County’s Investment Officer prioritizes financial safety

Best-Run GovernmentAs the County’s Investment Officer, Mike Smith manages an investment portfolio worth an average of $5 billion.  With the safety of $5 billion at stake, Mike depends heavily on assistance from his colleagues Christine Denis and Josh Freese in managing the King County Investment Pool.

In keeping with the County’s goals of financial stewardship and being the best-run government in the nation, Smith and his colleagues focus on the three ideals for public investing: safety, liquidity, and return.

“You want to keep the principal safe, you want to make sure money is always available to pay the bills, and thirdly you want to make sure you earn a return on it,” Smith said.

Mike Smith

The Finance and Business Operation Division’s (FBOD) Treasury Operations section serves as a treasurer to about 100 special purpose districts (school districts, water districts, fire districts, etc.). The majority of the assets in the County’s investment pool actually belong to districts, with 60 percent from special purpose districts and 40 percent belonging to the County itself.

Since Smith must comply with County and State laws, he can only invest County dollars in particular entities. Most types of County investments are fixed income instruments like U.S. Treasury and U.S. agency securities.

“A lot of people have a misconception. They ask me how the stock market is doing, but we can’t invest in stocks. The money in the pool is mostly from bond proceeds or other short-term operating fund money, so it’s money that’s meant to be spent on local infrastructure improvements and important services. It isn’t money set aside for retirement in 30 years,” Smith said.

In the past year Smith and his team were able to generate and distribute $24 million in earnings to various participants.

“The good news for taxpayers is that it’s non-tax-related revenue, so it helps keep taxes lower. The more we can generate the more money pool participants have to pay their employees, buy computers for schools, pay salaries for sheriffs, etc.,” Smith said.

Another role that FBOD plays is making sure there’s enough money every month for County payroll days.

“We have to make sure there’s about $25 million available at our bank just for the payroll so employee pay checks don’t bounce,” Smith said.

Smith has been at the County for a total of 18 years and continues to be interested in the work he does.

“It’s not routine and it’s always changing with the economic cycles we go through. The same thing never happens twice. There’s always some variation,” Smith said. “The better we do our job, the more effective we are, and the more money there is available for the important services that King County and the districts provide to local residents.”