It was recently announced that the San Mateo County Board of Supervisors decided to file a lawsuit against the remnants of Lehman Brothers for misleading them with investment advice, which resulted in the loss of 155 million dollars. The money was in an investment pool according to our County Treasurer Lee Buffington and 5.9 percent of $2.6 billion total was with Lehman Brothers.
The investors sustaining the loss include San Mateo County cities, fire districts, school districts, our county transportation agency, our air quality management board and others. The lawsuit could recover 20 to 60 percent of what was lost, minus expenses.
This is a very sad situation as it means hard-earned tax dollars are now gone into thin air. It also means the public entities, which made the investments, will now have to do with less money in an economy where dollars are becoming scarce.
I have been asked how much money Foster City lost and what services will it affect. The short answer is “not one single penny”. About 10 years ago, we decided not to participate in the County pool. A longer answer involves how our Foster City government invests our money. All our funds are tucked away in safe places.
City Manager Jim Hardy and Finance Director Ricardo Santiago, working within the City Council approved investment policy, make “safety first” their motto. Yes, it is true Foster City pursues “boring” lower yield investments and may miss out on some higher interest earning opportunities here or there.
Nevertheless, in the end our money is still where we put it, working slowly and steadily, but still working for us. More importantly, we do not have to make up shortfalls in our annual budget due to unexpected investment losses.
You may also wish to credit your present and past City Councils as well as our former City Manager and Council Member Rick Wykoff. Collectively over the years, we created a “financial culture” of safe investing for our City. This culture began in the 1970’s and is steeped in the traditions started by Rick Wykoff. Our past City Councils and Rick were the wise misers who realized the sacrifices our community needed to make in order to grow out of the mud flats and become the vibrant metropolis it is today.
This tradition, for lack of a better word, has continued from one City Manager to the next and from one City Council to the next. If there is one common denominator that binds every past or present City Council member together, it is the immense pride we all feel in deliberately making certain we have a very large compensating portion of our operating budget safely in the bank. We may not be exciting people but we do know where our money is. When it comes to protecting your hard-earned tax dollars, we think it is okay to be “boring.”
If you have any questions or remarks please feel free to call me at 650-349-2316 or e-mail me at jkiramis@fostercity.org.
Thank you for giving me the opportunity to serve you.
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