LGC works for member communities
Editor’s note: The following are excerpts from a letter written by Maura Carroll, executive director of the Local Government Center, to member communities.I am writing to provide you with a more detailed response to the recently released report from the Secretary of State’s Bureau of Securities Regulation.First, it is important to note that the release of the bureau’s report is the first step in a formal regulatory process. In our view, this report is riddled with errors. We believe many of the conclusions are based on faulty legal reasoning and erroneous factual assertions.It is important to recognize that the formal process regarding the complaint filed over two years ago begins with the bureau’s release of this report. LGC has not yet seen a copy of the complaint, filed two years ago, on which this investigation was conducted, so while some may say that the report concludes the process, it is really the beginning of the opportunity for LGC to present its case in a formal public proceeding.Some have suggested that LGC should ignore the inaccuracies and errors of law contained in the report and merely acquiesce to the demands made. We believe that approach is not in the interest of LGC members. This report is the first-ever review of a pooled risk program by securities regulators and seems to be based on the belief that the bureau, clearly having experience with securities regulation but no experience with risk coverage of local governments, can easily second-guess the good-faith decisions made by the elected and appointed local officials on the board of a risk pool.LGC firmly believes that the law has given the elected and appointed local officials on the board of a risk pool the authority to determine how to best run a pool in the interest of its member local governments. These decisions should not be overturned lightly by those who are not directly responsible for making members whole if their assumptions about the proper level of reserves, for example, end up being inadequate in the future.Not challenging the report would do an immense disservice to you as members who have relied on the financial soundness of the programs and services LGC has provided.To date, the bureau has requested documentation from LGC, and LGC produced over 7,000 pages of materials. In fact, there have been very recent requests for data. Criticisms were made in the report that we had not fully responded to the latest request, although information was housed with an outside attorney who happened to be on vacation at the end of July through the time of the report’s release.We believe that when all the facts are considered, the conclusions reached will be that LGC acted in the best interests of its members, in compliance with the statute and in a reasonable and responsible way. Does that mean everyone will agree with every decision the board has made? I doubt that. Does it mean that LGC has never made mistakes? Of course not. But the report asserts that LGC has operated illegally and without regard for its members or their taxpayers. We believe nothing could be further from the truth.The success of LGC is a reflection of the value of the services and products offered and the trust placed in the organization. Much of that trust comes from the fact that the organization is oriented toward and overseen by its members. The composition of the board is entirely local officials and employees of member local governments whose only compensation is the payment of mileage to attend board and committee meetings.Despite the external challenges, LGC staff works daily to bring you services that we know mean a lot to you, like legal advisory services, training, educational publications, advocacy and the risk pool coverages and services. Knowing that we play a part in helping you to do your jobs even better is important to us, and we’re always looking for ways to improve what we do for you.