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A bill to be entitled

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An act relating to state investments; amending s. 215.44,

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F.S.; clarifying provisions relating to the retention of

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independent investment advisors or managers by the State

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Board of Administration; authorizing the Investment

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Advisory Council to review such managers or advisors;

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requiring the board to include contingent compensation in

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its operating budget; clarifying the requirement that the

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Office of Program Policy Analysis and Government

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Accountability examine the board's management of

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investments; amending s. 215.441, F.S.; providing that the

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executive director of the board is subject to confirmation

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by the Senate; amending s. 215.442, F.S.; expanding the

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subject of a quarterly report to the board by the

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executive director to include certain mortgage securities

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and certain movements in investment grade of such

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securities; providing that the executive director of the

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board is a state officer subject to financial disclosure

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requirements; amending s. 215.444, F.S.; revising

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membership of the council; providing that council members

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are public officers subject to financial-disclosure

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requirements; amending s. 215.475, F.S.; requiring the

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council to submit a review and summary of recommended

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changes to the investment policy statement of the board

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before the board votes on changes to the statement;

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providing an effective date.

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

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     Section 1.  Subsections (2), (4), and (6) of section 215.44,

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Florida Statutes, are amended to read:

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     215.44  Board of Administration; powers and duties in

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relation to investment of trust funds.--

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     (2)(a)  The board shall have the power to make purchases,

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sales, exchanges, investments, and reinvestments for and on

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behalf of the funds referred to in subsection (1), and it shall

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be the duty of the board to see that moneys invested under the

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provisions of ss. 215.44-215.53 are at all times handled in the

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best interests of the state.

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     (b)  In exercising investment authority pursuant to s.

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215.47, the board may retain independent investment advisers or

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managers, or both, external to in-house staff, to assist the

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board in carrying out the power specified in paragraph (a). The

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Investment Advisory Council shall have the right to review, on a

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semiannual basis, the advisers and managers retained by the

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board.

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     (4)  The board shall prepare and approve an operating budget

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each fiscal year consistent with the provisions of chapter 216.

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The approved operating budget shall be submitted to the

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legislative appropriation committees and the Executive Office of

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the Governor prior to July 1 of each year. The budget shall

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include any contingent compensation paid to any employee,

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adviser, or manager, based upon the performance of investments

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made by the board.

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     (6)  The Office of Program Policy Analysis and Government

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Accountability shall conduct a management and operations review,

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including, but not limited to, examine the board's management of

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investments every 2 years. The Office of Program Policy Analysis

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and Government Accountability shall submit such reports to the

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board, the President of the Senate, and the Speaker of the House

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of Representatives and their designees.

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     Section 2.  Section 215.441, Florida Statutes, is amended to

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read:

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     215.441  Board of Administration; appointment of executive

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director.--The appointment of the executive director of the State

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Board of Administration shall be subject to confirmation by the

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Senate and the approval by a majority vote of the Board of

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Trustees of the State Board of Administration, and the Governor

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must vote on the prevailing side. Such appointment must be

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reaffirmed in the same manner by the board of trustees on an

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annual basis.

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     Section 3.  Subsection (1) of section 215.442, Florida

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Statutes, is amended and subsection (4) is added to that section

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to read:

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     215.442  Executive director; reporting requirements; public

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meeting.--

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     (1)  Beginning October 2007 and quarterly thereafter, the

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executive director shall present to the Board of Trustees of the

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State Board of Administration a quarterly report to include the

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following:

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     (a)  The name of each equity in which the State Board of

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Administration has invested for the quarter.

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     (b)  The industry category of each equity.

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     (c) Mortgage securities or debt that represent

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participation in or are collateralized by mortgage loans secured

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by real property or debt issued, including the letter and

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numerical ratings provided by nationally recognized statistical

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rating organizations for each security.

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     (d) A reporting of which securities have moved inside and

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outside of investment grade.

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     (4) The executive director is a state officer, covered by

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s. 112.3145.

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     Section 4.  Section 215.444, Florida Statutes, is amended to

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read:

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     215.444  Investment Advisory Council.--

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     (1) There is created an 11-member a six-member Investment

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Advisory Council to review the investments made by the staff of

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the Board of Administration and to make recommendations to the

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board regarding investment policy, strategy, and procedures.

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     (2)  The members of the council shall be appointed by the

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board and shall be subject to confirmation by the Senate. The

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members shall include one member nominated by the President of

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the Senate, one member nominated by the Speaker of the House of

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Representatives, one member representing local government

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employees, one member representing state government employees,

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one member representing public education employees, and six

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additional persons. These individuals shall possess special

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knowledge, experience, and familiarity with financial investments

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and portfolio management. Members shall be appointed for 4-year

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terms. A vacancy shall be filled for the remainder of the

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unexpired term. The council shall annually elect a chair and a

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vice chair from its membership. A member may not be elected to

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consecutive terms as chair or vice chair. The members are state

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officers covered by s. 112.3145.

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     Section 5.  Section 215.475, Florida Statutes, is amended to

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read:

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     215.475  Investment policy statement.--

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     (1)  In making investments for the System Trust Fund

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pursuant to ss. 215.44-215.53, the board shall make no investment

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which is not in conformance with the Florida Retirement System

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Defined Benefit Plan Investment Policy Statement, hereinafter

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referred to as "the IPS," as developed by the executive director

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and the Investment Advisory Council and approved by the board.

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The IPS must include, among other items, the investment

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objectives of the System Trust Fund; permitted types of

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securities in which the board may invest; and evaluation criteria

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necessary to measure the investment performance of the fund. As

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required from time to time, the Investment Advisory Council and

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the executive director of the board may present recommended

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changes in the IPS to the board for approval.

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     (2) The Investment Advisory Council shall present its

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summary and review of recommended changes Prior to any

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recommended changes in the IPS to being presented to the board,

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the executive director and of the board shall present such

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changes to the Investment Advisory Council for review. The

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council shall present the results of its review to the board

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prior to the board's final approval of the IPS or changes in the

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IPS.

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     Section 6.  This act shall take effect July 1, 2008.