A state assemblymember is questioning the Orange County Board of Supervisors‘ decision to strip elected Treasurer-Tax Collector Shari Freidenrich of her management of the county’s $17 billion investment pool.

In a letter sent to board members Thursday, Feb. 20, Assemblymember Avelino Valencia, D-Anaheim, said he is considering whether to conduct a legislative hearing on their move to take away Freidenrich’s investment duties after employees accused her of mistreating staff.

“I do not wish to cast doubt on the validity and seriousness of those concerns. The Board may have been justified to make this change,” Valencia wrote. “At the same time, the public deserves clear answers from the county supervisors.”

With his letter, Valencia said, he wanted to get a better understanding of the board’s decision and promote public transparency.

Freidenrich, considered the county’s banker, was responsible for collecting taxpayer dollars as well as the management of the county’s investments. That changed in December, when the supervisors did not renew Freidenrich’s investment authority, automatically transferring oversight of the investment pool to interim CEO Michelle Aguirre. The board has since taken steps to hand the pool’s management to Chief Financial Officer Kimberly Engelby.

Read more: OC Board of Supervisors strip elected treasurer of investment duties

The board’s concerns were prompted by former staff members who allege a toxic atmosphere in Freidenrich’s department and an overly aggressive management style, resulting in a 2022 warning from the county human resources department.

An independent investigation commissioned by the county in 2022 and obtained by the Orange County Register found that Freidenrich threw some office keys at one employee — in violation of the county’s workplace violence policy — and stood over another, pointing her finger at the employee’s face in a threatening manner, which did not rise to the level of a county violence violation.

In taking away the investment pool, supervisors previously said they were concerned Freidenrich’s personnel problems would bleed over into the investment side of her job.

Referring to the high-risk investment bets and lack of oversight that led to the county’s 1994 bankruptcy, Valencia’s letter said the board’s decision requires more “scrutiny.”

“The decision the Board took was not a small one,” Valencia said. “The public deserves to understand why and how they will safeguard public funds. We cannot repeat the same mistakes that led Orange County to go bankrupt more than thirty years ago. The California Legislature stepped in then and will continue to do so in order to provide oversight and protect our tax dollars.”

Valencia acknowledged that the public has been mostly left in the dark about the board’s decision-making regarding the management of the investment pool.

“Thus far, most of the information Orange County residents have received about this decision comes from local news reports,” Valencia’s letter said. “At the same time, the public deserves clear answers from the county supervisors about the chief financial officer’s new role as the county’s investment manager. Given the county’s unfortunate history of fiscal mismanagement, our residents deserve more information than the Board may feel obligated to provide.”

Among the questions listed by Valencia:

Does the board believe that the county treasurer-tax collector failed to achieve her investment mandate to balance safety, liquidity, and yield?
Does the board believe the investment pool should be achieving a specific investment return that is not currently being achieved?
Would authority return to the Orange County treasurer-tax collector after the next election?

As chair of the state Assembly’s banking and finance committee, Valencia said he can hold informational hearings on various topics, including investments of public funds.

“In this option, all parties and stakeholders would be able to participate,” Valencia said Friday in a written statement. “This would allow for additional transparency and could help inform future policy on managing and investing public funds.”

Figures obtained from the Treasurer-Tax Collector’s Office show the county’s apportioned pool yield for fiscal 2023-24 was 4.246%, which appeared to be the fourth-highest yield of the state’s 58 counties.

“As the elected treasurer and a public servant, I value transparency and accountability of the people’s money,” Freidenrich said in a written statement. “My record of protecting public funds for the past 14 years and all related independent oversight on my performance is publicly available online at octreasurer.gov/publicfunds.”

Orange County Supervisor Don Wagner said he has asked legal counsel to review Valencia’s letter and the “Legislature’s legal role in attempting to exercise oversight” of the board and treasurer-tax collector’s respective responsibilities.

“I am certain the board has acted for very good reasons and well within its legal rights in its oversight capacity,” Wagner said. “Our goal remains, as it always has been, the same as expressed in the Assembly member’s letter: to protect public funds.”

The board has the ultimate authority and responsibility over investments, Supervisor Vicente Sarmiento said.

“I greatly appreciate the questions posed by the assemblymember. I share his concern that the investment portfolio be safeguarded for the benefit of county residents,” Sarmiento said. “The recent revelations of mismanagement and issues in the treasurer’s department have rightly generated concerns. I believe it is timely for the board to take this opportunity to review the existing structure in its entirety and make needed changes.”

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Supervisor Katrina Foley said the decision to bring back management of the county’s investments to the board was essential because of the human resources issues impacting the overall management, accountability and timeliness of the department.

“We’re listening to the professional staff, who are sounding the alarm and saying, ‘Hey, something’s not right here.’ We are exercising our judgment and our duty to listen to our staff, who are telling us … they need help now,” Foley said. “We’re not anywhere near on the verge of any bankruptcy.

“By making this decision, we’re bringing more oversight, more light and more accountability on our investments.”