COMMENTARY ON GOVERNANCE : Supervisors Must Regain High Ground of Public Confidence : Given more authority through home-rule legislation, local officials failed to assume a greater sense of accountability.

Sometime in the middle of the Fiesta Bowl on Monday, my term on the Orange County Board of Supervisors technically begins. Emotionally it began early in December, when I heard about the $1.5-billion “paper loss” to the treasurer’s investment pool. Nearly everyone in the county, from this state senator to the most distant school board member, instantly became part of the crisis.

In these pages and others, I’ve taken a dose or two of the blame even before assuming office. That’s because as chair of the Senate Local Government Committee, I’ve always been an aggressive advocate for home rule.

I believe that state government works best when it allows local officials to “go home and rule” with all of the accountability and responsibility that such a mandate entails.

I’ll be the first to admit that my 16 years in the Legislature have been characterized by trying to give local officials (even county treasurers) the ability to make decisions based on local needs and local oversight.

Local oversight is the all-important part of local control. Prudent investors--whether they be county officials or suburban families--have a variety of investment tools at their disposal. Like the variation in a good mutual fund, the tools allow us to maintain a return under different economic scenarios.

As investors, we take it upon ourselves to develop the principles that will govern our investment policies. We confer with friends and advisers to ensure that our principles are sound. And once they’re in place, we monitor and adjust our policies to ensure that we’re meeting our goals of safety and return.

In the 57 other counties that make up an Orange County-less California, 57 county treasurers used home rule quite successfully. They chose their tools carefully and monitored them routinely, responding to market and economic changes just as you or I would as we invest our savings for retirement. They consulted their advisers frequently for investment advice and to ensure that they were following those state laws that I helped enact.

Former Orange County Treasurer-Tax Collector Bob Citron, it appears, did not.

Without even commenting on issues of prudence, an audit performed on Citron’s office in 1993 shows that he may have violated state law (including my own legislation) and neglected to consult his investment advising team on investment strategies.

The audit says that his investments included “securities” rated far below the investment-grade bonds authorized by my bills. And where I restricted investments to U.S.-owned corporations, it appears that he purchased unrated notes issued by foreign firms. Oversight and discussion, the ingredients essential to both home rule and prudent investments, were left out of the Citron portfolio’s recipe.

If my efforts in Sacramento were “part of the problem” as some claim, then I have an obligation to be part of the solution. To me, that solution is the following:

* A County Charter. As UCI’s Dennis Aigner argued in The Times Orange County Edition last Sunday, Orange County’s term as the state’s largest county without a charter should end and end soon. As Washington and Sacramento decentralize by sending more power to cities and counties, we need to take advantage of the opportunity and craft a county government that reflects our communities and community needs. Term limits, privatization where appropriate, appointed CEOs, appointed department heads, fewer constituents-per-supervisor and more should be on the table in a yearlong charter discussion, culminating with a public vote at the March, 1996, primary election.

* Budget Oversight, Budget Hearings. For too long, the real “meat” of the county’s budget process has occurred behind closed doors without any significant participation from the supervisors. It’s time to bring all aspects of the county budget--from the most preliminary of discussions to the budget’s final adoption--before the public and before the board. To me, the public has as much reason to be angry over the “minor” mismanagement of $100 as it does by the loss of the pool’s $2.02 billion. It’s time to drag out the organization charts and review all county departments and county assets from the bottom up--and under the public’s eye.

* Performance Audits. Budgeting isn’t complete without follow-up. Many county departments, while receiving routine internal audits that focus on dollar accountability, have gone multiple years without performance or management audits. These reviews allow us to determine whether we are truly meeting the public’s expectations for county services. They compare costs with like programs run by other counties and comparable private sector firms. They look at ratios of managers to line employees against benchmark industry standards. Performance audits may be the keys to real county reform.

* A Commitment to Questions. Orange County’s fiscal mess was exacerbated by a lack of oversight and discussion of the treasurer’s activities. Too often his reports were received by the board without query or comment. The lack of attention given to the 1993 audit shows that the board needs to renew its commitment to questions--the whats, whos, and whys of county government. At my legislative committee in Sacramento, I required my membership to hear and discuss every proposal in a public forum at least once--it’s time to apply the same scrutiny and discussion (no matter how boring) to the financial decisions of the Board of Supervisors.

Rebuilding the county after bankruptcy is no less a challenge than rebuilding the confidence of its people in the county’s representatives, myself included. For both to be restored, the new Board of Supervisors must adopt patience, perseverance and a commitment to real reform as our standards of operation.

We’ll need to embark on a course of unprecedented cooperation and openness with our fellow travelers, the cities, schools, special districts, and people of the county who have been affected by the bankruptcy. Only together do we have the tools and resources to repair the damage--and only together will we succeed.

Best wishes, Orange County, for a better 1995.