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Millions in frozen fund
County agencies await the release of most of the money this week.
By DAVID DeCAMP, Times Staff Writer
Published December 5, 2007
DADE CITY - Pasco County government has $68-million locked up in a state-run investment pool that is now in turmoil.
Despite a tight budget, the county can't get the money out.
Pasco government agencies have $867-million in the $14-billion Local Government Investment Pool frozen by state officials and a private fund manager. Much of it could be available by Thursday, but not enough to keep some county officials from worrying.
The County Commission leads the way with $486-million invested at the end of November, the third-most for any governmental agency in Florida, according to the State Board of Administration. But the Pasco School Board has another $290-million invested, and several other officeholders have millions, too.
County officials tried to downplay the overall risk Tuesday. However, the commission is considering whether to request that Florida's auditor general investigate the decisions leading to the investment troubles, and called a special meeting for Thursday.
"You don't have a problem as far as cash flow," County Administrator John Gallagher said.
But more than $68-million overseen by the County Commission is tied to investments the state has deemed risky, and to prevent a run on investments, the county can't withdraw it until further notice.
Commissioner Michael Cox, a financial planner who called for the auditor's investigation, said the state appears not to have followed its investment policy, leaving it liable for losses.
The School Board agreed to take out a line of credit this week to make ends meet. The commission, however, says it has enough cash on hand to cover expenses in the short term.
Fearing a run on the fund, Florida froze its Local Government Investment Pool late last month as local governments began removing investments.
Gov. Charlie Crist and other state officials backed a plan Tuesday by BlackRock, a private investment company. BlackRock plans to separate the investments that are performing well from ones that are not.
Based on BlackRock's plan, 86 percent of the money is going into good funds, and 14 percent into bad ones. The good money would be available for withdrawal as early as Thursday, but cash in under-performing funds would be frozen until they stabilize.
In Pasco's case, that's $417-million into the good fund, and more than $68-million frozen in the bad, according to Jay Kominsky, director of financial services for the county Clerk of Courts Office, which manages county government finances.
Kominsky said the county decided to invest in the fund in the early 1990s. Its solid returns were attractive, and it was run similar to a money market fund by the State Board of Administration.
"Nobody lost money putting money into the SBA - nobody," Kominsky said.
It's the $68-million causing commissioners to worry. The county draws money from the investment pool to pay for salaries, equipment and other expenses. Its bond issues to pay for major projects and purchases are based on Pasco maintaining minimum amounts of cash. Without the cash levels, the county risks defaults.
The good news is the county has cash available in other funds to pay bills. Since 2000, it has never drained its investments in the state pool below $141-million, Kominsky said.
Investments in the Local Government Investment Pool.
County Commission: $486-million
School Board: $290-million
County Clerk: $20.6-million
Tax Collector: $55.4-million
New Port Richey: $7.8-million
Pasco-Hernando Community College: $4.3-million
St. Leo: $661,000
Supervisor of Elections: $467,000
Source: State Board of Administration
In other business
COUNTY ATTORNEY: New top lawyer Jeffrey Steinsnyder, of Bradenton's Kirk Pinkerton firm, will make $165,000 a year under a contract approved Tuesday. He also will receive $450 a month as a car allowance, and $7,750 a year in deferred compensation for a retirement account. Steinsnyder is expected to start in January, replacing retiring County Attorney Robert Sumner.
RESERVOIR TROUBLES: By a 4-1 vote, the commission approved spending $4.1-million more to shore up a sinkhole-riddled reservoir project in Land O'Lakes. It raises the total cost to $22-million, after an original budget of $13-million. The county has hired an attorney to investigate suing the engineers involved.