Chriss Street, the county’s treasurer-tax collector, is under fire from federal and local investigations into his past and current work.
Union opponents and onetime ally John Moorlach have called for his ouster.
Amid the political brouhaha, how has Street done with the county’s money?
Street, who was elected in June 2006 and has been on the job since December, has fared well as manager of the county’s money, according to companies that track municipal investing.
Under Street, the yearly return on the county’s money has been about 5%,below Wall Street but solid for a government fund that stresses safety.
“We’ve got a good track record,” Street said.
The county’s fund consistently ranks in the top 10 in the U.S., according to Utah’s Tracs Financial LLC, which ranks municipal funds by yield performance.
“I think they’re probably one of the best pools in the U.S.,” said Jeff Flynn, principal of Tracs Financial.
The county’s fund also gets the highest grades from credit rating companies Moody’s Corp. and Fitch Ratings Inc.
Of 50 county funds in California, only 10 get Moody’s AAA rating like OC, according to Flynn.
Much of the credit for the county’s fund goes to Street’s successor, Moorlach, now a county supervisor.
Moorlach put in place the county’s conservative investing strategies after its bankruptcy in the early 1990s. He and Street played leading roles in predicting the collapse of the county’s fund in 1994.
The county has $6.2 billion under management. It’s made up of tax revenue and some money from cities and other government agencies.
Street has been under pressure from investigators, critics and the Board of Supervisors. The Justice Department also is looking into his tenure as a bankruptcy trustee for a trucking company pension fund and allegations he diverted money for personal use.
The OC district attorney’s office is looking into allegations that Street intervened in the county’s bid process to steer a contract to an Irvine architectural firm.
Street has denied wrongdoing in both cases.
He’s also been criticized for an overhaul of the treasurer’s offices that has cost nearly $1 million.
Moorlach has called for Street to step down or be stripped of his investing powers because of the distraction of the investigations.
Conservative Guidelines
Street has continued managing the county’s money within guidelines that were set out before him, according to Moorlach.
Moorlach introduced the strategies when he took over from former treasurer Robert Citron in 1995.
Citron managed the county’s funds more like a hedge fund, according to Moorlach, who lost to Citron for treasurer but was appointed after his ouster.
The county’s fund, then worth about $2 billion, collapsed after Citron used borrowing to invest in derivatives,bets, in this case, on interest rates,to boost the county’s returns.
For about 10 years, Citron saw great returns on his complex holdings, before his investing strategy busted.
“It was like taking sleeping pills with alcohol,” Moorlach said of how the fund was managed.
After the fund collapsed, state and national laws were put in place to ensure history didn’t repeat itself. The laws limit the types of investments municipal funds may make and made it easier to see how government funds were doing.
These days, the county treasurer isn’t allowed to trade outside an agreed-upon strategy that is put in place every December, according to OC Auditor-Controller David Sundstrom. Software prevents trades outside the guidelines, he said.
An advisory committee also looks after the fund. The portfolio’s holdings are posted online every month.
Sundstrom gives an audit four times a year to ensure security, compliance and proper valuation of the funds. An outside audit is done by Macias Gini & O’Connell LLP of Sacramento.
“I doubt it could be safer,” Sundstrom said. “There’s nothing wrong with the process.”
Two basic investing strategies are administered by Street. One involves a money market fund where bonds are held for 90 days or less. The second is an extended fund that holds investments for longer periods.
The funds buy bonds backed by government agencies and established companies to keep risk down.
Changes in interest rates may be considered the biggest risk to the funds, according to Street. But the risk is still minimal, he said.
Street said he sees interest rates moving down from now after the Federal Reserve’s half-point cut earlier this month.
