LOS ANGELES -- In a move that foreshadows a change in underwriter selection policies, Los Angeles County supervisors yesterday approved a recommendation by the newly appointed treasurer and tax collector, Larry J. Monteilh, to place key public finance responsibilities under his control.
The motion, by supervisor Edmund D. Edelman, was approved on a 5-to-0 vote with no discussion. It effectively splits public finance decisions between two powerful county departments -- the treasurer-tax collector and the chief administrative office.
In dividing the functions, major public finance functions that in recent months have been handled by the chief administrative office have been turned over to Monteilh's department.
Among newly acquired duties of the treasurer-tax collector's office are selection of financial advisers in competitive financings, selection of underwriters in negotiated financings, awarding of bonds in competitive financings, approval of pricing in negotiated financings, and responsibility for investment of bond proceeds.
Passage of the Edelman motion shrinks the public finance domain overseen by Sharon Yonashiro, assistant administrative officer for the chief administrative office.
"We believe there will be no disruption in the maintenance of Los Angeles County's public finance programs," Yonashiro said yesterday. "This is an internal adjustment."
Following the vote, Monteilh disclosed during a telephone interview that he will review why Los Angeles County negotiates most bond transactions, as opposed to asking for sealed competitive bids.
He will "look at competitive" transactions more closely, Monteilh said. "We'Ve been doing mostly negotiated. We haven't been doing many competitive deals at all."
Whether the county should contract with private financial advisory firms, discontinuing its traditional practice of relying on county staff for financial advisory work, will also be examined, he said.
Monteilh said he plans "to revisit [the question of] whether a financial adviser is a good idea for the treasurer to have when it comes to market" county transactions.
"I am going to look at the whole process" in which underwriters have been selected in the past, Monteilh said. "My goal would be to have an expansive list of underwriters who are qualified" to handle county financings.
Bond counsel firms are chosen by the county counsel's office, Monteilh said, and will not be part of his oversight responsibility.
Monteilh, a career Los Angeles County employee, has been executive officer to the supervisors since 1983. He began his county career in 1962, and in the late 1970s served as assistant chief deputy for the treasurer-tax collector's office. On July 26 he was named to fill the treasurer and tax collector's position vacated by Sandra M. Davis last December. Davis, who held the post for six years, was named top assistant to chief administrative officer Sally Reed.
Reed was hired as chief administrative officer last October to replace Richard B. Dixon, who retired.
All public finance functions have historically been placed under the treasurer and tax collector's purview, but last March were transferred to the chief administrative office. At the time, Reed said she wanted a stronger link between long-term debt management and the county budget, which Reed oversees.
In March, to strengthen the link, she brought aboard Yonashiro, formerly director of public finance in the treasurer-tax,collector's office, and other veteran members of the public finance group. Yonashiro oversees central finance operations, the health services budget, and public finance.
Monteilh indicated that Yonashiro will continue with public finance responsibilities, although the scope will be narrowed following the supervisor's decision to transfer major duties back to the treasurer-tax collector's office.
Yonashiro and the other public finance officials who transferred to the chief administrative office earlier this year "are still CAO folks," Monteilh said, referring to the office by its well-known three-letter abbreviation.
"What I plan to do is take a good look at the entire [debt management] process," Monteilh said. "I am not certain what positions would come back, if any at all. I may do it with existing resources here."
The public finance functions to be returned to Monteilh's office include "the typical treasurer's functions when you are ready to go to market, such as selection of underwriters," Monteilh said.
Asked if he suggested to Edelman that he introduce the motion, Monteilh said, "I was asked my opinions with respect to this during the interview process. I expressed strong opinions that these functions were a treasurer's function."
When Monteilh was asked if the supervisors approved the motion as a method to give them stronger oversight in the selection of underwriters, he replied: "Not at all."
"I would view it as a way to separate a process between two county offices," Monteilh said. He said the treasurer-tax collector "is in the financial markets on a daily basis. In that process, I think there is an opportunity to make sure Los Angeles County's way of dealing with the financial community, including underwriters, will be very open."
Edelman's motion said that having public finance responsibilities split between two departments "will provide a broader perspective. We will obtain not only the review and advice of our treasurer, but the independent recommendation of the chief administrative officer" on finance issues.
The move will give Reed's staff "more time [to devote] to the pressing budget issues," the motion said.
The motion said that the county "recently experienced a reduction in its credit rating," referring to Moody's Investors Service's downgrade of more than 40 lease-secured obligations in March. The county's fixed asset-secured debt went to A from A1 and its equipment leases dropped to Baal from A. Moody's also confirmed the Aa rating on the county's general obligation bonds.
"Strong fiscal management and continuity of leadership is an important ingredient in maintaining the best possible credit rating in the face of our economic and budget difficulties," the motion said.