Florida Senate - 2017 CS for SB 1402
By the Committee on Community Affairs; and Senator Latvala
578-03380-17 20171402c1
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 manner
9 of appointing members to the board; providing
10 qualifications of members and the chair of the board;
11 revising the information to which the board has
12 access; requiring the adoption of rules to conduct
13 board business; authorizing the board to hire or
14 retain legal counsel; requiring recommendations and
15 reports to be submitted to specified entities;
16 providing that certain board members of a local
17 governmental entity or district school board who fail
18 to vote affirmatively to take certain actions in
19 certain circumstances are subject to suspension by the
20 Governor; amending s. 218.504, F.S.; conforming
21 provisions to changes made by the act; providing an
22 effective date.
23
24 Be It Enacted by the Legislature of the State of Florida:
25
26 Section 1. Subsections (1), (2), and (3) of section
27 218.503, Florida Statutes, are amended, subsections (4), (5),
28 and (6) are renumbered as subsections (5), (6), and (7),
29 respectively, and a new subsection (4) is added to that section,
30 to read:
31 218.503 Determination of financial emergency.—
32 (1) Local governmental entities, charter schools, charter
33 technical career centers, and district school boards shall be
34 subject to review and oversight by the Governor, the Senate, the
35 House of Representatives, the Legislative Auditing Committee,
36 the charter school sponsor, the charter technical career center
37 sponsor, or the Commissioner of Education, as appropriate, when
38 any one of the following conditions occurs:
39 (a) Failure within the same fiscal year in which due to pay
40 short-term loans or failure to make bond debt service or other
41 long-term debt payments when due, as a result of a lack of
42 funds.
43 (b) Failure to pay uncontested claims from creditors within
44 90 days after the claim is presented, as a result of a lack of
45 funds.
46 (c) Failure to transfer at the appropriate time, due to
47 lack of funds:
48 1. Taxes withheld on the income of employees; or
49 2. Employer and employee contributions for:
50 a. Federal social security; or
51 b. Any pension, retirement, or benefit plan of an employee.
52 (d) Failure for one pay period to pay, due to lack of
53 funds:
54 1. Wages and salaries owed to employees; or
55 2. Retirement benefits owed to former employees.
56 (2) A local governmental entity shall notify the Governor,
57 the President of the Senate, the Speaker of the House of
58 Representatives, and the Legislative Auditing Committee; a
59 charter school shall notify the charter school sponsor, the
60 Commissioner of Education, and the Legislative Auditing
61 Committee; a charter technical career center shall notify the
62 charter technical career center sponsor, the Commissioner of
63 Education, and the Legislative Auditing Committee; and a
64 district school board shall notify the Commissioner of Education
65 and the Legislative Auditing Committee, when one or more of the
66 conditions specified in subsection (1) have occurred or will
67 occur if action is not taken to assist the local governmental
68 entity, charter school, charter technical career center, or
69 district school board. In addition, any state agency must,
70 within 30 days after a determination that one or more of the
71 conditions specified in subsection (1) have occurred or will
72 occur if action is not taken to assist the local governmental
73 entity, charter school, charter technical career center, or
74 district school board, notify the Governor, charter school
75 sponsor, charter technical career center sponsor, or the
76 Commissioner of Education, as appropriate, and the President of
77 the Senate, the Speaker of the House of Representatives, and the
78 Legislative Auditing Committee.
79 (3) Upon notification that one or more of the conditions in
80 subsection (1) have occurred or will occur if action is not
81 taken to assist the local governmental entity or district school
82 board, the Governor or his or her designee, in cooperation with
83 the President of the Senate or his or her designee, the Speaker
84 of the House of Representatives or his or her designee, and the
85 Legislative Auditing Committee, shall contact the local
86 governmental entity or the Commissioner of Education or his or
87 her designee shall contact the district school board to
88 determine what actions have been taken by the local governmental
89 entity or the district school board to resolve or prevent the
90 condition. The information requested must be provided within 45
91 days after the date of the request. If the local governmental
92 entity or the district school board does not comply with the
93 request, the Governor or his or her designee or the Commissioner
94 of Education or his or her designee shall notify the members of
95 the Legislative Auditing Committee who may take action pursuant
96 to s. 11.40. The Governor or the Commissioner of Education, as
97 appropriate, shall determine whether the local governmental
98 entity or the district school board needs state assistance to
99 resolve or prevent the condition into the future. If state
100 assistance is needed, the local governmental entity or district
101 school board is considered to be in a state of financial
102 emergency. The Governor or the Commissioner of Education, as
103 appropriate, may has the authority to implement measures as set
104 forth in ss. 218.50-218.504 to assist the local governmental
105 entity or district school board in resolving the financial
106 emergency. Such measures may include, but are not limited to:
107 (a) Requiring approval of the local governmental entity’s
108 budget by the Governor or approval of the district school
109 board’s budget by the Commissioner of Education.
110 (b) Authorizing a state loan to a local governmental entity
111 and providing for repayment of same.
112 (c) Prohibiting a local governmental entity or district
113 school board from issuing bonds, notes, certificates of
114 indebtedness, or any other form of debt until such time as it is
115 no longer subject to this section.
116 (d) Making such inspections and reviews of records,
117 information, reports, and assets of the local governmental
118 entity or district school board as are needed. The appropriate
119 local officials shall cooperate in such inspections and reviews.
120 (e) Consulting with officials and auditors of the local
121 governmental entity or the district school board and the
122 appropriate state officials regarding any steps necessary to
123 bring the books of account, accounting systems, financial
124 procedures, and reports into compliance with state requirements.
125 (f) Providing technical assistance to the local
126 governmental entity or the district school board.
127 (g)1. Establishing and empowering a financial emergency
128 board to oversee the activities of the local governmental entity
129 or the district school board as set forth in subsection (4). If
130 a financial emergency board is established for a local
131 governmental entity, the Governor shall appoint board members
132 and select a chair. If a financial emergency board is
133 established for a district school board, the State Board of
134 Education shall appoint board members and select a chair. The
135 financial emergency board shall adopt such rules as are
136 necessary for conducting board business. The board may:
137 a. Make such reviews of records, reports, and assets of the
138 local governmental entity or the district school board as are
139 needed.
140 b. Consult with officials and auditors of the local
141 governmental entity or the district school board and the
142 appropriate state officials regarding any steps necessary to
143 bring the books of account, accounting systems, financial
144 procedures, and reports of the local governmental entity or the
145 district school board into compliance with state requirements.
146 c. Review the operations, management, efficiency,
147 productivity, and financing of functions and operations of the
148 local governmental entity or the district school board.
149 d. Consult with other governmental entities for the
150 consolidation of all administrative direction and support
151 services, including, but not limited to, services for asset
152 sales, economic and community development, building inspections,
153 parks and recreation, facilities management, engineering and
154 construction, insurance coverage, risk management, planning and
155 zoning, information systems, fleet management, and purchasing.
156 2. The recommendations and reports made by the financial
157 emergency board must be submitted to the Governor for local
158 governmental entities or to the Commissioner of Education and
159 the State Board of Education for district school boards for
160 appropriate action.
161 (h) Requiring and approving a plan, to be prepared by
162 officials of the local governmental entity or the district
163 school board in consultation with the appropriate state
164 officials, prescribing actions that will cause the local
165 governmental entity or district school board to no longer be
166 subject to this section. The plan must include, but need not be
167 limited to:
168 1. Provision for payment in full of obligations outlined in
169 subsection (1), designated as priority items, which are
170 currently due or will come due.
171 2. Establishment of priority budgeting or zero-based
172 budgeting in order to eliminate items that are not affordable.
173 3. The prohibition of a level of operations which can be
174 sustained only with nonrecurring revenues.
175 4. Provisions implementing the consolidation, sourcing, or
176 discontinuance of all administrative direction and support
177 services, including, but not limited to, services for asset
178 sales, economic and community development, building inspections,
179 parks and recreation, facilities management, engineering and
180 construction, insurance coverage, risk management, planning and
181 zoning, information systems, fleet management, and purchasing.
182 (4)(a) Any financial board established must consist of an
183 odd number of members comprised of at least 7 but not more than
184 13 members.
185 1. If a financial emergency board is established for a
186 local governmental entity, the President of the Senate and the
187 Speaker of the House of Representatives shall each nominate five
188 individuals as candidates for appointment to the board. The
189 Governor shall choose two candidates from each list and appoint
190 them as four of the members of the board. The Governor shall
191 appoint the remainder of the board members and shall designate
192 the chair of the board.
193 2. If a financial emergency board is established for a
194 district school board, the President of the Senate, the Speaker
195 of the House of Representatives, and the State Board of
196 Education shall each nominate five individuals as candidates for
197 appointment to the board. The Governor shall choose two
198 candidates from each list and appoint them as six of the members
199 to the board. The State Board of Education shall appoint the
200 remainder of the board members and shall designate the chair of
201 the board.
202 (b) Appointees to a financial emergency board should
203 collectively possess the knowledge, skills, and competencies
204 needed to perform their individual responsibilities and
205 accomplish the mission of the financial emergency board,
206 including, but not limited to, internal quality control,
207 finance, business administration, and public works. The chair of
208 the financial emergency board must have experience in at least
209 one of the following positions or areas:
210 1. Inspector general.
211 2. Supervisory experience in an office of inspector general
212 or an investigative public agency similar to an office of
213 inspector general.
214 3. Local, state, or federal law enforcement officer.
215 4. Local, state, or federal court judge.
216 5. Senior-level auditor or comptroller.
217 6. The administration and management of complex audits and
218 investigations.
219 7. Managing programs for prevention, examination,
220 detection, elimination of fraud, waste, abuse, mismanagement,
221 malfeasance, or misconduct in government or other organizations.
222 8. Certified fraud examiner.
223 (c) The financial emergency board shall have access to
224 records, data, and other information of the local governmental
225 entity or the district school board that the board deems
226 necessary to carry out its duties and shall be given the
227 technical and financial resources necessary to complete those
228 duties. The financial emergency board shall adopt such rules as
229 are necessary for conducting board business. The board may:
230 1. Hire or retain legal counsel.
231 2. Obtain external advice and assistance if the financial
232 emergency board or the staff of the entity under review lacks
233 the knowledge, skills, or other competencies needed to perform
234 all or part of the duties necessary to resolve the financial
235 emergency conditions.
236 3. Request and obtain assistance from any federal agency,
237 state agency, or local entity.
238 4. Issue and serve subpoenas or subpoenas duces tecum to
239 compel the attendance of witnesses and the production of
240 documents, reports, answers, records, accounts, and data in any
241 format. In the event of noncompliance with a subpoena issued
242 pursuant to this subparagraph, the chair of the financial
243 emergency board may petition the circuit court of the county for
244 an order requiring the subpoenaed person to appear and testify
245 and to produce documents.
246 5. Require a person to file a statement in writing, under
247 oath, as to all the facts and circumstances concerning the
248 matter to be audited, examined, or investigated.
249 6. Make such reviews of records, reports, and assets of the
250 local governmental entity or the district school board as are
251 needed.
252 7. Consult with officials and auditors of the local
253 governmental entity or the district school board and the
254 appropriate state officials regarding any steps necessary to
255 bring the books of account, accounting systems, financial
256 procedures, and reports of the local governmental entity or the
257 district school board into compliance with state requirements.
258 8. Review the operations, management, efficiency,
259 productivity, and financing of functions and operations of the
260 local governmental entity or the district school board.
261 9. Consult with other governmental entities for the
262 consolidation of all administrative direction and support
263 services, including, but not limited to, services for asset
264 sales, economic and community development, building inspections,
265 parks and recreation, facilities management, engineering and
266 construction, insurance coverage, risk management, planning and
267 zoning, information systems, fleet management, and purchasing.
268 (d)1. Each recommendation and report made by the financial
269 emergency board addressing a local entity must be submitted to
270 the Governor, the President of the Senate, the Speaker of the
271 House of Representatives, the Legislative Auditing Committee,
272 and the local governmental entity under review.
273 2. Each recommendation and report made by the financial
274 emergency board addressing a district school board must be
275 submitted to the Governor, the President of the Senate, the
276 Speaker of the House of Representatives, the Legislative
277 Auditing Committee, the district school board under review, the
278 Commissioner of Education, and the State Board of Education for
279 appropriate action.
280 (e) If a local governmental entity or the district school
281 board, as appropriate, fails to remedy or take action on
282 recommendations made in any report submitted under paragraph (d)
283 within 60 days after receiving the recommendations, a member of
284 the governing body of the local governmental entity or the
285 district school board, as appropriate, who failed to vote
286 affirmatively to remedy or take action on the recommendations is
287 subject to suspension from office by the Governor for
288 malfeasance and misfeasance in office.
289 Section 2. Paragraph (b) of subsection (1) and subsection
290 (2) of section 218.504, Florida Statutes, are amended to read:
291 218.504 Cessation of state action.—The Governor or the
292 Commissioner of Education, as appropriate, has the authority to
293 terminate all state actions pursuant to ss. 218.50-218.504.
294 Cessation of state action must not occur until the Governor or
295 the Commissioner of Education, as appropriate, has determined
296 that:
297 (1) The local governmental entity, charter school, charter
298 technical career center, or district school board:
299 (b) Has resolved the conditions outlined in s. 218.503(1)
300 or (4) s. 218.503(1).
301 (2) None of the conditions outlined in s. 218.503(1) or (4)
302 s. 218.503(1) exists.
303 Section 3. This act shall take effect upon becoming a law.