Orange County’s top executive has doubled down on taking control of over $17 billion in investments from elected Treasurer Tax Collector Shari Freidenrich.
At the same time, Freidenrich this week is appealing directly to county supervisors in private on why they should give her back investment power.
The clash comes after a contentious oversight meeting last Wednesday where CEO Michelle Aguirre repeatedly praised Freidenrich’s second in command and told oversight committee members their role was no longer relevant moving into 2025.
In a brief interview that she cut short right after that meeting, Freidenrich said she doesn’t know why supervisors took away her investment powers, declining to comment on the issue.
“They can decide to delegate it,” Freidenrich said. “It’s their right.”
Aguirre defended the county’s handling of the investment pool at the Jan. 29 county Treasury Oversight Committee meeting, telling board members they were “nitpicking,” when they pointed out the county doesn’t currently have an investment policy or enough oversight.
“What I’m hearing today sounds like the world is ending and we have no (investment policy strategy) and everybody’s just going rogue,” Aguirre said. “That is not our situation.”
But Aguirre didn’t say why the move was necessary, noting repeatedly in public that Assistant Treasurer Dana Schultz was continuing to legally invest the money based on last year’s expired guidelines in the absence of a new plan from the board.
When asked if Aguirre still had confidence in the treasurer after the meeting, county spokesperson Molly Nichelson referred reporter’s to Aguirre’s comments where she praised Schulz and did not mention Freidenrich.
County supervisors quietly took back control of their investments from the county treasurer at the end of last year, but it’s unclear what their long term plans are for investing over $17 billion.
[Read: Santana: Mystery Crisis Brewing at the OC Treasurer Tax Collector]
Supervisors haven’t publicly discussed why they took control of the fund away from Freidenrich after Aguirre removed a proposal from the board’s Dec. 17 agenda that would’ve given her permission to keep managing the funds.
That action drew a spirited debate amongst members of the county’s Treasury Oversight Committee, one of several boards set up after the county bankruptcy to help the public keep an eye on the county’s finances, whose members voiced concerns that they no longer have an investment policy to hold county staff accountable.
While county supervisors took back control of the fund they didn’t provide the public with the traditional investment policy statement for 2025, which would lay out how county investments are handled in a jurisdiction that went bankrupt in 1994 after questionable investments and shoddy oversight of the Treasurer Tax Collector.
That lack of oversight has left the panelists charged with overseeing the Treasurer Tax Collector in limbo.
“As an obsessive compulsive personality, I don’t like uncertainty and gaps,” said David Carlson, chair of the committee. “At the moment, we are in a gap.”
Francine Scinto, another member of the board, also pointed back to the county’s bankruptcy in 1994, saying people need to know where the money is.
“Is the public reassured that Orange County isn’t headed on some crazy path?” Scinto asked at the meeting. “We have a history in Orange County.”
The 2025 guidelines have not yet been created or voted on by supervisors, who are expected to discuss the issue at their first meeting in February according to Aguirre. It is not listed on the agenda for that meeting as of Tuesday.
Right now, the treasurer tax collector staff are continuing to invest and handle the county’s $17 billion fund according to Nichelson, but they’re doing it at the direction of the CEO, not the treasurer.
County Supervisor Doug Chaffee, who’s the new chair of the board, said he wanted to take over watching the money after former Supervisor Andrew Do pleaded guilty to accepting bribes in exchange for redirecting contracts that were unrelated to the county investment pool.
[Read: Former OC Supervisor Andrew Do Pleads Guilty to Bribery Scheme]
He declined to comment on whether Freidenrich had properly managed the funds, but said he would be meeting with her in the next week to discuss it.
“I don’t have any opinion on that as I don’t know,” Chaffee said.
Supervisor Vicente Sarmiento said it was in the “best interest of the County,” to have them review investments, and also pledged to meet with Freidenrich to discuss the shift.
“This is an essential aspect of the Board’s oversight role in the County’s financial management, and I take it very seriously,” Sarmiento said in a Thursday statement.
None of the other supervisors replied to requests for comment.
Aguirre and county auditor-controller Andrew Hamilton also shot down a draft of the annual oversight report that questioned why there was no public discussion on how the county should invest.
“We are concerned that to date, there has been no public discussion regarding the Board’s assumption of fiduciary responsibility of the $17.1 billion of public funds,” the proposed statement signed by Scinto reads.
That statement will now be revised behind closed doors by a panel including Aguirre, Hamilton and Scinto.
Leon Page, the county’s top lawyer, also sent a letter on Jan. 13 to the committee warning them against discussing the county’s 2025 plans and to focus on the past.
“I understand that future questions may arise with respect to the (committee’s) ongoing role in providing oversight over the Treasurer’s investments,” Page wrote. “I recommend the (committee) remain patient as the Board prudently considers its next steps.”
Carlson questioned that letter, asking what their role would be now if they weren’t overseeing the investment pool.
“I think our world changed on January 13,” Carlson said. “As a brand new chair this was a little bit disconcerting because it left in limbo what our responsibilities are.”
Aguirre made it clear that moving forward, the committee would not have the power to oversee the county’s investments unless the board of supervisors gave it back to them.
“There is no oversight by the treasury oversight committee of 2025,” Aguirre said. “The investment authority is with the board…there is no oversight by (the committee).”
Carlson asked if that was the best way forward for a county that’s faced repeated questions over its fiscal health.
“Currently, there is no oversight by this committee,” Carlson said. “Has the world so changed that there is no need for oversight?”
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at nbiesiada@voiceofoc.org.
