TREASURER/TAX COLLECTOR - M. L. ANDRADE

Consider Adopting Resolution Delegating To The County Treasurer The Authority To Invest Or To Re-invest County Funds And The Funds Of Other Depositors In The County Treasury, Or To Sell Or Exchange Securities So Purchased for a one-year period; or provide other direction as desired.

SBC FILE NUMBER: 685.2

RESOLUTION NO: 2018-6

Ordinance #689 passed and was adopted on April 1, 1997 to implement Government Code Section 53607.  Since adopting Ordinance #689, the Board has adopted Resolutions renewing this delegation of authority for subsequent one-year terms.  Section 53607 provides as follows:

"The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency, who shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires, and shall make a monthly report of those transactions to the legislative body. Subject to review, the legislative body may renew the delegation of authority pursuant to this section each year."

The Board of Supervisors previously established a Treasury Oversight Committee, pursuant to Government Code Section 27131.  Section 27131 authorizes the Board to establish an oversight committee to consist of from 3 to 11 members, representing the categories specified in Section 27132(a)-(g), who are nominated by the Treasurer and confirmed by the Board.  The Board adopted Resolution 2016-71, confirming the Treasurer's nominations and appointing the County Auditor, a Board member and the County Superintendent of Schools.  Once a committee is established, the Treasurer prepares an annual investment policy for the Oversight Committee's review (Section 27133) and the Committee causes an audit to be conducted to determine the Treasurer's compliance, and may also include issues relating to the structure of the investment portfolio and risk (Section 27134).  However, the Oversight Committee does not direct individual investment decisions, select individual investment advisors, brokers, or dealers, or impinge on the day-to-day operations of the County Treasury (Section 27137).  The annual investment policy was recently provided to the members of the County Treasury Oversight Committee for review and preparation of an audit, as required by Sections 27133 and 27134.

Consequence of Not Delegating Authority to the Treasurer:

If the delegation of authority is not approved, the Board of Supervisors would have to assume the investment responsibility for County funds, and each of the other entities with funds deposited in the County Treasury would either have to manage their own investments or continue to delegate investment authority to the County Treasurer.  In managing investment of County funds, the Board would be subject to the requirements set forth in Title 5, Division 2, Part 1, Chapter 4, Article 1, Sections 53600 through 53610 of the Government Code.  The standard for making investment decisions, whether by the County Treasurer or by the Board and other entities' legislative bodies, is set forth in Government Code section 53600.3.  Section 53600.3 provides as follows:

"...[A]ll governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law."

It is recommended that the Board:

a) Adopt Resolution 2018-___ Delegating To The County Treasurer The Authority To Invest Or To Re-invest County Funds And The Funds Of Other Depositors In The County Treasury, Or To Sell Or Exchange Securities So Purchased for a one-year period, and authorize the Board Chair to sign the Resolution.