Senate Bill 0266c1

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    Florida Senate - 1998                            CS for SB 266

    By the Committee on Community Affairs and Senator Childers





    316-1746-98

  1                      A bill to be entitled

  2         An act relating to the municipal firefighters'

  3         pension trust fund and the municipal police

  4         officers' retirement trust fund; amending ss.

  5         175.071, 185.06, F.S.; revising the powers of

  6         the board of trustees for each trust fund;

  7         providing guidelines for the investment of

  8         funds; requiring additional recordkeeping by

  9         the boards; providing qualifications for

10         professionally qualified independent

11         consultants; providing an effective date.

12

13  Be It Enacted by the Legislature of the State of Florida:

14

15         Section 1.  Section 175.071, Florida Statutes, is

16  amended to read:

17         175.071  General powers and duties of board of

18  trustees.--For any municipality, special fire control

19  district, chapter plan, local law municipality, local law

20  special fire control district, or local law plan under this

21  chapter:

22         (1)  The board of trustees may:

23         (a)  Invest and reinvest the assets of the

24  firefighters' pension trust fund in annuity and life insurance

25  contracts of life insurance companies in amounts sufficient to

26  provide, in whole or in part, the benefits to which all of the

27  participants in the firefighters' pension trust fund shall be

28  entitled under the provisions of this chapter and pay the

29  initial and subsequent premiums thereon.

30         (b)  Invest and reinvest the assets of the

31  firefighters' pension trust fund in:

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    Florida Senate - 1998                            CS for SB 266
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  1         1.  Time or savings accounts of a national bank, a

  2  state bank insured by the Bank Insurance Fund Federal Deposit

  3  Insurance Corporation, or a savings, building, and loan

  4  association insured by the Savings Association Insurance Fund

  5  which are administered by the Federal Deposit Insurance

  6  Corporation or a state or federal chartered credit union whose

  7  share accounts are insured by the National Credit Union Share

  8  Insurance Fund Federal Savings and Loan Insurance Corporation.

  9         2.  Obligations of the United States or obligations

10  guaranteed as to principal and interest by the Government of

11  the United States.

12         3.  Bonds issued by the State of Israel.

13         4.  Bonds, stocks, or other evidences of indebtedness

14  issued or guaranteed by a corporation organized under the laws

15  of the United States, any state or organized territory of the

16  United States, or the District of Columbia, provided:

17         a.  The corporation is listed on any one or more of the

18  recognized national stock exchanges and, in the case of bonds

19  only, holds a rating in one of the three highest

20  classifications by a major rating service; and

21         b.  The board of trustees shall not invest more than 5

22  percent of its assets in the common stock or capital stock of

23  any one issuing company, nor shall the aggregate investment in

24  any one issuing company exceed 5 percent of the outstanding

25  capital stock of that company or the aggregate of its

26  investments under this subparagraph at cost exceed 50 30

27  percent of the assets of the fund.

28

29  This paragraph shall apply to all boards of trustees and

30  participants. However, in the event that a municipality or

31  special fire control district has a duly enacted pension plan

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    Florida Senate - 1998                            CS for SB 266
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  1  pursuant to, and in compliance with, s. 175.351, and the

  2  trustees thereof desire to vary the investment procedures

  3  herein, the trustees of such plan shall request a variance of

  4  the investment procedures as outlined herein only through a

  5  municipal ordinance, special act of the Legislature, or

  6  resolution by the governing body of the special fire control

  7  district; where a special act, or a municipality by ordinance

  8  adopted prior to the effective date of this act October 1,

  9  1986, permits a greater than 50-percent 30-percent equity

10  investment, such municipality shall not be required to comply

11  with the aggregate equity investment provisions of this

12  paragraph. The board of trustees may invest up to 10 percent

13  of plan assets in foreign securities. Investments shall not be

14  made in any stocks, bonds, or other securities owned or

15  controlled by a government other than that of the United

16  States or the several states.

17         (c)  Issue drafts upon the firefighters' pension trust

18  fund pursuant to this act and rules and regulations prescribed

19  by the board of trustees. All such drafts shall be

20  consecutively numbered, be signed by the chair and secretary,

21  and state upon their faces the purpose for which the drafts

22  are drawn.  The treasurer or depository of each municipality

23  or special fire control district shall retain such drafts when

24  paid, as permanent vouchers for disbursements made, and no

25  money shall be otherwise drawn from the fund.

26         (d)  Convert into cash any securities of the fund.

27         (e)  Keep a complete record of all receipts and

28  disbursements and of the board's acts and proceedings.

29         (2)  Any and all acts and decisions shall be

30  effectuated by vote of a majority of the at least three

31  members of the board; however, no trustee shall take part in

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    Florida Senate - 1998                            CS for SB 266
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  1  any action in connection with the trustee's own participation

  2  in the fund, and no unfair discrimination shall be shown to

  3  any individual firefighter participating in the fund.

  4         (3)  The board's action on all claims for retirement

  5  under this act shall be final, provided, however, that the

  6  rules and regulations of the board have been complied with.

  7         (4)  The secretary of the board of trustees shall keep

  8  a record of all persons receiving retirement payments under

  9  the provisions of this chapter, in which shall be noted the

10  time when the pension is allowed and when the pension shall

11  cease to be paid.  In this record, the secretary shall keep a

12  list of all firefighters employed by the municipality or

13  special fire control district.  The record shall show the

14  name, address, and time of employment of such firefighters and

15  when they cease to be employed by the municipality or special

16  fire control district.

17         (5)(4)  The sole and exclusive administration of, and

18  the responsibilities for, the proper operation of the

19  firefighters' pension trust fund and for making effective the

20  provisions of this chapter are vested in the board of

21  trustees; however, nothing herein shall empower a board of

22  trustees to amend the provisions of a retirement plan without

23  the approval of the municipality or special fire control

24  district. The board of trustees shall keep in convenient form

25  such data as shall be necessary for an actuarial valuation of

26  the firefighters' pension trust fund and for checking the

27  actual experience of the fund.

28         (6)(a)(5)  At least once every 3 years, the board of

29  trustees shall retain a professionally qualified an

30  independent consultant who shall professionally qualified to

31  evaluate the performance of any existing professional money

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    Florida Senate - 1998                            CS for SB 266
    316-1746-98




  1  manager and managers.  The independent consultant shall make

  2  recommendations to the board of trustees regarding the

  3  selection of money managers for the next investment term.

  4  These recommendations shall be considered by the board of

  5  trustees at its next regularly scheduled meeting. The date,

  6  time, place, and subject of this meeting shall be advertised

  7  in the same manner as for any meeting of the board a newspaper

  8  of general circulation in the municipality or special fire

  9  control district, as appropriate, at least 10 days prior to

10  the date of the hearing.

11         (b)  For purposes of this subsection, the term

12  "professionally qualified independent consultant" means a

13  consultant who, based on education and experience, is

14  professionally qualified to evaluate the performance of

15  professional money managers, and who, at a minimum:

16         1.  Provides his or her services on a flat-fee basis.

17         2.  Is not associated in any manner with the money

18  manager for the pension fund.

19         3.  Makes calculations according to the American

20  Banking Institute method of calculating time-weighted rates of

21  return. All calculations must be made net of fees.

22         4.  Has 3 or more years of experience working in the

23  public sector.

24         (7)  To assist the board in meeting its

25  responsibilities under this chapter, the board, if it so

26  elects, may:

27         (a)  Employ independent legal counsel at the pension

28  fund's expense.

29         (b)  Employ an independent actuary at the pension

30  fund's expense.

31

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    Florida Senate - 1998                            CS for SB 266
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  1         (c)  Employ such independent professional, technical,

  2  or other advisers as it deems necessary at the pension fund's

  3  expense.

  4

  5  If the board chooses to use the municipality's or special

  6  district's legal counsel or actuary, or chooses to use any of

  7  the municipality's or special district's other professional,

  8  technical, or other advisers, it may do so only under terms

  9  and conditions acceptable to the board.

10         Section 2.  Section 185.06, Florida Statutes, is

11  amended to read:

12         185.06  General powers and duties of board of

13  trustees.--For any municipality, chapter plan, local law

14  municipality, or local law plan under this chapter:

15         (1)  The board of trustees may:

16         (a)  Invest and reinvest the assets of the retirement

17  trust fund in annuity and life insurance contracts of life

18  insurance companies in amounts sufficient to provide, in whole

19  or in part, the benefits to which all of the participants in

20  the municipal police officers' retirement trust fund shall be

21  entitled under the provisions of this chapter, and pay the

22  initial and subsequent premiums thereon.

23         (b)  Invest and reinvest the assets of the retirement

24  trust fund in:

25         1.  Time or savings accounts of a national bank, a

26  state bank insured by the Bank Insurance Fund Federal Deposit

27  Insurance Corporation, or a savings and loan association

28  insured by the Savings Association Insurance Fund which are

29  administered by the Federal Deposit Insurance Corporation or a

30  state or federal chartered credit union whose share accounts

31

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    Florida Senate - 1998                            CS for SB 266
    316-1746-98




  1  are insured by the National Credit Union Share Insurance Fund

  2  Federal Savings and Loan Insurance Corporation.

  3         2.  Obligations of the United States or obligations

  4  guaranteed as to principal and interest by the United States.

  5         3.  Bonds issued by the State of Israel.

  6         4.  Bonds, stocks, or other evidences of indebtedness

  7  issued or guaranteed by a corporation organized under the laws

  8  of the United States, any state or organized territory of the

  9  United States, or the District of Columbia, provided:

10         a.  The corporation is listed on any one or more of the

11  recognized national stock exchanges and, in the case of bonds

12  only, holds a rating in one of the three highest

13  classifications by a major rating service; and

14         b.  The board of trustees shall not invest more than 5

15  percent of its assets in the common stock or capital stock of

16  any one issuing company, nor shall the aggregate investment in

17  any one issuing company exceed 5 percent of the outstanding

18  capital stock of the company or the aggregate of its

19  investments under this subparagraph at cost exceed 50 30

20  percent of the fund's assets.

21

22  This paragraph shall apply to all boards of trustees and

23  participants. However, in the event that a municipality has a

24  duly enacted pension plan pursuant to, and in compliance with,

25  s. 185.35 and the trustees thereof desire to vary the

26  investment procedures herein, the trustees of such plan shall

27  request a variance of the investment procedures as outlined

28  herein only through a municipal ordinance or special act of

29  the Legislature; where a special act, or a municipality by

30  ordinance adopted prior to the effective date of this act

31  October 1, 1986, permits a greater than 50-percent 30-percent

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    Florida Senate - 1998                            CS for SB 266
    316-1746-98




  1  equity investment, such municipality shall not be required to

  2  comply with the aggregate equity investment provisions of this

  3  paragraph. The board of trustees may invest up to 10 percent

  4  of plan assets in foreign securities. Investments shall not be

  5  made in any stocks, bonds, or other securities owned or

  6  controlled by a government other than that of the United

  7  States or of the several states.

  8         (c)  Issue drafts upon the municipal police officers'

  9  retirement trust fund pursuant to this act and rules and

10  regulations prescribed by the board of trustees.  All such

11  drafts shall be consecutively numbered, be signed by the chair

12  and secretary, and state upon their faces the purposes for

13  which the drafts are drawn.  The city treasurer or other

14  depository shall retain such drafts when paid, as permanent

15  vouchers for disbursements made, and no money shall otherwise

16  be drawn from the fund.

17         (d)  Finally decide all claims to relief under the

18  board's rules and regulations and pursuant to the provisions

19  of this act.

20         (e)  Convert into cash any securities of the fund.

21         (f)  Keep a complete record of all receipts and

22  disbursements and of the board's acts and proceedings.

23         (2)  Any and all acts and decisions shall be

24  effectuated by vote of a majority of the at least three

25  members of the board; however, no trustee shall take part in

26  any action in connection with his or her own participation in

27  the fund, and no unfair discrimination shall be shown to any

28  individual employee participating in the fund.

29         (3)  The secretary of the board of trustees shall keep

30  a record of all persons receiving retirement payments under

31  the provisions of this chapter, in which shall be noted the

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    Florida Senate - 1998                            CS for SB 266
    316-1746-98




  1  time when the pension is allowed and when the pension shall

  2  cease to be paid.  In this record, the secretary shall keep a

  3  list of all police officers employed by the municipality.  The

  4  record shall show the name, address, and time of employment of

  5  such police officer and when he or she ceases to be employed

  6  by the municipality.

  7         (4)(3)  The sole and exclusive administration of, and

  8  the responsibilities for, the proper operation of the

  9  retirement trust fund and for making effective the provisions

10  of this chapter are vested in the board of trustees; however,

11  nothing herein shall empower a board of trustees to amend the

12  provisions of a retirement plan without the approval of the

13  municipality. The board of trustees shall keep in convenient

14  form such data as shall be necessary for an actuarial

15  valuation of the retirement trust fund and for checking the

16  actual experience of the fund.

17         (5)(a)(4)  At least once every 3 years, the board of

18  trustees shall retain a professionally qualified an

19  independent consultant who shall professionally qualified to

20  evaluate the performance of any existing professional money

21  manager and managers.  The independent consultant shall make

22  recommendations to the board of trustees regarding the

23  selection of money managers for the next investment term.

24  These recommendations shall be considered by the board of

25  trustees at its next regularly scheduled meeting. The date,

26  time, place, and subject of this meeting shall be advertised

27  in the same manner as for any meeting of the board a newspaper

28  of general circulation in the municipality at least 10 days

29  prior to the date of the hearing.

30         (b)  For the purpose of this subsection, the term

31  "professionally qualified independent consultant" means a

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    Florida Senate - 1998                            CS for SB 266
    316-1746-98




  1  consultant who, based on education and experience, is

  2  professionally qualified to evaluate the performance of

  3  professional money managers, and who, at a minimum:

  4         1.  Provides his or her services on a flat-fee basis.

  5         2.  Is not associated in any manner with the money

  6  manager for the pension fund.

  7         3.  Makes calculations according to the American

  8  Banking Institute method of calculating time-weighted rates of

  9  return. All calculations must be made net of fees.

10         4.  Has 3 or more years of experience working in the

11  public sector.

12         (6)  To assist the board in meeting its

13  responsibilities under this chapter, the board, if it so

14  elects, may:

15         (a)  Employ independent legal counsel at the pension

16  fund's expense.

17         (b)  Employ an independent actuary at the pension

18  fund's expense.

19         (c)  Employ such independent professional, technical,

20  or other advisers as it deems necessary at the pension fund's

21  expense.

22

23  If the board chooses to use the municipality's or special

24  district's legal counsel or actuary, or chooses to use any of

25  the municipality's other professional, technical, or other

26  advisers, it may do so only under terms and conditions

27  acceptable to the board.

28         Section 3.  This act shall take effect July 1, 1998.

29

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    Florida Senate - 1998                            CS for SB 266
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  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                         Senate Bill 266

  3

  4  Expands the list of institutions in which the trustees may
    invest the pension funds to include a state or federal
  5  chartered credit union whose share accounts are insured by the
    National Credit Union Share Insurance Fund;
  6
    Authorizes the trustees to invest pension funds in the stock
  7  of a corporation which does not hold a rating in one of the
    three highest classifications by a major rating service -- the
  8  amendment limits this investment restriction to bonds only;
    and
  9
    In determining the "aggregate" investment of the fund, the
10  amendment retains the term "cost," rather than replacing it
    with "market," and deletes new language which provided that
11  exceeding the stated limit does not necessarily require
    liquidation.
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