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Agenda Item
ASR
Control 25-000925 |
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MEETING
DATE: |
12/16/25 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
All
Districts |
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SUBMITTING Agency/Department: |
Treasurer-Tax
Collector (Approved) |
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Department contact person(s): |
Shari
L. Freidenrich (714) 834-7625 |
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Subject: Approve 2026 Statement of
Investment Policy and Investment Authority Delegation
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Resolution to Form |
Discussion |
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3
Votes Board Majority |
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Budgeted: N/A |
Current Year
Cost: N/A |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 2/11/2025, #S31K 12/17/2024 #S31F;
12/19/2023 #17, 12/20/2022 #15 |
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RECOMMENDED
ACTION(S):
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1 |
Approve the 2026
Statement of Investment Policy |
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2 |
Adopt
Resolution approving the 2026 Statement of Investment Policy and delegating
investment authority to the Treasurer-Tax Collector for calendar year 2026 |
SUMMARY:
State law authorizes the county
treasurer to submit a statement of investment policy to the governing board of
a local agency and be delegated the authority to invest and reinvest surplus
funds. This submittal allows the
Treasurer to meet this duty and by delegation to the Treasurer, remove the $15+
billion of County and Educational District public funds fiduciary
responsibility from the Board.
BACKGROUND
INFORMATION:
Article 4, Section 1-2-320 of the
Orange County Codified Ordinances requires that the Treasurer submit an annual
Statement of Investment Policy (IPS) for the Board to review and approve in
order for the delegation of the authority to invest or reinvest surplus funds
from the Board to be effective.
In accordance with Government Code
Section (GCS) 53646 (a)(1), in the case of county government, the treasurer may
annually render to the Board a statement of investment policy, which the Board
shall review and approve at a public meeting.
Any change in the policy shall also be reviewed and approved by the
Board at a public meeting. GCS 53646 (g)
states that in recognition of the state and local interests served by the
actions made optional in subdivision 53646 (a)(1), the Legislature encourages
the local agency officials to continue taking the actions formerly mandated by
this section.
After the Orange County bankruptcy,
Government Code section 53646 was enacted to require the county treasurer to
annually render a statement of investment policy to the legislative body for
approval. In 2004, the legislature
changed the law to no longer make this a mandated requirement and added GCS
53646 (g). The County Treasurer is
continuing to take this action formally mandated by law and is submitting the
IPS to the Board pursuant to GCS 53646 (a)(1).
GCS 53600.3 provides that all
governing bodies or persons authorized to make investment decisions on behalf
of the local agency are fiduciaries subject to the prudent investor
standard. Government Code section 27000.1
provides that, subject to Section 53607, the Board is authorized to make
investment decisions on behalf of the County and may delegate the authority to
invest or reinvest the funds of the county and the fund of other depositors in
the county treasury to the to the County Treasurer by Ordinance. In addition, pursuant to Government Code
section 27000.3, the Board is the agent of the county who serves as the
fiduciary and is subject to the prudent investor standard, unless a delegation
has occurred pursuant to Section 53607, in which case the county treasurer
shall be the agent of the county with respect to these funds, serve as the
fiduciary and be subject to the prudent investor standard and the Board shall
not be the agent, serve as the fiduciary, or be subject to the prudent investor
standard.
Treasurer
Experience and Qualifications:
The Treasurer has 28 years of
public fund investing and has prudently managed public fund portfolios during
that period and has several credentials earned over her career demonstrating
her technical expertise in the area of investments, accounting and finance,
including CPA, CCMT, CPFA, CPFIM and ACFIM.
In addition to the public funds experience, the Treasurer meets the
requirements of Government Code section 27000.7. The Treasurer has met the bonding
requirements for this position. The
Treasurer has been active in Treasury organization including recently being
elected by the 58 County Treasurers to be the President of the California
Association of County Treasurer Tax Collectors (CACTTC), after serving on the
Executive Committee and elected for all officer positions and is now a Past
CACTTC President. In 2024, the Treasurer submitted the Treasurer’s IPS to both
the California Municipal Treasurer’s Association and the Association of Public
Treasurers of the United States and Canada and received certifications from
both associations.
Treasurer
Duties:
For calendar year 2026, pursuant to
GCS 53646(a)(1), the Treasurer submits the 2026 IPS. The Treasurer has also provided financial
reports referenced in GCS 53646(b)(2) on a monthly and quarterly basis. All other reports (except for the annual
compliance audit as of 6-30-24 originally required per GCS 27134 and County
Counsel advised is no longer required due to dissolution of the Treasury
Oversight Committee) are in process or have been issued by external
auditors. Three reports (Annual
Compliance audit as of 6-30-24 and Quarterly Compliance reviews as of 9-30-24
and 12-31-24 were delayed due to re-prioritization to complete the March 31,
2025, Quarterly Compliance review, a decision with which the Treasurer
disagreed. None of the reports issued
in 2025 by external auditors relating to inspections of the books and records
by independent auditors have identified any compliance or other exceptions,
except that the Schedule of Asset Reviews were completed, as requested by
Auditor-Controller, on a modified basis of accounting versus using generally
accepted accounting principles. All of
the issued reports have been received and filed by oversight committees in 2025
except the Review of the Treasurer’s Schedule of Assets in the County Treasury
as of September 30, 2024 and December 31, 2024 that were issued on November 14,
2025.
IPS
Due Diligence:
Consistent with the August 4, 2015,
memo to the Board describing the general process still in place for due
diligence of the IPS, the Treasurer performed the due diligence review of the
Treasurer’s 2026 IPS and updated the policy based on that review.
The proposed changes below are
based on the draft 2025 IPS submitted to the Board by the Treasurer on December
17, 2024, that had been previously reviewed by the now dissolved Treasury
Oversight Committee. The main change
from the IP approved by the Board on February 11, 2025, is the delegation
section and the removal of the TOC and Voluntary Pool Participants (VPP)
sections. In the 2025 IP, the Board
remained as the fiduciary with the authority to invest and reinvest public
funds, and this IPS delegates the authority to the Treasurer as provided for by
law.
Update
to the term based on a new state law that modified the term of Commercial Paper
from 270 days to 397 days
Removed the sections related to the VPP
program that was deactivated by the Board in 2025 and references to the
Treasury Oversight Committee that was also dissolved in 2025.
Added
that the funds covered under this IPS are surplus funds as the IPS does not
cover cash maintained in bank accounts.
Added code sections for clarification and
relevance within certain sections of the IPS.
Made other small formatting or grammar
changes that were not significant.
Based on the
above, the Treasurer believes that the proposed changes to the 2026 Treasurer’s
IPS are appropriate and suitable for the County of Orange.
Delegation
of Investment:
The Board is vested with certain
public funds investment transaction authority with respect to the County and
other funds and may delegate its authority to invest funds in County funds to
the Treasurer under GCS 27000.1. In
addition, subject to 53607, the Board may delegate its authority to invest and
reinvest funds of other depositors in the county treasury with both delegations
defined in section 1-2-320 (a) and (b) of the Orange County Codified
Ordinances. This delegation is subject
to the Treasurer's submission to the Board an IPS for review and approval
annually and, per Ordinance 1-2-320 (g), requires approval of a Board
resolution annually for each calendar year.
The Treasurer, as required by GCS
53607, will provide the monthly transactions to the various legislative bodies
with funds in the county treasury in the quarterly report that have delegated
the investment authority to the Treasurer. In addition, the Treasurer will
provide at least quarterly reports within 45 days of the end of the quarter, as
required by Government Code Section 53646 (b) and (c), will state the
compliance of the portfolio to the IPS, and include a statement denoting the
ability of the County to meet the pool expenditure requirements for the next
six months. Government Code section
25303 states that the Board shall supervise the official conduct of all county
officers and require them to renew their official bonds, make reports and
present their books and accounts for records.
Delegation
for Safekeeping Authority:
On December 14, 2021, as allowed
under GCS 53608 and County Ordinance 1-2-320(c), the Board delegated the
depository authority for safekeeping to the Treasurer and that delegation is
effective until revoked.
The Treasurer is requesting that
the Board, pursuant to GCS 27000.1, delegate its investment authority for
surplus funds of the County, the Educational Districts and any other local
agency funds required to be deposited into the County Treasury to the County
Treasurer for 2026 and approve the 2026 IPS.
Prior
Board Actions:
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Board
Date |
Board
Action |
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2/11/25, #S31K; |
Approved the
2025 County of Orange California Investment Policy submitted by County
Counsel. |
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12/17/24 #S31F |
Deleted the
Treasurer’s 2025 IPS and annual resolution delegating authority to the
Treasurer. |
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12/19/2023 #17 |
Approved the
2024 IPS and the delegation of investment to the Treasurer for calendar year
2024 |
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12/20/2022 #15 |
Approved the
2023 IPS and the delegation of investment to the Treasurer for calendar year
2023 |
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12/14/2021 #15 |
Approved the
2022 IPS, the TOC Bylaws, the delegation of investment to the Treasurer for
calendar year 2022 and delegated the deposit for safekeeping authority to the Treasurer-Tax Collector |
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11/17/2020 #12 |
Approved the
2021 IPS, the TOC Bylaws and the delegation of investment and depository
authority to the Treasurer for calendar year 2021 |
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11/19/2019 #14 |
Approved the
2020 IPS, the amended TOC Bylaws and the delegation of investment and
depository authority to the Treasurer for calendar year 2020 |
County Audits in Last Three Years:
In 2022, 2023 and 2024, The
Auditor-Controller Internal Audit Division (A-C IAD) or the TTC contracted
external audit firm caused an annual compliance audit as required by CGS
27134. This requirement is no longer applicable
as the Board inactivated the CGS 27130 et seq. that required the Treasury
Oversight Committee to cause an annual compliance audit of the Treasurer’s
compliance with the IPS submitted to the Board and TOC. None of the issued reports have any
compliance exceptions. A-C IAD also performed the Quarterly Compliance
Monitoring of the Treasury Investment Portfolio from January 1, 2023, through
June 30, 2024, as directed by the Treasury Oversight Committee with no
compliance exceptions. The A-C IAD completed the reviews and audits of the Treasurer’s
Statements of Assets for the periods of September 30, 2024, and December 31,
2024 (reviews) and June 30, 2024 (audit) with no findings.
FINANCIAL
IMPACT:
N/A
STAFFING
IMPACT:
N/A
ATTACHMENT(S):
Attachment
A - 2026 Investment Policy Statement
Attachment B - Board Resolution
Attachment C - California Government Code Section 53646
Attachment D - County Ordinance 1-2-320
Attachment E - August 4, 2015, Memo to the Board of Supervisors
Attachment F - California Government Code Sections 53600-53608
Attachment G - California Government Code Section 27000-27013
Attachment H - California Government Code Sections 26920
Attachment I - California Government Code Section 25303