December 05, 2020
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HB 1307

A bill to be entitled
2An act relating to state financial matters; amending s.
3121.4501, F.S.; revising and providing definitions;
4providing for excess account balances in the Public
5Employee Optional Retirement Program when an employee
6transfers to the defined benefit program; providing for
7the use of such excess balance; requiring the State Board
8of Administration to develop procedures to resolve
9complaints; providing for the use of records in resolving
10such complaints; clarifying the state board's rule
11authority with respect to the program; amending s.
12121.4502, F.S.; establishing a forfeiture account in the
13Public Employee Retirement Program Trust Fund; providing
14for the use of funds in the account; amending s. 121.591,
15F.S.; conforming a cross-reference; permitting an
16application for benefits under the optional retirement
17program to be submitted by electronic means; amending s.
18121.74, F.S.; revising the contribution rates for
19employers participating in the Florida Retirement System;
20amending s. 121.78, F.S.; exempting the Division of
21Retirement, the state board, and the third-party
22administrator from liability for market losses due to acts
23of God; amending s. 215.44, F.S.; providing reporting
24requirements for the state board; amending s. 215.441,
25F.S.; providing minimum qualifications for the executive
26director of the state board; amending s. 215.444, F.S.;
27increasing membership of the Investment Advisory Council;
28revising membership requirements; providing council
29meeting and reporting requirements; providing certain
30immunity from liability with respect to authorized actions
31for members of the council; amending s. 215.47, F.S.;
32authorizing moneys available for investment by the state
33board to be invested in certain federally tax-exempt
34bonds, notes, or obligations not subject to the federal
35alternative minimum tax; increasing the fund amount that
36may be invested in a foreign entity; amending s. 215.52,
37F.S.; providing the state board with certain powers;
38amending s. 218.409, F.S.; providing for extending a
39moratorium on contributions to or withdrawals from the
40Local Government Surplus Funds Trust Fund under certain
41circumstances; authorizing the state board to develop work
42products that are subject to trademark, copyright, or
43patent; providing an effective date.
45Be It Enacted by the Legislature of the State of Florida:
47     Section 1.  Subsection (2), paragraph (e) of subsection
48(4), subsection (6), and paragraphs (a) and (g) of subsection
49(8) of section 121.4501, Florida Statutes, are amended to read:
50     121.4501  Public Employee Optional Retirement Program.-
51     (2)  DEFINITIONS.-As used in this part, the term:
52     (a)  "Approved provider" or "provider" means a private
53sector company that is selected and approved by the state board
54to offer one or more investment products or services to the
55Public Employee optional retirement program. The term includes a
56bundled provider that offers participants a range of
57individually allocated or unallocated investment products and
58may offer a range of administrative and customer services, which
59may include accounting and administration of individual
60participant benefits and contributions; individual participant
61recordkeeping; asset purchase, control, and safekeeping; direct
62execution of the participant's instructions as to asset and
63contribution allocation; calculation of daily net asset values;
64direct access to participant account information; periodic
65reporting to participants, at least quarterly, on account
66balances and transactions; guidance, advice, and allocation
67services directly relating to the provider's its own investment
68options or products, but only if the bundled provider complies
69with the standard of care of s. 404(a)(1)(A-B) of the Employee
70Retirement Income Security Act of 1974 (ERISA) and if providing
71such guidance, advice, or allocation services does not
72constitute a prohibited transaction under s. 4975(c)(1) of the
73Internal Revenue Code or s. 406 of ERISA, notwithstanding that
74such prohibited transaction provisions do not apply to the
75optional retirement program; a broad array of distribution
76options; asset allocation; and retirement counseling and
77education. Private sector companies include investment
78management companies, insurance companies, depositories, and
79mutual fund companies.
80     (b)  "Average monthly compensation" means one-twelfth of
81average final compensation as defined in s. 121.021(24).
82     (c)  "Covered employment" means employment in a regularly
83established position as defined in s. 121.021(52).
84     (d)  "Defined benefit program" means the defined benefit
85program of the Florida Retirement System administered under part
86I of this chapter "Department" means the Department of
87Management Services.
88     (e)  "Division" means the Division of Retirement within the
89department of Management Services.
90     (f)  "Electronic means" means by telephone, if the required
91information is received on a recorded line, or through Internet
92access, if the required information is captured online.
93     (g)(f)  "Eligible employee" means an officer or employee,
94as defined in s. 121.021, who:
95     1.  Is a member of, or is eligible for membership in, the
96Florida Retirement System, including any renewed member of the
97Florida Retirement System initially enrolled before July 1,
982010; or
99     2.  Participates in, or is eligible to participate in, the
100Senior Management Service Optional Annuity Program as
101established under s. 121.055(6), the State Community College
102System Optional Retirement Program as established under s.
103121.051(2)(c), or the State University System Optional
104Retirement Program established under s. 121.35.
106The term does not include any member participating in the
107Deferred Retirement Option Program established under s.
108121.091(13), a retiree of a state-administered retirement system
109initially reemployed on or after July 1, 2010, or a mandatory
110participant of the State University System Optional Retirement
111Program established under s. 121.35.
112     (h)(g)  "Employer" means an employer, as defined in s.
113121.021(10), of an eligible employee.
114     (i)  "Optional retirement program" or "optional program"
115means the Public Employee Optional Retirement Program
116established under this part.
117     (j)(h)  "Participant" means an eligible employee who elects
118to participate in the Public Employee Optional Retirement
119Program and enrolls in the such optional program as provided in
120subsection (4) or a terminated Deferred Retirement Option
121Program participant as described in subsection (21).
122     (i)  "Public Employee Optional Retirement Program,"
123"optional program," or "optional retirement program" means the
124alternative defined contribution retirement program established
125under this section.
126     (k)(j)  "Retiree" means a former participant of the Florida
127Retirement System Public Employee optional retirement program
128who has terminated employment and has taken a distribution as
129provided in s. 121.591, except for a mandatory distribution of a
130de minimis account authorized by the state board.
131     (k)  "State board" or "board" means the State Board of
133     (l)  "Trustees" means Trustees of the State Board of
135     (l)(m)  "Vested" or "vesting" means the guarantee that a
136participant is eligible to receive a retirement benefit upon
137completion of the required years of service under the Public
138Employee optional retirement program.
140     (e)  After the period during which an eligible employee had
141the choice to elect the defined benefit program or the Public
142Employee optional retirement program, or the month following the
143receipt of the eligible employee's plan election, if sooner, the
144employee shall have one opportunity, at the employee's
145discretion, to choose to move from the defined benefit program
146to the Public Employee optional retirement program or from the
147Public Employee optional retirement program to the defined
148benefit program. Eligible employees may elect to move between
149Florida Retirement System programs only if they are earning
150service credit in an employer-employee relationship consistent
151with the requirements under s. 121.021(17)(b), excluding leaves
152of absence without pay. Effective July 1, 2005, such elections
153are shall be effective on the first day of the month following
154the receipt of the election by the third-party administrator and
155are not subject to the requirements regarding an employer-
156employee relationship or receipt of contributions for the
157eligible employee in the effective month, except that the
158employee must meet the conditions of the previous sentence when
159the election is received by the third-party administrator. This
160paragraph is shall be contingent upon approval from the Internal
161Revenue Service for including the choice described herein within
162the programs offered by the Florida Retirement System.
163     1.  If the employee chooses to move to the Public Employee
164optional retirement program, the applicable provisions of this
165section shall govern the transfer.
166     2.  If the employee chooses to move to the defined benefit
167program, the employee must transfer from his or her Public
168Employee optional retirement program account, and from other
169employee moneys as necessary, a sum representing the present
170value of that employee's accumulated benefit obligation
171immediately following the time of such movement, determined
172assuming that attained service equals the sum of service in the
173defined benefit program and service in the Public Employee
174optional retirement program. Benefit commencement occurs on the
175first date the employee is would become eligible for unreduced
176benefits, using the discount rate and other relevant actuarial
177assumptions that were used to value the Florida Retirement
178System defined benefit plan liabilities in the most recent
179actuarial valuation. For any employee who, at the time of the
180second election, already maintains an accrued benefit amount in
181the defined benefit program plan, the then-present value of the
182such accrued benefit shall be deemed part of the required
183transfer amount described in this subparagraph. The division
184shall ensure that the transfer sum is prepared using a formula
185and methodology certified by an enrolled actuary.
186     3.  Notwithstanding subparagraph 2., an employee who
187chooses to move to the defined benefit program and who became
188eligible to participate in the Public Employee optional
189retirement program by reason of employment in a regularly
190established position with a state employer after June 1, 2002; a
191district school board employer after September 1, 2002; or a
192local employer after December 1, 2002, must transfer from his or
193her Public Employee optional retirement program account, and,
194from other employee moneys as necessary, a sum representing the
195that employee's actuarial accrued liability.
196     4.  An employee's Employees' ability to transfer from the
197Florida Retirement System defined benefit program to the Public
198Employee optional retirement program pursuant to paragraphs (a)-
199(d), and the ability of a for current employee employees to have
200an option to later transfer back into the defined benefit
201program under subparagraph 2., shall be deemed a significant
202system amendment. Pursuant to s. 121.031(4), any such resulting
203unfunded liability arising from actual original transfers from
204the defined benefit program to the optional program must shall
205be amortized within 30 plan years as a separate unfunded
206actuarial base independent of the reserve stabilization
207mechanism defined in s. 121.031(3)(f). For the first 25 years, a
208no direct amortization payment may not shall be calculated for
209this base. During this 25-year period, the such separate base
210shall be used to offset the impact of employees exercising their
211second program election under this paragraph. It is the
212legislative intent of the Legislature that the actuarial funded
213status of the Florida Retirement System defined benefit program
214not be affected plan is neither beneficially nor adversely
215impacted by such second program elections in any significant
216manner, after due recognition of the separate unfunded actuarial
217base. Following the this initial 25-year period, any remaining
218balance of the original separate base shall be amortized over
219the remaining 5 years of the required 30-year amortization
221     5.  If the employee chooses to transfer from the optional
222retirement program to the defined benefit program and retains an
223excess account balance in the optional program after satisfying
224the buy-in requirements under this paragraph, the excess may not
225be distributed until the member retires from the defined benefit
226program. The excess account balance may be rolled over to the
227defined benefit program and used to purchase service credit or
228upgrade creditable service in that program.
230     (a)1.  With respect to employer contributions paid on
231behalf of the participant to the Public Employee optional
232retirement program, plus interest and earnings thereon and less
233investment fees and administrative charges, a participant is
234shall be vested after completing 1 work year, as defined in s.
235121.021(54), with an employer, including any service while the
236participant was a member of the defined benefit retirement
237program or an optional retirement program authorized under s.
238121.051(2)(c) or s. 121.055(6).
239     2.  If the participant terminates employment before prior
240to satisfying the vesting requirements, the nonvested
241accumulation must shall be transferred from the participant's
242accounts to the state board for deposit and investment by the
243state board in the suspense account created within of the Public
244Employee Optional Retirement Program Trust Fund of the board. If
245the terminated participant is reemployed as an eligible employee
246within 5 years, the state board shall transfer to the
247participant's account any amount of the moneys previously
248transferred from the participant's accounts to the suspense
249account of the Public Employee Optional Retirement Program Trust
250Fund, plus the actual earnings on such amount while in the
251suspense account.
252     (b)1.  With respect to amounts transferred from the defined
253benefit program to the investment program, plus interest and
254earnings, and less investment fees and administrative charges, a
255participant shall be vested in the amount transferred from the
256defined benefit program, plus interest and earnings thereon and
257less administrative charges and investment fees, upon meeting
258the service requirements for the participant's membership class
259as set forth in s. 121.021(29). The third-party administrator
260shall account for such amounts for each participant. The
261division shall notify the participant and the third-party
262administrator when the participant has satisfied the vesting
263period for Florida Retirement System purposes.
264     2.  If the participant terminates employment before prior
265to satisfying the vesting requirements, the nonvested
266accumulation must shall be transferred from the participant's
267accounts to the state board for deposit and investment by the
268state board in the suspense account created within of the Public
269Employee Optional Retirement Program Trust Fund of the board. If
270the terminated participant is reemployed as an eligible employee
271within 5 years, the state board shall transfer to the
272participant's account any amount of the moneys previously
273transferred from the participant's accounts to the suspense
274account of the Public Employee Optional Retirement Program Trust
275Fund, plus the actual earnings on such amount while in the
276suspense account.
277     (c)  Any nonvested accumulations transferred from a
278participant's account to the suspense account shall be forfeited
279by the participant if the participant is not reemployed as an
280eligible employee within 5 years after termination.
282     (a)  The Public Employee optional retirement program shall
283be administered by the state board and affected employers. The
284board may is authorized to require oaths, by affidavit or
285otherwise, and acknowledgments from persons in connection with
286the administration of its statutory duties and responsibilities
287for this program under this chapter. An No oath, by affidavit or
288otherwise, may not shall be required of an employee participant
289at the time of enrollment election. Acknowledgment of an
290employee's election to participate in the program shall be no
291greater than necessary to confirm the employee's election. The
292state board shall adopt rules to carry out its statutory duties
293with respect to administering the optional retirement program,
294including, but not limited to, establishing the roles role and
295responsibilities of affected state, local government, and
296education-related employers, the state board, the department,
297and third-party contractors in administering the Public Employee
298optional retirement program. The department shall adopt rules
299necessary to administer implement the optional program in
300coordination with the defined benefit retirement program and the
301disability benefits available under the optional program.
302     (g)  The state board shall develop procedures to receive
303and resolve participant complaints against the program, the
304third-party administrator, or any program vendor or provider;
305shall resolve any conflict between the third-party administrator
306and an approved provider if when such conflict threatens the
307implementation or administration of the program or the quality
308of services to employees; and may resolve any other conflicts.
309The third-party administrator shall retain all participant
310records for at least 5 years for use in resolving any
311participant conflicts. The state board, the third-party
312administrator, or a provider is not required to produce
313documentation or an audio recording to justify action taken with
314regard to a participant if the action occurred 5 or more years
315before the complaint is submitted to the state board. It is
316presumed that all action taken 5 or more years before the
317complaint is submitted was taken at the request of the
318participant and with the participant's full knowledge and
319consent. To overcome this presumption, the participant must
320present documentary evidence or an audio recording demonstrating
322     Section 2.  Subsection (3) is added to section 121.4502,
323Florida Statutes, to read:
324     121.4502  Public Employee Optional Retirement Program Trust
326     (3)  A forfeiture account shall be created within the
327Public Employee Optional Retirement Program Trust Fund to hold
328the assets derived from the forfeiture of benefits by
329participants. Pursuant to a private letter ruling from the
330Internal Revenue Service, the forfeiture account may be used
331only for paying expenses of the Public Employee Optional
332Retirement Program and reducing future employer contributions to
333the program. Consistent with Rulings 80-155 and 74-340 of the
334Internal Revenue Service, unallocated reserves within the
335forfeiture account must be used as quickly and as prudently as
336possible considering the state board's fiduciary duty. Expected
337withdrawals from the account must endeavor to reduce the account
338to zero each fiscal year.
339     Section 3.  Paragraphs (a) and (b) of subsection (1) of
340section 121.591, Florida Statutes, are amended to read:
341     121.591  Benefits payable under the Public Employee
342Optional Retirement Program of the Florida Retirement System.-
343Benefits may not be paid under this section unless the member
344has terminated employment as provided in s. 121.021(39)(a) or is
345deceased and a proper application has been filed in the manner
346prescribed by the state board or the department. The state board
347or department, as appropriate, may cancel an application for
348retirement benefits when the member or beneficiary fails to
349timely provide the information and documents required by this
350chapter and the rules of the state board and department. In
351accordance with their respective responsibilities as provided
352herein, the State Board of Administration and the Department of
353Management Services shall adopt rules establishing procedures
354for application for retirement benefits and for the cancellation
355of such application when the required information or documents
356are not received. The State Board of Administration and the
357Department of Management Services, as appropriate, are
358authorized to cash out a de minimis account of a participant who
359has been terminated from Florida Retirement System covered
360employment for a minimum of 6 calendar months. A de minimis
361account is an account containing employer contributions and
362accumulated earnings of not more than $5,000 made under the
363provisions of this chapter. Such cash-out must either be a
364complete lump-sum liquidation of the account balance, subject to
365the provisions of the Internal Revenue Code, or a lump-sum
366direct rollover distribution paid directly to the custodian of
367an eligible retirement plan, as defined by the Internal Revenue
368Code, on behalf of the participant. If any financial instrument
369issued for the payment of retirement benefits under this section
370is not presented for payment within 180 days after the last day
371of the month in which it was originally issued, the third-party
372administrator or other duly authorized agent of the State Board
373of Administration shall cancel the instrument and credit the
374amount of the instrument to the suspense account of the Public
375Employee Optional Retirement Program Trust Fund authorized under
376s. 121.4501(6). Any such amounts transferred to the suspense
377account are payable upon a proper application, not to include
378earnings thereon, as provided in this section, within 10 years
379after the last day of the month in which the instrument was
380originally issued, after which time such amounts and any
381earnings thereon shall be forfeited. Any such forfeited amounts
382are assets of the Public Employee Optional Retirement Program
383Trust Fund and are not subject to the provisions of chapter 717.
384     (1)  NORMAL BENEFITS.-Under the Public Employee Optional
385Retirement Program:
386     (a)  Benefits in the form of vested accumulations as
387described in s. 121.4501(6) are payable under this subsection in
388accordance with the following terms and conditions:
389     1.  To the extent vested, benefits are payable only to a
391     2.  Benefits shall be paid by the third-party administrator
392or designated approved providers in accordance with the law, the
393contracts, and any applicable board rule or policy.
394     3.  To receive benefits, the participant must be terminated
395from all employment with all Florida Retirement System
396employers, as provided in s. 121.021(39).
397     4.  Benefit payments may not be made until the participant
398has been terminated for 3 calendar months, except that the board
399may authorize by rule for the distribution of up to 10 percent
400of the participant's account after being terminated for 1
401calendar month if the participant has reached the normal
402retirement date as defined in s. 121.021 of the defined benefit
404     5.  If a member or former member of the Florida Retirement
405System receives an invalid distribution from the Public Employee
406Optional Retirement Program Trust Fund, such person must repay
407the full invalid distribution to the trust fund within 90 days
408after receipt of final notification by the state board or the
409third-party administrator that the distribution was invalid. If
410such person fails to repay the full invalid distribution within
41190 days after receipt of final notification, the person may be
412deemed retired from the optional retirement program by the state
413board, as provided pursuant to s. 121.4501(2)(k)(j), and is
414subject to s. 121.122. If such person is deemed retired by the
415state board, any joint and several liability set out in s.
416121.091(9)(d)2. becomes null and void, and the state board, the
417department, or the employing agency is not liable for gains on
418payroll contributions that have not been deposited to the
419person's account in the retirement program, pending resolution
420of the invalid distribution. The member or former member who has
421been deemed retired or who has been determined by the board to
422have taken an invalid distribution may appeal the agency
423decision through the complaint process as provided under s.
424121.4501(9)(g)3. As used in this subparagraph, the term "invalid
425distribution" means any distribution from an account in the
426optional retirement program which is taken in violation of this
427section, s. 121.091(9), or s. 121.4501.
428     (b)  If a participant elects to receive his or her benefits
429upon termination of employment as defined in s. 121.021, the
430participant must submit a written application or an application
431by electronic means an equivalent form to the third-party
432administrator indicating his or her preferred distribution date
433and selecting an authorized method of distribution as provided
434in paragraph (c). The participant may defer receipt of benefits
435until he or she chooses to make such application, subject to
436federal requirements.
437     Section 4.  Section 121.74, Florida Statutes, is amended to
439     121.74  Administrative and educational expenses.-In
440addition to contributions required under s. 121.71, effective
441July 1, 2010, through June 30, 2014, employers participating in
442the Florida Retirement System shall contribute an amount equal
443to 0.03 0.05 percent of the payroll reported for each class or
444subclass of Florida Retirement System membership; effective July
4451, 2014, the contribution rate shall be 0.04 percent of the
446payroll reported for each class or subclass of membership. The,
447which amount contributed shall be transferred by the Division of
448Retirement from the Florida Retirement System Contributions
449Clearing Trust Fund to the State Board of Administration's
450Administrative Trust Fund to offset the costs of administering
451the optional retirement program and the costs of providing
452educational services to participants in the defined benefit
453program and the optional retirement program. Approval of the
454trustees of the State Board of Administration is required before
455prior to the expenditure of these funds. Payments for third-
456party administrative or educational expenses shall be made only
457pursuant to the terms of the approved contracts for such
459     Section 5.  Subsection (3) of section 121.78, Florida
460Statutes, is amended to read:
461     121.78  Payment and distribution of contributions.-
462     (3)(a)  Employer contributions and accompanying payroll
463data received after the 5th working day of the month are shall
464be considered late. The employer shall be assessed by the
465Division of Retirement a penalty of 1 percent of the
466contributions due for each calendar month or part thereof that
467the contributions or accompanying payroll data are late.
468Proceeds from the 1-percent assessment against contributions
469made on behalf of participants of the defined benefit program
470shall be deposited in the Florida Retirement System Trust Fund,
471and proceeds from the 1-percent assessment against contributions
472made on behalf of participants of the optional retirement
473program shall be transferred to the third-party administrator
474for deposit into participant accounts, as provided in paragraph
476     (b)  If contributions made by an employer on behalf of
477participants of the optional retirement program or accompanying
478payroll data are not received within the calendar month they are
479due, including, but not limited to, contribution adjustments as
480a result of employer errors or corrections, and if that
481delinquency results in market losses to participants, the
482employer shall reimburse each participant's account for market
483losses resulting from the late contributions. If a participant
484has terminated employment and taken a distribution, the
485participant is responsible for returning any excess
486contributions erroneously provided by employers, adjusted for
487any investment gain or loss incurred during the period such
488excess contributions were in the participant's Public Employee
489Optional Retirement Program account. The state board of
490Administration or its designated agent shall communicate to
491terminated participants any obligation to repay such excess
492contribution amounts. However, the state board of
493Administration, its designated agents, the Public Employee
494Optional Retirement Program Trust Fund, the department of
495Management Services, or the Florida Retirement System Trust Fund
496may shall not incur any loss or gain as a result of an
497employer's correction of such excess contributions. The third-
498party administrator, hired by the state board pursuant to s.
499121.4501(8), shall calculate the market losses for each affected
500participant. If When contributions made on behalf of
501participants of the optional retirement program or accompanying
502payroll data are not received within the calendar month due, the
503employer shall also pay the cost of the third-party
504administrator's calculation and reconciliation adjustments
505resulting from the late contributions. The third-party
506administrator shall notify the employer of the results of the
507calculations and the total amount due from the employer for such
508losses and the costs of calculation and reconciliation. The
509employer shall remit to the Division of Retirement the amount
510due within 30 10 working days after the date of the penalty
511notice sent by the division. The division shall transfer that
512said amount to the third-party administrator, which who shall
513deposit proceeds from the 1-percent assessment and from
514individual market losses into participant accounts, as
515appropriate. The state board may is authorized to adopt rules to
516administer implement the provisions regarding late
517contributions, late submission of payroll data, the process for
518reimbursing participant accounts for resultant market losses,
519and the penalties charged to the employers.
520     (c)  Delinquency fees may be waived by the Division of
521Retirement, with regard to defined benefit program
522contributions, and by the state board of Administration, with
523regard to optional retirement program contributions, only if
524when, in the opinion of the division or the board, as
525appropriate, exceptional circumstances beyond the employer's
526control prevented remittance by the prescribed due date
527notwithstanding the employer's good faith efforts to effect
528delivery. Such a waiver of delinquency may be granted an
529employer only once one time each state fiscal year.
530     (d)  If contributions made by an employer on behalf of
531participants in the optional retirement program are delayed in
532posting to participant accounts due to acts of God beyond the
533control of the Division of Retirement, the state board, or the
534third-party administrator, as applicable, market losses
535resulting from the late contributions are not payable to the
537     Section 6.  Subsections (1) and (2) of section 215.44,
538Florida Statutes, are amended to read:
539     215.44  Board of Administration; powers and duties in
540relation to investment of trust funds.-
541     (1)  Except when otherwise specifically provided by the
542State Constitution and subject to any limitations of the trust
543agreement relating to a trust fund, the Board of Administration,
544hereinafter sometimes referred to in this chapter as "board," or
545"Trustees of the State Board of Administration," composed of the
546Governor as chair, the Chief Financial Officer, and the Attorney
547General, shall invest all the funds in the System Trust Fund, as
548defined in s. 121.021(36), and all other funds specifically
549required by law to be invested by the board pursuant to ss.
550215.44-215.53 to the fullest extent that is consistent with the
551cash requirements, trust agreement, and investment objectives of
552the fund. Notwithstanding any other law to the contrary, the
553State Board of Administration may invest any funds of any state
554agency or any unit of local government pursuant to the terms of
555a trust agreement with the head of the state agency or the
556governing body of the unit of local government, which trust
557agreement shall govern the investment of such funds, provided
558that the board shall approve the undertaking of such investment
559before execution of the trust agreement by the State Board of
560Administration. The funds and the earnings therefrom are exempt
561from the service charge imposed by s. 215.20. As used in this
562subsection, the term "state agency" has the same meaning as that
563provided in s. 216.001, and the terms "governing body" and "unit
564of local government" have the same meaning as that provided in
565s. 218.403.
566     (2)(a)  The board shall have the power to make purchases,
567sales, exchanges, investments, and reinvestments for and on
568behalf of the funds referred to in subsection (1), and it shall
569be the duty of the board to see that moneys invested under the
570provisions of ss. 215.44-215.53 are at all times handled in the
571best interests of the state.
572     (b)  In exercising investment authority pursuant to s.
573215.47, the board may retain investment advisers or managers, or
574both, external to in-house staff, to assist the board in
575carrying out the power specified in paragraph (a).
576     (c)  The board shall produce a set of financial statements
577for the Florida Retirement System on an annual basis which shall
578be reported to the Legislature and audited by a commercial
579independent third-party audit firm.
580     Section 7.  Section 215.441, Florida Statutes, is amended
581to read:
582     215.441  Board of Administration; appointment of executive
583director.-The appointment of the executive director of the State
584Board of Administration shall be subject to the approval by a
585majority vote of the Board of Trustees of the State Board of
586Administration, and the Governor must vote on the prevailing
587side. Such appointment must be reaffirmed in the same manner by
588the board of trustees on an annual basis. The executive director
589shall, at a minimum, possess substantial experience, knowledge,
590and expertise in the oversight of investment portfolios and must
591meet any other requirements determined by the board to be
592necessary to the overall management and investment of funds.
593     Section 8.  Section 215.444, Florida Statutes, is amended
594to read:
595     215.444  Investment Advisory Council.-
596     (1)  There is created a nine-member six-member Investment
597Advisory Council to review the investments made by the staff of
598the Board of Administration and to make recommendations to the
599board regarding investment policy, strategy, and procedures. The
600council shall meet with staff of the board no less than
601quarterly and shall provide a quarterly report directly to the
602Trustees of the State Board of Administration at a meeting of
603the board.
604     (2)  The members of the council shall be appointed by the
605board as a resource to the Trustees of the State Board of
606Administration and shall be subject to confirmation by the
607Senate. These individuals shall possess special knowledge,
608experience, and familiarity with financial investments and
609portfolio management, institutional investments, and fiduciary
610responsibilities. Members shall be appointed for 4-year terms. A
611vacancy shall be filled for the remainder of the unexpired term.
612The council shall annually elect a chair and a vice chair from
613its membership. A member may not be elected to consecutive terms
614as chair or vice chair.
615     (3)  In carrying out the provisions of this chapter,
616members of the Investment Advisory Council shall be officers,
617employees, or agents of the state for the purposes of s. 768.28.
618     Section 9.  Paragraph (o) is added to subsection (1) of
619section 215.47, Florida Statutes, and subsection (5) of that
620section is amended, to read:
621     215.47  Investments; authorized securities; loan of
622securities.-Subject to the limitations and conditions of the
623State Constitution or of the trust agreement relating to a trust
624fund, moneys available for investments under ss. 215.44-215.53
625may be invested as follows:
626     (1)  Without limitation in:
627     (o)  Bonds, notes, or obligations described in 26 U.S.C. s.
628149(g)(3)(B) if investment in such bonds, notes, or obligations
629is necessary in order to comply with covenants in documents or
630proceedings relating to bonds issued pursuant to s. 215.555(6).
631Investments made pursuant to this paragraph may be purchased
632only from the proceeds of bonds issued pursuant to s. 215.555(6)
633and must be authorized under documents or proceedings relating
634to such bonds.
635     (5)  With no more than 35 25 percent of any fund in
636corporate obligations and securities of any kind of a foreign
637corporation or a foreign commercial entity having its principal
638office located in any country other than the United States of
639America or its possessions or territories, not including United
640States dollar-denominated securities listed and traded on a
641United States exchange which are a part of the ordinary
642investment strategy of the board.
643     Section 10.  Section 215.52, Florida Statutes, is amended
644to read:
645     215.52  Rules and regulations.-The board shall have the
646power and authority to make reasonable rules and regulations
647necessary or appropriate to carry out the provisions of ss.
648215.44-215.53. To ensure full transparency and accountability in
649fulfillment of its fiduciary duties, the board may implement any
650policies, restrictions, or guidelines necessary to the
651application of such provisions, including, but not limited to,
652policies, restrictions, or guidelines in the areas of
653compliance, ethics, training, audit procedures, service
654providers, vendors, and third parties doing business with the
656     Section 11.  Paragraph (a) of subsection (8) of section
657218.409, Florida Statutes, is amended to read:
658     218.409  Administration of the trust fund; creation of
659advisory council.-
660     (8)(a)  The principal, and any part thereof, of each and
661every account constituting the trust fund is shall be subject to
662payment at any time from the moneys in the trust fund. However,
663the executive director may, in good faith, on the occurrence of
664an event that has a material impact on liquidity or operations
665of the trust fund, for 48 hours limit contributions to or
666withdrawals from the trust fund to ensure that the board can
667invest moneys entrusted to it in exercising its fiduciary
668responsibility. Such action must shall be immediately disclosed
669to all participants, the trustees, the Joint Legislative
670Auditing Committee, the Investment Advisory Council, and the
671Participant Local Government Advisory Council. The trustees
672shall convene an emergency meeting as soon as practicable from
673the time the executive director has instituted such measures and
674review the necessity of those measures. If the trustees are
675unable to convene an emergency meeting before the expiration of
676the 48-hour moratorium on contributions and withdrawals, the
677moratorium may be extended by the executive director until the
678trustees are able to meet to review the necessity for the
679moratorium. If the trustees agree with such measures, the
680trustees shall vote to continue the measures for up to an
681additional 15 days. The trustees must convene and vote to
682continue any such measures before prior to the expiration of the
683time limit set, but in no case may the time limit set by the
684trustees exceed 15 days.
685     Section 12.  Trademarks, copyrights, or patents.-The State
686Board of Administration, on behalf of the Florida Retirement
687System or any other trust fund under its jurisdiction, may
688develop work products that are subject to trademark, copyright,
689or patent statutes. The board may, in its own name or through
690the growth initiative program created pursuant to s. 215.47(7),
691Florida Statutes, or any other program developed with or for the
693     (1)  Perform all things necessary to secure letters of
694patent, copyrights, or trademarks on any work products and
695enforce its rights therein.
696     (2)  License, lease, assign, or otherwise give written
697consent to any person for the manufacture or use of its work
698products on a royalty basis or for such other consideration as
699the board deems proper.
700     (3)  Take any action necessary, including legal action, to
701protect its work products against improper or unlawful use or
703     (4)  Enforce the collection of any sums due the board for
704the manufacture or use of its work products by any other party.
705     (5)  Sell any of its work products and execute all
706instruments necessary to consummate any such sale.
707     (6)  Do all other acts necessary and proper for the
708execution of powers and duties provided under this section.
709     Section 13.  This act shall take effect July 1, 2010.

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