Panel supports bill to enhance Finance Board

Measure to provide oversight of treasurer’s office employees

— A bill to expand the state Board of Finance, increase its oversight of state investments and allow it to decide who works in several key positions in the state treasurer’s office cleared an Arkansas Senate committee Thursday without state Treasurer Martha Shoffner on hand.

Sen. Jason Rapert, R-Bigelow, who called for Shoffner’s resignation in December, said his 33-page Senate Bill 838 also would prescribe best investment practices for the treasurer’s office, which invests about $3 billion for the state.

“This is something that, regardless of the issues that have been addressed over the last year, should have been taken to give a little tighter control,” he told the Senate Insurance and Commerce Committee, of which he is chairman.

Sen. Joyce Elliott, D-Little Rock, told Rapert that “this is a big bill and it does a lot.”

Shoffner, a Democrat who has been treasurer since 2007, has been the target of criticism largely from Republican state lawmakers over her office’s decisions to sell 30 bonds before they matured.

State auditors said in December that the sales cost the state about $434,000 in forgone earnings, prompting a legislative committee to ask law-enforcement agencies to review the decisions. A spokesman for the FBI has declined to say whether it’s conducting an investigation of Shoffner.

After the Senate committee meeting on Thursday, Shoffner’s executive assistant, Janice Lewis, said Shoffner wasn’t in the office Thursday and shedidn’t know where Shoffner was. Shoffner could not be reached for comment on her cell phone Thursday afternoon. Lewis and investment manager Hunter Johnson attended the legislative meeting “to observe,” Lewis said.

The Finance Board is made up of the governor, treasurer, auditor, bank commissioner and the director of the state Department of Finance and Administration under state law.

Rapert’s bill would expand the board to include the state’s securities commissioner; a person with knowledge and experience in commercial banking; a person who is or has been a licensed general securities representative for at least five years; a certified public accountant with at least five years of experience who is licensed in Arkansas; and a member of the public. The Senate president pro tempore would appoint the commercial banker and general securities representative, while the House speaker would appoint the certified public accountant and the member of the public.

The bill would let the board select people to work in certain positions in the treasurer’s office. These positions include the chief investments officer, chief fiscal officer, manager of local government services, manager of receipts processing, manager of warrants processing, and “any other position designated by the board.”

Under the legislation, these employees would work with and at the direction of the state treasurer consistent with the board’s policies and directives.

Elliott asked Rapert who would be these employees’ boss.

Accompanied by two Legislative Audit Division officials at the meeting, Rapert replied that the Finance Board would be the boss of the employees that they select, but they also would work for the treasurer. These employees would work permanently for the board no matter who the treasurer is, he said.

“And if there was a conflict in the office, then I am sure the Board of Finance would work with the treasurer to resolve that,” he said.

But Elliott said, “Wouldn’t that be like the executive branch hiring somebody and placing them on our staff and then we don’t have the oversight over that person?”

Rapert said his bill allows the board to oversee these employees. “Had that been the case, there may not have been some of the issues that we have run into.”

Autumn Sanson, the chief investment officer in the treasurer’s office, and Shoffner have disagreed with each other in testimony before lawmakers.

In December, Shoffner told lawmakers that her office “didn’t consciously show preference” to a Russellville-based bond broker who had received more business than other brokers through her office. But Sanson told them that Shoffner instructed her to do more businesswith St. Bernard Financial Services.

Sanson told lawmakers in September that she had advised Shoffner against selling bonds before their maturity; Shoffner denied Sanson’s assertion.

Shoffner and St. Bernard’s chief executive officer, Robert Keenan, have said they have done nothing wrong.

After no one testified for or against Rapert’s bill Thursday, Elliott said Rapert’s bill has “far-reaching possibilities and I really would like to have time to digest this a little more.” She asked Rapert to have the committee that he heads to delay action on the bill.

But Rapert said his bill has been filed and on the committee’s calendar for several days and it’s coming close to the end of this year’s session.

“At this point I would like to proceed with the bill because the time is running short,” he said. He said he would be glad to work with Elliott if she sees a need to make any changes in the bill.

Afterward, Finance Board chairman Richard Weiss, who is director of the Department of Finance and Administration, said he had no comment about the merits of Rapert’s legislation, adding that he hopes to meet Monday with Rapert.

Democratic Gov. Mike Beebe, who sends a representative to Finance Board meetings, believes Rapert’s bill has a laudable goal of bringing more oversight to the state’s investments but “it may be creating a little too much bureaucracy to do that,” said Beebe spokesman Matt DeCample.

He noted that Weiss favorshaving the state’s chief investment officer work for the Finance Board.

The governor’s office didn’t have a representative at the Senate committee meeting Thursday because it wasn’t aware that Rapert intended to present his bill at the meeting, DeCample said.

Democratic state Auditor Charlie Daniels, who sends a representative to Finance Board meetings, has “some concerns about employees of a constitutional officer reporting to a board versus the elected official, but is deferring to the treasurer to work out those details with the bill’s sponsor, since the treasurer’s office would be the one impacted,” said Daniels’ spokesman Janet Harris.

Lewis said Shoffner has similar concerns.

Front Section, Pages 1 on 03/15/2013

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