December 05, 2020
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CS/CS/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 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.;
23expanding the authority of the state board to use trust
24agreements; providing reporting requirements for the state
25board; amending s. 215.441, F.S.; providing minimum
26qualifications for the executive director of the state
27board; amending s. 215.444, F.S.; increasing membership of
28the Investment Advisory Council; revising membership
29requirements; providing council meeting and reporting
30requirements; amending s. 215.47, F.S.; expanding the
31types of investments that the state board is authorized to
32make; authorizing moneys available for investment by the
33state board 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 requirements for rules made by the state
38board with respect to certain fiduciary duties; amending
39s. 218.409, F.S.; providing for extending a moratorium on
40contributions to or withdrawals from the Local Government
41Surplus Funds Trust Fund under certain circumstances;
42authorizing the state board to develop work products that
43are subject to trademark, copyright, or patent; providing
44an effective date.
46Be It Enacted by the Legislature of the State of Florida:
48     Section 1.  Subsection (2), paragraph (e) of subsection
49(4), subsection (6), and paragraphs (a) and (g) of subsection
50(8) of section 121.4501, Florida Statutes, are amended to read:
51     121.4501  Public Employee Optional Retirement Program.-
52     (2)  DEFINITIONS.-As used in this part, the term:
53     (a)  "Approved provider" or "provider" means a private
54sector company that is selected and approved by the state board
55to offer one or more investment products or services to the
56Public Employee optional retirement program. The term includes a
57bundled provider that offers participants a range of
58individually allocated or unallocated investment products and
59may offer a range of administrative and customer services, which
60may include accounting and administration of individual
61participant benefits and contributions; individual participant
62recordkeeping; asset purchase, control, and safekeeping; direct
63execution of the participant's instructions as to asset and
64contribution allocation; calculation of daily net asset values;
65direct access to participant account information; periodic
66reporting to participants, at least quarterly, on account
67balances and transactions; guidance, advice, and allocation
68services directly relating to the provider's its own investment
69options or products, but only if the bundled provider complies
70with the standard of care of s. 404(a)(1)(A-B) of the Employee
71Retirement Income Security Act of 1974 (ERISA) and if providing
72such guidance, advice, or allocation services does not
73constitute a prohibited transaction under s. 4975(c)(1) of the
74Internal Revenue Code or s. 406 of ERISA, notwithstanding that
75such prohibited transaction provisions do not apply to the
76optional retirement program; a broad array of distribution
77options; asset allocation; and retirement counseling and
78education. Private sector companies include investment
79management companies, insurance companies, depositories, and
80mutual fund companies.
81     (b)  "Average monthly compensation" means one-twelfth of
82average final compensation as defined in s. 121.021(24).
83     (c)  "Covered employment" means employment in a regularly
84established position as defined in s. 121.021(52).
85     (d)  "Defined benefit program" means the defined benefit
86program of the Florida Retirement System administered under part
87I of this chapter "Department" means the Department of
88Management Services.
89     (e)  "Division" means the Division of Retirement within the
90department of Management Services.
91     (f)  "Electronic means" means by telephone, if the required
92information is received on a recorded line, or through Internet
93access, if the required information is captured online.
94     (g)(f)  "Eligible employee" means an officer or employee,
95as defined in s. 121.021, who:
96     1.  Is a member of, or is eligible for membership in, the
97Florida Retirement System, including any renewed member of the
98Florida Retirement System initially enrolled before July 1,
992010; or
100     2.  Participates in, or is eligible to participate in, the
101Senior Management Service Optional Annuity Program as
102established under s. 121.055(6), the State Community College
103System Optional Retirement Program as established under s.
104121.051(2)(c), or the State University System Optional
105Retirement Program established under s. 121.35.
107The term does not include any member participating in the
108Deferred Retirement Option Program established under s.
109121.091(13), a retiree of a state-administered retirement system
110initially reemployed on or after July 1, 2010, or a mandatory
111participant of the State University System Optional Retirement
112Program established under s. 121.35.
113     (h)(g)  "Employer" means an employer, as defined in s.
114121.021(10), of an eligible employee.
115     (i)  "Optional retirement program" or "optional program"
116means the Public Employee Optional Retirement Program
117established under this part.
118     (j)(h)  "Participant" means an eligible employee who elects
119to participate in the Public Employee Optional Retirement
120Program and enrolls in the such optional program as provided in
121subsection (4) or a terminated Deferred Retirement Option
122Program participant as described in subsection (21).
123     (i)  "Public Employee Optional Retirement Program,"
124"optional program," or "optional retirement program" means the
125alternative defined contribution retirement program established
126under this section.
127     (k)(j)  "Retiree" means a former participant of the Florida
128Retirement System Public Employee optional retirement program
129who has terminated employment and has taken a distribution as
130provided in s. 121.591, except for a mandatory distribution of a
131de minimis account authorized by the state board.
132     (k)  "State board" or "board" means the State Board of
134     (l)  "Trustees" means Trustees of the State Board of
136     (l)(m)  "Vested" or "vesting" means the guarantee that a
137participant is eligible to receive a retirement benefit upon
138completion of the required years of service under the Public
139Employee optional retirement program.
141     (e)  After the period during which an eligible employee had
142the choice to elect the defined benefit program or the Public
143Employee optional retirement program, or the month following the
144receipt of the eligible employee's plan election, if sooner, the
145employee shall have one opportunity, at the employee's
146discretion, to choose to move from the defined benefit program
147to the Public Employee optional retirement program or from the
148Public Employee optional retirement program to the defined
149benefit program. Eligible employees may elect to move between
150Florida Retirement System programs only if they are earning
151service credit in an employer-employee relationship consistent
152with the requirements under s. 121.021(17)(b), excluding leaves
153of absence without pay. Effective July 1, 2005, such elections
154are shall be effective on the first day of the month following
155the receipt of the election by the third-party administrator and
156are not subject to the requirements regarding an employer-
157employee relationship or receipt of contributions for the
158eligible employee in the effective month, except that the
159employee must meet the conditions of the previous sentence when
160the election is received by the third-party administrator. This
161paragraph is shall be contingent upon approval from the Internal
162Revenue Service for including the choice described herein within
163the programs offered by the Florida Retirement System.
164     1.  If the employee chooses to move to the Public Employee
165optional retirement program, the applicable provisions of this
166section shall govern the transfer.
167     2.  If the employee chooses to move to the defined benefit
168program, the employee must transfer from his or her Public
169Employee optional retirement program account, and from other
170employee moneys as necessary, a sum representing the present
171value of that employee's accumulated benefit obligation
172immediately following the time of such movement, determined
173assuming that attained service equals the sum of service in the
174defined benefit program and service in the Public Employee
175optional retirement program. Benefit commencement occurs on the
176first date the employee is would become eligible for unreduced
177benefits, using the discount rate and other relevant actuarial
178assumptions that were used to value the Florida Retirement
179System defined benefit plan liabilities in the most recent
180actuarial valuation. For any employee who, at the time of the
181second election, already maintains an accrued benefit amount in
182the defined benefit program plan, the then-present value of the
183such accrued benefit shall be deemed part of the required
184transfer amount described in this subparagraph. The division
185shall ensure that the transfer sum is prepared using a formula
186and methodology certified by an enrolled actuary.
187     3.  Notwithstanding subparagraph 2., an employee who
188chooses to move to the defined benefit program and who became
189eligible to participate in the Public Employee optional
190retirement program by reason of employment in a regularly
191established position with a state employer after June 1, 2002; a
192district school board employer after September 1, 2002; or a
193local employer after December 1, 2002, must transfer from his or
194her Public Employee optional retirement program account, and,
195from other employee moneys as necessary, a sum representing the
196that employee's actuarial accrued liability.
197     4.  An employee's Employees' ability to transfer from the
198Florida Retirement System defined benefit program to the Public
199Employee optional retirement program pursuant to paragraphs (a)-
200(d), and the ability of a for current employee employees to have
201an option to later transfer back into the defined benefit
202program under subparagraph 2., shall be deemed a significant
203system amendment. Pursuant to s. 121.031(4), any such resulting
204unfunded liability arising from actual original transfers from
205the defined benefit program to the optional program must shall
206be amortized within 30 plan years as a separate unfunded
207actuarial base independent of the reserve stabilization
208mechanism defined in s. 121.031(3)(f). For the first 25 years, a
209no direct amortization payment may not shall be calculated for
210this base. During this 25-year period, the such separate base
211shall be used to offset the impact of employees exercising their
212second program election under this paragraph. It is the
213legislative intent of the Legislature that the actuarial funded
214status of the Florida Retirement System defined benefit program
215not be affected plan is neither beneficially nor adversely
216impacted by such second program elections in any significant
217manner, after due recognition of the separate unfunded actuarial
218base. Following the this initial 25-year period, any remaining
219balance of the original separate base shall be amortized over
220the remaining 5 years of the required 30-year amortization
222     5.  If the employee chooses to transfer from the optional
223retirement program to the defined benefit program and retains an
224excess account balance in the optional program after satisfying
225the buy-in requirements under this paragraph, the excess may not
226be distributed until the member retires from the defined benefit
227program. The excess account balance may be rolled over to the
228defined benefit program and used to purchase service credit or
229upgrade creditable service in that program.
231     (a)1.  With respect to employer contributions paid on
232behalf of the participant to the Public Employee optional
233retirement program, plus interest and earnings thereon and less
234investment fees and administrative charges, a participant is
235shall be vested after completing 1 work year, as defined in s.
236121.021(54), with an employer, including any service while the
237participant was a member of the defined benefit retirement
238program or an optional retirement program authorized under s.
239121.051(2)(c) or s. 121.055(6).
240     2.  If the participant terminates employment before prior
241to satisfying the vesting requirements, the nonvested
242accumulation must shall be transferred from the participant's
243accounts to the state board for deposit and investment by the
244state board in the suspense account created within of the Public
245Employee Optional Retirement Program Trust Fund of the board. If
246the terminated participant is reemployed as an eligible employee
247within 5 years, the state board shall transfer to the
248participant's account any amount of the moneys previously
249transferred from the participant's accounts to the suspense
250account of the Public Employee Optional Retirement Program Trust
251Fund, plus the actual earnings on such amount while in the
252suspense account.
253     (b)1.  With respect to amounts transferred from the defined
254benefit program to the investment program, plus interest and
255earnings, and less investment fees and administrative charges, a
256participant shall be vested in the amount transferred from the
257defined benefit program, plus interest and earnings thereon and
258less administrative charges and investment fees, upon meeting
259the service requirements for the participant's membership class
260as set forth in s. 121.021(29). The third-party administrator
261shall account for such amounts for each participant. The
262division shall notify the participant and the third-party
263administrator when the participant has satisfied the vesting
264period for Florida Retirement System purposes.
265     2.  If the participant terminates employment before prior
266to satisfying the vesting requirements, the nonvested
267accumulation must shall be transferred from the participant's
268accounts to the state board for deposit and investment by the
269state board in the suspense account created within of the Public
270Employee Optional Retirement Program Trust Fund of the board. If
271the terminated participant is reemployed as an eligible employee
272within 5 years, the state board shall transfer to the
273participant's account any amount of the moneys previously
274transferred from the participant's accounts to the suspense
275account of the Public Employee Optional Retirement Program Trust
276Fund, plus the actual earnings on such amount while in the
277suspense account.
278     (c)  Any nonvested accumulations transferred from a
279participant's account to the suspense account shall be forfeited
280by the participant if the participant is not reemployed as an
281eligible employee within 5 years after termination.
283     (a)  The Public Employee optional retirement program shall
284be administered by the state board and affected employers. The
285board may is authorized to require oaths, by affidavit or
286otherwise, and acknowledgments from persons in connection with
287the administration of its statutory duties and responsibilities
288for this program under this chapter. An No oath, by affidavit or
289otherwise, may not shall be required of an employee participant
290at the time of enrollment election. Acknowledgment of an
291employee's election to participate in the program shall be no
292greater than necessary to confirm the employee's election. The
293state board shall adopt rules to carry out its statutory duties
294with respect to administering the optional retirement program,
295including establishing the roles role and responsibilities of
296affected state, local government, and education-related
297employers, the state board, the department, and third-party
298contractors in administering the Public Employee optional
299retirement program. The department shall adopt rules necessary
300to administer implement the optional program in coordination
301with the defined benefit retirement program and the disability
302benefits available under the optional program.
303     (g)  The state board shall receive and resolve participant
304complaints against the program, the third-party administrator,
305or any program vendor or provider; shall resolve any conflict
306between the third-party administrator and an approved provider
307if when such conflict threatens the implementation or
308administration of the program or the quality of services to
309employees; and may resolve any other conflicts. The third-party
310administrator shall retain all participant records for at least
3115 years for use in resolving any participant conflicts. The
312state board, the third-party administrator, or a provider is not
313required to produce documentation or an audio recording to
314justify action taken with regard to a participant if the action
315occurred 5 or more years before the complaint is submitted to
316the state board. It is presumed that all action taken 5 or more
317years before the complaint is submitted was taken at the request
318of the participant 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, any state university or college, or any unit of local
555government, or any direct-support organization thereof pursuant
556to the terms of a trust agreement with the head of the state
557agency or the governing body of the state university or college,
558unit of local government, or direct-support organization
559thereof, or pursuant to the enrollment requirements stated in s.
560218.407, and may invest such funds in the Local Government
561Surplus Funds Trust Fund created by s. 218.405., which trust
562agreement shall govern the investment of such funds, provided
563that The board shall approve the undertaking of investments
564subject to a trust agreement such investment before execution of
565such the trust agreement by the State Board of Administration.
566The funds and the earnings therefrom are exempt from the service
567charge imposed by s. 215.20. As used in this subsection, the
568term "state agency" has the same meaning as that provided in s.
569216.001, and the terms "governing body" and "unit of local
570government" have the same meaning as that provided in s.
572     (2)(a)  The board shall have the power to make purchases,
573sales, exchanges, investments, and reinvestments for and on
574behalf of the funds referred to in subsection (1), and it shall
575be the duty of the board to see that moneys invested under the
576provisions of ss. 215.44-215.53 are at all times handled in the
577best interests of the state.
578     (b)  In exercising investment authority pursuant to s.
579215.47, the board may retain investment advisers or managers, or
580both, external to in-house staff, to assist the board in
581carrying out the power specified in paragraph (a).
582     (c)  The board shall produce a set of financial statements
583for the Florida Retirement System on an annual basis which shall
584be reported to the Legislature and audited by a commercial
585independent third-party audit firm.
586     Section 7.  Section 215.441, Florida Statutes, is amended
587to read:
588     215.441  Board of Administration; appointment of executive
589director.-The appointment of the executive director of the State
590Board of Administration shall be subject to the approval by a
591majority vote of the Board of Trustees of the State Board of
592Administration, and the Governor must vote on the prevailing
593side. Such appointment must be reaffirmed in the same manner by
594the board of trustees on an annual basis. The executive director
595shall, at a minimum, possess substantial experience, knowledge,
596and expertise in the oversight of investment portfolios and must
597meet any other requirements determined by the board to be
598necessary to the overall management and investment of funds.
599     Section 8.  Section 215.444, Florida Statutes, is amended
600to read:
601     215.444  Investment Advisory Council.-
602     (1)  There is created a nine-member six-member Investment
603Advisory Council to review the investments made by the staff of
604the Board of Administration and to make recommendations to the
605board regarding investment policy, strategy, and procedures. The
606council shall meet with staff of the board no less than
607quarterly and shall provide a quarterly report directly to the
608Trustees of the State Board of Administration at a meeting of
609the board.
610     (2)  The members of the council shall be appointed by the
611board as a resource to the Trustees of the State Board of
612Administration and shall be subject to confirmation by the
613Senate. These individuals shall possess special knowledge,
614experience, and familiarity with financial investments and
615portfolio management, institutional investments, and fiduciary
616responsibilities. Members shall be appointed for 4-year terms. A
617vacancy shall be filled for the remainder of the unexpired term.
618The council shall annually elect a chair and a vice chair from
619its membership. A member may not be elected to consecutive terms
620as chair or vice chair.
621     Section 9.  Paragraphs (b) and (c) of subsection (1),
622paragraph (a) of subsection (2), and subsection (5) of section
623215.47, Florida Statutes, are amended, and paragraph (o) is
624added to subsection (1) of that section, to read:
625     215.47  Investments; authorized securities; loan of
626securities.-Subject to the limitations and conditions of the
627State Constitution or of the trust agreement relating to a trust
628fund, moneys available for investments under ss. 215.44-215.53
629may be invested as follows:
630     (1)  Without limitation in:
631     (b)  State Bonds, notes, or obligations of any state or
632organized territory of the United States or the District of
633Columbia that pledge pledging the full faith and credit of the
634state, territory, or district; and revenue bonds, notes, or
635obligations of any state or organized territory of the United
636States or the District of Columbia additionally secured by the
637full faith and credit of the state, territory, or district.
638     (c)  Bonds, notes, or obligations of the several counties
639or districts in any the state or organized territory of the
640United States or the District of Columbia containing a pledge of
641the full faith and credit of the county or district involved.
642     (o)  Bonds, notes, or obligations described in 26 U.S.C. s.
643149(g)(3)(B), if investment in such bonds, notes, or obligations
644is necessary in order to comply with covenants in documents or
645proceedings relating to bonds issued pursuant to s. 215.555(6).
646Investments made pursuant to this paragraph may be purchased
647only from the proceeds of bonds issued pursuant to s. 215.555(6)
648and must be authorized under documents or proceedings relating
649to such bonds.
650     (2)  With no more than 25 percent of any fund in:
651     (a)  Bonds, notes, or obligations of any state or organized
652territory of the United States or the District of Columbia; of
653any municipality or political subdivision or any agency,
654district, or authority thereof; or of any agency or authority of
655this state, if the obligations are rated investment grade by at
656least one nationally recognized statistical rating organization.
657     (5)  With no more than 35 25 percent of any fund in
658corporate obligations and securities of any kind of a foreign
659corporation or a foreign commercial entity having its principal
660office located in any country other than the United States of
661America or its possessions or territories, not including United
662States dollar-denominated securities listed and traded on a
663United States exchange which are a part of the ordinary
664investment strategy of the board.
665     Section 10.  Section 215.52, Florida Statutes, is amended
666to read:
667     215.52  Rules and regulations.-The board shall have the
668power and authority to make reasonable rules and regulations
669necessary to carry out the provisions of ss. 215.44-215.53. The
670rules shall provide for full transparency and accountability in
671fulfillment of the board's fiduciary duties in the areas of
672compliance, ethics, training, and audit procedures.
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
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
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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