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Letter to the editor

Pinellas Park pulls cold cash from fund

The half-million was in a state-run investment pool that soured recently.

By ANNE LINDBERG, Times Staff Writer
Published January 20, 2008

City officials wasted no time Friday: They yanked tax money out of a frozen fund immediately after the state lifted restrictions on access to the fund.

The $509,223 was a portion of the money the Pinellas County Tax Collector's Office was holding for Pinellas Park when the state froze the fund in November to prevent a run on the account. City officials had been notified Thursday that the state would loosen the restrictions on Friday to allow depositors to take out up to $4-million from the fund.

"We got our money out of it and ran," Pinellas Park spokesman Tim Caddell said.

The city left just enough in the fund, he said, to keep the account open. Still frozen is $100,653 of Pinellas Park's tax money the state put into the so-called B fund, which has riskier investments than the A fund, where the $509,223 had been located. Pinellas Park transferred those to a city account with Wachovia Bank.

Pinellas Park, along with other municipalities, counties and taxing authorities across the state, had long parked tax money in the state-run investment pool. The pool was considered a safe place to stash public monies until the taxing entity needed it. With luck, the taxing authority would not only receive some interest but would see the money appreciate.

But last year, the stock market became tumultuous as the national housing market started collapsing. Pinellas Park and some other taxing authorities pulled out all their money from the state investment pool to keep from losing it. So many taxing authorities fled the pool that officials from the State Board of Administration froze all the accounts.

The State Board of Administration is investigating the situation and last week asked the Legislature to direct the auditor general to conduct an independent review in addition to the board's own inquiry.

The SBA oversees investment of the state retirement system funds as well as other programs.

Board trustees also approved by a 2-1 vote spending about $111,000 to hire a search firm to find a new executive director. The salary will be between $250,000 and $350,000.

In the meantime, the state's freeze was irking some Pinellas officials. The freeze had caught some, like Pinellas County Tax Collector Diane Nelson, with money in the pool. The money was the tax revenue she was holding for the county's 47 taxing authorities, a total of $48.1-million.

Between Christmas and New Year's, Nelson told Pinellas Park and other taxing authorities that the state refused to free up their funds but would allow her to transfer them into frozen accounts within the state investment pool. When the funds were transferred to the individual accounts, the state placed part of them in the A fund and part in the riskier B fund.

The move infuriated and frustrated cities and other taxing authorities who said Nelson had failed to inform them in advance of problems with their funds. Nelson has said she had no time to let other officials know what was happening.

In the past few weeks, the state has periodically thawed accounts to allow some monies to be removed. The notice about Friday's thaw, which allowed access to more funds than previously, gave Pinellas Park its chance to act.

Caddell, the Pinellas Park spokesman, said there was no intention of keeping the city's money in the troubled fund. Referring to Ron Miller, city Finance Department head, Caddell said, "I think he said to me, 'We're not team players.'"

Now Pinellas Park must wait until the B funds are thawed.

[Last modified January 19, 2008, 22:14:01]