Weeks before Orange County Supervisors took the rare move of stripping all investment powers from the county’s elected treasurer, two supervisors met privately with a group of workers who expressed a host of festering concerns about their boss.
Such private meetings are rare.
It’s even more rare to see county supervisors take immediate action based on worker complaints, especially involving an independent elected official.
[Read: Santana: Why Did OC Supervisors Strip Elected Treasurer of Managing Investments?]
All with no prior notice or public debate.
The move also comes as supervisors are slated to consider disbanding the Treasury Oversight Committee, placing control of a $17 billion investment pool with five politicians who just saw one of their colleagues plead guilty to bribery charges involving public contracts.
Now, supervisors are looking to let the Audit Oversight Committee handle overseeing the funds – a committee which has the majority of its members appointed by supervisors.
Orange County is also facing a looming liability related to the Airport Fire, one that sources indicate now includes over 500 claims that could potentially exceed $1 billion.
The deadline to file claims is today.
In a letter to State Senator Avelino Valencia, OC Treasurer Tax Collector Shari Freidenrich claims supervisors trashed the state’s transparency laws when they stripped her investment powers.
“The Board of Supervisors’ actions to take control over the pooled funds as the named fiduciary was taken after it appears that they reached consensus behind closed doors, without any public discussion,” wrote Freidenrich to Valencia, who originally sent county supervisors a letter of concern over the issue last month.
That letter came after Freidenrich told supervisors on February 11 that it was up to them to give her the power to invest the money.
“I acknowledge by law the board is the fiduciary,” Freidenrich said at that meeting.
To read Freidenrich’s letter, click here.
To read Valencia’s letter, click here.
Freidenrich also raises the specter in her letter that Orange County supervisors may be violating state law, noting “the Board of Supervisors appears to intend to delegate its fiduciary duties to an unelected and publicly unaccountable County Investment Manager, which I have been advised may violate State law.”
In her letter, Freidenrich takes issue with no public discussion about the move, along with statements made by county supervisors that based on worker complaints, they lost faith in her ability to oversee the investment pool.
[Read: OC Supervisors Break Silence; Publicly Blast Treasurer’s Alleged Workplace Hostility]
“They took this unprecedented action based on undisclosed complaints from former staff that I created a hostile workplace, had significant vacancies in positions and that they have lost faith in my ability to manage my Department,” she wrote.
Freidenrich raised a host of legal concerns about the move.
“This consensus was apparently reached outside of Board meetings, without agendized personnel evaluation sessions required by the Brown Act. without public discussion, and without providing me an opportunity to confront the charges or be heard at all,” she wrote in her March 4 letter to Valencia.
Regardless of one’s view of Freidenrich or her stewardship of the office, she’s not wrong that a dramatic shift has occurred without any public discussion, much less debate.
She isn’t alone in that concern.
Both District Attorney Todd Spitzer and the chairman of the County’s Treasurer Oversight Board raised concerns about such an action without corresponding public debate or in the case of the oversight panel chairman, the removal of independent citizen monitoring that was set up after the 1994 bankruptcy to much official fanfare.
[Read: OC District Attorney and Treasurer Question Supervisors Takeover of $17 Billion Investments]
OC Supervisors’ Chairman Doug Chaffee all but admitted in his recent public remarks from the dais that the intent was clearly to try to clean up a situation at the treasurer’s office quietly – underscoring the favorite sport of OC Supervisors: keep the public out, protect the brand.
“The County investment pool remains safe, liquid, and earning a rate of return that is commensurate with the market,” Chaffee wrote Valencia in his letter. “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.”
To read Chaffee’s letter, click here.
The action to remove Freidenrich’s stewardship came following a late November meeting with a coalition of disgruntled workers, their union leaders, and OC Supervisors Don Wagner and Katrina Foley.
What Prompted Employees to Speak Out?
It’s unclear how those two supervisors came to meet with the workers.
However, it seems county leaders somehow secretly decided to pass on their annual December delegation of investment authority to OC Treasurer Tax Collector after these meetings.
Tensions have apparently been building up with staff at the Treasurer Tax Collector office for some time under Freidenrich.
When a 2021 Performance Audit on the office was completed there was little mention of the specific issues workers wanted addressed and union officials attended the ensuing Audit Oversight Committee (which few members of the public ever attend and whose meetings are not videotaped) to express concerns that worker worries hadn’t been adequately addressed.
After that meeting, interim CEO Michelle Aguirre met with union officials on concerns in the office, triggering a meeting with Aguirre and the head of Human Resources Department, Collette Farnes amidst ongoing worker complaints.
Issues mentioned by workers include a lack of written procedures on how to do things around the office, coupled with a demanding, micromanaging boss that changes direction quickly making it hard to understand what she wants, resulting in delays for simple things like ordering office supplies.
County supervisors confronted by workers seemed shocked at the situation, sources note.
Yet ironically, after the meeting that supervisors say was so pivotal, officials still had planned to grant delegation of investment authority on official agendas to Freidenrich.
The ensuing Dec. 17 action came quietly – with the Clerk of the Board simply reading out loud that the annual item had been removed from the agenda. When asked about it, county leaders largely remained quiet for several months.
Third Strike For OC Treasurer/Tax Collector?
It’s a public third strike for the OC Treasurer Tax Collectors office – which was at the center of the county’s biggest scandal back in 1994 when then-treasurer Robert Citron got in trouble with risky investments that eventually put the county government in bankruptcy.
The elected office generated controversy again in 2010 when Treasurer Chriss Street was stripped of investment authority after becoming embroiled in a civil fraud lawsuit regarding his stewardship of a bankrupt trucking firm before becoming a public official.
Today, Freidenrich faces a similar storm.
Workers who attended the November private meeting with county supervisors described a tough working environment under Freidenrich, presenting a picture of a micromanager who wants control over every aspect of the department, even ordering office supplies.
They say the turnover rate at the Treasurer Tax Collector was high and the office was hard to work in, something echoed in the scathing 2021 Performance Audit.
To read the Performance Audit report, click here.
In interviews with Voice of OC, Freidenrich said those issues are resolved and she’s grown as a manager since implementing the recommendations of the Performance Audit.
“Today we run a collaborative, effective fiscal office, with an excellent chain-of-command structure, with all staff reporting administratively to my Assistant Treasurer-Tax Collector, who is responsible for the day-to-day operations under my policy direction,” Freidenrich wrote to Valencia.
“We have a much improved work culture compared to 2021 with engaged staff, enjoy good relations with our largest bargaining unit and continue to perform all of the required statutory duties in the area of public funds and other areas of responsibility consistent with the conclusion reached by the external auditor in the performance audit report dated May 19, 2021.”
Yet when reached for comment, Orange County Employee Association General Manager C.B. Barfield issued a statement acknowledging a better work culture since a deputy took over management of the office, but also underscoring the challenges facing Freidenrich as a manager.
“OCEA has worked alongside County CEO since 2021 to improve the working conditions for our members,” wrote Barfield. “While the efforts from the Deputy TTC (Treasurer Tax Collector) have been positive, Shari’s have not been positive in making change for the workers. Culture change status quo.”
Freidenrich acknowledges tension at the staff level at times.
“I consider myself a humble public servant, and I hold myself and my office staff to the highest fiduciary standards,” she wrote Valencia. “Adhering to those standards has sometimes led to uncomfortable discussions with some supervisory staff members, mostly relating to my expectations on implementing efficient and cost-effective processes and work product quality based on policies or strategies that I set as the elected official.”
Yet, I’ve heard similar staff tension within county supervisors’ offices themselves as well as with a host of county department managers.
Never with this kind of publicity.
Or immediate action.
Are County Investments Safe?
Despite the concerns aired publicly about Freidenich’s office management skills, no one has found any issues with the county’s investments.
She touts a 28-year record as an elected Treasurer in public service, noting in her letter, “I am highly credentialed in key areas of treasury, investments and accounting and have earned the Certified California Municipal Treasurer (CCMT), the Certified Public Finance Administrator (CPFA), the Certified Public Investment Manager (CPFIM) and the Advanced Certified Public Investment Officer (ACPFIM) local government certifications.”
She further notes, “our Treasury regularly scores at the very top statewide in meeting our statutory obligations for balancing safety, liquidity and yield. We’ve saved Orange County taxpayers over $1 billion since I took office in 2011.
In FY 23-24, we were the #1 county in the state (out of 58) for the highest secured property tax collection rate at 99.2% and #4 for the highest investment pool yield at 4.246%, (while maintaining a 9944% NAV) and an informal survey by Sacramento County as of 12-31-24 shows Orange County as having one of the highest net asset values at 1.000 (safety), one of the lowest in weighted maturity of 283 days (liquidity) and one of the highest returns (yields), balancing the public safety objectives of safety, liquidity and yield.”
While county officials noted in Chafee’s letter to Valencia that they have hired an outside firm to advise on investments, Freidenrich said she hired that firm in the last year.
She also defends her approach in avoiding public tax auctions in recent years, arguing the county makes considerable interest on those properties and in some cases those defaults are homeowners in trouble that need consideration that can be offered while the county still makes interest on delays in payment.
What to Monitor Next
Valencia’s idea to have state hearings on how county investments are handled could be an interesting way to learn more about a locally elected office that rarely gets attention until there’s trouble or controversy.
In the meantime, while county supervisors have adopted an investment policy statement similar to what Freidenrich has maintained, there is still wiggle room within that policy to take on more risk, sources indicate.
Any changes on investments that may carry more risk – and return – are the measurement for Orange County taxpayers to monitor this controversy in real time.
Whether they have that oversight ability remains up in the air.
