Report 2015-102 Recommendation 8 Responses

Report 2015-102: Central Basin Municipal Water District: Its Board of Directors Has Failed to Provide the Leadership Necessary for It to Effectively Fulfill Its Responsibilities (Release Date: December 2015)

Recommendation #8 To: Central Basin Municipal Water District

To help it maintain its current insurance coverage and better position it to negotiate for more cost-effective and appropriate coverage in the future, the board should immediately adopt a policy requiring a four-fifths majority to terminate the district's general manager. Further, the board should review the district's insurance coverage annually and renegotiate costs and coverage amounts as necessary, particularly as the district resolves outstanding legal claims against it.

6-Month Agency Response

The four-fifths majority vote for the General Manager's termination policy was presented to the Board for consideration on January 25, 2016. The Board approved a four-fifths majority vote to terminate the current General Manager. This item was presented to the Board on March 15, 2016 for incorporation into the Administrative Code and Resolution No. 3-16-890 was adopted.

Regarding review of insurance coverages, the District sought coverage from three sources: ACWA/JPIA, Special Districts Risk Management Authority (SDRMA) and from the private insurance market through Keenan & Associates. As part of the renewal process, the Board discussed insurance coverages at the April 25, 2016 Board Meeting. At this same meeting, the Board authorized the General Manager to secure comprehensive coverages at appropriate price levels for FY2017. At the May 2, 2016 ACWA/JPIA Board Meeting, the ACWA/JPIA Board voted to postpone discussion of District's reinstatement until to December 2016. SDRMA approved the District's participation in the SDRMA Worker's Compensation pool and denied coverage for property and general liability coverages. The District secured all appropriate coverages for FY2017 with the private market through Keenan & Associates. To ensure that this recommendation occurs annually, staff will include insurance coverage review as part of the Budget process.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The four-fifths majority vote for the General Manager's termination policy was presented to the Board on January 25 for consideration. An additional recommendation was added to include a four-fifths vote for hiring a new General Manager, with the proviso of reverting back to a majority vote upon the termination of the new General Manager. This item was approved at the January 25, 2016 Board meeting.

On the matter of review of the District's insurance coverage annually, staff has begun the annual renewal process with Keenan & Associates, the District's broker. Keenan will be reviewing all proposals received from the insurance markets and that information will be presented to the Board of Directors for discussion in April 2016. Additionally, the District is scheduled to make a presentation on March 30, 2016 to ACWA/JPIA for them to consider the District's reinstatement into their insurance program. Lastly, this step will be added to the Budget Policy process currently in development.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2015-102

Agency responses received are posted verbatim.