Florida Senate - 2020 SB 1270 By Senator Lee 20-01665E-20 20201270__ 1 A bill to be entitled 2 An act relating to the fiduciary duty of care for 3 appointed public officials and executive officers; 4 providing a directive to the Division of Law Revision 5 to create part IX of ch. 112, F.S.; creating s. 6 112.89, F.S.; providing legislative findings and 7 purpose; defining terms; establishing standards for 8 the fiduciary duty of care for appointed public 9 officials and executive officers of specified 10 governmental entities; requiring training on board 11 governance beginning on a specified date; requiring 12 the Department of Business and Professional Regulation 13 to contract for or approve such training programs or 14 publish a list of approved training providers; 15 specifying requirements for such training; authorizing 16 training to be provided by in-house counsel for 17 certain governmental entities; requiring appointed 18 public officials and executive officers to certify 19 their completion of the annual training; requiring the 20 department to adopt rules; providing an exception to 21 the training requirement; specifying requirements for 22 the appointment of executive officers and general 23 counsels of governmental entities; specifying 24 standards for legal counsel; providing an effective 25 date. 26 27 Be It Enacted by the Legislature of the State of Florida: 28 29 Section 1. The Division of Law Revision is directed to 30 create part IX of chapter 112, Florida Statutes, consisting of 31 s. 112.89, Florida Statutes, to be entitled “Fiduciary Duty of 32 Care for Appointed Public Officials and Executive Officers.” 33 Section 2. Section 112.89, Florida Statutes, is created to 34 read: 35 112.89 Fiduciary duty of care.— 36 (1) LEGISLATIVE FINDINGS AND PURPOSE.—The Legislature finds 37 that appointed public officials and executive officers acting on 38 behalf of governmental entities owe a fiduciary duty to the 39 entities they serve. The Legislature finds that codifying a 40 fiduciary duty of care will require that appointed public 41 officials and executive officers stay adequately informed of 42 affairs, perform due diligence, perform reasonable oversight, 43 and practice fiscal responsibility regarding decisions involving 44 corporate and proprietary commitments on behalf of a 45 governmental entity. 46 (2) DEFINITIONS.— 47 (a) “Appointed public official” means either a “local 48 officer” as defined in s. 112.3145(1)(a)2. or a “state officer” 49 as defined in s. 112.3145(1)(c)2. and 3. 50 (b) “Department” means the Department of Business and 51 Professional Regulation. 52 (c) “Executive officer” means the chief executive officer 53 of a governmental entity. 54 (d) “Governmental entity” means the entity, or a board, a 55 council, a commission, an authority, or other body thereof, to 56 which an appointed public official or an executive officer is 57 appointed or hired. 58 (3) FIDUCIARY DUTY OF CARE.—Each appointed public official 59 and executive officer owes a fiduciary duty of care to the 60 governmental entity he or she serves and has a duty to: 61 (a) Act in accordance with the laws, ordinances, rules, 62 policies, and terms governing his or her office or employment. 63 (b) Act with the care, competence, and diligence normally 64 exercised by private business professionals in similar corporate 65 and proprietary circumstances. 66 (c) Act only within the scope of his or her authority. 67 (d) Refrain from conduct that is likely to damage the 68 financial or economic interests of the governmental entity. 69 (e) Use reasonable efforts to maintain documentation in 70 accordance with applicable laws. 71 (f) Maintain reasonable oversight of any delegated 72 authority and discharge his or her duties with the care that a 73 reasonably prudent person in a like private business position 74 would believe appropriate under the circumstances, and must: 75 1. Become reasonably informed in connection with any 76 decisionmaking function; 77 2. Become reasonably informed when devoting attention to 78 any oversight function; 79 3. Keep reasonably informed concerning the affairs of the 80 governmental entity; and 81 4. Keep reasonably informed concerning the performance of a 82 governmental entity’s executive officers or other officers, 83 agents, or employees. 84 (4) TRAINING REQUIREMENT.— 85 (a) Beginning January 1, 2021, each appointed public 86 official and executive officer of a governmental entity shall 87 complete a minimum of 5 hours of board governance training for 88 each term served. 89 1. An appointed public official or executive officer 90 holding office or employed by a governmental entity on January 91 1, 2021, shall complete the 5 hours of board governance training 92 before the expiration of his or her term of service. 93 2. An appointed public official or executive officer who is 94 appointed, reappointed, or hired after January 1, 2021, shall 95 complete the 5 hours of board governance training within 180 96 days after the date of his or her appointment, reappointment, or 97 hire. 98 (b) By January 1, 2021, the department shall: 99 1. Contract for or approve a board governance training 100 program that includes an affordable web-based electronic media 101 option; or 102 2. Publish a list of approved board governance training 103 providers on its website. A provider may include a Florida 104 College System institution, a state university, a nationally 105 recognized entity specializing in board governance education, or 106 any other entity deemed qualified by the department as capable 107 of providing the minimum training requirements specified in this 108 subsection. 109 (c) The board governance training programs must provide, at 110 a minimum, educational materials and instruction on the 111 following: 112 1. Generally accepted corporate board governance principles 113 and best practices; corporate board fiduciary duty of care legal 114 analyses; corporate board oversight and evaluation procedures; 115 governmental entity responsibilities; executive officer 116 responsibilities; executive officer performance evaluations; 117 selecting, monitoring, and evaluating an executive management 118 team; reviewing and approving proposed investments, 119 expenditures, and budget plans; financial accounting and capital 120 allocation principles and practices; and new governmental entity 121 member orientation. 122 2. The fiduciary duty of care and liabilities imposed upon 123 appointed public officials and executive officers pursuant to 124 this section. 125 (d) A governmental entity complies with the training 126 requirement under this subsection by providing a department 127 approved program or contracting with a provider listed by the 128 department under subparagraph (b)2. However, for governmental 129 entities with annual revenues of less than $300,000, board 130 governance training may be provided by in-house counsel of the 131 governmental entity or the unit of government that created the 132 governmental entity, if applicable, so long as the training 133 complies with the minimum course content established by 134 department rule. 135 (e) Within 30 days after completion of the board governance 136 training, each appointed public official and executive officer 137 shall certify, in writing or electronic form and under oath, to 138 the department that he or she: 139 1. Has completed the training required by this subsection; 140 2. Has read the laws and relevant policies applicable to 141 his or her position; 142 3. Will work to uphold such laws and policies to the best 143 of his or her ability; and 144 4. Will faithfully discharge his or her fiduciary 145 responsibility, as imposed by this section. 146 (f) The department shall adopt rules to implement this 147 subsection. 148 (g) This subsection does not apply to appointed public 149 officials and executive officers of governmental entities whose 150 annual revenues are less than $100,000 or to appointed public 151 officials who hold elected office in another capacity. 152 (5) APPOINTMENT OF EXECUTIVE OFFICERS AND GENERAL 153 COUNSELS.—The appointment of any executive officer or general 154 counsel is subject to approval by a majority vote of the 155 governing body of the governmental entity. 156 (6) STANDARDS FOR LEGAL COUNSEL.—All legal counsel employed 157 by a governmental entity must represent the legal interest and 158 position of the governing body of the governmental entity and 159 not the interest of any individual or employee of the 160 governmental entity. 161 Section 3. This act shall take effect July 1, 2020.