Don’t forget to read my summary article in the Rio Rancho Observer

Hefty accusations levied against the County Commission

I will say at the outset of this that I think most individuals involved in this are not doing so out of maliciousness, but rather that past Treasurer’s have settled for deferring to county staff as “the experts” in their respective fields and/or have felt powerless to intervene. This is none-the-less a very real problem as it seems to be a common threat in local politics; elected officers tend to be more ministerial in practice even if not on paper. It’s easy to do this; well-intentioned (and even impassioned) people run for office seeking to make a difference. When they get elected, they are at the mercy of staff and prescribed “crash courses” in the inner workings of local government to tell them how they must operate.

Very few enter with the foreknowledge of their authority and power or even that elected offices stand in opposition by design, as part of a vast network of checks and balances used mitigate corruption. Still, even with the checks and balances in place, every person who works in government, whether elected or not, is subject to corruption regardless of intentions. The problems we face in government today are the result of a convoluted, tightly-wound mess of tangles that is not easily combed through. This mess, no doubt, is far more convoluted then I can even present here, but as snarls go, you have two choices – cut it out entirely, or start somewhere and begin combing through a section at a time.

The Sandoval County Commission may be undermining the County Treasurer

(Before continuing, you may want to read my editorial in the Rio Rancho Observer to get the gist of the following presentation.)

State Statutes Concerning Co. Treasurer's Duties

Who decides the role and duties of the county treasurer?  The state; not the countyWhile there is an interesting discussion to be had about whether or not this is best way to delegate authority, at this moment, this is how the law is written. Those desiring to challenge this must present a case to change the law. While there is a general statute outlining the broad authority of the treasurer, the county treasurer has been inserted into other various areas of county government. As such, her duties and powers are scattered through the state code.

So let’s break some of this down:

4-43-2. Duties.

The county treasurer shall keep:   
A.   account of all money received and disbursed;   
B.   regular accounts of all checks and warrants drawn on the treasury and paid; and   
C.   the books, papers and money pertaining to his office ready for inspection by the board of county commissioners at all times.  

6-10-8 County boards of finance.

 The board of county commissioners in each county in the state shall, ex officio and without additional compensation, constitute a county board of finance and as such shall, subject to the limitations of this act, have supervision over the determination of the qualifications and selection of banks, savings and loan associations and credit unions, whose deposits are insured by an agency of the United States, to receive the public money of their respective counties and of independent rural school districts, rural school districts and municipal school districts of municipalities having less than twenty-five thousand population according to the next preceding United States census and of any special or other districts in their respective counties for which the respective county treasurers of such counties act as ex-officio tax collectors. The county clerk in each county shall, ex officio and without additional compensation, act as clerk of such county board of finance. Every county board of finance shall hold meetings whenever necessary for the discharge of its duties, and the chairman shall convene such board whenever necessity therefor exists or when requested so to do by two of its members or at any time when the county treasurer shall advise the chairman that he has in his custody public money in excess of the aggregate amount which depositories qualified by law are entitled to hold. A majority of the board shall constitute a quorum for the transaction of business. The county treasurer of each county in the state shall have supervision of the deposit and safekeeping of the public money of his county and all the money which may at any time come into or be in his possession as county treasurer and ex-officio tax collector for the use and benefit of the state or of any county, municipality or district or of any subdivision of any county or of any state or public institution and by and with the advice and consent of the respective boards of finance having jurisdiction over the respective funds shall designate banks, savings and loan associations and credit unions, whose deposits are insured by an agency of the United States, to receive on deposit all moneys entrusted in his care.

6-10-10. Deposit and investment of funds.

F.   County or municipal treasurers, with the advice and consent of their respective boards of finance charged with the supervision and control of the respective funds, may invest all sinking funds or money remaining unexpended from the proceeds of any issue of bonds or other negotiable securities of any county, municipality or school district that is entrusted to their care and custody and all money not immediately necessary for the public uses of the counties, municipalities or school districts not invested or deposited in banks, savings and loan associations or credit unions in:
(1)   bonds or negotiable securities of the United States, the state or a county, municipality or school district that has a taxable valuation of real property for the last preceding year of at least one million dollars ($1,000,000) and that has not defaulted in the payment of any interest or sinking fund obligation or failed to meet any bonds at maturity at any time within five years last preceding; or
(2)   securities that are issued and backed by the full faith and credit of the United States government or issued by its agencies or instrumentalities.
G.   The treasurer of a class A county or the treasurer of a municipality having a population of more than sixty-five thousand according to the most recent federal decennial census and located within a class A county, with the advice and consent of the boards of finance charged with the supervision and control of the funds, may invest all sinking funds or money remaining unexpended from the proceeds of any issue of bonds or other negotiable securities of the county or municipality that is entrusted to the treasurer’s care and custody and all money not immediately necessary for the public uses of the county or municipality not invested or deposited in banks, savings and loan associations or credit unions in:
(1)   shares of a diversified investment company registered pursuant to the federal Investment Company Act of 1940 that invests in fixed-income securities or debt instruments that are listed in a nationally recognized, broad-market, fixed-income-securities market index; provided that the investment company or manager has total assets under management of at least one hundred million dollars ($100,000,000) and provided that the board of finance of the county or municipality may allow reasonable administrative and investment expenses to be paid directly from the income or assets of these investments;
(2)   individual, common or collective trust funds of banks or trust companies that invest in fixed-income securities or debt instruments that are listed in a nationally recognized, broad-market, fixed-income-securities market index; provided that the investment company or manager has total assets under management of at least one hundred million dollars ($100,000,000) and provided that the board of finance of the county or municipality may allow reasonable administrative and investment expenses to be paid directly from the income or assets of these investments; or
(3)   shares of pooled investment funds managed by the state investment officer, as provided in Subsection E of Section 6-8-7 NMSA 1978; provided that the board of finance of the county or municipality may allow reasonable administrative and investment expenses to be paid directly from the income or assets of these investments.

That term “advice and consent” is important. Black’s Law Dictionary defines ‘advice’ (n) as a view or opinion; information. To advise means to give advice, but is not instruction, or even persuasion, but rather “imports that it is discretionary or optional with the person being addressed.” In other words, the advice given by the Board of Finance does not have to be taken by the Treasurer as instruction, direction, or persuasion. The consent part is simply that the board holds veto power (the yes or no vote) over the treasurer’s decisions that require such approval. This is important as you’ll see further down.

Previous Opinions from the Attorney General Concerning the Treasurer's Role
Below is a screenshot and attached pdf files of previous AG opinions on the role and relationship between the county treasurer and the county commission. In short, while the treasurer does indeed work with the county and is under the commission’s jurisdiction in-so-far-as their control over the budget, regulating general terms of employment, and holding “advice and consent” authority, the treasurer is a governing authority in her own right, whose duties are determined by state statue which cannot be usurped by the commission whether by passage of legislation or delegating the treasurer’s authority to someone else. Treasurer Montoya’s letter to the AG asks for further clarification and confirmation of previously upheld opinions.

So let’s break it down:

  1. The AG has upheld that the commission does not hold supervisory authority over the treasurer, and only holds “advice and consent” authority.

To read full AG opinion in context, click here http://mereliberty.com/wp-content/uploads/2015/10/2014-AG-opinion-BOF-Advice-and-Consent.pdf

2. The AG stated that “[The executive] does not have the authority to expand the power of the Board of Finance beyond that conferred by law. We can interpret the executive here to mean the county manager. So, in other words, the county manager cannot give power to the Board of Finance, that is not already spelling out by state statute, and neither can the board of finance itself.

Further clarifying the term “advice and consent,” the AG stated, “The relationship between the county treasurer and the county board of finance was undoubtedly intended to be the same as that between the President of the United States and the Senate when the President can only act with the advice and consent of the Senate … Thus, decisions … are in the first instance, a matter for the county treasurer; the board of finance has veto power … it does not have the power of choice itself.”

It goes on to add, “the power of veto, like all powers constitutionally conferred upon a government officer or agency, is not absolute and may not be exercised without any restraint or limitation whatsoever.”

Other AG opinions have upheld this as longstanding precedence, stating that ‘if the role of treasurer was merely ministerial what was the purpose of the legislation (passed in 1933) in giving powers to the county treasurer,(1) and that the treasurer and the board of finance do not have co-equal powers. If this was the case, it “could create an absurd situation.” (2) It further states that the county cannot employ and pay “a person to perform services which the law requires be performed by the county [treasurer].” (3) This last point is important, remember, with regard to the county’s delegation of powers and authority to their Financial Adviser (an unelected government contractor further explained below). The closing states the commission can neither “act in a manner amounting to supervisory control over [the county treasurer,” nor “usurp this authority by effectively controlling the tasks and responsibilities of elected officials’ employees.” (4)

AG Legal Opinion Delegation of Authority

  1. pg 6
  2. pg 7
  3. pg 9
  4. pg 10

So think about “advice and consent” this way. The President of the United States must get approval from the Senate for appointments and ratification of treaties. The President is allowed by the Constitution to do all the foot work, the interviews, the research, the negotiations, the internal policies, etc., related to choosing his appointment or working out treaties. The Senate can offer opinions and information to aid him in this process, but they cannot instruct him as to how or whom to choose, or what will be included in a treaty. Then, after the President has done all the work, he brings his appointment (or treaty) before the Senate and the Senate only has the power to vote to uphold the work the President has done, or vote it down, sending the President back to make adjustments, but once again, he does not have to take the input provided by the Senate. The AG has upheld that this relationship is the same relationship that the Treasurer has with the Board of Finance, where the treasurer is likened to the President and the BoF is likened to the Senate. Keep this in mind.

County Investment Policy and Proposed Changes
  There’s a few problems with the Investment Policy passed by the county board of finance on Sep 17th, but I’m, going to focus on the major ones. You can read it here:DRAFT SC Investment and Deposit Policy

First, the county treasurer currently has employed a Portfolio Manager to assist the treasurer in her statutory duties of investment and up until the passage of this new policy, was under the jurisdiction and direction of the treasurer. However, two changes were made that are cause for concern:

Section S.e., which affirmed the treasurer’s jurisdiction and direction of the portfolio manager was deleted, and an addition to S.a was made stating that the portfolio manager’s contract established a fiduciary relationship between “the County (Sandoval County) and the Manager,” but “Treasurer” is specifically left out. As written it appears as though the Portfolio Manager has moved under the authority of the county Manager and outside the jurisdiction of the Treasurer.

The role of the county’s Financial Adviser (FA) is a curious one too. I’ll get into more in the box below, but suffice it say, the new policy inserts the Adviser in areas related to investment that are squarely under the Treasurer’s jurisdiction (thanks to implied relationship under the advice and consent rule), while taking the Treasurer out of the picture. Section T.i stipulates the the FA will agree to meet personally with the Board of Finance – striking out Treasurer. It also stipulates that the FA will be the one to present to the board of finance all things investment related, and strikes out the Treasurer’s (acting as the Investment Officer) right to request monthly meetings.

It establishes a new Investment Committee that will supplant the Treasurer’s Investment Committee, and it’s made up almost entirely by Board of Finance members. So to be clear … The Board of Finance is one and the same as the County Commission – identical. And now the Investment Committee (which is taking the place of the Treasurer’s committee) is made Commissioners and county staff. So this new policy allows Commissioners (acting as committee members) to advise themselves (acting as Board of Finance members) on matters delegated to the treasurer by the state.

Who is this Unelected Government Contractor?
A curious thing happened on Sep 17th at the county Board of Finance meeting. Rather than country treasurer, Laura Montoya presenting, it was a man by the name of Robert Burpo. Burpo is well known in Sandoval county government for being the Financial Adviser to the previous Treasurer. In 2013, he was hired (by the Commission and against the recommendation of Laura Montoya) to be the Financial Adviser to Montoya shortly after she took office, but later it was agreed that his contract should terminated early to comply with Dodd-Frank. Three months before his contract was up with Montoya’s office, he was hired again by the Commission to be their Financial Adviser and that is where he is today.

Burpo was hired in June 2014 and it was he that presented the new Investment Policy to the the Board of Finance on Sep 17th. But in addition to curiosities mentioned above, is Burpo’s contract. Under the Scope of Services, Burpo was given a series of duties concerning investments and deposits. See below:

Burpo FA Commission contract April112014 1

All of the items under Investments and Deposits are duties normally entailed in the treasurer’s duties and what’s more is there are even some duties that appear to be delegations of the “advice” part of the Board’s duties. (I’ll pull this altogether below). But this contract, coupled with the new investment policy, and the fact that Burpo was at one time in a position under the Treasurer where he had the power to invest (and was subsequently removed to comply with federal law), gives one reason to pause.

Don’t forget to also look at the compensation page. Burpo has been tasked with a portion of the work load that would be entailed in the Treasurer’s job concerning investments, and yet, he’s being compensated $9200 a month (plus fees) to do the same thing the Treasurer gets paid roughly half to do (without fees). It was mentioned at a recent meeting on Sep 29th, by Burpo himself, that he was responsible for making changes to the new investment policy, “all the red and blue sections” (see the link in the box above), while the portion written by the legal department, was the old policy. So to be clear … the guy that used to work on investments under the old Treasurer, forced to leave under the new treasurer, was hired on again by the Commission, and wrote new policy that broadened his role as Financial Adviser, after being contracted to do a job that the state has delegated to the treasurer, getting paid twice as much as the Treasurer. Can you say conflict of interest?

Okay, let’s pull this all together:

The longstanding definition of the term “advice and consent” dictates the relationship between the county treasurer and the county board of finance, and it is vastly clear that the state-designated role of the Treasurer is to work out everything entailed in investing legally available monies in legally available avenues, and that the board of finance can offer their opinions and advice, but that the Treasurer can take it or leave it. Ultimately, and the county manager and attorney know and understand that the board of finance can only approve or deny the Treasurer’s proposals; they cannot interject themselves into her role.

But there’s more. The longstanding opinion from the AG is that the commission neither has the authority to usurp the Treasurer’s authority, nor do they have the power to delegate their own authority to someone else. In this case, the Commission’s Financial Advisor arguably does both – usurp’s the treasurer’s authority and assumes delegated power from the board of finance. Think about this: if a future treasurer was elected, and that person was a bit naive about his or her power, and was told by county staff that she didn’t need to worry about the work entailed in investing because the commission has a guy who does it, and oh! there’s this investment policy that makes it set in stone! Can you imagine this naive treasurer shrugging his and her shoulders and just going with what they’re told? I can.

The AG also said that the county treasurer is not a mere ministerial role but rather a governing authority in her own right. If this future treasurer left the duties outlined in Burpo’s contract, to Burpo, then, aside from collecting taxes and signing checks, what governing authority does she have? None. In effect, she becomes ministerial, and that’s a violation of state law.

In fact, because it is the responsibility of the Treasurer to work out the details of investing practices before presenting to the Board of Finance for final approval, it’s actually the treasurer’s responsibility to write the Investment policy, and in 2009, that’s the office who had presented it, with the adviser Robert Burpo. In other words, neither the Commission nor the their contractor has any business drafting an investment policy in the first place.

The county manager and attorney were almost patronizing at the Sep 17th meeting with how they treated Montoya’s concerns regarding this apparent usurpation of her authority. And yet, they offered no real substantial defense. It was, “this is much ado about nothing,” or “let’s agree to disagree,” or “you’re confused; you must be confused.” And why aren’t the commissioners asking these questions? Do they just take what the manager and attorney say at face value? What’s the point of having a commission if they’re going to just defer to the manager and attorney. Maybe the real reason why they don’t see this as reducing the treasurer to a mere figurehead, is because they have reduced themselves to mere figureheads.

There’s still time before this Investment Policy gets final approval by the County Commission, so if this is as disconcerting to you as it has been to me, contact your county commissioner, and tell them it’s time to start paying attention and stop micromanaging the treasurer.