administrative operations including analysis of data, processing reports, copying and conducting final “fit and finish” reviews of all outgoing products.

On a project-by-project basis, we will propose cost structures based on hourly rates, flat fee for service, or a combination thereof, depending on the preference of the City, and will negotiate with the Cityto ensure a mutually-agreeable cost structure.
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Principal Staff Contacts & Resumes
Structured as a California Sub-Chapter S Corporation, Sjoberg Evashenk Consulting is a certified womanowned small business enterprise and operates out of its headquarters in Sacramento, California. Our firm consists of three partners, two directors, and a team of six senior and staff professional consulting staff.

Each member of our management team has been employed with the firm since at least 2006 and has been responsible for leading internal audit engagements for many years.

We propose to designate George Skiles, Partner, as our Project Manager for the City of Modesto. Mr.

Skiles is a Certified Internal Auditor with more than 21 years’ experience conducting performance audits in accordance with Generally Accepted Government Auditing Standards. Mr. Skiles heads up our Internal Audit practice, and focuses the bulk of his work at the local level. Prior to joining Sjoberg Evashenk Consulting, Mr. Skiles was an Audit Manager with the City of Los Angeles, conducting dozens of performance audits of municipal operations. He is also well-accustomed to serving local governments by providing outsourced internal audit services; he is currently the city internal auditor for the City of Elk Grove, California, and the County Performance Auditor for Snohomish County, Washington.

We also bring a core group of Key Personnel to this project, each with different professional experience, education, and certifications. Combined, we believe this team will provide a well-rounded group of professionals that will serve the City with diligence, professionalism, and expertise. • George Skiles, Partner, MA, CIA, CRMA
• Cathy Brady, Partner and Project Manager, MBA, CPA, CCA, CGMA • Lynda McCallum, Partner, MBA, CGFM, CGAP
• Nicole Dyer, Director, MBA, PMP, CGAP, CCA
• Lien Luu, Director, BA, CCA
• Eduardo Luna, Chief Audit Executive
This group of Key Personnel will directly manage all work performed on behalf of the City—including project planning, detailed fieldwork, and report writing—and will provide overall technical expertise and guidance on projects, prepare project deliverables, and perform quality control procedures. Our entire team is well versed in public sector performance auditing and fully conversant with Yellow Book Standards (generally accepted government auditing standards—GAGAS—as promulgated by the U.S. Comptroller General) and the Red Book Standards (International Professional Practices Framework—IPPF) for internal auditing.

We offer numerous certifications such as Certified Public Accountant, Certified Internal Auditor, Certified Government Financial Manager, Certified Government Audit Professional, Project Management Professional, Certified Construction Auditor, and Chartered Global Management Accountant. We are also active members in several industry organizations, including the Project Management Institute, Institute of Internal Auditors, Association of Government Accountants, American Institute of Certified Public Accountants, Association of Local Government Auditors, National Association of Construction Auditors, and the Society of Human Resources Management.
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George Skiles, Partner with Sjoberg Evashenk
Consulting, brings more than 21 years of experience
in evaluating programs in the public and private
sector. Mr. Skiles specializes in state and local
government programs and operations, and currently
serves as the outsourced Chief Audit Executive for
two local governments—the City of Elk Grove,
California, and Snohomish County, Washington—in
addition to conducting performance audit/evaluation
and consulting services for state and local
governments throughout the Western United States.

His experience includes projects relating to:
 Development Services, including public works,
planning, building and safety, transit, and code
enforcement
 Affordable housing, economic development,
workforce development, community
redevelopment, and financing programs
 Youth and family services, community
development and gang reduction programs
 Park and recreation, convention center, museum,
and multi-purpose facility operations
 Government administration, including human
resources, payroll, budgets, finance,
procurement, contracting, and leasing
 Enterprise operations, including ports, airports,
and municipal utilities
 Public safety, including law enforcement,
corrections, and emergency response
His projects address a broad range of issues or
challenges faced by public sector management
though assessments of efficiency and effectiveness,
inherent risks and risk mitigation, performance
evaluation and measurement, and business process
development and/or streamlining. Each resulted in
practical, actionable recommendations.

George J. Skiles

CIA, MA, CRMA
Partner, Sjoberg Evashenk Consulting
Experience
 21 years of experience in public sector
auditing and consulting
 13 years with Sjoberg Evashenk
Consulting
 6 years with the Los Angeles City
Controller
 Former part-time instructor at College of
the Canyons and Moorpark College
Functional Expertise
 State and local government programs
 Enterprise Risk Management (ERM), risk
assessment and mitigation
 Organization and Efficiency Reviews,
SWOT analysis, and business process
evaluation and streamlining
 Business and strategic plan evaluation
 Performance measurement, evaluation,
and audit
 Insurance, Risk, and Control (GRC)
 Management reporting & results—
accountability and transparency
 Management Training
Education and Certifications
 California State University, Northridge,
BA—Sociology
 Master of Arts, Sociology, California State
University, Northridge
 Certification in Risk Management
Assurance
 Certified Internal Auditor
 Member of the Institute of Internal Auditors
 Member of the Association of Local
Government Auditors
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Catherine Brady, Partner, has overseen and managed
hundreds of assignments ranging from reengineering
practices at the California Air Resources Board and its Cap-and-Trade program to internal audits of more than
50 county Superior Courts to comprehensive reviews of
major transportation and transit projects in Arizona and San Diego. She has conducted internal control reviews
and risk assessments of major state and local
governments and reviewed program activities involving
the San Francisco International Airport, California Health Benefit Exchange, Judicial Council, State Treasurer’s
Office, Caltrans, Department of Managed Health Care,
and City of Oakland to name a few.

Ms. Brady’s diverse background includes evaluating and
consulting on programs at both large Southern California ports, city franchise fees paid by gas and power
companies, public works and community development
programs, internal control risk assessments, analyses of financing authority bonding and loan activities, cost
controls, program performance metrics and peer
comparisons, plans of finance and budget assumptions,
bus transit and rail operations, capital project and
construction reviews, health care exchanges, and school and university program.

Further, Ms. Brady is an experienced trainer and has
authored and provided courses in performance audit,
fraud, fiscal reviews, interviewing, internal controls, and documentation. She offers hands-on experience
designing manuals, tools, checklists, and handbooks for the implementation and application of the new
processes and protocols as well as provides coaching to management and staff of public entities relating to
updated policies, procedures, operations, and best
practices.

Catherine Brady

MBA, CPA, CGMA, CCA
Partner, Sjoberg Evashenk Consulting
Experience
 Nearly 31 years’ experience in public sector
management consulting
 More than 20 as an executive with Sjoberg
Evashenk Consulting and 11 years with the
California State Auditor
Functional Expertise
 Internal controls and risk assessments
 Information technology systems development
and analysis
 Federal and State grant programs
 Performance metrics and analysis
 Project management, project oversight,
PMBOK
 Financial audits and evaluations, fiscal
analysis, loan activities
 Capital construction, change order
management, and related practices
 Performance audits and evaluations
 Strategic planning, organizational
development, change management
 Transportation, bus transit, and rail program
delivery and management
Education and Certifications
 California State University, Sacramento, BS
Business Administration, Accounting
 MBA—California State University,
Sacramento
 Certified Public Accountant
 Chartered Global Management Accountant
 Certified Construction Auditor
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Lynda McCallum, Partner with Sjoberg Evashenk
Consulting, offers over 19 years’ experience managing
large project teams conducting a wide array of complex
high-profile engagements for local and state government, including large-scale complex performance audits,
program evaluations, operational reviews, rate studies, and financial analyses. Ms. McCallum has presented her
reports to city councils, boards of supervisors, and state commissions.

Highlights of recent engagements include: reviewing
several large State and local environmental programs to ensure acquisition, restoration, and land management
expenditures and activities were in compliance with
established ordinances and program policies and,
strategic plans, and program objectives. Also, evaluated priority categories, processes to reimburse claimants
environmental cleanup activities, and contracting
practices with oversight regulators.

Other recent projects include evaluating complex
operations at two state departments to determine whether existing rates charged to rate payers support the program activity and services, assessing the rate structure,
reviewing key functional areas, and determining the fiscal viability of the related funds/programs. Also, Ms.

McCallum has recently managed an accounting business
process reengineering effort for a large state agency and has conducted several large performance audits related
to hiring practices associated with sworn employees.

Moreover, she has led dozens of performance audits at
superior courts throughout California that include all fiscal related business operations, service delivery, and case management and conducted projects involving large
complex leasing, procurements, finance, outcome
monitoring, human resources, and indirect costing and
allocation.

Lynda A. McCallum

MBA, CGFM, CGAP
Partner, Sjoberg Evashenk Consulting
Experience
 19 years’ experience in public sector
management consulting with Sjoberg
Evashenk Consulting.
 Pension Administrator with responsibilities
over 401K retirement plans
 Human resources coordinator for large-scale
IT projects for local state and county
government agencies
Functional Expertise
 Performance audits, program evaluation, and
best practices
 Complex fiscal and economic analysis
 Rate setting and process streamlining
 Information technology systems analysis
 Business process reengineering
 Human resources practices
 Financial-related audits, evaluations
 Board and other stakeholder relations
 Focus groups and surveys
Education and Certifications
 University of Southern Mississippi,
Hattiesburg, BS Business Administration
 MBA—California State University,
Sacramento Finance
 Certified Government Financial Manager
 Certified Government Audit Professional
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Nicole Dyer, Director with Sjoberg Evashenk Consulting
offers over 14 years of in-depth experience managing
and conducting program evaluations, business process
assessments, and performance audits and evaluations.

Ms. Dyer has managed and conducted performance
audits and reviews of trial court operations, including contract, procurement, cashiering, fiscal functions,
information technology, payroll, and security at several counties. She brings a broad range of experience
working in the government environment, including:
 Affordable Care Act and state-based marketplace
operations
 Government administration, including human
resources, payroll, budgets, finance, leasing
procurement, contracting, risk management, and
local franchise agreements
 State regulatory boards
 Redevelopment and financing programs
 State and federal grant programs
 Public safety, including law enforcement and
emergency response
 Public infrastructure and capital construction,
including bond programs and propositions
 Institutions of higher education
 Development of information systems
Ms. Dyer recently managed a review of a $400 million
Earthquake Safety and Emergency Response bond
program where she evaluated program oversight and
management and project management practices during
pre-construction phases. She is currently managing
several projects including, a comprehensive
performance audit of the largest state-based health
exchange in the United States, performance evaluation
of the California Poison Control System, and utility cost audit for a large utility company.

Nicole M. Dyer

MBA, PMP, CGAP, CCA
Director, Sjoberg Evashenk Consulting
Experience
 14 years of management consulting and
auditing experience with Sjoberg Evashenk
Consulting
 Other relevant experience working as a
Financial Analyst at The Retirement Group
Functional Expertise
 Program evaluation, business process
reengineering and organizational
development
 Complex fiscal analysis
 Cost and rate studies
 Gap and needs analysis
 Benchmarking, best practices, performance
metrics and assessment
 Cost benefit and economic analyses
 Enterprise risk assessment and internal
controls reviews
 Development of policies and procedures as
well as desk manuals
 Developing and delivering professional
training
Education and Certifications
 California State University, San Diego – BS
Business Administration (Financial Services)
 Western Governor’s University – MBA in
Healthcare Management
 Certified Project Management Professional
 Certified Government Auditing Professional
 Certified Construction Auditor
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Lien Luu, Director with Sjoberg Evashenk Consulting,
has conducted and lead program evaluations, business
process assessments and re-engineering, performance
audits and evaluations, and construction and contract
reviews. With goals of identifying efficiencies, determining effectiveness, and delivering more with less, Ms. Luu has successfully completed several of the firm’s largest public works and transportation construction audits.

As a manager, Ms. Luu has supervised numerous reviews
and audits involving determination of governmental grant recipients’ compliance with regulations, competitiveness of government procurement and contracting including
selection, and award processes and best value for
purchase of material, equipment, and supplies.

Ms. Luu was instrumental at performance audits of over a dozen trial courts in California which included the review of the courts’ fees and fine structures, internal controls, financial operations, cash collections and recording.

She has lead projects involving the roll-out of new
federally sponsored programs that will be administered
statewide as well as design a framework for internal
controls, risk management, compliance and reporting,
developing user manuals and training.

Most recently, Ms. Luu completed the fourth triennial
performance audit of the San Diego Association of
Governments’ TransNet program where she was the
technical lead for analyzing construction project oversight and delivery practices at several local agencies in the San Diego region and assessing system- and project level
performance metrics.

Currently, Ms. Luu is assisting the San Francisco County Transportation Authority with improving the management, oversight, and delivery of its $3 billion transportation improvement program in areas of capital programming,
budgeting, and grant processes.

Lien Luu

BS, CCA
Director, Sjoberg Evashenk Consulting
Experience
 Over 15 years of management consulting
experience with Sjoberg Evashenk
Consulting
Functional Expertise
 Business operations mapping, gap analysis,
needs assessments
 Construction and contract management and
review
 Internal audits – risk assessment and
internal controls
 Development of policies, procedures, and
operational manuals
 Best practices and performance
measurement
 Small business financing—loan portfolio
insurance, collateral support
 Capital construction—freeways,
transportation, water infrastructure, cogeneration power, airports, schools  Trial court operations, trust fund
management, budgeting and fiscal oversight
 Federal funding compliance—overhead
costs, grants, super circular
 Federal Acquisition Regulations
Education and Certifications
 BS Business Administration, International
Business—California State University,
Sacramento
 Certified Construction Auditor (CCA)
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Eduardo Luna, works to ensure that the public has trust in government by ensuring resources are not wasted,
but spent appropriately. Eduardo has over 28 years of
performance audit experience at the federal and local
level of government. He is a Certified Internal Auditor and a Certified Government Financial Manager. He
serves as a member of the U.S. Comptroller General’s
GAO Domestic Working Group; Executive Committee
member, Western Intergovernmental Audit Forum; and
Government Relations Chair, Institute of Internal
Auditors-San Diego Chapter. Specialties: Auditing, Risk Assessment, Government Accountability.

At the City of San Diego, Luna worked as Chief Audit
Executive of the 8th largest city in the United States with an annual budget of $3.9 million. He provided public and elected officials with audit services to promote
accountability, transparency, efficiency, and
effectiveness in City government. Mr. participated in
City Council and Audit Committee meetings regarding
audit operations. He established risk based and
innovative audit processes, including lean six sigma
tools, benchmarking, advanced analytics for auditing
departments and programs. Additionally, he provided
oversight of the City’s Fraud Hotline and investigations of fraud, waste, and abuse.

Most recently, as the City of Beverly Hills’ first
independent City Auditor, he interacted with elected and appointed government officials to convey audit risks,
findings, and issues affecting City operations. He
developed and implemented audit handbook, audit
protocols for conducting audits in accordance with
GAGAS. He created the Trust and Innovation Portal, an
online tool to report potential improper activity and solicit ideas from residents and employees on how to help the
City run better.

Mr. Luna is an eight-time winner of the Association of
Local Government Auditors ‘Knighton Award’ for Best
Performance in the United States and Canada.

Eduardo Luna

MPA, CIA, CGFM
Chief Audit Executive, Subject Matter Expert
Experience
 2+ years’ experience as an Independent City
Auditor
 11 years as City Auditor
 12 years as Deputy City Auditor
 5+ years’ experience as an Evaluator for the
U.S. Government Accountability Offices in
San Francisco and Washington D.C.
 Over 31 years of experience at the Federal
and local level of governments
 Established the City of San Diego’s and City
of Beverly Hills’ first independent audit offices
Functional Expertise
 Expertise in Government Auditing Standards
and International Professional Practices
Framework
 Nationally recognized leader in Performance
Auditing
Education and Certifications
 Santa Clara University, CA – B.A.in Political
Science
 University of Texas at Austin - Lyndon B.

Johnson School of Public Affairs – M.P.A.
 Certified Internal Auditor
 Certified Government Financial Manager
 Member – U.S. Comptroller General’s
Domestic Working Group (2009-2021)
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Firm Background
Established in January 2000 by the former California State Auditor General Kurt Sjoberg and former Chief Deputy State Auditor Marianne Evashenk, Sjoberg Evashenk Consulting is a national firm specializing in evidence-based consulting services. Our practice is built on decades of experience providing management consulting and auditing services on behalf of public sector agencies, non-profit organizations, and private sector businesses throughout the Western United States. In our more than 20 years of service to public sector agencies, we have conducted more than 400 engagements for approximately 220 public sector clients.

Sjoberg Evashenk Consulting and our team of professionals have dedicated our careers to evaluating and improving government operations and programs. Our mission is to be the firm of choice by exceeding client expectations through value-driven, evidenced-based, and reliable performance audit, management consulting, and advisory services. With uncompromised integrity and values, we serve government, nonprofit, and private enterprises by providing accurate, insightful, timely, and practical solutions for improving service delivery and making informed decisions.

Core Lines of Business
While conducting public sector performance audits in accordance with Generally Accepted Government Auditing Standards (Yellow Book) has always remained the cornerstone of our firm’s practice, over the past 20 years our firm has developed four primary lines of business:

Internal Audit: We provide independent, objective assurance and consulting services (internal audit) on behalf of local and state government agencies. Our practice includes serving as the appointed internal auditors for local government agencies and independent organizations, including serving as the outsourced Internal/Performance Auditor for two local governments—the City of Elk Grove, California, and Snohomish County, Washington—assisting internal audit units through training and consultation, conducting performance audits upon request, and performing independent quality assurance reviews of our clients’ in-house internal audit activities. Internal audit services include conducting organizationwide risk assessments, developing annual audit plans, executing audit engagements, providing periodic status reports, presenting audit results and updates to council/legislative committees, and advising legislative and executive officials on a wide variety of matters.

Performance Audit: We offer extensive experience and expertise in program, management, and operational audit and evaluation services. These projects generally strive to assess how effectively, efficiently, economically, ethically, and equitably programs and services are delivered and are conducted in accordance with Generally Accepted Government Auditing Standards. In doing so, we promote public accountability and transparency.

Management Consulting: Our management consulting practice is focused on assisting leaders, managers, decision-makers, and practitioners within government and non-profit organizations in doing what they do best — serve the public. We provide a variety of advisory and consulting services, including policy and procedure development, control and operational risk assessments, project #35..
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management and oversight, process re-engineering, employee classification and compensation studies, benchmarking, change implementation, and training. We take a cooperative approach with our clients to really understand their organization and the challenges they face to provide assistance and solutions that are practical, actionable, and cost-effective. We offer a wide-variety of services.

Training: Through a formal Continuing Professional Education (CPE) training program, our firm offers a wide selection of training courses for both public and private entities. Striving to deliver pertinent and practical training related topics such as audit practice and proficiency, performance audits and program evaluations, risk assessments and Enterprise Risk Management, internal controls, regulatory controls and monitoring, fraud, waste and abuse, and a wide range of internal control best practices. We are an approved member and maintain our compliance with the National Registry of CPE Sponsors through the National Association of State Boards of Accountancy (NASBA).

Regardless of the type of service, our firm’s overall philosophy is simple. We strive to deliver more to our clients than they expect, and do so with unsurpassed quality. Our consulting approach and rigid quality control procedures ensure that we consistently produce insightful, on-point, value-added, and practical solutions—and we do so on-time and on-budget.

General Firm Information
Firm contact information is presented below:

Legal Name: Sjoberg Evashenk Consulting., Inc.

Type of Firm: National Management Consulting Firm
Principal Line of Business: Public Sector Management Consulting and Performance Auditing Address: 455 Capitol Mall, Suite 700
Sacramento, CA 95814
Telephone: (916) 443-1300
Fax: (916) 443-1350
Web: www.secteam.com
Binding Parties: George Skiles, Principal/Partner, [email protected] Cathy Brady, Principal/Partner, [email protected]
Lynda McCallum, Principal/Partner, [email protected]
Project Manager: George Skiles, Partner, [email protected] California Secretary of State: C2561012
Federal Tax ID: 71-0956506
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Sample of Similar Projects
As described in our proposal, under Firm Qualifications, Sjoberg Evashenk Consulting has provided internal audit and performance audit services to a diverse group of local government agencies in California and the Western United States. Below, we provide work samples of three specific projects along with references for each client.
• First, we provide an example of a universal risk assessment completed on behalf of the County Council of Pierce County, Washington. This report can also be found here:
https://www.piercecountywa.gov/DocumentCenter/View/106213/2020-Pierce-Risk-AssessmentPresentation-062121?bidId=.

Client: Pierce County, Washington
Contact: Bill Vetter, Senior Legislative Analyst
Phone: (253) 798-2330
Email: [email protected]
• Second, is an audit report completed on behalf of Snohomish County, Washington, presenting the results of a performance audit of the County’s Human Resources Department. This report can be found at: https://snohomishcountywa.gov/Archive.aspx?ADID=6150.

Client: Snohomish County, Washington
Contact: Heidi Beazizo, Legislative Analyst
Phone: (425) 388-3471
Email: [email protected]
• Third, we provide a report submitted to the Colorado Office of the State Auditor, presenting the results of a performance audit of the State’s Treasury function. This report can be found at:
https://leg.colorado.gov/audits/colorado-department-treasury%E2%80%99s-investmentmanagement.

Client: Colorado State Auditor
Contact: Michele Colin, Deputy Director
Phone: (303) 869-2823
Email: [email protected]
Each report is included in Appendix A of this proposal.

Additional References are provided below:

City of Sacramento
Jorge Oseguera, City Auditor
(916) 808-7270
[email protected]
City of Long Beach
Laura Doud, City Auditor
(562) 570-6751
[email protected]
City of San Francisco
Mark de la Rosa, Chief Audit Executive
(415) 554-7574
[email protected]
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List of Current & Prior Clients
Anaheim, City of Colorado State Auditor (cont'd)
City Manager's Office Office of Administrative Courts
Anaheim Chamber of Commerce Office of the State Auditor Arizona, State of Contra Costa Economic Partnership
Office of the Auditor General Elk Grove, City of
Department of Education Elk Grove Police Department
Pima Association of Governments Finance & Administration Maricopa Association of Governments Human Resources Department Rio Nuevo Multipurpose Facilities District Information Technology Department Bay Area Rapid Transit Integrated Waste Management
California Special District Association (CSDA) Planning Department Special District Workers Compensation Authority Public Works Department Special District Risk Management Authority Transit Department California State Bar Grants Pass, City of
California State Sheriff Association Economic Development Department California Dental Association Tourism Department
California, State of Idaho, State of
Air Resources Board State Legislature
Bureau of Private Postsecondary Education Department of Health & Welfare California Earthquake Authority Independent Cities Risk Management Authority California Health Benefit Exchange Judicial Council of California Dental Board of California Office of Internal Audits
Department of Child Support Services Executive Office
Department of Conservation Alpine County Superior Court Department of Consumer Affairs Amador County Superior Court Department of Corrections Butte County Superior Court
Department of Education Calaveras County Superior Court Department of General Services Colusa County Superior Court Department of Managed Health Care Contra Costa County Superior Court Department of Pesticide Regulation Del Norte County Superior Court Emergency Medical Services Authority El Dorado County Superior Court Gambling Control Commission Fresno County Superior Court Governor's Office of Emergency Services Glenn County Superior Court Health Facilities Financing Authority Humboldt County Superior Court Housing Financing Authority Imperial County Superior Court Integrated Waste Management Board Inyo County Superior Court Office of Statewide Health Planning and Development Lake County Superior Court Public Utilities Commission Lassen County Superior Court Secretary of State Los Angeles County Superior Court
State Board of Pharmacy Madera County Superior Court
State Teacher's Retirement System Marin County Superior Court State Treasurer Mendocino County Superior Court
Student Aid Commission Modoc County Superior Court
Water Resources Control Board Mono County Superior Court Colorado State Auditor Monterey County Superior Court
Board of Assessment Appeals Nevada County Superior Court Board of Medical Examiners Orange County Superior Court Colorado New Energy Improvement District Placer County Superior Court Department of Corrections Plumas County Superior Court
Department of Higher Education Riverside County Superior Court Department of Personnel & Administration Sacramento County Superior Court Department of Regulatory Agencies San Benito County Superior Court Department of the Treasury San Bernardino County Superior Court Division of Securities San Diego County Superior Court
Nursing Board San Joaquin County Superior Court
Sjoberg Evashenk Constulting
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Judicial Council of California (Cont'd) Oakland, City of (cont'd) San Mateo County Superior Court Department of Human Resources Management Santa Barbara County Superior Court Orange County Transportation Authority Santa Clara County Superior Court Orange County Sheriff's Department Santa Cruz County Superior Court Oregon, State of
Shasta County Superior Court Department of Human Services Sierra County Superior Court Department of Justice
Siskiyou County Superior Court Judicial Department
Solano County Superior Court Public Employees Retirement System Sonoma County Superior Court Oregon State University
Stanislaus County Superior Court Portland Public Schools Sutter County Superior Court Portland, City of
Tehema County Superior Court Portland City Auditor
Trinity County Superior Court Human Resources Department Ventura County Superior Court Sacramento Public Library Authority Yolo County Superior Court Sacramento, City of
Kern County Water Agency Office of the City Auditor
Long Beach, City of Community Development Department
Alamitos Bay Marina Rehabilitation Project Sacramento County Office of Education City Auditor San Diego Association of Governments
Department of Human Resources San Diego, City of
Long Beach Airport Office of the City Auditor
Long Beach Sea Festival Association Centre City Development Corporation Port of Long Beach Department of Human Resources
Queen Mary San Francisco, City and County of
WIC Supplemental Nutrition Program City Services Auditor Los Angeles Unified School District Controller's Office Los Angeles, City of Department of Public Works
Animal Services Department General Services Agency
City Administrative Officer Human Services Agency
Community Development Department Public Utilities Commission Department of Cannabis Regulation San Francisco County Transportation Authority Department of Public Works San Francisco Municipal Transporation Agency Department of Recreation & Parks SF City Option
Information Technology Agency SFO Airport
Los Angeles Department of Water & Power San Juaquin, County of Los Angeles Fire Department San Mateo County Department of Human Resources Los Angeles Memorial Coliseum Commission Santa Clara County Office of Education Los Angeles Police Department Santa Monica Airport Department Los Angeles Visitors and Convention Bureau Snohomish, County of Los Angeles World Airports County Council
Office of Finance Finance Department
Office of the Treasury Human Resources Department
Personnel Department Information Technology Department
Port of Los Angeles Public Works
Zoo Sheriff's Office
Los Angeles, County of Surface Waterof Department
Auditor-Controller Southern California Regional Rail Authority Los Angeles County Fairplex Sutter, County of
Probation Department Community Services Department
Nevada Department of Transportation Finance Department
New Port Beach, City of Human Resources Department
Public Works, Municipal Operations Public Works Department Newport Beach Chamber of Commerce University of California, Office of the President Oakland, City of Washington, State of
City Auditor State Auditor's Office
Finance & Management Agency Washington State University Sjoberg Evashenk Constulting
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Appendix A. Sample Reports
On the following pages, we provide three sample reports:
• First, we provide an example of a universal risk assessment completed on behalf of the County Council of Pierce County, Washington. This report can also be found here:
https://www.piercecountywa.gov/DocumentCenter/View/106213/2020-Pierce-Risk-AssessmentPresentation-062121?bidId=. • Second, is an audit report completed on behalf of Snohomish County, Washington, presenting the results of a performance audit of the County’s Human Resources Department. This report can be found at: https://snohomishcountywa.gov/Archive.aspx?ADID=6150. • Third, we provide a report submitted to the Colorado Office of the State Auditor, presenting the results of a performance audit of the State’s Treasury function. This report can be found at:
https://leg.colorado.gov/audits/colorado-department-treasury%E2%80%99s-investmentmanagement. #35..
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Prepared by:

Sjoberg
Evashenk
Consulting

PIERCE COUNTY

OFFICE OF THE COUNTY COUNCIL

COUNTYWIDE RISK ASSESSMENT
JUNE 21, 2021
DRA=
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2 TABLE OF CONTENTS
SJOBERGEVASHENK
Introduction & Background 3
Program Risk Profiles 6
Countywide Risk Ratings 39
Additional Audit Topic Observations 41
Proposed Audit Plan 45
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Objectives,
Scope, &
Methodology
3 INTRODUCTION &

BACKGROUND
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 The objective of the Countywide Risk Assessment was to:
▪ Determine audit areas in the form of agencies, divisions, programs, or other appropriate units.
▪ Identify and rank potential adverse consequences associated with county expenditures, productivity, output, effectiveness, and outcome effectiveness. ▪ Identify realized adverse consequences in the above areas due to the coronavirus pandemic. ▪ Develop a ranking matrix that identifies potential risks.  The scope of the of the risk assessment included, all County of fices, depar tments, cour ts—including the programs, ser vices, and activities of each —in place at the time the risk assessment was conducted.
4 PROJECT SCOPE & OBJECTIVES
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To complete the risk assessment, Sjoberg Evashenk Consulting per formed the following procedures:
 Obtained and evaluated current and historical background information for each of fice, depar tment, and cour t (collectively referred to as “depar tments”), including information available through the County’s website and intranet site, program descriptions, budget documentation, Open Pierce County, strategic plans and annual repor ts, and other relevant documentation, etc.
 Identified the audit universe and auditable units, including County depar tments and the defined programs, ser vices, and functions carried out by County depar tments.  Inter viewed depar tment heads and coordinated with depar tments to gather information about County operations, programs, and functions; to identify potential and inherent risks to the achievement of the missions, objectives, and goals of each; and to discuss current initiatives and activities of the depar tments.
 Based on information provided and auditor judgement, prepared “risk profiles” for each depar tment; evaluated potential risks associated with each auditable unit (depar tment or program); assigned risk ratings for each based on inherent and control risks, vulnerability and auditability, and the potential likelihood and impact the risks pose to the County; and identified potential audit topics to address key risks.  Based on the risk profiles and risk ratings, as well as additional information obtained through this risk assessment, identified the potential audit topics believed to present the greatest value to the County in its upcoming audit plan. 5 RISK ASSESSMENT METHODOLOGY
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Departments,
Offices, &
Courts
6 PROGRAM

RISK PROFILES
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Mission: Fairly and efficiently value property and collect revenue to fund public services throughout Pierce County. 2020-2021 Budget: $24.2 million FTE: 76.20
Core Functions: Discover and value real and personal property, determine eligibility for property tax exemptions and other taxpayer programs, provide current assessment information, maintain updated mapping of real property parcels, complete the levy process, and ensure the accurate billing of real and personal property taxes used to fund essential government services.

Factors Contributing to Risk Assessment: Office has a moderate level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; mission critical to ensuring taxpayers are assessed fair and equitable property taxes; divisions each perform specialized tasks, subject to statutory deadlines, designed to ensure property records remain up-to-date and assessments accurate, suggesting increased complexity; Office recently experienced significant budget fluctuations, with 20-35% increases for appraisal appeals, general administration, and residential appraisals, as well as a 25% decrease in budget for information management; no past or planned audits; tracks performance metrics internally and is subject to Department of Revenue reporting; Assessment Roll Certification generally filed timely, and Assessment Ratios consistently above State average; relatively high turnover in recent years resulting from retirement, associated loss of institutional knowledge; high public visibility and scrutiny.

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Commercial Property
Appraisal
Value all commercial property for tax purposes, including specific appraisals of each property at least once every six years, and identifying all new construction.

Conduct statistical appraisals. Ensure valuations are reliable.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Potential for inaccurate appraisals, intentionally or a result of methods; noncompliance with DOR requirements.

Other: DOR annual reports show Office is performing in line with peers; require conflict of interest attestations in appraisal activity.

Residential Property
Appraisal
Value all residential property for tax purposes, including specific appraisals of each property at least once every six years, and identifying all new construction.

Conduct statistical appraisals. Ensure valuations are reliable.

Budget: $4-10 million FTE: 21-50
Inherent Risks: Potential for inaccurate appraisals, intentionally or a result of methods; noncompliance with DOR requirements.

Other: DOR annual reports show Office is performing in line with peers; require conflict of interest attestations in appraisal activity.

Information
Management
Provides in-house support for the Department’s information systems used to maintain property records, assess property values, and levy property taxes— including RealWare and Ascend.

Budget: $0-3 million FTE: 0-10
Inherent Risks: Accuracy of data in information system, efficiency of system to minimize manual efforts, effectiveness of information security protocols.

Other: Functionality of system long-term, potential need for system replacement.

Records
The Records Officer manages several units responsible for ensuring property records remain up-to-date for assessment purposes, and maintaining current digital data sets of all map-related data necessary to support property valuation. This includes general customer service, open space and exemptions processing, mobile home and personal property assessment support, cartography, land maintenance and GIS management, foreclosure avoidance, and document management.

Budget: $11-20 million FTE: 21-50
Inherent Risks: Potential for backlogs to build, resulting in untimely maintenance of property records, impacting assessed values; reliance on manual efforts.

Other: Staff cross-trained to address seasonal fluctuations in workload; generally able to handle existing workloads to maintain property records in a timely manner (no significant backlogs); experiencing loss of institutional knowledge with increased turnover and staff retirements; policies and procedures not fully up-to-date, a work in progress.

Assessor - Treasurer
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Primary Program Areas:

Residential Property Appraisal
Commercial Property Appraisal
Information Management
Records
Risk Rating Heat Map
Assessor - Treasurer
Potential Audit Topic(s)
While the Office of the Assessor-Treasurer is organized into four program units, representing discrete auditable unit, each contributes to a unified purpose and outcome. Therefore, we find that greater value can be achieved through an Office-wide performance audit rather than smaller audits of any component unit. The proposed audit objective is:
(1) Evaluation of business processes and information systems to identify potential:
(a) Inefficiencies, duplication of efforts, backlogs.
(b) Opportunities to improve tax discovery efforts.
(c) Barriers to meeting DOR mandates.
(d) Approaches to enhancing knowledge transfer.

Residential
Commercial
Information
Management
Records

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Provide and administer a public defense delivery system that assures eligible people receive professional and effective representation while efficiently utilizing public resources.
2020-21 Budget: $43.1 million FTE: 100.90
Core Functions: Delivery of mandated legal services to indigent persons accused of crimes, provide constitutionally mandated legal services to indigent parents involved in Juvenile Court dependency, and provide representation to clients detained pursuant to RCW 71.09, and a limited number of felony and misdemeanor appeals.

Factors Contributing to Risk Assessment: Office has moderate- to high-level of funding / FTEs, relatively low level of cash or other high-risk assets, and is responsible to ensure all qualified persons receive adequate counsel; performance dashboard exists, but does not include some key performance metrics, such as those related to caseload management; meeting all Indigent Defense Standards, which include appointment of qualified counsel (e.g., assigned and individual appointments based upon case complexity and attorney qualifications); Information Technology tools are generally effective, but enhancements are needed to allow for increased automation, electronic record-keeping, and improved indigent notification systems to increase appearance rates for indigent clients; Office has little control over workload fluctuations and must manage caseloads in conformance with state standards, presenting potential budgetary challenges; experienced reduction in reliable experienced external professional service providers (e.g., psychologists, conflict panel attorneys) to take on challenging complex cases, presenting a potentially significant challenge in the future.

UNITS RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Felony & Misdemeanor
The Department of Assigned Counsel (DAC) is responsible for the delivery of mandated legal services to indigent persons charged in adult felonies and misdemeanors cases.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Primary risk relates to the ability of Office to manage caseloads in a manner consistent with State standards; failure to do so could lead to determinations that defendants’ rights to an attorney were withheld. Efficient and effective management of contract attorneys / conflict panel.

Other: Rigorous case monitoring to ensure compliance with state mandates; high public visibility; historically experienced adequate funding levels but increased caseloads may be imminent.

Juvenile & Dependency
The Department provides constitutionally mandated legal services to indigent parents involved in Juvenile Court dependency and termination proceedings.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Primary risk relates to the ability of Office to manage caseloads in a manner consistent with State standards; failure to do so could lead to determinations that defendants’ rights to an attorney were withheld. Efficient and effective management of contract attorneys / conflict panel.

Other: Rigorous case monitoring to ensure compliance with state mandates; historically experienced adequate funding levels but increased caseloads may be imminent.

Western State Hospital
Division
The Department provides legal assistance representing persons detained for involuntary civil commitment proceedings at Western State Hospital and other evaluation and treatment facilities.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Effective and efficient case management.

Other: Rigorous case monitoring to ensure compliance with state mandates.

Program Administration
Providing public defense services includes various administrative responsibilities, assignment of qualified counsel, monitoring caseloads and ensuring in-house counsel maintain workloads in conformance with state standards, maintaining a “conflict panel” or pool of contracted counsel to accommodate caseload demands. The Department also provides legal services to local municipalities.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Effective monitoring of caseloads, conformance with state caseload requirements, and efficient use and monitoring of conflict panel and outsourced attorneys.

Other: Effective information technology tools (LINX) and resources allow for efficient and effective case management and caseload monitoring; adopted case weighting model to closely monitor caseloads; perception of significant time waste in manual record-keeping and storage.

Assigned Counsel
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Primary Program Areas:

Program Administration
Juvenile & Dependency
Felony & Misdemeanor
Western State Hospital (WSH)
Risk Rating Heat Map
Assigned Counsel
Potential Audit Topic(s)
Successfully achieving the mission of the Office of Assigned Counsel requires the Office to maintain caseloads that comply with State mandates. The Office has little control over workload fluctuations and must manage caseloads in conformance with state standards, presenting potential budgetary challenges.

A performance audit of the Office of Assigned Counsel should focus on this primary concern.
(1) Evaluation of caseload management in the Office of Assigned Counsel business processes and information systems to identify potential:
(a) Determining whether the Office consistently adheres to State mandated caseload requirements.
(b) Assess the methods employed by the Office to measure assigned caseloads, evaluate resource allocation, and identify opportunities for improvement.

Admin
Juvenile &
Dependency
Felony &
Misdemeanor
WSH

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Conduct honest and accurate elections; maintain the integrity and accessibility of the public record; and provide efficient licensing services.
2020-21 Budget: $20.8 million FTE: 52.05
Core Functions: Maintain voter registration database, conduct elections, maintain public records, renew and issue licenses and permits for vehicles, vessels, issue marriage, business, pet licenses, and passports.

Factors Contributing to Risk Assessment: Office has a moderate level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; there have been no prior County performance audits of the Auditor’s Office, though most functions of the Office are subject to State laws, regulations, and oversight (e.g., Secretary of State, State Auditor’s Office); licensing and record-keeping make up a substantial portion of the Office’s routine workload, requiring significant efforts to retain and manage official records and respond to public records requests; and, as the office responsible for managing elections county-wide, it is receives significant public attention.

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Elections
Register and maintain voter rolls; maintain precinct and district boundaries; conduct all aspects of federal, state, and local elections; and check signatures on local petitions.

Budget: $4-10 million FTE: 11-20
Inherent Risks: The perception that actions of the Auditor’s Office could unduly impact the outcome of a fair election, whether intentional or unintentional.

Other: Regulated by the Secretary of State and subject to state audits, Elections presents a very high profile function of County government in an era in which election officials are subject to intense scrutiny.

Recording
Receive documents and public records submitted by public agencies, private companies, and individuals, and retain for permanent preservation and availability. Collect or exempt taxes due on sale/transfer of properties and mobile homes.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Inefficiencies that could impact the receipt and recording of publicly recorded documents, as well as the availability of records, in a manner that is easy, prompt, and low-cost; potential theft or loss of monies through cashiering operations.

Other: Has begun and made progress on digitizing records and making them available online; however, treating all requests for public records as an official public records request subject to PRA—even when records are already public (marriage licensing) is becoming increasingly costly.

Licensing
Responsible for processing business licenses, marriage licenses, pet licenses, and automobile and vessel licenses; register process servers; select, contract, supervise, train, provide inventory to, maintain banking relationship with, and audit 10 community-based licensing subagencies.

Budget: $4-10 million FTE: 21-50
Inherent Risks: Potential theft or loss of monies through cashiering operations (in-house and subagents); ensuring full compliance with licensing requirements (e.g., business licenses).

Other: Lack of uniformity and consistency among departments with respect to language and translation services may contribute to duplication of effort and inefficiencies.

Passports
Assists US citizens with their passport application needs, receiving and processing applications on behalf of the US Department of State.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Potential theft or loss of monies through cashiering operations.

Other: Office has experienced a drop in revenue resulting from the closure of the passport office (pandemic).

Administration /
Fiscal Services
Provides administrative support to the Office, including information technology support of multiple election and business systems, along with human resources, fiscal, procurement, and contracting support.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Potentially inefficient or insufficient support of the Office’s core operations.

Other: The office maintains a rigorous schedule for updating policies and procedures annually, but Fiscal Services believed to be understaffed, with static FTEs and mounting workload (e.g., increased methods of payment, oversight of subagents, and accounting for every line of service).

Auditor
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Primary Program Areas:

Elections
Recording
Licensing
Passports
Administration
Risk Rating Heat Map
Auditor
Potential Audit Topic(s)
The operations of the Auditor’s Office generally represents low to moderate risk. Based on this risk assessment, performance audits of the Office could include the following five (5) potential audit topics:
1) Internal controls over payment processing and oversight of subagents. 2) Operational efficiencies and performance designed to ensure the easy and prompt recording of publicly recorded documents.
3) Report on the Auditor’s Office performance during past and/or upcoming elections.
4) Potential efficiencies and enhanced quality control to be gained by consolidating or coordinating countywide language and translation services.
5) Sufficiency of resources to support the Office’s administrative functions.

Elections
Records Licensing
Passport
Admin.

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Protect the integrity and accuracy of the Superior Court case records, to provide these records with excellent customer service in a fair, thorough, accurate, and respectful matter, and to understand the needs of the customer, assist when necessary and appropriate, and provide direction as needed.
2020-21 Budget: $14.9 million FTE: 52.00
Core Functions: Maintain records of all cases filed in the Superior Court dating back to the 1890s, perform quasi-judicial duties including issuance of writs, orders, subpoenas, and warrants, serve as administrator of the Superior Court’s Mandatory Arbitration Program.

Factors Contributing to Department Risk Level: Department has a low level of funding / FTEs when compared to other departments / offices, but controls a moderate level of cash or other high-risk assets; no past or planned audits of the Clerk; relatively few or outdated policies and procedures; information technology resources are perceived to be adequate and effective; much of the functions of the Clerk are subject to the Revised Code of Washington (RCW) as well as state and local rules of court; and the function does not represent a strategic or legislative priority of the County Council.

Clerk of the
Superior Court

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Court Operations / Clerical
Serves as record keeper of Superior Court. Provides administrative support for court operations, including administering the court’s case management system; managing and securing the exhibit room; maintaining and providing access to all records of the court; managing the public counter; docketing; process, maintain, and provide access to court records; notifying licensing and law enforcement agencies of convictions, restrictions, loss of firearms, restraining orders, etc.; and issuing writs, orders, subpoenas, and warrants. Provides assistance and information to victims of domestic violence, harassment, and sexual assault; and assists self-represented litigants with family law processes, such as guardianship, dissolutions, custody, etc.

Budget: $11-20 million FTE: 21-50
Inherent Risks: Potential theft or loss of monies through cashiering operations, charges associated with access to the Court’s case management system, or other high-risk items placed in the Court’s custody and stored in the evidence room; comingled cashiering operations; efficient records management.

Other: Department does not maintain comprehensive up-to-date policies and procedures, but relies primarily on local and state rules of court; potential to increase revenue by modifying charges for access to the case management system.

Pretrial Services
Provides pretrial services on behalf of the Superior Court, including conducting indigent screening and providing the court with information pertaining to the setting of bail and release of offenders pending trial.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Primary risk relates to indigent screening itself, ensuring every qualified individual benefits from the program and no unqualified individual.

Other: Relatively small operation with relatively low risk; during the pandemic, reported an increase in pretrial expenses related to screenings.

Arbitration
Manages the County’s Mandatory Arbitration System (MAR), which provides an alternative to a court hearing for cases with a total value of less than $100,000.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Optimizing participation in the program in order to reduce court costs, improve scheduling, and resolve disputes timely.

Other: Relatively small operation with relatively low risk.

Fiscal Division
Serves as Fiscal Officer of Superior Court. Oversees and maintains accounting functions for Superior Court cases. Process court fees, collect/account for restitution, filing fees, court fines and assessments, trust funds, child support funds, cash bail, etc. Enters judgments into the LINX court case management system and keep public records of court decisions.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Ensuring accuracy of court records and funds held in trust; accurately recording fee and fine collections to ensure appropriate distribution between the County and State.

Other: Department experienced reduction in revenue resulting from a reduction in unlawful retainers/evictions.

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Primary Program Areas:

Court Operations
Pretrial Services
Arbitration
Fiscal Division
Risk Rating Heat Map
Clerk of the
Superior Court
Potential Audit Topic(s)
The operations of the Clerk of the Superior Court generally represent low- to moderate-risk. Based on this risk assessment, a performance audit of the Clerk of the Superior Court could include the following two objectives:
(1) Determine whether the Clerk has established sound internal controls over cash collections, taking custody of exhibits and securing the exhibit room, and tracking and escheating funds held in trust.
(2) Evaluate whether the processes employed by the Clerk to record judicial decisions and fee/fine collections ensures accuracy and correct distribution of fee and fine revenue to the County.

Court
Operations
Pretrial
Services
Arbitration
Fiscal

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: As an independent and impartial branch of government, promote respect for law, society and individual rights; provide open, accessible and effective forums for dispute resolution; resolve legal matters in a just, efficient and timely manner and assure the dignified and fair treatment of all parties. 2020-21 Budget: $32 million FTE: 103.00
Core Functions: Serve as a court of limited jurisdiction over traffic infractions, criminal and traffic misdemeanors, gross misdemeanors, civil matters for damages or injury to individuals or personal property, penalties and contract disputes no greater than $100,000, small claims, name changes, and anti-harassment and stalking protection orders.

Factors Contributing to Department Risk Level: Court has a moderate level of funding / FTEs when compared to other departments / offices, and moderate cash or other high-risk assets; no past or planned audits; no performance measure dashboard; and the function does not represent a strategic or legislative priority of the County Council.

District Court

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Administrative Services &
Court Solutions
Provides administrative support to judicial officers, staff public counters, process filling fees, collect court fines and assessments, and information technology support.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Potential theft or loss of monies through cashiering operations; efficient records management; ensuring accuracy of court records; accurately recording fee and fine collections to ensure appropriate revenue distribution.

Other: None.

Court Operations
Responsible for case management and processing for a variety of case types, including protection orders, civil case filings, criminal and traffic misdemeanors, infractions, name changes, and related matters. Manages the administration of the court and juvenile court programs and services. Also responsible for processing court filings and judicial orders, and the administration of the Court’s therapeutic programs, which provide intervention aimed to offer supervision, accountability and treatment in lieu of incarceration.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Ensuring accuracy of court records and funds held in trust; accurately recording fee and fine collections to ensure appropriate distribution between the County and State; ensuring efficiency in court operations, case management, scheduling, and administration of therapeutic courts.

Other: None.

Probation Services
Provides probation and pre-trial supervision, including providing District Court judges with information regarding individuals’ behavior in accordance with court ordered conditions, offering viable costeffective sentencing options, and providing supervision for alternative (day reporting and work crew programs) and diversion therapeutic program participants.

Budget: $4-10 million FTE: 21-50
Inherent Risks: Ensuring efficiency in case management.

Other: None.

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Primary Program Areas:

Administrative Services & Court Solutions
Court Operations
Probation Services
Risk Rating Heat Map
District Court
Potential Audit Topic(s)
The operations of the District Court generally represents moderate risk. Based on this risk assessment, a performance audit of the District Court could include the following three objectives:
(1) Determine whether the Court has established sound internal controls over cash collections.
(2) Evaluate whether the processes employed by the Court to record judicial decisions and fee/fine collections ensures accuracy and correct distribution of fee and fine revenue to the County.
(3) Assess overall efficiency of court operations, case management, scheduling, and administration of therapeutic courts. Administrative Services Court
Operations
Probation

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Create resilient communities and enhance public safety by empowering the whole community in Pierce County to prevent, mitigate, prepare for, respond to, and recover from all types of hazards, emergencies, and disasters. 2020-21 Budget: $8.7 million FTE: 30.00
Core Functions: Prepare and protect people by providing a duty officer program that monitors and maintains situational awareness 24 hours a day, operate the Emergency Operations Center (EOC) during emergencies, operate alert and warning systems, provide contract services for emergency management activities, provide emergency preparedness training, conduct regional test exercises, maintain an Urban Search and Rescue warehouse, and conduct inspections.

Factors Contributing to Department Risk Level: Department has a low level of funding / FTEs when compared to other departments / offices, but a high level of cash or other high-risk assets (search and rescue warehouse, communications equipment); information technology resources generally meet Department needs; Dependent on grant revenues, with sustainability dependent on a sometimes uncertain federal and state grant landscape; Department experienced a 9.3 percent budget reduction from 2018-19 funding levels, reflecting a reorganization of the department to streamline service delivery; no past or planned performance audits, though subject to routine FEMA and State Auditor audits.

Emergency Management

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Enhanced 911 /
Radio Communications
Maintain GIS and MSAG for call routing, work with carriers to resolve all ALI issues, receive and distribute revenue from county 911 tax, and provide public education and outreach to reduce incorrect calls to 911.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Any potential failure of emergency communications equipment.

Other Notes: None.

Emergency Management
Equip and operate an emergency coordination center (ECC); practice emergency planning, preparedness, and mitigation; community and regional outreach and stakeholder participation; maintain alert and warning system for emergencies and disasters; compile and develop response plans; manage search and rescue warehouse; develop and implement a training and exercise program; promote emergency management accreditation; administer homeland security (UASI and FEMA) grants; and manage 24 hour duty officer program.

Budget: $0-3 million FTE: 1-10
Inherent Risks: In the event of an emergency, plans do not adequately address mitigation steps or they neglect / exclude the specific type of event; despite sound planning, being unprepared when an event occurs; the effect of both is delays in response that can be devastating.

Other Notes: Seeking accreditation through the Emergency Management Accreditaion Program.

Fire Prevention Bureau
Fire Marshal conducts fire code building inspections; investigates the origin and cause of all fires in the unincorporated county and contract cities.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Failure to inspect buildings in a timely manner or to identify fire hazards during inspection.

Other Notes: None.

Finance
Fiscal management, accounting services, and general administrative support, budget preparation, grant management, financial reporting/monitoring, accounts payable & receivable, purchasing, payroll.

Budget: $0-3 million FTE: 11-20
Inherent Risks: Failure to appropriately record, track, and monitor grant funds, resulting in the loss of potential revenues.

Other Notes: Subject to routine FEMA and State Auditor audits.

SJOBERGEVASHENK 17
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Primary Program Areas:

Enhanced 911 / Communications
Emergency Management
Fire Prevention
Finance
Risk Rating Heat Map
Potential Audit Topic(s)
Each of the Department’s key functions—Enhanced 911, Emergency Management, Fire Prevention, and Finance—are clustered as moderate-risk.

While they have a lower level of funding / FTEs when compared to other departments / offices, the nature of their work warrants at moderate risk rating and, given the work performed by the Department during the pandemic, possibly a high-risk rating. Potential audit objectives include:
(1) Evaluating the Department’s Disaster Preparedness Plans and conducting a response assessment in the aftermath of the pandemic to assess lessons learned.
(2) Determining whether the Fire Prevention unit meets plan review and inspection timeliness standards (e.g., inspection cycles, review turnaround times, etc.).
(3) Evaluating the Finance unit’s processes for recording, tracking, and monitoring grant funds and reporting to ensure full compliance and recovery.

Emergency Management
Enhanced 911
Emergency
Management
Fire
Prevention
Finance

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 18
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Mission: Provide quality spaces that are safe and ready to support Pierce County business each day---taken from budget. On their website they have a diff super long mission.
2020-21 Budget: $101.7 million FTE: 70.54
Core Functions: Provide services to County departments for the purchase, sale, and lease of real estate, manage new construction and remodel projects, provide oversight, maintenance, and management of County-owned facilities, and develop and monitor security systems, processes, and solutions.

Factors Contributing to Department Risk Level: Department has a moderate- to high-level of funding / FTEs when compared to other departments / offices, and relatively high level of other high-risk assets; no past or planned audits specifically related to the Department or divisions; construction and maintenance operations presents inherent workplace safety risks.

Facilities Management

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Construction
Manages the building of new county facilities as well as upgrades to existing facilities, from initial needs assessments through project management and warranty issue resolution.

Budget: $51+ million FTE: 1-10
Inherent Risks: Controlling capital construction costs to ensure allowability and avoid cost over-runs; workforce safety; project management to ensure project is completed on time and on schedule; and managing contractors and controlling project costs.

Other Notes:

Maintenance &
Operations
Provides clean, attractive, well cared for places to conduct County business; maintain County buildings, grounds, and equipment; prepare preventive maintenance schedules and ticketing system for repairs; meet required compliance codes for building systems such as elevators, fire, electrical, and water; ensure efficient operation of energy consuming equipment.

Budget: $21-50 million FTE: 21-50
Inherent Risks: Maintaining facilities in a cost-effective manner; controlling high-risk assets (tools, equipment, etc.); workforce safety; and avoidable cost increases stemming from emergency repairs.

Other Notes: Full asset inventory, but condition assessment not yet complete; high reliance on contract maintenance; utilizes effective work order management system, implemented relatively recently; perceived strong inventory management system for tools & equipment; COVID resulted in increased workload, primarily preparing and cleaning facilities.

Real Property
Acquire, maintain, manage, and dispose of real property owned, leased or otherwise held by the County; record property in the County’s asset inventory, and assess asset condition; manage all operational functions of County offices, facilities, parking, and other assets; oversee surplus property sales, tax title property sales, lease management and forestry management.

Budget: $0-3 million FTE: 1-10
Inherent Risks: For assets that are in use, maintaining the assets in a cost effective manner; for assets that are not in use by the County, risks associated with unauthorized used of County-owned property; optimizing the value of surplus property to the County, and determining future operating needs of the County in terms of the potential for continued remote work and the impact this could have on the County’s office space footprint.

Other Notes: Full asset inventory, but condition assessment not yet complete; Security
Enhances the delivery of County services by providing physical security programs, including security guards; systems designed to reduce vulnerabilities and mitigate security risks; and employee and contractor background checks.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Ensuring the safety and security of the County’s workforce and member of the public visiting County properties.

Other Notes: High reliance on contract security;
Administration
Oversees strategic planning, and performance management, departmental fiscal and human resource support, and resource conservation, including reducing energy and water consumption within County government and identifying opportunities for daily conservation.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Inefficient or ineffective support of Department functions.

Other Notes: Department experienced reduction in parking revenues during pandemic.

SJOBERGEVASHENK 19
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Primary Program Areas:

Construction
Maintenance & Operations
Real Property
Security
Administration
Risk Rating Heat Map
20 Potential Audit Topic(s)
Each of the program areas within Facilities Management are clustered in the moderate-risk area, with the exception of Administration. Given the size of the department and the inter-related program activities, a performance audit of Facilities Management could take a department-wide perspective rather than focusing on individual, smaller programs. Such an audit could include the following objectives:
(1) Assess the Department’s overall approach to project management for construction projects, including its project delivery manual and guidelines, and determine the extent to which it is consistent with best practices.
(2) Evaluate the Department’s ongoing control, monitoring, assessment, and maintenance of County facilities and properties to identify opportunities to enhance efficiencies and protect County assets.

Facilities Management
Construction
Maintenance &
Operations
Real
Property
Security
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 20
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Mission: To enable effective management of resources throughout Pierce County government. 2020-21 Budget: $181.6 million FTE: 203.31
Core Functions: Responsible for financial planning, management of revenues and expenditures, preparation of financial reports, and other fiscal operations. Serve as treasurer to numerous outside taxing districts.

Factors Contributing to Department Risk Level: High budget, high FTE. No past or planned audits specifically related to department or divisions, but multidepartment evaluation that included Finance: 2015 Centralization and Shared Services Evaluation. Department performance dashboard exists, but needs improvement.

Finance

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Finance & Performance
Management
Responsible for financial planning, management of revenues and expenditures, preparation of financial reports and other related fiscal operations; develops and maintains fiscal management policies, tax reporting and disbursements, budget and grant management, banking services, payroll, process accounts payable and receivable; manages internal audit function.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Integrity and effectiveness of internal controls related to the County’s fiscal transactions of all types.

Other Notes: Subject to annual financial audit; progress on performance measurement.

Budget and Grants
Develop and maintain the county budget, CIP, multi-year financial models, annexation, and financial system tools which provide accurate and timely information to county government and the public.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Reliability of financial models and forecasts; compliance with grants and increasing grant footprint.

Information Technology
Supports a wide range of technology services for Pierce County employees, departments and Pierce County citizens; develop, procure, and administer application software; maintain databases and GIS data; maintain application security, cybersecurity, networks, data centers, and Open Pierce County; administer workstations for County employees, address daily requests/tickets for assistance, deliver technology for data and voice communications.

Budget: $51+ million FTE: 101+
Inherent Risks: Ensuring systems are effective and meet end user needs; network hygiene and cybersecurity.

Other Notes: Moving hardware from data centers throughout county to the State’s data center, working on the conversion now.

Procurement and
Contract Services
Responsible for procurement of material, equipment, supplies, construction and services required by Pierce County; assures that purchases are acquired legally from responsible providers at the lowest possible costs; manages requests for proposals, notices of intent and bid opportunities; procurement of goods and services; and contract monitoring and compliance..

Budget: $0-3 million FTE: 11-20
Inherent Risks: Ensuring most competitive price for high-quality goods or services; avoiding potential conflicts of interest and other forms of fraud, waste, or abuse.

Risk Management
Procures and works with the County’s broker of record; conducts risk retention analyses; administers self-insurance program; procures insurance products; reviews all contracts for appropriate insurance criteria; administers Worker's Compensation and workplace safety programs.

Budget: $51+ million FTE: 1-10
Inherent Risks: Minimizing cost by striking the best balance between risk retention and risk transfer; establishing adequate reserves; routinely evaluating insurance markets to ensure cost-effective risk transfer; and ensuring effective risk mitigation efforts.

Investments
Tax administration, revenue collection, cash management, investments, debt management, and accounting/reporting functions.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Ensuring investment policies are fiscally sound and in line with best practices; ensuring compliance with investment policies and asset allocation; engaging in effective cash management practices.

Records Management
Provide records management, including storage and destruction of records, scanning and printing services, daily mail distribution, assist in public records requests.

Budget: $4-10 million FTE: 1-10
Inherent Risks: Maintain a cost-effective records retention program; minimize risk by consistently adhering to retention and destruction schedules.

Fleet Management
Procures, maintains, and manages a fleet of passenger vehicles for use by County departments and personnel.

Budget: $11-20 million FTE: 1-10
Inherent Risks: Maintaining adequate internal controls over vehicle and maintenance assets; ensuring competitive procurement for all assets; and ensuring an effective preventive maintenance program.

Benefits Administration
Manages all group benefit plans (health, dental, life, disability, etc., insurance plans), administer self- and fully-insured plans.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Ensuring competitive benefits, compliance with both fully insured and self insured plans; actuarial analysis to evaluate utilization; ensuring claims properly handled.

SJOBERGEVASHENK 21
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Primary Program Areas:

Finance & Performance Management Risk Management
Budget & Grants Investments
Information Technology Records Management
Procurement & Contract Services Fleet Management
Benefits Administration
Risk Rating Heat Map
Potential Audit Topic(s)
Most of the divisions of the Finance Department perform functions that are common subjects of internal and external audit activities: procurement, grant management, fleet management, benefits administration, etc. Generally, each employs systems of internal controls to ensure compliance, fiscal integrity, and the prevention of fraud, waste, and abuse. Through Finance’s Internal Auditor and annual external audit functions, these internal controls should be routinely tested and evaluated. There are for audit topics, however, that ranked the highest during this risk assessment:
(1) Performance Audit of Finance’s Performance Measurement System, the purpose of which would be to identify ways to build upon an already strong performance measurement system.
(2) Performance Audit of Risk Management, including evaluating key business processes associated with risk transfer and retention decisions, gauging the insurance market, risk mitigation techniques, and claims administration.
(3) Performance Audit of Information Technology practices and protocols. (4) Performance Audit of Investment Practices, including ensuring investment policies are in line with best practices, investments are compliant with investment policies, and cash management practices optimize investment objectives.

Finance
Finance &
Performance
Management
Budget &
Grants
Information
Technology
Procurement &
Contract Services
Risk
Management
Investments
Records
Management
Fleet
Management
Benefits
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 22
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Mission: Provide our customers with human resource services to attract, hire, develop, and retain an effective, talented, and diverse workforce for Pierce County.
2020-21 Budget: $10.6 million FTE: 29.80
Core Functions: Provide wide range of human resource management services such as recruitment and compensation, civil service, employment support services, employee relations, and training. Provide leadership on innovative workforce management strategies.

Factors Contributing to Department Risk Level: Department has a low-level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; budget increase of 16.4 percent from last biennium; several prior audits of human resources management activities, including those conducted in 2011, 2013, 2014, 2017, and 2019. No planned audits.

Human Resources

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Talent Management
Recruit qualified candidates, implement selection processes (application review, interviews, examinations); onboard newly hired employees; and manage the County’s performance management system.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Unsuccessful talent management resulting in a County workforce that does not meet the needs of the County or it’s residents and business community; unfair hiring practices or favoritism.

Other Notes: Utilizes LinkedIn Recruiting; proactive recruiting strategies.

Classification &
Compensation
Develop and maintain the County’s classification system to ensure the efficient and effective treatment of employees in a wide variety of positions, and the County’s compensation system that promotes fair and competitive compensation sufficient to attract, retain, and motivate employees.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Compensation levels that are insufficient to attract, retain, and motivate a talented and qualified workforce; a classification system that is both inefficient to administer and results in inconsistent treatment of similarly situated employees.

Other Notes: Recently completed a comprehensive classification and compensation study to revamp a decades-old system; developed systematic approach to maintain the systems to avoid future obsolescence.

Training &
Organizational
Development
Provide multi-faceted employee training program, including developing and conducting County-wide training courses, providing subscription-based content for training and employee development, identifying unique training needs (such as diversity, equity, and inclusion training), and implementing a leadership development program.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Unsuccessful workforce development resulting in a County workforce that does not meet the needs of the County or it’s residents and business community.

Other Notes: Offers training and organizational resources, including Department-administered training and subscription-based training (LinkedIn), peer instructor/facilitator training, DEI programming, and related programs.

Employee & Labor
Relations
Administer labor relations and negotiations, EEO and affirmative action programs, matters of employee discipline, and related functions.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Increased employment costs, including prolonged employee-employer disputes, labor costs, undue limitations to management’s ability to manage an agile workforce, potential discrimination, and related matters.

Other Notes:

Administration
Maintain HR policies and procedures; provide support for Countywide use of WorkDay, the County’s human resources information system; process personnel action changes in WorkDay; maintain all personnel records to ensure compliance with federal and state law; Budget: $0-3 million FTE: 1-10
Inherent Risks: Inefficient or ineffective support of critical HR functions.

Other Notes:

SJOBERGEVASHENK 23
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Primary Program Areas:

Talent Management
Classification & Compensation
Training & Organizational Development
Employee & Labor Relations
Administration
Risk Rating Heat Map Potential Audit Topic(s)
Each of the Department’s key functions, with the exception of Administration, are clustered as moderate-risk. Each function is generally designed to achieve a singular goal: to attract, retain, and motivate a highly talented, qualified, and effective workforce. Therefore, we recommend that a performance audit of human resources management within the County to address the following objective:
(1) Determine whether the County’s human resources management activities are consistent with industry standards; sufficient to ensure compliance with federal, state, and local laws and regulations; and effective in attracting, retaining, and motivating a highly talented, qualified, and effective workforce.

Human Resources
Talent
Class/Comp
Training &
Organizational
Development
Employee &
Labor Relations
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 24
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Mission: Ensure all of Pierce County has equitable access to community-based services that respect each person's unique experience.
2020-21 Budget: $185.9 million FTE: 230.50
Core Functions: Provide assistance to vulnerable populations. Provide programs for housing assistance, veterans, home repair, home weatherization, early childhood, energy assistance, developmental disabilities, crisis recovery and community development.

Inherent Risks: While each of the programs administered by the Department are distinct, focus on different populations and different needs, utilize different community based organizations (CBO) and service providers, and rely on different funding streams, the inherent risks faced by each are generally consistent. Inherent risks include grant-dependency, with sustainability dependent on a sometimes uncertain federal and state grant landscape; potential non-compliance of service providers, including performance and use of funds; less visibility into CBOs with increased remote work; achieving goals to optimize outcomes rather than outputs; and financial integrity, including optimizing use of limited resources and expanding grant footprint.

Other Factors Contributing to Department Risk Level: Department has a high-level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; maintains significant reliance on contracts (community based organizations); utilizes a substantial number of information systems and databases, many of which are administered at the state or federal level; and is subject to a few ongoing performance audits many of the Departments programs represent a strategic or legislative priority of the County Council.

Human Services

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Aging and Disability
Resources
Responsible for local planning, coordination, and administration of Federal and State funds targeted to provide a comprehensive system of long term services and supports (LTSS) designed to address the needs and support community living for frail older adults, adults with disabilities, and their caregivers; authorize Medicaid and coordinate care services and support for elderly and disabled; administer developmental disabilities program services, which oversees early intervention, school-to-work, and adult employment; manage care services contracts; oversee family care programs; provide financial, legal, housing, nutrition / food, transportation, and other resources.

Budget: $51+ million FTE: 101+
Other: Mission-critical program; high-level of complexity; and has not been subject to a recent performance audit and no audits are planned.

Behavioral Health
Enhance the resources and care that low income residents with behavioral or mental health disorders, through direct service, oversight of administrative programs, and the Pierce County Crisis Line.

Budget: $11-20 million FTE: 1-10
Other: Mission-critical program; high-level of complexity; recent behavioral health tax, which is subject to a program evaluation in the Council’s 2021 Audit Workplan.

Community Action
Empower low-income individuals and families to achieve self-sufficiency by helping residents with early childhood education, energy assistance, rental assistance, home repairs, home weatherization and more; partner with WSU extension.

Budget: $21-50 million FTE: 51+
Other: Mission-critical program; high-level of complexity; and has not been subject to a recent performance audit and no audits are planned.

Community Services
Provide public benefits to low income households, engage in planning and grants management to support economic development, affordable housing, homelessness, community revitalization, health care, violence prevention, and other CDBG-funded programs.

Budget: $51+ million FTE: 11-20
Other: Mission-critical program; high-level of complexity; subject to 2019 Affordable Housing audit and 2021 Audit Workplan includes Homeless Services and Food Bank Needs Assessment.

Finance and
Administration
Provide administrative support for other division within the department, including clerical, fiscal, research and evaluation, contract processing, and technology support.

Budget: $4-10 million FTE: 11-20
Other: Limited financial resources to support growing administrative support needs.

Veterans Assistance Provides emergency assistance to qualified indigent veterans and family members, including support for burial, food, medical, rent, and utilities related costs; host Veterans Resource Center.

Budget: $0-3 million FTE: 1-10
Other: Funded through dedicated funding at state level; relief funds for veterans.

SJOBERGEVASHENK 25
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Primary Program Areas:

Aging and Disability Resources
Behavioral Health
Community Action
Community Services
Veterans Assistance
Finance and Administration
Risk Rating Heat Map
Human Services
Potential Audit Topic(s)
Performance audits of human services agencies often focus on:
(1) Subrecipient Compliance and the agency’s methods and procedures for monitoring subrecipients.
(2) Outreach efforts designed to ensure those that are in need are in fact aware of available services.
(3) Efforts to expand the agency’s grant footprint to render the agency less susceptible to fluctuations in grand funding streams.
(4) Performance measurement that goes beyond federal or state mandates and which focus on outcomes, targeting resources to the greatest needs, and incentivizing excellent performance.
(5) Evaluating the use of various funding sources, including less restrictive sources (e.g., general fund) and more restrictive sources, to optimize program funding and the funding of essential administrative functions.

These audit topics, and others, are worthy of consideration given the scope, magnitude, and importance of the departments operations. However, underlying each of these audit objectives is another audit topic that is often overlooked—data analytics. The Department utilizes perhaps dozens of information systems and databases to support various programs. This data reveals eligibility and participation, outputs and outcomes, client interactions with various CBOs operating different programs—much of which has historically been understood and evaluated in silos. Data analytics, used to compare information in different data sets, can also be used to assess potential fraud, including fraudulent eligibility information submitted by clients or fraudulent enrollment information from service providers. A great deal more can be done with the data available to the Department, which could better enable the Department to tie program resources to data and outcomes; determining the ultimate potential benefit this could provide requires independent analysis.

Aging & Disability
Resources
Behavioral
Health
Community
Action
Community
Services
Finance &
Administration
Veterans
Assistance

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 26
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Mission: To serve the living by death investigations and forensic postmortem examinations. The overarching purpose of the medial examiner system is to answer questions about deaths that impacts the living. 2020-21 Budget: $8.8 million FTE: 24.00
Core Functions: Provide professional forensic death investigations and postmortem examinations of those who die under circumstances that are sudden, unexpected, unattended, unnatural, violent, or suspicious. The office is an independent entity that operates under the authority of the laws of the State of Washington and investigates deaths 24/7/365. It is a separate department within Pierce County and not under the supervision or direction of law enforcement or prosecutorial influences.

Factors Contributing to Department Risk Level: Department has a low-level of funding / FTEs when compared to other departments / offices, and moderate level of cash or other high-risk assets (decedent property, medical equipment); 2020-21 biennial budget is 21 percent higher than 2018-19 levels, resulting in additional staff to support office; no past or planned department or division specific audits.

Medical Examiner

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Operations
Forensic pathologists diagnose a wide variety of natural disease and injuries through examination of tissue and biological fluids, generate written reports of their findings, certify death certificates, and provide expert testimony in criminal and civil proceedings. Forensic death investigations are focused on determining the cause and manner of deaths that fall under medical examiner jurisdiction. Investigations range in complexity up to and including death scene investigations. Postmortem examination may, but not always, include an autopsy, imaging, and other laboratory testing to determine the cause and manner of death and document injuries. Ensures reliable and/or scientific identification of decedents. Provides disposition for decedents unclaimed by family or friends. Responsible for recognition, collection, and maintaining the integrity of biological and physical evidence collected from the body.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Potential for compromised investigations or less-than-respectful handling of decedent due to resource limitations, unprofessional conduct, or other factors.

Other Notes: Accredited by the National Association of Medical Examiners; Office may not have sufficient equipment to operate efficiently (laboratory space, equipment such as body lifts and CT scanners, basic supplies); COVID-19 and recent trends have stressed existing capacity to its limit.

Administration
Direct and oversee the development, implementation, and maintenance of all policies, procedures, and practices to meet or exceed professional accreditation standards of the National Association of Medical Examiner’s (NAME). Manage the implementation and enhancements of new case management system. Direct and manage mass fatality incident planning so operations can accommodate surge capacity alongside daily operations. Direct and oversee the responsible stewardship of facility, equipment, staffing, and administrative services necessary to provide the public with timely, accurate, and thorough services, compassionately delivered.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Ineffective or inefficient to support Operations.

Other Notes: Implemented new case management system in 2021, but system is still in progress and is mission-critical; inadequate space and capacity creates risks; room for improvement in policies and procedures.

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Primary Program Areas:

Operations
Administration
Risk Rating Heat Map Potential Audit Topic(s)
As an accredited body, the professional conduct of the Office of the Medical Examiner are verified periodically. The most significant risk identified during this Risk Assessment relates to the ongoing modernization of the Office, including the implementation of the Office’s new case management system and it’s assessment of it’s existing capacity infrastructure. This transition presents an opportune time to conduct an independent assessment of the development and implementation of the new case management system and the physical office, laboratory, and cooler space needs reasonably anticipated for the future.

Medical Examiner
Operations
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
SJOBERGEVASHENK 28
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Mission: Provide opportunities for people to connect with nature, live healthy lifestyles, enjoy vibrant community spaces, and learn about sustainable practices.
2020-21 Budget: $114.9 million FTE: 82.00
Core Functions: Provide leisure and facility services, maintain parks, community centers, boat launch sites, and trails. Provide programs such as athletics, tournaments, youth camps, special events, and more.

Factors Contributing to Department Risk Level: Department has a moderate- to high-level of funding / FTEs when compared to other departments / offices, and a high level of cash or other high-risk assets and equipment; experienced a decline in earned revenue during the pandemic.

Parks and Recreation

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Administration
Provides administrative support to the department, including business services, accounts payable and receivable, procurement and contracting, records retention and management, information technology, and human resources.

Budget: $4-10 million FTE: 11-20
Inherent Risks: Efficiency of professional services provided by all Programs Other: Department in the process of revising and updating policies and procedures.

Parks, Recreation, and Tourism
Administer and manage recreational assets (land, building, and equipment), recreational programs, and maintenance operations through four regional divisions; maintain 5,216 acres of parks and trails, operate park facilities, community centers, golf courses, quarter midget race track, sports complexes, waterfronts, hiking trails, etc.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Health and safety for visitors and staff; cash handling and payment processing at park locations; ensuring accessibility and being responsive to recreational needs; maintaining reliable revenue streams.

Other: Earned revenue declined significantly in 2020-21; performance measurement is a work in progress, as existing measures do not fully illustrate park or program utilization or opportunities for improvement.

Resource Stewardship
Plans and oversees facility planning and capital improvement projects related to recreational assets, including ballfields, natural land and trails, landscaping, wetlands, and wildlife habitat; responsible for strategic planning.

Budget: $21-50 million FTE: 1-10
Inherent Risks: Sustainability, particularly as it relates to future funding required to maintain additional assets designed and constructed through the Resource Stewardship program; maintaining the system in a cost-effective manner; maintaining adequate funding; and managing contractors and controlling project costs.

Other: As the system grows, so to do future operating costs; building asset inventory and condition assessments in place, but life-cycle modeling for replacement projects not yet established.

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Primary Program Areas:

Administration
Parks, Recreation, Tourism
Resource Stewardship
Risk Rating Heat Map
Potential Audit Topic(s)
This risk assessment revealed three potential audit topics worth considering:
(1) Evaluate the Department’s strategic planning, particularly as it relates to:
(a) Capital asset planning and the impacts on future operating costs. (b) Recreational programming, utilization, and responsiveness to community needs.
(c) Maintenance programming and the approaches taken by the Department to assess and maintain its asset infrastructure. (2) Evaluate the Department’s performance measurement system and its effectiveness in capturing relevant metrics regarding the utilization of park assets and recreational programming.

Parks and Recreation
Administration
Parks,
Recreation, &
Tourism
Resource
Stewardship

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: To deliver customer-focused services and maintain vital infrastructure to enhance livability in Pierce County. 2020-21 Budget: $782.6 million FTE: 780.00
Core Functions: Provide variety of public services including road design, maintenance, construction, planning and development services, code enforcement, sewer collection and treatment, airport and ferry services, sustainable resources administration, and surface water management.

Factors Contributing to Department Risk Level: Department has a high-level of funding / FTEs when compared to other departments / offices, and a high level of high-risk assets; subject to several audits in the past; utilizes a large number of contractors; reliant on a significant special revenue funds; public infrastructure remain highly visible to the public and a legislative priority.

Planning and
Public Works

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Sewers
Construct, operate, and maintain the County’s regional sewer system; develop utility fees designed to cover the cost to maintain the integrity of the system long term.

Budget: $51+ million FTE: 101+
Inherent Risks: Maintaining the system in a cost-effective manner; maintaining adequate funding; and managing contractors and controlling project costs.

Surface Water
Management
Provide a variety of programs focusing on clean water in rivers, streams and lakes; habitat for fish and aquatic wildlife; river flooding and erosion; and storm water drainage systems.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Maintaining the system in a cost-effective manner; maintaining adequate funding (rate evaluation in 2015); and managing contractors and controlling project costs.

Sustainable Resources
(Solid Waste)
Manage solid waste program, including contracting for waste disposal, the operation of three transfer stations, and a composting center.

Budget: $11-20 million FTE: 1-10
Inherent Risks: Ensuring quality service and establishing rates sufficient to sustain quality service.

Other: Revenue sustainability concerns and the use of Solid Waste fees to support Code Enforcement.

Airport and Ferry
Manage and operate two general aviation airports (Tacoma Narrows Airport and Thun Field), and manages and operates the Steilacoom, Ketron & Anderson Island Ferry.

Budget: $4-10 million FTE: 1-10
Inherent Risks: Operator compliance; revenue reporting; ensuring capacity to meet demand.

Other: Perceived missed opportunities and unrealized FAA/DOT revenues at the Airports; restricted capacity at the Ferry with high demand; both Ferry and Airport lack a strategic vision; asset inventory and condition assessment incomplete but in progress.

Sustainability
Develop ten-year sustainability plan to reduce greenhouse gas emissions across County operations and the larger community, coordinate with department stakeholders to reduce GHG emissions.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Continued long term trajectory toward climate change.

County Roads
Provide expertise in right-of-way, survey, design, geotechnical services, easement, and construction administration; plan and prioritize external grant funding for County road activities and projects, perform environmental reviews of projects, traffic engineering, and traffic signal maintenance and operations; and maintain all roads and bridges in the County.

Budget: $51+ million FTE: 101+
Inherent Risks: Maintaining the system in a cost-effective manner; maintaining adequate funding; ensuring Road Funds are used for intended purpose; managing contractors and controlling project costs.

Other: Significant revenue sustainability concerns; maintains a robust asset inventory and condition assessment methodology.

Community Planning
Prepare and administer the Comprehensive Plan, engage in long range planning regarding population and employment growth, transportation and capacity planning, zoning, historic preservation, capital facilities, and other elements.

Budget: $11-20 million FTE: 21-50
Inherent Risks: Building broad engagement, particularly among underrepresented groups, and consensus in community planning.

Permitting
Review land use and development permit applications for compliance with the community plan and federal regulations; process building permit applications, perform building inspections, and issue certificates of occupancy.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Reviewing plans and issuing permits in a time, quality, and responsive manner; ensuring compliance with Community Plan.

Code Enforcement Provides code enforcement in unincorporated areas of the County. Budget: $4-10 million FTE: 11-20 Inherent Risks: Sustainability concerns; funded through solid waste management fees.

Administration
Budget development and monitoring, financial modeling and forecasting, financial operations, grant management, records management, public disclosure requests, technology, contract management, payroll, and human resources.

Budget: $4-10 million FTE: 21-50
Inherent Risks: Efficiency of professional services provided by all Programs.

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Primary Program Areas:

Sewer Airport and Ferry
Surface Water Management Sustainable Resources
Solid Waste Management Community Planning
County Roads Permitting
Administration Code Enforcement
Risk Rating Heat Map
Potential Audit Topic(s)
Nearly every program in Planning and Public Works can be considered moderate- to high-risk, primarily because of the amount of public resources allocated to the development and preservation of public infrastructure and natural resources. With the exception of the Department’s Administration Division, the importance of and the resources managed by each division would warrant a performance audit at some point. However, for this purpose of this Risk Assessment, three performance audits rank as the most important:
(1) County Roads, particularly because there may be significant sustainability concerns and, while funding options may be considered, so should operational efficiencies, project management protocols, and other potential cost savings.
(2) Solid Waste Management, particularly because there may be significant sustainability concerns; these concerns, however, stem in part from the reliance of Code Enforcement on Solid Waste Management revenues, which has the potential to create a strain on the financial resources of both important functions.
(3) Airport & Ferry: while rated as one of the lower-risk functions of the Department (primarily because of the relatively small fiscal and staffing resources dedicated to the programs), the lack of a strategic direction for airport and ferry operations suggest the potential for missed opportunities. Given the Council’s legislative priorities related to economic development and tourism, this low- to moderate-risk program could benefit from an independent performance audit.

Planning and
Public Works
Sewer
Surface Water
Management
Solid Waste
Management
Airport &
Ferry
Sustainable
Resources
County
Roads
Community
Planning Permitting
Code
Enforcement
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Pursuing Justice. Representing the People. Serving Our Community. 2020-21 Budget: $72 million FTE: 218.00
Core Functions: Prosecutes homicide cases, felonies, misdemeanors, and processes appeals. Provides legal services for civil cases.

Factors Contributing to Department Risk Level: Office has a moderate- to high-level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; no past or planned audits; general satisfaction with information technology resources, but significant concerns regarding the cost-effectiveness of existing record management practices; no performance measure dashboard; and the function does not represent a strategic or legislative priority of the County Council.

Prosecuting Attorney

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Administration
Provide professional administrative work and guidance concerning human resources, budgeting, technology, facilities, and management.

Budget: $0-3 million FTE: 1-10
Inherent Risks: Efficiency of professional services provided by Office.

Other: None.

Civil
Provides accurate and timely legal advice to county officials and represents the county’s interests in court. Deputy prosecutors in the Civil Division have extensive experience concerning the many constitutional, statutory and administrative provisions and court decisions which apply to governmental activities.

Budget: $11-20 million FTE: 21-50
Inherent Risks: Efficiency of professional services provided by Office; use of resources.

Other: Records management perceived to be a significant source of inefficiency, both with respect to ongoing records retention and in responding to public records requests.

Criminal
Represents the State and the County in criminal matters in the Pierce County District and Superior Courts, the state and federal courts of appeal, and the Washington and U.S. Supreme Courts. Subdivisions include Felony, Juvenile, Appeals, Misdemeanor, and Victim Witness Assistance Services.

Budget: $21-50 million FTE: 101+
Inherent Risks: Efficiency of professional services provided by Office; use of resources.

Other: Records management perceived to be a significant source of inefficiency.

Family
Represents the Division of Child Support, a DSHS agency. The division works with child support agencies throughout Washington State, the U.S. and abroad to establish and enforce child support and to protect the best interests of children in accordance with the laws of Washington State.

Budget: $4-10 million FTE: 21-50
Inherent Risks: Efficiency of professional services provided by Office; use of resources.

Other: Records management perceived to be a significant source of inefficiency.

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Primary Program Areas:

Administration
Civil
Criminal
Family
Risk Rating Heat Map
Prosecuting Attorney
Potential Audit Topic(s)
Overall, the Prosecuting Attorney’s Office rates at low- to moderate-risk, with the Criminal and, potentially, Civil Divisions approaching higher risk primarily based on budget / FTE factors. Ultimately, audit topics relate primarily to the efficiency with which the Office manages resources and the County’s approach to records management, retention, and public records requests.

Based on this, and on the results of our assessment of other departments, we propose the following potential audit objectives:
• Evaluate the County’s Record Retention Policy and its application countywide, and determine the extent to which the Record Retention Policy is cost-effective and consistent with the County’s Risk Management guidelines.
• Evaluate the County’s Public Records Request policies and protocols, and determine the extent to which practices comply with state law, are consistent with the County’s Risk Management guidelines, and are costeffective both with respect to the cost of implementing existing practices and the cost of resulting claims.

Administration Civil
Criminal
Family

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Protect life and property, uphold rights, and work in partnership to build strong, safe communities. 2020-21 Budget: $304.2 million FTE: 752
Core Functions: Provide police services such as traffic law enforcement, accident investigation, responses to calls for assistance, crime prevention, manage the county jail, secure county courts, and deploy special units.

Factors Contributing to Department Risk Level: Law enforcement agencies are inherently high-risk—large budgets, significant public profile and scrutiny, large number of at-risk assets (equipment, weapons, cash, evidence, and other assets), overtime usage, and routinely understaffed; the Sheriff’s Office is currently in the process of accreditation, but not yet accredited; there is no Office performance dashboard.

DIVISION /

PROGRAM

RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE
Patrol Bureau
Uniformed law enforcement response to public safety emergencies in unincorporated areas of the County and within jurisdictions under contract with the County Sheriff, traffic accidents and enforcement, response to 911 calls for service, crime prevention, affect arrests, and problem solving social issues within the community; administer school resources officer program.

Budget: $51+ million FTE: 101+
Inherent Risks: Public relations, potential for abuse, response times, unnecessary overtime costs, and ability to effectively patrol, prevent crime, and affect arrests.

Other: Vacancies increasing and ability to fill positions challenged; unfunded training and legislative mandates; current audit workplan includes a 911 Response Time audit.

Investigations
Bureau
Investigate reported crime through specialized units, including major crimes, property crimes, forensic, narcotic/vice, gangs, and juvenile units; manage specialized teams to address acute risks, including search & rescue, hazardous device (bomb), dive, marine, and SWAT; service of warrants; and manage the Department’s property room, including seized property and evidence.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Public relations, potential for abuse, unnecessary overtime costs, inventory control—both assets and evidence—and ability to effectively prevent crime, and affect arrests.

Other: Conduct self-assessments of property room; property room may not be sufficient to address growing needs.

Corrections
Bureau
Operates two correctional facilities to house pre- and post-conviction persons, providing a safe and secure environment, mental and medical health services, and other provisions required by law.

Budget: $51+ million FTE: 101+
Inherent Risks: Public relations, potential for abuse, unnecessary overtime costs, inventory control, and ability to ensure appropriate staffing levels, including sworn, medical, and other support functions.

Other: COVID-19 has resulted in restrictions on bookings and a significant loss of revenue as well as a reduction in low-cost in-custody labor, presenting a significant budgetary challenge; Bureau experiencing a large number of vacancies, and has undergone several audits over the past decade, including audits of Corrections Staffing, Detentions Operations, and Corrections Misdemeanor Jail.

Administrative
Services
Provides agency support services, including hiring and background, training, civil, court security, information technology, crime analysis, professional standards, public disclosure, and Internal Affairs; provides fiscal support services, including budget, fiscal management, trust accounts, grant management and reporting, purchasing and contracts, communications, and other program support.

Budget: $21-50 million FTE: 51-100
Inherent Risks: Public relations, allocation of staffing (civilian v. sworn), and ability to effectively prevent crime, and affect arrests.

Other: Provides support services to each of the other bureaus; an audit of other bureaus may encompass aspects of Administrative Services; facilities in County/City buildings are not adequate or secure.

Animal Control
Services
Contracts with the Humane Society to operate a regional animal shelter; responds to dangerous animal, animal noise, and animal-related code violations.

Budget: $0-3 million FTE: 0-10
Inherent Risks: Public relations,
Other: A function that is ancillary to core law enforcement functions, though a portion related to public safety (public health); increased animal cruelty costs--holding animals for a longer period of time, increased costs, as a result of COVID.

Sheriff
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Primary Program Areas:

Operations: Patrol
Operations: Investigations
Corrections
Administrative Services, Fiscal, Other
Animal Control
Risk Rating Heat Map
Sheriff
Potential Audit Topic(s)
Because law enforcement agencies are inherently high-risk, there is no shortage of potential audit topics. Of those that have not been evaluated recently (or planned, such as response times), we believe that consideration of the following topics are warranted:
(1) Sworn overtime usage;
(2) Inventory management, including equipment, cash, weapons, evidence, and other sensitive assets; and
(3) Staffing Study, including shift scheduling, civilian v. sworn staffing, and recruitment strategies.
(4) The Office’s progress toward achieving accreditation; the steps required to achieve full accreditation; and the role accreditation will fulfill in providing external reviews of the Office.

Of these, we believe the latter topic is of greatest benefit to the County and the Sheriff’s Office. Combined, this has the potential to provide the Office support for accreditation and independent, ongoing audit support of the many high- to moderate-risk areas faced by the agency.

Patrol
Investgations
Corrections
Administration
Animal Control

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Mission: Actively manage the business of the court so as to provide for fair, prompt and efficient resolution of disputes.

Maintain independence and parity as an equal branch of government. Provide due process and individual justice in each case. 2020-21 Budget: $40.8 million FTE: 105.00
Core Functions: Serve as the highest judicial branch in the County. Follow mandated responsibilities such as handle felony criminal proceedings.

Factors Contributing to Department Risk Level: Court has a moderate level of funding / FTEs when compared to other departments / offices, and relatively low level of cash or other high-risk assets; experienced budget reductions related to family court and family drug program; no past or planned audits; no performance measure dashboard; and the function does not represent a strategic or legislative priority of the County Council.

Superior Court

DIVISION/PROGRAM RESPONSIBILITIES FACTORS CONTRIBUTING TO RISK SCORE Judicial Officers & Support
Provides 22 Superior Court Judges and 9 Court Commissioners to hear assigned cases, as well as judicial assistants and court reporters assigned to each Superior Court Judge.

Budget: $11-20 million FTE: 51-100
Inherent Risks: Ensuring efficiency in court operations, case management, and scheduling.

Other: None.

Court Administration
Provide administrative support to courtrooms and court proceedings, including legal assistant staffing, selecting potential jurors, court interpreters, program coordinators (such as for family law cases, marriage ceremonies, settlement conferences, alternative dispute resolution, and therapeutic court programs).

Budget: $21-50 million FTE: 11-20
Inherent Risks: Ensuring efficiency in court operations and administration of programs such as family law, marriage ceremonies, settlement conferences, alternative dispute resolution and therapeutic court programs.

Other: None.

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Primary Program Areas:

Judicial Officers & Support
Court Administration
Risk Rating Heat Map
Superior Court
Potential Audit Topic(s)
The operations of the Superior Court generally represents low- to moderaterisk. Based on this risk assessment, a performance audit of the Superior Court could include the following objective:
(1) Assess overall efficiency of court operations, case management, scheduling, and administration of key programs, including family law cases, marriage ceremonies, settlement conferences, alternative dispute resolution, and therapeutic court programs.

Judicial Officers
& Support
Administration

1.0 2.0

3.0 4.0

5.0 1.0 2.0 3.0 4.0 5.0
Likelihood
Impact
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Overview of
Departmental
Audit Risk
Universe
39 COUNTYWIDE

RISK RATINGS
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Countywide
Risk Ratings
Administrtion
Assessor
Assigned Counsel
Elections
Recording/Licensing
Court Clerk
District Court
Emergency
Management
Facilities
Management
Finance &
Performance
Budgets
& Grants
Information
Technology
Procurement
Risk
Management
Finance:

Investments
Finance:

Record
Management
Fleet
Management
Benefits
Administration
Human
Resources
Aging &
Disability
Behavioral Health
Community
Action
Community
Services
Veterans
Assistance
Medical
Examiner
P&R: Parks
P&R: Stewardship
Sewer
SWM
Solid
Waste
Airport
& Ferry
PPW:

Sustainability
County
Roads
Community
Planning
Permitting
Code
Enforcement
Prosecuting
Attorney
Sheriff:

Corrections
Sheriff:

Animal Control
Sheriff:

Patrol &
Investigations
Superior
Court
1 2
3 4
5 1 2 3 4 5
Likelihood
Impact
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Countywide
Observations
41 ADDITIONAL AUDIT

TOPIC OBSERVATIONS
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 In addition to the depar tment-specific audit topics identified in the preceding risk profiles, this risk assessment identified four additional audit topics that are not specific to any single depar tment or program, but of ten involve multiple depar tments. Specifically:
▪ Records Management. While Finance manages the Records Management Division, records management activities (including record management solutions, retention and destruction practices, and responding to public records requests) are carried out by every county department and represent a countywide concern affecting the efficiency of county operations. A performance audit of countywide records management activities could include the following objectives:
▪ Evaluate the County’s Record Retention Policy and its application countywide, and determine the extent to which the record retention policy is cost-effective from a risk management perspective.
▪ Evaluate public records request policies and protocols and determine the extent to which practices comply with state law, are cost-effective from a risk management perspective. ▪ Franchise Agreements. The County administers different types of franchise agreements (cable, telecommunications, waste haulers, utilities, etc.). While each presents differing benefits to the County and its residents and businesses, the County has not conducted a performance audit of its overall approach to franchise agreements. A performance audit of the County’s franchise agreements could include the following two objectives:
▪ Determine Franchisees’ compliance with franchise agreements. ▪ Determine the extent to which the County is optimizing the benefit of such agreements, and the extent to which the agreements are consistent with best and leading practices. 42 ADDITIONAL AUDIT TOPICS
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▪ The County’s Court System. The County’s court system is made up of the Superior Court, Court Clerk, and the District Court. While neither department received a risk rating high enough to warrant placement on the proposed audit plan, when viewed collectively, the system is significant in size (e.g., budget and FTE) and complexity, and the efficiency of its operations affect other County offices, such as the Prosecuting Attorney, Assigned Counsel, and Sheriff. A performance audit of the system could include the following objectives:
▪ Determine whether the Courts have established sound internal controls over cash collections, evidence storage, and other assets.
▪ Evaluate whether the processes employed by the Courts to record judicial decisions and fee/fine collections ensures accuracy and correct distribution of fee and fine revenue. ▪ Assess overall efficiency of court operations, case management, scheduling, and administration of key court programs.
▪ Interlocal Agreements. Interlocal Agreements are used by various county departments for a variety of purposes. While contractual relationships between the County and other governmental agencies exist, such arrangements can take on a life of their own without clear roles, responsibilities, or governance structures—all of which may create confusion and inefficiencies in the County’s approach to facilitating the agreements. A performance audit of the County’s overall approach to such agreements could focus on departmental efforts to manage ILAs, consistency in contract language, and adherence to sound governance principles in establishing the agreements. 43 ADDITIONAL AUDIT TOPICS ( C O N T ’ D )
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▪ COVID Response. There are four primary performance audit topics to consider as it relates to the County’s response to the pandemic:
▪ An evaluation of the County’s use of COVID relief funds, both with respect to compliance and how well the County put the funds to best use;
▪ An evaluation of ongoing reimbursement claim processes with the purpose of ensuring that all allowable expenditures are identified; and
▪ An evaluation of lessons learned as the County responded to the pandemic and implemented changes that impacted its operations, workforce, and practices.
44 ADDITIONAL AUDIT TOPICS ( C O N T ’ D )
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11 Proposed
Audit Topics
45 PROPOSED AUDIT PLAN
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Based on this risk assessment, we propose the following 11 audit engagements for the upcoming Per formance Audit Plan:

1. Countywide information technology practices.

2. Countywide records management policies and practices.

3. Medical Examiner’s Of fice.

4. Risk Management, par ticularly risk transfer and retention practices, insurance programs, and claims administration processes of the Risk Management Division.

5. County per formance measurement practices (Finance & countywide).

6. Investment and cash management practices of Finance’s Investments Division.

7. Human Ser vices’ use of information system resources and analytics to enhance ser vice deliver y.

8. The Of fice of the Sherif f’s progress in achieving accreditation.

9. Franchise agreements administered countywide.

10. Interlocal A greeme nts administered countywide.

11. Evaluation of sustainability concerns related to two Planning & Public Works programs (County Roads and Solid Waste).
46 POTENTIAL AUDIT TOPICS
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George Skiles, Partner
Sjoberg Evashenk Consulting
455 Capitol Mall, Suite 700
Sacramento, CA 95814
(916) 443-1300
[email protected]
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455 Capitol Mall • Suite 700 • Sacramento, California • 95814 • Tel 916.443.1300 • www.secteam.com Office of the County Performance Auditor
Performance Audit of the
County’s Human Resources Department
January 2019
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Table of Contents
Table of Contents ........................................................................................................................................... i Report Highlights ........................................................................................................................................... 1 A. Introduction and Background ................................................................................................................. 2 B. Scope and Methodology ........................................................................................................................ 4 C. Structure and Approach to Human Resources Management ................................................................. 6 D. Classification & Compensation ............................................................................................................ 17 E. Record Retention ................................................................................................................................. 29 F. Conclusions and Recommendations ................................................................................................... 37 Appendix A – Human Resources Department’s Response ......................................................................... 40 #35..
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REPORT HIGHLIGHTS

RESULTS
The County’s human resources management activities were not always consistent with industry standards and were not sufficient to ensure compliance with federal and state laws. The Human Resources Department did not maintain an up-to-date compensation and classification plan, and did not consistently apply protocols that were in place; it’s record retention system was cumbersome, duplicative, and failed to ensure employee personnel files were complete; it did not provide adequate oversight or guidance for those human resources activities performed by decentralized offices, departments, and courts; and it is not structured to effectively manage a professional system of human resources management.

AUDIT PURPOSE
To determine whether the County’s
human resources management
activities were consistent with industry
standards and were sufficient to
ensure compliance with federal, state,
and local laws and regulations.

BACKGROUND
Human resources management
activities within the County are partially
centralized and partially decentralized.

Human Resources maintains and
administers the classification and
compensation plans, employee
personnel records and files, the
County’s benefit plans, the Equal
Employment Opportunity Office, and
labor relations activities associated
with 37 bargaining units.

County departments administer other
activities, such as recruiting, hiring,
and onboarding staff; training and
workforce development; fulfilling
reasonable accommodation requests;
administering employee leave
programs; and managing employee
relations matters and discipline.

KEY FINDINGS
 Decentralized human resources functions are disjointed and do not adequately mitigate key risks or position the County to implement strategic initiatives.

Policies do not adequately address the decentralization of human resources functions, the controls that should be in place when human resources functions are carried out by personnel outside Human Resources, or the role the Department Director has in providing oversight of human resources functions throughout the County. As a result, County management cannot be reasonably assured that the County maintains consistent compliance with federal and state laws employment laws, or that county-wide initiatives are effectively carried out.  The Department is not structured in a way that promotes the professional specialization expected of a human resources function as large as the County’s.

It has a “flat” structure with few discernable work units, all 23 subordinate positions reporting to the Director, and no professional development program.

This manager-to-employee ratio, 1:23, and the lack of specialized work units, inhibits the Department’s ability to effectively manage a professional system of human resources management, as required by County Code.  The Department has not maintained a compensation structure that promotes internally-consistent pay levels throughout the County. It has not consistently applied FLSA status designations or established a clear rationale to determine exemptions; and has assigned employees within the same or similar classifications differing compensation levels without a clear rationale. Employee pay levels and the availability of overtime compensation are subject to significant discretion and subjective decision making.
 The Department uses microfiche to store and maintain official personnel files, a process that is inefficient, results in duplicative records maintained in multiple locations, does not ensure the completeness of employee personnel files, and does not adequately restrict access to confidential personnel records is not sufficiently restricted.

KEY RECOMMENDATIONS
 Develop and implement a strategy to better coordinate decentralized human resources functions within the County and throughout each department.
 Develop a plan to move from a wide/flat organizational structure to one that incorporates distinct organizational units with clear roles and responsibilities; reflects key areas of specialization; reduces the number of staff reporting directly to the Human Resources Director; and ensures key functional areas are managed by individuals with appropriate expertise.  Conduct a comprehensive and methodologically sound classification and compensation study and ensure compensation protocols are consistently applied for all employees.
 Develop and implement document retention policies and procedures that reflect best practices, ensuring all original personnel records are maintained in official personnel files, and destroying personnel records that the County is no longer legally required to retain and is no longer of practical use to the County; and developing a strategic plan to modernize record keeping of personnel records in the County.
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A. Introduction and Background
The mission of the Snohomish County Human Resources Department (herein referred to as “Human Resources” or “Department”) is to achieve the mission and vision of the County by attracting, developing, and retaining peak performers. Snohomish County employs more than 3,200 employees in 21 offices, departments, and courts (herein collectively referred to as “departments”). Human resources management throughout the County is overseen by the Director of the Human Resources Department. The Human Resources Director, according to Snohomish County Code, is responsible to administer all of the activities of the Human Resources Department, manage a professional system of human resources management in the County, and develop administrative procedures and guidelines as necessary to assist in the administration of the human resources system [Section 3A.03.010(2), SCC].

While the Human Resources Department directly administers several aspects of a professional system of human resources management, it is not responsible for administering all aspects. Rather, the County employs a human resources management model that is partially centralized and partially decentralized, with many roles and functions of human resources performed in coordination between each department and the Human Resources Department. Centralized within the Human Resources Department are several core human resources management functions, including maintaining the classification and compensation plans, maintaining employee personnel records and files, administering the County’s benefit plans, managing the Equal Employment Opportunity Office (including coordinating the Affirmative Action Plan), and managing all labor relations activities between the County and its 37 bargaining units.

Other areas of human resources management are either partially or entirely decentralized and administered by each County department. This includes hiring activities, including recruiting, interviewing, selecting, and onboarding staff; training and workforce development, with the Department responsible for new-employee orientation and managing an online training program and County departments responsible for training programs that are specific to their respective responsibilities and mission; reviewing and administering reasonable accommodation requests pursuant to the Americans with Disabilities Act (ADA); administering employee leave programs, including the processing and tracking of mandated leave benefits such as leave requests pursuant to the ADA, the Family Medical Leave Act (FMLA), and other extended leave; and employee relations matters, including setting performance expectations, conducting performance evaluations, professional development, and discipline. While these activities are primarily administered at the department-level, the Human Resources Department is available to each department as a resource, provides County-wide guidance, and consults with departments on case-specific situations, upon request.

In addition to carrying out these responsibilities, the Human Resources Department, like a human resources department within any organization, is also responsible for ensuring the County, as an employer, adheres to a series of statutes that mandate specific benefits and rights for all employees. These include a variety of laws that prohibit discrimination, guarantee rights of employees related to compensation (wage and hour laws), health and retirement benefits, mandated leave benefits, and privacy laws, among many others.

In fulfilling administering specific human resources programs, assisting County departments in administering other human resources functions, and overseeing compliance with federal and state law, the Human Resources department is considered to be an internal service provider with a significant role in risk management.
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A.1 Report Overview
The remainder of this report is organized into four (4) sections. The first, Section B, focuses on the objectives and scope of this audit, and provides an overview of the methodological approach employed by the audit team to evaluate the Human Resources Department. The next three sections present our findings, conclusions, and recommendations.

Section C focuses on the structure and approach to human resources management employed by the County as a whole, and addresses the effectiveness of the decentralized model employed by the County and on the effectiveness of the organizational structure of the Human Resources Department itself. In this section, we address many of the core human resources functions that are either fully or partially decentralized to County Departments.

The following two sections address two of the core human resources functions for which the Department is fully responsible, and which we find to be in greatest need for improvement. The first, “Classification and Compensation” (Section D) addresses the outdated classification and compensation systems currently employed by the County, and the inconsistencies that have developed since the most recent comprehensive classification and compensation study was completed in 1997. The second, “Record Retention” (Section E), discusses the Department’s responsibilities with respect to maintaining personnel records, inefficiencies associated with the current record retention practices, and opportunities to improve upon existing practices.

Following the presentation of our findings, conclusions, and recommendations, we include the Human Resources Department’s written response to this audit report. #35..
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B. Scope and Methodology
On February 13, 2018, the Snohomish County Council passed Motion No. 18-034 directing Council staff to issue a notice to proceed to the Office of the Performance Auditor to complete a performance audit of the County’s Human Resources Activities (Audit Topic A.1 in the 2018 Audit Plan). The scope of this audit included an evaluation of existing practices of the Human Resources Department, including a review of activities during the three fiscal years 2015-2017, with an objective to determine whether the County’s human resources management activities were consistent with industry standards and were sufficient to ensure compliance with federal, state, and local laws and regulations. To meet this objective, the audit team performed the following general procedures:

B.1 Interviewed County employees involved in human resources management activities, including the Director of Human Resources; Human Resources Department staff; staff within other offices, departments, and courts (herein collectively referred to as “departments”) who were routinely engaged in human resources activities; and representatives of the County Executive, Finance Department, and Prosecuting Attorney’s Office.

B.2 Reviewed pertinent laws, regulations, ordinances, and policies and procedures related to human resources management within the County.

B.3 Obtained and analyzed personnel records in High Line, the County’s human resources information system, including data related to compensation, FLSA status, overtime worked, and employee classifications.

B.4 Selected a sample of 27 personnel files, including those maintained both by the Human Resources Departments and decentralized County departments; reviewed each to determine their completeness, the overall organization and consistency of the files, and whether the official personnel file maintained by the Human Resources Department contained all relevant personnel documentation consistent with best practices.

B.5 Conducted a survey of County departments to obtain their input regarding human resources management and the services of the Human Resources Department, including their overall satisfaction with these services; we solicited input from 21 County departments and received responses from 15 departments—a response rate of 71 percent.

B.6 Evaluated key human resources activities through interviews, observations, walk-throughs, and a review of documentation, including recruiting and hiring, training and development, classification and compensation, employee relations, labor relations, record-keeping, Equal Employment Opportunity and affirmative action programs, and compliance with mandated benefit programs.

Audit fieldwork was performed between June 2018 and October 2018. On December 17, 2018, the Office of the County Performance Auditor provided the Human Resources Department with a draft of this report and, on December 26, 2018, discussed the report findings and recommendations in an exit conference with representatives of the Human Resources Department and the County Executive. We incorporated into the final report responses and input received where warranted. The Human Resources Department generally agreed with the conclusions and recommendations of this report. Management’s formal response to the recommendations contained in this report is included in Appendix A. #35..
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We conducted this performance audit in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our conclusions based on our audit objectives. #35..
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C. Structure and Approach to Human Resources Management The County’s approach to human resources management has been to centralize certain functions within the Human Resources Department, which reports to the County Executive, and to decentralize other functions throughout County departments that either also report to the County Executive or are independent of the Executive. Because the Human Resources Department serves the needs of a wide variety of County departments, we solicited input from human resources personnel within each department to obtain their perspective regarding the Department and services received. Based on this survey, we found that between 60 and 80 percent of responding departments indicated general satisfaction with the centralized services the Human Resources Department’s provides, as well as the assistance it provides to departments in carrying out decentralized human resources activities. Generally, departments found that Human Resources staff were available when needed; were timely and responsive to and facilitated the needs of County departments; administered policies and procedures in a consistent manner; were courteous, helpful, and provided clear and complete answers to questions; and were knowledgeable of, and communicated well with departments regarding, a variety of human resources matters. Departments also indicated that they were comfortable discussing problems or concerns with Human Resources staff, and knew with whom they should communicate regarding different human resources matters—a critical success factor in managing a decentralized human resources management model.

Overall, on a scale of 1 to 5, responding departments rated the Human Resources Department at 3.6, which is consistent with much of the positive feedback we received while also pointing to opportunities for improvement. Based on this input and our observations, we find that the very structure of human resources management within the County represents one of the most significant opportunities for improvement.

A partially decentralized structure presents certain benefits not available to fully centralized human resources operations, particularly by ensuring that departments have direct access to human resources professionals that are familiar with their unique operating needs. However, such a model also presents certain challenges with respect to the County’s ability to ensure compliance with a wide range of federal and state laws, ensuring the consistent application of personnel rules, or adopting and implementing strategic approaches to a variety of initiatives, including workforce planning and development.

As part of this audit, we evaluated the roles and responsibilities of those charged with carrying out human resources activities throughout the County, and found that the Human Resources Department was not adequately positioned to manage a professional system of human resources management in the County, particularly with respect to those decentralized functions, partly because the Department lacked adequate or authoritative administrative procedures and guidelines necessary to assist in the consistent administration of the human resources system throughout the County. As a result, the Human Resources Department is not effectively positioned to manage risks associated with human resources management—such as discrimination risks and ensuring employee rights—or to optimize the effectiveness of county-wide programs or initiatives—such as the Affirmative Action Plan. Below, we present two findings. The first addresses the lack of clarity with respect to the roles and responsibilities of the Human Resources Department and departments throughout the County, and the second addresses inefficiencies in the Department’s #35..
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organizational structure and how such inefficiencies have affected the efficiency and responsiveness of the Human Resources Department.

C.1 Decentralized Human Resources Functions Are Disjointed and Do Not Adequately Mitigate Key Risks or Position the County to Implement Strategic Initiatives A decentralized human resources operation requires clearly defined roles and responsibilities and a high level of cooperation to ensure critical functions are carried out consistently and effectively. This audit revealed two key areas relevant to human resources management where the level of coordination between Human Resources and County departments was not adequate or where the roles and expectations of each party were not clear or well developed: (a) compliance and risk management and (b) staffing and workforce development. With respect to these two areas, we found the execution of several critical human resources functions to be disjointed to the extent that the ability of the County to strategically address critical needs or to ensure compliance with federal and state law is impaired.

C.1.a Compliance and Risk Management
The specific legal risks and obligation brought about by state and federal laws affect employers in many areas, including recruitment and selection, affirmative action and equal employment opportunity (EEO), performance management, compensation, benefits, safety and health, employee relations, policies and procedures, training, and termination. In this sense, effective human resources management equates to effective risk management. Legal risks associated with human resources management are wide ranging and, as they relate specifically to our observations and findings, include but are not limited to the following risk categories:
 Discrimination: the Civil Rights Acts of 1964 and 1991, Equal Pay Act, Americans with Disabilities Act (ADA), Genetic Information Nondiscrimination Act of 2008, and the Lilly Ledbetter Fair Pay Act, among several others.
 Wage and Hour Laws: the Equal Pay Act and Fair Labor Standards Act (FLSA).  Mandated Leave Benefits: Family and Medical Leave Act (FLMA) and the ADA, among others.  Privacy: the Fourth Amendment of the U.S. Constitution, Electronic Communications Privacy Act of 1986, Fair Credit Reporting Act of 1970, Health Insurance Portability and Accountability Act of 1996, Drug-Free Workplace Act, and various discrimination-related legislation.

Because of this, it is considered best practice for the Human Resources Director to take both preventive and detective measures to mitigate risks associated with being an employer the size of Snohomish County. This includes developing policies and procedures that specify the responsibilities of supervisors and managers with respect to matters of compliance and risk, and to provide oversight of the activities of supervisors and managers with respect to these responsibilities. We found that the Human Resources Department has not adequately implemented either, and that it is not clear whether the Director has the authority to do so on a county-wide basis.
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Overall, the Human Resources Department has not developed adequate guidelines, training programs, or oversight procedures regarding all relevant areas of risk, including areas that are generally centralized within the Human Resources Department, such as the Equal Employment Opportunity (EEO) program, or areas that are generally decentralized among County departments, such as the administration of and compliance with the mandated benefits provided pursuant to the Family and Medical Leave Act (FMLA).

To illustrate, Equal Employment Opportunity is the absence of discrimination against job applicants or employees, either intentionally or unintentionally, based on their protected group status or other non-jobrelated criteria. All employers are at risk of violating this standard. Therefore, the Department has developed EEO Complaint Procedures, informing staff and management throughout County departments of available avenues through which complaints could be investigated and resolved, but the guidelines provide a level of flexibility in how EEO complaints are handled such that the Department is unable to ascertain the prevalence of discrimination complaints in the County, or the manner in which such complaints are resolved. Specifically, County employees are first encouraged to discuss concerns of discrimination, harassment, and or retaliation with the appropriate supervisor unless the supervisor is the source of the concern, in which case the appropriate manager. The supervisor is not required to notify the EEO Office, but is encouraged to do so only if the supervisor is not trained to handle the complaint.

In seeking input from County departments, we found that they routinely do not bring concerns of discrimination to the EEO Office, but rather handle the matters internally or, if assistance is needed, turn to a variety of sources. For instance, of 15 departments from which we obtained input, 11 indicated that they typically handle EEO complaints internally or rely on the Prosecuting Attorney’s Office for assistance, or some combination of handling complaints internally while relying on both the Prosecuting Attorney and Human Resources Department depending on the situation. Similarly, when matters relating to employee discipline arise, departments are more likely to turn to the Prosecuting Attorney’s Office for consultation rather than the Human Resources Department.

There is no mandate that all complaints of discrimination or harassment be handled through the EEO Office; however, in the field of human resources management, adherence to EEO requirements is considered most effective when it is systemic, when employers adopt an organizational philosophy and policies promoting equal treatment, and when they establish an EEO Officer responsible for overseeing EEO compliance and affirmative action programs—which the County has done. However, it is also considered a best and standard practice to ensure the EEO Office is, at a minimum, aware of all complaints of discrimination and harassment within the organization and empowered to address EEO issues. It is difficult, for instance, for the EEO Officer to oversee EEO compliance and affirmative action programs if the Office is not aware of what is going on throughout County departments.

Unlike EEO procedures, FMLA administration is fully decentralized, with each department generally handling FMLA leave matters internally without Human Resource’s involvement or assistance. FMLA provides certain employees with up to 12 weeks of unpaid, job-protected leave per year, and requires that health benefits be maintained during the leave. In most organizations, it is the role of Human Resources to ensure that the employer, including department managers and supervisors, do not restrict either intentionally or unintentionally employees’ rights to family and medical leave under federal and state law. This is often achieved by developing clear policies and procedures that are communicated to all departments and #35..
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employees; training employees throughout the organization charged with administering the benefit, whether centralized or decentralized; and regularly reviewing FMLA cases to ensure consistency across departments and overall legal compliance.

We found that the Department has developed guidelines that inform departments of necessary steps to ensure compliance, and a review of a small sample of records of employees who have taken leave under FMLA revealed that the Department’s official personnel records contained all necessary documentation required in statute. However, the Human Resources Department has not implemented any processes through which it can evaluate whether departments may be unduly restricting FMLA benefits, intentionally or unintentionally, because departments are not required to inform Human Resources of all leave requests that could have FMLA implications. At the time of this audit, the Human Resources Department could not provide a definitive list of employees who took leave pursuant to FMLA, making it difficult for the Department to oversee FMLA practices in other departments. In part, this is because, similar to matters of discrimination or discipline, respondents to our survey revealed that they were as likely to turn to the Prosecuting Attorney’s Office or another department for consultation regarding FMLA as they were to turn to the Human Resources Department.

Ultimately, we found that the Human Resources Department has not proactively trained department representatives in the administration of FMLA benefits, nor has it reviewed instances of extended leave to determine whether employees received correct information from their departmental liaisons or that FMLA policy had been applied consistently throughout the County. It therefore cannot be reasonably assured that FMLA practice throughout the County remain compliant.

C.1.b Staffing and Workforce Development
County Code requires the Human Resources Director to manage a professional system of human resources management and develop administrative procedures and guidelines as necessary to assist in the administration of the human resources system [Section 3A.03.010(2), SCC]. This includes those functions that remain decentralized, such as the hiring process (e.g., recruiting, selecting, and onboarding employees), workforce planning, and training and workforce development. Overall, we found that Human Resources and County departments were performing those functions described in County Code for which each is responsible. However, based on our observations and input from County departments, we found that the existing model of decentralization needs to be recalibrated such that departments continue their ability to make personnel decisions as they deem necessary while also positioning the Human Resources Department to better coordinate, lead, and oversee county-wide strategic initiatives that relate to all decentralized human resources activities. To illustrate, we present below three fully or partially decentralized functional areas in which Human Resources currently does not have a level of involvement that would be expected of a professional human resources agency.
 Recruiting and Hiring. Snohomish County Code states that the recruitment of candidates is the responsibility of elected officials and department heads, and requires the Human Resources Director to develop an active recruitment program designed to help departments meet current and projected employment needs [Section 3A.07.010, SCC]. We found that County departments and the Human Resources Department are generally fulfilling these responsibilities. Recruitment efforts are initiated #35..
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and carried out by each County department and, to assist departments in the recruitment and hiring process, the Human Resources Department developed resources to assist and facilitate departmental recruiting efforts. Specifically, Human Resources contracted with NeoGov, a third-party service provider of web-based human resources tools, guidelines and resources relating to job posting, recruiting, hiring, examination, scoring, and other related processes. The implementation of NeoGov in this area provides the tactical framework for recruiting and hiring throughout the County, providing a set of automated tools and promoting consistency among departments. Utilizing NeoGov, all departments perform their own recruiting and hiring activities and generally rely on Human Resources for assistance as needed.

While NeoGov provides a valuable tool for recruiting and hiring activities, the relative autonomy exercised by departments in these areas may undermine or create barriers to achieving broader strategic objectives. For instance, while the County Council has adopted an affirmative action plan that establishes goals for all department heads, the County is not well positioned to implement a broad strategic effort to achieve these goals. The plan sets forth a goal to increase diversity in a manner that reflects the diversity of Snohomish County. To achieve this goal, County Code requires county officials to “rigorously take affirmative action to eliminate barriers to equal employment opportunity encountered by women and racial minorities and to improve employment opportunities available to specific underutilized groups of women and racial minorities” [Section 3.57.010(2), SCC].

The Human Resources Director is responsible to develop an affirmative action plan, to coordinate and monitor these efforts, and to report annually on the County’s progress to the County Council [Section 3.57.030, SCC]; while department heads are responsible for implementing the plan [Section

3.57.040, SCC].

There are many methods to promote such a goal, including ensuring all job postings are advertised through resources that directly target specific minority audiences and implementing “blind assessments” of applications by decision makers, such as candidate names--among other methods.

The Human Resources Department has developed optional tools for departments to utilize, such as the Strategic Recruitment & Selection Plan; however, whether departments use these tools, and how consistently they use the tools, is a matter of their discretion. So long as this remains the case, the implementation of broad strategic programs or goals in County hiring will remain a challenge.  Workforce Planning. Similarly, while the Human Resources Director is required to develop an “active recruitment program designed to help departments meet current and projected employment needs” [Section 3A.07.010, SCC], we do not find that the tools and resources developed thus far sufficiently meet this objective. Rather, an active recruitment program requires a level of coordination and workforce planning that the County has not yet undertaken. Human resources management includes the responsibility for ensuring organizations have the right number of people, with the right skills, at the right time to perform the required work. This is the goal of workforce planning, and it can only be achieved through coordinated efforts of departments and centralized leadership. Workforce planning generally includes the following elements:
 An outline of organization’s strategic direction.
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 An overview of organization’s current demographic profile, including workforce statistics by gender, age groups, ethnicity, and disabled employee representation.  The current and future separation trends, organized by classifications, position types, and/or occupational series.
 An analysis and forecast of separations/retirements, based on a wide range of factors. These are unique to each organization, but can include transfer, voluntary separations, number of employees that have reached a certain age, total retirements in the last 12 months, trends vs. actual separations from 3 years ago, 2 years ago, 1 year ago, etc.  The identification of competencies necessary today and expected for the future to successfully achieve the organization’s mission and critical functions.  A list of all critical/key leadership positions, ranked by most critical to least.  A summary of employee preferences, experiences, and perceptions, as illustrated by an employee survey.
 A workforce gap analysis, including recruitment gaps, retention issues/gaps, professional development challenges, knowledge transfer challenges, associated risks, and priority order of challenges that will be addressed.
 The development of workforce planning initiatives, based on the results of this workforce gap analysis, that will be implemented or improved on to meet workforce needs.

Government services are changing and evolving, placing new demands on the skills and abilities of their employees. Identifying current competencies and delineating future needs assists leaders to determine near- and long-term gaps, and to develop training and hiring strategies to meet those demands. Like many government agencies, the County has not engaged in workforce planning.  Workforce Development and Training. The County has implemented several approaches to promote the professional development of its workforce. This includes centralized training opportunities offered through the Human Resources Department, decentralized opportunities facilitated by departments throughout the County, and a broad strategic initiative underway through the County Executive’s Department that focuses on process and workforce improvements. Yet, these efforts are distinct from one another, uncoordinated, and disparate.

For instance, the Human Resources Department administers a training program that offers both mandatory (e.g., sexual harassment, ethics, etc.) and generalized (e.g., training on computer applications, supervision, management, etc.) training that is offered both online and in-person. For instance, utilizing an online learning management portal (Continuous Learning Center) through its third-party vendor, Skillsoft, Human Resources is able to make available to County employees hundreds of online training courses. The Human Resources Department also hosts orientation for all employees during sessions held twice per month, a process that covers benefits, County work culture, harassment training and rules of conduct, and other logistical matters. #35..
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In addition to training offered by Human Resources, significant employee training and professional development occurs outside the purview of the Human Resources Department. This includes longerterm employee onboarding processes and specialized training that address the unique needs and work of different departments.

Beyond typical training that is offered through Human Resources and County departments, the County Executive has initiated a Continuous Improvement program referred to as STEP (i.e., the Service, Technology, Excellence Program) that incorporates LEAN principles into County processes.

While this effort is largely focused on process improvement and customer service, it also focuses on empowering employees and fostering the skills to solve problems and implement change, and is perhaps the most significant effort currently underway that will have a lasting impact on the County’s future workforce.

While training and employee development are widely recognized as fundamental aspects of human resources management—and are traditionally administered, facilitated, and/or overseen by human resources departments—the Human Resources Department appears entirely divorced from the training and workforce development aspects of the STEP program and of the efforts of County departments to develop and train employees.

In part, Human Resources has not been as involved in these activities as would generally be expected of a human resources department because the Department’s role in human resources has traditionally been viewed as administrative, not strategic, in nature. As is discussed in the next finding, the Department has largely been organized to provide administrative support to departments, to consult with management in appropriate personnel actions, and to process and file paperwork submitted by departments—applications, position change forms, classification change forms, benefit enrollment forms, etc.—with a focus on maintenance, regulatory compliance, and administrative tasks. However, it is now commonplace for human resources departments to take on tactical and strategic roles within organizations, developing and implementing programs that support the overall growth of the organization, productivity improvement, workforce planning, succession planning, employee relations, and talent management and development.

Such a role is consistent with the responsibilities set forth in Snohomish County Code.

Furthermore, in reviewing County Code and existing policies and guidelines, we found that neither adequately addresses the decentralization of human resources functions, the types of controls that should be in place when human resources functions are carried out by personnel outside the Human Resources Department, or the role of the Human Resources Director in providing oversight of human resources functions or activities performed in other departments. In fact, half of the departments surveyed as part of this audit stated that County Code was either confusing with respect to human resources matters, or did not provide clear guidance to the Human Resources Department or decentralized departments. Therefore, we recommend that the Director work with County officials to more clearly define the roles and responsibilities of Human Resources and other departments in carrying out decentralized personnel functions, and develop professionally sound policies and procedures for departments to follow in performing these activities. #35..
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C.2 The Department Is Not Structured in a Manner Consistent with Industry Standards There is no single organizational structure that is considered “best practice” in the field of human resources management. Generally, human resources departments are responsible for all aspects of human resources activities, including employment, training, safety programs, benefits, compensation, employee relations, labor relations, personnel file maintenance, employee programs and services, and termination-related activities— or, if a decentralized model is employed, they are involved in each of these functional areas in some capacity.

Ultimately, though, the form the organizational structure takes will follow the function the department is expected to fulfill. There are pros and cons with respect to how human resources departments structure operations to carry out core functions. In this audit, we did not evaluate all the possible organizational structures that could be employed by the County; rather, this audit evaluated the existing organizational structure of the Human Resources Department, and identified opportunities for improvement.

The Human Resources Department consists of 24 positions, including the Director. At the time of this audit, 20 positions were filled and there were four (4) vacancies, as reflected in the organizational chart in Figure

1. Figure 1: Human Resources Department Organizational Chart As is evident in this organizational chart, the Human Resources Department is a flat organization, with all employees reporting to the Director and with few distinguishable organizational units. This is problematic for several reasons.

First, the current span of control within the Department is excessive and not practical for an organization responsible for human resources management functions associated with 3,200 employees. There is some disagreement in the industry regarding what an appropriate span of control is between supervisor and staff.

In some cases, professionals advocate for a target span of control between five (5) and six (6) direct reports and, in other cases, professionals advocate for a target span of control between 15 and 20 direct reports. #35..
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With 24 authorized positions in the Department, the Director’s span of control is 1:23—at the very high end of what professionals consider best practice. The reason for disagreement in determining the ideal span of control, however, stems largely from the recognition that there are many factors that impact the effectiveness of a large or wide span of control versus a narrow span of control. Figure 2 illustrates the impact of such factors in determining the ideal span of control.

Figure 2: Span of Control Considerations
In short, a wide span of control, or a large number of direct reports, is most appropriate in organizations where the work is not complex, the work performed is similar for all employees, there is relatively low risk associated with the work performed, and there is a low degree of coordination required. We do not believe these characteristics represent human resources management functions. It is true that some human resources activities are not complex and where several employees are generally performing similar work; this is most true for staff processing paperwork, such as applications or personnel change request forms, and entering the data into High Line.

However, other functions are complex, differ significantly, and are associated with a significant amount of risk: classification and compensation—as is discussed in the following section—labor relations, employee benefits, employee relations, federal and state compliance, Equal Employment Opportunity and affirmative action program administration. These functional areas do not simply represent variations in the type of work performed, but they are areas of professional specialization governed by well recognized bodies of knowledge and industry standards. Because of this, we do not believe a span of control of 1:23 is feasible. #35..
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Second, the organizational structure does not recognize, to the extent that is typical in human resources organizations for employers as large as Snohomish County, key areas of specialization through the use of distinct organizational units. In only a few cases, such as labor relations and EEO, does the Department employ distinct organizational units—even without supervisors or managers—that align with these functional areas of specialization, or have assigned employees with professional expertise to those functional areas.

Not only would this help develop specialized expertise within the Department, but it would also help communicate to employees and decentralized departments who in the Human Resources Department is responsible for what, and where departments and employees should turn to address specific questions. It is critical that employees and managers throughout the organization know where to go in the Department for answers and, based on the results of our department survey, several participants indicated that they did not.

Therefore, we recommend that the Department develop a plan to move from a wide/flat structure to an organizational structure that incorporates distinct organizational units that reflect these areas of specialization. Ultimately, management or supervisory personnel will be necessary to alleviate the Director’s span of control and to ensure key functional areas are managed by individuals with appropriate expertise.

Third, at the time of this audit, the Department did not have a professional development program for its own personnel. A critical step the Department could employ in moving toward an organizational structure defined more specifically by these areas of specialization is to promote specialization among its current employees.

This could include more explicitly encouraging professional growth, development, and specialization within the Human Resources Department, including professional certifications and continuing professional education.

There are numerous widely recognized professional certification programs in the field of human resource management. The prominent “generalist” certifications include the Professional in Human Resources (PHR) and Senior Professional in Human Resources (SPHR) awarded by the Human Resource Certification Institute (HRCI); the Society of Human Resource Management’s (SHRM) Certified Professional (SHRM-CP) and Senior Certified Professional (SHRM-SCP); and the Certified Professional for Human Resources offered through the International Public Management Association (IPMA-SCP). There are also numerous “specialist” certifications in the field of human resources management; these include the Certified Labor Relations Manager, Certified Employee Benefit Specialist (CEBS), Certified Compensation Professional (CCP), among others. These typically require 40 or so hours of continuous professional education hours every one or two years. Given the size of the County’s workforce, we recommend that County management promote the attainment of professional certifications and related continuous professional education within the Human Resources Department.

Finally, it is unclear that the Human Resources Department is appropriately staffed. As of the end of audit fieldwork, the Department employed 20 staff, including the Director, for an overall workforce of approximately 3,200 employees, for a ratio of 0.63 human resources staff per 100 employees. Industry standards suggest this is a relatively low level of staffing. The generally accepted ratio is between one (1) and (2) full-time human resources employees for every 100 employees in the organization, with the assumption that those employees are fully qualified and trained human resources professionals. Numerous factors impact the ideal ratio an employer should consider targeting when staffing a Human Resources Department, including the extent to #35..
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which human resources functions are decentralized, and the level of staffing dedicated to human resources activities in other departments; the relative complexity of the organization’s strategic mission and objectives for the human resources function; the extent of automation within the Human Resources Department; among other factors.

At this point, we do not believe there is sufficient evidence to recommend a specific FTE-to-employee ratio as the necessary level of staffing to be considered properly staffed. Rather, based on the findings presented in this section, and our recommendations to undertake two organizational initiatives—i.e., to re-define the role and responsibilities of the Department in designing and overseeing human resources management activities in the County and, including the responsibilities of decentralized departments, and the reorganization of the Human Resources Department into work units that promote specialization and reduce the number of staff reporting directly to the Director—we recommend that the Department hold off on making any significant changes to the number of staff until after these initiatives indicate such changes are necessary. #35..
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D. Classification & Compensation
As a matter of professional practice, human resources management serves three critical purposes with respect to an employer’s compensation decisions. First, it is essential to maintain a consistent compensation structure within an organization. Inconsistencies in the administration of compensation are common contributors to complaints of unequal pay for similar work and increased administrative costs associated with tracking employee- or department-specific variations in pay. Classification and compensation programs are designed to fulfill this purpose in an efficient manner by providing a transparent framework that guides compensation decisions. This includes determining the requirements of every job; grouping similar jobs— those with similar duties, responsibilities, and requirements—into classifications; and assigning each classification a salary range or compensation package sufficient to recruit, retain, and motivate a talented workforce.

Second, while executive management ultimately makes decisions regarding compensation, it is essential that human resources stay informed of the market rates for compensation in the region, and let management know existing compensation levels are drifting too low or high as compared to the employment market.

Third, employers must ensure compliance with compensation-related laws, including wage and hour laws (e.g., Fair Labor Standards Act, or FLSA) or discrimination laws. Federal law requires employers to pay their employees a minimum wage and compensate them for overtime unless such employees have specifically been exempted from such rules. Federal law also requires employers to pay employees of protected classes equal compensation for performing substantially equal work.

Ultimately, employers create rewards programs to entice workers to come work for them, retain, and motivate the employer’s workforce. With this goal in mind, human resources departments are responsible to inform management of market rates of compensation necessary to recruit, retain, and motivate; advocate internallyconsistent pay levels throughout the organization; and minimize compensation-related risks related to federal and state statutory requirements. This audit revealed problems with respect to each of these elements, which contribute to inconsistencies, inefficiencies, and uncertainty in the application of compensation-related protocols. These problems, when combined, affect the County in two key ways.

First, the Human Resources Department has not maintained a compensation structure that promotes internally-consistent pay levels throughout the County. The Department has not applied FLSA requirements, particularly relating to overtime compensation, or established a clear rationale to determine exemptions; and has assigned employees within the same or similar classifications differing compensation levels without a clear rationale. Further, while department policy requires newly-hired employees to start at the first pay grade in the assigned classification, it is not uncommon for departments to assign newly-hired employees to higher pay grades without defined criteria or a clear rationale. Employee pay levels and the availability of overtime compensation are subject to significant discretion and subjective decision making within Human Resources and by County management, increasing the risk that employees may be compensated differently for performing substantively the same work, thus placing the County at risk.

Second, the Department lacks the very foundation for ensuring consistent, equitable, and market-based compensation: a sound classification and compensation structure. The Human Resources Department has #35..
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not taken steps to develop a compensation philosophy, which typically provides a sound basis upon which compensation-related recommendations are derived; evaluate systematically the duties and responsibilities assigned to County employees; maintain an updated classification system that groups similar jobs into classifications, identifies the FLSA status of each classification based on the characteristics of the positions allocated to the classifications or the physical demands of the positions allocated to each classification, pursuant to the Americans with Disabilities Act; or keep informed of compensation rates in the employment market for comparable positions in order to inform County leadership of how the County’s compensation levels compare to the market.

These deficiencies are described in the four findings below.

D.1 The County’s Job Classification System Is Outdated, Cumbersome, and Inconsistent
For employers the size of the County, it is not efficient or practical to administer compensation on a positionby-position basis. Instead, grouping similar positions into classifications and creating pay ranges and a corresponding pay structure helps set financial limits on compensation, provides similar pay for positions performing similar work, and allows for market-based benchmarks and strategies. Snohomish County Code requires the Human Resources Director to develop and maintain a classification plan for all positions of employment with the County and to develop classification specifications for each classification [Section 3A.04.010 et seq., SCC]. Classification specifications describe the body of work assigned to a group of employees, including essential duties and characteristics that distinguish one group or classification from another within the County’s classification system. They may also include the FLSA-status of the positions allocated to the classification (i.e., whether the employees working within the classification are entitled to overtime compensation) and the physical requirements of the jobs performed within the classifications, as defined in the Americans with Disabilities Act (ADA).

The most recent comprehensive classification study commissioned by the County was completed in 1997, more than 20 years ago. Since this time, the County’s classification structure has undergone numerous changes, has become increasingly inefficient to administer, and has contributed to inequities in compensation. There are three reasons for this, as described below.  The County’s classification system has become cumbersome and inefficient to administer.

Typically, classification systems are developed through a multi-step process that includes identifying the specific work of each job, including the roles, responsibilities, duties, and qualifications through a complete job analysis; identifying the exempt or non-exempt status of each job under FLSA and the physical job requirements under the ADA; and grouping substantially similar jobs into classifications and job families. Such a classification system provides a systematic means of determining a defendable and consistent compensation structure.

Job descriptions serve as the basis for recruiting and hiring processes, setting performance expectations and conducting performance evaluations, and defining specific characteristics of each position that facilitate compliance with federal law, including FLSA and ADA. Classifications group substantially similar jobs together; define through specifications the general duties, responsibilities, #35..
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qualifications, and characteristics of each job included in the classification; and define the salary range for every job in the classification, thereby ensuring consistency in compensation for all substantially equal jobs.

However, at the time of the 1997 classification study, the County did not develop detailed position descriptions, reflecting the roles and responsibilities of each position. Rather, it focused on grouping similar positions and developing classification specifications for the group as a whole. Over time, the specific duties and responsibilities of individual positions change, often at a faster pace than the generalized roles and responsibilities of entire groups of positions. To accommodate these changes relative to specific positions, managers sought modifications to the classifications and, if the changes were not applicable to the entire group of positions, the Human Resources Department opted to create new classifications for the now-unique positions. By following this practice, the number of classifications in the County’s classification system increased from 481 in 1997 to 945 classifications in 2018, nearly doubling the number of classifications the Department administers.

As a result, classifications are increasingly specific to individual positions—which is contrary to the intended effect of grouping like positions into classifications. This is illustrated in Table 1, which shows that the majority of the County’s classifications have five or fewer incumbents.

Table 1: Number of Incumbents per Classification
Number of Classifications
Number of
Incumbents
474 1
315 2-5
125 6-20
23 21-50
8 51+
Source: Position incumbent report prepared by the Department.

Because the County’s personnel system was designed to apply salary ranges to classifications of similar positions, not individual positions, this shift to position-specific “classifications” has eroded the intent of the classification system envisioned in County Code, and has increased the risk that compensation may not be equitably applied to positions with responsibilities, duties, and qualifications that are similar. It also makes the process of evaluating market compensation costlier.

That is, the more classifications within the classification system, the more complex and resource intensive compensation studies become.
 Employees within the Same or Similar Classifications Are Assigned Differing Compensation Levels Without a Clear Rationale. A key purpose for establishing and administering a classification system that groups similar jobs into classifications and assigns pay ranges to those classifications is to ensure that employees performing similar work are compensated similarly and that compensation #35..
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decisions are defendable. Pay guidance provided by a grade assignment and range minimums and maximums is intended to prevent considerations of an employee’s pay from becoming a stand-alone event.

This analysis revealed two means through which inequities in compensation appear evident in the County. Specifically,
 Our analysis of all classifications currently in use revealed 20 for which employees within the classification—which, unless assigned out-of-class work would be performing substantially similar work—were assigned different pay scales in the County’s human resources information system, High Line. According to the Human Resources Department, this is due in part to the fact that some of these positions are represented through different bargaining units. While representatives of one bargaining unit may advocate for the salary increase of certain positions under representation, another may not for similar positions; as a result, compensation may increase for some employees and not others, even though the work performed may be sufficiently similar to justify similar salaries.  In addition to the classifications described above, we also identified a few dozen more classifications that were substantively similar to other classifications, but were assigned differing pay scales in High Line. For example, there are 17 distinct “Administrative Assistant” classifications with similar job duties and responsibilities, each of which were assigned to one of six (6) different pay scales. Similarly, several Accounting and Office Assistant classifications also provided differing pay scales based on the Department employing the position. We found no strategic or operational rationale for these variances.

The United States Equal Pay Act (EPA) prohibits unequal pay for equal or substantially equal work performed by men and women. This audit did not assess the extent to which the pay disparities described above correlate to gender differences, but the existence of such disparities at the classification level, the lack of clear rationales for them, and the increasing likelihood that compensation decisions could become stand-alone events create unnecessary risks. The EPA applies to individual employees, specifically, and not to general classifications; yet, once a pay disparity is established between a male worker and a female worker performing substantially equal jobs, the onus is on the employer to justify the disparity.  Existing classification specifications or job descriptions do not provide sufficient detail regarding the physical requirements of positions they represent. It is standard industry practice for position-specific job descriptions to include sufficiently detailed information regarding the environmental conditions and physical requirements of a specific position as a means of establishing reasonable accommodation controls. This typically includes the physical attributes an employee must have to perform the job duties with or without a reasonable accommodation, the working conditions (e.g., temperature, noise level, inside or outside, exposure to hazardous materials, shifts, etc.) and physical demands of a job (e.g., bending, sitting, lifting, driving, etc.). Establishing such requirements on a position-specific basis is necessary to limit the County’s liability in making hiring decisions and fulfilling reasonable accommodation requests. #35..
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However, because the County has not established position-specific job descriptions, it has instead included general language in most, but not all of its classification specifications that describe at a high level the work conditions of jobs typically allocated to the classification. For instance, for the classification of Real Property Appraiser, the classification defines “working conditions” as:
“Work is performed in the office and in the field. Meetings or project requirements involve working evenings, weekends and holidays as necessary.” For the classification of Judicial Process Assistant II:
“The work is performed in all areas of the Clerk’s Office and Superior Court, including the Denney Juvenile Justice Center and off-site locations.” And, for the Community Services Counselor:
“Work is performed in the usual office environment and in a variety of community settings.”
This level of detail is not considered meaningful or sufficient in defining the environmental and physical demands of a specific position for the purposes of making hiring decisions or reasonable accommodation determinations.
 A comprehensive classification study is necessary. As time passes classification specifications must be updated. Classification plans require routine monitoring and maintenance to ensure they continue to accurately reflect the County’s workforce. As business needs change, employees’ functions, responsibilities, and duties will also change. Over time, even seemingly insignificant changes to employees’ functions, responsibilities, or duties compound, potentially rendering outdated the classifications to which the employees are allocated. Therefore, it is best practice to conduct periodic system maintenance studies. Such studies can be comprehensive (analyzing all classifications within the personnel system) or they can be specific to a subset of classifications. It is standard professional practice to conduct a comprehensive system maintenance study every 15-20 years, and to conduct system maintenance studies on a select number of classifications on a periodic basis. County Code generally reflects this need by allowing the Director to perform classification studies of individual positions or groups of positions as deemed necessary [Section 3A.04.030(1), SCC].

Because the classification system, as a whole, has not been re-evaluated in more than 20 years, departments routinely seek Human Resources assistance to revise existing classifications, create new classifications, eliminate outdated classifications, or re-allocate existing positions to different classifications. Between 2017 and 2018, County departments have requested that the Human Resources Department perform more than 280 classification evaluations for one of these reasons, between two and three requests per week. Each request requires a job analysis, which involves the preparation and submittal of request forms by management to Human Resources, the independent evaluation of the request, and an assessment of the impact of any classification change on #35..
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compensation and internal equity—and often requires significant back and forth between Human Resources and department management.

While County Code acknowledges the need, from time to time, to perform classification studies of individual positions or groups of positions, the process currently employed has become resource intensive, time consuming, and reactive, and it does not result in an improved classification structure.

Keeping the County’s classification system up-to-date requires the periodic evaluation of all existing classifications, with the goal of aligning and maintaining the entire system, not simply updating specific classifications or positions. This can be achieved through comprehensive classification studies (e.g., evaluating all classifications at one time) or proactive system maintenance studies designed to address all classifications over a defined period of time. Regardless of the approach, periodic evaluations of the classification system not only enable employers to ensure classifications are up-to-date, but also enable employers to ensure the structure can be managed in a cost-effective manner. Because the County’s classification system serves as the basis for defining job expectations and compensation, all of this ultimately impacts the County’s ability to recruit, retain, and motivate a qualified and talented workforce.

D.2 Application of FLSA Overtime Requirements Is Inconsistent and Requires Updating
A critical element in classifying jobs for any employer within the United States is the identification and determination of those positions that the employer considers and designates as exempt from overtime requirements of the Fair Labor Standards Act (FLSA). FLSA requires most employees in the United States to be paid at least the federal minimum wage for all hours worked, and overtime pay for all hours worked over 40 hours in a work week. However, the FLSA includes exemptions from the overtime pay requirement for employees who qualify under a specified set of guidelines. For one of the following exemptions to apply, an employee’s specific job duties must meet all of the requirements of the U.S. Department of Labor’s FLSA regulations:
 Executive Exemption: Primary duties must be managing the enterprise, or managing a customarily recognized department or subdivision; employee must regularly direct the work of two other full-time employees; and play a significant role in the hiring, firing, advancements, and promotions of other employees.
 Administrative Exemption: Primary duties must include the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and those duties include the exercise of discretion and independent judgment with respect to matters of significance.
 Learned Professional Exemption: Primary duties must be the performance of work requiring advanced knowledge and which include the consistent exercise of discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be acquired by a prolonged course of specialized instruction. #35..
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 Creative Professional Exemption: Primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field or artistic or creative endeavor.  Computer Employee Exemption: Must be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field performing duties in systems analysis, including analysis of software, hardware, or system functionality; design and development of computer systems or programs or programs related to machine operating systems; or a combination of the above duties.

All Snohomish County positions have been classified as either exempt or non-exempt under the above FLSA regulations, and these classifications are entered into High Line, the County’s human resources information system, designating whether an employee will be paid for overtime hours worked. To evaluate the County’s compliance with the FLSA overtime exemption rules, we selected a sample of positions classified as both exempt and non-exempt and analyzed the job descriptions to determine whether the position appears to match the FLSA status assigned by the County, based on the U.S. Dept. of Labor regulations. This analysis revealed two problems.
 Existing FLSA designations appear to inconsistently or inappropriately restrict some employees’ rights to overtime compensation. Generally, FLSA guarantees all employees the right to a minimum level of compensation, including overtime pay, unless an employer exempts the employee under specific circumstances. Correspondingly, County Code requires the County to compensate non-exempt employees for time worked in excess of 40 hours [Section 3A.05.020(11), SCC]. Exempting employees that do not qualify for exemption effectively restricts an employee’s right to fair compensation. Three factors suggest some employees may be mis-classified as exempt:
 First, High Line-generated reports showing the FLSA status of all County employees reveal several instances in which the FLSA classification appears to be inconsistent with federal law. For instance, there were many law enforcement officials designated as salaried, or exempt from FLSA overtime requirements, but public safety personnel are typically not considered exempt from FLSA overtime rules. Similarly, High Line revealed instances in which staff, including lower-level staff (e.g., Accountant I, Program Assistant, Secretary, Administrative Assistant, etc.) were designated as FLSA-exempt, but their job descriptions do not appear to fall into one of the exemption categories established in law and described above.
 Second, we analyzed the data to see if employees within the same classifications were generally treated consistently with respect to FLSA status, and found 50 classifications that have incumbent employees with differing FLSA status designations, sometimes within the same department. For instance, in a single classification (such as Office Assistant I), some employees with the same job description were designated as salaried (exempt) and some were designated as hourly. This means some have the right to overtime compensation while others do not have that right, even though the employees perform substantially equal work at the same pay range. This does not appear to comply with federal law.  Third, as described previously, the existing classification system includes many classifications that are substantively similar to one another. Above, we illustrated how the #35..
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classification system included 17 distinct “Administrative Assistant” classifications with similar job duties and responsibilities, each of which were assigned to one of six (6) different pay scales. Likewise, there were several distinct classifications that represented substantively the same job duties (e.g., Accountant I and Accountant I (OOC)) and found that some were designated as salaried (exempt) and some as hourly, without a clear rationale for the differing FLSA designation.
 The County may be paying overtime to employees either not entitled to overtime pay or to employees that the County may be able to rightfully exempt from overtime pay. While County Code allows for additional compensation for FLSA-exempt employees in limited circumstances when the employee is required to work overtime under limited circumstances [Section 3A.05.020(12), SCC], we identified numerous examples where the County may be incurring excessive overtime costs related to exempt employees. Two factors support this conclusion:
 A review of FLSA designations in High Line suggest that some employees designated as “hourly” could be considered exempt under federal law, such as engineering personnel; certain analysts; medical, mental health, engineering, and other professionals; and senior supervisory and management personnel, among others.
 Likewise, a review of overtime charged by employees in 2017, there were nearly 700 “salaried” employees who charged overtime in 2017, though, as discussed above, many employees designated as “salaried” or exempt appear, in fact, to be non-exempt under FLSA (e.g., law enforcement personnel). Therefore, overtime payments for many of these employees appear appropriate; however, overtime compensation given to legitimate salaried employees would not be appropriate and unnecessarily increase the County’s overtime costs.

Furthermore, based on this, it appears that High Line does not have a system control that prohibits salaried/exempt employees from being compensated for overtime worked and that the protocols for establishing FLSA status designations in High Line are flawed. According to the Department, it will be working with its High Line vendor to determine the feasibility of implementing system controls designed to prevent departments from paying overtime compensation to employees designated by the County as exempt from FLSA overtime requirements.

D.3 Decentralized Departments Assign Newly-Hired Employees to Higher Pay Grades without Defined Criteria or a Clear Rationale
Each job classification is assigned a pay range that sets forth the minimum and maximum base salaries employees within the classification shall be compensated in a given year. In accordance with County Code and standard industry practice, pay ranges are divided into multiple steps or intervals [Section 3.69.040(1), SCC] that establish both the starting salary for a position and salary increases as an employee progresses through the salary range over time [Section 3A.05.030, SCC]. County Code requires that the starting pay rate for all employees hired into a classification be the minimum of the pay range for the classification, or “Step #35..
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1,” and allows the Human Resources Director to authorize exceptions to this requirement allowing employees to start at a “step” higher than the minimum [Sections 3.69.040(2)(a) and 3A.05.020(1), SCC].

We examined the initial pay determinations for all newly hired employees between 2016 and 2018 and found that 161 (or 14 percent) of the 1,119 full time employees hired by the County during the three-year period were assigned a pay grade above Step 1 in their respective classification ranges. This is not entirely uncommon, as hiring managers, in general, will routinely argue for higher salaries and higher starting rates for qualified candidates—making it easier for them to recruit talent and to motivate their employees. However, to ensure pay equity and the defensibility of pay differences, guidelines should establish protocols allowing starting salaries to be set above the minimum, and oversight should ensure such protocols are followed.

When exceptions are made on a regular basis, and compensation decisions become stand-alone events, the employer increases the risk of pay disparities among employees performing substantially equal work.

We requested documentation for 24 newly-hired employees who were assigned a pay grade above Step 1 between July and December 2018 to determine whether the Human Resources Director authorized advanced pay in these cases as required and, if so, whether there was a defined rationale guiding the determinations so as to promote consistency and minimize the risk of discrimination. Based on this review, we found that the Human Resources Director authorized 11 of these exceptions.

This is consistent with general industry practice. However, we found no evidence that the Human Resources Director authorized increased pay in 13 of the cases. According to the Human Resources Director, departments occasionally circumvent this approval step in seeking authorization for such pay increases, either altogether or after receiving an initial denial from the Director. This practice is not consistent with the County Code and, without clear guidelines for the consistent application of such exceptions, granting authorization for advanced pay on a case-by-case basis or outside of the Human Resources Department increases the risk that an employee could claim discrimination.

D.4 The Department Does Not Monitor or Inform County Leadership of Market Compensation Levels
County Code requires the Human Resources Director to develop a Classification Plan [Sections 3A.04.010, SCC], as noted previously, and to assign salary ranges to each classification in the plan [Section 3.69.040, SCC]. County Code further states that salary range adjustments may be proposed annually to the County Council by the Human Resources Director based on consideration of the results of salary surveys of comparable positions in the labor market, the results of union negotiations, changes in the cost of living, the County’s ability to pay, and other applicable factors [Section 3.69.040(3)(a), SCC]. This is consistent with industry standards, which generally recommends that employers conduct comprehensive market studies on a periodic basis and partial or “benchmark” studies on an annual basis in order to keep a pulse on the employment market. Generally, organizations that fail to perform thorough market analyses could have employee recruitment and retention difficulties or could be unnecessarily overpaying salaries.

This audit revealed little evidence that the Human Resources Department had conducted any substantive salary surveys of comparable positions in the labor market in more than 20 years. Current management noted that, on rare occasion, it may conduct a market analysis in preparation for labor negotiations, but #35..
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typically would only do so for “interest arbitration” groups, such as public safety positions (e.g., firefighters, correctional officers, etc.). Management also stated that, in 2015, the County engaged in a small-scale salary survey specifically related to director-level positions throughout the County. In reviewing three salary surveys provided by management upon request, it was evident that each used differing methodological approaches and included different labor markets or comparable agencies.

This practice is not consistent with industry standards, particularly over the course of 20 years. To be effective, market studies are not intended to focus on a small subset of an employer’s workforce, such as only executive directors, firefighters, and correctional officers. Rather, market information should be considered on a system-wide basis.
 Comprehensive versus Maintenance Market Studies. There are two types of system-wide market studies, comprehensive studies and maintenance studies, and each differs in scope, resources required to perform, and purpose. A “comprehensive” study includes an evaluation of the total compensation provided to a defined set of classifications comprising most of the organization’s positions, and comparing the County’s total compensation for those positions to that which is provided by other employers within the County’s labor market. Snohomish County’s 1997 Classification and Compensation Study found that the County’s labor market included numerous counties (e.g., Clark, King, Kitsap, Pierce, etc.), cities (e.g., Bellevue, Edmonds, Everett, Kirkland, Renton, Seattle, Tacoma, etc.), and other public sector agencies (e.g., school districts, Snohomish Public Utilities District, and the State of Washington). In general, creating a competitive compensation plan requires employers to analyze the markets in which they compete for talent— that is, from where does the County recruit talent and to which employers does the County lose talent.

This process allows the Department to determine how the County compares to other employers in its labor market, and to identify all potential adjustments to the total compensation plan that would be required to ensure the plan provides competitive compensation for all positions throughout the County.

A maintenance study differs from a comprehensive study in that it includes significantly fewer classifications, possibly as few as 20 percent of the employer’s classifications. The selected classifications, known as “benchmark classifications,” represent a cross-section of jobs and all departments within the County, as well as the range of lowest to highest paying classifications.

Benchmark classifications also represent positions that are easily identifiable in the labor market and for which compensation for similar classifications can be found in most published compensation surveys. Maintenance studies are less resource intensive and thus, more cost-effective than comprehensive studies and provide information on whether the labor market experienced a significant shift in any of the key sectors, professions, trades, or industries within which the County hires employees. If the maintenance study reveals a significant change, the employer may elect to expand the study to include additional positions within the sector or industry, implement targeted adjustments to compensate for the affected positions, or monitor the market more closely before determining a specific course of action. The overall results from a benchmark study is intended to #35..
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guide an employer in determining how much, if any, total compensation must change to continue to ensure that it remains competitive in the labor market.  Published versus Custom Surveys. Determining how well the County’s compensation plan compares to the labor market requires the Department to measure compensation provided by other employers. Professional compensation firms publish annual surveys that employers can purchase and utilize when comparing their compensation plans to those of other employers. Employers may also conduct custom surveys of employers within their labor market. Custom surveys often allow employers to obtain more current compensation data from employers that best reflect their defined labor market, but they require more time and resources than utilizing published surveys.

In 1997, the consultant elected to use both published and custom surveys in evaluating the County’s market competitiveness—often considered a best practice in public sector agencies.

Having not conducted a comprehensive study, or engaged in a systematic maintenance study cycle, the County does not have sufficient information regarding compensation in the labor market to adequately determine its own competitiveness and, if the County budget is unable to meet market demands, to inform County leadership of the disparity and its potential consequences.

D.5 The County Has Not Established a Compensation Philosophy as the Framework for its Classification and Compensation Program
A compensation philosophy lays out the guiding principles and serves as a mission statement for an organization’s compensation policy, provides the employer’s strategic approach to compensation and benefits, and gives both managers and employees—including labor representatives—a better understanding of the organization’s position on compensation and benefits. Generally, a compensation philosophy defines the employer’s competitive market (i.e., what is the employer’s market for talent and with whom does the employer compete for employees) and competitive position (i.e., compensation in relation to the market, such as setting base salaries to equal the median of the market). It also sets forth the employer’s goals with respect to its compensation plan, as well as the balance of salary, benefits, and incentives in the compensation plan.

For instance, it is not uncommon for public sector agencies, which have fiscal responsibilities to the public, to define its competitive market as other public sector employers and competitive position to equal the median of compensation provided by other public sector employers, and to have an increased focus on benefits and work-life balance. Regardless, establishing a compensation philosophy provides guidance in all compensation-related matters, including labor negotiations and compensation recommendations.

Organizations without a clear, written compensation philosophy risk rewarding employees inconsistently, which increases the risk of discrimination law violations, and risk either paying too much or too little in salaries, which impact operating costs and employee retention.

This audit found that the County did not have a clearly defined compensation philosophy and did not have a strategic approach in establishing compensation levels, which occur primarily through labor negotiations. In the 1997 Classification and Compensation study commissioned by the County, the consultant found that the County did not have a compensation philosophy, but identified several objectives County management #35..
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desired of a compensation plan at the time, including “providing pay and promotional opportunities which are competitive with comparable regional employers, based on ability to pay,” and “administer pay equitably across both departmental and occupational lines.” These are reasonable objectives, but we found that the Department was ill equipped to achieve them in part because it lacked the foundation, direction, resources, and tools for executing them.

For instance, according to Department management, salaries for classified employees—the majority of employees employed by the County—are determined through labor negotiations; and, in this process, the Department does not routinely evaluate compensation of comparable regional employers and does not consider pay equity across both departmental and occupational lines to be a priority. Rather, the Department gauges resource availability based on input from the County Council and the County Executive, listens to requests of labor representatives, and considers which requests can be granted within the resource constraints of the County. According to the Department, it is not uncommon for each bargaining unit to have different priorities and, if similar positions are represented through different bargaining units, salaries for some positions may be increased through negotiations while others may not. This, in part, contributes to the disparities in compensation for similar positions described previously.

A philosophy statement is not intended to be so detailed as to cover all factors needed for the administration of a compensation program, such as a definition of the process used to determine internal equity (job evaluation), the different types or elements of compensation, clearly defined management responsibilities, or compensation program administration procedures. But, it is necessary to define the framework for making compensation-related decisions.
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E. Record Retention
It is necessary for employers to capture and maintain key employee information and to document the basis for employment decisions. Developing and maintaining an efficient system for capturing and storing employee information ensures that relevant information is available, in an easy to use format, to decision makers at the time that personnel decisions are being made. In particular, employment-related decisions are facilitated if a complete employment history is maintained on each employee, including information relating to positions held, pay rates, performance assessments, disciplinary actions, significant achievements, and professional development activities. In addition to informing personnel decisions, employment records are also useful in justifying or defending against legal challenges for disciplinary or other personnel actions, and for ensuring compliance with federal and state employment law, as well as internal employer policies and procedures.

Specifically, documentation is necessary to demonstrate compliance with federal and state employment law, including, but not limited to wage and hour laws (e.g., the Fair Labor Standards Act), mandated leave benefits (e.g., the Family and Medical Leave Act), equal employment and non-discrimination laws (e.g., the Americans with Disabilities Act), employee relations, and other statutes. Documentation is also necessary to demonstrate adherence to organizational policies and procedures, such as those relating to employee compensation, eligibility for advancement, professional development, and performance evaluation, among other areas. The importance of an employer’s documentation of personnel actions is memorialized in both federal and state law, which generally requires employers to obtain and retain information relating to personnel, payroll, medical, benefit, and residency matters, as summarized below.  Personnel Files: Employers routinely capture and maintain general personnel records, including employment applications, employment references and recommendations, results of background checks, employee licenses, performance evaluations, compensation records, disciplinary records, grievance records, and a wide variety of other employment records.  Medical Files: In certain circumstances, employers must gather and retain employee information relating to physical examinations (e.g., periodic or post-job offer), drug and alcohol testing, occupational health and medical records, disability and health insurance claims records, medical information related to medical leaves of absence, and medical information related to workers’ compensation claims.
 Payroll Files: Employers must gather and retain payroll-related information for each employee, including Forms W-4, wage and salary data, time cards and attendance records, authorization for payroll deductions or withholdings, garnishments, child support deduction orders, etc.  Benefits Files: Employers are required to maintain information relating to an employee’s insurance provider, enrollment information, and beneficiary information.  U.S. Citizenship and Immigration Services Form I-9 Files: Employers are required to maintain Form I-9, include residency, citizenship, and immigration-related information regarding employees or prospective employees, information which is used to verify employment eligibility. #35..
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 Investigation Files: Employers must maintain results of past investigations of internal or external charges.

The importance of maintaining comprehensive and confidential personnel records is reflected in Snohomish County Code, which requires the Human Resources Director to:
[E]stablish and maintain a personnel records system which will include a copy of each employee’s application, the job title under which the employee is employed, the rate of pay, date of employment, the organizational unit assignment, reports of all personnel actions including disciplinary actions, reports of work performance, employment history and such other records, reports or information as deemed pertinent. The human resources department will be the central depository for all such personnel records and files … Every appointment, transfer, promotion, demotion, termination, dismissal, suspension, leave of absence, change of pay rate or other change in an employee’s status will be reported to the human resources department in writing in the manner, time, form and method prescribed by the director. [Section 3A.15.010 et seq., SCC].

Just as important as an employer’s documentation of personnel actions is how the employer maintains and retains personnel records of current and past employees. Record keeping requirements and protocols in the field of human resources management focus on three key principals. First, documentation should be sufficient to demonstrate compliance with applicable federal and state laws, as well as employer human resources policies and procedures. Second, to be useful, personnel records should be complete and maintained in an organized and consistent manner. Strong record keeping reduces organizational risk because employment records can be used to justify or defend against legal challenges to disciplinary or other human resources actions. For example, if an EEO complaint is filed against the County, up-to-date performance evaluations maintained in a personnel file can be used to prove that termination of an employee was related to job performance and was non-discriminatory.

Finally, all of this information is sensitive and confidential, and is relevant to only certain aspects of human resources management; therefore, to avoid unauthorized disclosure or breach of employee personally identifiable information (PII) or personal health information (PHI), access to personnel records should be limited to only those authorized human resources professionals that require access in order to perform assigned human resources duties. For instance, in the case of Form I-9s, once an employee is deemed eligible to work in the United States, Human Resources staff generally no longer have a legitimate need to maintain access to Form I-9; yet, the Department must maintain the forms in the event a federal audit were initiated. Therefore, maintaining Form I-9s along with other personnel records is not considered an acceptable practice because it routinely exposes sensitive information to employees that do not need the information to carry out their assigned job duties. The same can generally be said of each of the different types of employee records described above.

Below, we present three findings related to the Human Resources Department’s record keeping practices.

These relate to the overall efficiency of its practices, its effectiveness in ensuring the completeness of official personnel files, and its ability to protect confidential employee information. #35..
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E.1 The Existing Record Keeping Process Is Inefficient and Results in Duplicative Records Maintained in Multiple Locations
According to Human Resources Department management, it has captured and stored personnel records in the form of microfiche since the early 2000’s, when it converted paper files to microfiche in order to reduce the space required to store several decades of personnel files. This decision, and the processes employed to microfiche and maintain centralized personnel records, has contributed to an unnecessarily inefficient and duplicative record keeping process.

Generally, personnel records may be generated centrally through the Human Resources Department, such as those initiated through the new-hire orientation process, or by other county departments, offices, or courts, such as Personnel Record Change (PRC) forms, promotions, or related personnel actions. Regardless of how the record is initiated, preparing the record for inclusion in an employee’s personnel file requires the submission of the record to the Human Resources Department, the processing of the record, and the conversion of the paper document to microfiche.

All personnel files are initially routed to a group of human resources generalists working within the Human Resources Department, who review the documents for content, accuracy, and completeness; enter relevant personnel information into the County’s human resources information system (High Line); and forward the record to a designated Human Resources Department employee for conversion to microfiche. This employee receives the files, organizes them by type (medical, personnel, discipline, etc.) and by document retention/destruction cycle, places the records into storage boxes, and prepares record retention logs reflecting the contents of each storage box. Once a storage box is full, the employee sends the box of records to the County’s document imaging center, which photographs each page by hand, develops the microfiche record, sends the microfiche record to the Human Resources Department, and sends the storage boxes of original personnel records to the Snohomish County Records Center for archiving. The Human Resources Department places the microfiche within the respective employee’s personnel file, which is organized in a manner that segregates general personnel records, medical records, disciplinary records, and Form I-9 records. The County Records Center archives the record until the Local Government Common Records Retention Schedule (CORE), issued by the Washington State Archives, allows the destruction of the record.

We found this process to be overly cumbersome, outdated, and inefficient for the following reasons.  The Process is Inefficient: According to the Department, the process to microfiche and file official personnel records takes approximately six (6) months to complete, an excessive amount of time.

This is because, rather than imaging the record immediately for inclusion in the employee’s personnel file, staff wait until there are hundreds of similar, but unrelated personnel files that also require imaging before beginning the process to microfiche and file the record. As described below, during this six-month period, official personnel files remain incomplete while confidential employee documents are stored at an employee’s desk, either in piles or in boxes, that are accessible to all individuals with access to the Human Resources Department office, including all Human Resources staff as well as other County custodial, maintenance, information technology, security and other personnel.
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 The Process is Duplicative: In addition to the length of time it takes to file personnel records, the process the Department employs to microfiche and file the record results in two sets of records: (1) the storage of original hard-copy records first in the Human Resources Department offices, then in the imaging center facilities, and finally in the County Storage Center, and (2) the microfiche record in official personnel file maintained by the Human Resources Department. Both sets of records must be maintained and secured in a manner compliant with federal and state law, which requires ongoing resources and unnecessarily increases the number of County employees with access to confidential employee records, which in turn increases the risk of unauthorized disclosure or breach of personally identifiable information or personal health information.  The Process is Impractical: While management personnel responsible for the transition to microfiche in the early 2000s were no longer with the Department, it appears that the primary factor leading to the decision to utilize microfiche as the official record was that it required far less storage space than original hard-copy records. Microfiche’s efficient use of space is a key reason why it is a medium well suited for long-term storage and archiving. However, its use as a medium for maintaining actively used records in the field of human resources management is not common because, while microfiche reduces the need for storage space, it is generally more cumbersome to use than other media. It is not easily accessible, it is not searchable, and it is not usable. It requires the use of specialized reader machines, which can be far more time consuming than reading a hardcopy personnel file, and requires conversion back to hard-copy or another image if the personnel file were ever needed to defend against a complaint or lawsuit. It is, according to imaging center staff, also an increasingly dated technology that is becoming increasingly difficult and costly to maintain.

E.2 This Process Does Not Ensure the Completeness of Employee Personnel Files We reviewed a sample of 27 employee personnel files to evaluate the condition and content of the files.

Overall, we found that personnel files were well-organized, consistent, and included the type documentation expected of a personnel file, such as the employee’s original job application, performance evaluations, PRC forms, compensation and benefits information, leave-related documentation, and other documentation supporting personnel actions. While we found that the storage of these records could be improved to better restrict access to only those employees that require access—as described in the following discussion—we generally found that the personnel files contain most of the information we would expect to see in a personnel file. However, the completeness of the files varied by department and type of record.  Personnel Record Change Forms: The majority of personnel files did not contain all PRCs necessary to support or document a variety of personnel actions, including salary increases, promotions, reclassifications, etc. In many cases, the most recent PRC in each file included in our sample was often several years out of date in terms of both employee salary and employee status (class and grade). For instance, the most recent PRC for one employee showed a salary of $5,946 per month, while High Line shows that the employee is receiving a salary of $8,699 per month. For another employee, the most recent PRC was in 2015 and showed a salary of $4,883 per month, while High Line reflected a salary of $9,494 per month. Personnel Record Change Forms are not merely a hard-copy documentation of an electronic record in High Line; rather, they are key in #35..
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demonstrating that the increase in compensation was appropriately authorized by management and, therefore, comprise an important control against improper changes to employee compensation.  Performance Reviews and Performance-Related Documentation: All department heads are required to develop and maintain performance evaluation systems for all groups of employees [Section 3A.12.020(2)(a), SCC], and records of the performance evaluations are required to be maintained in the official personnel records maintained by the Human Resources Department, as described previously. However, of the 27 files reviewed, 22 files did not contain up-to-date performance reviews, and six (6) did not contain a performance review at all. Human Resources did does not actively monitor whether departments are sending performance reviews to the Department for filing. For the performance reviews that were on file, they were generally completed in a thoughtful manner and contained constructive feedback that was directly related to the employee’s job performance.

Likewise, according to the Department, it does not always maintain all disciplinary records in personnel records. In part this is because initial warnings or reprimands are handled at the department level and Human Resources may not be made aware of the incidents. This includes EEO complaints, which are also encouraged to be addressed at the lowest level possible before being escalated. It is also due to language in several collective bargaining agreements which requires the Human Resources Department to remove documentation of oral warnings and written reprimands for many violations after only one (1) year, for safety violations after two (2) years, and for EEOrelated discrimination violations after three (3) years. This practice exposes the County to undue risk by making it more difficult to effect progressive discipline over time or to justify future disciplinary actions, including terminations. It is critical, and is considered best practice, that personnel files retain a record of disciplinary actions, including warnings; failure to do so may prevent an employer such as the County from fully justifying its actions in terminating an employee’s employment. It is considered a best practice that personnel records include all relevant documentation of verbal warnings, written warnings, suspensions, and terminations.

Several factors can impact the completeness of an employee’s personnel record. Because of the decentralized nature of human recourses management within the County, the Human Resources Department is dependent upon County departments forwarding and submitting all relevant personnel documents. Based on input from the Human Resources Department and other County departments, decentralized human resources personnel do not always submit personnel records to the Human Resources Department for inclusion in the official personnel file. Specifically, our survey of decentralized human resources staff revealed that 80 percent maintain a set of personnel files for their employees, which include employee performance evaluations, disciplinary documents, personnel record change requests, onboarding materials, training documents, copies of I-9, W-9, direct deposit information, and background check documentation, among other documents. While in some cases, it is appropriate for departments to maintain copies of these records, in other cases—such as I-9 and payroll records—such documentation should be restricted to Human Resources personnel. Despite best practices, the Human Resources Department has historically considered this an acceptable practice, has primarily served as a facilitator in filing whichever documents are sent to them by the departments, and has not played an active role by ensuring the files are comprehensive and upto-date. #35..
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Further, it is not uncommon for individual supervisors to maintain their own sets of employee files, who may not consider certain files to be part of a formal employee file; however, all records pertaining to an employee’s employment status within an organization or personnel actions taken with respect to the employee are considered to be official personnel records if an employee or former employee brings legal action against the employer. If the Human Resources Department is unaware of the existence of such records, the County’s liability may be increased. Thus, a formal record keeping function should clearly indicate to supervisors the County’s policy on maintaining unofficial employee files. Supervisors should be allowed to maintain employee files containing only copies of original documentation, and should not be permitted to maintain unique data not found in the employee’s “master” personnel file or any documentation containing confidential information, such as medical information relating to a FMLA leave request, for example.

Finally, the excessive time it takes to file personnel records in the official microfiche personnel files also contributes to the incomplete personnel records identified in our review. Employees’ personnel files are routinely incomplete while personnel records are held in storage boxes—or at an employee’s desk—waiting to be imaged and filed in the employee’s official personnel file. With a six-month timeframe to process personnel records and place them in an employee’s personnel file, it is possible that a significant number of employees’ personnel files are incomplete at any given time.

E.3 Access to Confidential Personnel Records is Not Sufficiently Restricted As a general principal, access to sensitive or confidential information—no matter the type or subject—should be restricted to only those employees that require such access to carry out assigned duties.

Standard industry practice suggest that employers, given the sensitivity of the personal information maintained in such records, develop and communicate to its employees a formal, written employee records policy addressing several key aspects of employee records management. This includes, but is not limited to records description, information sources, review cycles, record retention, employee file inspection, adding or modifying employee records, information requests by employees or external sources, records maintenance, file security, and records destruction. While the Human Resources Department did not have such a policy, it did design a records maintenance system to address some of these factors.

For instance, it designed records maintenance protocols that segregated various types of sensitive employee data. As described above, the Department stored general personnel information for each employee in one microfiche folder, organized chronologically, but stored other sensitive personnel information (such as medical-related information and disciplinary information) for each employee in separate microfiche folders within the same file cabinet. Completed employee immigration status and employment authorization forms (Form I-9) were not microfiched, but were stored in hard-copy in a separate file cabinet. In the event an individual within or outside of the Department were to review a personnel file, the Department could give them access to the elements they need without disclosing information they do not need. The Department also followed Washington State’s requirements regarding document retention and destruction through the County’s Record Storage Center, which tracked retention schedules, identified original/hard-copy human resources documents scheduled for destruction, and administered the destruction process. #35..
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However, we found these protocols to be inadequate on their own to adequately protect sensitive employee records from unauthorized disclosure or breach, and we found numerous factors that enabled employees to have access to sensitive employee information, including personally identifiable information and personal health information, that they did not need access to carry out assigned job duties.  Untimely Record Destruction: While the Human Resources Department relies on the County’s Document Storage Center to track document retention schedules and to initiate the destruction process for all hard-copy personnel records, it has not implemented any protocols for the tracking of retention or destruction of microfiche records. Because of this, the County has not initiated the systematic destruction of any sensitive personnel records maintained on microfiche since it transitioned records to microfiche in the 2000s. According to management, it now stores records for past employees that date back to the 1970s and, due to space limitations, stores microfiche records for past employees in the document imaging center. Because of this, both Human Resources Department staff and staff of other departments have unwarranted access to sensitive information of past employees that should have been destroyed long ago.  Access to Records Is Not Sufficiently Restricted: While it is best practice to maintain personnel records in a double-locked location (such as in a locked file cabinet located in a locked room) to which only those employees whose assignments require it have access, the Human Resources Department does not do this. Rather, it maintains personnel records for active employees within the Human Resources Department’s secured office space—to which all Human Resources Employees have access—but does not further secure the files to limit which Department staff have the ability to access the records.

Within the Human Resources Department, the microfiche personnel files are kept in a centrally located file cabinet, which is accessible to all Human Resources employees, as well as any visitors to the Department. During audit fieldwork, we found that the file cabinet is generally not locked on a regular basis. Files for all active employees are located in the same unlocked file cabinet as the personnel files for many former employees, and all Human Resources employees have access to all microfiche records.

While each type of record is segregated into separate folders by employee, every employee in the Human Resources Department has access to these sensitive records, even those that do not need such access, such as staff responsible for administrative support, labor relations, recruiting, and other unrelated activities. Similarly, Forms I-9, which contain immigration and residency status information, are maintained in a separate unlocked file cabinet; and all personnel records, regardless of type or sensitivity that are awaiting to be photographed on microfiche are stored unsecured at an employee’s desk for months or longer. In addition to Human Resources personnel, non-departmental employees such as custodial, maintenance, security, information technology, and other County employees or visitors would also have unnecessary access to sensitive employee information.  Personnel Records Include Payroll Information: Nearly all personnel files reviewed contained payroll information, such as Forms W-4, even though payroll is not a function of the Human Resources Department, there is no operational reason for Human Resources staff to use employee #35..
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payroll information, and the Finance Department’s payroll unit maintains its own records for all employee payroll matters. It is standard industry practice that payroll records (such as tax information, withholdings, garnishments, etc.) be kept separate from personnel records because any disclosure of such information to individuals without a need-to-know could be considered a violation of employees’ right to privacy.

There are inherent risks to retaining personnel records, which may contain medical records, disciplinary records, personally identifiable information, and other sensitive and confidential information, long after the record is required to be retained. For instance, a future unauthorized breach or disclosure of such records, if it were to occur, would pose financial risks to the County. We recommend that Human Resources consult with the Prosecuting Attorney’s Office regarding the destruction of all records that are no longer legally required to be retained.
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F. Conclusions and Recommendations
This report presents findings that point to deficiencies in four key areas of human resources management within the County. Specifically, we found that the structure and approach to human resources management within the County was flawed in that it (a) did not promote adequate collaboration between the Human Resources Department and County offices, departments, and courts; and (b) did not exhibit the level of specialization or well-defined units within Human Resources as would be expected, or a span of control sufficiently manageable for an organization with such diverse responsibilities. Further, we found that (c) the County’s classification and compensation model was outdated, cumbersome, and inconsistently applied, potentially resulting in excessive costs and undue risk; and (d) its record retention practices were also outdated, cumbersome, and exposed the County to undue risk, specifically in that personnel files were incomplete and records were not adequately controlled and restricted.

Based on this, we recommend that the Department undertake four initiatives, as presented below:

F.1. Develop and implement a strategy to better coordinate decentralized human resources functions within the County and throughout each elected office, executive department, and court. We recommend that this emphasize:
 Defining the roles and responsibilities of County departments and the Human Resources Department in carrying out decentralized personnel functions, as well as the internal controls required to be in place.
 Enhancing the Human Resources Department’s role as a risk manager as it relates to compliance with federal and state laws relating to employers.  Developing policies and procedures that specify the responsibilities of supervisors and managers with respect to matters of compliance and risk.  Enhancing consistency in the administration of decentralized human resources activities throughout the County.
 Developing clear policies and procedures and the implementation of an adequate and authoritative oversight program designed to identify noncompliance and to recommend corrective action.

F.2. Develop a plan to move from a wide/flat structure to an organizational structure that incorporates distinct organizational units that reflect these areas of specialization. We recommend that this include reorganizing the Human Resources Department to:
 Reduce the number of staff reporting directly to the Human Resources Director; in doing so, determine the appropriate number of supervisory or management personnel necessary to effectively supervise Department employees and manage each specialized work unit. #35..
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 Establish clearly defined organizational units, with clear roles, responsibilities, and expertise.  Ensure key functional areas are managed by individuals with appropriate expertise.  Promote the attainment of professional certifications and related continuous professional education within the Human Resources Department.
 Communicate to departments throughout the County key points of contact for each area of specialization.
 Evaluate, after implementation of Recommendation F.1 and the re-organization of the Human Resources Department into work units that promote specialization and reduce the number of staff reporting directly to the Director, whether each specialized work unit is properly staffed to meet the needs of Snohomish County.

F.3. Conduct a comprehensive and methodologically sound classification and compensation study— consistent with accepted professional practices—that achieves the following goals:
 Develop a compensation philosophy that reflects the priorities of the County.  Develop job descriptions that define the roles, responsibilities, work conditions, and physical requirements of each job.
 Group all substantially similar jobs into classifications, balancing the need to minimize the overall number of classifications so as to ensure the efficiency of the classification system and the need to ensure adequate differentiation between classifications so as to ensure only those jobs that are substantially similar are classified together.  Develop classification specifications that, in general, describe the duties, responsibilities, qualifications, and FLSA status of all the jobs within the classification.  Conduct professionally sound market analyses, on a periodic basis, to (a) stay informed of market compensation provided by similarly situated employers, such as those of similar size and type as well as those with which the County competes for employees, and (b) inform County officials of where the County stands with respect to its position relative to the market.  Ensure compensation protocols, including salary ranges and overtime, are consistently applied for all employees.

F.4. Develop and implement document retention policies and procedures that reflect best practices.

We recommend that the Human Resources Department:
 Instruct, in the short term, all County departments to submit all original personnel records in their possession to the Human Resources Department for filing, and to retain copies of only those records that department management has a legitimate need to retain. #35..
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 Initiate the destruction of personnel records, in consultation with legal counsel, that the County is no longer legally required to retain, including microfiche records.  Develop a strategic plan to modernize record keeping of personnel records in the County, including moving away from microfiche, eliminating the excessive lag in time currently experienced to include personnel records into the official personnel file, and better restricting access to personnel records, even within the Department. #35..
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Appendix A – Human Resources Department’s Response
The Director of the Human Resources Department submitted the following statement in response to this performance audit report.

HR is in agreement with the report as structured and recognizes that many of the issues identified evolved over time and became part of County culture. Many of the recommendations will require long term, strategic planning and it is imperative that the County recognizes that HR will require support from all levels in order for any true change to take place.

HR believes that recommendations relative to centralized versus decentralized human resource functions are an important piece to making any of the other changes. When there is clarity relative to functions and authority it will serve to reduce the numerous potential risks that currently face the County.

HR agrees that the current model of one director who is also directly responsible for the supervision of all staff is an untenable model and one that needs attention.

Classification and compensation is an area which regularly creates tensions between HR and departments. Although County Code places authority for such processes in HR, over the years a culture has developed that has created channels that allow departments to override any actions with which they do not agree. After the comprehensive classification/compensation study that was done in the late 1990’s was not implemented, many were left with the belief that staff is undercompensated relative to the market. As a result, the classification system is often used to “reclassify” staff in order to generate what is believed to be the appropriate pay. A comprehensive study, will allow the County to have a clearer picture of the market. It will be imperative for the County to develop a plan which identifies, where it wants to sit relative to the market, what its comparative market is, and, amongst other things a strategy for it will communicate and implement any classification/compensation changes.

While HR agrees that the County has significantly more “classifications” than other organizations, it should also be noted that in the last couple of years, HR has been working to reduce that number as we are aware that having numerous, one-off classifications will further complicate our ability to complete a classification/compensation study which produces reliable data.

In sum, HR is in agreement with the report and its recommendations. We want to thank Mr.

Skiles for the respect and professionalism that he showed while working with HR staff to conduct this audit.
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455 Capitol Mall•Suite 700•Sacramento, California•95814•Tel 916.443.1300•Fax 916.443.1350 State of Colorado
Office of the State Auditor
Performance Audit of the Colorado Department of the
Treasury’s Investment Management
October 2019
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Senator Nancy Todd – Chair Representative Lori Saine – Vice-Chair Representative Rod Bockenfeld Senator Paul Lundeen
Senator Rhonda Fields Representative Dafna Michaelson Jenet Representative Tracy Kraft-Tharp Senator Jim Smallwood

Dianne E. Ray State Auditor
Monica Bowers Deputy State Auditor
Vickie Heller Contract Monitor
Sjoberg Evashenk Consulting, Inc. Contractor

AN ELECTRONIC VERSION OF THIS REPORT IS AVAILABLE AT
WWW.COLORADO.GOV/AUDITOR

A BOUND REPORT MAY BE OBTAINED BY CALLING THE

OFFICE OF THE STATE AUDITOR
303.869.2800
PLEASE REFER TO REPORT NUMBER 1950P WHEN REQUESTING THIS REPORT

LEGISLATIVE AUDIT COMMITTEE

OFFICE OF THE STATE AUDITOR
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455 CAPITOL MALL, SUITE 700 ∙ SACRAMENTO, CALIFORNIA 95814 ∙ (916) 443-1300 ∙ FAX (916) 443-1350 ∙ WWW.SECTEAM.COM October 22, 2019
Members of the Legislative Audit Committee:

This report contains the results of a performance audit of the Colorado Department of the Treasury (Treasury). The audit was conducted pursuant to Section 2-3-103, C.R.S., which authorizes the State Auditor to conduct audits of all departments, institutions, and agencies of state government, and Section 2-7-204(5), C.R.S., which requires the State Auditor to annually conduct performance audits of one or more specific programs or services in at least two departments for purposes of the SMART Government Act. The report presents our findings, conclusions, and recommendations, and the responses of the Treasury.

Respectfully submitted,
George J. Skiles
Principal
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TABLE OF CONTENTS
PAGE
REPORT HIGHLIGHTS ........................................................................................ 1 CHAPTER 1 - Overview. ........................................................................................ 3 Audit Scope and Methodology ..................................................................... 8 CHAPTER 2 – Audit Findings ............................................................................. 11 Investment Performance ............................................................................. 13 Recommendation 1 ...................................................................................... 24 Compliance with Investment Policies ........................................................ 26 Recommendation 2 ...................................................................................... 44 #35..
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REPORT
SJOBERGEVASHENK P a g e | 1

HIGHLIGHTS

KEY FINDINGS
 The Treasury established two performance benchmarks against which it could evaluate and report on its performance, a yield benchmark and a total return benchmark, but it regularly only reported its book yield because its investment strategy is focused on maximizing yield and cash flow. This showed the Treasury outperforming its yield benchmark at nearly every point between Calendar Years 2011 through 2018, but an analysis of total returns reveals a more nuanced perspective in which the Treasury outperformed and underperformed its benchmarks in different years. Measuring total returns accounts for both the yield generated and the change in value experienced due to market conditions, and is therefore an important indicator of the overall value, risk, and return characteristics of a portfolio.
 Some investment holdings were outside the parameters allowed in the Investment Policy Statements.
o The Treasury allocated assets within the T-Pool in a manner consistent with the Investment Policy Statements, but allocations of the Public School Permanent Fund and the Unclaimed Property Tourism Fund portfolios to Treasury/Agency assets and to corporate bonds and notes were often not compliant, as were allocations from these portfolios to the T-Pool.
o Some T-Pool investment holdings exceeded maturity limits, including assets with maturities exceeding one year in its T-Pool Cash sub-portfolio and five years in its T-Pool Bond sub-portfolio.  The Treasury did not always maintain documentation supporting older total return benchmark information or portfolio credit ratings, including information generated by its prior custodian, impeding verification and replication of reported results.

Colorado Department of the Treasury’s Investment Management Performance Audit, October 2019

AUDIT CONCERN
The investment management practices of the Colorado Department of the Treasury (Treasury) were consistent with statutory requirements and generally achieved the Treasury Investment Program’s statutory objectives of legality, safety, liquidity, and yield. However, the Treasury’s portfolio holdings did not always comply with its Investment Policy Statements, and opportunities exist to improve the manner in which the Treasury reports its investment performance.

RECOMMENDATIONS
 Enhance measurement and reporting of portfolio performance by including in quarterly reporting both the book yield and total returns of its portfolios versus established benchmarks, and ensuring total return benchmarks are consistent with the Treasury’s Investment Policy Statements.  Specify in the Investment Policy Statements how compliance with key restrictions related to asset allocations, maturity, and credit quality will be measured, and develop a formal procedure requiring investment officers to obtain the pre-approval from the State Treasurer for deviations from Investment Policy Statement provisions.  Ensure adequate documentation is maintained by Treasury and/or its custodian for all benchmarks used to allow results to be verified and replicated.

The Treasury agreed with these recommendations.

BACKGROUND
The Treasury is part of the executive
branch of state government. The State
Treasurer, an elected position, is the
chief executive of the Treasury and is
authorized by statute to maintain
custody of and invest state monies.

The Treasury manages three primary
portfolios:
 Treasury Pool (T-Pool): pools
monies held in more than 800
government funds; as of December
31, 2018, it held nearly $8 billion in
assets.
 Public School Permanent Fund:
holds assets from the sale or use of
lands that have been granted by the
federal government for educational
purposes; as of December 31,
2018, it held approximately $775
million in assets.
 Unclaimed Property Tourism
Promotion Trust Fund: holds the
proceeds from the sale of securities
held as unclaimed property for more
than a year; as of December 31,
2018, it held approximately $208
million in assets.
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Overview
Chapter 1
The Colorado Department of the Treasury (Treasury) is part of the executive branch of Colorado state government. The State Treasurer, which is an elected position, is the chief executive officer of the Treasury and is authorized by statute to maintain custody of and invest state monies [Section 24-36-101, et seq., C.R.S].

The Treasury receives state monies collected by or otherwise coming into the hands of any officer, department, institution, or agency of state government, and deposits and disburses the same in the manner prescribed by law [Section 24-36-102, C.R.S]. The Treasury has no tax collection or enforcement responsibilities.

Statute authorizes the State Treasurer to invest any funds that are not immediately required to be disbursed into a variety of investment options, such as bonds, debt obligations, bank deposits, and securities [Sections 24-36-109 through 24-36-113, C.R.S.]. As shown in Exhibit 1.1, between Calendar Years 2011 and 2018, the Treasury managed up to eight different investment portfolios.

Exhibit 1.1: Investment Portfolio Year-End Balances (Calendar Years 2011 through 2018, in millions)
Portfolio Name 2011 2012 2013 2014 2015 2016 2017 2018
Treasury Pool (T-Pool) $6,117 $6,920 $7,476 $6,932 $7,039 $6,486 $6,795 $7,858 Public School Permanent Fund* $619.6 $654.3 $664.1 $747.3 $842.8 $902.3 $941.6 $775.1 Unclaimed Property Tourism Promotion Trust Fund* $122.7 $132.0 $140.0 $164.7 $172.7 $195.2 $189.3 $208.1 Major Medical Insurance Fund $93.1 $75.8 $53.8 $41.6 $27.8 $17.4 $6.2 $2.4 State Education Fund $35.3 - - - - - - -
Colorado Prepaid Tuition Fund $24.8 $22.8 - - - - - -
Colorado Department of Labor & Employment $0.5 $0.8 $0.8 $0.5 $0.8 - - - Colorado Water Conservation Board $0.4 $0.5 $0.8 $0.5 $0.8 - - - Source: Auditor analysis of the Colorado Department of the Treasury’s monthly security holding reports.

Note: * A portion of the assets reflected in the Public School Permanent Fund and the Unclaimed Property Tourism Promotion Trust Fund portfolios are invested in T-Pool, and thus are also reflected in the T-Pool portfolio balances.

Between Calendar Years 2011 and 2018, the Treasury, at the request of State agencies, closed several portfolios and, to the extent it continued to manage the remaining funds, consolidated the monies into the Treasury Pool (T-Pool) portfolio.

Specifically, the Treasury drew down and eventually closed the separately managed portfolios for the State Education Fund (2012) and the Colorado Prepaid Tuition Fund (2013), and two portfolios used to track certificates of deposit on behalf of the Colorado Department of Labor & Employment and the Colorado Water #35..
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Conservation Board (2016). While the Treasury continued to manage the Major Medical Insurance Fund portfolio through 2018, no securities have been added to the portfolio since 2008. As of the end of 2018, the number of portfolios actively managed by the Treasury had been reduced to three: the T-Pool, the Public School Permanent Fund, and the Unclaimed Property Tourism Promotion Trust Fund. Each is described below.
 Treasury Pool (T-Pool)—This portfolio pools monies held in more than 800 government funds, the pooling of which creates economies of scale that result in administrative efficiency and increased diversification opportunities, which is intended to result in higher earnings. The T-Pool holds liquid assets with maturities of less than one year (formerly referred to as the T-Pool Cash sub-portfolio) and assets with longer maturities that can extend up to five years (formerly referred to as the T-Pool Bond subportfolio). As of December 31, 2018, the T-Pool held approximately $7.9 billion in assets.
 Public School Permanent Fund—The State Public School Fund was established in the State Constitution to hold assets from the sale or use of lands that have been granted by the federal government to the State for educational purposes [State Constitution, Article IX, Section 3]. The Colorado Public School Fund Investment Board invests funds in three distinct portfolios: the Public School Permanent Fund, Public School Equity Fund, and Public School Permanent Fund Janus Henderson. The former is managed by the Treasury under the direction of the Colorado Public School Fund Investment Board, while the latter two are managed by external entities, also under the direction of the Colorado Public School Fund Investment Board, but outside of the purview of the Treasury. Interest earned on the fund is credited to the Public School Income Fund and then transferred to the Colorado Department of Education. As of December 31, 2018, the Public School Permanent Fund held approximately $775 million in assets, of which approximately 10 percent was invested in the T-Pool and 90 percent was invested in other assets, such as treasuries, asset-backed securities, corporate notes and bonds, municipal bonds, and mutual equity funds.
 Unclaimed Property Tourism Promotion Trust Fund (Unclaimed Property Tourism Fund)—This portfolio was created in statute to hold in trust the proceeds from the sale of securities held as unclaimed property for more than a year, the principal of which is not to be expended except to pay claims [Section 38-13-116.7, C.R.S]. The interest derived from the investment of the principal is credited to the Colorado State Fair Authority cash fund (25 percent), the Agriculture Management Fund within the Department of Agriculture (65 percent), and Travel and Tourism Promotion #35..
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Fund (10 percent). As of December 31, 2018, the Unclaimed Property Tourism Fund held approximately $208 million in assets, of which approximately 10 percent was invested in the T-Pool and the remaining 90 percent was invested in other assets, such as treasuries, asset-backed securities, and corporate bonds and notes.

Investment Policies
Statute requires the State Treasurer to “use prudence and care to preserve the principal and to secure the maximum rate of interest consistent with safety and liquidity”, and to create investment policies regarding liquidity, maturity and diversification that are appropriate to each fund, or pool of funds, in the Treasury’s custody and available for investment [Section 24-36-113, C.R.S.]. The State Treasurer authorizes Investment Officers, within its Investment Division, to make decisions, execute transactions, and take actions necessary to fulfill the Treasury’s investment objectives. Daily operations are managed by the Treasury’s Chief Investment Officer.

Additionally, the Treasury has an Investment Advisory Committee (Committee) to help evaluate investments. The Committee is composed of local investment professionals; members of the General Assembly; and representatives from Colorado counties, the Department of Labor & Employment, and the State Land Board (who provide advice on land assets within the Public School Permanent Fund). Service on the Committee is voluntary and members do not have decisionmaking authority or any fiduciary responsibility for the Treasury’s portfolios.

The Treasury’s investment policies are outlined in Investment Policy Statements, which are formal documents that define the process used to manage the portfolios of the Treasury Investment Program (Investment Program), outline the appropriate mix of investments and asset holdings, set expectations of risk, and communicate the roles and responsibilities of the State Treasurer, the Investment Officers, and the Advisory Committee with respect to managing the State’s investment portfolios. The State Treasurer is responsible for approving all Investment Policy Statements, and the Investment Officers are required to adhere to the terms of the Investment Policy Statements when carrying out their duties in managing the Investment Program portfolios.

Between Calendar Years 2011 and 2018, both statute and the Treasury’s Investment Policy Statements experienced modest updates and amendments. Generally, changes to state law were intended to allow the Treasurer to invest in municipal bonds and sovereign, national, or supranational securities, while changes to the Treasury’s Investment Policy Statements were designed to reflect changes in statute and the Treasury’s investment strategies. Within the parameters of the Investment Policy Statements, the Treasury has adopted two different approaches to managing #35..
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the Treasury’s portfolios. For instance, the Investment Division manages the TPool and the Unclaimed Property Tourism Fund portfolios with a strategy designed to maximize yield and cash flow, while it manages the Public School Permanent Fund to maximize total returns pursuant to the Investment Policy Statement approved by the Colorado Public School Fund Investment Board. According to Treasury management, its goal in managing the T-Pool and the Unclaimed Property Tourism Fund portfolios has been to optimize cash flows from interest income and realized capital gains. In doing so, market benchmarks were used primarily to monitor relative asset allocation with an eye on prudent diversification and not to outperform benchmarks for total returns.

The Treasury’s requirements related to asset mix, maturity, and credit quality in its Investment Policy Statements, along with our evaluation of the Treasury’s holdings with respect to each, are described in Chapter 2.

Cash Management
A large portion of the activity of the Treasury concerns short-term transactions, or cash management. The Treasury’s Investment Policy Statements require that the Treasury maintain sufficient liquidity to fund anticipated state agency spending needs. Because of this, the Investment Policy Statements require that a portion of the T-Pool, a minimum of $300 million, be highly liquid with maturities of no more than one year. Our evaluation of the ending cash pool balances for every quarter during Calendar Years 2011 through 2018 revealed that the lowest balance of the cash pool was more than $1.6 billion, well above the $300 million minimum required in the Investment Policy Statements. In this manner, the cash pool, or the T-Pool Cash sub-portfolio, functions essentially as an interest-bearing checking account that ensures that all operational cash requirements are met.

Included in this cash pool is, as of December 31, 2018, approximately $350 million in cash held in money market accounts and the Treasury’s Wells Fargo bank account, from which all investment disbursements are made and into which all Treasury deposits and investment proceeds are made. The Treasury targets an overnight balance of between $20 and $80 million in the bank account, which enables the Treasury to both issue disbursements with very short notice and facilitate large anticipated disbursements. At the end of each day, Treasury staff evaluate the bank account balance and any anticipated revenues or disbursements, and move monies into or out of money market accounts to maintain the desired balance at the end of the day.

Effective cash management requires (1) adequate information regarding cash flow needs, including expected revenues and disbursements; (2) the maintenance of sufficient liquidity at all times; and (3) the timely investment of monies deposited into the Treasury.
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Additionally, the Treasury monitors cash flow, including potential revenues and cash demands over a 45- to 60-day period, on a daily basis, enabling investment staff to anticipate and plan impending investment decisions. Common inflows include tax receipts, miscellaneous fees, investment earnings, federal funding, and funds from revenue generating bodies such as lottery, while common outflows include anticipated payments such as employee payroll, debt service, payments to vendors of goods or services, grant funding such as social service benefits, and Electronic Benefits Transfers (EBT). Exhibit 1.2 illustrates the net flow of cash from the T-Pool for each month of Calendar Years 2015 through 2018, and reveals a predictable flow of funds into and out of the Treasury during the annual cycle, allowing for a stable cash management program. Earlier years were similar in the predictable flow of funds.

Exhibit 1.2: T-Pool Net Cash Flow (Calendar Years 2015 through 2018) Source: Colorado Department of the Treasury’s net monthly cash flow analysis, Colorado State Treasury Investment Division Overview, January 16, 2019.

Exhibit 1.3 shows that while cash balances fluctuate over time, the Treasury’s cash management process effectively ensures daily cash balances generally fall within its target range of $20 to $80 million (as represented by the blue band) and that balances exceeding or falling short of this range are typically short-lived. Between Calendar Years 2011 and 2018, we found that daily bank balances fell within this range more than 75 percent of the time and there were fewer instances in which bank balances significantly deviated from this range after July 2016 than during the prior period.
$550
$350
$150
$50
$250
$450
$650
$850
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
(In Millions)
2015 2016 2017 2018
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Exhibit 1.3: Average Bank Balances (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s cash receipt, disbursement, and bank account records.

Audit Scope and Methodology
The Colorado Office of the State Auditor (State Auditor) contracted with Sjoberg Evashenk Consulting, Inc., to conduct this performance audit pursuant to Section 2-3-103, C.R.S., which authorizes the State Auditor to conduct audits of all departments, institutions, and agencies of state government. The Office of the State Auditor typically conducts an evaluation of the Treasury’s investments at intervals corresponding to changes in the Office’s incumbency. Audit work was performed from May 2019 through August 2019. We appreciate the cooperation provided by the Treasury and its staff during the course of this audit.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on the audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

The objectives of this audit were to analyze the performance of the Treasury’s investments for the period between January 1, 2011 to December 31, 2018; #35..
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determine whether the Treasury’s investment practices, including asset mix, were in compliance with state law, approved investment policies, and prudent industry practice; evaluate the Treasury’s cash management strategies, liquidity needs, and associated management practices; and evaluate the effectiveness of internal controls, including electronic and manual systems used to track and report on investments, investment performance, and cash management.

To accomplish the audit objectives, Sjoberg Evashenk Consulting subcontracted with Analysis Group, Inc., a professional services firm specializing in economic, financial, and strategy consulting. Analysis Group provided general consultative services on behalf of the project team; conducted key analyses of the performance of the Treasury’s investments for the audit period; and evaluated the Treasury’s investment asset mix—including implied risk, diversification and return—in relationship to the Treasury’s statutory objectives to use prudence and care to preserve principal and to secure the maximum rate of interest consistent with safety and liquidity [Section 24-36-113, C.R.S.].

The project team performed the following audit work:
 Interviewed key Treasury personnel, including the Chief Investment Officer, Chief Financial Officer, Controller, and other staff.  Reviewed Colorado Revised Statutes, Treasury Investment Policy Statements (Investment Policy Statement), written procedures and work flows, relevant background information, cash management reports and tools, contracts with investment custodians, and monthly holdings data and investment and performance reports.
 Reviewed business processes related to, and conducted walk-throughs of, investment activities and cash management, including internal controls and electronic and manual information systems used for Treasury investments activities and cash management.
 Obtained and reviewed public quarterly investment reports of the State and other government entities, as well as financial data of various benchmarks used by the State from Bloomberg, Morningstar Direct, Lipper for Investment Management, and Capital IQ.
 Analyzed investment data to evaluate overall investment performance and compliance with the Treasury’s Investment Policy Statements.  Reviewed best practices issued by the National Association of State Auditors, Controllers, and Treasurers (NASACT) and the Government Financial Officers Association (GFOA), as well published information from #35..
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a dozen public sector treasury agencies, including those of local and state governments in the Mountain State region.

We planned our audit work to evaluate the Treasury’s investment activities and its internal controls that were significant to the audit objectives. Our conclusions on the effectiveness of those controls, as well as specific details about the audit work supporting our findings, conclusions, and recommendations, are described in the remainder of this report.

A draft of this report was reviewed by the Treasury. We have incorporated the Treasury’s comments into the report where relevant and appropriate. The written responses to the recommendations and the related implementation dates are the sole responsibility of the Treasury.
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Audit Findings
Chapter 2
According to statute, the primary objectives of the Colorado Department of the Treasury (Treasury) in managing its investment portfolios are to “use prudence and care to preserve the principal and to secure the maximum rate of interest consistent with safety and liquidity” [Section 24-36-113, C.R.S.]. To guide the investment practices of the Treasury and its staff, the State Treasurer adopts and occasionally modifies formal Investment Policy Statements that meet these objectives and align with Colorado’s Uniform Prudent Investor Act. Specifically, the Uniform Prudent Investor Act states that “A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution” [Section 15-1.1-101 et seq., C.R.S.].

To ensure transparency in public sector investment practices, it is common in the industry to establish quarterly reporting practices that address market conditions, economic developments, investment details, and overall returns on investments.

Consistent with this, statute requires the State Treasurer to report to the Governor, on a quarterly basis, the condition of the State Treasury, the amount of money in the Treasury, the amount of securities held in custody, a list of the funds and accounts carried on the records of the Treasury, and such other information deemed appropriate [Section 24-22-107(1), C.R.S.].

These reports to the Governor focus on providing a general statement of financial condition, bank operating balances, and the book value of the Treasury’s combined investments. Exhibit 2.1 illustrates the Treasury’s quarterly report to the Governor as of December 31, 2018, and reflects nearly $7.9 billion in investments and a bank operating balance of more than $36 million.
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Exhibit 2.1: Treasury’s Quarterly Report to the Governor (December 31, 2018, in millions)
Account Title Book Value Balance
Bank Operating Account $36.4
Investments $7,865.0
Miscellaneous Government Guarantee $10.1
Reverse Repurchase Agreements $0
Agency Collateralized Mortgage Obligations $0.4
Commercial Paper $1,310.8
Us Treasury Notes $779.5
Accrued Interest Purchased $2.1
Bankers’ Acceptance $0
U.S. Treasury Bills $273.8
Federal Agencies $560.4
Asset-Backed Securities $978.0
Money Market $350.0
Bank Notes $503.9
Corporates $3,095.9
Certificates of Deposit $0
Total Investments $7,865.0
Source: Colorado Department of the Treasury’s Quarterly Report to the Governor, December 31, 2018.

In addition to submitting quarterly reports to the Governor’s Office, the Treasury also prepares and makes available on its website Quarterly Performance Reports that inform its stakeholders and the public of the performance of its investments.

These reports present key information designed to demonstrate each portfolio’s performance and compliance with respect to the Treasury’s Investment Policy Statements. Each includes a snapshot of each portfolio’s investment values (market and book value), asset mix (e.g., corporate bonds and notes, treasuries, asset backed securities, etc.), average maturity, overall credit quality of each portfolio, and monthly yield as compared to established benchmarks.

Our review found the Colorado Treasurer’s Investment Policy Statements to be consistent with statutory requirements and sound investment practice, and that the Treasury had implemented effective controls over its cash management practices and investment transactions. We also reviewed the performance of each portfolio separately and as a whole, and found that the portfolios have generally achieved the Treasury Investment Program’s statutory objectives of legality, safety, liquidity, and yield.

However, this audit found that, when considered individually, the performance of each of the three portfolios actively managed by the Treasury as of the end of 2018 (i.e., the T-Pool, the Public School Permanent Fund, and the Unclaimed Property Tourism Fund) was mixed. There were also some instances in which portfolio holdings did not comply with the Treasury’s Investment Policy Statement parameters. In this chapter, we discuss both issues in two findings; the first #35..
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describes the Treasury’s investment performance and the second describes the Treasury’s compliance with investment policies. In both findings, this audit also revealed opportunities for the Treasury to improve upon its current methods of reporting investment practices and performance.

Investment Performance
The mission of the Treasury’s Investment Division is to provide an Investment Program that is safe, prudent, and appropriate for the public purpose of each fund, with rates of return consistently at or above performance benchmarks.

What audit work was performed and what was the purpose? To evaluate the performance of Treasury investments, we identified the methods employed by Treasury staff to track and report on investments and investment performance, obtained and reviewed monthly holdings reports, determined annual returns of the Treasury’s three actively managed portfolios—the T-Pool, the Public School Permanent Fund, and the Unclaimed Property Tourism Fund—and compared the performance of each portfolio with benchmarks set by the Treasury.

We also reviewed the Treasury’s published Quarterly Performance Reports, which describe the condition of the State Treasury, the amount of money in the Treasury, the yield generated by each portfolio, and the portfolio’s credit quality and average maturity, along with other key characteristics.

The purpose of the audit work was to evaluate the performance of the Treasury’s investments and to determine whether the Treasury’s investments, consistent with its mission, achieved rates of return at or above performance benchmarks. The Treasury’s performance benchmarks include both yield and total return benchmarks.

How were the results of the audit work measured?
We reviewed the Treasury’s reported investment performance against the benchmarks specified in the Treasury’s Investment Policy Statements. The Statements contain two sets of benchmarks:
 A yield benchmark, which measures the percentage increase or decrease a portfolio generates during a given period. Measuring the Treasury’s performance with respect to its yield benchmark is a relevant indicator of performance because, as is described in the background section of this report, the Treasury manages the T-Pool and the Unclaimed Property Tourism Fund portfolios with a strategy specifically designed to maximize yield and optimize cash flows from interest income and realized capital gains. Exhibit 2.2 shows the Treasury’s yield benchmarks.
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Exhibit 2.2: Yield Benchmarks Established by the Treasury (Calendar Years 2010, 2017, 2018)
Portfolio Benchmark—12 Month Moving Average of the:

T-Pool Bond Sub-Portfolio Constant Maturity Yield of the 2 year U.S. Treasury T-Pool Cash Sub-Portfolio 30 day U.S. Treasury
T-Pool Portfolio Constant Maturity Yield of the 1 year U.S. Treasury Public School Permanent Fund
Constant Maturity Yield of the 5 year U.S. Treasury (2011- 2017)
Constant Maturity Yield of the 7 year U.S. Treasury (2018) Unclaimed Property Tourism Fund Constant Maturity Yield of the 7 year U.S. Treasury Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements and Quarterly Performance Reports.
 A total return benchmark, which focuses on the rate of return and measures the percent change in the value of a portfolio over time, accounts for both the yield generated by the investment and the increase or decrease in value experienced as a result of market conditions. Measuring the Treasury’s performance with respect to its total return benchmark is also a relevant indicator of performance because, particularly to the extent that investments are liquidated before they reach maturity, it provides an important indicator of the overall value, risk, and return characteristics of a portfolio.

The Government Finance Officers Association outlines several best practices for the reporting of total return performance in the public sector, including:
 Evaluating and reporting portfolio rates of return along with comparisons to its established total return benchmarks on a quarterly basis.
 Using total return benchmarks that have a composition that is similar to the portfolio holdings, and closely resemble the policy constraints described in the Investment Policy Statements and management practices in terms of duration or maturity, security types and allocations, and credit quality.
 Using total return benchmarks that are transparent, clearly defined, and available—including the names and weights of securities or indices that constitute the benchmark, historical data regarding past returns—and that have published risk characteristics so an investor can compare portfolio risks and potential returns against benchmark risks and potential returns.

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Exhibit 2.3: Total Return Benchmarks Established by the Treasury (Calendar Years 2010, 2017, 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s Investment Policy Statements.

In general, yield and total return performance indicators will produce similar results in as much as a portfolio holds investments to maturity; to the extent the portfolio’s holdings are subject to market conditions—e.g., the sale or liquidation of an investment before it reaches maturity—yield and total return indicators are more likely to differ. Comparing a portfolio’s total return to its benchmark is a way of measuring the potential impact of market conditions, and investment decisions, on the value of the portfolio. We provide the Treasury’s investment results compared to both yield and total return benchmarks.

What did the audit work find?
As described earlier, the Treasury’s Investment Policy Statements and practices were consistent with statutory requirements and sound investment practice, and generally achieved the Treasury Investment Program’s statutory objectives of 2010 2017 2018
T-Pool Does not use a total return
benchmark
Does not use a total return
benchmark
Bloomberg Barclays US
Aggregate 1-3 Year Index
T-Pool
Bond SubPortfolio
Composite Benchmark that
includes the following indices:
70% Treasuries/Agencies, 1-5
Years Index
20% U.S. Corporates A-AAA
RATED, 1-5 Years Index
10% Asset-backed Securities, 0-3
Years, Fixed-Rate Index
Bloomberg Barclays US
Government/Credit 1-5 Year Index
Bloomberg Barclays US
Government/Credit 1-5 Year
Index
T-Pool
Cash SubPortfolio
Does not use a total return
benchmark
Does not use a total return
benchmark
Bloomberg Barclays Short
Term Index 1-3 Months
Public
School
Permanent
Fund
Composite Benchmark that
includes the following indices:
37% Merrill Lynch U.S. Treasury,
1-10 Years Index
34% Merrill Lynch Mortgages, 0-10
Years WAL Index
19% Merrill Lynch AAA U.S.

Agencies, 1-10 Years Index
10% Merrill Lynch U.S.

Corporates, A-AAA Rated, 1-
10 Years Index
Composite Benchmark that
includes the following indices:
37% Merrill Lynch U.S. Treasury,
1-10 Years Index
34% Merrill Lynch Mortgages, 0-10
Years WAL Index
19% Merrill Lynch AAA U.S.

Agencies, 1-10 Years Index
10% Merrill Lynch U.S.

Corporates, A-AAA Rated, 1-
10 Years Index
Bloomberg Barclays US
Aggregate
Unclaimed
Property
Tourism
Fund
Composite Benchmark that
includes the following indices, both
A-rated and above:
65% Merrill Lynch U.S., Domestic
Master 1-10 Years
35% Merrill Lynch U.S., Corporate
& Government, 10+ years
Bloomberg Barclays US
Aggregate Index
Bloomberg Barclays US
Aggregate Total Return
Index
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legality, safety, liquidity, and yield. At the same time, this audit found that the Treasury could improve the manner in which it reports on its investment performance. Our analysis revealed three areas for improvement.

First, the Treasury did not publicly report on its performance using total rates of return. Instead, for all of the quarterly reports issued between Calendar Years 2011 and 2018, the Treasury only reported the portfolio’s book yield, which measures the percentage increase or decrease a portfolio generates during a given period, compared to its yield benchmark. For each of the three portfolios, a comparison of the reported book yield to the established benchmarks shows the Treasury outperforming the benchmark at nearly every point over the eight-year period under review. However, our examination of total return presents a more nuanced picture in which the Treasury both outperformed and underperformed established benchmarks in different years.

The following Exhibits illustrate how the Treasury reported its performance based on book yield between Fiscal Years 2011 through 2018 for each of its three key portfolios, followed by Exhibits showing the annual total return for each portfolio.

T-Pool. Exhibit 2.4 illustrates the annual book yield the Treasury reported for the T-Pool between Fiscal Years 2011 and 2018, and shows the Treasury’s portfolio exceeding its benchmark (the 12 month moving average of the 1 year U.S. Treasury at the end of period) through most of the eight-year period.

Exhibit 2.4: The Treasury’s Reported Book Yield and Benchmark for the TPool Portfolio (Fiscal Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s Quarterly Reports.

Note: * The benchmark used by the Treasury in this comparison is the benchmark in effect at the time, the 12 month moving average of the 1 year U.S. Treasury, as reflected in Exhibit 2.2. The yield benchmark for this portfolio remained constant between Fiscal Years 2011 and 2018.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%
2011 2012 2013 2014 2015 2016 2017 2018
Book Yield Performance Benchmarks
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In comparison, Exhibit 2.5 showing annual total returns reveals generally mixed performance of the T-Pool. Specifically, the T-Pool underperformed total return benchmarks in five years and outperformed in three years during Calendar Years 2011 through 2018.

Exhibit 2.5: Comparison of T-Pool Total Rate of Return vs. the Treasury’s Benchmark (Calendar Years 2011 through 2018)
Source: Auditor analysis of the Colorado Department of the Treasury’s Annual Returns; Lipper for Investment Management.

Note: * The total return benchmark used by the Treasury in this comparison is reflected in Exhibit

2.3. The Treasury changed its benchmarks between Calendar Years 2011 through 2018.

Another way to evaluate the portfolio is through the compound annual growth rate (CAGR or compound growth rate). The compound growth rate is the mean annual growth rate of an investment over a multi-year period, and can be used to compare the performance of various investments over an extended period. Based on Treasury’s records, the compound growth rate of the T-Pool between Calendar Years 2011 and 2018 was 1.00 percent, which was less than the 1.12 percent compound growth rate of its benchmarks, or the mean annual growth rate of the aggregated benchmarks, over the same period. While the Treasury’s reported comparisons of book yield to its yield benchmark showed the T-Pool exceeding its benchmark, the compound growth rate shows that, overall, the T-Pool underperformed its benchmarks over the eight-year period.

Public School Permanent Fund. Exhibit 2.6 illustrates the annual book yield reported for the Public School Permanent Fund between Fiscal Years 2011 and 2018, and shows the Treasury’s portfolio exceeding its benchmark through the eight-year period.

0.0%

0.5%

1.0%

1.5%

2.0%
2011 2012 2013 2014 2015 2016 2017 2018
Total Rate of Return Total Return Benchmark*
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Exhibit 2.6: The Treasury’s Reported Book Yield and Benchmark for the Public School Permanent Fund Portfolio (Fiscal Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s Quarterly Reports.

Note: * The benchmark used by the Treasury in this comparison is the 12 month moving average of the constant maturity yield of the 5 year U.S. Treasury for the period between Fiscal Years 2011 and 2017, and the constant maturity yield of the 7 year U.S. Treasury for Fiscal Year 2018.

Exhibit 2.7 shows that the annual rate of return for the Public School Permanent Fund portfolio generally outperformed its benchmark over the eight-year period, which is consistent with the book yield comparison above.

Exhibit 2.7: Comparison of Public School Permanent Fund Total Rate of Return vs the Treasury’s Benchmark (Calendar Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s Annual Returns; Lipper for Investment Management.

Note: * The total return benchmark used by the Treasury in this comparison is the benchmark in effect at the time, as reflected in Exhibit 2.3. The Treasury changed its benchmark in 2018. ** The returns reported by the Treasury do not include assets held in the T-Pool prior to 2018.

The compound growth rate of the Public School Permanent Fund during this period was 2.60 percent, which was greater than the 2.15 percent compound growth rate of its benchmark over the same period. The Public School Permanent Fund

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%
2011 2012 2013 2014 2015 2016 2017 2018
Book Yield Performance Benchmark*
-4.0%
-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%
2011 2012 2013 2014 2015 2016 2017 2018
Total Rate of Return Total Return Benchmark*
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portfolio experienced a negative return in 2013, consistent with its performance benchmark, coinciding with a significant increase in U.S. Treasury interest rates that, as a result, negatively impacted the market value of the portfolio’s holdings.

Unclaimed Property Tourism Fund. Exhibit 2.8 illustrates the annual book yield reported for the Unclaimed Property Tourism Fund portfolio between Fiscal Years 2011 and 2018, and shows the Treasury’s portfolio exceeding its benchmark throughout the eight-year period.

Exhibit 2.8: The Treasury’s Reported Book Yield and Benchmark for the Unclaimed Property Tourism Fund Portfolio (Fiscal Years 2011 through 2018) Source: Auditor analysis of the Colorado Department of the Treasury’s Quarterly Reports.

Note: * The benchmark used by the Treasury in this comparison is the benchmark in effect at the time, the 12 month moving average of the constant maturity yield of the 7 year U.S. Treasury, as reflected in Exhibit 2.2. The Treasury’s yield benchmark for this portfolio remained constant between Fiscal Years 2011 and 2018.

Exhibit 2.9 below shows that the Unclaimed Property Tourism Fund slightly underperformed compared to its contemporaneous total return benchmarks in four years and slightly outperformed in the other four years during the Review Period.

Modesto City CouncilApril 5, 2022

Modesto City Council
April 5, 2022