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County tries not to repeat mistakes

Don't expect to see Mike Fasano milling around the upcoming discussions on reinvesting about $100-million in public money.

The Clerk of Court's office is trying to avoid bringing any semblance of controversy into its proposal to reinvest some of Pasco's available money to receive a better return. That means nothing will be done without approval from county commissioners. That means county budget officials will be involved. And it certainly means no Mike Fasano.

When the same issue exploded into a bitter dispute between commissioners and Clerk of Court Jed Pittman nearly two years ago, Fasano was at the center of the debate. At the time, most commissioners were furious that Pittman quietly invested $210-million in mutual funds without obtaining their input or approval. About $115-million of that was invested through broker and Republican leader Fasano, who had recently helped recruit Pittman to the GOP and who acknowledged earning $34,000 in commissions from the investment.

By the time the dust settled, commissioners had seized more control of county investments and all the public money involved was placed back into the conservative State Board of Administration's investment fund, where it remains.

Now the issue of exploring other investment opportunities has returned _ with plenty of lessons learned from the previous experience. This time, it appears a decision can be made without controversy about how to invest $180-million. As skittish as some commissioners sound about the prospect of moving vast amounts of taxpayer money around, both the clerk's office and the commission are talking openly.

"If everybody will put their hands together and work in the right direction, we can have something positive come out of this," County Commissioner Sylvia Young said last week about the prospect of moving some money out of the SBA pool.

Pasco gets about 3.4 percent interest from the SBA, and some county officials believe the county can safely receive a better return by investing elsewhere.

Nothing firm has been proposed, and whatever is agreed upon must comply with state laws and with a new Pasco investment policy drawn up in the aftermath of the mutual fund debacle two years ago. An investment committee that includes representatives from the clerk's office, the county administrator's office and the committee is scheduled to begin discussions in July.

They will consider some general recommendations Pittman recently sent commissioners. Those include:

Moving up to $20-million into the Florida Counties Investment Trust, an investment pool organized in 1992 by the Florida Association of Counties and the Association of Court Clerks. The FCIT restricts its investments to U.S. Treasuries, federal agencies and federally chartered corporations, such as the Federal Home Loan Mortgage Corp.

In a June 14 letter to commissioners, Pittman said the trust has 19 counties investing in it with a total pool of about $150-million. In 1992, the total rate of return was about 7.5 percent, and in its year and a half existence the total return has been more than 9 percent. Pittman proposed amending the county's new investment policy so it would allow the county to invest in the FCIT, but not more than 25 percent of its total portfolio.

Requesting investment proposals be submitted to the county by several financial institutions, with a focus on medium and long-term securities to supplement the shorter term FCIT. Up to $80-million could be invested through one of those firms.

The clerk's office has narrowed down the institutions to First Union National Bank, SunBank, Paine Webber and Prudential Securities.

Keeping the balance of the board's funds with the SBA, which offers the county almost immediate access to its money.

County Commission Chairman Ann Hildebrand said she will listen to anything the clerk proposes, but she wants to step cautiously.

"I sense a trend that some people think we ought to be out there earning a lot more return on the money we have. I don't know. This is a public portfolio, not a private portfolio," Hildebrand said. "When you start getting glitzy, I get nervous because I feel my job is to be ever vigilant with protecting county dollars."

The SBA pool "hasn't made us money, but it hasn't lost us any sleep," Hildebrand said.

Jay Kominsky, finance director for the clerk's office, said he agreed with her sentiments and that the clerk's office is proposing only conservative options.

Some of the securities the FCIT invests in, such as Freddie Macs and Ginnie Maes, are not fully insured by the government and can lose value if interest rates rise, but Kominsky said governments regularly invest in them.

"There is a relative risk differential between the different investment vehicles, but this is not to say it's risky. Not by any means," Kominsky said.

Kominsky said he narrowed down the set of prospective financial institutions, but he would be open to whatever other institutions commissioners might consider. He chose four based on everything from national reputation to what he heard from them in telephone conversations. He wanted to avoid anybody who sounded too slick.

"You'd be amazed at how many places call," he said. "They badger you, it's incredible. They continually call, looking for ways to make a buck."

He excluded from his list Fasano's firm, Dean Witter Reynolds, because he knew some commissioners had "a bad taste in their mouths"' from two years ago.

"That taste was castor oil to me," Hildebrand agreed.

Fasano agreed, too. "What the clerk's office did was an excellent idea _ take away the controversy, take away the politics," he said.

In part because of the controversy two years ago, Hildebrand said she also has reservations about hiring a private firm to handle millions of dollars in taxpayers money. Since a recent Times story about the county considering moving some money from the SBA pool, she said she has received many calls from interested financial advisers.

The practice of bringing in private firms to advise governments on investing their money is a common one, said Corrine Sandlin of the Government Finance Officers Association of the U.S. and Canada.

While those financial agents can receive hefty commissions from governments, it's unlikely they could easily abuse that privilege because governments tend to invest conservatively, said Relmond Van Danicker, executive director of the National Association of State Treasurers Accountants and Auditors. "It's not necessarily a bad idea (to utilize a private investment adviser), but it bears watching," he said.

Kominsky said the main goal of the clerk's office is to come up with an investment strategy that earns Pasco more money but that everyone feels perfectly comfortable with.

"I think everyone wants it to work, I really do," he said.

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