Florida Senate - 2017 SB 1402
By Senator Latvala
16-01485-17 20171402__
1 A bill to be entitled
2 An act relating to local governmental financial
3 emergencies; amending s. 218.503, F.S.; expanding the
4 entities that have oversight over local governmental
5 entities, charter schools, charter technical career
6 centers, and district school boards under certain
7 circumstances; specifying the number of members to be
8 on a financial emergency board; specifying the
9 entities who shall appoint members to the board;
10 providing qualifications of members and the chair of
11 the board; revising the information to which the board
12 has access; requiring the adoption of rules to conduct
13 board business; authorizing the board to take
14 specified actions; requiring recommendations and
15 reports to be submitted to specified entities;
16 authorizing the board to assume operation and
17 institutional control of a local governmental entity’s
18 or district school board’s functions under certain
19 circumstances; amending s. 218.504, F.S.; conforming
20 provisions to changes made by the act; providing an
21 effective date.
22
23 Be It Enacted by the Legislature of the State of Florida:
24
25 Section 1. Subsections (1), (2), and (3) of section
26 218.503, Florida Statutes, are amended, subsections (4), (5),
27 and (6) are renumbered as subsections (5), (6), and (7),
28 respectively, and a new subsection (4) is added to that section,
29 to read:
30 218.503 Determination of financial emergency.—
31 (1) Local governmental entities, charter schools, charter
32 technical career centers, and district school boards shall be
33 subject to review and oversight by the Governor, the Senate, the
34 House of Representatives, the Legislative Auditing Committee,
35 the charter school sponsor, the charter technical career center
36 sponsor, or the Commissioner of Education, as appropriate, when
37 any one of the following conditions occurs:
38 (a) Failure within the same fiscal year in which due to pay
39 short-term loans or failure to make bond debt service or other
40 long-term debt payments when due, as a result of a lack of
41 funds.
42 (b) Failure to pay uncontested claims from creditors within
43 90 days after the claim is presented, as a result of a lack of
44 funds.
45 (c) Failure to transfer at the appropriate time, due to
46 lack of funds:
47 1. Taxes withheld on the income of employees; or
48 2. Employer and employee contributions for:
49 a. Federal social security; or
50 b. Any pension, retirement, or benefit plan of an employee.
51 (d) Failure for one pay period to pay, due to lack of
52 funds:
53 1. Wages and salaries owed to employees; or
54 2. Retirement benefits owed to former employees.
55 (2) A local governmental entity shall notify the Governor,
56 the President of the Senate, the Speaker of the House of
57 Representatives, and the Legislative Auditing Committee; a
58 charter school shall notify the charter school sponsor, the
59 Commissioner of Education, and the Legislative Auditing
60 Committee; a charter technical career center shall notify the
61 charter technical career center sponsor, the Commissioner of
62 Education, and the Legislative Auditing Committee; and a
63 district school board shall notify the Commissioner of Education
64 and the Legislative Auditing Committee, when one or more of the
65 conditions specified in subsection (1) have occurred or will
66 occur if action is not taken to assist the local governmental
67 entity, charter school, charter technical career center, or
68 district school board. In addition, any state agency must,
69 within 30 days after a determination that one or more of the
70 conditions specified in subsection (1) have occurred or will
71 occur if action is not taken to assist the local governmental
72 entity, charter school, charter technical career center, or
73 district school board, notify the Governor, charter school
74 sponsor, charter technical career center sponsor, or the
75 Commissioner of Education, as appropriate, and the President of
76 the Senate, the Speaker of the House of Representatives, and the
77 Legislative Auditing Committee.
78 (3) Upon notification that one or more of the conditions in
79 subsection (1) have occurred or will occur if action is not
80 taken to assist the local governmental entity or district school
81 board, the Governor or his or her designee, in cooperation with
82 the appropriate committees and subcommittees of the House of
83 Representatives and of the Senate, including the Legislative
84 Auditing Committee, shall contact the local governmental entity
85 or the Commissioner of Education or his or her designee shall
86 contact the district school board to determine what actions have
87 been taken by the local governmental entity or the district
88 school board to resolve or prevent the condition. The
89 information requested must be provided within 45 days after the
90 date of the request. If the local governmental entity or the
91 district school board does not comply with the request, the
92 Governor or his or her designee or the Commissioner of Education
93 or his or her designee shall notify the members of the
94 Legislative Auditing Committee who may take action pursuant to
95 s. 11.40. The Governor or the Commissioner of Education, as
96 appropriate, shall determine whether the local governmental
97 entity or the district school board needs state assistance to
98 resolve or prevent the condition into the future. If state
99 assistance is needed, the local governmental entity or district
100 school board is considered to be in a state of financial
101 emergency. The Governor or the Commissioner of Education, as
102 appropriate, may has the authority to implement measures as set
103 forth in ss. 218.50-218.504 to assist the local governmental
104 entity or district school board in resolving the financial
105 emergency. Such measures may include, but are not limited to:
106 (a) Requiring approval of the local governmental entity’s
107 budget by the Governor or approval of the district school
108 board’s budget by the Commissioner of Education.
109 (b) Authorizing a state loan to a local governmental entity
110 and providing for repayment of same.
111 (c) Prohibiting a local governmental entity or district
112 school board from issuing bonds, notes, certificates of
113 indebtedness, or any other form of debt until such time as it is
114 no longer subject to this section.
115 (d) Making such inspections and reviews of records,
116 information, reports, and assets of the local governmental
117 entity or district school board as are needed. The appropriate
118 local officials shall cooperate in such inspections and reviews.
119 (e) Consulting with officials and auditors of the local
120 governmental entity or the district school board and the
121 appropriate state officials regarding any steps necessary to
122 bring the books of account, accounting systems, financial
123 procedures, and reports into compliance with state requirements.
124 (f) Providing technical assistance to the local
125 governmental entity or the district school board.
126 (g)1. Establishing and empowering a financial emergency
127 board to oversee the activities of the local governmental entity
128 or the district school board as set forth in subsection (4). If
129 a financial emergency board is established for a local
130 governmental entity, the Governor shall appoint board members
131 and select a chair. If a financial emergency board is
132 established for a district school board, the State Board of
133 Education shall appoint board members and select a chair. The
134 financial emergency board shall adopt such rules as are
135 necessary for conducting board business. The board may:
136 a. Make such reviews of records, reports, and assets of the
137 local governmental entity or the district school board as are
138 needed.
139 b. Consult with officials and auditors of the local
140 governmental entity or the district school board and the
141 appropriate state officials regarding any steps necessary to
142 bring the books of account, accounting systems, financial
143 procedures, and reports of the local governmental entity or the
144 district school board into compliance with state requirements.
145 c. Review the operations, management, efficiency,
146 productivity, and financing of functions and operations of the
147 local governmental entity or the district school board.
148 d. Consult with other governmental entities for the
149 consolidation of all administrative direction and support
150 services, including, but not limited to, services for asset
151 sales, economic and community development, building inspections,
152 parks and recreation, facilities management, engineering and
153 construction, insurance coverage, risk management, planning and
154 zoning, information systems, fleet management, and purchasing.
155 2. The recommendations and reports made by the financial
156 emergency board must be submitted to the Governor for local
157 governmental entities or to the Commissioner of Education and
158 the State Board of Education for district school boards for
159 appropriate action.
160 (h) Requiring and approving a plan, to be prepared by
161 officials of the local governmental entity or the district
162 school board in consultation with the appropriate state
163 officials, prescribing actions that will cause the local
164 governmental entity or district school board to no longer be
165 subject to this section. The plan must include, but need not be
166 limited to:
167 1. Provision for payment in full of obligations outlined in
168 subsection (1), designated as priority items, which are
169 currently due or will come due.
170 2. Establishment of priority budgeting or zero-based
171 budgeting in order to eliminate items that are not affordable.
172 3. The prohibition of a level of operations which can be
173 sustained only with nonrecurring revenues.
174 4. Provisions implementing the consolidation, sourcing, or
175 discontinuance of all administrative direction and support
176 services, including, but not limited to, services for asset
177 sales, economic and community development, building inspections,
178 parks and recreation, facilities management, engineering and
179 construction, insurance coverage, risk management, planning and
180 zoning, information systems, fleet management, and purchasing.
181 (4)(a) Any financial emergency board established must
182 consist of at least 7 members but not more than 13 members.
183 1. If a financial emergency board is established for a
184 local governmental entity, the President of the Senate and the
185 Speaker of the House of Representatives shall each appoint two
186 of the members to the board. The Governor shall appoint the
187 remainder of the board members and shall designate the chair of
188 the board.
189 2. If a financial emergency board is established for a
190 district school board, the President of the Senate and the
191 Speaker of the House of Representatives shall each appoint two
192 of the members to the board. The State Board of Education shall
193 appoint the remainder of the board members and shall designate
194 the chair of the board.
195 (b) Appointees to a financial emergency board should
196 collectively possess the knowledge, skills, and competencies
197 needed to perform their individual responsibilities and
198 accomplish the mission of the financial emergency board,
199 including, but not limited to, internal quality control,
200 finance, business administration, and public works. The chair of
201 the financial emergency board must have experience in at least
202 one of the following positions or areas:
203 1. Inspector general.
204 2. Supervisory experience in an office of inspector general
205 or an investigative public agency similar to an office of
206 inspector general.
207 3. Local, state, or federal law enforcement officer.
208 4. Local, state, or federal court judge.
209 5. Senior-level auditor or comptroller.
210 6. The administration and management of complex audits and
211 investigations.
212 7. Managing programs for prevention, examination,
213 detection, elimination of fraud, waste, abuse, mismanagement,
214 malfeasance, or misconduct in government or other organizations.
215 8. Certified fraud examiner.
216 (c) The financial emergency board shall have access to
217 records, data, and other information of the local governmental
218 entity or the district school board which the board deems
219 necessary to carry out its duties and shall be given the
220 technical and financial resources necessary to complete those
221 duties. The financial emergency board shall adopt such rules as
222 are necessary for conducting board business. The board may:
223 1. Hire or retain legal counsel.
224 2. Obtain external advice and assistance if the internal
225 audit staff lacks the knowledge, skills, or other competencies
226 needed to perform all or part of the duties necessary to resolve
227 the financial emergency conditions.
228 3. Request and obtain assistance from any federal agency,
229 state agency, or local entity.
230 4. Issue and serve subpoenas or subpoenas duces tecum to
231 compel the attendance of witnesses and the production of
232 documents, reports, answers, records, accounts, and data in any
233 format. In the event of noncompliance with a subpoena issued
234 pursuant to this subparagraph, the chair of the financial
235 emergency board may petition the circuit court of the county for
236 an order requiring the subpoenaed person to appear and testify
237 and to produce documents.
238 5. Require a person to file a statement in writing, under
239 oath, as to all the facts and circumstances concerning the
240 matter to be audited, examined, or investigated.
241 6. Make such reviews of records, reports, and assets of the
242 local governmental entity or the district school board as are
243 needed.
244 7. Consult with officials and auditors of the local
245 governmental entity or the district school board and the
246 appropriate state officials regarding any steps necessary to
247 bring the books of account, accounting systems, financial
248 procedures, and reports of the local governmental entity or the
249 district school board into compliance with state requirements.
250 8. Review the operations, management, efficiency,
251 productivity, and financing of functions and operations of the
252 local governmental entity or the district school board.
253 9. Consult with other governmental entities for the
254 consolidation of all administrative direction and support
255 services, including, but not limited to, services for asset
256 sales, economic and community development, building inspections,
257 parks and recreation, facilities management, engineering and
258 construction, insurance coverage, risk management, planning and
259 zoning, information systems, fleet management, and purchasing.
260 (d)1. Each recommendation and report made by the financial
261 emergency board addressing a local entity must be submitted to
262 the Governor, the President of the Senate, the Speaker of the
263 House of Representatives, the Legislative Auditing Committee,
264 and the local governmental entity under review.
265 2. Each recommendation and report made by the financial
266 emergency board addressing a district school board must be
267 submitted to the Governor, the President of the Senate, the
268 Speaker of the House of Representatives, the Legislative
269 Auditing Committee, the Commissioner of Education, and the State
270 Board of Education for appropriate action.
271 (e) If a local governmental entity or the district school
272 board, as appropriate, fails to remedy or take action on
273 recommendations made in any report submitted under paragraph (d)
274 within 60 days after receiving the recommendations, the
275 financial emergency board may assume operation and institutional
276 control of the local governmental entity’s or district school
277 board’s functions.
278 Section 2. Paragraph (b) of subsection (1) and subsection
279 (2) of section 218.504, Florida Statutes, are amended to read:
280 218.504 Cessation of state action.—The Governor or the
281 Commissioner of Education, as appropriate, has the authority to
282 terminate all state actions pursuant to ss. 218.50-218.504.
283 Cessation of state action must not occur until the Governor or
284 the Commissioner of Education, as appropriate, has determined
285 that:
286 (1) The local governmental entity, charter school, charter
287 technical career center, or district school board:
288 (b) Has resolved the conditions outlined in s. 218.503(1)
289 or (4) s. 218.503(1).
290 (2) None of the conditions outlined in s. 218.503(1) or (4)
291 s. 218.503(1) exists.
292 Section 3. This act shall take effect upon becoming a law.