Countywide : County Investments Earn Record Interest

Money invested by the county treasurer’s office earned an all-time high of $245 million in interest during the fiscal year that ended June 30, according to a recently released report.

The county’s investments were so bullish this year, they even outpaced earnings by the state treasury, which earned an 8.20% average rate of interest; the county earned 8.9%.

“The county treasury has had an unusually profitable year, compared to what other money managers have earned in these economically recessionary times,” County Treasurer-Tax Collector Robert L. Citron said in his annual report to county supervisors.

Citron’s office manages money for 185 government agencies. Just 17% of it is money controlled by the Board of Supervisors, including the county’s general fund, John Wayne Airport funds and the Environmental Management Agency’s monies.

The rest belongs to varied other agencies, from school districts throughout the state to water districts to city governments.

About four years ago, state legislation was passed that allowed cities and counties and other agencies to pool their money for investment purposes, Citron said. Since then, many smaller agencies have found it more profitable to join their funds with those of larger entities. All the agencies pay the county an administrative fee to cover the cost of handling their money.

The average monthly balance in the treasury during the 1990-91 fiscal year was $2.9 billion, an increase of $95 million from the previous year, the report said.

The interest earned during the 1990-91 fiscal year increased by more than 7% from the year before. The earnings were higher than his office had predicted.

Citron said the profitable returns are from a strategy that involves investing only in the highest-rated financial institutions around the world, and from lending government securities that the county controls for a charge, which allows the county to invest in other securities that pay a higher interest rate.