Hillsborough to review investment procedures

12/05/07 Mitch E. Perry
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Hillsborough commmisioners today directed financial planners to review the county's options in the wake of sell-offs of the state-run investment fund.

In just the last month, nervous local government who used the fund for short-term investments of their operating cash began withdrawing funds after reports that about $2-billion in notes backed by subprime mortgages had been downgraded, reducing the balance of the fund from $26-billion to $14-billion.

Hillsborough County is one of the biggest shareholders in the fund, with the county and School Board holding more than $1.4 billion in the fund. County Commissioner Brian Blair today to scheduled a discussion about what – if anything the County –should do about the situation.

The Hillsborough Clerk of the Circuit Court’s Office administers the county’s investments. Pat Frank, the Clerk of the Court, told commissioners she has been in close touch with Chief Financial Officer Alex Sink since the problems arose.

Frank said the investment trust fund, run by the State Board of Administration (SBA), has always been a reliable source of investing.

On Tuesday, the SBA split the fund into two parts, with the largest containing the most secure assets. This so-called ‘clean’ portion of the fund will make up 86 percent of investments, while shares of the fund’s other 14 percent, that contain defaulted and at –risk securities will not be tradable.

Frank told commissioners that the SBA has always been considered a safe investment, even after it sent a letter to local governments warning that there might be some collateral investments in subprimes. Frank said the SBA had surveyed it totally and downplayed any significance on the security of the fund. That’s why Hillsborough County – unlike other local governments has not pulled out of the fund.

But Frank said ultimately it’s the Board of Commissioners call.

Dan Klein is the chief deputy clerk of the court. He told the board that if security is the top concern, the County should invest in treasury bonds.

He says the return is about 3.8 percent, while funds in the SBA have given the county more than a 5 percent return.

Klein told Blair that now is the right time to get the financial officers from the county and the clerk’s office to review their investment policies.

On Tuesday, the director of the SBA, Coleman Stipanovich, resigned.

Sharpe asked Frank the SBA made mistakes. Frank said there wasn’t enough transparency with SBA members. She said she just recently learned that the state-run insurer, Citizens, is actually one of the largest investors in the fund.

While Blair continued to say he didn’t want any taxpayers money being invested unwisely, Commissioner Ken Hagen interjected, saying it was fine to review policy, but he didn’t want the recommendation to simply copy what some other local governments might be doing.

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