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For the first time in two months since Voice of OC first alerted the public to the quiet stripping of investment authority from Orange County’s elected Treasurer Tax Collector Shari Freidenrich, county supervisors have issued a public statement to the rising tide of questioning from residents, elected officials and investment pool participants.
[Read: Santana: Why Did OC Supervisors Strip Elected Treasurer of Managing Investments?]
Two public agencies – the OC Toll Roads and the OC Water District – have reportedly pulled their funds from the county’s $17 billion investment pool amidst the lack of public information from county leaders.
The chairman of the county’s Treasury Oversight Committee – a review panel set up in the wake of the 1994 Orange County bankruptcy – has been raising questions about keeping up independent oversight of the county investment pool under the new arrangement where the county CEO’s office oversees investments.
[Read: OC CEO Defends Stripping Elected Treasurer of $17 Billion Investment Pool]
Two countywide elected officials – District Attorney Todd Spitzer and Freidenrich herself – publicly called out county leaders for their lack of an official explanation for such a controversial move, right on the heels of the 30th anniversary of the 1994 county bankruptcy.
[Read: OC District Attorney and Treasurer Question Supervisors Takeover of $17 Billion Investments]
Now, a State Assemblyman is also raising concerns about the mysterious move.
Late Monday, county supervisors finally spoke up, in the form of a letter released by Chairman Doug Chaffee.
The issue is also likely to be addressed this morning at the county supervisors’ regularly scheduled meeting, starting at 9:30 a.m.
To watch the meeting live, click here.
County investments are safe, Chaffee writes but county supervisors have lost faith in Freidenrich.
“The financial health of the County is strong, and our investments are secure,” wrote Chaffee in a letter released publicly late Monday, writing back to State Assemblyman Avelino Valencia, right after the OC Register reported that Valencia raised concerns about the lack of transparency from the County of Orange and the potential need for state hearings on the issue.
To read Chaffee’s full letter, click here.
On Monday, Chaffee admitted what supervisors have avoided publicly saying since their quiet action last December.
“Issues have come to light regarding the Treasurer-Tax Collector’s (“Treasurer”) ability to effectively manage her department and this impacts her ability to effectively perform her statutory duties,” Chaffee wrote in his response to Valencia.
“For example,” Chaffee wrote, “the Treasurer was nearly a year late in preparing the annual statement of assets for Fiscal Year 2022-23, which shows the amounts and types of assets in the County treasury, as required by Government Code section 26920.”
“This failure to submit the statement of assets to the County’s auditor in a timely manner resulted in a delay in the County’s ability to complete its Annual Comprehensive Financial Report,” Chaffee continued.
“While the statement of assets was finally submitted in November 2024, the Treasurer’s failure to timely complete her statutorily mandated duties is a cause for concern for the Board.”
It’s not the first time an OC Treasurer has been stripped of investment authority – the most recent episode occurring in 2010 when former Treasurer Tax Collector Chriss Street became entangled in a civil lawsuit and board members took back investment authority, which is usually delegated to the elected treasurer every year.
County supervisors have stuck to the same investment plan authorized previously, Chaffee wrote, noting it’s more restrictive than state law adding that “The County has contracted with Chandler Asset Management, Inc. to provide investment advisory services.”
In his letter, Chaffee highlighted a 2021 county performance audit on Freidenrich’s management of the Treasurer/Tax Collector office.
“At the time the performance audit was prepared, due to significant employee turnover and a growing number of vacancies during the official’s tenure, the OC Treasurer-Tax Collector Department had the lowest level of full-time equivalent positions compared to similar counties, with the average count of filled positions being well below the positions budgeted for the department. According to the performance audit report, the high level of attrition increases the potential for failure,” Chaffee wrote.
“The Treasurer was also the subject of an independent investigation, following various claims that she violated the County’s Equal Employment Opportunity Policy (“EEO”) and the County’s Workplace Violence Policy. The investigation substantiated a violation of the Workplace Violence Policy. As a result, the Treasurer was directed by the County Chief Human Resources Officer to cease and desist from all verbal or physical conduct that violates County policy,” Chaffee wrote.
While Chaffee’s letter paints a bad picture of Freidenrich as a boss, his letter also stresses there’s no performance issues with the investment pool, a point also acknowledged by David Carlson, longtime chair of the Treasurer’s Oversight Committee.
Freidenrich in earlier interviews speaking to these issues has defended the stability of the county’s investment pool under her watch along with its competitive earnings.
She also defends her management of the agency calling the performance audit “old news” but acknowledged she faced challenges as a manager with her staff that required executive coaching.
“I’m asking the board to reconsider this decision,” Freidenrich said when she addressed county supervisors publicly on their decision to rescind investment authority. “I’ve received significant feedback from the public, pool participants…they’ve expressed their satisfaction.”
Whatever county officials say now, Freidenrich has been in office longer than any of her colleagues – first elected in 2010 and then re-elected in 2014, 2018 and in 2022.
She ran without opposition in all her re-election campaigns.
Even a year after the scathing performance audit.
Freidenrich, a Republican, went on to get more votes in 2022 than any countywide elected official, winning her seat outright in the June primary.
I can’t recall one county supervisor – Republican or Democrat – saying a word publicly about her management back then.
Yet interestingly, in her list of endorsements – chock-full of standard OC political brands like the Lincoln Club and the Republican Party – Freidenrich doesn’t list one current county supervisor, just former supervisors.
Still, there’s a strong tendency in OC government circles to stay quiet, protect the brand.
Despite the past experience with the 1994 bankruptcy or most recently, the federal indictment of County Supervisor Andrew Do on a bribery scheme – this episode shows that the official penchant for avoiding public debate remains strong inside the County of Orange Hall of Administration.
Consider that in his Monday letter, where Supervisors’ Chairman Chaffee clearly speaks to spooked partners, he underscores that the county investments are safe, issuing an assurance and explanation, which if he is to be taken at his word, most likely should have been offered two months ago.
“The County investment pool remains safe, liquid, and earning a rate of return that is commensurate with the market,” Chaffee writes.
“However, rather than waiting for an impact to the investment pool, the Board has taken proactive steps to mitigate any risk from the persistent employee retention and understaffing issues that the Treasurer has experienced.”
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