February 18, 2019
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CS/HB 1307

1
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 resolve complaints; providing for the
9use of records in resolving such complaints; clarifying
10the state board's rule authority with respect to the
11program; amending s. 121.4502, F.S.; establishing a
12forfeiture account in the Public Employee Retirement
13Program Trust Fund; providing for the use of funds in the
14account; amending s. 121.591, F.S.; conforming a cross-
15reference; permitting an application for benefits under
16the optional retirement program to be submitted by
17electronic means; amending s. 121.74, F.S.; revising the
18contribution rates for employers participating in the
19Florida Retirement System; amending s. 121.78, F.S.;
20exempting the Division of Retirement, the state board, and
21the third-party administrator from liability for market
22losses due to acts of God; amending s. 215.44, F.S.;
23providing reporting requirements for the state board;
24amending s. 215.441, F.S.; providing minimum
25qualifications for the executive director of the state
26board; amending s. 215.444, F.S.; increasing membership of
27the Investment Advisory Council; revising membership
28requirements; providing council meeting and reporting
29requirements; providing certain immunity from liability
30with respect to authorized actions for members of the
31council; amending s. 215.47, F.S.; expanding the types of
32investments that the state board is authorized to make;
33authorizing moneys available for investment by the state
34board to be invested in certain federally tax-exempt
35bonds, notes, or obligations not subject to the federal
36alternative minimum tax; increasing the fund amount that
37may be invested in a foreign entity; amending s. 215.52,
38F.S.; providing requirements for rules made by the state
39board with respect to certain fiduciary duties; amending
40s. 218.409, F.S.; providing for extending a moratorium on
41contributions to or withdrawals from the Local Government
42Surplus Funds Trust Fund under certain circumstances;
43authorizing the state board to develop work products that
44are subject to trademark, copyright, or patent; providing
45an effective date.
46
47Be It Enacted by the Legislature of the State of Florida:
48
49     Section 1.  Subsection (2), paragraph (e) of subsection
50(4), subsection (6), and paragraphs (a) and (g) of subsection
51(8) of section 121.4501, Florida Statutes, are amended to read:
52     121.4501  Public Employee Optional Retirement Program.-
53     (2)  DEFINITIONS.-As used in this part, the term:
54     (a)  "Approved provider" or "provider" means a private
55sector company that is selected and approved by the state board
56to offer one or more investment products or services to the
57Public Employee optional retirement program. The term includes a
58bundled provider that offers participants a range of
59individually allocated or unallocated investment products and
60may offer a range of administrative and customer services, which
61may include accounting and administration of individual
62participant benefits and contributions; individual participant
63recordkeeping; asset purchase, control, and safekeeping; direct
64execution of the participant's instructions as to asset and
65contribution allocation; calculation of daily net asset values;
66direct access to participant account information; periodic
67reporting to participants, at least quarterly, on account
68balances and transactions; guidance, advice, and allocation
69services directly relating to the provider's its own investment
70options or products, but only if the bundled provider complies
71with the standard of care of s. 404(a)(1)(A-B) of the Employee
72Retirement Income Security Act of 1974 (ERISA) and if providing
73such guidance, advice, or allocation services does not
74constitute a prohibited transaction under s. 4975(c)(1) of the
75Internal Revenue Code or s. 406 of ERISA, notwithstanding that
76such prohibited transaction provisions do not apply to the
77optional retirement program; a broad array of distribution
78options; asset allocation; and retirement counseling and
79education. Private sector companies include investment
80management companies, insurance companies, depositories, and
81mutual fund companies.
82     (b)  "Average monthly compensation" means one-twelfth of
83average final compensation as defined in s. 121.021(24).
84     (c)  "Covered employment" means employment in a regularly
85established position as defined in s. 121.021(52).
86     (d)  "Defined benefit program" means the defined benefit
87program of the Florida Retirement System administered under part
88I of this chapter "Department" means the Department of
89Management Services.
90     (e)  "Division" means the Division of Retirement within the
91department of Management Services.
92     (f)  "Electronic means" means by telephone, if the required
93information is received on a recorded line, or through Internet
94access, if the required information is captured online.
95     (g)(f)  "Eligible employee" means an officer or employee,
96as defined in s. 121.021, who:
97     1.  Is a member of, or is eligible for membership in, the
98Florida Retirement System, including any renewed member of the
99Florida Retirement System initially enrolled before July 1,
1002010; or
101     2.  Participates in, or is eligible to participate in, the
102Senior Management Service Optional Annuity Program as
103established under s. 121.055(6), the State Community College
104System Optional Retirement Program as established under s.
105121.051(2)(c), or the State University System Optional
106Retirement Program established under s. 121.35.
107
108The term does not include any member participating in the
109Deferred Retirement Option Program established under s.
110121.091(13), a retiree of a state-administered retirement system
111initially reemployed on or after July 1, 2010, or a mandatory
112participant of the State University System Optional Retirement
113Program established under s. 121.35.
114     (h)(g)  "Employer" means an employer, as defined in s.
115121.021(10), of an eligible employee.
116     (i)  "Optional retirement program" or "optional program"
117means the Public Employee Optional Retirement Program
118established under this part.
119     (j)(h)  "Participant" means an eligible employee who elects
120to participate in the Public Employee Optional Retirement
121Program and enrolls in the such optional program as provided in
122subsection (4) or a terminated Deferred Retirement Option
123Program participant as described in subsection (21).
124     (i)  "Public Employee Optional Retirement Program,"
125"optional program," or "optional retirement program" means the
126alternative defined contribution retirement program established
127under this section.
128     (k)(j)  "Retiree" means a former participant of the Florida
129Retirement System Public Employee optional retirement program
130who has terminated employment and has taken a distribution as
131provided in s. 121.591, except for a mandatory distribution of a
132de minimis account authorized by the state board.
133     (k)  "State board" or "board" means the State Board of
134Administration.
135     (l)  "Trustees" means Trustees of the State Board of
136Administration.
137     (l)(m)  "Vested" or "vesting" means the guarantee that a
138participant is eligible to receive a retirement benefit upon
139completion of the required years of service under the Public
140Employee optional retirement program.
141     (4)  PARTICIPATION; ENROLLMENT.-
142     (e)  After the period during which an eligible employee had
143the choice to elect the defined benefit program or the Public
144Employee optional retirement program, or the month following the
145receipt of the eligible employee's plan election, if sooner, the
146employee shall have one opportunity, at the employee's
147discretion, to choose to move from the defined benefit program
148to the Public Employee optional retirement program or from the
149Public Employee optional retirement program to the defined
150benefit program. Eligible employees may elect to move between
151Florida Retirement System programs only if they are earning
152service credit in an employer-employee relationship consistent
153with the requirements under s. 121.021(17)(b), excluding leaves
154of absence without pay. Effective July 1, 2005, such elections
155are shall be effective on the first day of the month following
156the receipt of the election by the third-party administrator and
157are not subject to the requirements regarding an employer-
158employee relationship or receipt of contributions for the
159eligible employee in the effective month, except that the
160employee must meet the conditions of the previous sentence when
161the election is received by the third-party administrator. This
162paragraph is shall be contingent upon approval from the Internal
163Revenue Service for including the choice described herein within
164the programs offered by the Florida Retirement System.
165     1.  If the employee chooses to move to the Public Employee
166optional retirement program, the applicable provisions of this
167section shall govern the transfer.
168     2.  If the employee chooses to move to the defined benefit
169program, the employee must transfer from his or her Public
170Employee optional retirement program account, and from other
171employee moneys as necessary, a sum representing the present
172value of that employee's accumulated benefit obligation
173immediately following the time of such movement, determined
174assuming that attained service equals the sum of service in the
175defined benefit program and service in the Public Employee
176optional retirement program. Benefit commencement occurs on the
177first date the employee is would become eligible for unreduced
178benefits, using the discount rate and other relevant actuarial
179assumptions that were used to value the Florida Retirement
180System defined benefit plan liabilities in the most recent
181actuarial valuation. For any employee who, at the time of the
182second election, already maintains an accrued benefit amount in
183the defined benefit program plan, the then-present value of the
184such accrued benefit shall be deemed part of the required
185transfer amount described in this subparagraph. The division
186shall ensure that the transfer sum is prepared using a formula
187and methodology certified by an enrolled actuary.
188     3.  Notwithstanding subparagraph 2., an employee who
189chooses to move to the defined benefit program and who became
190eligible to participate in the Public Employee optional
191retirement program by reason of employment in a regularly
192established position with a state employer after June 1, 2002; a
193district school board employer after September 1, 2002; or a
194local employer after December 1, 2002, must transfer from his or
195her Public Employee optional retirement program account, and,
196from other employee moneys as necessary, a sum representing the
197that employee's actuarial accrued liability.
198     4.  An employee's Employees' ability to transfer from the
199Florida Retirement System defined benefit program to the Public
200Employee optional retirement program pursuant to paragraphs (a)-
201(d), and the ability of a for current employee employees to have
202an option to later transfer back into the defined benefit
203program under subparagraph 2., shall be deemed a significant
204system amendment. Pursuant to s. 121.031(4), any such resulting
205unfunded liability arising from actual original transfers from
206the defined benefit program to the optional program must shall
207be amortized within 30 plan years as a separate unfunded
208actuarial base independent of the reserve stabilization
209mechanism defined in s. 121.031(3)(f). For the first 25 years, a
210no direct amortization payment may not shall be calculated for
211this base. During this 25-year period, the such separate base
212shall be used to offset the impact of employees exercising their
213second program election under this paragraph. It is the
214legislative intent of the Legislature that the actuarial funded
215status of the Florida Retirement System defined benefit program
216not be affected plan is neither beneficially nor adversely
217impacted by such second program elections in any significant
218manner, after due recognition of the separate unfunded actuarial
219base. Following the this initial 25-year period, any remaining
220balance of the original separate base shall be amortized over
221the remaining 5 years of the required 30-year amortization
222period.
223     5.  If the employee chooses to transfer from the optional
224retirement program to the defined benefit program and retains an
225excess account balance in the optional program after satisfying
226the buy-in requirements under this paragraph, the excess may not
227be distributed until the member retires from the defined benefit
228program. The excess account balance may be rolled over to the
229defined benefit program and used to purchase service credit or
230upgrade creditable service in that program.
231     (6)  VESTING REQUIREMENTS.-
232     (a)1.  With respect to employer contributions paid on
233behalf of the participant to the Public Employee optional
234retirement program, plus interest and earnings thereon and less
235investment fees and administrative charges, a participant is
236shall be vested after completing 1 work year, as defined in s.
237121.021(54), with an employer, including any service while the
238participant was a member of the defined benefit retirement
239program or an optional retirement program authorized under s.
240121.051(2)(c) or s. 121.055(6).
241     2.  If the participant terminates employment before prior
242to satisfying the vesting requirements, the nonvested
243accumulation must shall be transferred from the participant's
244accounts to the state board for deposit and investment by the
245state board in the suspense account created within of the Public
246Employee Optional Retirement Program Trust Fund of the board. If
247the terminated participant is reemployed as an eligible employee
248within 5 years, the state board shall transfer to the
249participant's account any amount of the moneys previously
250transferred from the participant's accounts to the suspense
251account of the Public Employee Optional Retirement Program Trust
252Fund, plus the actual earnings on such amount while in the
253suspense account.
254     (b)1.  With respect to amounts transferred from the defined
255benefit program to the investment program, plus interest and
256earnings, and less investment fees and administrative charges, a
257participant shall be vested in the amount transferred from the
258defined benefit program, plus interest and earnings thereon and
259less administrative charges and investment fees, upon meeting
260the service requirements for the participant's membership class
261as set forth in s. 121.021(29). The third-party administrator
262shall account for such amounts for each participant. The
263division shall notify the participant and the third-party
264administrator when the participant has satisfied the vesting
265period for Florida Retirement System purposes.
266     2.  If the participant terminates employment before prior
267to satisfying the vesting requirements, the nonvested
268accumulation must shall be transferred from the participant's
269accounts to the state board for deposit and investment by the
270state board in the suspense account created within of the Public
271Employee Optional Retirement Program Trust Fund of the board. If
272the terminated participant is reemployed as an eligible employee
273within 5 years, the state board shall transfer to the
274participant's account any amount of the moneys previously
275transferred from the participant's accounts to the suspense
276account of the Public Employee Optional Retirement Program Trust
277Fund, plus the actual earnings on such amount while in the
278suspense account.
279     (c)  Any nonvested accumulations transferred from a
280participant's account to the suspense account shall be forfeited
281by the participant if the participant is not reemployed as an
282eligible employee within 5 years after termination.
283     (8)  ADMINISTRATION OF PROGRAM.-
284     (a)  The Public Employee optional retirement program shall
285be administered by the state board and affected employers. The
286board may is authorized to require oaths, by affidavit or
287otherwise, and acknowledgments from persons in connection with
288the administration of its statutory duties and responsibilities
289for this program under this chapter. An No oath, by affidavit or
290otherwise, may not shall be required of an employee participant
291at the time of enrollment election. Acknowledgment of an
292employee's election to participate in the program shall be no
293greater than necessary to confirm the employee's election. The
294state board shall adopt rules to carry out its statutory duties
295with respect to administering the optional retirement program,
296including establishing the roles role and responsibilities of
297affected state, local government, and education-related
298employers, the state board, the department, and third-party
299contractors in administering the Public Employee optional
300retirement program. The department shall adopt rules necessary
301to administer implement the optional program in coordination
302with the defined benefit retirement program and the disability
303benefits available under the optional program.
304     (g)  The state board shall receive and resolve participant
305complaints against the program, the third-party administrator,
306or any program vendor or provider; shall resolve any conflict
307between the third-party administrator and an approved provider
308if when such conflict threatens the implementation or
309administration of the program or the quality of services to
310employees; and may resolve any other conflicts. The third-party
311administrator shall retain all participant records for at least
3125 years for use in resolving any participant conflicts. The
313state board, the third-party administrator, or a provider is not
314required to produce documentation or an audio recording to
315justify action taken with regard to a participant if the action
316occurred 5 or more years before the complaint is submitted to
317the state board. It is presumed that all action taken 5 or more
318years before the complaint is submitted was taken at the request
319of the participant and with the participant's full knowledge and
320consent. To overcome this presumption, the participant must
321present documentary evidence or an audio recording demonstrating
322otherwise.
323     Section 2.  Subsection (3) is added to section 121.4502,
324Florida Statutes, to read:
325     121.4502  Public Employee Optional Retirement Program Trust
326Fund.-
327     (3)  A forfeiture account shall be created within the
328Public Employee Optional Retirement Program Trust Fund to hold
329the assets derived from the forfeiture of benefits by
330participants. Pursuant to a private letter ruling from the
331Internal Revenue Service, the forfeiture account may be used
332only for paying expenses of the Public Employee Optional
333Retirement Program and reducing future employer contributions to
334the program. Consistent with Rulings 80-155 and 74-340 of the
335Internal Revenue Service, unallocated reserves within the
336forfeiture account must be used as quickly and as prudently as
337possible considering the state board's fiduciary duty. Expected
338withdrawals from the account must endeavor to reduce the account
339to zero each fiscal year.
340     Section 3.  Paragraphs (a) and (b) of subsection (1) of
341section 121.591, Florida Statutes, are amended to read:
342     121.591  Benefits payable under the Public Employee
343Optional Retirement Program of the Florida Retirement System.-
344Benefits may not be paid under this section unless the member
345has terminated employment as provided in s. 121.021(39)(a) or is
346deceased and a proper application has been filed in the manner
347prescribed by the state board or the department. The state board
348or department, as appropriate, may cancel an application for
349retirement benefits when the member or beneficiary fails to
350timely provide the information and documents required by this
351chapter and the rules of the state board and department. In
352accordance with their respective responsibilities as provided
353herein, the State Board of Administration and the Department of
354Management Services shall adopt rules establishing procedures
355for application for retirement benefits and for the cancellation
356of such application when the required information or documents
357are not received. The State Board of Administration and the
358Department of Management Services, as appropriate, are
359authorized to cash out a de minimis account of a participant who
360has been terminated from Florida Retirement System covered
361employment for a minimum of 6 calendar months. A de minimis
362account is an account containing employer contributions and
363accumulated earnings of not more than $5,000 made under the
364provisions of this chapter. Such cash-out must either be a
365complete lump-sum liquidation of the account balance, subject to
366the provisions of the Internal Revenue Code, or a lump-sum
367direct rollover distribution paid directly to the custodian of
368an eligible retirement plan, as defined by the Internal Revenue
369Code, on behalf of the participant. If any financial instrument
370issued for the payment of retirement benefits under this section
371is not presented for payment within 180 days after the last day
372of the month in which it was originally issued, the third-party
373administrator or other duly authorized agent of the State Board
374of Administration shall cancel the instrument and credit the
375amount of the instrument to the suspense account of the Public
376Employee Optional Retirement Program Trust Fund authorized under
377s. 121.4501(6). Any such amounts transferred to the suspense
378account are payable upon a proper application, not to include
379earnings thereon, as provided in this section, within 10 years
380after the last day of the month in which the instrument was
381originally issued, after which time such amounts and any
382earnings thereon shall be forfeited. Any such forfeited amounts
383are assets of the Public Employee Optional Retirement Program
384Trust Fund and are not subject to the provisions of chapter 717.
385     (1)  NORMAL BENEFITS.-Under the Public Employee Optional
386Retirement Program:
387     (a)  Benefits in the form of vested accumulations as
388described in s. 121.4501(6) are payable under this subsection in
389accordance with the following terms and conditions:
390     1.  To the extent vested, benefits are payable only to a
391participant.
392     2.  Benefits shall be paid by the third-party administrator
393or designated approved providers in accordance with the law, the
394contracts, and any applicable board rule or policy.
395     3.  To receive benefits, the participant must be terminated
396from all employment with all Florida Retirement System
397employers, as provided in s. 121.021(39).
398     4.  Benefit payments may not be made until the participant
399has been terminated for 3 calendar months, except that the board
400may authorize by rule for the distribution of up to 10 percent
401of the participant's account after being terminated for 1
402calendar month if the participant has reached the normal
403retirement date as defined in s. 121.021 of the defined benefit
404plan.
405     5.  If a member or former member of the Florida Retirement
406System receives an invalid distribution from the Public Employee
407Optional Retirement Program Trust Fund, such person must repay
408the full invalid distribution to the trust fund within 90 days
409after receipt of final notification by the state board or the
410third-party administrator that the distribution was invalid. If
411such person fails to repay the full invalid distribution within
41290 days after receipt of final notification, the person may be
413deemed retired from the optional retirement program by the state
414board, as provided pursuant to s. 121.4501(2)(k)(j), and is
415subject to s. 121.122. If such person is deemed retired by the
416state board, any joint and several liability set out in s.
417121.091(9)(d)2. becomes null and void, and the state board, the
418department, or the employing agency is not liable for gains on
419payroll contributions that have not been deposited to the
420person's account in the retirement program, pending resolution
421of the invalid distribution. The member or former member who has
422been deemed retired or who has been determined by the board to
423have taken an invalid distribution may appeal the agency
424decision through the complaint process as provided under s.
425121.4501(9)(g)3. As used in this subparagraph, the term "invalid
426distribution" means any distribution from an account in the
427optional retirement program which is taken in violation of this
428section, s. 121.091(9), or s. 121.4501.
429     (b)  If a participant elects to receive his or her benefits
430upon termination of employment as defined in s. 121.021, the
431participant must submit a written application or an application
432by electronic means an equivalent form to the third-party
433administrator indicating his or her preferred distribution date
434and selecting an authorized method of distribution as provided
435in paragraph (c). The participant may defer receipt of benefits
436until he or she chooses to make such application, subject to
437federal requirements.
438     Section 4.  Section 121.74, Florida Statutes, is amended to
439read:
440     121.74  Administrative and educational expenses.-In
441addition to contributions required under s. 121.71, effective
442July 1, 2010, through June 30, 2014, employers participating in
443the Florida Retirement System shall contribute an amount equal
444to 0.03 0.05 percent of the payroll reported for each class or
445subclass of Florida Retirement System membership; effective July
4461, 2014, the contribution rate shall be 0.04 percent of the
447payroll reported for each class or subclass of membership. The,
448which amount contributed shall be transferred by the Division of
449Retirement from the Florida Retirement System Contributions
450Clearing Trust Fund to the State Board of Administration's
451Administrative Trust Fund to offset the costs of administering
452the optional retirement program and the costs of providing
453educational services to participants in the defined benefit
454program and the optional retirement program. Approval of the
455trustees of the State Board of Administration is required before
456prior to the expenditure of these funds. Payments for third-
457party administrative or educational expenses shall be made only
458pursuant to the terms of the approved contracts for such
459services.
460     Section 5.  Subsection (3) of section 121.78, Florida
461Statutes, is amended to read:
462     121.78  Payment and distribution of contributions.-
463     (3)(a)  Employer contributions and accompanying payroll
464data received after the 5th working day of the month are shall
465be considered late. The employer shall be assessed by the
466Division of Retirement a penalty of 1 percent of the
467contributions due for each calendar month or part thereof that
468the contributions or accompanying payroll data are late.
469Proceeds from the 1-percent assessment against contributions
470made on behalf of participants of the defined benefit program
471shall be deposited in the Florida Retirement System Trust Fund,
472and proceeds from the 1-percent assessment against contributions
473made on behalf of participants of the optional retirement
474program shall be transferred to the third-party administrator
475for deposit into participant accounts, as provided in paragraph
476(b).
477     (b)  If contributions made by an employer on behalf of
478participants of the optional retirement program or accompanying
479payroll data are not received within the calendar month they are
480due, including, but not limited to, contribution adjustments as
481a result of employer errors or corrections, and if that
482delinquency results in market losses to participants, the
483employer shall reimburse each participant's account for market
484losses resulting from the late contributions. If a participant
485has terminated employment and taken a distribution, the
486participant is responsible for returning any excess
487contributions erroneously provided by employers, adjusted for
488any investment gain or loss incurred during the period such
489excess contributions were in the participant's Public Employee
490Optional Retirement Program account. The state board of
491Administration or its designated agent shall communicate to
492terminated participants any obligation to repay such excess
493contribution amounts. However, the state board of
494Administration, its designated agents, the Public Employee
495Optional Retirement Program Trust Fund, the department of
496Management Services, or the Florida Retirement System Trust Fund
497may shall not incur any loss or gain as a result of an
498employer's correction of such excess contributions. The third-
499party administrator, hired by the state board pursuant to s.
500121.4501(8), shall calculate the market losses for each affected
501participant. If When contributions made on behalf of
502participants of the optional retirement program or accompanying
503payroll data are not received within the calendar month due, the
504employer shall also pay the cost of the third-party
505administrator's calculation and reconciliation adjustments
506resulting from the late contributions. The third-party
507administrator shall notify the employer of the results of the
508calculations and the total amount due from the employer for such
509losses and the costs of calculation and reconciliation. The
510employer shall remit to the Division of Retirement the amount
511due within 30 10 working days after the date of the penalty
512notice sent by the division. The division shall transfer that
513said amount to the third-party administrator, which who shall
514deposit proceeds from the 1-percent assessment and from
515individual market losses into participant accounts, as
516appropriate. The state board may is authorized to adopt rules to
517administer implement the provisions regarding late
518contributions, late submission of payroll data, the process for
519reimbursing participant accounts for resultant market losses,
520and the penalties charged to the employers.
521     (c)  Delinquency fees may be waived by the Division of
522Retirement, with regard to defined benefit program
523contributions, and by the state board of Administration, with
524regard to optional retirement program contributions, only if
525when, in the opinion of the division or the board, as
526appropriate, exceptional circumstances beyond the employer's
527control prevented remittance by the prescribed due date
528notwithstanding the employer's good faith efforts to effect
529delivery. Such a waiver of delinquency may be granted an
530employer only once one time each state fiscal year.
531     (d)  If contributions made by an employer on behalf of
532participants in the optional retirement program are delayed in
533posting to participant accounts due to acts of God beyond the
534control of the Division of Retirement, the state board, or the
535third-party administrator, as applicable, market losses
536resulting from the late contributions are not payable to the
537participants.
538     Section 6.  Subsections (1) and (2) of section 215.44,
539Florida Statutes, are amended to read:
540     215.44  Board of Administration; powers and duties in
541relation to investment of trust funds.-
542     (1)  Except when otherwise specifically provided by the
543State Constitution and subject to any limitations of the trust
544agreement relating to a trust fund, the Board of Administration,
545hereinafter sometimes referred to in this chapter as "board," or
546"Trustees of the State Board of Administration," composed of the
547Governor as chair, the Chief Financial Officer, and the Attorney
548General, shall invest all the funds in the System Trust Fund, as
549defined in s. 121.021(36), and all other funds specifically
550required by law to be invested by the board pursuant to ss.
551215.44-215.53 to the fullest extent that is consistent with the
552cash requirements, trust agreement, and investment objectives of
553the fund. Notwithstanding any other law to the contrary, the
554State Board of Administration may invest any funds of any state
555agency or any unit of local government pursuant to the terms of
556a trust agreement with the head of the state agency or the
557governing body of the unit of local government, which trust
558agreement shall govern the investment of such funds, provided
559that the board shall approve the undertaking of such investment
560before execution of the trust agreement by the State Board of
561Administration. The funds and the earnings therefrom are exempt
562from the service charge imposed by s. 215.20. As used in this
563subsection, the term "state agency" has the same meaning as that
564provided in s. 216.001, and the terms "governing body" and "unit
565of local government" have the same meaning as that provided in
566s. 218.403.
567     (2)(a)  The board shall have the power to make purchases,
568sales, exchanges, investments, and reinvestments for and on
569behalf of the funds referred to in subsection (1), and it shall
570be the duty of the board to see that moneys invested under the
571provisions of ss. 215.44-215.53 are at all times handled in the
572best interests of the state.
573     (b)  In exercising investment authority pursuant to s.
574215.47, the board may retain investment advisers or managers, or
575both, external to in-house staff, to assist the board in
576carrying out the power specified in paragraph (a).
577     (c)  The board shall produce a set of financial statements
578for the Florida Retirement System on an annual basis which shall
579be reported to the Legislature and audited by a commercial
580independent third-party audit firm.
581     Section 7.  Section 215.441, Florida Statutes, is amended
582to read:
583     215.441  Board of Administration; appointment of executive
584director.-The appointment of the executive director of the State
585Board of Administration shall be subject to the approval by a
586majority vote of the Board of Trustees of the State Board of
587Administration, and the Governor must vote on the prevailing
588side. Such appointment must be reaffirmed in the same manner by
589the board of trustees on an annual basis. The executive director
590shall, at a minimum, possess substantial experience, knowledge,
591and expertise in the oversight of investment portfolios and must
592meet any other requirements determined by the board to be
593necessary to the overall management and investment of funds.
594     Section 8.  Section 215.444, Florida Statutes, is amended
595to read:
596     215.444  Investment Advisory Council.-
597     (1)  There is created a nine-member six-member Investment
598Advisory Council to review the investments made by the staff of
599the Board of Administration and to make recommendations to the
600board regarding investment policy, strategy, and procedures. The
601council shall meet with staff of the board no less than
602quarterly and shall provide a quarterly report directly to the
603Trustees of the State Board of Administration at a meeting of
604the board.
605     (2)  The members of the council shall be appointed by the
606board as a resource to the Trustees of the State Board of
607Administration and shall be subject to confirmation by the
608Senate. These individuals shall possess special knowledge,
609experience, and familiarity with financial investments and
610portfolio management, institutional investments, and fiduciary
611responsibilities. Members shall be appointed for 4-year terms. A
612vacancy shall be filled for the remainder of the unexpired term.
613The council shall annually elect a chair and a vice chair from
614its membership. A member may not be elected to consecutive terms
615as chair or vice chair.
616     (3)  In carrying out the provisions of this chapter,
617members of the Investment Advisory Council shall be officers,
618employees, or agents of the state for the purposes of s. 768.28.
619     Section 9.  Paragraphs (b) and (c) of subsection (1),
620paragraph (a) of subsection (2), and subsection (5) of section
621215.47, Florida Statutes, are amended, and paragraph (o) is
622added to subsection (1) of that section, to read:
623     215.47  Investments; authorized securities; loan of
624securities.-Subject to the limitations and conditions of the
625State Constitution or of the trust agreement relating to a trust
626fund, moneys available for investments under ss. 215.44-215.53
627may be invested as follows:
628     (1)  Without limitation in:
629     (b)  State Bonds, notes, or obligations of any state or
630organized territory of the United States or the District of
631Columbia that pledge pledging the full faith and credit of the
632state, territory, or district; and revenue bonds, notes, or
633obligations of any state or organized territory of the United
634States or the District of Columbia additionally secured by the
635full faith and credit of the state, territory, or district.
636     (c)  Bonds, notes, or obligations of the several counties
637or districts in any the state or organized territory of the
638United States or the District of Columbia containing a pledge of
639the full faith and credit of the county or district involved.
640     (o)  Bonds, notes, or obligations described in 26 U.S.C. s.
641149(g)(3)(B), if investment in such bonds, notes, or obligations
642is necessary in order to comply with covenants in documents or
643proceedings relating to bonds issued pursuant to s. 215.555(6).
644Investments made pursuant to this paragraph may be purchased
645only from the proceeds of bonds issued pursuant to s. 215.555(6)
646and must be authorized under documents or proceedings relating
647to such bonds.
648     (2)  With no more than 25 percent of any fund in:
649     (a)  Bonds, notes, or obligations of any state or organized
650territory of the United States or the District of Columbia; of
651any municipality or political subdivision or any agency,
652district, or authority thereof; or of any agency or authority of
653this state, if the obligations are rated investment grade by at
654least one nationally recognized statistical rating organization.
655     (5)  With no more than 35 25 percent of any fund in
656corporate obligations and securities of any kind of a foreign
657corporation or a foreign commercial entity having its principal
658office located in any country other than the United States of
659America or its possessions or territories, not including United
660States dollar-denominated securities listed and traded on a
661United States exchange which are a part of the ordinary
662investment strategy of the board.
663     Section 10.  Section 215.52, Florida Statutes, is amended
664to read:
665     215.52  Rules and regulations.-The board shall have the
666power and authority to make reasonable rules and regulations
667necessary to carry out the provisions of ss. 215.44-215.53. The
668rules shall provide for full transparency and accountability in
669fulfillment of the board's fiduciary duties in the areas of
670compliance, ethics, training, audit procedures, service
671providers, vendors, and third parties doing business with the
672board.
673     Section 11.  Paragraph (a) of subsection (8) of section
674218.409, Florida Statutes, is amended to read:
675     218.409  Administration of the trust fund; creation of
676advisory council.-
677     (8)(a)  The principal, and any part thereof, of each and
678every account constituting the trust fund is shall be subject to
679payment at any time from the moneys in the trust fund. However,
680the executive director may, in good faith, on the occurrence of
681an event that has a material impact on liquidity or operations
682of the trust fund, for 48 hours limit contributions to or
683withdrawals from the trust fund to ensure that the board can
684invest moneys entrusted to it in exercising its fiduciary
685responsibility. Such action must shall be immediately disclosed
686to all participants, the trustees, the Joint Legislative
687Auditing Committee, the Investment Advisory Council, and the
688Participant Local Government Advisory Council. The trustees
689shall convene an emergency meeting as soon as practicable from
690the time the executive director has instituted such measures and
691review the necessity of those measures. If the trustees are
692unable to convene an emergency meeting before the expiration of
693the 48-hour moratorium on contributions and withdrawals, the
694moratorium may be extended by the executive director until the
695trustees are able to meet to review the necessity for the
696moratorium. If the trustees agree with such measures, the
697trustees shall vote to continue the measures for up to an
698additional 15 days. The trustees must convene and vote to
699continue any such measures before prior to the expiration of the
700time limit set, but in no case may the time limit set by the
701trustees exceed 15 days.
702     Section 12.  Trademarks, copyrights, or patents.-The State
703Board of Administration, on behalf of the Florida Retirement
704System or any other trust fund under its jurisdiction, may
705develop work products that are subject to trademark, copyright,
706or patent statutes. The board may, in its own name or through
707the growth initiative program created pursuant to s. 215.47(7),
708Florida Statutes, or any other program developed with or for the
709board:
710     (1)  Perform all things necessary to secure letters of
711patent, copyrights, or trademarks on any work products and
712enforce its rights therein.
713     (2)  License, lease, assign, or otherwise give written
714consent to any person for the manufacture or use of its work
715products on a royalty basis or for such other consideration as
716the board deems proper.
717     (3)  Take any action necessary, including legal action, to
718protect its work products against improper or unlawful use or
719infringement.
720     (4)  Enforce the collection of any sums due the board for
721the manufacture or use of its work products by any other party.
722     (5)  Sell any of its work products and execute all
723instruments necessary to consummate any such sale.
724     (6)  Do all other acts necessary and proper for the
725execution of powers and duties provided under this section.
726     Section 13.  This act shall take effect July 1, 2010.


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