Florida Senate - 2011                        COMMITTEE AMENDMENT
       Bill No. SB 1182
       
       
       
       
       
       
                                Barcode 849726                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: FAV            .                                
                  04/05/2011           .                                
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       The Committee on Governmental Oversight and Accountability
       (Latvala) recommended the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete lines 18 - 59
    4  and insert:
    5         Section 1. Subsections (1), (2) and (3) of section 215.44,
    6  Florida Statutes, are amended to read:
    7         215.44 Board of Administration; powers and duties in
    8  relation to investment of trust funds.—
    9         (1) Except when otherwise specifically provided by the
   10  State Constitution and subject to any limitations of the trust
   11  agreement relating to a trust fund, the Board of Administration,
   12  sometimes referred to in this chapter as “board” or “Trustees of
   13  the State Board of Administration,” composed of the Governor as
   14  chair, the Chief Financial Officer, and the Attorney General,
   15  shall invest all the funds in the System Trust Fund, as defined
   16  in s. 121.021(36), and all other funds specifically required by
   17  law to be invested by the board pursuant to ss. 215.44-215.53 to
   18  the fullest extent that is consistent with the cash
   19  requirements, trust agreement, and investment objectives of the
   20  fund. Notwithstanding any other law to the contrary, the State
   21  Board of Administration may invest any funds of any state
   22  agency, any state university or college, any unit of local
   23  government, or any direct-support organization thereof pursuant
   24  to the terms of a trust agreement with the head of the state
   25  agency or the governing body of the state university or college,
   26  unit of local government, or direct-support organization
   27  thereof, or pursuant to the enrollment requirements stated in s.
   28  218.407, and may invest such funds in the Local Government
   29  Surplus Funds Trust Fund created by s. 218.405, without a trust
   30  agreement, upon completion of enrollment materials provided by
   31  the board. The board shall approve the undertaking of
   32  investments subject to a trust agreement before execution of
   33  such trust agreement by the State Board of Administration. The
   34  funds and the earnings therefrom are exempt from the service
   35  charge imposed by s. 215.20. As used in this subsection, the
   36  term “state agency” has the same meaning as that provided in s.
   37  216.011, and the terms “governing body” and “unit of local
   38  government” have the same meaning as that provided in s.
   39  218.403.
   40         (2)(a) The board shall have the power to make purchases,
   41  sales, exchanges, investments, and reinvestments for and on
   42  behalf of the funds referred to in subsection (1), and it shall
   43  be the duty of the board to see that moneys invested under the
   44  provisions of ss. 215.44-215.53 are at all times handled in the
   45  best interests of the state.
   46         (b) In exercising investment authority pursuant to s.
   47  215.47, the board may retain investment advisers or managers, or
   48  both, external to in-house staff, to assist the board in
   49  carrying out the power specified in paragraph (a).
   50         (c) The board shall create an audit committee to assist the
   51  board in fulfilling its oversight responsibilities. The
   52  committee shall consist of three members appointed by the board.
   53  Members shall be appointed for 4-year terms. A vacancy shall be
   54  filled for the remainder of the unexpired term. The committee
   55  shall annually elect a chair and vice chair from its membership.
   56  A member may not be elected to consecutive terms as chair or
   57  vice chair. Persons appointed to the audit committee must have
   58  relevant knowledge and expertise as determined by the board. The
   59  audit committee shall serve as an independent and objective
   60  party to monitor processes for financial reporting, internal
   61  controls and risk assessment, audit processes, and compliance
   62  with laws, rules, and regulations. The audit committee shall
   63  direct the efforts of the board’s independent external auditors
   64  and the board’s internal audit staff. The committee shall
   65  periodically, but at least not less than quarterly, report to
   66  the board and the executive director of the board.
   67         (d) The board shall produce a set of financial statements
   68  for the Florida Retirement System on an annual basis, which
   69  shall be reported to the Legislature and audited by a commercial
   70  independent third-party audit firm under the direction of the
   71  audit committee.
   72         (e)Pursuant to s. 110.205, the board shall establish and
   73  maintain the salaries and benefits of its officers and employees
   74  in a manner consistent with the board’s fiduciary responsibility
   75  to recruit and retain highly qualified and effective key
   76  personnel. At least every 5 years, the Investment Committee
   77  shall cause a total compensation study to be conducted by a
   78  private consulting firm having expertise in salary and benefits
   79  administration of institutional investment entities. The study
   80  shall be designed to determine competitive salary ranges, other
   81  compensation, and benefits for positions within the board based
   82  on comparable public-sector peer investment entities. The
   83  committee shall present the total compensation study, along with
   84  its recommendations, to the board. The recommendations are
   85  subject to review and ratification or reversal by the board. The
   86  board may delegate to the executive director the authority and
   87  duty to set staff salaries within the ranges approved by the
   88  board.
   89         (f)(e) The board shall meet at least quarterly and shall
   90  receive reports from the audit committee, the investment
   91  committee advisory committee, the inspector general, the general
   92  counsel, the executive director, and such other persons or
   93  entities as the board may require about the financial status,
   94  operations, and investment activities of the board.
   95         (3) Notwithstanding any law to the contrary, all
   96  investments made by the State Board of Administration pursuant
   97  to ss. 215.44-215.53 shall be subject to the restrictions and
   98  limitations contained in s. 215.47, except that investments made
   99  by the board under a trust agreement pursuant to subsection (1)
  100  are subject only to the restrictions and limitations contained
  101  in that trust agreement.
  102         Section 2. Section 215.441, Florida Statutes, is amended to
  103  read:
  104         215.441 Board of Administration; appointment of executive
  105  director.—The appointment of the executive director of the State
  106  Board of Administration is shall be subject to the approval by a
  107  majority vote of the Board of Trustees of the State Board of
  108  Administration, and the Governor must vote on the prevailing
  109  side. Such appointment must be reaffirmed in the same manner by
  110  the board of trustees on an annual basis.
  111         (1)Before appointing the executive director, the board
  112  shall appoint a search committee to develop minimum position
  113  requirements, review applications, and make recommendations to
  114  the board with regard to qualified applicants for the position.
  115  At a minimum, the search committee shall consist of at least
  116  three members of the Investment Committee.
  117         (2) The executive director shall, at a minimum, possess
  118  substantial experience, knowledge, and expertise in the
  119  oversight of investment portfolios and must meet any other
  120  requirements determined by the board to be necessary to the
  121  overall management and investment of funds.
  122         (3)The compensation for the executive director shall be
  123  determined by the board, consistent with s. 215.44(2)(d).
  124         Section 3. Subsection (1) of section 215.442, Florida
  125  Statutes, is amended to read:
  126         215.442 Executive director; reporting requirements; public
  127  meeting.—
  128         (1) Beginning October 2007 and quarterly thereafter, the
  129  executive director shall present to the Board of Trustees and
  130  the Investment Committee of the State Board of Administration a
  131  quarterly report to include the following:
  132         (a) The name of each equity in which the State Board of
  133  Administration has invested for the quarter.
  134         (b) The industry category of each equity.
  135         Section 4. Section 215.444, Florida Statutes, is amended to
  136  read:
  137         215.444 Investment Committee Advisory Council.—
  138         (1) There is created A seven-member six-member Investment
  139  Committee Advisory Council is created to review the investments
  140  made by the staff of the Board of Administration and to make
  141  recommendations to the board regarding investment policy,
  142  strategy, and procedures.
  143         (2) Beginning February 1, 2011, the membership of the
  144  committee council shall be expanded to nine members. Beginning
  145  July 1, 2011, board membership shall be reduced by not refilling
  146  board positions as the terms of the members expire until board
  147  membership consists of seven members. Thereafter, each trustee
  148  shall appoint one member and one member shall be appointed by a
  149  unanimous vote of the trustees. Members shall be appointed for
  150  4-year terms. A vacancy shall be filled for the remainder of the
  151  unexpired term. The committee shall annually elect a chair and a
  152  vice chair from its membership. A member may not be elected to
  153  consecutive terms as chair or vice chair. The council shall meet
  154  with staff of the board at least once each quarter and shall
  155  provide a quarterly report directly to the Board of Trustees of
  156  the State Board of Administration at a meeting of the board.
  157         (2) The members of the council shall be appointed by the
  158  board as a resource to the Board of Trustees of the State Board
  159  of Administration and shall be subject to confirmation by the
  160  Senate.
  161         (3) In order to be appointed, an individual must These
  162  individuals shall possess special knowledge, experience, and
  163  familiarity with portfolio management, institutional
  164  investments, and fiduciary responsibilities, have been in a
  165  position that oversaw $1 billion in assets, and may have had
  166  extensive experience in managing or overseeing investment
  167  portfolios or conducting research in any two or more of the
  168  following areas: domestic equities, international equities,
  169  fixed-income securities, cash management, marketable and
  170  nonmarketable alternative investments, or real estate. Members
  171  shall be appointed for 4-year terms. A vacancy shall be filled
  172  for the remainder of the unexpired term. The council shall
  173  annually elect a chair and a vice chair from its membership. A
  174  member may not be elected to consecutive terms as chair or vice
  175  chair.
  176         (4)(3) The committee council members must undergo regular
  177  fiduciary training as required by the board and must complete an
  178  annual conflict disclosure statement. In carrying out their
  179  duties, council members must make recommendations consistent
  180  with the fiduciary standards applicable to the board.
  181         (5)In addition to the duties in subsection (1), the
  182  committee shall approve the investment policy statements of the
  183  board, participate in the selection process regarding an
  184  executive director, obtain periodic compensation studies and
  185  provide recommendations thereon, meet quarterly to review the
  186  investment performance of funds, and perform any other duties as
  187  determined by the board. The committee shall meet with board
  188  staff at least once each quarter and provide a quarterly report
  189  directly to the board at a meeting of the board.
  190         (6) The committee shall approve the investment policy
  191  statements of the board as provided in ss. 215.475,
  192  121.4501(14), 215.5601(4)(a), and 218.409(2)(d), participate in
  193  the selection process regarding an executive director, obtain
  194  periodic compensation studies and provide recommendations
  195  thereon, meet at least quarterly to review the investment
  196  performance of funds, and perform any other duties as determined
  197  by the board. Decisions of the committee may be overturned only
  198  by a unanimous vote of the board. The committee shall meet with
  199  board staff at least once each quarter and provide a quarterly
  200  report directly to the board at a meeting of the board.
  201         (7)(4) The committee council may create subcommittees as
  202  necessary to carry out its duties and responsibilities and may
  203  direct the executive director to enter into contracts with
  204  independent compensation consultants.
  205         (8) In carrying out the provisions of this subsection, a
  206  member of the committee is an officer, employee, or agent of the
  207  state for purposes of the state’s waiver of sovereign immunity
  208  as provided in s. 768.28.
  209  
  210  ================= T I T L E  A M E N D M E N T ================
  211         And the title is amended as follows:
  212         Delete lines 3 - 10
  213  and insert:
  214         amending s. 215.44, F.S.; authorizing the board to
  215         invest the assets of a governmental entity in the
  216         Local Government Surplus Funds Trust Fund without a
  217         trust agreement with that governmental entity;
  218         requiring the board to establish and maintain the
  219         salaries of its officers and employees in a manner
  220         consistent with its fiduciary duties; requiring that
  221         the Investment Committee initiate a study at specified
  222         intervals to evaluate compensation; requiring that the
  223         committee present the results of such study to the
  224         board; authorizing the board to delegate certain
  225         authority and duties relating to salaries to the
  226         executive director; revising the entities that submit
  227         reports to the board; providing that certain
  228         investments made by the board under a trust agreement
  229         are subject only to the restrictions and limitations
  230         contained in the trust agreement; amending s. 215.441,
  231         F.S.; providing for the creation, operation, and
  232         membership of a search committee for the purpose of
  233         selecting the executive director; providing
  234         requirements for the appointment as executive
  235         director; providing for the determination of the
  236         executive director’s compensation; amending s.
  237         215.442, F.S.; requiring that the executive director
  238         present certain information quarterly to the
  239         Investment Committee; amending s. 215.444, F.S.;
  240         reducing the number of committee members and providing
  241         for the appointment of such members; expanding
  242         prerequisites for membership on the committee;
  243         providing additional duties of the committee;
  244         authorizing the committee to create subcommittees and
  245         direct the executive director to enter into certain
  246         contracts; providing that a committee member is an
  247         officer, employee, or agent of the state for the
  248         purpose of sovereign immunity; amending s. 215.4755,
  249         F.S.; correcting