The resignation of the state Treasurer highlights a much-needed cleanup bill approved by the legislature earlier this year in the regular session, Act 1088 of 2013 to provide for prudent management of state treasury funds.
Act 1088 was prompted in part by reports last year that the treasurer had changed long standing procedures and invested state funds with a select few firms. Seven senators sponsored the bill, which passed the Senate unanimously in March.
The act expands the membership of the state Board of Finance and requires that at least one member have experience in commercial banking, one member have experience in the buying and selling of securities and another member have five years’ experience as a certified public accountant.
Members of the Board of Finance must abstain from voting on issues affecting any business or organization with which they are connected. The Board shall select a chief investment officer within the Treasurer’s office, and the Board may also hire investment counselors and money managers to regularly examine the investment practices of the Treasurer’s office.
Act 1088 lists the qualifications needed by employees who manage money and make investments for the Treasurer’s office and the Board of Finance. The new law sets standards of transparency and accountability that will prevent any repeat of the practices that raised so many questions last year.
Lawmakers were concerned last year about the state Treasurer’s change from traditional investments practices, even before she was arrested on a federal charge alleging that she had steered investments to a particular bond broker in exchange for payment.
Legislators expressed doubts about the qualifications of staff within the Treasurer’s office who handled billions of dollars in investments. Act 1088 addresses the concerns that came to light during last year’s legislative hearings.
Traditionally, the Treasurer and the Board of Finance have rotated state investments more or less evenly among banks and financial institutions throughout Arkansas. It was quickly noticed in the financial community when the Treasurer’s office began doing much more business than usual with a couple of firms, which sold bonds before they had matured.
Legislative auditors questioned whether the early bond sales generated as much in earnings as the state would have earned under traditional practices.
The governor appointed Charles Robinson of North Little Rock to serve as Treasurer until the next election. Robinson, 66, graduated from Harrison High School and earned a B.S. degree in accounting at Arkansas Tech in Russellville. He earned an MBA from the University of Arkansas at Fayetteville and worked for a private auditing company for a couple of years before joining the staff of the Legislative Joint Auditing Committee in 1973.
Robinson worked for Legislative Audit for 34 years, 28 of them as the head of the bureau. He is a certified public accountant and a certified fraud examiner. He retired in 2007 and only a handful of today’s senators and representatives were in the legislature when Robinson headed Joint Audit.
Those legislators who served with Robinson say that he brings credibility to an office that needs it. Changes mandated by Act 1088 of 2013 will do much to help restore the integrity of the Treasurer’s office.