HB 1361

1	A bill to be entitled
2	An act relating to state investments; amending s. 215.44,
3	F.S.; clarifying provisions relating to the retention of
4	independent investment advisers or managers by the State
5	Board of Administration; authorizing the Investment
6	Advisory Council to review such managers or advisers;
7	requiring the board to include contingent compensation in
8	its operating budget; clarifying the requirement that the
9	Office of Program Policy Analysis and Government
10	Accountability examine the board's management of
11	investments; amending s. 215.441, F.S.; providing that the
12	executive director of the board is subject to confirmation
13	by the Senate; amending s. 215.442, F.S.; expanding the
14	subject of a quarterly report to the board by the
15	executive director to include certain mortgage securities
16	and certain movements in investment grade of such
17	securities; providing that the executive director of the
18	board is a state officer subject to financial disclosure
19	requirements; amending s. 215.444, F.S.; revising
20	membership of the council; providing that council members
21	are public officers subject to financial disclosure
22	requirements; amending s. 215.475, F.S.; requiring the
23	council to submit a review and summary of recommended
24	changes to the investment policy statement of the board
25	before the board votes on changes to the statement;
26	providing an effective date.
27
28	Be It Enacted by the Legislature of the State of Florida:
29
30	Section 1.  Subsections (2), (4), and (6) of section
31	215.44, Florida Statutes, are amended to read:
32	215.44  Board of Administration; powers and duties in
33	relation to investment of trust funds.--
34	(2)(a)  The board shall have the power to make purchases,
35	sales, exchanges, investments, and reinvestments for and on
36	behalf of the funds referred to in subsection (1), and it shall
37	be the duty of the board to see that moneys invested under the
38	provisions of ss. 215.44-215.53 are at all times handled in the
39	best interests of the state.
40	(b)  In exercising investment authority pursuant to s.
41	215.47, the board may retain independent investment advisers or
42	managers, or both, external to in-house staff, to assist the
43	board in carrying out the power specified in paragraph (a). The
44	Investment Advisory Council shall have the right to review, on a
45	semiannual basis, the advisers and managers retained by the
46	board.
47	(4)  The board shall prepare and approve an operating
48	budget each fiscal year consistent with the provisions of
49	chapter 216. The approved operating budget shall be submitted to
50	the legislative appropriation committees and the Executive
51	Office of the Governor prior to July 1 of each year. The budget
52	shall include any contingent compensation paid to any employee,
53	adviser, or manager, based upon the performance of investments
54	made by the board.
55	(6)  The Office of Program Policy Analysis and Government
56	Accountability shall conduct a management and operations review,
57	including, but not limited to, examine the board's management of
58	investments every 2 years. The Office of Program Policy Analysis
59	and Government Accountability shall submit such reports to the
60	board, the President of the Senate, and the Speaker of the House
61	of Representatives and their designees.
62	Section 2.  Section 215.441, Florida Statutes, is amended
63	to read:
64	215.441  Board of Administration; appointment of executive
65	director.--The appointment of the executive director of the
66	State Board of Administration shall be subject to confirmation
67	by the Senate and the approval by a majority vote of the Board
68	of Trustees of the State Board of Administration, and the
69	Governor must vote on the prevailing side. Such appointment must
70	be reaffirmed in the same manner by the board of trustees on an
71	annual basis.
72	Section 3.  Subsection (1) of section 215.442, Florida
73	Statutes, is amended, and subsection (4) is added to that
74	section, to read:
75	215.442  Executive director; reporting requirements; public
76	meeting.--
77	(1)  Beginning October 2007 and quarterly thereafter, the
78	executive director shall present to the Board of Trustees of the
79	State Board of Administration a quarterly report to include the
80	following:
81	(a)  The name of each equity in which the State Board of
82	Administration has invested for the quarter.
83	(b)  The industry category of each equity.
84	(c)  Mortgage securities or debt that represent
85	participation in or are collateralized by mortgage loans secured
86	by real property or debt issued, including the letter and
87	numerical ratings provided by nationally recognized statistical
88	rating organizations for each security.
89	(d)  A reporting of which securities have moved inside and
90	outside of investment grade.
91	(4)  The executive director is a state officer, covered by
92	s. 112.3145.
93	Section 4.  Section 215.444, Florida Statutes, is amended
94	to read:
95	215.444  Investment Advisory Council.--
96	(1)  There is created an 11-member a six-member Investment
97	Advisory Council to review the investments made by the staff of
98	the Board of Administration and to make recommendations to the
99	board regarding investment policy, strategy, and procedures.
100	(2)  The members of the council shall be appointed by the
101	board and shall be subject to confirmation by the Senate. The
102	members shall include one member nominated by the President of
103	the Senate, one member nominated by the Speaker of the House of
104	Representatives, one member representing local government
105	employees, one member representing state government employees,
106	one member representing public educational employees, and six
107	additional persons. These individuals shall possess special
108	knowledge, experience, and familiarity with financial
109	investments and portfolio management. Members shall be appointed
110	for 4-year terms. A vacancy shall be filled for the remainder of
111	the unexpired term. The council shall annually elect a chair and
112	a vice chair from its membership. A member may not be elected to
113	consecutive terms as chair or vice chair. The members are state
114	officers covered by s. 112.3145.
115	Section 5.  Section 215.475, Florida Statutes, is amended
116	to read:
117	215.475  Investment policy statement.--
118	(1)  In making investments for the System Trust Fund
119	pursuant to ss. 215.44-215.53, the board shall make no
120	investment which is not in conformance with the Florida
121	Retirement System Defined Benefit Plan Investment Policy
122	Statement, hereinafter referred to as "the IPS," as developed by
123	the executive director and the Investment Advisory Council and
124	approved by the board. The IPS must include, among other items,
125	the investment objectives of the System Trust Fund; permitted
126	types of securities in which the board may invest; and
127	evaluation criteria necessary to measure the investment
128	performance of the fund. As required from time to time, the
129	Investment Advisory Council and the executive director of the
130	board may present recommended changes in the IPS to the board
131	for approval.
132	(2)  The Investment Advisory Council shall present its
133	summary and review of recommended changes Prior to any
134	recommended changes in the IPS to being presented to the board,
135	the executive director and of the board shall present such
136	changes to the Investment Advisory Council for review. The
137	council shall present the results of its review to the board
138	prior to the board's final approval of the IPS or changes in the
139	IPS.
140	Section 6.  This act shall take effect July 1, 2008.

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