County treasurer defends investment policies
EDWARDSVILLE — The Madison County treasurer today defended his investment practices as a matter of adhering to the law and said he has no problem working with financial advisers or members of the County Board to address any concerns.
Kurt Prenzler, a Republican officer holder who’s been under fire from Democratic counterparts from the beginning of his tenure in 2010, responded today to County Board Chairman Alan Dunstan’s proposal to hire an outside financial adviser in a move to improve return on county investments.
Dunstan brought forth the idea this week as a more politically palatable solution than one being pushed by county Auditor Rick Faccin, who last month called for an oversight committee for the treasurer’s office.
Prenzler said he is empowered by state statute to direct the county’s investments and he adheres to state law that requires him to focus on — in order — safety, liquidity and yield on investments.
“County treasurers probably know that law better than they know their wife’s anniversary or the Ten Commandments,” he told the Illinois Business Journal.
Prenzler stirred waves when, after taking office, he shifted investments from long-term holdings to short-term ones and from mostly bonds to mostly bank investments. The yield dropped but the safety of those investments increased, he said.
“Should the county be running a hedge fund, investing in such long-term investments? No other county is doing that,” he said.
In the last three-plus years, the county’s overall investment portfolio grew, from $105 million to $135 million, a result of “taxing more than spending,” he said.
The county is now “debt free or almost debt free, which is a good thing,” and Prenzler said money that’s not being used should be returned to taxpayers rather than sitting in reserves. He noted the recently failed referendum to issue almost $19 million in bonds to improve the county jail. The county has some of that money in reserve and could still use that toward the jail, rather than add to the debt, he said.
When he became treasurer, some $72 million was in long-term bonds — $42 million of that in bonds that matured in 12 to 15 years. That was outside the scope of the office’s “sound investment policy,” which had been drafted but not followed by his predecessors in office. He succeeded Frank Miles, who was appointed to the post after Fred Bathon resigned at the height of a scandal involving tax sales — a case that eventually sent Bathon to prison.
“The weighted average maturity” on investment bonds should be no more than five years, but in Madison County’s case it was closer to eight years when he came into office, Prenzler said.
From 2001 to 2010, Bathon conducted much of his business via an exclusive arrangement with one particular bond salesman in Little Rock, Ark., Prenzler said.
Since Prenzler took office, he has shifted much more of the county’s money into local banks, increasing that balance from $33 million to $87 million — which helps the county’s economy, he said.
Prenzler said he talks to financial advisers “all the time” and has no qualms about doing so in conjunction with the county’s finance committee, which voted Tuesday to recommend seeking such proposals.
