How to Spend $12 Million

Backstage for the last couple of months, county supervisors have tried to resolve a dispute between the county and local government officials over $12 million that mysteriously appeared in a county account.

What to do with $12 million is a nice problem to have. The money is interest accrued in the giant county investment pool in which various participants had put their faith in the pre-Robert Citron era. What happened to that pool is the story of the county’s 1994 bankruptcy.

Afterward, there followed a long period of negotiation over resolving the portion of the fund that remained. Some $3.4 billion was distributed to participants in 1995. But that money didn’t include interest. The interest apparently is at the root of the current impasse. Now the battle is over how to disperse that money. There are several good reasons why the money should be divided between the county and pool participants.

First, it’s important for the entire county to move beyond the bankruptcy and continue the healing process.

Second, it makes sense for the long term to avoid perpetuating the perception that the county regards localities as adversaries.

Third, dividing the money will keep more for the various parties and put less in the hands of lawyers, who inevitably will haggle over remains if the dispute isn’t resolved amicably.

At issue is a bankruptcy agreement that requires the county to share any future unclaimed money with cities and public agencies that invested in the county’s two investment pools. County staff handling negotiations has been taking the hard-line position that bankruptcy money was resolved long ago, and that this money belongs to the county.

The hard line isn’t really warranted. Moreover, the public no doubt must wonder how so soon after the bankruptcy there seems to be so much pool money that wasn’t accounted for. It could raise the perception that the county still doesn’t have a complete handle on things. In fact, the discrepancy appears to arise from the differing calculations of accounting firms representing the county and the pool investors.

The differences arising from different readings of county funds should be regarded as reason enough for compromise. Rebuilding public trust is an important enough reason for the parties to settle their differences on who gets the money. This will enable the county to move on.

That would be an important gesture given the wrangling that historically has gone on between the cities and the county. Already, some of the cities and the county are locked in a battle over the future of the El Toro Marine Corps Air Station. There are other issues, such as court funding, where there has been tension between layers of government.

In looking back over the bankruptcy last year, John M. W. Moorlach, the county’s treasurer-tax collector, noted that a fundamental lesson from the bankruptcy was the need for diligent oversight. Now that the county is doing much better on this front, it needs to take another lesson forward into the post-bankruptcy era. That is the need for different layers of government to work cooperatively and openly to address and resolve differences over money.

The spirit of the post-bankruptcy reform era hinged on the philosophy that the public’s money was a sacred trust, and that the county would learn from the lessons of the past and vow to do business differently.

To be sure, both county and cities have been feeling the pain from money lost during the bankruptcy. In recent months, it has become apparent just how much the county has stretched. For example, parks and trails have suffered deterioration because of the failure to keep after the basic business of maintenance.

Regular maintenance costs money. The county has also been affected in the delivery of social services, health care and juvenile justice programs. At the same time, the regular needs of cities and special districts go unattended because of lost money.

All of this argues for a Solomon-like solution to the $12 million. It really comes down to good faith and improved relations between levels of government.

How much is it worth to achieve those things for Orange County’s future? A lot.