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County To Take $65 Million From Pool

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By JULIA FERRANTE, The Tampa Tribune

Published: December 7, 2007

DADE CITY - Pasco County leaders on Thursday unanimously agreed to withdraw the maximum 15 percent, or $65 million, from a state investment pool as they wait for assurances that the fund can remain solvent.

The county commission, school board and clerk of the court also will not make any new deposits into the account but instead put their savings in federally secured investments until administrators can ensure potential losses will be recovered.

"Because the state has not done anything to ensure the security of this even from an investment perspective, the prudent thing to do is to take the 15 percent out," said Commissioner Michael Cox, a financial planner. "My concern is they will freeze the fund again."

State officials froze the $14 billion account until Thursday morning after a number of concerned investors pulled out $10 billion from it in two weeks. The fund includes mortgage-backed assets, which have been deemed "questionable" in light of the slow real estate market.

The State Board of Administration oversees the local government investment pool, which counties, municipalities and school districts depend on to meet payroll, bond payments and other obligations.

Pasco and Hillsborough County government entities are among the largest shareholders.

The Pasco commission had about $507 million tied up as of Wednesday, including $22 million Tax Collector Mike Olson was ordered to deposit that day. That represents the vast majority of Pasco's savings, said Michael Nurrenbrock, the county's director of management and budget. Pasco also has $6 million in solid waste fees in a separate account.

Commission Can Meet Obligations

Commissioners expect a check for $81 million from Olson from real estate tax collections, Nurrenbrock said. That, and $8 million of available cash will help cover payroll and weekly bills at least through January.

"It appears we can meet all of our obligations for the month of December ... and January, and somewhere along there, the tax collector will give us another check," Nurrenbrock said.

This week, county commissioners will need $5 million to pay bills, Nurrenbrock said. Next week, the county will need $11 million, including $5 million for regular bills, $5 million to pay employees, and $1 million to pay unionized firefighters overtime and sick leave back pay according to a court order. In the last week of December they will need $23 million for payroll and quarterly draws for the sheriff, supervisor of elections and other constitutional officers.

The Pasco County School District also is concerned about the stability of the state board's fund.

The school board voted Tuesday to give the district's finance department authorization to open other investment accounts "that will provide protection of the district funds and a reasonable return on investments."

The board also agreed to establish a $27 million line of credit with Bank of America because of uncertainty about when the district might be able to withdraw money it has invested with the state board's fund.

"We hope we won't have to use it," said Olga Swinson, the district's chief finance officer.

State Pool Shouldn't Be Doomed

County commissioners fleetingly considered continuing to deposit funds into the account but fears that the account would be frozen again put an end to those discussions.

Jay Kominsky, director of financial services for the clerk of the court, noted that there was always a risk that governments would take money out of the account. He said if investors take their 15 percent out, it "should not doom the pool."

"If nothing goes back in, it will be doomed," he said.

Commissioner Ann Hildebrand said she is worried about long-term risks of the board's strategy.

"This has been a week of turmoil," she said. "While I support this decision, I can't help but think the state account has performed really well. Because we had so many runs on the state account is why we're here today. It kind of erodes the trust."

Commissioners considered setting up a checking account or mutual fund investments with SunTrust Banks, but Cox suggested a bigger investment house, Federated Investors, which projects a 4.34 percent return. "SunTrust's claim to fame is that they own Coca-Cola stock," he said. "Federated is bigger than SunTrust ever thought about being."

Cox, who this week was asked to serve on a Florida Association of Counties committee investigating the state account, said he wants to look at investment policies to ensure the member governments followed the rules.

County Attorney Robert Sumner suggested hiring a securities attorney. The board unanimously agreed.

Reporter Ronnie Blair contributed to this report. Reporter Julia Ferrante can be reached at (813) 948-4220 or jferrante@tampatrib.com.

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