Idaho Treasurer Ron Crane may soon be getting help making sure taxpayers' money is safe after auditors rebuked him earlier this year for inappropriately transferring tens of millions of dollars to state accounts where it was lost, the AP reports. The Senate State Affairs Committee Wednesday approved a measure to create a new, five-person advisory board to make sure Crane or future treasurers are appropriately managing accounts; click below for a full report from AP reporter John Miller.
Idaho Senate panel passes new oversight for Crane
By JOHN MILLER, Associated Press
BOISE, Idaho (AP) — Idaho Treasurer Ron Crane may soon be getting help making sure taxpayers' money is safe after auditors rebuked him earlier this year for inappropriately transferring tens of millions of dollars to state accounts where it was lost.
The Senate State Affairs Committee Wednesday approved a measure to create a new, five-person advisory board to make sure Crane or future treasurers are appropriately managing accounts.
The measure now goes to the full Senate floor for a vote.
In January, state auditors said Crane's office fell short of its responsibilities, losing $10 million and risking millions more in unrealized losses from ill-advised 2008 transactions. In the report, auditors recommended the office strengthen processes to reduce risk — including by adding an independent investment board to watch over what it does.
Senate President Pro Tem Brent Hill, R-Rexburg and the proposal's sponsor, said the new board will be similar to the Endowment Fund Investment Board that currently helps shepherd Idaho's $1.6 billion endowment fun. It will meet in public at least four times yearly to advise Crane and his successors in the office.
Such a board, Hill said, would also boost the treasurer's credibility in instances where investments sour, like with those from 2008.
"Some of the concerns that were brought up...would have been avoided if there had been an advisory board," Hill said, adding it would also protect the treasurer "from false accusations that something is improper."
In their report in late January, auditors concluded Crane's office inappropriately transferred mortgage-backed securities with a total face value of $86 million from an investment fund he oversaw for local governments to a separate account that he manages for state agencies.
In trying to shield the local government fund from a potential downgrade of its credit rating, auditors concluded Crane's office erred, among other things, by exchanging the securities at their face value, rather than their fair market value that was much lower at the time.
"The internal controls established by the Office in its investment policy were overridden when senior management directed the reallocations," auditors wrote, adding Crane violated his fiduciary duty of "undivided loyalty" when managing public money.
For his part, Crane, a four-term Republican who says he's seeking a fifth stint in office this year, vehemently denies overriding internal controls but acknowledges oversight shortcomings in his office six years ago, when the transactions in question took place.
Since then, he's said he's revamped his office, shedding the previous investment adviser who made most of the decisions and replacing her with a cadre of experts who now help him shepherd public money. Crane says he supports the advisory board promoted by Senate President Pro Tem Brent Hill to ensure taxpayers can have confidence public money is being handled properly.
"I am pleased to express my support," wrote Crane in a letter. "It appears to be a well drafted piece of legislation, while at the same time not infringing on the powers and duties of the treasurer set forth in the Idaho Constitution.
"I heartily endorse the concept as set forth in the language presented and pledge to work with this board for the benefit of the citizens of Idaho," he added.
Among other things, Crane won't be obligated to follow the advice of the new board, but senators Wednesday said they were confident its guidance will be taken to heart.
"I think it's a fine piece of legislation," said Sen. Elliot Werk, D-Boise. "I appreciate it."
Copyright 2014 The Associated Press