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Questions continue mounting about a mystery move just before the winter holiday break to strip investing powers from Orange County’s elected treasurer by a board of supervisors still reeling from the aftermath of an FBI bribery scandal involving one of their colleagues.
It also comes on the heels of the 30th anniversary of Orange County declaring bankruptcy in 1994.
Since my original column, I kept asking questions about this strange, last-minute move that essentially relieved elected Treasurer Tax Collector Shari Freidenrich of her investment powers over the county’s multi- Billion dollar investment pool — with little public explanation, much less input or transparency.
[Read: Santana: Why Did OC Supervisors Strip Elected Treasurer of Managing Investments?]
Called the banker for the county along with community and school districts, Freidenrich primary responsibility is the deposit, investment, collection and paying out of public funds.
According to county documents, she is responsible for overseeing the County of Orange’s $12 billion investment pool and serves as a trustee for the $20 billion Orange County Employee Retirement System.
The last time something like this happened was in 2010 when county supervisors voted to strip then-Treasurer Tax Collector Chriss Street of his investment authority.
Back then, that kind of action sparked a lot of attention.
Today, officials aren’t saying much beyond a very short statement.
“If the Board does not delegate the authority to the Treasurer,” said County Spokeswoman Molly Nicholson in my original column, “the responsibility defaults to the CEO who is responsible for implementing and administering Board policy.”
A Public Questioning
I’m not the only one asking questions.
At the county Hall of Administration at 3 p.m. today, Orange County’s Treasury Oversight Committee members have scheduled a public update on what’s happening.
The citizen’s oversight panel is one of the few reforms left from the fallout from the 1994 bankruptcy and features public members, along with the Elected Auditor Controller Andrew Hamilton and County CEO Michelle Aguirre.
Treasury Oversight Committee Chairman David Carlson questions how public inspection of the county’s investments can be done.
“I have to say I am not comfortable that the current situation allows appropriate oversight of how these funds are invested and handled,” Carlson said in an interview.
His concerns are exacerbated by the recent bribery scandal surrounding disgraced former Supervisor Andrew Do.
“Given the recent situation with Supervisor Do,” Carlson said, “one would think the county would be sure that oversight of all aspects of County activities were tightened and not loosened.”
Carlson – who is also a former longtime chairman of the county’s Audit Oversight Committee with 20 years experience on the panel, another 1994 bankruptcy reform – further expressed concerns that county supervisors failed to review the Treasurer’s proposed 2025 Investment Policy Statement as in previous years.
That means county supervisors are flying solo.
“The lack of a formal Orange County [investment policy statement] also clouds the ability of the Treasury Oversight Committee to rigorously monitor how the funds are managed against a known formal policy statement,” said Carlson, who emblazons his business cards with the motto, “Honoring the Public Trust With Relentless Oversight.”
The situation also may be triggering concerns from those who pool their investments with the County of Orange.
“To my knowledge at least one organization has pulled funds out of the pool, citing their ‘uncertainty’ with the existing situation,” Carlson said.
Employee Troubles
In addition to the loss of confidence from county supervisors, Freidenrich also may not be a great boss.
A May 2019 Performance Audit report looking into the Treasurer-Tax Collector detailed a high turnover rate and it’s unclear how those challenges have been addressed.
“In the six years evaluated, the TTC has had the largest percentage of employees who have left their departments, with percentages twice as high than the other two departments in the past two years. Most significantly, in 2019, 34% of TTC employees separated or transferred out of the department,” states the report completed by Arroyo Associations Management Consultants.
That study found that the Treasurer Tax Collector’s office had the lowest full-time employees of any similar agency in Southern California with only 78 full time equivalents – compared to 123 in similar-sized San Diego County.
In addition to several problems noted, the report highlighted problems in staff retention.
“With many managerial positions open, there is a potential for critical failure should the current staffing levels continue. Since the start of the engagement in July 2020, there were two vacant positions out of six total management positions in the Treasury Division with 50% of the filled positions having less than two years of tenure. There have since been further departures by managers from the Treasury Division.”
Where’s the Investments?
Carlson figures that the county is currently receiving about $10 million a day from property tax payments. Those revenues will swell to as much as $50 million a day between now and April 1., he said.
He is asking hard questions about how much is being invested into what financial vehicles from this daily cash flow.
While Freidenrich isn’t returning my calls or emails, she apparently isn’t in agreement with county supervisors about what’s going on.
Carlson confirmed as much, adding that Freidenrich isn’t exactly happy being represented by the county’s attorney – who is hired by OC supervisors.
The clash of independent elected officials at the County of Orange isn’t new.
Former County Auditor Controller Eric Woolery got into arguments with county supervisors over their funding of political mailers and pension benefit packages and wasn’t happy with his county-appointed attorney advising him in their disagreements, a situation he sponsored legislation to change.
[Read: Santana: OC Auditor Controller Leads CA Public Accountants Uprising]
Given the uncertainty of the situation, Carlson speculated that Freidenrich may soon go this route, calling for her own attorney.
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