House Bill 3661e2

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  1                      A bill to be entitled

  2         An act relating to authority of the State Board

  3         of Administration to invest public funds;

  4         amending s. 215.44, F.S.; requiring the Office

  5         of Program Policy Analysis and Government

  6         Accountability to conduct or have conducted

  7         periodic performance audits of the board's

  8         management of trust fund investments and to

  9         submit the audit reports to the board and

10         specified individuals; authorizing the State

11         Board of Administration to invest funds of a

12         state agency or unit of local government under

13         certain circumstances; amending s. 215.47,

14         F.S.; revising provisions relating to the

15         investment of public funds and the securities

16         authorized for such investment; providing for

17         the loan of securities; repealing s. 215.455,

18         F.S., relating to the loan of securities, to

19         conform; amending s. 215.50, F.S.; correcting a

20         cross reference, to conform; amending s.

21         215.515, F.S.; eliminating review by the

22         Department of Management Services of charges of

23         the board for investment services rendered;

24         amending s. 215.835, F.S.; authorizing the

25         board to adopt rules necessary to carry out the

26         provisions and intent of the State Bond Act;

27         amending s. 159.825, F.S.; authorizing the

28         board to adopt rules necessary to carry out

29         provisions of law relating to interest rate

30         waivers for the sale of taxable bonds; amending

31         s. 190.016, F.S.; correcting a cross reference,


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  1         to conform; amending s. 218.407, F.S.; revising

  2         provisions relating to local government

  3         resolutions required for deposit of surplus

  4         funds in the Local Government Surplus Funds

  5         Trust Fund; amending s. 235.187, F.S.;

  6         authorizing covenants that additional funds

  7         from lottery and certain similar sources will

  8         be available for payments for Classrooms First

  9         Program bonds before any other purpose;

10         amending s. 235.2195, F.S.; authorizing

11         covenants that additional funds from lottery

12         and certain similar sources will be available

13         for payments for the 1997 School Capital Outlay

14         Bond Program bonds before any other purpose;

15         creating s. 218.412, F.S.; authorizing the

16         board to adopt rules necessary for the

17         administration of the trust fund; creating s.

18         413.0115, F.S.; authorizing the board to invest

19         and reinvest the portfolio of stocks, bonds,

20         and mutual funds held by the Division of Blind

21         Services; requiring the division director to

22         make the portfolio available and transfer it to

23         the board for investment; providing intent with

24         respect to a time limitation on the issuance of

25         certain lottery bonds; providing an effective

26         date.

27

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

29

30         Section 1.  Subsections (1) and (6) of section 215.44,

31  Florida Statutes, are amended to read:


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  1         215.44  Board of Administration; powers and duties in

  2  relation to investment of trust funds.--

  3         (1)  Except when otherwise specifically provided by the

  4  State Constitution and subject to any limitations of the trust

  5  agreement relating to a trust fund, the Board of

  6  Administration, hereinafter sometimes referred to as "board,"

  7  composed of the Governor as chair, the Treasurer, and the

  8  Comptroller, shall invest all the funds in the System Trust

  9  Fund, as defined in s. 121.021(36), and all other funds

10  specifically required by law to be invested by the board

11  pursuant to ss. 215.44-215.53 to the fullest extent that is

12  consistent with the cash requirements, trust agreement, and

13  investment objectives of the fund. Notwithstanding any other

14  law to the contrary, the State Board of Administration may

15  invest any funds of any state agency or any unit of local

16  government pursuant to the terms of a trust agreement with the

17  head of the state agency or the governing body of the unit of

18  local government, which trust agreement shall govern the

19  investment of such funds, provided that the board shall

20  approve the undertaking of such investment before execution of

21  the trust agreement by the State Board of Administration. The

22  funds and the earnings therefrom are exempt from the service

23  charge imposed by s. 215.20. As used in this subsection, the

24  term "state agency" has the same meaning as that provided in

25  s. 216.001, and the terms "governing body" and "unit of local

26  government" have the same meaning as that provided in s.

27  218.403.

28         (6)  The Auditor General shall audit annually the

29  entire operation of the board. The Office of Program Policy

30  Analysis and Government Accountability In addition to his or

31  her regular financial and compliance audit, the Auditor


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  1  General shall also perform or cause to be performed a

  2  performance audit of the management by the board of

  3  investments every 2 years., including among other things his

  4  or her independent verification of the data included by the

  5  board in its reports to the Legislature required by subsection

  6  (5).  The Auditor General may elect to contract with a private

  7  professional firm qualified in investment portfolio management

  8  to conduct the performance audit of investment management

  9  required by this subsection.  In addition to the duties

10  prescribed in this subsection, the Auditor General and the

11  Office of Program Policy Analysis and Government

12  Accountability shall annually as part of his or her audit

13  conduct performance postaudits of investments under s.

14  215.47(6) which are not otherwise authorized under ss.

15  215.44-215.53.  The Auditor General shall submit such audit

16  report to the board, the President of the Senate, and the

17  Speaker of the House of Representatives and their designees.

18         Section 2.  Section 215.47, Florida Statutes, is

19  amended to read:

20         215.47  Investments; authorized securities; loan of

21  securities.--Subject to the limitations and conditions of the

22  State Constitution or of the trust agreement relating to a

23  trust fund, moneys available for investments under ss.

24  215.44-215.53 may be invested as follows:

25         (1)  Without limitation in:

26         (a)  Bonds, notes, or other obligations of the United

27  States or those guaranteed by the United States or for which

28  the credit of the United States is pledged for the payment of

29  the principal and interest or dividends thereof.

30

31


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  1         (b)  State bonds pledging the full faith and credit of

  2  the state and revenue bonds additionally secured by the full

  3  faith and credit of the state.

  4         (c)  Bonds of the several counties or districts in the

  5  state containing a pledge of the full faith and credit of the

  6  county or district involved.

  7         (d)  Bonds issued or administered by the State Board of

  8  Administration secured solely by a pledge of all or part of

  9  the 2-cent constitutional fuel tax accruing under the

10  provisions of s. 16, Art. IX of the State Constitution of

11  1885, as amended, or of s. 9, Art. XII of the 1968 revised

12  State Constitution.

13         (e)  Bonds issued by the State Board of Education

14  pursuant to ss. 18 and 19, Art. XII of the State Constitution

15  of 1885, as amended, or to s. 9, Art. XII of the 1968 revised

16  State Constitution, as amended.

17         (f)  Bonds issued by the Florida Outdoor Recreational

18  Development Council pursuant to s. 17, Art. IX of the State

19  Constitution of 1885, as amended.

20         (g)  Bonds issued by the Florida State Improvement

21  Commission, Florida Development Commission, Division of Bond

22  Finance of the Department of General Services, or Division of

23  Bond Finance of the State Board of Administration.

24         (h)  Savings accounts in, or certificates of deposit

25  of, any bank, savings bank, or savings and loan association

26  incorporated under the laws of this state or organized under

27  the laws of the United States doing business and situated in

28  this state, the accounts of which are insured by the Federal

29  Government or an agency thereof, in an amount that does not

30  exceed 15 percent of the net worth of the institution, or a

31  lesser amount as determined by rule by the State Board of


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  1  Administration, provided such savings accounts and

  2  certificates of deposit are secured in the manner prescribed

  3  in chapter 280.

  4         (i)  Notes, bonds, and other obligations of agencies of

  5  the United States.

  6         (i)  Obligations of the Federal Farm Credit Banks and

  7  obligations of the Federal Home Loan Bank and its district

  8  banks.

  9         (j)  Obligations of the Federal Home Loan Mortgage

10  Corporation, including participation certificates.

11         (k)  Obligations guaranteed by the Government National

12  Mortgage Association.

13         (j)(l)  Commercial paper of prime quality of the

14  highest letter and numerical rating as provided for by at

15  least one nationally recognized rating service.

16         (k)(m)  Time drafts or bills of exchange drawn on and

17  accepted by a commercial bank, otherwise known as banker's

18  acceptances, which are accepted by a member bank of the

19  Federal Reserve System having total deposits of not less than

20  $400 million.

21         (l)  Negotiable certificates of deposit issued by

22  domestic or foreign financial institutions in United States

23  dollars.

24         (m)(n)  Short-term obligations not authorized elsewhere

25  in this section to be purchased individually or in pooled

26  accounts or other collective investment funds, for the purpose

27  of providing liquidity to any fund or portfolio.

28         (n)(o)  Securities of, or other interests in, any

29  open-end or closed-end management type investment company or

30  investment trust registered under the Investment Company Act

31  of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to


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  1  time, provided that the portfolio of such investment company

  2  or investment trust is limited to obligations of the United

  3  States Government or any agency or instrumentality thereof and

  4  to repurchase agreements fully collateralized by such United

  5  States Government obligations and provided that such

  6  investment company or investment trust takes delivery of such

  7  collateral either directly or through an authorized custodian.

  8         (2)  With no more than 25 percent of any fund in:

  9         (a)  Bonds, notes, or obligations of any municipality

10  or political subdivision or any agency or authority of this

11  state, if such obligations are rated in any one of the three

12  highest ratings by two nationally recognized rating services.

13  However, if only one nationally recognized rating service

14  shall rate such obligations, then such rating service must

15  have rated such obligations in any one of the two highest

16  classifications heretofore mentioned.

17         (b)  Notes secured by first mortgages on Florida real

18  property, insured or guaranteed by the Federal Housing

19  Administration or the United States Department of Veterans

20  Affairs.

21         (c)  Interest-bearing obligations of the International

22  Bank for Reconstruction and Development, the Inter-American

23  Development Bank, the African Development Bank, the

24  International Finance Corporation, the Asian Development Bank,

25  the European Investment Bank, or the Nordic Investment Bank.

26         (c)(d)  Investments collateralized by first mortgages

27  covering single-family Florida residences, provided such

28  mortgages do not exceed $60,000, do not exceed 80 percent of

29  value, are not delinquent, and are originated by a lender

30  regulated by the state or Federal Government and the aggregate

31  of the collateral furnished is at least 150 percent of the


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  1  aggregate investment under this subsection.  The mortgages

  2  used for collateral shall be segregated by the lending

  3  institution so that such segregation may be confirmed by

  4  independent audit.  In the event any such mortgage used as

  5  collateral becomes more than 3 months delinquent, the lender

  6  shall immediately substitute therefor a mortgage of equal or

  7  greater value.

  8         (d)  Mortgage securities which represent participation

  9  in or are collateralized by mortgage loans secured by real

10  property. Such securities must be issued by an agency of or

11  enterprise sponsored by the United States Government,

12  including, but not limited to, the Government National

13  Mortgage Association, the Federal National Mortgage

14  Association, and the Federal Home Loan Mortgage Corporation.

15         (e)  Mortgage pass-through certificates, meaning

16  certificates evidencing ownership of an undivided interest in

17  pools of conventional mortgages on real property which is

18  improved by a building or buildings used for residential

19  purposes for one to four families when:

20         1.  Such real property is located in this state;

21         2.  Such mortgages are originated by one or more banks

22  or savings and loan associations organized under the laws of

23  this state, by national banks or federal savings and loan

24  associations having their principal place of business in this

25  state, or by a lender that is approved by the Secretary of

26  Housing and Urban Development for the participation in any

27  mortgage insurance program under the National Housing Act and

28  has its principal place of business in this state, or by any

29  combination thereof; and

30

31


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  1         3.  Such mortgages are transferred or assigned to a

  2  corporate trustee acting for the benefit of the holders of

  3  such certificates.

  4         (f)  Obligations of the Federal National Mortgage

  5  Association.

  6         (e)(g)  Group annuity contracts of the pension

  7  investment type with insurers licensed to do business in this

  8  state, except that amounts invested by the board with any one

  9  insurer shall not exceed 3 percent of its assets.

10         (f)(h)  Certain interests in real property and related

11  personal property, including mortgages and related instruments

12  on commercial or industrial real property, with provisions for

13  equity or income participation or with provisions for

14  convertibility to equity ownership; and interests in

15  collective investment funds. Associated expenditures for

16  acquisition and operation of assets purchased under this

17  provision shall be included as a part of the cost of the

18  investment.

19         1.  The title to real property acquired under this

20  paragraph shall be vested in the name of the respective fund.

21         2.  For purposes of taxation of property owned by any

22  fund, the provisions of s. 196.199(2)(b) do not apply.

23         3.  Real property acquired under the provisions of this

24  paragraph shall not be considered state lands or public lands

25  and property as defined in chapter 253, and the provisions of

26  that chapter do not apply to such real property.

27         (g)(i)  General obligations backed by the full faith

28  and credit of a foreign government which has not defaulted on

29  similar obligations for a minimum period of 25 years prior to

30  purchase of the obligation and has met its payments of similar

31  obligations when due.


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  1         (h)(j)  A portion of the funds available for investment

  2  pursuant to this subsection may be invested in rated or

  3  unrated bonds, notes, or instruments backed by the full faith

  4  and credit of the government of Israel.

  5         (i)(k)  Obligations of agencies of the government of

  6  the United States, provided such obligations have been

  7  included in and authorized by the Florida Retirement System

  8  Total Fund Investment Plan established in s. 215.475.

  9         (j)(l)  United States dollar-denominated obligations

10  issued by foreign governments, or political subdivisions or

11  agencies thereof, supranational agencies, or foreign

12  corporations, or foreign commercial entities.

13         (3)  With no more than 80 percent of any fund in common

14  stock, preferred stock, and interest-bearing obligations of a

15  corporation having an option to convert into common stock,

16  provided:

17         (a)  The corporation is organized under the laws of the

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

19  States, or the District of Columbia; or

20         (b)  The corporation is listed on any one or more of

21  the recognized national stock exchanges in the United States

22  and conforms with the periodic reporting requirements under

23  the Securities Exchange Act of 1934.

24         (c)  Not more than 75 50 percent of the fund may be in

25  internally managed common stock.

26

27  The board shall not invest more than 10 percent of the equity

28  assets of any fund in the common stock, preferred stock, and

29  interest-bearing obligations having an option to convert into

30  common stock, of any one issuing corporation; and the board

31  shall not invest more than 3 percent of the equity assets of


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  1  any fund in such securities of any one issuing corporation

  2  except to the extent a higher percentage of the same issue is

  3  included in a nationally recognized market index, based on

  4  market values, at least as broad as the Standard and Poor's

  5  Composite Index of 500 Companies, or except upon a specific

  6  finding by the board that such higher percentage is in the

  7  best interest of the fund. The board may only sell listed

  8  options to reduce investment risk, to improve cash flow, or to

  9  provide alternative means for the purchase and sale of

10  underlying investment securities. Reversing transactions may

11  be made to close out existing option positions.

12         (4)  With no more than 80 percent of any fund, in

13  interest-bearing obligations with a fixed maturity of any

14  corporation or commercial entity within the United States.

15         (5)  With no more than 20 10 percent of any fund in

16  corporate obligations and securities of any kind of a foreign

17  corporation or a foreign commercial entity having its

18  principal office located in any country other than the United

19  States of America or its possessions or territories, not

20  including United States dollar-denominated securities listed

21  and traded on a United States exchange which are a part of the

22  ordinary investment strategy of the board.

23         (6)  With no more than 5 percent of any fund to be

24  invested as deemed appropriate by the board, notwithstanding

25  investment limitations otherwise expressed in this section.

26  Prior to the board engaging in any investment activity not

27  otherwise authorized under ss. 215.44-215.53, excluding

28  investments in publicly traded securities, options, financial

29  futures, or similar instruments, the board shall present to

30  the Investment Advisory Council a proposed plan for such

31  investment. Said plan shall include, but not be limited to,


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  1  the expected benefits and potential risks of such activity;

  2  methods for monitoring and measuring the performance of the

  3  investment; a complete description of the type, nature, extent

  4  and purpose of the investment, including description of

  5  issuer, security in which investment is proposed to be made,

  6  voting rights or lack thereof and control to be acquired,

  7  restrictions upon voting, transfer, and other material rights

  8  of ownership, and the existence of any contracts,

  9  arrangements, understandings, or relationships with any person

10  or entity (naming the same) with respect to the proposed

11  investment; and assurances that sufficient investment

12  expertise is available to the board to properly evaluate and

13  manage such activity. The Investment Advisory Council may

14  obtain independent investment counsel to provide expert advice

15  with regard to such proposed investment activity by the board,

16  and the board shall defray such costs.

17         (7)  For the purpose of determining the above

18  investment limitations, the value of bonds shall be the par

19  value thereof, and the value of evidences of ownership and

20  interest-bearing obligations having an option to convert to

21  ownership shall be the cost thereof.

22         (8)  Investments in any securities authorized by this

23  section may be under repurchase agreements or reverse

24  repurchase agreements.

25         (9)  Investments made by the State Board of

26  Administration shall be designed to maximize the financial

27  return to the fund consistent with the risks incumbent in each

28  investment and shall be designed to preserve an appropriate

29  diversification of the portfolio. The board shall discharge

30  its duties with respect to a plan solely in the interest of

31  its participants and beneficiaries. The board in performing


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  1  the above investment duties shall comply with the fiduciary

  2  standards set forth in the Employee Retirement Income Security

  3  Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A) through (C). In case

  4  of conflict with other provisions of law authorizing

  5  investments, the investment and fiduciary standards set forth

  6  in this subsection shall prevail.

  7         (10)  The board is authorized to buy and sell futures

  8  and options, provided the instruments for such purpose are

  9  traded on a securities exchange or board of trade regulated by

10  the Securities and Exchange Commission or the Commodity

11  Futures Trading Commission, unless the board by rule

12  authorizes a different market.

13         (11)  The board is authorized to invest in domestic or

14  foreign notional principal contracts.

15         (12)  The State Board of Administration, consistent

16  with sound investment policy, may pledge up to 2 percent of

17  the assets of the Florida Retirement System Trust Fund as

18  collateral for housing bonds issued by the State of Florida or

19  its political subdivisions under chapter 159, part V of

20  chapter 420, or chapter 421 as a supplemental income program

21  for the system. With regard to any collateral program, the

22  State Board of Administration is authorized to coordinate or

23  retain other governmental entities of the State of Florida or

24  private entities to administer this program, as well as

25  receive fees for the use of the designated collateral.

26         (13)  The State Board of Administration, consistent

27  with sound investment policy, may invest the earnings accrued

28  and collected upon the investment of the minimum balance of

29  funds required to be maintained in the State Transportation

30  Trust Fund pursuant to s. 339.135(6)(7)(b). Such investment

31  shall be limited as provided in s. 288.9607(7).


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  1         (14)  With no more than 5 percent of any fund in

  2  private equity through participation in limited partnerships

  3  and limited liability companies.

  4         (15)  The State Board of Administration is authorized

  5  to invest in domestic and foreign group trusts.

  6         (16)  Securities or investments purchased or held under

  7  the provisions of this section may be loaned to securities

  8  dealers or financial institutions, provided the loan is

  9  collateralized by cash or securities having a market value of

10  at least 100 percent of the market value of the securities

11  loaned.

12         Section 3.  Section 215.455, Florida Statutes, is

13  repealed.

14         Section 4.  Subsection (4) of section 215.50, Florida

15  Statutes, is amended to read:

16         215.50  Custody of securities purchased; income.--

17         (4)  Securities that the board selects to use for

18  options operations under s. 215.45 or for lending under s.

19  215.47(16) 215.455 shall be registered by the Treasurer in the

20  name of a third-party nominee in order to facilitate such

21  operations.

22         Section 5.  Section 215.515, Florida Statutes, is

23  amended to read:

24         215.515  Investment accounts; charges for services.--

25         (1)  The State Board of Administration shall make

26  reasonable charges for all investment services performed for

27  any agency, the judicial branch, or any fund in accordance

28  with the provisions of ss. 215.44-215.53 or other provisions

29  of law. The agency, fund, or judicial branch shall pay the

30  charges, and such sums as may be necessary for this purpose

31  are hereby appropriated from earnings on investments held by


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  1  such agency, fund, or the judicial branch. The amount to be

  2  paid by each agency, fund, or the judicial branch shall be

  3  determined in such proportion as the service rendered to each

  4  agency, fund, or the judicial branch bears to the total

  5  service rendered to all agencies and funds and the judicial

  6  branch.

  7         (2)  The charges established and any revisions thereof

  8  shall be reviewed by the Department of Management Services.

  9  The review, and any recommendations of the Department of

10  Management Services accompanying the review, may be considered

11  by the board prior to the adoption of the charges or revision

12  thereof by the board.

13         (2)(3)  The State Board of Administration

14  Administrative Expense Trust Fund may be invested by the board

15  to the extent that such investment is consistent with the cash

16  requirements and investment objectives of the board.

17         Section 6.  Section 215.835, Florida Statutes, is

18  amended to read:

19         215.835  Rulemaking authority.--The Division of Bond

20  Finance and the State Board of Administration may adopt rules

21  deemed as it deems necessary to carry out the provisions and

22  intent of this act, including, but not limited to, reporting

23  of debt service accounts.

24         Section 7.  Section 159.825, Florida Statutes, is

25  amended to read:

26         159.825  Terms of bonds.--

27         (1)  The ordinance, resolution, indenture, agreement,

28  or other instrument providing for the issuance of taxable

29  bonds may provide for any of the following:

30         (a)(1)  The bonds shall be in such denominations, in

31  such form, either bearer or registered, and payable at such


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  1  place or places, either within or without the United States,

  2  at such time or times, as, in each case, the governing body

  3  shall determine subject to any limitations on the maturity of

  4  bonds set forth in the statutes under authority of which the

  5  bonds are issued.

  6         (b)(2)  The bonds shall be payable in legal tender of

  7  the United States, in a foreign currency, in commodities, or

  8  in precious metals, as the governing body shall determine.

  9         (c)(3)  The governing body may appoint, in connection

10  with the bond issue, a cotrustee located outside of the

11  boundaries of the United States or its territories or

12  possessions so long as it shall also appoint a trustee

13  otherwise meeting the requirements of the statutes under

14  authority of which the bonds are issued. The governing body

15  may appoint, in connection with the bond issue, a paying agent

16  or a copaying agent located outside the boundaries of the

17  United States or its territories or possessions.

18         (d)(4)  Bonds shall bear interest at a rate not to

19  exceed an average net interest cost rate, which shall be

20  computed by adding 500 basis points to the 30-year Treasury

21  Bond yield published in The Bond Buyer immediately preceding

22  the first day of the calendar month in which the bonds are

23  sold. If the interest rate on bonds bearing a floating or

24  variable rate of interest as calculated on the date of the

25  initial sale thereof does not exceed the limitation provided

26  by this paragraph section, so long as the basis, method, or

27  formula for computing the floating or variable rate does not

28  change during the life of the bonds, subsequent increases in

29  the interest rate in accordance with said basis, method, or

30  formula shall not cause the interest rate on the bonds to

31  violate the limitation provided by this paragraph subsection.


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  1  A certificate by the issuer of the bonds as to the computation

  2  of the interest rate in compliance with this requirement shall

  3  be deemed conclusive evidence of compliance with the

  4  provisions of this paragraph subsection. Such maximum rate

  5  does not apply to bonds rated by a nationally recognized

  6  rating service in any one of the three highest

  7  classifications, which rating services and classifications are

  8  determined pursuant to rules adopted by the State Board of

  9  Administration.

10         (e)(5)  Upon the request of a governmental unit, the

11  State Board of Administration may authorize, for a specific

12  issue or reissue of bonds, a rate of interest in excess of the

13  maximum rate prescribed in paragraph (d) subsection (4). The

14  governmental unit shall provide in its request:

15         1.(a)  Relevant supporting data which shall include,

16  but not be limited to:

17         a.1.  The official statement or prospectus, if

18  available, or similar information relating to the sale of the

19  bonds;

20         b.2.  The resolution or ordinance authorizing the

21  issuance of the bonds;

22         c.3.  Financial data relating to anticipated revenue,

23  debt service, and coverage; and

24         d.4.  The most recent financial statement of the

25  governmental unit.

26         2.(b)  Information relating to sale of the bonds,

27  including the amount of the discount, if any. In making the

28  determination to exceed the maximum interest rate, the State

29  Board of Administration shall consider, but not be limited to

30  considering, comparable sales of other taxable bonds of other

31  governmental units and evidence that the objectives and intent


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                                  CS/HB 3661, Second Engrossed/ntc



  1  of the issuing of such bonds will be realized. This

  2  subparagraph paragraph shall not apply to:

  3         a.1.  Bonds which have been sold prior to June 30,

  4  1987, and which are delivered pursuant to said sale on or

  5  after June 30, 1987.

  6         b.2.  Bonds issued to finance projects under part II,

  7  part III, or part V of this chapter or health facilities under

  8  part III of chapter 154.

  9         c.3.  Limit or restrict the rate of interest on bonds

10  or other obligations of municipal utilities or agencies

11  thereof issued or made pursuant to authority provided in part

12  II of chapter 166 and s. 215.431.

13         (f)(6)  In connection with, or incidental to, the sale

14  and issuance of bonds, the governmental unit may enter into

15  any contracts which the governing body determines to be

16  necessary or appropriate to achieve a desirable effective

17  interest rate in connection with the bonds by means of, but

18  not limited to, contracts commonly known as investment

19  contracts, funding agreements, interest rate swap agreements,

20  currency swap agreements, forward payment conversion

21  agreements, futures, or contracts providing for payments based

22  on levels of or changes in interest rates, or contracts to

23  exchange cash flows or a series of payments, or contracts,

24  including, without limitation, options, puts, or calls to

25  hedge payment, rate, spread, or similar exposure. Such

26  contracts or arrangements may also be entered into by

27  governmental units in connection with, or incidental to,

28  entering into any agreement which secures bonds or provides

29  liquidity therefor. Such contracts and arrangements shall be

30  made upon the terms and conditions established by the

31  governing body, after giving due consideration for the credit


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  1  worthiness of the counterparties, where applicable, including

  2  any rating by a nationally recognized rating service or any

  3  other criteria as may be appropriate.

  4         (g)(7)  In connection with, or incidental to, the sale

  5  and issuance of the bonds, or entering into any of the

  6  contracts or arrangements referred to in paragraph (f)

  7  subsection (6), the governmental unit may enter into such

  8  credit enhancement or liquidity agreements, with such payment,

  9  interest rate, security, default, remedy, and other terms and

10  conditions as the governing body shall determine.

11         (h)(8)  Notwithstanding any provisions of state law

12  relating to the investment or reinvestment of surplus funds of

13  any governmental unit, proceeds of the bonds and any moneys

14  set aside or pledged to secure payment of the principal of,

15  premium, if any, and interest on the bonds, or any of the

16  contracts entered into pursuant to paragraph (f) subsection

17  (6), may be invested in securities or obligations described in

18  the ordinance or resolution providing for the issuance of the

19  bonds.

20         (2)  The State Board of Administration may adopt rules

21  as it deems necessary to carry out the provisions of this

22  section relating to interest rate waivers for the sale of

23  taxable bonds.

24         Section 8.  Subsection (2) of section 190.016, Florida

25  Statutes, is amended to read:

26         190.016  Bonds.--

27         (2)  AUTHORIZATION AND FORM OF BONDS.--Any general

28  obligation bonds, benefit bonds, or revenue bonds may be

29  authorized by resolution or resolutions of the board which

30  shall be adopted by a majority of all the members thereof then

31  in office. Such resolution or resolutions may be adopted at


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  1  the same meeting at which they are introduced and need not be

  2  published or posted. The board may, by resolution, authorize

  3  the issuance of bonds and fix the aggregate amount of bonds to

  4  be issued; the purpose or purposes for which the moneys

  5  derived therefrom shall be expended, including, but not

  6  limited to, payment of costs as defined in s. 190.003(7); the

  7  rate or rates of interest, in compliance with s. 215.84; the

  8  denomination of the bonds; whether or not the bonds are to be

  9  issued in one or more series; the date or dates of maturity,

10  which shall not exceed 40 years from their respective dates of

11  issuance; the medium of payment; the place or places within or

12  without the state where payment shall be made; registration

13  privileges; redemption terms and privileges, whether with or

14  without premium; the manner of execution; the form of the

15  bonds, including any interest coupons to be attached thereto;

16  the manner of execution of bonds and coupons; and any and all

17  other terms, covenants, and conditions thereof and the

18  establishment of revenue or other funds. Such authorizing

19  resolution or resolutions may further provide for the

20  contracts authorized by s. 159.825(1)(f) and (g) (6) and (7)

21  regardless of the tax treatment of such bonds being

22  authorized, subject to the finding by the board of a net

23  saving to the district resulting by reason thereof. Such

24  authorizing resolution may further provide that such bonds may

25  be executed in accordance with the Registered Public

26  Obligations Act, except that bonds not issued in registered

27  form shall be valid if manually countersigned by an officer

28  designated by appropriate resolution of the board. The seal of

29  the district may be affixed, lithographed, engraved, or

30  otherwise reproduced in facsimile on such bonds. In case any

31  officer whose signature shall appear on any bonds or coupons


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  1  shall cease to be such officer before the delivery of such

  2  bonds, such signature or facsimile shall nevertheless be valid

  3  and sufficient for all purposes the same as if he or she had

  4  remained in office until such delivery.

  5         Section 9.  Subsection (1) of section 218.407, Florida

  6  Statutes, is amended to read:

  7         218.407  Local government investment authority.--

  8         (1)  Upon determination by the governing body that it

  9  is in the interest of the unit of local government to deposit

10  surplus funds in the trust fund, a resolution by the governing

11  body shall be filed with the State Board of Administration

12  authorizing investment of its surplus funds in the trust fund

13  established by this part. The resolution shall name:

14         (a)  The local government official, who may be the

15  chief financial or administrative officer of the local

16  government, or

17         (b)  An independent trustee holding funds on behalf of

18  the unit of local government,

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20  responsible for deposit and withdrawal of such funds and shall

21  state the approximate cash-flow requirements of the local

22  government for the surplus funds to be invested.

23         Section 10.  Subsection (4) of section 235.187, Florida

24  Statutes, is amended to read:

25         235.187 Classrooms First Program; uses.--

26         (4) Bonds issued under this section must be validated

27  as prescribed by chapter 75.  The complaint for the validation

28  must be filed in the circuit court of the county where the

29  seat of state government is situated; the notice required to

30  be published by s. 75.06 must be published only in the county

31  where the complaint is filed; and the complaint and order of


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  1  the circuit court must be served only on the state attorney of

  2  the circuit in which the action is pending.  The state

  3  covenants with holders of bonds issued under this section that

  4  it will not take any action that will materially and adversely

  5  affect the rights of such holders so long as such bonds are

  6  outstanding.  The state does hereby additionally authorize the

  7  establishment of a covenant in connection with the bonds which

  8  provides that any additional funds received by the state from

  9  new or enhanced lottery programs, video gaming, or other

10  similar activities will first be available for payments

11  relating to bonds pledging revenues available pursuant to s.

12  24.121(2), prior to use for any other purpose.

13         Section 11.  Subsection (1) of section 235.2195,

14  Florida Statutes, is amended to read:

15         235.2195  The 1997 School Capital Outlay Bond

16  Program.--There is hereby established the 1997 School Capital

17  Outlay Bond program.

18         (1)  The issuance of revenue bonds payable from the

19  first lottery revenues transferred to the Educational

20  Enhancement Trust Fund each fiscal year, as provided by s.

21  24.121(2), is authorized to finance or refinance the

22  construction, acquisition, reconstruction, or renovation of

23  educational facilities.  Such bonds shall be issued pursuant

24  to and in compliance with the provisions of s. 11(d), Art. VII

25  of the State Constitution, the provisions of the State Bond

26  Act, ss.215.57-215.83, as amended, and the provisions of this

27  section.  The state does hereby covenant with the holders of

28  such revenue bonds that it will not take any action which will

29  materially and adversely affect the rights of such holders so

30  long as bonds authorized by this section are outstanding.  The

31  state does hereby additionally authorize the establishment of


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  1  a covenant in connection with the bonds which provides that

  2  any additional funds received by the state from new or

  3  enhanced lottery programs, video gaming, or other similar

  4  activities will first be available for payments relating to

  5  bonds pledging revenues available pursuant to s. 24.121(2),

  6  prior to use for any other purpose.

  7         Section 12.  Section 218.412, Florida Statutes, is

  8  created to read:

  9         218.412  Rulemaking authority.--The State Board of

10  Administration may adopt rules as it deems necessary to carry

11  out the provisions of this part for the administration of the

12  Local Government Surplus Funds Trust Fund.

13         Section 13.  Section 413.0115, Florida Statutes, is

14  created to read:

15         413.0115  State Board of Administration; authorization

16  to invest division's portfolio.--The State Board of

17  Administration may invest and reinvest the portfolio of

18  stocks, bonds, and mutual funds held by the Division of Blind

19  Services in accordance with the trust agreement approved by

20  the Division of Blind Services and the State Board of

21  Administration and the provisions of ss. 215.44-215.53. The

22  director of the Division of Blind Services shall make the

23  portfolio available and shall transfer it to the State Board

24  of Administration for investment.

25         Section 14.  After considering relevant factors in

26  providing the most cost effective plan for financing public

27  school construction and in order to minimize amounts paid in

28  interest on lottery revenue bonds issued pursuant to chapter

29  97-384, Laws of Florida, it is desirable that the final

30  maturity of any such bonds not exceed 20 years, even though

31  such limitation on maturity may require an increase in the


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                                  CS/HB 3661, Second Engrossed/ntc



  1  maximum annual appropriation to reach the desired level of

  2  funding for public school construction.

  3         Section 15.  This act shall take effect upon becoming a

  4  law.

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