HB 7155

1	A bill to be entitled
2	An act relating to state financial matters; amending s.
3	121.4501, F.S.; revising the method for calculating
4	interest on certain moneys transferred between retirement
5	accounts; providing for credit for military service of
6	members of the Public Employee Optional Retirement
7	Program; amending s. 121.591, F.S.; prescribing procedures
8	to follow if a participant in the Public Employee Optional
9	Retirement Program receives an invalid distribution;
10	amending s. 215.47, F.S.; revising standards for
11	determining eligibility of specified savings accounts,
12	certificates of deposit, time drafts, bills of exchange,
13	bonds, notes, and other instruments for investment by the
14	State Board of Administration; amending s. 1002.36, F.S.;
15	conforming a cross-reference; providing an effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1.  Paragraph (c) of subsection (3) of section
20	121.4501, Florida Statutes, is amended, and subsection (22) is
21	added to that section, to read:
22	121.4501  Public Employee Optional Retirement Program.--
23	(3)  ELIGIBILITY; RETIREMENT SERVICE CREDIT.--
24	(c)1.  Notwithstanding paragraph (b), each eligible
25	employee who elects to participate in the Public Employee
26	Optional Retirement Program and establishes one or more
27	individual participant accounts under the optional program may
28	elect to transfer to the optional program a sum representing the
29	present value of the employee's accumulated benefit obligation
30	under the defined benefit retirement program of the Florida
31	Retirement System. Upon such transfer, all service credit
32	previously earned under the defined benefit program of the
33	Florida Retirement System shall be nullified for purposes of
34	entitlement to a future benefit under the defined benefit
35	program of the Florida Retirement System. A participant is
36	precluded from transferring the accumulated benefit obligation
37	balance from the defined benefit program upon the expiration of
38	the period afforded to enroll in the optional program.
39	2.  For purposes of this subsection, the present value of
40	the member's accumulated benefit obligation is based upon the
41	member's estimated creditable service and estimated average
42	final compensation under the defined benefit program, subject to
43	recomputation under subparagraph 3. For state employees
44	enrolling under subparagraph (4)(a)1., initial estimates will be
45	based upon creditable service and average final compensation as
46	of midnight on June 30, 2002; for district school board
47	employees enrolling under subparagraph (4)(b)1., initial
48	estimates will be based upon creditable service and average
49	final compensation as of midnight on September 30, 2002; and for
50	local government employees enrolling under subparagraph
51	(4)(c)1., initial estimates will be based upon creditable
52	service and average final compensation as of midnight on
53	December 31, 2002. The dates respectively specified above shall
54	be construed as the "estimate date" for these employees. The
55	actuarial present value of the employee's accumulated benefit
56	obligation shall be based on the following:
57	a.  The discount rate and other relevant actuarial
58	assumptions used to value the Florida Retirement System Trust
59	Fund at the time the amount to be transferred is determined,
60	consistent with the factors provided in sub-subparagraphs b. and
61	c.
62	b.  A benefit commencement age, based on the member's
63	estimated creditable service as of the estimate date. The
64	benefit commencement age shall be the younger of the following,
65	but shall not be younger than the member's age as of the
66	estimate date:
67	(I)  Age 62; or
68	(II)  The age the member would attain if the member
69	completed 30 years of service with an employer, assuming the
70	member worked continuously from the estimate date, and
71	disregarding any vesting requirement that would otherwise apply
72	under the defined benefit program of the Florida Retirement
73	System.
74	c.  For members of the Special Risk Class and for members
75	of the Special Risk Administrative Support Class entitled to
76	retain special risk normal retirement date, the benefit
77	commencement age shall be the younger of the following, but
78	shall not be younger than the member's age as of the estimate
79	date:
80	(I)  Age 55; or
81	(II)  The age the member would attain if the member
82	completed 25 years of service with an employer, assuming the
83	member worked continuously from the estimate date, and
84	disregarding any vesting requirement that would otherwise apply
85	under the defined benefit program of the Florida Retirement
86	System.
87	d.  The calculation shall disregard vesting requirements
88	and early retirement reduction factors that would otherwise
89	apply under the defined benefit retirement program.
90	3.  For each participant who elects to transfer moneys from
91	the defined benefit program to his or her account in the
92	optional program, the division shall recompute the amount
93	transferred under subparagraph 2. not later than 60 days after
94	the actual transfer of funds based upon the participant's actual
95	creditable service and actual final average compensation as of
96	the initial date of participation in the optional program. If
97	the recomputed amount differs from the amount transferred under
98	subparagraph 2. by $10 or more, the division shall:
99	a.  Transfer, or cause to be transferred, from the Florida
100	Retirement System Trust Fund to the participant's account in the
101	optional program the excess, if any, of the recomputed amount
102	over the previously transferred amount together with interest
103	from the initial date of transfer to the date of transfer under
104	this subparagraph, based upon 8 percent effective annual
105	interest equal to the assumed return on the actuarial investment
106	which was used in the most recent actuarial valuation of the
107	system, compounded annually.
108	b.  Transfer, or cause to be transferred, from the
109	participant's account to the Florida Retirement System Trust
110	Fund the excess, if any, of the previously transferred amount
111	over the recomputed amount, together with interest from the
112	initial date of transfer to the date of transfer under this
113	subparagraph, based upon 6 percent effective annual interest,
114	compounded annually, pro rata based on the participant's
115	allocation plan.
116	4.  As directed by the participant, the board shall
117	transfer or cause to be transferred the appropriate amounts to
118	the designated accounts. The board shall establish transfer
119	procedures by rule, but the actual transfer shall not be later
120	than 30 days after the effective date of the member's
121	participation in the optional program unless the major financial
122	markets for securities available for a transfer are seriously
123	disrupted by an unforeseen event which also causes the
124	suspension of trading on any national securities exchange in the
125	country where the securities were issued. In that event, such
126	30-day period of time may be extended by a resolution of the
127	trustees. Transfers are not commissionable or subject to other
128	fees and may be in the form of securities or cash as determined
129	by the state board. Such securities shall be valued as of the
130	date of receipt in the participant's account.
131	5.  If the board or the division receives notification from
132	the United States Internal Revenue Service that this paragraph
133	or any portion of this paragraph will cause the retirement
134	system, or a portion thereof, to be disqualified for tax
135	purposes under the Internal Revenue Code, then the portion that
136	will cause the disqualification does not apply. Upon such
137	notice, the state board and the division shall notify the
138	presiding officers of the Legislature.
139	(22)  CREDIT FOR MILITARY SERVICE.--Creditable service of
140	any member of the Public Employee Optional Retirement Program
141	shall include military service in the Armed Forces of the United
142	States as provided in the conditions outlined in s. 121.111(1).
143	Section 2.  Paragraph (a) of subsection (1) of section
144	121.591, Florida Statutes, is amended to read:
145	121.591  Benefits payable under the Public Employee
146	Optional Retirement Program of the Florida Retirement
147	System.--Benefits may not be paid under this section unless the
148	member has terminated employment as provided in s.
149	121.021(39)(a) or is deceased and a proper application has been
150	filed in the manner prescribed by the state board or the
151	department. The state board or department, as appropriate, may
152	cancel an application for retirement benefits when the member or
153	beneficiary fails to timely provide the information and
154	documents required by this chapter and the rules of the state
155	board and department. In accordance with their respective
156	responsibilities as provided herein, the State Board of
157	Administration and the Department of Management Services shall
158	adopt rules establishing procedures for application for
159	retirement benefits and for the cancellation of such application
160	when the required information or documents are not received. The
161	State Board of Administration and the Department of Management
162	Services, as appropriate, are authorized to cash out a de
163	minimis account of a participant who has been terminated from
164	Florida Retirement System covered employment for a minimum of 6
165	calendar months. A de minimis account is an account containing
166	employer contributions and accumulated earnings of not more than
167	$5,000 made under the provisions of this chapter. Such cash-out
168	must either be a complete lump-sum liquidation of the account
169	balance, subject to the provisions of the Internal Revenue Code,
170	or a lump-sum direct rollover distribution paid directly to the
171	custodian of an eligible retirement plan, as defined by the
172	Internal Revenue Code, on behalf of the participant. If any
173	financial instrument issued for the payment of retirement
174	benefits under this section is not presented for payment within
175	180 days after the last day of the month in which it was
176	originally issued, the third-party administrator or other duly
177	authorized agent of the State Board of Administration shall
178	cancel the instrument and credit the amount of the instrument to
179	the suspense account of the Public Employee Optional Retirement
180	Program Trust Fund authorized under s. 121.4501(6). Any such
181	amounts transferred to the suspense account are payable upon a
182	proper application, not to include earnings thereon, as provided
183	in this section, within 10 years after the last day of the month
184	in which the instrument was originally issued, after which time
185	such amounts and any earnings thereon shall be forfeited. Any
186	such forfeited amounts are assets of the Public Employee
187	Optional Retirement Program Trust Fund and are not subject to
188	the provisions of chapter 717.
189	(1)  NORMAL BENEFITS.--Under the Public Employee Optional
190	Retirement Program:
191	(a)  Benefits in the form of vested accumulations as
192	described in s. 121.4501(6) shall be payable under this
193	subsection in accordance with the following terms and
194	conditions:
195	1.  To the extent vested, benefits shall be payable only to
196	a participant.
197	2.  Benefits shall be paid by the third-party administrator
198	or designated approved providers in accordance with the law, the
199	contracts, and any applicable board rule or policy.
200	3.  To receive benefits under this subsection, the
201	participant must be terminated from all employment with all
202	Florida Retirement System employers, as provided in s.
203	121.021(39).
204	4.  Benefit payments may not be made until the participant
205	has been terminated for 3 calendar months, except that the board
206	may authorize by rule for the distribution of up to 10 percent
207	of the participant's account after being terminated for 1
208	calendar month if a participant has reached the normal
209	retirement requirements of the defined benefit plan, as provided
210	in s. 121.021(29).
211	5.  If a member or former member of the Florida Retirement
212	System receives an invalid distribution from the Public Employee
213	Optional Retirement Program Trust Fund, such person shall repay
214	the full invalid distribution to the trust fund within 90 days
215	after receipt of final notification by the State Board of
216	Administration or the third-party administrator that the
217	distribution was invalid. If such person fails to repay the full
218	invalid distribution within 90 days after receipt of final
219	notification, the person may be deemed retired from the Public
220	Employee Optional Retirement Program by the state board, as
221	provided pursuant to s. 121.4501(2)(j), and shall be subject to
222	s. 121.122. If such person is deemed retired by the state board,
223	any joint and several liability set out in s. 121.091(9)(c)2.
224	becomes null and void, and the state board, the Department of
225	Management Services, or the employing agency is not liable for
226	gains on payroll contributions that have not been deposited to
227	the person's account in the Public Employee Optional Retirement
228	Program, pending resolution of the invalid distribution. The
229	member or former member who has been deemed retired or who has
230	been determined by the board to have taken an invalid
231	distribution may appeal the agency decision through the
232	complaint process as provided under s. 121.4501(9)(f)3. The term
233	"invalid distribution," as used in this section, means any
234	distribution from an account in the Public Employee Optional
235	Retirement Program that is taken in violation of the provisions
236	of this section, s. 121.091(9), or s. 121.4501.
237	Section 3.  Subsections (1), (2), and (5) of section
238	215.47, Florida Statutes, are amended, and subsection (17) is
239	added to that section, to read:
240	215.47  Investments; authorized securities; loan of
241	securities.--Subject to the limitations and conditions of the
242	State Constitution or of the trust agreement relating to a trust
243	fund, moneys available for investments under ss. 215.44-215.53
244	may be invested as follows:
245	(1)  Without limitation in:
246	(a)  Bonds, notes, or other obligations of the United
247	States or those guaranteed by the United States or for which the
248	credit of the United States is pledged for the payment of the
249	principal and interest or dividends thereof.
250	(b)  State bonds pledging the full faith and credit of the
251	state and revenue bonds additionally secured by the full faith
252	and credit of the state.
253	(c)  Bonds of the several counties or districts in the
254	state containing a pledge of the full faith and credit of the
255	county or district involved.
256	(d)  Bonds issued or administered by the State Board of
257	Administration secured solely by a pledge of all or part of the
258	2-cent constitutional fuel tax accruing under the provisions of
259	s. 16, Art. IX of the State Constitution of 1885, as amended, or
260	of s. 9, Art. XII of the 1968 revised State Constitution.
261	(e)  Bonds issued by the State Board of Education pursuant
262	to ss. 18 and 19, Art. XII of the State Constitution of 1885, as
263	amended, or to s. 9, Art. XII of the 1968 revised State
264	Constitution, as amended.
265	(f)  Bonds issued by the Florida Outdoor Recreational
266	Development Council pursuant to s. 17, Art. IX of the State
267	Constitution of 1885, as amended.
268	(g)  Bonds issued by the Florida State Improvement
269	Commission, Florida Development Commission, Division of Bond
270	Finance of the Department of General Services, or Division of
271	Bond Finance of the State Board of Administration.
272	(h)  Savings accounts in, or certificates of deposit of,
273	any bank, savings bank, or savings and loan association
274	incorporated under the laws of this state or organized under the
275	laws of the United States doing business and situated in this
276	state, the accounts of which are insured by the Federal
277	Government or an agency thereof, and having a prime quality of
278	the highest letter and numerical ratings as provided for by at
279	least one nationally recognized statistical rating organization,
280	in an amount that does not exceed 15 percent of the net worth of
281	the institution, or a lesser amount as determined by rule by the
282	State Board of Administration, provided such savings accounts
283	and certificates of deposit are secured in the manner prescribed
284	in chapter 280.
285	(i)  Notes, bonds, and other obligations of agencies of the
286	United States.
287	(j)  Commercial paper of prime quality of the highest
288	letter and numerical rating as provided for by at least one
289	nationally recognized rating service.
290	(k)  Time drafts or bills of exchange drawn on and accepted
291	by a commercial bank, otherwise known as banker's acceptances,
292	which are accepted by a member bank of the Federal Reserve
293	System and are of prime quality of the highest letter and
294	numerical ratings as provided for by at least one nationally
295	recognized statistical rating organization having total deposits
296	of not less than $400 million.
297	(l)  Negotiable certificates of deposit issued by domestic
298	or foreign financial institutions in United States dollars of
299	prime quality of the highest letter and numerical ratings as
300	provided for by at least one nationally recognized statistical
301	rating organization.
302	(m)  Short-term obligations not authorized elsewhere in
303	this section to be purchased individually or in pooled accounts
304	or other collective investment funds, for the purpose of
305	providing liquidity to any fund or portfolio.
306	(n)  Securities of, or other interests in, any open-end or
307	closed-end management type investment company or investment
308	trust registered under the Investment Company Act of 1940, 15
309	U.S.C. ss. 80a-1 et seq., as amended from time to time, provided
310	that the portfolio of such investment company or investment
311	trust is limited to obligations of the United States Government
312	or any agency or instrumentality thereof and to repurchase
313	agreements fully collateralized by such United States Government
314	obligations and provided that such investment company or
315	investment trust takes delivery of such collateral either
316	directly or through an authorized custodian.
317	(2)  With no more than 25 percent of any fund in:
318	(a)  Bonds, notes, or obligations of any municipality or
319	political subdivision or any agency or authority of this state,
320	if the obligations are rated investment grade by at least one
321	nationally recognized statistical rating organization such
322	obligations are rated in any one of the three highest ratings by
323	two nationally recognized rating services. However, if only one
324	nationally recognized rating service shall rate such
325	obligations, then such rating service must have rated such
326	obligations in any one of the two highest classifications
327	heretofore mentioned.
328	(b)  Notes secured by first mortgages on Florida real
329	property, insured or guaranteed by the Federal Housing
330	Administration or the United States Department of Veterans
331	Affairs.
332	(c)  Investments collateralized by first mortgages covering
333	single-family Florida residences, provided such mortgages do not
334	exceed $60,000, do not exceed 80 percent of value, are not
335	delinquent, and are originated by a lender regulated by the
336	state or Federal Government and the aggregate of the collateral
337	furnished is at least 150 percent of the aggregate investment
338	under this subsection.  The mortgages used for collateral shall
339	be segregated by the lending institution so that such
340	segregation may be confirmed by independent audit.  In the event
341	any such mortgage used as collateral becomes more than 3 months
342	delinquent, the lender shall immediately substitute therefor a
343	mortgage of equal or greater value.
344	(c)(d)  Mortgage securities which represent participation
345	in or are collateralized by mortgage loans secured by real
346	property. Such securities must be issued by an agency of or
347	enterprise sponsored by the United States Government, including,
348	but not limited to, the Government National Mortgage
349	Association, the Federal National Mortgage Association, and the
350	Federal Home Loan Mortgage Corporation.
351	(d)(e)  Group annuity contracts of the pension investment
352	type with insurers licensed to do business in this state which
353	are rated investment grade by at least one nationally recognized
354	rating service, except that amounts invested by the board with
355	any one insurer shall not exceed 3 percent of its assets.
356	(e)(f)  Certain interests in real property and related
357	personal property, including mortgages and related instruments
358	on commercial or industrial real property, with provisions for
359	equity or income participation or with provisions for
360	convertibility to equity ownership; and interests in collective
361	investment funds. Associated expenditures for acquisition and
362	operation of assets purchased under this provision or of
363	investments in private equity or other private investment
364	partnerships or limited liability companies shall be included as
365	a part of the cost of the investment.
366	1.  The title to real property acquired under this
367	paragraph shall be vested in the name of the respective fund.
368	2.  For purposes of taxation of property owned by any fund,
369	the provisions of s. 196.199(2)(b) do not apply.
370	3.  Real property acquired under the provisions of this
371	paragraph shall not be considered state lands or public lands
372	and property as defined in chapter 253, and the provisions of
373	that chapter do not apply to such real property.
374	(f)(g)  Fixed-income obligations not otherwise authorized
375	by this section issued by foreign governments or political
376	subdivisions or agencies thereof, supranational agencies,
377	foreign corporations, or foreign commercial entities, if the
378	obligations are rated investment grade by at least one
379	nationally recognized rating service.
380	(g)(h)  A portion of the funds available for investment
381	pursuant to this subsection may be invested in rated or unrated
382	bonds, notes, or instruments backed by the full faith and credit
383	of the government of Israel.
384	(h)(i)  Obligations of agencies of the government of the
385	United States, provided such obligations have been included in
386	and authorized by the Florida Retirement System Defined Benefit
387	Plan Investment Policy Statement established in s. 215.475.
388	(i)(j)  United States dollar-denominated obligations issued
389	by foreign governments, or political subdivisions or agencies
390	thereof, supranational agencies, foreign corporations, or
391	foreign commercial entities.
392	(j)(k)  Asset-backed securities not otherwise authorized by
393	this section.
394	(5)  With no more than 25 20 percent of any fund in
395	corporate obligations and securities of any kind of a foreign
396	corporation or a foreign commercial entity having its principal
397	office located in any country other than the United States of
398	America or its possessions or territories, not including United
399	States dollar-denominated securities listed and traded on a
400	United States exchange which are a part of the ordinary
401	investment strategy of the board.
402	(17)  The State Board of Administration may sell short any
403	of the securities and investments authorized under this section.
404	Section 4.  Paragraph (e) of subsection (4) of section
405	1002.36, Florida Statutes, is amended to read:
406	1002.36  Florida School for the Deaf and the Blind.--
407	(4)  BOARD OF TRUSTEES.--
408	(e)  The board of trustees is invested with full power and
409	authority to:
410	1.  Appoint a president, faculty, teachers, and other
411	employees and remove the same as in its judgment may be best and
412	fix their compensation.
413	2.  Procure professional services, such as medical, mental
414	health, architectural, and engineering.
415	3.  Procure legal services without the prior written
416	approval of the Attorney General.
417	4.  Determine eligibility of students and procedure for
418	admission.
419	5.  Provide for the students of the school necessary
420	bedding, clothing, food, and medical attendance and such other
421	things as may be proper for the health and comfort of the
422	students without cost to their parents, except that the board of
423	trustees may set tuition and other fees for nonresidents.
424	6.  Provide for the proper keeping of accounts and records
425	and for budgeting of funds.
426	7.  Enter into contracts.
427	8.  Sue and be sued.
428	9.  Secure public liability insurance.
429	10.  Do and perform every other matter or thing requisite
430	to the proper management, maintenance, support, and control of
431	the school at the highest efficiency economically possible, the
432	board of trustees taking into consideration the purposes of the
433	establishment.
434	11.  Receive gifts, donations, and bequests of money or
435	property, real or personal, tangible or intangible, from any
436	person, firm, corporation, or other legal entity. However, the
437	board of trustees may not obligate the state to any expenditure
438	or policy that is not specifically authorized by law. If the
439	bill of sale, will, trust indenture, deed, or other legal
440	conveyance specifies terms and conditions concerning the use of
441	such money or property, the board of trustees shall observe such
442	terms and conditions.
443	12.  Deposit outside the State Treasury such moneys as are
444	received as gifts, donations, or bequests and may disburse and
445	expend such moneys, upon its own warrant, for the use and
446	benefit of the Florida School for the Deaf and the Blind and its
447	students, as the board of trustees deems to be in the best
448	interest of the school and its students. Such money or property
449	shall not constitute or be considered a part of any legislative
450	appropriation, and such money shall not be used to compensate
451	any person for engaging in lobbying activities before the House
452	of Representatives or Senate or any committee thereof.
453	13.  Sell or convey by bill of sale, deed, or other legal
454	instrument any property, real or personal, received as a gift,
455	donation, or bequest, upon such terms and conditions as the
456	board of trustees deems to be in the best interest of the school
457	and its students.
458	14.  Invest such moneys in securities enumerated under s.
459	215.47(1), (2)(c) (2)(d), (3), (4), and (9), and in The Common
460	Fund, an Investment Management Fund exclusively for nonprofit
461	educational institutions.
462	Section 5.  This act shall take effect July 1, 2006.

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