Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2024-02-13 Policy & Services Committee Agenda Packet
POLICY AND SERVICES COMMITTEE Special Meeting Tuesday, February 13, 2024 Council Chambers & Hybrid 6:30 PM Policy and Services Committee meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. To maximize public safety while still maintaining transparency and public access, members of the public can choose to participate from home or attend in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person. T h e m e e t i n g w i l l b e b r o a d c a s t o n C a b l e T V C h a n n e l 2 6 , l i v e o n YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/94618744621) Meeting ID: 946 1874 4621 Phone: 1(669)900‐6833 PUBLIC COMMENTS Public comments will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to city.council@CityofPaloAlto.org and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. CALL TO ORDER PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. ACTION ITEMS 1.Approval of Office of City Auditor FY2024 Task 4 Task Orders Supplemental Memo 2.The Office of the City Auditor Presentation of the Quarterly Report for the Period of October ‐ December 2023 3.City Council Referral to Discuss and Recommend City Council Procedures and Protocols on: Council Discretionary Expenditures – Consideration of the establishment of appropriate parameters for Council discretionary expenditures and whether to allocate $2,000 annually from the City Council contingency fund for each Council member to decide its purpose. 4.City Council Referral to Discuss the Creation of a Citizen Advisory Committee to Evaluate City Council Member Compensation above SB 329 Guidelines FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 946‐1874‐4621 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. 1 Special Meeting February 13, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas. POLICY AND SERVICES COMMITTEESpecial MeetingTuesday, February 13, 2024Council Chambers & Hybrid6:30 PMPolicy and Services Committee meetings will be held as “hybrid” meetings with the option toattend by teleconference/video conference or in person. To maximize public safety while stillmaintaining transparency and public access, members of the public can choose to participatefrom home or attend in person. Information on how the public may observe and participate in themeeting is located at the end of the agenda. Masks are strongly encouraged if attending inperson. T h e m e e t i n g w i l l b e b r o a d c a s t o n C a b l e T V C h a n n e l 2 6 , l i v e o nYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/94618744621)Meeting ID: 946 1874 4621 Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance tocity.council@CityofPaloAlto.org and will be provided to the Council and available for inspectionon the City’s website. Please clearly indicate which agenda item you are referencing in yoursubject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. CALL TO ORDER PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. ACTION ITEMS 1.Approval of Office of City Auditor FY2024 Task 4 Task Orders Supplemental Memo 2.The Office of the City Auditor Presentation of the Quarterly Report for the Period of October ‐ December 2023 3.City Council Referral to Discuss and Recommend City Council Procedures and Protocols on: Council Discretionary Expenditures – Consideration of the establishment of appropriate parameters for Council discretionary expenditures and whether to allocate $2,000 annually from the City Council contingency fund for each Council member to decide its purpose. 4.City Council Referral to Discuss the Creation of a Citizen Advisory Committee to Evaluate City Council Member Compensation above SB 329 Guidelines FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 946‐1874‐4621 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. 2 Special Meeting February 13, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas. POLICY AND SERVICES COMMITTEESpecial MeetingTuesday, February 13, 2024Council Chambers & Hybrid6:30 PMPolicy and Services Committee meetings will be held as “hybrid” meetings with the option toattend by teleconference/video conference or in person. To maximize public safety while stillmaintaining transparency and public access, members of the public can choose to participatefrom home or attend in person. Information on how the public may observe and participate in themeeting is located at the end of the agenda. Masks are strongly encouraged if attending inperson. T h e m e e t i n g w i l l b e b r o a d c a s t o n C a b l e T V C h a n n e l 2 6 , l i v e o nYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/94618744621)Meeting ID: 946 1874 4621 Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance tocity.council@CityofPaloAlto.org and will be provided to the Council and available for inspectionon the City’s website. Please clearly indicate which agenda item you are referencing in yoursubject line.PowerPoints, videos, or other media to be presented during public comment are accepted onlyby email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received,the Clerk will have them shared at public comment for the specified item. To uphold strongcybersecurity management practices, USB’s or other physical electronic storage devices are notaccepted.CALL TO ORDERPUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. ACTION ITEMS1.Approval of Office of City Auditor FY2024 Task 4 Task Orders Supplemental Memo2.The Office of the City Auditor Presentation of the Quarterly Report for the Period ofOctober ‐ December 20233.City Council Referral to Discuss and Recommend City Council Procedures and Protocolson: Council Discretionary Expenditures – Consideration of the establishment ofappropriate parameters for Council discretionary expenditures and whether to allocate$2,000 annually from the City Council contingency fund for each Council member todecide its purpose.4.City Council Referral to Discuss the Creation of a Citizen Advisory Committee to EvaluateCity Council Member Compensation above SB 329 GuidelinesFUTURE MEETINGS AND AGENDASMembers of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 946‐1874‐4621 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. 3 Special Meeting February 13, 2024 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.CityofPaloAlto.org/agendas. 3 7 5 8 Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Auditor Meeting Date: February 13, 2024 Report #:2312-2460 TITLE Approval of Office of City Auditor FY2024 Task 4 Task Orders (CEQA Status - Not a Project) RECOMMENDATION The City Auditor recommends that the Policy and Services Committee recommend the City Council approve the following Task 4 Task Orders, identified in the Audit Plan Report: •TASK ORDER FY24-4.23 Recruitment and Succession Planning •TASK ORDER FY24-4.24 Grant Management •TASK ORDER FY24-4.25 Emergency Preparedness •TASK ORDER FY24-4.26 Utility Billing •TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) BACKGROUND The Task 4, Execute Annual Audit Plan, in the agreement between the City of Palo Alto (City) and Baker Tilly US, LLP (Baker Tilly)1 states, “Conduct a minimum number of internal audits in accordance with each approved annual audit plan based on the risk assessments. Each internal audit will commence only upon the City’s approval of a Task Order (which may be at the task or sub-task level) as required by this Agreement. Each internal audit requires the preparation of a written report for review by the City Manager, City Attorney and appropriate Council committee, and review/approval by the City Council as required.” 1 Baker Tilly US, LLP, Agreement for Professional Services, C21179340; https://www.cityofpaloalto.org/files/assets/public/v/5/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2022/20220509/20220509pccsmamended-linked.pdf Item 1 Item 1 Staff Report Packet Pg. 4 3 7 5 8 ANALYSIS The Office of the City Auditor (OCA) is seeking approval from the Policy and Services Committee of the following Task Orders for internal audits listed in the Fiscal Year 2024 audit plan that was approved by the City Council on January 22, 20242: •TASK ORDER FY24-4.23 Recruitment and Succession Planning The preliminary audit objectives include: •Determine the efficiency and effectiveness of the recruitment and hiring process •Determine whether a formal succession plan and related policies procedures are in place •TASK ORDER FY24-4.24 Grant Management The preliminary audit objective is to determine whether the City has adequate internal controls to manage the grant lifecycle efficiently and effectively •TASK ORDER FY24-4.25 Emergency Preparedness The preliminary audit objective is to determine whether the City is working to prevent wildfire and adequately prepared to respond to wildfire as part of the City’s emergency management plan •TASK ORDER FY24-4.26 Utility Billing The preliminary audit objectives include: •Determine whether the internal controls over the utility billing process are adequate and working effectively to ensure billing is accurate and in compliance with the City's policy and regulations •Determine whether billing adjustments are properly supported and approved •TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) The preliminary audit objective is to determine whether the internal controls over the payment card processing are adequate and working effectively for the City and any third party service provider 2 City Council, January 22, 2024, Agenda Item #9, SR # 2311-2304 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13333 Item 1 Item 1 Staff Report Packet Pg. 5 3 7 5 8 FISCAL/RESOURCE IMPACT Work recommended in these tasks is within both the approved scope and compensation of the agreement with Baker Tilly and funding levels in the Fiscal Year 2024 operating budget for the OCA. Management has expressed a concern that multiple audits will be in progress simultaneously for the duration of this fiscal year. Staff will therefore work with the OCA to sequence audits to minimize conflicts. STAKEHOLDER ENGAGEMENT No stakeholder outreach was necessary to create task orders for the tasks described in the signed contract. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by CEQA because the Auditor task orders are administrative activities that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5). ATTACHMENTS Attachment A: TASK ORDER FY24-4.23 Recruitment and Succession Planning Attachment B: TASK ORDER FY24-4.24 Grant Management Attachment C: TASK ORDER FY24-4.25 Emergency Preparedness Attachment D: TASK ORDER FY24-4.26 Utility Billing Attachment E: TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) APPROVED BY: Adriane D. McCoy, City Auditor Item 1 Item 1 Staff Report Packet Pg. 6 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.23 Recruitment and Succession Planning Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.23 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: January 1, 2024 COMPLETION: June 30, 2024 4 TOTAL TASK ORDER PRICE: $58,890 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Attachment A: TASK ORDER FY24-4.23 Recruitment and Succession Planning Packet Pg. 7 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Recruitment and Succession Planning involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Control Review and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary • Assess the audit risk • Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Attachment A: TASK ORDER FY24-4.23 Recruitment and Succession Planning Packet Pg. 8 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to (1) determine the efficiency and effectiveness of the recruitment and hiring process; (2) determine whether a formal succession plan and related policies and procedures are in place. Procedures include, but not limited to: • Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to recruitment and succession planning. • Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. • Select a sample of the recruitment activities for documentation review • Review the existing succession plan • Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: • Develop findings, conclusions, and recommendations based on the supporting evidence gathered • Validate findings with the appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: • Audit Report Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated End Date: June 30, 2024 Item 1 Attachment A: TASK ORDER FY24-4.23 Recruitment and Succession Planning Packet Pg. 9 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $58,890. The not-to-exceed budget is based on an estimate of 290 total project hours, of which 20 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Attachment A: TASK ORDER FY24-4.23 Recruitment and Succession Planning Packet Pg. 10 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.24 Grant Management Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.24 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: January 1, 2024 COMPLETION: June 30, 2024 4 TOTAL TASK ORDER PRICE: $60,330 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Attachment B: TASK ORDER FY24-4.24 Grant Management Packet Pg. 11 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Grant Management involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Control Review and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary • Assess the audit risk • Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Attachment B: TASK ORDER FY24-4.24 Grant Management Packet Pg. 12 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the City has adequate internal controls to manage the grant lifecycle efficiently and effectively. Procedures include, but not limited to: • Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to grant management. • Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. • Select a sample of grants for documentation review. • Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: • Develop findings, conclusions, and recommendations based on the supporting evidence gathered • Validate findings with the appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: • Audit Report Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated End Date: June 30, 2024 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Item 1 Attachment B: TASK ORDER FY24-4.24 Grant Management Packet Pg. 13 Task is $60,330. The not-to-exceed budget is based on an estimate of 315 total project hours, of which 23 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Attachment B: TASK ORDER FY24-4.24 Grant Management Packet Pg. 14 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.25 Emergency Preparedness Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.25 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: January 1, 2024 COMPLETION: June 30, 2024 4 TOTAL TASK ORDER PRICE: $73,110 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Attachment C: TASK ORDER FY24-4.25 Emergency Preparedness Packet Pg. 15 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Emergency Preparedness involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Control Review and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary • Assess the audit risk • Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Attachment C: TASK ORDER FY24-4.25 Emergency Preparedness Packet Pg. 16 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the City is working to prevent wildfire and adequately prepared to respond to wildfire as part of the City’s emergency management plan. Procedures include, but not limited to: • Interview the appropriate individuals in all relevant departments to gain an understanding of the organizational structure, processes, and controls related to wildfire prevention and response as well as the City’s overall emergency preparedness. • Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. • Review the existing emergency management plan and other related documents such as prevention activities, training and exercises, equipment, and service contracts. • Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: • Develop findings, conclusions, and recommendations based on the supporting evidence gathered • Validate findings with the appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: • Audit Report Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated End Date: June 30, 2024 Item 1 Attachment C: TASK ORDER FY24-4.25 Emergency Preparedness Packet Pg. 17 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $73,110. The not-to-exceed budget is based on an estimate of 385 total project hours, of which 25 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flights x 2 auditors) • Ground Transportation (car rental or Uber/taxi) - $800 • Hotel accommodation - $3,000 (2 rooms x 4 nights) • Food and incidentals – $700 Item 1 Attachment C: TASK ORDER FY24-4.25 Emergency Preparedness Packet Pg. 18 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.26 Utility Billing Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.26 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: January 1, 2024 COMPLETION: June 30, 2024 4 TOTAL TASK ORDER PRICE: $72,010 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Attachment D: TASK ORDER FY24-4.26 Utility Billing Packet Pg. 19 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Utility Billing involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Control Review and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary • Assess the audit risk • Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Attachment D: TASK ORDER FY24-4.26 Utility Billing Packet Pg. 20 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to (1) determine whether the internal controls over the utility billing process are adequate and working effectively to ensure billing is accurate and in compliance with the City's policy and regulations; (2) determine whether billing adjustments are properly supported and approved. Procedures include, but not limited to: • Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to utility billing. • Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. • Select a sample of utility invoices and a sample of billing adjustments for testing. • Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: • Develop findings, conclusions, and recommendations based on the supporting evidence gathered • Validate findings with the appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: • Audit Report Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated End Date: June 30, 2024 Item 1 Attachment D: TASK ORDER FY24-4.26 Utility Billing Packet Pg. 21 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $72,010. The not-to-exceed budget is based on an estimate of 385 total project hours, of which 24 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Attachment D: TASK ORDER FY24-4.26 Utility Billing Packet Pg. 22 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.27 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: January 1, 2024 COMPLETION: June 30, 2024 4 TOTAL TASK ORDER PRICE: $69,680 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Attachment E: TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) Packet Pg. 23 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Payment Card Industry Data Security Standard (PCI DSS) Compliance involves three (3) primary steps: • Step 1: Audit Planning • Step 2: Control Review and Testing • Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: • Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary • Assess the audit risk • Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined • Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Attachment E: TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) Packet Pg. 24 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the internal controls over the payment card processing are adequate and working effectively for the City and any third party service provider. Procedures include, but not limited to: • Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to compliance with PCI/DSS for payment card processing. • Review policies and procedures as well as the legislative and regulatory requirements (including PCI/DSS) to identify the criteria to be used for evaluation of control design and effectiveness. • Review the documentation related to ensuring third party providers’ PCI/DSS compliance • Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: • Develop findings, conclusions, and recommendations based on the supporting evidence gathered • Validate findings with the appropriate individuals and discuss the root cause of the identified findings • Complete supervisory review of working papers and a draft audit report • Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses • Obtain written management responses and finalize a report • Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: • Audit Report Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated End Date: June 30, 2024 Item 1 Attachment E: TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) Packet Pg. 25 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $69,680. The not-to-exceed budget is based on an estimate of 370 total project hours, of which 10 hours are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $2,000 (1 round trip flights x 2 auditors) • Ground Transportation (car rental or Uber/taxi) - $800 • Hotel accommodation - $3,000 (2 rooms x 4 nights) • Food and incidentals – $700 Item 1 Attachment E: TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) Packet Pg. 26 The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. © 2020 Baker Tilly US, LLP Memo To:City Clerk, City of Palo Alto From:Chiemi Perry, Manager, Baker Tilly US, LLP c.c.Ed Shikada, City Manager Date:February 8, 2024 Subject:Supplemental Memo for Staff Report #2312-2460 Changes to the task order dates in the attachments to Staff Report #2312-2460 for the Agenda Item #1 of the Policies and Services Committee on February 13, 2024 The following five task orders prepared based on the FY2024 Audit Plan have the task order end dates of June 30, 2024, and were attached to Staff Report #2312-2460 when it was submitted on February 1, 2024: •TASK ORDER FY24-4.23 Recruitment and Succession Planning •TASK ORDER FY24-4.24 Grant Management •TASK ORDER FY24-4.25 Emergency Preparedness •TASK ORDER FY24-4.26 Utility Billing •TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI/DSS) Due to the departure of the City Auditor, Adriane D. McCoy, this week, there will be a delay in starting new audits as no new audit will be commenced until a new City Auditor is appointed. To be able to resume internal audit activities as soon as a new City Auditor is appointed, Baker Tilly is not withdrawing a request for approval of the task orders for the audits listed in the FY2024 Audit Plan approved by the City Council in January 2024. However, the delay necessitates an adjustment to the planned audit timeline. Therefore, we are submitting the task orders with new task order dates. The following changes were made to all five task orders originally attached to the Staff Report #2312-2460: Page of a task order Section Title Change from Change to 1 3. PERIOD OF PERFORMANCE START: January 1, 2024 START: March 1, 2024 1 3. PERIOD OF PERFORMANCE COMPLETION: June 30, 2024 COMPLETION: December 31, 2024 3 Schedule of Performance Anticipated Start Date: January 1, 2024 Anticipated Start Date: March 1, 2024 3 Schedule of Performance Anticipated End Date: June 30, 2024 Anticipated End Date: December 31, 2024 The changes listed above are the only changes made. No other changes were made since the City Clerk published the meeting packet in the City’s website. Item 1 Item 1 Supplemental Memo Packet Pg. 27 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.23 Recruitment and Succession Planning Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.23 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024 4 TOTAL TASK ORDER PRICE: $58,890 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Supplemental Attachment A - TASK ORDER FY24- 4.23 Recruitment and Succession Planning Packet Pg. 28 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: Services and Deliverables To Be Provided Schedule of Performance Maximum Compensation Amount and Rate Schedule (As Applicable) Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Recruitment and Succession Planning involves three (3) primary steps: Step 1: Audit Planning Step 2: Control Review and Testing Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary Assess the audit risk Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Supplemental Attachment A - TASK ORDER FY24- 4.23 Recruitment and Succession Planning Packet Pg. 29 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to (1) determine the efficiency and effectiveness of the recruitment and hiring process; (2) determine whether a formal succession plan and related policies and procedures are in place. Procedures include, but not limited to: Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to recruitment and succession planning. Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. Select a sample of the recruitment activities for documentation review Review the existing succession plan Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: Develop findings, conclusions, and recommendations based on the supporting evidence gathered Validate findings with the appropriate individuals and discuss the root cause of the identified findings Complete supervisory review of working papers and a draft audit report Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses Obtain written management responses and finalize a report Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: Audit Report Schedule of Performance Anticipated Start Date: March 1, 2024 Anticipated End Date: December 31, 2024 Item 1 Supplemental Attachment A - TASK ORDER FY24- 4.23 Recruitment and Succession Planning Packet Pg. 30 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $58,890. The not-to-exceed budget is based on an estimate of 290 total project hours, of which 20 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Supplemental Attachment A - TASK ORDER FY24- 4.23 Recruitment and Succession Planning Packet Pg. 31 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.24 Grant Management Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.24 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024 4 TOTAL TASK ORDER PRICE: $60,330 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Supplemental Attachment B - TASK ORDER FY24-4.24 Grant Management Packet Pg. 32 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: Services and Deliverables To Be Provided Schedule of Performance Maximum Compensation Amount and Rate Schedule (As Applicable) Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Grant Management involves three (3) primary steps: Step 1: Audit Planning Step 2: Control Review and Testing Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary Assess the audit risk Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Supplemental Attachment B - TASK ORDER FY24-4.24 Grant Management Packet Pg. 33 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the City has adequate internal controls to manage the grant lifecycle efficiently and effectively. Procedures include, but not limited to: Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to grant management. Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. Select a sample of grants for documentation review. Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: Develop findings, conclusions, and recommendations based on the supporting evidence gathered Validate findings with the appropriate individuals and discuss the root cause of the identified findings Complete supervisory review of working papers and a draft audit report Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses Obtain written management responses and finalize a report Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: Audit Report Schedule of Performance Anticipated Start Date: March 1, 2024 Anticipated End Date: December 31, 2024 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Item 1 Supplemental Attachment B - TASK ORDER FY24-4.24 Grant Management Packet Pg. 34 Task is $60,330. The not-to-exceed budget is based on an estimate of 315 total project hours, of which 23 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Supplemental Attachment B - TASK ORDER FY24-4.24 Grant Management Packet Pg. 35 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.25 Emergency Preparedness Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.25 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024 4 TOTAL TASK ORDER PRICE: $73,110 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Supplemental Attachment C - TASK ORDER FY24-4.25 Emergency Preparedness (002) Packet Pg. 36 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: Services and Deliverables To Be Provided Schedule of Performance Maximum Compensation Amount and Rate Schedule (As Applicable) Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Emergency Preparedness involves three (3) primary steps: Step 1: Audit Planning Step 2: Control Review and Testing Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary Assess the audit risk Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Supplemental Attachment C - TASK ORDER FY24-4.25 Emergency Preparedness (002) Packet Pg. 37 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the City is working to prevent wildfire and adequately prepared to respond to wildfire as part of the City’s emergency management plan. Procedures include, but not limited to: Interview the appropriate individuals in all relevant departments to gain an understanding of the organizational structure, processes, and controls related to wildfire prevention and response as well as the City’s overall emergency preparedness. Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. Review the existing emergency management plan and other related documents such as prevention activities, training and exercises, equipment, and service contracts. Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: Develop findings, conclusions, and recommendations based on the supporting evidence gathered Validate findings with the appropriate individuals and discuss the root cause of the identified findings Complete supervisory review of working papers and a draft audit report Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses Obtain written management responses and finalize a report Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: Audit Report Schedule of Performance Anticipated Start Date: March 1, 2024 Anticipated End Date: December 31, 2024 Item 1 Supplemental Attachment C - TASK ORDER FY24-4.25 Emergency Preparedness (002) Packet Pg. 38 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $73,110. The not-to-exceed budget is based on an estimate of 385 total project hours, of which 25 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: Round-trip Airfare – $2,000 (1 round trip flights x 2 auditors) Ground Transportation (car rental or Uber/taxi) - $800 Hotel accommodation - $3,000 (2 rooms x 4 nights) Food and incidentals – $700 Item 1 Supplemental Attachment C - TASK ORDER FY24-4.25 Emergency Preparedness (002) Packet Pg. 39 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.26 Utility Billing Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.26 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024 4 TOTAL TASK ORDER PRICE: $72,010 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Supplemental Attachment D - TASK ORDER FY24- 4.26 Utility Billing Packet Pg. 40 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: Services and Deliverables To Be Provided Schedule of Performance Maximum Compensation Amount and Rate Schedule (As Applicable) Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Utility Billing involves three (3) primary steps: Step 1: Audit Planning Step 2: Control Review and Testing Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary Assess the audit risk Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Supplemental Attachment D - TASK ORDER FY24- 4.26 Utility Billing Packet Pg. 41 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to (1) determine whether the internal controls over the utility billing process are adequate and working effectively to ensure billing is accurate and in compliance with the City's policy and regulations; (2) determine whether billing adjustments are properly supported and approved. Procedures include, but not limited to: Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to utility billing. Review policies and procedures as well as the legislative and regulatory requirements to identify the criteria to be used for evaluation of control design and effectiveness. Select a sample of utility invoices and a sample of billing adjustments for testing. Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: Develop findings, conclusions, and recommendations based on the supporting evidence gathered Validate findings with the appropriate individuals and discuss the root cause of the identified findings Complete supervisory review of working papers and a draft audit report Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses Obtain written management responses and finalize a report Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: Audit Report Schedule of Performance Anticipated Start Date: March 1, 2024 Anticipated End Date: December 31, 2024 Item 1 Supplemental Attachment D - TASK ORDER FY24- 4.26 Utility Billing Packet Pg. 42 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $72,010. The not-to-exceed budget is based on an estimate of 385 total project hours, of which 24 are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. If at any point the City and Baker Tilly mutually determine it will be beneficial to perform a portion of the work on-site, we will submit an estimate of our reimbursable expenses for the City’s approval prior to traveling to Palo Alto. Item 1 Supplemental Attachment D - TASK ORDER FY24- 4.26 Utility Billing Packet Pg. 43 PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340 1B. TASK O RDER NO.: FY23-4.27 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024 4 TOTAL TASK ORDER PRICE: $69,680 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE: SERVICES AND DELIVERABLES TO BE PROVIDED SCHEDULE OF PERFORMANCE MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable) REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Item 1 Supplemental Attachment E - TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Packet Pg. 44 Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: Services and Deliverables To Be Provided Schedule of Performance Maximum Compensation Amount and Rate Schedule (As Applicable) Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to conducting an internal audit of Payment Card Industry Data Security Standard (PCI DSS) Compliance involves three (3) primary steps: Step 1: Audit Planning Step 2: Control Review and Testing Step 3: Reporting Step 1 – Audit Planning This step consists of the tasks performed to adequately plan the work necessary to address the overall audit objective and to solidify mutual understanding of the audit scope, objectives, audit process, and timing between stakeholders and auditors. Tasks include: Gather information to understand the environment under review o Understand the organizational structure and objectives o Review the City code, regulations, and other standards and expectations o Review prior audit results, as applicable o Review additional documentation and conduct interviews as necessary Assess the audit risk Write an audit planning memo and audit program o Refine audit objectives and scope o Identify the audit procedures to be performed and the evidence to be obtained and examined Announce the initiation of the audit and conduct kick-off meeting with key stakeholders o Discuss audit objectives, scope, audit process, timing, resources, and expectations o Discuss documentation and interview requests for the audit Item 1 Supplemental Attachment E - TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Packet Pg. 45 Step 2 – Control Review and Testing This step involves executing the procedures in the audit program to gather information, interview individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The preliminary audit objective is to determine whether the internal controls over the payment card processing are adequate and working effectively for the City and any third party service provider. Procedures include, but not limited to: Interview the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to compliance with PCI/DSS for payment card processing. Review policies and procedures as well as the legislative and regulatory requirements (including PCI/DSS) to identify the criteria to be used for evaluation of control design and effectiveness. Review the documentation related to ensuring third party providers’ PCI/DSS compliance Compare the process and controls against the best practices. Step 3 – Reporting In Step 3, the project team will perform tasks necessary to finalize audit working papers, prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks include: Develop findings, conclusions, and recommendations based on the supporting evidence gathered Validate findings with the appropriate individuals and discuss the root cause of the identified findings Complete supervisory review of working papers and a draft audit report Distribute a draft audit report and conduct a closing meeting with key stakeholders o Discuss the audit results, finings, conclusions, and recommendations o Discuss management responses Obtain written management responses and finalize a report Review report with members of City Council and/or the appropriate Council Committee Deliverables: The following deliverable will be prepared as part of this engagement: Audit Report Schedule of Performance Anticipated Start Date: March 1, 2024 Anticipated End Date: December 31, 2024 Item 1 Supplemental Attachment E - TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Packet Pg. 46 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $69,680. The not-to-exceed budget is based on an estimate of 370 total project hours, of which 10 hours are estimated to be completed by the City Auditor. Reimbursable Expenses We plan to complete all work remote including all interviews and documentation review. However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may mutually determine it will be beneficial to perform a portion of the work on-site. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $6,500. The following summarizes anticipated reimbursable expenses: Round-trip Airfare – $2,000 (1 round trip flights x 2 auditors) Ground Transportation (car rental or Uber/taxi) - $800 Hotel accommodation - $3,000 (2 rooms x 4 nights) Food and incidentals – $700 Item 1 Supplemental Attachment E - TASK ORDER FY24-4.27 Payment Card Industry Data Security Standard (PCI DSS) Packet Pg. 47 3 8 9 4 Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Auditor Meeting Date: February 13, 2024 Report #:2401-2550 TITLE The Office of the City Auditor Presentation of the Quarterly Report for the Period of October - December 2023 RECOMMENDATION City Auditor recommends that the Policy and Services Committee review and recommend the City Council accept the Office of the City Auditor’s Quarterly Status Report covering October – December 2023. BACKGROUND The Task 5 of the six required internal audit tasks in the agreement between the City of Palo Alto (City) and Baker Tilly US, LLP (Baker Tilly)1 is to provide a quarterly report of the status and progress toward audit completion as information reports to the City Council. ANALYSIS The internal audit activities from October to December 2023 are listed below by task within the agreement with the City: •Task 1 – Citywide Risk Assessment o Presented to and approved by the Policy and Services Committee on December 12, 2023 (Report# 2310-2174)2 •Task 2 – Preparation of Annual Audit Plan o FY2024 Audit Plan presented to and approved by the Policy and Services Committee on December 12, 2023 (Report# 2310-2174)² •Task 3 – Selection of External Financial Auditor and Annual Audit Coordination o FY2023 Audited Financial Statements presented to and approved by Finance 1 Baker Tilly US, LLP, Agreement for Professional Services, C21179340; https://www.cityofpaloalto.org/files/assets/public/v/5/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2022/20220509/20220509pccsmamended-linked.pdf 2 Policy and Services Committee, December 12, 2023, Agenda Item #3, SR #2310-2174; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=12186 Item 2 Item 2 Staff Report Packet Pg. 48 3 8 9 4 Committee on November 28, 2023 (Report# 2309-2041)3 •Task 4 – Execute Annual Audit Plan o Presented the Wastewater Treatment Plant Agreement Audit report to Policy and services Committee on December 12, 2023 (Report# 2311-2307)4 o Presented the Investment Management Audit report to the Policy and Services Committee on December 12, 2023 (Report# 2311-2308)5 •Task 5 – Periodic Reporting, Hotline Monitoring, and Other Administrative Functions o Obtained City Council consent of the proposed changes to the Fraud, Waste, and Abuse Hotline Administration Policy on November 13, 2023 (Report # 2310-2180)6 o No hotline reports were received during this period o Participated in various meetings, including City Council, Executive Leadership, Agenda Planning, and Committee Meetings •Task 6 – Evaluation and Benchmarking o No activity to report in this quarter FISCAL/RESOURCE IMPACT This quarterly report does not have resource impact. STAKEHOLDER ENGAGEMENT No stakeholder was engaged in preparation of this quarterly report. ENVIRONMENTAL REVIEW Environmental review is not applicable to preparation of this quarterly report. APPROVED BY: Adriane D. McCoy, City Auditor 3 Finance Committee, November 28, 2023, Agenda Item #1, SR #2309-2041; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13238 4 Policy and Services Committee, December 12, 2023, Agenda Item #4, SR # 2311-2307; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=12186 5 Policy and Services Committee, December 12, 2023, Agenda Item #5, SR # 2311-2308; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=12186 6 City Council, November 13, 2023, Agenda Item #1, SR #2310-2180; https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13056 Item 2 Item 2 Staff Report Packet Pg. 49 Policy & Services Committee Staff Report From: Chantal Gaines, Deputy City Manager Meeting Date: February 13, 2024 Report #: 2309-2058 TITLE City Council Referral to Discuss and Recommend City Council Procedures and Protocols on: Council Discretionary Expenditures – Consideration of the establishment of appropriate parameters for Council discretionary expenditures and whether to allocate $2,000 annually from the City Council contingency fund for each Council member to decide its purpose. RECOMMENDATION Staff recommends that the Policy and Services Committee discuss the referral from the City Council related to City Council Discretionary Expenditures and make a recommendation to the City Council for inclusion in the City Council Procedures and Protocols Handbook. BACKGROUND The City Council discussed the City Council Procedures and Protocols Handbook on January 30 and March 20, 2023 and adopted the most recent version on April 24, 2023. The City Council referred a few discussion topics to the Policy and Services Committee during these discussions. The Committee made progress on these referrals and have sent recommendations to the City Council for consideration on all but one of the referrals (City Council discussion planned for February 5, 2024). Referral #7 is the remaining referral and is analyzed within this report. All referrals are listed below: 1. Procedures Section 1.1: Annual Organization of City Council. 2. Procedures Section 5.1a(4): Video Participation for Public Comment. 3. Procedures Section 8.2: Related to Enforcement and Censure. 4. Protocols Section 2.2: Refrain from Lobbying Board and Commission Members. 5. Protocols Section 2.8: The Role of Council Liaison to Boards or Commissions. 6. Protocols Section 4: International Travel. 7. Protocols Section 4.1: Miscellaneous Expenditures. Council referral for the committee to discuss the establishment of appropriate parameters for Council discretionary expenditures and whether to allocate $2,000 annually from the Council contingency fund for each Council member to decide its purpose. Item 3 Item 3 Staff Report Packet Pg. 50 ANALYSIS In 2023, the City Council referred to Policy and Services discussion of “the establishment of appropriate parameters for Council discretionary expenditures and whether to allocate $2,000 annually from the Council contingency fund for each Council member to decide its purpose.” This referral includes several sub-questions: 1. As a policy matter, does the City Council wish to allocate some amount of City funds to individual Council Members to spend at their discretion, within limits defined by law and City Council policy? 2. If so, what is the appropriate amount? 3. What purpose or purposes does the City Council wish to define for these expenditures? 4. In light of the identified purpose or purposes, what procedures are appropriate. As a first step in considering these issues, this memorandum outlines the relevant state and federal law requirements that will apply to any program of this type. This memorandum does not explore the pros and cons of adopting a program to delegate spending discretion to individual City Council members. It also does not discuss in detail the various purposes that the City Council could approve for expenditures (beyond identifying purposes that are unlawful under state or federal law), except to list a few potential options for illustration and consideration if the Committee chooses: •Small grants to community organizations •Reimbursement for expenses related to official duties •Funding for community events •Discretionary dollars to allocate during the budget process There may be other permissible uses that the Committee wishes to discuss. Note that the purposes that the Committee and City Council choose may lead to additional legal implications and considerations that will need to be analyzed. For example, purchases of good or services are likely subject to procurement and/or operational limitations. Written Expenditure Policy. The City Council should adopt a comprehensive written policy that identifies permissible purposes for expending City funds, identifies impermissible expenditures and other limitations, and establishes clear procedures and documentation requirements. At a minimum, the policy should identify key legal limitations, such as the following: •City funds may not be used for personal activities •City funds may not be used for partisan political activities, including campaigning for office or supporting or opposing ballot measures or candidates •City funds may not be used to fund specific religious purposes Item 3 Item 3 Staff Report Packet Pg. 51 •Expenditures must comply with laws prohibiting conflicts of interest •Expenditures must comply with limitations on “mass mailings” The City Council policy should be flexible enough to address any other legal issues that may arise, depending on the specific nature and scope of the policy implemented. The policy also should specify a review process and documentation that will be required. Review and documentation protect the City and each Council member by demonstrating compliance with legal requirements and City Council policy. Finally, note that City expenditure records are public records and are subject to disclosure on request. General Legal Restrictions. The following are state and federal law prohibitions on certain types of expenditures of public funds. Prohibition on Use of City Funds for Personal or Partisan Political Purposes. Public funds are designated exclusively for public purposes. While the definition of a public purpose is broad, there are categories of expenditure that clearly do not qualify. It is unlawful to use public resources for personal or political purposes. Cal. Govt Code § 8314. This includes using public funds for a personal purpose, such as an official’s own personal purposes or the purposes of family or friends. It also includes partisan political purposes, including the official’s own campaign activities or support or opposition to ballot measures or other political campaigns. Staff recommends that the expenditure policy integrate this prohibition and also include clear examples to highlight what constitutes personal or political use. Note that some well-intended City expenditures that do not directly and immediately benefit local residents—for example, donations to other cities in response to disasters— can generate questions about compliance with the public purpose mandate. These concerns are sometimes described as “gift of public funds.“ When these issues arise, California courts generally defer to the wisdom of city councils to determine the appropriateness and public nature of expenditures. For example, courts have accepted council findings that disaster donations support a broad community of mutual aid that benefits local residents in the long run. If the City Council wishes to authorize individual Council members to make extra-jurisdictional expenditures, it should define the scope and public purpose rationale in its written policy. Restrictions on Use of City Funds for Religious Purposes. The federal and California Constitutions prohibit use of public funds for the purpose religious practice. U.S. Const. Item 3 Item 3 Staff Report Packet Pg. 52 amend 1; Cal. Const. Art. XVI, Sect. 6. Recent Supreme Court rulings, however, have held that religious institutions may (and in some cases must) be allowed access to public funds when these public funds are made available to other private organizations for the same purpose. Carson v. Makin (2022) 596 U.S. 767. City Council’s policy should identify both the restriction on the use of City funds for religious purposes and the requirement not to discriminate against religious institutions and should encourage consultation with the Attorneys Office whenever these issues arise. Avoiding Conflicts of Interest. The Political Reform Act, Cal. Govt Code §§ 81000 et seq. (the Act), prohibits City officials from directing funds in ways that could result in financial benefits to themselves, their family members, or other entities in which they have financial interests as defined by the Act. Under the Act, financial interests include real property, ownership and investment in business entities, sources of income, gifts, and personal financial holdings. Cal. Code Regs. 18700 et seq. City Council's expenditure policy should acknowledge the conflict-of-interest provisions of the Act and incorporate guidelines to ensure adherence to these legal requirements. Adhering to Mass Mailing Rules. The Political Reform Act also prohibits the use of public funds for “mass mailings.” Under the Act, a “mass mailing” is any tangible item, like a newsletter or brochure, in quantities of 200 or more, featuring an elected official and financed with public funds. These mailings may not be sent to residences, places of employment, businesses, or post office boxes. (The restriction does not apply to electronic communications.) If the City Council’s expenditure policy permits the use of City funds for distributing such materials to residents, it will be important to include a provision for staff review prior to distribution to ensure adherence to the mass mailing restriction. Additional Legal Restrictions that May Apply to Certain Types of Expenditures. Additional legal procedures or restrictions might apply, depending on the type of expenditures that the City Council authorizes. Without knowing what the City Council is interested in, we cannot yet provide a complete analysis. We do know however, that the following types of expenditures raise particular issues. Reimbursement for Expenses Related to Official Duties. State law authorizes expenditure of local funds to reimburse city council members for “actual and necessary expenses incurred in the performance of official duties.” Cal. Govt. Code § 53232.2. State law requires a written policy specifying the types of occurrences that qualify for reimbursement, and establishes other procedural requirements for reimbursement rates, documentation (receipts), and reports on uses of the funds. Govt. Code § 53232.3. Amounts paid consistent with these procedures are excluded from salary that would otherwise be subject to the maximums under state law and the Palo Alto Charter. Govt. Item 3 Item 3 Staff Report Packet Pg. 53 Code § 36516(e). If the City Council decides to authorize funds to be used for reimbursement, it will be important to comply with all of the requirements of Sections 53232.2 and 53232.3, so that these funds are not counted towards salary. This is because the City Council has directed that salary be increased to the state-law limit, leaving no room for additional funds should they be classified as salary. Grants to Community Organizations or Funding for Community Events. When the City makes grants to community organizations or funds community events, staff vets recipients and uses agreement templates—appropriate to the type and size of the grant or event—to document expectations and protect the City and taxpayers in the event of unexpected negative occurrences. In the case of very small neighborhood grants, the agreements are short and relatively simple, and focused on the most important issues (e.g., non-discrimination and appropriate insurance). If the City Council is interested in authorizing individual the City Council members to make grants or fund events, consideration should be given to who will have contract authority, whether vetting and documentation will be required, and what that will look like; conversely, if none is required, the City Council should understand that there may be risks assumed by the City as a result. FISCAL/RESOURCE IMPACT The City Council contingency fund total allocation is determined each year through the budget process and this program proposes to dedicate some of those funds, thus this is not new funding. However, depending on the program parameters discussed, the staff time resources to administer the program would need to be further assessed. Item 3 Item 3 Staff Report Packet Pg. 54 Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: February 13, 2024 Report #:2402-2632 TITLE City Council Referral to Discuss the Creation of a Citizen Advisory Committee to Evaluate City Council Member Compensation above SB 329 Guidelines RECOMMENDATION Staff recommends the Policy and Services Committee discuss and respond to the City Council referral for the creation of a Citizen Advisory Committee to evaluate City Council Member compensation above SB 329 guidelines. BACKGROUND AND ANALYSIS The City Council heard this Colleagues’ Memo on December 4, 2023 and took the following action: Item 4 Item 4 - Staff Report Packet Pg. 55 Item #3 of the December City Council motion directed the Policy and Services Committee to discuss and recommend whether a Citizen Advisory Committee should be set up and other details such as the size of the Advisory Committee, how it should be composed, and other relevant details. The original Colleagues’ Memo and Legal Analysis Memo are both attached to this cover page. Staff will be prepared to support the Committee discussion by noting Brown Act requirements that may apply as well as timelines for ballot measures. ATTACHMENTS Attachment A: December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines APPROVED BY: Ed Shikada, City Manager Item 4 Item 4 - Staff Report Packet Pg. 56 CITY COUNCIL Colleague’s Memo Sponsor(s): Council Member Lauing and Vice Mayor Stone Meeting Date: December 4, 2023 Report #: 2311-2241 TITLE Colleague’s Memo - Adjustment to City Council Compensation RECOMMENDATION 1. Raise monthly City Councilmember salaries, at a minimum, to levels set by SB 329. In June of this year Governor Newsom signed SB 329 (Dodd) which allows cities to set council salaries according to the size of each city’s population. Based on the population of Palo Alto, SB 329 allows salaries to be set at $1600/month consistent with this new law. There is also a process for considering future increases over time by Council action. The motivation for Senator Dodd and his colleagues was precisely to make it more appealing to a broader cross section of citizens to stand for public office as well as to recognize the true responsibilities of councilmembers in a city as measured by size. Due to procedural requirements, approving this recommendation would raise Councilmember salaries effective January 1, 2025 (and not before). If this action is taken now, candidates who run in 2024 for City Council will know that, upon taking office in January 2025 their monthly compensation will be $1600. Our hope is to attract a more socioeconomically diverse group of candidates in the 2024 election. Sitting Councilmembers in 2025 will also be increased to that amount. 2. Allow City Councilmembers to participate in the city’s employee childcare assistance benefit as applicable. This new program for city workers should be broadened to include Councilmembers with this need. This benefit reduces a high out-of-pocket cost for the Councilmember for all of the meetings a member needs to attend – including during after school hours and for weekend meetings/events. By definition this benefit would be targeted to younger council members with pre-school or school age children – likely a renter’s demographic. It eliminates a financial burden a prospective candidate would have to address upon joining council. This is not extra salary, but it is a benefit. 3. Consider amending our charter to allow Palo Alto to set Councilmember compensation above SB 329- guidelines. Attachment A -Colleague's Memo and Legal Memo; Dec 2023 Item 4 Attachment A - December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines Packet Pg. 57 Palo Alto is among the most affluent and highest cost areas in California. As stated above, we are different than many other cities of our population size with our own utilities, a regional water treatment facility, and an airport. Add to that our extensive open space and parklands and a children’s zoo and many other amenities we have which expands the scope of decision- making a councilmember has. In addition, Palo Alto must add over 6000 new homes in the next seven years which will add about 15,000 more residents. A $1600 City Council salary ($19,200 annually) may not be enough to influence a decision to run for council given the time investment and the high expectations of our constituents across this broad scope of responsibilities. And it may not be fair. How should we set compensation? Here are a few data points for consideration. A. Minimum wage in Palo Alto is $17.25 per hour translating to $35,880.00 per year for a full-time job. B. A midlevel senior staff member across the board in the city makes about $162,229 per year. C. A State Assembly member makes $122,694/year + per diem. What is the appropriate compensation level for the job to be done and to attract more diversity in candidates for City Council? BACKGROUND The duties of a Palo Alto city councilmember require a broad skill set and an extraordinary commitment of time and effort. Many hours are required to perform the job while representing Palo Alto residents. Total hours per week are generally estimated to be in a range of 20-30+ hours across a seven-day week. This includes preparation for- and participation in- council meetings, many standing and ad hoc committee meetings, liaison assignments to commissions and outside agencies, meetings with staff, colleagues, residents, businesses, developers, public appearances, and more. The roles of Mayor and Vice Mayor require even more personal time commitment. Unlike many cities, Palo Alto owns its own utilities, regional water treatment facility, and an airport. There are approximately 1000 city employees with a $1 billion budget. In 2014 residents voted in a ballot measure to reduce the size of the council to seven from nine members, which became effective in 2018. All of the same work still needs to be done. The work is covered by spreading the workload among the seven council members. The base salary for a councilmember is currently $1000/month. CONSIDERATIONS I. Council Member Demographics for Better Representation Item 4 Attachment A - December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines Packet Pg. 58 Many councilmembers over the last two decades have been upper income residents with work flexibility and/or residents who are post-career without pressing income obligations. A good number of councilmembers have been empty-nesters. They have served the city admirably and we can expect this demographic to continue to produce excellent council members eager to serve the city. Palo Alto is committed to diversity in all areas of city life from our residents to our city staff to our commissioners and our council members. We welcome residents of all ethnicities and income levels. We also want our city council to represent the varied demographics we now have and the many new residents who will come to PA based on our initiatives to create hundreds of new affordable homes for lower income residents. Historically, few lower income workers have chosen to run for city council. This may be the result of less flexible work hours. In some cases, “free time” for public service is constrained by the demands of younger families to care for. II. Council Member Compensation Relative to Workload The Councilmember’s job is not full-time. But it is highly time intensive. Anecdotally, some residents have argued over the years that it should a be full-time job and that Councilmembers should be fairly compensated for the broad skills required in that full-time job. That option may have merit but is not under consideration as part of this colleagues’ memo. The issue, however, is to assess what fair compensation should be for the responsibilities of the role, the workload required, and to attract a broader spectrum of candidates. FISCAL IMPACT A change in Councilmember total compensation would be incorporated into the City’s General Fund budget; FY 2024 Adopted General Fund Budget is $279.6 million. Costs would consist of the change in salary plus the cost for all benefits, which conservatively amounts to approximately 63% of salary. Benefits will be charged based on the choices made by individuals and may include: pension, retiree medical, workers compensation, Medicare, healthcare (dental, vision, medical), and life insurance. ATTACHMENTS Attachment A - Memorandum on Council Member Salaries Item 4 Attachment A - December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines Packet Pg. 59 November 14, 2023 Page 1 of 2 Memorandum Office of the City Attorney City of Palo Alto This memorandum responds to a request by the authors of the above Colleagues Memo for a description of the law regarding Council Member compensation and Council’s options for increasing that compensation. Current Law. The Charter provides that Council may receive compensation in amounts not to exceed those provided in state law. (Charter, Art. III, Sec. 17.) The Palo Alto Municipal Code (PAMC) sets compensation at $1,000/month. (PAMC 2.04.360). The last update to council compensation was effective January 1, 2017. (Ord. 5304.) State law authorizes a maximum base monthly council member salary based on city population and authorizes annual increases according to a defined methodology. (See Gov. Code §36516.) In 2023, the state legislature adopted SB 329, which increased maximum authorized salary levels and created a second optional methodology for local city councils to increase salaries over time. Under the updated statute, a city of Palo Alto’s size may provide council members a monthly salary of $1,600/month, effective January 1, 2024. Thereafter, annual increases may be made in amounts not to exceed the greater of: (a) 5% of the existing salary for each calendar year since the Council last set council member salaries (noncompounded, see (89 Ops. Cal. Atty Gen. 159 (2006)); or (b) an amount equal to inflation since January 1, 2024 (CPI) but not to exceed 10 percent annually. (Gov. Code §36516.) Each increase must be made by ordinance, with findings demonstrating the need for the increase. Automatic increases are not allowed. Under state law, a salary increase may only come into effect at the beginning of at least one member’s new term. (Gov. Code section 36516.5) In Palo Alto, new Council terms begin on January 1st of every odd-numbered year. (See Charter, Art. III, Sec. 2.) Compensation can be (and typically is) adjusted for all members of a council serving staggered terms whenever at least one member begins a new term of office. State law also provides that council members may receive benefits from the city. Benefits are not counted towards the maximum allowable salary, provided that the same benefits are paid for and available to city employees. (Gov. Code § 36516 (d).) Options for Increasing Compensation. Council has two options to increase council member compensation. Option 2 is available to Palo Alto because Palo Alto is a charter city, and council compensation is a municipal affair. Council could choose one or the other of these options, or, could use option 1 followed by option 2. Attachment A - Memorandum On Council Member Salaries Item 4 Attachment A - December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines Packet Pg. 60 November 14, 2023 Page 2 of 2 Option 1: Amend PAMC 2.04.360 to increase council member salary, currently $1,000/month, to an amount up to $1,600/month plus inflation from January 1, 2024 to the date of adoption (capped at 10%), with an effective date of January 1, 2025 at the earliest. Option 2: Place a Charter amendment on the November 2024 ballot to delete the existing language that limits council member salary to amounts provided in state law and replace it with a local provision. Upon voter approval, amend PAMC 2.04.360 to increase salary according to the terms of the newly-amended Charter. Attachment A - Memorandum On Council Member Salaries Item 4 Attachment A - December Colleagues’ Memo and Legal Analysis Memo Regarding Council Member Compensation above SB 329 Guidelines Packet Pg. 61