House Bill 1885e1

CODING: Words stricken are deletions; words underlined are additions.







                                          HB 1885, First Engrossed



  1                      A bill to be entitled

  2         An act relating to trust funds; creating s.

  3         215.5601, F.S.; creating the Lawton Chiles

  4         Endowment Fund for Children and Elders;

  5         providing definitions; providing legislative

  6         intent; specifying the purposes and uses of

  7         endowment funds; providing for administration

  8         of the endowment by the State Board of

  9         Administration; providing for the availability

10         of endowment funds; providing appropriations;

11         providing for management of moneys in the

12         endowment as an annuity; amending s. 215.52,

13         F.S.; providing rulemaking authority; providing

14         an effective date.

15

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

17

18         Section 1.  Section 215.5601, Florida Statutes, is

19  created to read:

20         215.5601  Lawton Chiles Endowment Fund for Children and

21  Elders.--

22         (1)  SHORT TITLE.--This section may be cited as the

23  "Lawton Chiles Endowment Fund for Children and Elders Act."

24         (2)  DEFINITIONS.--As used in this section:

25         (a)  "Board" means the State Board of Administration

26  established by s. 16, Art. IX of the State Constitution of

27  1885, as amended, and incorporated into s. 9(c), Art. XII of

28  the State Constitution of 1968, as amended.

29         (b)  "Endowment" means the Lawton Chiles Endowment Fund

30  for Children and Elders.

31


                                  1

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1885, First Engrossed



  1         (c)  "Earnings" means all income generated by

  2  investments and the net change in the market value of assets.

  3         (d)  "State agency" or "state agencies" means the

  4  Department of Health, the Department of Children and Family

  5  Services, the Department of Elderly Affairs, or the Agency for

  6  Health Care Administration, or any combination thereof, as the

  7  context indicates.

  8         (3)  LEGISLATIVE INTENT.--It is the intent of the

  9  Legislature to:

10         (a)  Provide a perpetual source of funding for the

11  future of the state children's health insurance program

12  created in ss. 409.810-409.820, child welfare programs, and

13  community-based service initiatives for the elderly.

14         (b)  Ensure that enhancement revenues will be available

15  to finance these important initiatives.

16         (c)  Use tobacco settlement moneys to ensure the

17  financial health of vital children's and elders' programs.

18         (d)  Encourage the development of community-based

19  solutions to strengthen and improve the quality of life of

20  Florida's children and elders.

21         (4)  LAWTON CHILES ENDOWMENT FUND FOR CHILDREN AND

22  ELDERS; CREATION; PURPOSES AND USES.--

23         (a)  There is created the Lawton Chiles Endowment Fund

24  for Children and Elders, to be administered by the State Board

25  of Administration. The endowment shall serve as a clearing

26  trust fund not subject to termination pursuant to s. 19(f),

27  Art. III of the State Constitution and shall be funded by

28  settlement moneys received from the tobacco industry. The

29  endowment fund shall be exempt from the service charges

30  imposed by s. 215.20.

31


                                  2

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1885, First Engrossed



  1         (b)  Funds from the endowment shall be distributed by

  2  the board to trust funds of the state agencies in the amounts

  3  indicated by reference to the legislative appropriations for

  4  the state agencies.

  5         (c)  The state agencies shall use the funds from the

  6  endowment to enhance or support increases in clients served or

  7  in program costs for the state children's health insurance

  8  program created in ss. 409.810-409.820, child welfare

  9  programs, and community-based service initiatives for the

10  elderly.

11         (d)  The Secretary of Health, the Secretary of Children

12  and Family Services, the Secretary of Elderly Affairs, and the

13  Director of Health Care Administration shall conduct meetings

14  to discuss program priorities for endowment funding prior to

15  submitting their budget requests to the Executive Office of

16  the Governor and the Legislature. The purpose of the meetings

17  shall be to gain consensus for priority requests and

18  recommended endowment funding levels for those priority

19  requests. An agency head may not designate a proxy for these

20  meetings.

21         (e)  Funds from the endowment may not be used to

22  supplant existing revenues.

23         (5)  ADMINISTRATION OF THE ENDOWMENT.--

24         (a)  The board is authorized to invest and reinvest

25  funds of the endowment in those securities listed in s.

26  215.47, in accordance with the fiduciary standards set forth

27  in s. 215.47(9) and consistent with an investment plan

28  developed by the executive director and approved by the board.

29  Costs and fees of the board for investment services shall be

30  deducted from the endowment.

31


                                  3

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1885, First Engrossed



  1         (b)  Funds available from the endowment for

  2  distribution by the board shall only be earnings received on

  3  the endowment and reversions to principal. The original

  4  principal deposited in the endowment from the tobacco

  5  settlement for fiscal years 1999-2000 through 2002-2003, as

  6  provided in subsection (7), shall not be available for

  7  appropriation or distribution.

  8         (c)  The board shall design and operate an investment

  9  portfolio that maximizes the financial return to the

10  endowment, consistent with the risks inherent in each

11  investment, and that is designed to preserve an appropriate

12  diversification of the portfolio.

13         (d)  No later than February 15, 2000, the board shall

14  report on the financial status of the endowment to the

15  Governor, the President of the Senate, the Speaker of the

16  House of Representatives, the chairs of the respective

17  appropriations and applicable substantive committees of each

18  house of the Legislature, and the Revenue Estimating

19  Conference. Thereafter, the board shall make a status report

20  to such persons no later than August 15 and February 15 of

21  each year.

22         (e)  Accountability for funds from the endowment that

23  have been appropriated to a state agency and distributed by

24  the board shall reside with the state agency. The board is not

25  responsible for the proper expenditure or accountability of

26  funds from the endowment after distribution to a state agency.

27         (f)  The board may collect a fee for service from the

28  endowment no greater than that charged to the Florida

29  Retirement System.

30         (6)  AVAILABILITY OF FUNDS.--

31


                                  4

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1885, First Engrossed



  1         (a)  Funds from the endowment shall not be available

  2  for appropriation to a state agency until July 1, 2000.

  3  Beginning July 1, 2000, the maximum annual amount of endowment

  4  funds that may be appropriated shall be in accordance with the

  5  following, based on earnings averaged over 3 years:

  6         1.  Beginning July 1, 2000, no more than a level of

  7  spending representing earnings at a rate of 3 percent.

  8         2.  Beginning July 1, 2001, no more than a level of

  9  spending representing earnings at a rate of 4 percent.

10         3.  Beginning July 1, 2002, no more than a level of

11  spending representing earnings at a rate of 5 percent.

12         4.  Beginning July 1, 2003, and thereafter, no more

13  than a level of spending representing earnings at a rate of 6

14  percent.

15         (b)  Any earnings in excess of the amounts appropriated

16  in a given year shall remain part of the endowment.

17         (c)  If the earnings are insufficient to provide for

18  the appropriations specified in paragraph (a), then the

19  distribution of endowment funds to the state agencies shall be

20  an amount of the appropriations reduced on a pro rata basis.

21         (d)  Notwithstanding the provisions of s. 216.301 and

22  pursuant to s. 216.351, all unencumbered balances of

23  appropriations as of June 30 or undisbursed balances as of

24  December 31 shall revert to the endowment.

25         (7)  ENDOWMENT PRINCIPAL.--The following amounts are

26  appropriated from the Department of Banking and Finance

27  Tobacco Settlement Clearing Trust Fund to the Lawton Chiles

28  Endowment Fund for Children and Elders and shall constitute

29  the original principal of the endowment:

30         (a)  For fiscal year 1999-2000, $1,099,900,000.

31         (b)  For fiscal year 2000-2001, $297,700,000.


                                  5

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1885, First Engrossed



  1         (c)  For fiscal year 2001-2002, $383,100,000.

  2         (d)  For fiscal year 2002-2003, $151,400,000.

  3         (8)  ANNUITY.--Notwithstanding the provisions of

  4  paragraph (5)(c) and subsection (6), moneys in the endowment

  5  may be managed as an annuity. Under this option, the

  6  investment objective shall be long-term preservation of the

  7  real value of the original principal and a specified regular

  8  annual cash outflow for appropriation. The schedule of annual

  9  cash outflow shall be included within the investment plan

10  adopted pursuant to paragraph (5)(a).

11         Section 2.  Section 215.52, Florida Statutes, is

12  amended to read:

13         215.52  Rules and regulations.--The board shall have

14  the power and authority to adopt make reasonable rules and

15  regulations necessary to implement carry out the provisions of

16  ss. 215.44-215.53 and 215.5601.

17         Section 3.  This act shall take effect July 1, 1999.

18

19

20

21

22

23

24

25

26

27

28

29

30

31


                                  6