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PROPOSAL:

Approve Modification of Compensation Package for Certain Designated Deputies to Equalize Benefits

SYNOPSIS:

Three Designated Deputies are serving under contracts originally executed several years ago, the terms of which provide lower benefits than are currently afforded to the remaining Designated Deputies. The Acting Executive Officer proposes to modify the compensation package for these individuals to update benefit provisions consistent with those provided to all other Designated Deputies. This action is to approve the modified compensation package for these Designated Deputies.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

Approve adjustment to the compensation package for Joseph V. Contaoi, Dr. Chung S. Liu and Dr. Vinita C. Mathur to provide benefits consistent with those currently provided to all other Designated Deputies, effective October 9, 1998.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

There are three Designated Deputies [ Joseph V. Contaoi, Director of Administrative & Human Resources Dr. Chung S. Liu, Assistant Deputy Executive Officer/Technology Advancement Dr. Vinita C. Mathur, Director of Information Systems] presently serving under Executive Management Agreements executed on varying dates prior to the June, 1997 approval by the Board of updated contract language. The older contract language results in lesser benefits than are afforded to all other Designated Deputies in either or both of two areas: the Section 457 deferred compensation retirement program and life insurance.

For the Section 457 deferred compensation program, the current benefits provided to most Designated Deputies is that the District shall fund a contribution equal to three times the Designated Deputy's contribution to a combined maximum permitted by law. The former benefit was a District funding contribution of one-half the Designated Deputy’s contribution. In addition, the law relating to Section 457 programs changes in 1998 to increase the maximum allowable contribution from $7,500 to $8,000, thereby rendering the language specifying a $7,500 maximum obsolete. Based on the current allowable maximum contribution of $8,000, and depending on the individual employee’s degree of participation in the Section 457 program, currently, the maximum benefit increase would be $2,250 annually, or a total of $6,750 for three Designated Deputies. That amount could increase with increases in the maximum allowable contribution.

For the life insurance benefit, one Designated Deputy is affected. The benefit would change the life insurance coverage from $245,000 of term life insurance for which the District-paid monthly premium is $74.25 to $245,000 of life insurance of the Deputy’s choice, with a District-paid monthly premium not to exceed $250.00. All other Designated Deputies have this benefit. The annual cost increase for this benefit is $2,109.

The Acting Executive Officer proposes to modify the compensation package for Joseph V. Contaoi, Dr. Chung S. Liu, and Dr. Vinita C. Mathur to bring their benefits to parity with other Designated Deputies.

Fiscal Impacts

With these actions, all Designated Deputies will have the same benefit package. The maximum possible annual cost increase is $8,109. Sufficient funds are budgeted each fiscal year for salaries and benefits.

Attachments

Modification to Executive Management Agreement for Joseph V. Contaoi, Dr. Chung S. Liu, Dr. Vinita C. Mathur.

MODIFICATION TO
EXECUTIVE MANAGEMENT AGREEMENT
between
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
and
DESIGNATED DEPUTY

Director of Administrative and Human Resources

1. Recitals

   a. The South Coast Air Quality Management District ("District") and Joseph V. Contaoi ("Designated Deputy") have previously executed an Executive Management Agreement dated February 10, 1994 for a term terminating three years thereafter.
   

   b. The Agreement was modified on May 10, 1996 to extend the term to July 31, 1999.
   

   c. Paragraph I.D.11.d. of the Executive Management Agreement executed February 10, 1994 provides as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. During the term of this Agreement, the District shall fund a matching contribution equal to the Designated Deputy's contribution to a maximum of $3,750 per year. Designated Deputy may defer a minimum of $10 per biweekly pay period, or a maximum of $7,500 (including District's matching contribution) per calendar year. Designated Deputy can also defer up to $15,000 per year during the last three calendar years of plan participation prior to retirement from District service, provided Designated Deputy has not deferred the maximum allowed from the date he or she became eligible for participation in the plan (catch-up provision). In no event will the District's contribution exceed $3,750 per year.
   

   d. In 1997 the Board approved revised language for Executive Management Agreements as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. Designated Deputy may exercise a right to increase his/her deferred compensation deduction as set forth in the Executive Management Agreement if the Designated Deputy does so in accordance with the rules of the administrator of the deferred compensation plan to take effect on an allowable pay period pursuant to said rules. (This might result in the Designated Deputy maximizing the employer contribution match for the calendar year.) During the term of this Agreement, the District shall fund a contribution equal to three times the Designated Deputy's contribution to a combined maximum permitted by law. Designated Deputy may defer a minimum of $10 per biweekly pay period up to the maximum permitted by this contract and the law per calendar year. Designated Deputy can also defer up to $15,000 per year during the last three calendar years of plan participation prior to retirement from District service, provided Designated Deputy has not deferred the maximum allowed from the date he or she became eligible for participation in the plan (catch-up provision).
   

   e. In 1998 the law changed to increase the maximum allowable contribution to a Section 457 deferred compensation plan from $7,500 to $8,000.
   

1. Modification:

   The parties therefore agree to modify the Agreement, effective October 8, 1998, to replace the language of paragraph I.D.11.d. with that approved by the Board in 1997 and as indicated in sub-paragraph 1.d. hereinabove. All other provisions of the above-referenced Agreement shall remain in full force and effect.

Executed at Diamond Bar, California on the 9^th day of October, 1998

By: ____________________________

MODIFICATION TO
EXECUTIVE MANAGEMENT AGREEMENT
between
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
and
DESIGNATED DEPUTY

Director of Information Management

1. Recitals:

   a. The South Coast Air Quality Management District ("District") and Dr. Vinita C. Mathur ("Designated Deputy") have previously executed an Executive Management Agreement dated December 4, 1992 for a term terminating three years thereafter.
   

   b. The Agreement was modified on December 12, 1995 to extend the term to January 31, 1999.
   

   c. Paragraph I.D.11.d. provides as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. During the term of this Agreement, the District shall fund a matching contribution equal to the Designated Deputy's contribution to a maximum of $3,750 per year. Designated Deputy may defer a minimum of $10 per biweekly pay period, or a maximum of $7,500 (including District's matching contribution) per calendar year. Designated Deputy can also defer up to $15,000 per year during the last three calendar years of plan participation prior to retirement from District service, provided Designated Deputy has not deferred the maximum allowed from the date he or she became eligible for participation in the plan (catch-up provision). In no event will the District's contribution exceed $3,750 per year.
   

   d. In 1997 the Board approved revised language for Executive Management Agreements as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. Designated Deputy may exercise a right to increase his/her deferred compensation deduction as set forth in the Executive Management Agreement if the Designated Deputy does so in accordance with the rules of the administrator of the deferred compensation plan to take effect on an allowable pay period pursuant to said rules. (This might result in the Designated Deputy maximizing the employer contribution match for the calendar year.) During the term of this Agreement, the District shall fund a contribution equal to three times the Designated Deputy's contribution to a combined maximum permitted by law. Designated Deputy may defer a minimum of $10 per biweekly pay period up to the maximum permitted by this contract and the law per calendar year. Designated Deputy can also defer up to $15,000 per year during the last three calendar years of plan participation prior to retirement from District service, provided Designated Deputy has not deferred the maximum allowed from the date he or she became eligible for participation in the plan (catch-up provision).
   

   e. In 1998 the law changed to increase the maximum allowable contribution to a Section 457 deferred compensation plan from $7,500 to $8,000.
   

1. Modification:

   The parties therefore agree to modify the Agreement, effective October 9, 1998, to replace the language of paragraph I.D.11.d. with that approved by the Board in 1997 and as indicated in sub-paragraph 1.d. hereinabove. All other provisions of the above-referenced Agreement shall remain in full force and effect.

Executed at Diamond Bar, California on the 9^th day of October, 1998

By: ____________________________

MODIFICATION TO
EXECUTIVE MANAGEMENT AGREEMENT
between
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
and
DESIGNATED DEPUTY

Assistant Deputy Executive Officer/Technology Advancement

1. Recitals:

   a. The South Coast Air Quality Management District ("District") and Dr. Chung S. Liu ("Designated Deputy") have previously executed an Executive Management Agreement dated August 2, 1991 for a term terminating three years thereafter.
   

   b. The Agreement was modified on July 8, 1994 to extend the term to December 1, 1994, was further modified on November 28, 1994 to extend the term to July 31, 1997, and was further modified on May 10, 1996 to change the job responsibilities to Assistant Deputy Executive Officer/Technology Advancement, increase salary, and extend the term through July 31, 1999.
   

   c. Paragraph I.D.11.d. of the Agreement executed August 2, 1991 provides as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. During the term of this Agreement, the District shall fund a matching contribution equal to the Designated Deputy's contribution to a maximum of $3,750 per year. Designated Deputy may defer a minimum of $10 per biweekly pay period, or a maximum of $7,500 per calendar year. Designated Deputy can also defer up to $15,000 during one of the last three calendar years of plan participation prior to retirement from District service.
   

   d. In 1997 the Board approved revised language for Executive Management Agreements as follows:
   
   Deferred Compensation. On a voluntary basis, Designated Deputy is eligible to participate in the District's deferred compensation plan. Designated Deputy may exercise a right to increase his/her deferred compensation deduction as set forth in the Executive Management Agreement if the Designated Deputy does so in accordance with the rules of the administrator of the deferred compensation plan to take effect on an allowable pay period pursuant to said rules. (This might result in the Designated Deputy maximizing the employer contribution match for the calendar year.) During the term of this Agreement, the District shall fund a contribution equal to three times the Designated Deputy's contribution to a combined maximum permitted by law. Designated Deputy may defer a minimum of $10 per biweekly pay period up to the maximum permitted by this contract and the law per calendar year. Designated Deputy can also defer up to $15,000 per year during the last three calendar years of plan participation prior to retirement from District service, provided Designated Deputy has not deferred the maximum allowed from the date he or she became eligible for participation in the plan (catch-up provision).
   

   e. In 1998 the law changed to increase the maximum allowable contribution to a Section 457 deferred compensation plan from $7,500 to $8,000.
   

   f. Paragraph I.D.3. of the Executive Management Agreement executed August 2, 1991 further provides as follows:
   
   Life Insurance. Designated Deputy is covered by two (2) life insurance policies: (1) A $5,000 life insurance policy; and (2) a $50,000 combination life insurance and dismemberment policy. The District agrees to pay the premium costs for these plans during the term of this Agreement. In addition, the Designated Deputy shall receive $245,000 worth of term life insurance provided the Designated Deputy passes any requirements so stated by the insurance company.
   

   g. In 1991 the Board approved a staff recommendation that all future Executive Management Agreements would contain the following life insurance provision, which also was included in the 1997 revised boilerplate for Executive Management Agreements:
   
   Life Insurance. Designated Deputy is covered by two (2) life insurance policies: (1) A $5,000 life insurance policy; and (2) a $50,000 combination life insurance and dismemberment policy. The District agrees to pay the premium costs for these plans during the term of this Agreement. In addition, the Designated Deputy shall receive $245,000 worth of life insurance of the Designated Deputy's choice, provided the Designated Deputy passes any requirements so stated by the insurance company. The premium to be paid by the District for the additional life insurance shall not exceed $250 per month. In the event the Designated Deputy elects a life insurance program which may be portable, such policy or policies will be deemed portable to the Designated Deputy upon termination or retirement from District services.
   

   h. Since the expiration of the Executive Management Agreement between Chung S. Liu and District in 1994, a new Agreement has not been executed and changes have been effected by modifications. The change in life insurance language was inadvertently omitted in such modifications.
   

1. Modification:

   The parties therefore agree to modify the Executive Management Agreement, effective October 8, 1998, to replace the language of paragraph I.D.11.d. related to Deferred Compensation with that approved by the Board in 1997 as indicated in sub-paragraph 1.d. hereinabove and to replace the language relating to Life Insurance as set forth in sub-paragraph 1.g. hereinabove. All other provisions of the above-referenced Agreement shall remain in full force and effect.

Executed at Diamond Bar, California on the 9^th day of October, 1998

By: ____________________________

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