A Lesson From Camarillo’s Fiscal Crisis : Investments: Local governments learned to avoid mistakes that led to Orange County’s bankruptcy.

Can the same kind of economic disaster that hit Orange County befall Ventura County? Maybe, experts say. But it is not likely.

That is largely because of a generally conservative investment approach and a system of safeguards built into the investing process by both county and city governments.

It is also because the county witnessed its own financial debacle in the late 1980s, when the city of Camarillo almost went belly up.

The city lost its entire investment portfolio of $25 million through the same type of speculative investments that got Orange County into trouble.

The Camarillo experience has served as a lesson to local government officials.

“I think people in our county are very cognizant of financial investments because of the experience in Camarillo,” said Oxnard treasurer Dale Belcher. “I think there’s a perception out there now that things can happen.”

Indeed, several of the county’s cities tightened their investment and financial policies as a direct result of the problems in Camarillo.

As evidence of their conservative investment policies, the county and each of its large cities maintain high credit ratings and keep a majority of their unused funds in investment pools or securities managed by the state and federal government.

For example, Ventura County has a $546-million investment portfolio, which is expected to shoot up to about $750 million this week because of property tax collections, said Treasurer-Tax Collector Hal Pittman.

Of its current fund, about $427 million is invested in government securities, with the balance in the state treasurer’s pool, corporate notes, certificates of deposit and other investments.

Although Pittman is given great latitude to make investments, county officials said there are a number of safeguards in place to protect against risky investment practices.

First, Pittman is required to write monthly financial reports that are reviewed by chief administrator Richard Wittenberg, auditor-controller Thomas Mahon and the Board of Supervisors. Also, Mahon does a “cash count” on a quarterly basis to verify the reports’ information.

And no one individual, including Pittman, is allowed to sign off on a new investment.

“The No. 1 issue for us is safety,” Wittenberg said.

Mahon agreed.

“We keep getting criticized because we’re too conservative,” he said. “But it’s the taxpayers’ money you’re working with. We have an extra responsibility to protect the principal and not go out and see what extra interest we can get, because then you’re taking a risk.”

Orange County, however, was willing to take that risk. Managing an investment portfolio that included assets of 180 other public agencies, the county for years made speculative investments that depended on stable or falling interest rates.

But the county lost its bet when interest rates suddenly began to climb a year ago, creating a financial crisis that culminated with the county’s bankruptcy filing last week.

For Camarillo officials, Orange County’s embarrassing financial debacle was a grim reminder of its own troubled past.

“It’s like deja vu,” said Camarillo Councilwoman Charlotte Craven.

Craven said she had only been on the council one year when officials discovered in 1987 that the city had lost $25 million through the same type of risky investments that got Orange County into trouble. As a result, the city treasurer and finance director were fired, and the city manager was forced to resign.

Unlike Orange County, however, Camarillo never filed for bankruptcy.

“There was nothing left to preserve,” said J. William Little, who was hired as the city’s manager in 1988. “The money was all gone.”

The city simply tightened its belt by cutting back on operating costs, delaying capital improvement projects for two years and imposing what turned into a five-year hiring freeze.

“We used to get together every morning to see how much money we had so we could release checks,” Little said. “It was a tight couple of years. But we lived through it.”

To ensure that the city doesn’t get into a similar fix again, it created an oversight committee made up of two council members and two citizens with financial expertise who regularly check every investment made.

Currently, Camarillo has a $36-million investment portfolio, with $30 million invested in the state treasurer’s Local Agency Investment Fund and the remainder in government securities.

In light of Orange County’s bankruptcy, Craven urged all cities and counties to re-examine their investment policies to see if they can be improved and to ensure that there is adequate oversight of all financial dealings.

Although that may sound like obvious advice, Little said cities and counties continue to make the same mistakes over again.

“When it happened to us we made a decision to go out and try to make sure this didn’t happen to others,” she said. “We went to the California League of Cities and other agencies and said, ‘Look, how stupid we were.’ But you can’t tell people what they don’t want to hear. Everybody thinks it’s not going to happen to them.”

Little agreed, noting that Orange County Treasurer Robert Citron, who has since resigned, was blasted by his political opponent for his investment practices back in the June primary.

“Look what happened to him,” Little said of Citron’s challenger. “He got buried in a landslide.”

Kay Mirabelli, the city of Ventura’s treasury manager, echoed the concerns of Craven and Little.

“Your investment policies are only good if you are following them,” said Mirabelli, who is also president of the California Municipal Treasurer’s Assn. “Every city and county is required by law to have investment policies. But a lot of times they are not being followed.”

With cities strapped for cash and unable to raise taxes, the temptation to find new ways to raise revenues can be hard to resist for those entrusted with investing taxpayer money, she said.

“You might get away with it for a while,” she said. “But it will come back to get you.”

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Municipal Investment Portfolios

VENTURA COUNTY: $546 MILLION Portfolio includes $427 million in government securities, $69 million in state treasurer’s pool and various bank and government notes and $50 million in corporate notes and certificates of deposit. Credit rating A+

VENTURA: $158 MILLION Portfolio includes $76 million in government securities, $46 million in corporate notes and $36 million in state treasurer’s pool. Credit rating A

OXNARD: $74 MILLION Portfolio includes $42 million in government securities, $22 million in state treasurer’s pool and $10 million in corporate notes. Credit rating A

THOUSAND OAKS: $50.3 MILLION Portfolio includes $27.7 million in state treasurer’s pool, $14.3 million in government securities and $8.3 million in certificates of deposit. Credit rating A

SIMI VALLEY: $48.7 MILLION Portfolio includes $36.6 million in government securities and $12.1 million in state treasurer’s pool. Credit rating A-

CAMARILLO: $36 MILLION Portfolio includes $30 million in state treasurer’s pool and $6 million in government securities. Credit rating A

PORT HUENEME: $29.1 MILLION Portfolio includes $21 million in government securities, $3 million in state treasurer’s pool and $5.1 million in corporate notes and various investments. No credit rating

MOORPARK: $26 MILLION Portfolio includes $13 million in government securities and $13 million in state treasurer’s pool. No credit rating *

SANTA PAULA: $10 MILLION All of the portfolio is in state treasurer’s pool. No credit rating

FILLMORE: $8.5 MILLION All of the portfolio is in state treasurer’s pool. Credit rating A

OJAI: $2.35 MILLION All of the portfolio is in state treasurer’s pool. No credit rating

* Some smaller cities find it cheaper and easier to buy insurance when they issue bonds, rather than to have their cities rated on a regular basis.

* FINANCIAL FALLOUT: Orange County warns of layoffs. A1