Senate Bill 1992e1

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    CS for SB 1992                                 First Engrossed



  1                      A bill to be entitled

  2         An act relating to investment of public funds;

  3         amending s. 218.415, F.S.; prescribing

  4         guidelines for investments by units of local

  5         government; providing for authorized

  6         investments; prohibiting investments not

  7         authorized by local investment policy;

  8         providing for continuing education for local

  9         officials responsible for making investments;

10         prescribing a list of authorized investments;

11         providing alternative investment guidelines for

12         entities not adopting a written investment

13         policy; providing for safeguarding securities;

14         authorizing the sale of investments; providing

15         for investment of funds when made pursuant to

16         agreement or contract; providing for preemption

17         of state requirements; prescribing duties of

18         accountants and the Auditor General; amending

19         s. 112.625, F.S.; revising definitions and

20         defining terms; creating s. 112.661, F.S.;

21         prescribing guidelines for investments by

22         retirement systems or plans; providing for

23         authorized investments; prohibiting investments

24         not authorized by investment policy; providing

25         for continuing education for officials

26         responsible for making investments; providing

27         for the filing of the investment policy with

28         the Division of Retirement, the plan's sponsor,

29         and the consulting actuary; providing for the

30         valuation of illiquid investments; amending s.

31         28.33, F.S.; prescribing requirements for


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    CS for SB 1992                                 First Engrossed



  1         investment of county funds; amending s.

  2         159.416, F.S.; prescribing requirements for

  3         investment of bond proceeds and moneys held for

  4         payment of debt service on bonds; amending s.

  5         219.075, F.S.; prescribing requirements for

  6         investment of surplus funds by county officers;

  7         amending s. 230.23, F.S.; prescribing

  8         requirements for investment of school funds not

  9         needed for immediate expenditure; amending s.

10         236.24, F.S.; deleting provisions relating to

11         authorized investment of district school fund

12         moneys; amending s. 163.01, F.S.; authorizing a

13         local government self-insurance fund to

14         guarantee bonds; repealing s. 237.161(5), F.S.,

15         relating to investment of cash assets by school

16         boards; repealing s. 230.23(10)(k), F.S.,

17         relating to investment policies of district

18         school boards; repealing s. 125.31, F.S.,

19         relating to investment of surplus public funds

20         by counties; repealing s. 166.261, F.S.,

21         relating to investments by municipalities;

22         repealing s. 218.345, F.S., relating to

23         investments by special districts; providing an

24         effective date.

25

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

27

28         Section 1.  Section 218.415, Florida Statutes, is

29  amended to read:

30         218.415  Local government investment

31  policies.--Investment activity by a unit of local government


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    CS for SB 1992                                 First Engrossed



  1  must be consistent with a written investment plan adopted by

  2  the governing body, or in the absence of the existence of a

  3  governing body, the respective principal officer of the unit

  4  of local government and maintained by the unit of local

  5  government or, in the alternative, such activity must be

  6  conducted in accordance with the investment guidelines set

  7  forth in subsection (17) (15).  Any such unit of local

  8  government shall have an investment policy for any public

  9  funds in excess of the amounts needed to meet current expenses

10  as provided in subsections (1)-(16) (1)-(14), or shall meet

11  the alternative investment guidelines contained in subsection

12  (17) (15). Such policies shall be structured to place the

13  highest priority on the safety of principal and liquidity of

14  funds. The optimization of investment returns shall be

15  secondary to the requirements for safety and liquidity.  Each

16  unit of local government shall adopt policies that are

17  commensurate with the nature and size of the public funds

18  within their custody.

19         (1)  SCOPE.--The investment policy shall apply to funds

20  under the control of the unit of local government in excess of

21  those required to meet current expenses. The investment policy

22  shall not apply to pension funds, including those funds in

23  chapters 175 and 185; trust funds; or funds related to the

24  issuance of debt where there are other existing policies or

25  indentures in effect for such funds.

26         (2)  INVESTMENT OBJECTIVES.--The investment policy

27  shall describe the investment objectives of the unit of local

28  government. Investment objectives shall include safety of

29  capital, liquidity of funds, and investment income, in that

30  order.

31


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    CS for SB 1992                                 First Engrossed



  1         (3)  PERFORMANCE MEASUREMENT.--The investment policy

  2  unit of local government shall specify develop performance

  3  measures as are appropriate for the nature and size of the

  4  public funds within its custody.

  5         (4)  PRUDENCE AND ETHICAL STANDARDS.--The investment

  6  policy shall describe the level of prudence and ethical

  7  standards to be followed by the unit of local government in

  8  carrying out its investment activities with respect to funds

  9  described in this section.  The unit of local government shall

10  adopt the Prudent Person Rule, which states that: "Investments

11  should be made with judgment and care, under circumstances

12  then prevailing, which persons of prudence, discretion, and

13  intelligence exercise in the management of their own affairs,

14  not for speculation, but for investment, considering the

15  probable safety of their capital as well as the probable

16  income to be derived from the investment."

17         (5)  LISTING OF AUTHORIZED INVESTMENTS.--The investment

18  policy shall list investments authorized by the governing body

19  of the unit of local government, subject to the provisions of

20  subsection (16) investments. Investments not listed in the

21  investment policy are prohibited. If the policy authorizes

22  investments in derivative products, such policy must require

23  that must be specifically authorized in the investment plan

24  and may be considered only if the unit of local government's

25  officials responsible for making investment decisions have

26  chief financial officer has developed sufficient understanding

27  of the derivative products and have has the expertise to

28  manage them.  For purposes of this subsection, a "derivative"

29  is defined as a financial instrument the value of which

30  depends on, or is derived from, the value of one or more

31  underlying assets or index or asset values. If the policy


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    CS for SB 1992                                 First Engrossed



  1  authorizes investments in The use of reverse repurchase

  2  agreements or other forms of leverage, the policy must limit

  3  the investments shall be prohibited or limited by investment

  4  policy to transactions in which where the proceeds are

  5  intended to provide liquidity and for which the unit of local

  6  government has sufficient resources and expertise.

  7         (6)  MATURITY AND LIQUIDITY REQUIREMENTS.--The

  8  investment policy shall require that the investment portfolio

  9  is structured in such manner as to provide sufficient

10  liquidity to pay obligations as they come due. To that end,

11  the investment policy should direct that, to the extent

12  possible, an attempt will be made to match investment

13  maturities with known cash needs and anticipated cash-flow

14  requirements.

15         (7)  PORTFOLIO COMPOSITION.--The investment policy

16  shall establish guidelines for investments and limits on

17  security issues, issuers, and maturities.  Such guidelines

18  shall be commensurate with the nature and size of the public

19  funds within the custody of the unit of local government.

20         (8)  RISK AND DIVERSIFICATION.--The investment policy

21  shall provide for appropriate diversification of the

22  investment portfolio. Investments held should be diversified

23  to the extent practicable to control the risk of loss

24  resulting from overconcentration of assets in a specific

25  maturity, issuer, instrument, dealer, or bank through which

26  financial instruments are bought and sold.  Diversification

27  strategies within the established guidelines shall be reviewed

28  and revised periodically, as deemed necessary by the

29  appropriate management staff.

30         (9)  AUTHORIZED INVESTMENT INSTITUTIONS AND

31  DEALERS.--The investment policy should specify the authorized


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    CS for SB 1992                                 First Engrossed



  1  securities dealers, issuers, and banks from whom the unit of

  2  local government may purchase securities.

  3         (10)  THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment

  4  policy shall provide appropriate arrangements for the holding

  5  of assets of the unit of local government.  Securities should

  6  be held with a third party; and all securities purchased by,

  7  and all collateral obtained by, the unit of local government

  8  should be properly designated as an asset of the unit of local

  9  government. No withdrawal of securities, in whole or in part,

10  shall be made from safekeeping, except by an authorized staff

11  member of the unit of local government.  Securities

12  transactions between a broker-dealer and the custodian

13  involving purchase or sale of securities by transfer of money

14  or securities must be made on a "delivery vs. payment" basis,

15  if applicable, to ensure that the custodian will have the

16  security or money, as appropriate, in hand at the conclusion

17  of the transaction.

18         (11)  MASTER REPURCHASE AGREEMENT.--The investment

19  policy unit of local government shall require all approved

20  institutions and dealers transacting repurchase agreements to

21  execute and perform as stated in the Master Repurchase

22  Agreement. All repurchase agreement transactions shall adhere

23  to the requirements of the Master Repurchase Agreement.

24         (12)  BID REQUIREMENT.--The investment policy shall

25  require that the unit of local government's staff determine

26  the approximate maturity date based on cash-flow needs and

27  market conditions, analyze and select one or more optimal

28  types of investment, and competitively bid the security in

29  question when feasible and appropriate. Except as otherwise

30  required by law, the most economically advantageous bid must

31  be selected After the unit of local government staff has


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    CS for SB 1992                                 First Engrossed



  1  determined the approximate maturity date based on cash-flow

  2  needs and market conditions and has analyzed and selected one

  3  or more optimal types of investment, the security in question

  4  shall, when feasible and appropriate, be competitively bid.

  5         (13)  INTERNAL CONTROLS.--The investment policy shall

  6  provide for a system of internal controls and operational

  7  procedures.  The unit of local government's officials

  8  responsible for making investment decisions chief financial

  9  officer shall, by January 1, 1996, establish a system of

10  internal controls which shall be in writing and made a part of

11  the governmental entity's operational procedures.  The

12  investment policy shall provide for review of such controls by

13  independent auditors as part of any financial audit

14  periodically required of the unit of local government.  The

15  internal controls should be designed to prevent losses of

16  funds which might arise from fraud, employee error,

17  misrepresentation by third parties, or imprudent actions by

18  employees of the unit of local government.

19         (14)  CONTINUING EDUCATION.--The investment policy

20  shall provide for the continuing education of the unit of

21  local government's officials responsible for making investment

22  decisions. Such officials must annually complete 8 hours of

23  continuing education in subjects or courses of study related

24  to investment practices and products.

25         (15)(14)  REPORTING.--The investment policy shall

26  provide for appropriate annual or more frequent reporting of

27  investment activities.  To that end, the governmental entity's

28  officials responsible for making investment decisions chief

29  financial officer shall prepare periodic reports for

30  submission to the legislative and governing body of the unit

31  of local government, which shall include securities in the


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    CS for SB 1992                                 First Engrossed



  1  portfolio by class or type, book value, income earned, and

  2  market value as of the report date. Such reports shall be

  3  available to the public.

  4         (16)  AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT

  5  POLICIES.--Those units of local government electing to adopt a

  6  written investment policy as provided in subsections (1)-(15)

  7  may by resolution invest and reinvest any surplus public funds

  8  in their control or possession in:

  9         (a)  The Local Government Surplus Funds Trust Fund or

10  any intergovernmental investment pool authorized pursuant to

11  the Florida Interlocal Cooperation Act as provided in s.

12  163.01.

13         (b)  Securities and Exchange Commission registered

14  money market funds with the highest credit quality rating from

15  a nationally recognized rating agency.

16         (c)  Savings accounts in, or certificates of deposit

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

18  that is incorporated under the laws of this state or organized

19  under the laws of the United States, and that is doing

20  business in and is situated in this state, and whose accounts

21  are insured by the Federal Government or an agency thereof,

22  provided that such savings accounts and certificates of

23  deposit are secured in the manner prescribed in chapter 280.

24         (d)  Direct obligations of the United States Treasury.

25         (e)  Federal agencies and instrumentalities.

26         (f)  Securities of, or other interests in, any open-end

27  or closed-end management-type investment company or investment

28  trust registered under the Investment Company Act of 1940, 15

29  U.S.C. ss. 80a-1 et seq., as amended from time to time,

30  provided that the portfolio of such investment company or

31  investment trust is limited to obligations of the United


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    CS for SB 1992                                 First Engrossed



  1  States Government or any agency or instrumentality thereof and

  2  to repurchase agreements fully collateralized by such United

  3  States Government obligations, and provided that such

  4  investment company or investment trust takes delivery of such

  5  collateral either directly or through an authorized custodian.

  6         (g)  Other investments authorized by law or by

  7  ordinance.

  8         (17)(15)  AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT

  9  POLICY ALTERNATIVE INVESTMENT GUIDELINES.--Those units of

10  local government electing not to adopt a written investment

11  policy in accordance with investment policies developed as

12  provided in subsections (1)-(15) may invest or reinvest any

13  surplus public funds in their control or possession in: In

14  addition to or in lieu of establishing a written investment

15  plan in accordance with investment policies developed pursuant

16  to subsections (1)-(14), a unit of local government electing

17  to conduct investment activity outside the framework provided

18  by this part shall do so under the guidelines set forth in

19  this section.  The unit of local government may invest in the

20  following instruments and may divest itself of such

21  investments, at prevailing market prices or rates, subject to

22  the limitations of this section:

23         (a)  The Local Government Surplus Funds Trust Fund, or

24  any intergovernmental investment pool authorized pursuant to

25  the Florida Interlocal Cooperation Act, as provided in s.

26  163.01.

27         (b)  Securities and Exchange Commission registered

28  money market funds with the highest credit quality rating from

29  a nationally recognized rating agency.

30         (c)  Savings accounts, or certificates of deposit of,

31  any bank, savings bank, or savings and loan association that


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    CS for SB 1992                                 First Engrossed



  1  is incorporated under the laws of this state or organized

  2  under the laws of the United States, that is doing business

  3  and is situated in this state, and whose accounts are insured

  4  by the Federal Government or an agency thereof, provided that

  5  such savings accounts and certificates of deposit are secured

  6  in the manner prescribed in chapter 280 in state-certified

  7  qualified public depositories, as defined in s. 280.02.

  8         (d)  Certificates of deposit in state-certified

  9  qualified public depositories, as defined in s. 280.02.

10         (d)(e)  Direct obligations of the U.S. Treasury.

11         (f)  Federal agencies and instrumentalities.

12

13  The securities listed in paragraphs (c) and, (d), (e), and (f)

14  shall be invested to provide sufficient liquidity to pay

15  obligations as they come due match investment maturities with

16  current expenses.

17         (18)  SECURITIES; DISPOSITION.--

18         (a)  Every security purchased under this section on

19  behalf of the governing body of a unit of local government

20  must be properly earmarked and:

21         1.  If registered with the issuer or its agents, must

22  be immediately placed for safekeeping in a location that

23  protects the governing body's interest in the security;

24         2.  If in book entry form, must be held for the credit

25  of the governing body by a depository chartered by the Federal

26  Government, the state, or any other state or territory of the

27  United States which has a branch or principal place of

28  business in this state as defined in s. 658.12, or by a

29  national association organized and existing under the laws of

30  the United States of America which is authorized to accept and

31  execute trusts and which is doing business in this state, and


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    CS for SB 1992                                 First Engrossed



  1  must be kept by the depository in an account separate and

  2  apart from the assets of the financial institution; or

  3         3.  If physically issued to the holder but not

  4  registered with the issuer or its agents, must be immediately

  5  placed for safekeeping in a secured vault in a financial

  6  institution in this state which maintains adequate secured

  7  vault insurance.

  8         (b)  The unit of local government's governing body may

  9  also receive bank trust receipts in return for investment of

10  surplus funds in securities. Any trust receipts received must

11  enumerate the various securities held, together with the

12  specific number of each security held. The actual securities

13  on which the trust receipts are issued may be held by any bank

14  depository chartered by the Federal Government, this state, or

15  any other state or territory of the United States, which has a

16  branch or principal place of business in this state as defined

17  in s. 658.12, or by a national association organized and

18  existing under the laws of the United States of America which

19  is authorized to accept and execute trusts and which is doing

20  business in this state as defined by s. 658.12.

21         (19)  SALE OF SECURITIES.--When the invested funds are

22  needed in whole or in part for the purposes originally

23  intended, the unit of local government's governing body may

24  sell such investments at the then-prevailing market price and

25  place the proceeds into the proper account or fund of the unit

26  of local government.

27         (20)  PREEXISTING CONTRACT.--Any public funds subject

28  to a contract or agreement existing on October 1, 1999, may

29  not be invested contrary to such contract or agreement.

30         (21)  PREEMPTION.--Any word, sentence, phrase, or

31  provision of any special act, municipal charter, or other law


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    CS for SB 1992                                 First Engrossed



  1  which prohibits or restricts a local governmental entity from

  2  complying with this section or any rules adopted under this

  3  section is void to the extent of the conflict.

  4         (22)  AUDITS.--Certified public accountants conducting

  5  audits of units of local government pursuant to s. 11.45 shall

  6  report, as part of the audit, whether or not the unit of local

  7  government has complied with s. 218.415.

  8         (23)  AUDITOR GENERAL; REVIEW.--During the Auditor

  9  General's review of audit reports of units of local

10  government, the Auditor General shall notify the Joint

11  Legislative Auditing Committee of any unit of local government

12  not in compliance with this section. Following notification of

13  failure by a local government to comply with s. 218.415, a

14  hearing may be scheduled by the committee. If a hearing is

15  scheduled, the committee shall determine which units of local

16  government will be subjected to further state action. If the

17  committee finds that one or more units of local government

18  should be subjected to further state action, the committee

19  shall:

20         (a)  In the case of a county, municipality, or district

21  school board, request the Department of Revenue and the

22  Department of Banking and Finance to withhold any funds

23  payable to such entity until the entity has complied with this

24  section.

25         (b)  In the case of a special district, notify the

26  Department of Community Affairs that the special district has

27  failed to comply with this section. Upon receipt of

28  notification, the Department of Community Affairs shall

29  proceed pursuant to the provisions specified in ss. 189.421

30  and 189.422.

31


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    CS for SB 1992                                 First Engrossed



  1         Section 2.  Subsections (7) and (8) of section 112.625,

  2  Florida Statutes, are amended, and subsection (9) is added to

  3  that section, to read:

  4         112.625  Definitions.--As used in this act:

  5         (7)  "Statement value" means the value of assets in

  6  accordance with s. 302(c)(2) of the Employee Retirement Income

  7  Security Act of 1974 and as permitted under regulations

  8  prescribed by the Secretary of the Treasury. Assets for which

  9  a fair market value is not provided shall be excluded from the

10  assets used in the determination of annual funding cost.

11         (8)  "Named fiduciary," "board," or "board of trustees"

12  means the person or persons so designated by the terms of the

13  instrument or instruments, ordinance, or statute under which

14  the plan is operated.

15         (9)  "Plan sponsor" means the local governmental entity

16  that has established or that may establish a local retirement

17  system or plan.

18         Section 3.  Section 112.661, Florida Statutes, is

19  created to read:

20         112.661  Investment policies.--Investment of the assets

21  of any retirement system or plan must be consistent with a

22  written investment policy adopted by the board. Such policies

23  shall be structured to maximize the financial return to the

24  retirement system or plan consistent with the risks incumbent

25  in each investment and shall be structured to establish and

26  maintain an appropriate diversification of the retirement

27  system or plan's assets.

28         (1)  SCOPE.--The investment policy shall apply to funds

29  under the control of the board.

30         (2)  INVESTMENT OBJECTIVES.--The investment policy

31  shall describe the investment objectives of the board.


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    CS for SB 1992                                 First Engrossed



  1         (3)  PERFORMANCE MEASUREMENT.--The investment policy

  2  shall specify performance measures as are appropriate for the

  3  nature and size of the assets within the board's custody.

  4         (4)  INVESTMENT AND FIDUCIARY STANDARDS.--The

  5  investment policy shall describe the level of prudence and

  6  ethical standards to be followed by the board in carrying out

  7  its investment activities with respect to funds described in

  8  this section. The board in performing its investment duties

  9  shall comply with the fiduciary standards set forth in the

10  Employee Retirement Income Security Act of 1974 at 29 U.S.C.

11  s. 1104(a)(1)(A) through (C). In case of conflict with other

12  provisions of law authorizing investments, the investment and

13  fiduciary standards set forth in this section shall prevail.

14         (5)  AUTHORIZED INVESTMENTS.--

15         (a)  The investment policy shall list investments

16  authorized by the board. Investments not listed in the

17  investment policy are prohibited. Unless otherwise authorized

18  by law or ordinance, the investment of the assets of any

19  retirement system or plan covered by this part shall be

20  subject to the limitations and conditions in s. 215.47(1),

21  (2), (3), (4), (5), (6), (7), (8), (10), and (16).

22         (b)  If a retirement system or plan has investments

23  that, on October 1, 1999, either exceed the applicable limit

24  or do not satisfy the applicable investment standard, such

25  excess or investment not in compliance with the policy may be

26  continued until such time as it is economically feasible to

27  dispose of such investment. However, no additional investment

28  may be made in the investment category which exceeds the

29  applicable limit, unless authorized by law or ordinance.

30         (6)  MATURITY AND LIQUIDITY REQUIREMENTS.--The

31  investment policy shall require that the investment portfolio


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    CS for SB 1992                                 First Engrossed



  1  is structured in such manner as to provide sufficient

  2  liquidity to pay obligations as they come due. To that end,

  3  the investment policy should direct that, to the extent

  4  possible, an attempt will be made to match investment

  5  maturities with known cash needs and anticipated cash-flow

  6  requirements.

  7         (7)  PORTFOLIO COMPOSITION.--The investment policy

  8  shall establish guidelines for investments and limits on

  9  security issues, issuers, and maturities. Such guidelines

10  shall be commensurate with the nature and size of the funds

11  within the custody of the board.

12         (8)  RISK AND DIVERSIFICATION.--The investment policy

13  shall provide for appropriate diversification of the

14  investment portfolio. Investments held should be diversified

15  to the extent practicable to control the risk of loss

16  resulting from overconcentration of assets in a specific

17  maturity, issuer, instrument, dealer, or bank through which

18  financial instruments are bought and sold. Diversification

19  strategies within the established guidelines shall be reviewed

20  and revised periodically, as deemed necessary by the board.

21         (9)  EXPECTED ANNUAL RATE OF RETURN.--The investment

22  policy shall require that, for each actuarial valuation, the

23  board determine the total expected annual rate of return for

24  the current year, for each of the next several years, and for

25  the long term thereafter. This determination must be filed

26  promptly with the Division of Retirement and with the plan's

27  sponsor and consulting actuary. The Division of Retirement

28  shall use this determination only to notify the board, the

29  plan's sponsor, and consulting actuary of material differences

30  between the total expected annual rate of return and the

31  actuarial assumed rate of return.


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    CS for SB 1992                                 First Engrossed



  1         (10)  THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment

  2  policy shall provide appropriate arrangements for the holding

  3  of assets of the board. Securities should be held with a third

  4  party, and all securities purchased by, and all collateral

  5  obtained by, the board should be properly designated as an

  6  asset of the board. No withdrawal of securities, in whole or

  7  in part, shall be made from safekeeping except by an

  8  authorized member of the board or the board's designee.

  9  Securities transactions between a broker-dealer and the

10  custodian involving purchase or sale of securities by transfer

11  of money or securities must be made on a "delivery vs.

12  payment" basis, if applicable, to ensure that the custodian

13  will have the security or money, as appropriate, in hand at

14  the conclusion of the transaction.

15         (11)  MASTER REPURCHASE AGREEMENT.--The investment

16  policy shall require all approved institutions and dealers

17  transacting repurchase agreements to execute and perform as

18  stated in the Master Repurchase Agreement. All repurchase

19  agreement transactions shall adhere to the requirements of the

20  Master Repurchase Agreement.

21         (12)  BID REQUIREMENT.--The investment policy shall

22  provide that the board determine the approximate maturity date

23  based on cash-flow needs and market conditions, analyze and

24  select one or more optimal types of investment, and

25  competitively bid the security in question when feasible and

26  appropriate. Except as otherwise required by law, the most

27  economically advantageous bid must be selected.

28         (13)  INTERNAL CONTROLS.--The investment policy shall

29  provide for a system of internal controls and operational

30  procedures. The board shall establish a system of internal

31  controls which shall be in writing and made a part of the


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    CS for SB 1992                                 First Engrossed



  1  board's operational procedures. The policy shall provide for

  2  review of such controls by independent certified public

  3  accountants as part of any financial audit periodically

  4  required of the board's unit of local government. The internal

  5  controls should be designed to prevent losses of funds which

  6  might arise from fraud, error, misrepresentation by third

  7  parties, or imprudent actions by the board or employees of the

  8  unit of local government.

  9         (14)  CONTINUING EDUCATION.--The investment policy

10  shall provide for the continuing education of the board

11  members in matters relating to investments and the board's

12  responsibilities.

13         (15)  REPORTING.--The investment policy shall provide

14  for appropriate annual or more frequent reporting of

15  investment activities. To that end, the board shall prepare

16  periodic reports for submission to the governing body of the

17  unit of local government which shall include investments in

18  the portfolio by class or type, book value, income earned, and

19  market value as of the report date. Such reports shall be

20  available to the public.

21         (16)  FILING OF INVESTMENT POLICY.--Upon adoption by

22  the board, the investment policy shall be promptly filed with

23  the Division of Retirement and the plan's sponsor and

24  consulting actuary. The effective date of the investment

25  policy, and any amendment thereto, shall be the 31st calendar

26  day following the filing date with the plan sponsor.

27         (17)  VALUATION OF ILLIQUID INVESTMENTS.--The

28  investment policy shall provide for the valuation of illiquid

29  investments for which a generally recognized market is not

30  available or for which there is no consistent or generally

31  accepted pricing mechanism. If those investments are utilized,


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    CS for SB 1992                                 First Engrossed



  1  the investment policy must include the criteria set forth in

  2  s. 215.47(6), except that an Investment Advisory Council is

  3  not required. The investment policy shall require that, for

  4  each actuarial valuation, the board must verify the

  5  determination of the fair-market value for those investments

  6  and ascertain that the determination complies with all

  7  applicable state and federal requirements. The investment

  8  policy shall require that the board disclose to the Division

  9  of Retirement and the plan's sponsor each such investment for

10  which the fair-market value is not provided.

11         Section 4.  Section 28.33, Florida Statutes, is amended

12  to read:

13         28.33  Investment of county funds by the clerk of the

14  circuit court.--The clerk of the circuit court in each county

15  shall invest county funds in excess of those required to meet

16  expenses as provided in s. 218.415. make an estimate of his or

17  her projected financial needs for the county and shall invest

18  any funds in designated depository banks in interest-bearing

19  certificates or in any direct obligations of the United States

20  in compliance with federal laws relating to receipt of and

21  withdrawal of deposits.  All investments shall be open for bid

22  to all qualified depositories in the county. The clerk shall

23  select the highest and best bid for deposit.  All bids

24  received by the clerk shall include, but not be limited to,

25  the interest rate to be earned and the total amount of dollar

26  return to be paid to the clerk. In the event of a like bid

27  between two or more banks, the moneys shall be divided and

28  deposited in each bank, so long as the total interest income

29  from the divided deposits will not be less than the total

30  interest income had the deposits not been divided. If at the

31  time of bid the dollar return on direct obligations of the


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    CS for SB 1992                                 First Engrossed



  1  Federal Government is greater than the highest bank return,

  2  then the clerk shall invest in the higher return security.

  3  Moneys deposited in the registry of the court shall be

  4  deposited in interest-bearing certificates at the discretion

  5  of the clerk, subject to the above guidelines. No clerk

  6  investing such funds shall be liable for the loss of any

  7  interest when circumstances require the withdrawal of funds

  8  placed in a time deposit and needed for immediate payment of

  9  county obligations.  In any county where local banks refuse to

10  bid on securing such money on interest-bearing certificates,

11  the clerk may request and receive bids from banks in other

12  counties within the state and make such deposits to the

13  successful bidder. Except for interest earned on moneys

14  deposited in the registry of the court, all interest accruing

15  from moneys deposited shall be deemed income of the office of

16  the clerk of the circuit court investing such moneys and shall

17  be deposited in the same account as are other fees and

18  commissions of the clerk's office.  The clerk may invest

19  moneys deposited in the registry of the court and shall retain

20  as income of the office of the clerk and as a reasonable

21  investment management fee 10 percent of the interest accruing

22  on those funds with the balance of such interest being

23  allocated in accordance with the interest of the depositors.

24  Each clerk shall, as soon as practicable after the end of the

25  fiscal year, report to the county governing authority the

26  total interest earned on all investments during the preceding

27  year.

28         Section 5.  Subsection (9) of section 159.416, Florida

29  Statutes, is amended to read:

30         159.416  Pool financings.--

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    CS for SB 1992                                 First Engrossed



  1         (9)  Proceeds of bonds and moneys held for the payment

  2  of debt service on bonds, including, but not limited to,

  3  amounts held in the loan fund, any reserve fund, or debt

  4  service fund for the bonds, may be invested in investments

  5  authorized by or pursuant to an ordinance or resolution

  6  providing for the issuance of the bonds or any trust agreement

  7  or trust indenture or other instrument approved by such

  8  ordinance or resolution, including, but not limited to,

  9  investments described in s. 218.415 ss. 28.33, 125.31,

10  166.261, 218.345, 219.075, and 236.24 and chapter 280.  The

11  acquisition of any debt obligation or investment contract or

12  investment agreement of any bank, savings and loan

13  association, insurance company, registered broker-dealer, or

14  other financial institution shall be deemed to be an

15  investment and not a loan and therefore need not meet the

16  criteria of subsections (5), (6), and (7).

17         Section 6.  Section 219.075, Florida Statutes, is

18  amended to read:

19         219.075  Investment of surplus funds by county

20  officers.--

21         (1)(a)  Except when another procedure is prescribed by

22  law or by ordinance as to particular funds, a tax collector or

23  any other county officer having, receiving, or collecting any

24  money, either for his or her office or on behalf of and

25  subject to subsequent distribution to another officer of state

26  or local government, while such money is in excess of that

27  required to meet current expenses surplus to current needs of

28  his or her office or that is pending distribution, shall

29  invest such money, without limitation, as provided in s.

30  218.415. in:

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    CS for SB 1992                                 First Engrossed



  1         1.  The Local Government Surplus Funds Trust Fund, as

  2  created by s. 218.405;

  3         2.  Bonds, notes, or other obligations of the United

  4  States guaranteed by the United States or for which the credit

  5  of the United States is pledged for the payment of the

  6  principal and interest or dividends;

  7         3.  Interest-bearing time deposits or savings accounts

  8  in banks organized under the laws of this state, in national

  9  banks organized under the laws of the United States and doing

10  business and situated in this state, in savings and loan

11  associations which are under state supervision, or in federal

12  savings and loan associations located in this state and

13  organized under federal law and federal supervision, provided

14  that any such deposits are secured by collateral as may be

15  prescribed by law; or

16         4.  Securities of, or other interests in, any open-end

17  or closed-end management type investment company or investment

18  trust registered under the Investment Company Act of 1940, 15

19  U.S.C. ss. 80a-1 et seq., as amended from time to time,

20  provided the portfolio of such investment company or

21  investment trust is limited to obligations of the United

22  States Government or any agency or instrumentality thereof and

23  to repurchase agreements fully collateralized by such United

24  States Government obligations and provided such investment

25  company or investment trust takes delivery of such collateral

26  either directly or through an authorized custodian.

27         (b)  These investments shall be planned so as not to

28  slow the normal distribution of the subject funds.  The

29  investment earnings shall be reasonably apportioned and

30  allocated and shall be credited to the account of, and paid

31


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    CS for SB 1992                                 First Engrossed



  1  to, the office or distributee, together with the principal on

  2  which such earnings accrued.

  3         (2)  Except when another procedure is prescribed by

  4  law, ordinance, or court order as to particular funds, the tax

  5  collector shall, as soon as feasible after collection, deposit

  6  in a bank designated as a depository of public funds, as

  7  provided in s. 658.60, all taxes, fees, and other collections

  8  received by him or her and held prior to distribution to the

  9  appropriate taxing authority. Immediately after such funds

10  have cleared and have been properly credited to the tax

11  collector's his or her account, the tax collector shall invest

12  such funds according to the provisions of s. 218.415 this

13  section.  The earnings from such investments shall be

14  apportioned at least quarterly on a pro rata basis to the

15  appropriate taxing authorities.  However, the tax collector

16  may deduct therefrom such reasonable amounts as are necessary

17  to provide for costs of administration of such investments and

18  deposits.

19         (3)  The State Board of Administration may establish a

20  schedule and guidelines to be followed by tax collectors

21  making deposits and investments under the provisions of

22  subsection (2).

23         (4)  The provisions of this section are subject to the

24  provisions of s. 218.415.

25         Section 7.  Section 236.24, Florida Statutes, 1998

26  Supplement, is amended to read:

27         236.24  Sources of district school fund.--

28         (1)  The district school fund shall consist of funds

29  derived from the district school tax levy; state

30  appropriations; appropriations by county commissioners; local,

31  state, and federal school food service funds; any and all


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    CS for SB 1992                                 First Engrossed



  1  other sources for school purposes; national forest trust funds

  2  and other federal sources; and gifts and other sources.

  3         (2)(a)  Unless otherwise authorized by law or by

  4  ordinance, each school board shall, by resolution to be

  5  adopted from time to time, invest and reinvest any surplus

  6  public funds in its control or possession in:

  7         1.  The Local Government Surplus Funds Trust Fund;

  8         2.  Negotiable direct obligations of, or obligations

  9  the principal and interest of which are unconditionally

10  guaranteed by, the United States Government at the then

11  prevailing market price for such securities;

12         3.  Interest-bearing time deposits or savings accounts

13  in qualified public depositories as defined in s. 280.02;

14         4.  Obligations of the federal farm credit banks; the

15  Federal Home Loan Mortgage Corporation, including Federal Home

16  Loan Mortgage Corporation participation certificates; or the

17  Federal Home Loan Bank or its district banks or obligations

18  guaranteed by the Government National Mortgage Association;

19         5.  Obligations of the Federal National Mortgage

20  Association, including Federal National Mortgage Association

21  participation certificates and mortgage pass-through

22  certificates guaranteed by the Federal National Mortgage

23  Association; or

24         6.  Securities of, or other interests in, any open-end

25  or closed-end management type investment company or investment

26  trust registered under the Investment Company Act of 1940, 15

27  U.S.C. ss. 80a-1 et seq., as amended from time to time,

28  provided the portfolio of such investment company or

29  investment trust is limited to obligations of the United

30  States Government or any agency or instrumentality thereof and

31  to repurchase agreements fully collateralized by such United


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    CS for SB 1992                                 First Engrossed



  1  States Government obligations, and provided such investment

  2  company or investment trust takes delivery of such collateral

  3  either directly or through an authorized custodian.

  4         (b)1.  Securities purchased by any such school board

  5  under the authority of this law shall be delivered by the

  6  seller to the school board or its appointed safekeeper.  The

  7  safekeeper shall be a qualified bank or trust company

  8  chartered to operate as such by the State of Florida, any

  9  other state or territory of the United States, or the United

10  States Government, that has a branch or principal place of

11  business in this state as defined in s. 658.12. The safekeeper

12  shall issue documentation for each transaction, and a monthly

13  statement detailing all transactions for the period.

14         2.  Securities physically delivered to the school board

15  shall be placed in a safe-deposit box in a bank or other

16  institution located within the county and duly licensed and

17  insured.  Withdrawals from such safe-deposit box shall be only

18  by persons duly authorized by resolution of the school board.

19         3.  The school board may also receive bank trust

20  receipts in return for investment of surplus funds in

21  securities.  Any trust receipts received must enumerate the

22  various securities held together with the specific number of

23  each security held.  The actual securities on which the trust

24  receipts are issued may be held by any bank depository

25  chartered by the United States Government, the State of

26  Florida, or any other state or territory of the United States,

27  that has a branch or principal place of business in this state

28  as defined in s. 658.12, or their designated agents.

29         (c)  When the money invested in such securities is

30  needed in whole or in part for the purposes originally

31  intended, the school board is authorized to sell such security


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    CS for SB 1992                                 First Engrossed



  1  or securities at the then prevailing market price and to pay

  2  the proceeds of such sale into the proper account or fund of

  3  the school board.

  4         (d)  For the purposes of this law, the term "surplus

  5  funds" is defined as funds in any general or special account

  6  or fund of the school board, held or controlled by the school

  7  board, which funds are not reasonably contemplated to be

  8  needed for the purposes intended within a reasonable time from

  9  the date of such investment.

10         (e)  Any surplus public funds subject to a contract or

11  agreement on the date of this enactment shall not be invested

12  contrary to such contract or agreement.

13         (f)  The provisions of this subsection are supplemental

14  to any and all other laws relating to the legal investments by

15  school boards.

16         (3)  Investments made pursuant to this section may be

17  in book-entry form and may be under repurchase agreements.

18         (4)  The provisions of this section are subject to the

19  provisions of s. 218.415.

20         Section 8.  Paragraph (d) of subsection (7) of section

21  163.01, Florida Statutes, is amended to read:

22         163.01  Florida Interlocal Cooperation Act of 1969.--

23         (7)(d)  Notwithstanding the provisions of paragraph

24  (c), any separate legal entity created pursuant to this

25  section and controlled by the municipalities or counties of

26  this state or by one or more municipality and one or more

27  county of this state, the membership of which consists or is

28  to consist of municipalities only, counties only, or one or

29  more municipality and one or more county, may, for the purpose

30  of financing or refinancing any capital projects, exercise all

31  powers in connection with the authorization, issuance, and


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    CS for SB 1992                                 First Engrossed



  1  sale of bonds. Notwithstanding any limitations provided in

  2  this section, all of the privileges, benefits, powers, and

  3  terms of part I of chapter 125, part II of chapter 166, and

  4  part I of chapter 159 shall be fully applicable to such

  5  entity.  Bonds issued by such entity shall be deemed issued on

  6  behalf of the counties or municipalities which enter into loan

  7  agreements with such entity as provided in this paragraph.

  8  Any loan agreement executed pursuant to a program of such

  9  entity shall be governed by the provisions of part I of

10  chapter 159 or, in the case of counties, part I of chapter

11  125, or in the case of municipalities and charter counties,

12  part II of chapter 166. Proceeds of bonds issued by such

13  entity may be loaned to counties or municipalities of this

14  state or a combination of municipalities and counties, whether

15  or not such counties or municipalities are also members of the

16  entity issuing the bonds.  The issuance of bonds by such

17  entity to fund a loan program to make loans to municipalities

18  or counties or a combination of municipalities and counties

19  with one another for capital projects to be identified

20  subsequent to the issuance of the bonds to fund such loan

21  programs is deemed to be a paramount public purpose.  Any

22  entity so created may also issue bond anticipation notes, as

23  provided by s. 215.431, in connection with the authorization,

24  issuance, and sale of such bonds.  In addition, the governing

25  body of such legal entity may also authorize bonds to be

26  issued and sold from time to time and may delegate, to such

27  officer, official, or agent of such legal entity as the

28  governing body of such legal entity may select, the power to

29  determine the time; manner of sale, public or private;

30  maturities; rate or rates of interest, which may be fixed or

31  may vary at such time or times and in accordance with a


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    CS for SB 1992                                 First Engrossed



  1  specified formula or method of determination; and other terms

  2  and conditions as may be deemed appropriate by the officer,

  3  official, or agent so designated by the governing body of such

  4  legal entity.  However, the amounts and maturities of such

  5  bonds and the interest rate or rates of such bonds shall be

  6  within the limits prescribed by the governing body of such

  7  legal entity and its resolution delegating to such officer,

  8  official, or agent the power to authorize the issuance and

  9  sale of such bonds. A local government self-insurance fund

10  established under this section may financially guarantee bonds

11  or bond anticipation notes issued or loans made under this

12  subsection.  Bonds issued pursuant to this paragraph may be

13  validated as provided in chapter 75.  The complaint in any

14  action to validate such bonds shall be filed only in the

15  Circuit Court for Leon County.  The notice required to be

16  published by s. 75.06 shall be published only in Leon County,

17  and the complaint and order of the circuit court shall be

18  served only on the State Attorney of the Second Judicial

19  Circuit and on the state attorney of each circuit in each

20  county where the public agencies which were initially a party

21  to the agreement are located. Notice of such proceedings shall

22  be published in the manner and the time required by s. 75.06

23  in Leon County and in each county where the public agencies

24  which were initially a party to the agreement are located.

25  Obligations of any county or municipality pursuant to a loan

26  agreement as described in this paragraph may be validated as

27  provided in chapter 75.

28         Section 9.  Subsection (5) of section 237.161, Florida

29  Statutes, is repealed.

30

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    CS for SB 1992                                 First Engrossed



  1         Section 10.  Paragraph (k) of subsection (10) of

  2  section 230.23, Florida Statutes, 1998 Supplement, is

  3  repealed.

  4         Section 11.  Section 125.31, Florida Statutes, as

  5  amended by section 4 of chapter 98-409, Laws of Florida;

  6  section 166.261, Florida Statutes; and section 218.345,

  7  Florida Statutes, as amended by section 8 of chapter 98-409,

  8  Laws of Florida, are repealed.

  9         Section 12.  This act shall take effect October 1,

10  1999.

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