On Thursday, January 23, concerned community members attended the latest quarterly meeting of the Franklin County Investment Advisory Committee (IAC) to challenge Treasurer Cheryl Brooks Sullivan’s investments of taxpayer money into the State of Israel. The high stakes meeting was the last before $5 million dollars in Israel Bonds mature on February 1. Historically, the treasurer has used money repaid upon maturity to swiftly repurchase new Israel Bonds.
In response to constituent questions, Brooks Sullivan confirmed that it is ultimately her decision whether or not to reinvest in Israel Bonds. She acknowledged that the county is not obligated to invest any money toward the 2 percent ceiling set aside for foreign investments, of which only Israel bonds qualify. “It's not a requirement,” she told meeting attendees, “it's just a ceiling. A treasurer can fall at 2 percent or under but it is not required that it has to be at 2 percent...I can decide.”
Currently, Israel Bonds are one downgrade away from not being eligible for county investment. According to the section of the Ohio Revised Code responsible for dictating foreign debt purchase, eligible debt securities must be, “rated at the time of purchase in the three highest categories by two nationally recognized statistical rating organizations and issued by foreign nations diplomatically recognized by the United States government.”
Brooks Sullivan confirmed Moody’s Baa1 rating is below the eligible threshold for purchase, but went on to say, “we only have to have 2 ratings that are above.” S&P and Fitch have downgraded Israel to an A rating (the third and lowest before becoming ineligible for purchase under ORC) with a negative outlook, indicating it is likely the ratings will continue to be downgraded over a one- to two-year period. If either S&P or Fitch downgrade into the B range, Israel Bonds will no longer be eligible for purchase using county funds. Brooks Sullivan maintained that she has not made a decision, and is considering all information, but stated, “As it stands right now, I’m not comfortable with only two rating agencies left.”
Brooks Sullivan and members of the IAC have previously told constituents at meetings that they are a small group and do not represent Franklin County. At the meeting last week, Brooks Sullivan stated, “We do not at any time manage the investment portfolio based on constituent opinion. That's never how we make investment choices. Ever.”
Constituents raised many other concerns to the IAC which Brooks Sullivan dismissed as “not germane” to investment decisions. These included: the committee’s refusal to consider politics despite rating organizations citing political risk as the main factor driving downgrades; county investments alienating residents; and opportunities to invest in local infrastructure, housing, and employment.
