ERMU Commission-Management WS Draft Agenda...

SPECIAL MEETING OF THE

UTILITIES COMMISSION

August 16, 2016 – 2:15 p.m.

Cragun’s Resort on Gull Lake

Paul Bunyan Room 4

11000 Craguns Drive – Brainerd, MN

13069 Orono Parkway, P.O. Box 430, Elk River, MN 55330-0430

763.441.2020 (O) 7633.441.8099 (F) www.elkriverutilities.com

@ERMU_MN @ERMU_MN

AGENDA

1.0 CALL MEETING TO ORDER

2.0 GOVERNANCE REVIEW AND DEVELOPMENT

3.0 ADJOURNMENT

http://www.elkriverutilities.com/

ELK RIVER MUNICIPAL UTILITIES GOVERNANCE REVIEW & DEVELOPMENT

© 2016 Collaboration Unlimited

COMMISSION-MANAGEMENT WORK SESSION

Agenda

Tuesday August 16th ~ 2:15 to 3:15 p.m.

1. (2:15) Opening Remarks (Commission Chair and General Manager)

2. (2:20) Opening Remarks and Agenda Review (John Miner)

3. (2:25) Review of work tasks and schedule (John)

4. (2:35) Presentation (John Miner) and discussion (All) of effective governance structure and processes. (Content based on CU’s experience, with references from the American Public Power Association and Carver Policy Governance™ model).

5. (2:55) Presentation of Sample Policy Guidance Documents (John)

a. Guiding Principles for Governance & Policy Development

b. Governance Policy Manual Table of Contents

c. Model Policy Format.

6. (3:15) End of Work Session

Documents:

Work Plan & Schedule (Agenda Item No. 3)

PowerPoint presentation handout (Agenda Item No. 4)

Sample Policy Guidance Documents (Agenda Item No. 5)

ERMU GOVERNANCE REVIEW & DEVELOPMENT – DRAFT TASK PLAN (08-12-16)

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ERMU Governance Review & Development

Draft Task Plan & Schedule

TASK Task Description Proposed Schedule Comments

1. Kick-Off Commission-Management Work Session

Review of Work Tasks & Schedule

Presentation of effective governance structure and processes

Presentation of sample policy documents

August 15, 2016

2. Commissioner-Manager Questionnaire (Optional)

.Not Authorized .

3. Review of Governance Documents

Consultant and Team review of documents provided by ERMU.

Enabling legislation Bylaws Existing policies and resolutions Commission meeting agendas,

minutes and other documentation

August-September, 2016

4. Commissioner-Manager Interviews (Optional)

Not Authorized

5. Commissioner-Manager Retreat (Optional)

Not Authorized

ERMU GOVERNANCE REVIEW & DEVELOPMENT – DRAFT TASK PLAN (08-12-16)

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TASK Task Description Proposed Schedule Comments

6. Policy Guidance Documents

a. ERMU Guiding Principles for Governance and Policy Development

b. ERMU Governance Policy Manual Table of Contents (specific policy titles by category)

c. ERMU Model Policy Format (generic format for preparing written policies)

d. ERMU Foundational Policies

September 2016

October 2016

September 2016

November-December 2016

7. Additional Policy Development (Phase II)

ERMU Policy Manual Development.

Not Authorized

January-February 2017

1Copyright © 2016 Collaboration Unlimited

Governance Review Introductory


ERMU Governance Review: Purpose

Elk River Municipal Utilities (ERMU) is engaging in a review and development of its governance structure and processes. This review, designed and facilitated by Collaboration Unlimited (CU), will provide the information needed to build clarity and consensus about ERMU’s desired governance model, as well as the process and resources by which it can be developed and implemented.


Key Ideas

Effective governance is essential to the success of a municipal utility

The governing board and its management have separate and distinct roles and responsibilities in providing effective governance for the organization

In a healthy municipal utility organization, the governing board and management have a collaborative and productive working relationship

Routine evaluation of the governing board’s performance is a necessary part of achieving and sustaining effective governance


Why Strong Governance?

The reason for wanting a board that exercises strong governance has to do with an organization’s continuity and self-renewal. CEOs and executive managers change over time and vary in their strengths and personalities; individual board members also come and go. Only the board, acting as a body, can ensure that the organization’s institutional philosophy is aligned with the owners’/stakeholders’ long-term interests and is reasonably consistent over time.


The Policy Structure

of

Governance


Acknowledgement

Some of the information presented here is derived from the Policy GovernanceSM model developed by

John Carver and

Miriam Mayhew Carver.


Responsibility for Governance

The governing board, and only the board, is responsible for the structure and processes of governance (although the CEO and executive managers can and should support this work)

The board, acting on behalf of its customers (owners), and other stakeholders is expected to set the expectations for and achieve effective governance

The board delegates the work of governance only to its officers, committees, and outside independent advisors (not to management)



The governing board is directly responsible for:Compliance with legal requirementsProtection of assetsAccurate accounting & reporting of financial transactions

and condition

These “fiduciary responsibilities” of the board are non-delegable. In other words, only the board can do them or otherwise ensure that they are carried out by others.



The governing board is indirectly responsible, but ultimately accountable, for:What the organization accomplishes (or doesn’t)How those results are accomplished

The direct responsibility for results and methods is delegated to management through the CEO



An effective board pays close attention to: Its own non-delegable governance responsibilities on

behalf of the organization’s owners/stakeholdersThe strategic business results that are essential to short

and long-term success (delegated to the management through the director or manager)

Setting appropriate limits on the methods that management may employ in achieving the business results

The working relationship with management


Board Policies

The policies of a board are its principal work productsThe process by which the policies are developed

defines the board’s leadership An effective board uses policies to

defines its expectations assigns those expectations to someone checsk periodically to see that they are met


The Board’s Global Policy View

All situations, decisions, activities and products fit somewhere in four (4) policy/issue domains: Corporate Results Board-Management Connection (Methods) Delegation to Management (Results & Methods) Governance (Methods)


Corporate Results

The ERMU Commission should consider adopting results policies that are aligned (at a high level) with its Strategic Business Plan (once one is developed).Core Purpose (Why ERMU exists)Mission(s) (What ERMU does and for whom)Core Values (How we do business)


The Board’s Global Policy View

Both the Board Chair and the CEO are empowered to interpret and implement board policy: The Chair has no authority over CEO/management/staff

functions The CEO has no authority over board governance

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Governance Issues/values

Board-ManagementIssues/values

MethodsIssues/values

ResultsIssues/values

Bo

ard

Ch

air

CE

O


Board Delegations

The board defines its policies in sufficient detail that it is comfortable allowing the Chair and the General Manager to use any reasonable interpretation of its words.

The board delegates to its Chair and other officers the responsibility for enacting Governance and Board-Management Connection policies.

The board delegates to the CEO and management the responsibility to enact Results and Delegation to Management policies.


Board Delegations

Delegation policies do not rely on the CEO and Chair seeking approvals from the board before acting...any action that is true to the results policies and does not violate a governance policy (Chair) or delegation policy (CEO) is, in effect, pre-approved by the board.


Delegation to Management Policies

A board shares its authority with the CEO through Delegation to Management policies

Delegation policies describe what is delegated to management.

These policies place limitations on management practices and organizational situations.


Board - Management Connection Policies

The board and management should function as a leadership team.

Board - Management Connection Policies describe how the board transfers a large part of its authority to management and staff (through the CEO).


Why Governance Review

& Development?


Governance Review

A governance review is appropriate when:There are governance problems that need to be

addressedThere has been a change in leadership or composition of

the board…or a change is anticipatedThings are going well but the board is working toward

excellenceThere is a board policy that calls for periodic reviewAlmost any time a board member or the CEO believes

that some reflective thinking will be helpful


Governance Review

Perhaps the most important objective of governance review is to keep the board focused on what it should be doing.

A review can also open up communication on issues that may otherwise be avoidedA board that has blurred the line between governance

and managementA board that is dominated by the CEO and/or Board

ChairA board that is not providing adequate preparation and

support for its members


Governance Review

Outcomes from this governance review will help the ERMU Commission redefine the structure and processes by which it:Establishes and maintains policyUses policy as a reference for discussion and decision-

makingMonitors its own compliance with policyMonitors management’s compliance with policyPrepares in supports its Commissioners to perform the

critical work of effective governance


Governance Development

What is your vision for ERMU’s governance?

ERMU GOVERNANCE POLICY MANUAL PRINCIPLES FOR POLICY DEVELOPMENT

© Copyright 2016 Collaboration Unlimited

DRAFT ~ AUGUST 12, 2016

1. The Commission, as a body, is accountable to its customers and other stakeholders for the ERMU’s overall performance.

2. The Commission, within the limits established by State Law, City Resolution, and its Certificate of Incorporation, is responsible for the proper and effective governance of the ERMU.

3. The Commission’s most important and tangible work products are its written policies and the written record of its official actions in compliance with those policies.

4. The Commission’s policies are statements of conviction that serve as a definitive point of reference for all decisions and actions of the Commission and for the decisions and actions that the Commission delegates to the General Manager.

5. The Commission’s policies will be sufficient in scope for the proper and effective governance of the ERMU.

6. The Board’s policies will be sufficient in depth for the Commission, as a body, to accept any reasonable interpretation of meaning by those to whom it delegates the authority to make decisions and take actions on its behalf (Commission Officers and General Manager).

7. The Commission will prepare policies that clearly communicate affirmative expectations for organizational results.

8. The Commission will prepare polices that set limits on the authority delegated to the General Manager and the Commission’s officers by clearly communicating actions and situations that are unacceptable.

9. The Commission will refrain from:

a. Establishing any more policies than are necessary for proper and effective governance.

b. Establishing policies in any more detail than is necessary to communicate appropriate limits or reasonable interpretations by others who are empowered to do so.

c. Establishing policies that are vague, duplicative, in conflict with one another, or in conflict with legal and regulatory requirements.

10. The manner in which the Commission develops its policies is an expression of its leadership.

ERMU GOVERNANCE POLICY MANUAL

PRINCIPLES FOR POLICY DEVELOPMENT

© Copyright 2016 Collaboration Unlimited 2

11. The Commission will prepare draft policies only after obtaining and reviewing relevant and accurate information concerning the appropriate range of policy options and the likely results of their implementation.

12. The Commission will adopt a policy only after all Commissioners have had a reasonable opportunity to contribute to, consider, express opinions about, and vote to approve or disapprove a written statement of the policy, drafted in the Commission’s approved format.

13. The Commission will periodically review and update all of its adopted governance policies.

14. The General Manager will prepare and keep current a policy reference manual containing all adopted governance policies and related documents. The General Manager will ensure that the manual is made available to all Commissioners, the Commission Secretary, and executive managers in hard copy and digital form.

15. The Commission Chair will provide a copy of the policy reference manual to all new Commissioners and will ensure that the orientation of new Commissioners includes adequate coverage of the manual to ensure a thorough understanding of Commission policies and the Commission’s policymaking process.

16. The General Manager will monitor and routinely report to the Commission on management’s compliance with the limits established by the Commission through its governance policies.

SAMPLE GOVERNANCE POLICY MANUAL

TABLE OF CONTENTS

© Copyright 2016 Collaboration Unlimited

Results Policies

R - 1 Organizational Core Purpose R - 1.1 Organizational Vision R - 1.2 Organizational Mission R - 1.3 Organizational Core Values

Commission - Management Connection Policies

BMC - 1 Commission - Management Roles BMC - 1.1 Controlling Authority BMC - 1.2 Delegation of Authority to the General Manager BMC - 1.3 General Manager Accountability BMC - 1.4 Monitoring Performance of the General Manager BMC - 1.5 General Manager Performance Planning & Evaluation

Delegation to Management Policies

DM - 1 Corporate Limitations DM - 1.1 Succession of Leadership DM - 1.2 Information and Support to the Commission DM - 1.3 Strategic and Business Planning DM - 1.4 Customer Interests

DM - 1.5 Core Customer Services DM - 1.5.1 Electric Services DM - 1.5.2 Natural Gas Services DM - 1.5.3 Water Services DM - 1.5.4 Wastewater Services DM - 1.5.5 Telecommunication Services DM - 1.6 Other Customer Services

DM - 1.7 Employee Interests DM - 1.8 Organization & Staffing DM - 1.9 Financial Planning and Budgeting DM - 1.10 Financial Condition and Transactions DM - 1.10.1 Investments DM - 1.10.2 Reserve Funds DM - 1.10.3 Debt Issuance and Payment DM - 1.10.4 Procurement DM - 1.11 Cost Allocation and Recovery DM - 1.11.1 Rates & Charges for Electric Services DM - 1.11.2 Rates & Charges for Water and Wastewater Services DM - 1.11.3 Rates & Charges for Natural Gas Services DM - 1.11.3 Rates & Charges for Telecommunication Services DM - 1.11.3 Rates & Charges for Other Services

SAMPLE GOVERNANCE POLICY MANUAL

TABLE OF CONTENTS

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Delegation to Management Policies (continued)

DM - 1.12 Joint-Action Agency Relationship, Representation and Governance DM - 1.13 Protection of Assets (physical property, information, cash, investments) DM - 1.14 Corporate Risk Management DM - 1.15 Legal & Regulatory Compliance DM - 1.16 Environmental Stewardship DM - 1.17 External Communications (public, legislative, allied organizations) DM - 1.18 Community Involvement

Governance Policies

G - 1 Commission Purpose G - 1.1 Commission - City Council Relationship and Roles G - 1.2 Commission Authorities and Responsibilities G - 1.3 Governing Style (how the Commission intends to govern) G - 1.4 Agenda Planning (annual agenda & meeting agendas) G - 1.5 Commissioner Role, Responsibilities & Orientation G - 1.6 Commissioner Conduct (commitments & conflicts of interest) G - 1.7 Commission Officer Roles, Responsibilities & Succession G - 1.8 Commission Committees (principles, structure, roles and responsibilities) G - 1.9 Independent Advisors to the Commission (general counsel, bond counsel, human resources counsel, etc.) G - 1.10 Governance Evaluation and Development (annual evaluation, continuing education, etc.) G - 1.11 Cost of Governance (financial support for Commission operations and Commissioner compensation)

SAMPLE BOARD POLICY


CENTRAL STATES UTILITIES - BOARD POLICY

Category: DELEGATION TO

MANAGEMENT Title: INFORMATION & SUPPORT TO THE BOARD

Page 1 of 2

DM

Date of Adoption: Policy Number: DM – 1.2 Purpose & Summary: With this policy, the Board communicates its expectations for information and support from the General Manager. Policy: The General Manager shall not permit the Board to be uninformed or unsupported in its work.

Consistent with this general statement, the General Manager shall not fail to:

1. Inform the Board in a timely manner about CSU’s significant successes or shortcomings with respect to Board policies, goals and other directives.

2. Submit timely, accurate, and understandable financial, operating and other monitoring data required by the Board in a form that directly relates to the provisions of the Board policies being monitored. (See Policy BMC - 1.4 Monitoring Performance of the General Manager)

3. Report in a timely manner any actual or anticipated instance of management noncompliance with Board policies. Inform the Board about significant events and situations that are directly relevant to the Board’s policies, especially any changes which may materially alter assumptions that the Board has used previously to establish policy and make other significant decisions.

4. Advise the Board if, in the General Manager’s opinion, the Board is not in compliance with its own policies on Governance (G Series Policies) and Board-Management Connection (CMC Series Policies), especially where Board actions or behavior (individual or collective) is detrimental to the working relationship between the Board and the General Manager.

5. Advise the Board if, in the General Manager’s opinion, the Board is unfocused in its work or out of step with CSU’s strategic framework (vision, core purpose, core values, mission and strategic objectives).

6. Bring before the Board in a timely manner as many internal and external points of view, issues and alternatives as the Board may need to deliberate and make fully informed decisions.

7. Bring to the Board, in support of the Board’s deliberations and decision-making, the recommendation(s) of management, the rationale for those recommendations, and the process(es) by which those recommendations were developed.


Policy DM – 1.2 Page 2 of 2

8. Present information that is clear, concise, and in a form that differentiates among the purposes for which it is intended (i.e. monitoring, decision-making, business context, education, etc.).(See Policy G – 1.4 Agenda Planning).

9. Provide appropriate methods and resources for official communications and other functions of the Board, its officers, committees and independent advisors.

10. Communicate and work with the Board as a whole, either directly or, as appropriate, through its officers and committees.

11. Supply for the agenda of any Board meeting all matters that are required by law or contract to be approved by action of the Board.

SAMPLE BOARD POLICY


CENTRAL STATES UTILITIES - BOARD POLICY

Category: BOARD-

MANAGEMENT CONNECTION

Title: BOARD-MANAGEMENT ROLES BMC

Date of Adoption: Policy Number: BMC - 1 Purpose & Summary: With this policy, the Board describes the general nature of its working relationship with the General Manager and distinguishes its role as the governing body from the role of the General Manager, management and staff. Policy: The Board will work with the General Manager as a leadership team. The Board’s principal role is to:

Develop and adopt policies for the governance of CSU that set forth the results CSU is to achieve and place limits on the authority of the General Manager to determine how those results are achieved.

Review and approve strategic and business plans that set forth broadly stated objectives and performance measures.

Review and approve major project plans and programs, capital and operating budgets proposed by the General Manager (as required by the Board’s Delegation to Management policies).

Routinely monitor organizational performance and accept accountability for that performance.

Hire a competent General Manager and support the General Manager by routinely engaging in collaborative performance planning and evaluation.

The General Manager’s principal role, with the support of management and staff employees, is to:

Support the Board in its development of policies. Carry out the Board’s policies. Keep the Board fully informed about the outcomes of its policies, including the

achievement of results and the use of resources. Prepare and present, for Board approval and consistent with Board policies,

strategic and business plans, major project plans and programs, and capital and operating budgets.

Manage and operate CSU, accepting accountability for the performance of the organization in relation to the Board’s policies, as well as its approved strategic and business plans, major project plans and programs, and capital and operating budgets.

ERMU Commission-Management WS Draft Agenda...

Documents

Transcript of ERMU Commission-Management WS Draft Agenda...