Florida Senate - 2020 COMMITTEE AMENDMENT Bill No. SB 1270 Ì116502qÎ116502 LEGISLATIVE ACTION Senate . House Comm: RCS . 02/10/2020 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Governmental Oversight and Accountability (Lee) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 Section 1. The Division of Law Revision is directed to 6 create part IX of chapter 112, Florida Statutes, consisting of 7 s. 112.89, Florida Statutes, to be entitled “Fiduciary Duty of 8 Care for Appointed Public Officials and Executive Officers.” 9 Section 2. Section 112.89, Florida Statutes, is created to 10 read: 11 112.89 Fiduciary duty of care.— 12 (1) LEGISLATIVE FINDINGS AND PURPOSE.—The Legislature finds 13 that appointed public officials and executive officers acting on 14 behalf of governmental entities owe a fiduciary duty to the 15 entities they serve. The Legislature finds that codifying a 16 fiduciary duty of care will require that appointed public 17 officials and executive officers stay adequately informed of 18 affairs, perform due diligence, perform reasonable oversight, 19 and practice fiscal responsibility regarding decisions involving 20 corporate and proprietary commitments on behalf of the entity 21 they serve. 22 (2) DEFINITIONS.— 23 (a) “Appointed public official” means either a “local 24 officer” as defined in s. 112.3145(1)(a)2. or a “state officer” 25 as defined in s. 112.3145(1)(c)2. and 3. 26 (b) “Department” means the Department of Business and 27 Professional Regulation. 28 (c) “Executive officer” means the chief executive officer 29 of a governmental entity to which an appointed public official 30 is appointed. 31 (d) “Governmental entity” means the entity, or a board, a 32 council, a commission, an authority, or other body thereof, to 33 which an appointed public official or an executive officer is 34 appointed or hired. 35 (3) FIDUCIARY DUTY OF CARE.—Each appointed public official 36 and executive officer owes a fiduciary duty of care to the 37 applicable entity in accordance with law he or she serves and 38 has a duty to: 39 (a) Act in accordance with the laws, ordinances, rules, 40 policies, and terms governing his or her office or employment. 41 (b) Act with the care, competence, and diligence normally 42 exercised by private business professionals in similar corporate 43 and proprietary circumstances. 44 (c) Act only within the scope of his or her authority. 45 (d) Refrain from conduct that is likely to damage the 46 financial or economic interests of the governmental entity. 47 (e) Use reasonable efforts to maintain documentation in 48 accordance with applicable laws. 49 (f) Maintain reasonable oversight of any delegated 50 authority and discharge his or her duties with the care that a 51 reasonably prudent person in a like business position would 52 believe appropriate under the circumstances, and must: 53 1. Become reasonably informed in connection with any 54 decisionmaking function; 55 2. Become reasonably informed when devoting attention to 56 any oversight function; 57 3. Keep reasonably informed concerning the affairs of the 58 governmental entity; and 59 4. Keep reasonably informed concerning the performance of a 60 governmental entity’s executive officers or other officers, 61 agents, or employees. 62 (4) TRAINING REQUIREMENT.— 63 (a) Beginning January 1, 2021, each appointed public 64 official and executive officer shall complete a minimum of 5 65 hours of board governance training for each term served. 66 1. An appointed public official or executive officer 67 holding office or employed by an entity on January 1, 2021, 68 shall complete the 5 hours of board governance training before 69 the expiration of his or her term of service. If an appointed 70 public official or executive officer is employed under a 71 contract that does not specify a termination date for 72 employment, the public official or executive officer shall 73 complete the 5 hours of training by January 1, 2022, and once 74 every 4 years thereafter for the duration of their employment. 75 2. An appointed public official or executive officer who is 76 appointed, reappointed, or hired after January 1, 2021, shall 77 complete the 5 hours of board governance training within 180 78 days after the date of his or her appointment, reappointment, or 79 hire. 80 (b) By January 1, 2021, the department shall: 81 1. Contract for or approve a board governance training 82 program that includes an affordable web-based electronic media 83 option; or 84 2. Publish a list of approved board governance training 85 providers on its website. A provider may include a Florida 86 College System institution, a state university, a nationally 87 recognized entity specializing in board governance education, or 88 any other entity deemed qualified by the department as capable 89 of providing the minimum training requirements specified in this 90 subsection. 91 (c) The board governance training programs must provide, at 92 a minimum, educational materials and instruction on the 93 following: 94 1. Generally accepted corporate board governance principles 95 and best practices; corporate board fiduciary duty of care legal 96 analyses; corporate board oversight and evaluation procedures; 97 governmental entity responsibilities; executive officer 98 responsibilities; executive officer performance evaluations; 99 selecting, monitoring, and evaluating an executive management 100 team; reviewing and approving proposed investments, 101 expenditures, and budget plans; financial accounting and capital 102 allocation principles and practices; and new governmental entity 103 member orientation. 104 2. The fiduciary duty of care and obligations imposed upon 105 appointed public officials and executive officers pursuant to 106 this section. 107 (d) A governmental entity complies with the training 108 requirement under this subsection by providing a department 109 approved program or contracting with a provider listed by the 110 department under subparagraph (b)2. However, for governmental 111 entities with annual revenues of less than $300,000, board 112 governance training may be provided by in-house counsel of the 113 governmental entity or the unit of government that created the 114 governmental entity, if applicable, so long as the training 115 complies with the minimum course content established by 116 department rule. 117 (e) Within 30 days after completion of the board governance 118 training, each appointed public official and executive officer 119 shall certify, in writing or electronic form and under oath, to 120 the department that he or she: 121 1. Has completed the training required by this subsection; 122 2. Has read the laws and relevant policies applicable to 123 his or her position; 124 3. Will work to uphold such laws and policies to the best 125 of his or her ability; and 126 4. Will faithfully discharge his or her fiduciary 127 responsibility, as imposed by this section. 128 (f) The department shall adopt rules to implement this 129 subsection. 130 (g) This subsection does not apply to: 131 1. Appointed public officials and executive officers of 132 governmental entities whose annual revenues are less than 133 $100,000 or to appointed public officials who hold elected 134 office in another capacity; or 135 2. An appointed public official or executive officer who 136 completes board governance training involving fiduciary duties 137 or responsibilities which is required under any other state law. 138 (5) APPOINTMENT OF EXECUTIVE OFFICERS AND GENERAL 139 COUNSELS.—The appointment of any executive officer or general 140 counsel is subject to approval by a majority vote of the 141 governmental entity. 142 (6) STANDARDS FOR LEGAL COUNSEL.—All legal counsel employed 143 by a governmental entity must represent the legal interests and 144 positions of the governmental entity and not the interest of any 145 individual or employee of the governmental entity, unless such 146 representation is directed by the governmental entity. 147 Section 3. This act shall take effect July 1, 2020. 148 149 ================= T I T L E A M E N D M E N T ================ 150 And the title is amended as follows: 151 Delete everything before the enacting clause 152 and insert: 153 A bill to be entitled 154 An act relating to the fiduciary duty of care for 155 appointed public officials and executive officers; 156 providing a directive to the Division of Law Revision 157 to create part IX of ch. 112, F.S.; creating s. 158 112.89, F.S.; providing legislative findings and 159 purpose; defining terms; establishing standards for 160 the fiduciary duty of care for appointed public 161 officials and executive officers of specified 162 governmental entities; requiring training on board 163 governance beginning on a specified date; requiring 164 the Department of Business and Professional Regulation 165 to contract for or approve such training programs or 166 publish a list of approved training providers; 167 specifying requirements for such training; authorizing 168 training to be provided by in-house counsel for 169 certain governmental entities; requiring appointed 170 public officials and executive officers to certify 171 their completion of the annual training; requiring the 172 department to adopt rules; providing exceptions to the 173 training requirement; specifying requirements for the 174 appointment of executive officers and general counsels 175 of governmental entities; specifying standards for 176 legal counsel; providing an effective date.