Florida Senate - 2023 SB 110
By Senator Hooper
21-00352A-23 2023110__
1 A bill to be entitled
2 An act relating to the State Board of Administration;
3 amending s. 215.47, F.S.; revising the types of
4 investments in real property and related personal
5 property which the board may make; authorizing the
6 board and certain affiliated entities and ventures to
7 issue securities and borrow money through specified
8 means; authorizing the board to use the proceeds of
9 loans or financing obligations as loans to or sources
10 of funding for certain entities; requiring the
11 ownership of an entity holding title to real property
12 to be vested in the name of the System Trust Fund;
13 revising the funds in which the state may invest no
14 more than 80 percent of its moneys available for
15 investments; revising the requirements of the proposed
16 plan the board must present to the Investment Advisory
17 Council to invest in unauthorized investments;
18 deleting authorization for the council to obtain
19 independent investment counsel to provide expert
20 advice on board investment activity; requiring the
21 board’s evaluation of an investment to be based solely
22 on pecuniary factors; defining the term “pecuniary
23 factor”; providing construction; revising the
24 threshold for the amount of the fund which may be
25 invested in alternative investments; authorizing the
26 board and certain affiliated entities to issue
27 securities and borrow money through specified means;
28 reenacting ss. 112.661(5)(a), 218.409(2)(a),
29 420.503(3)(a), and 1002.36(4)(e), F.S., relating to
30 authorized investments, administration of the trust
31 fund, investments the board is permitted to make, and
32 investments made on behalf of the Florida School for
33 the Deaf and the Blind, respectively, to incorporate
34 the amendments made to s. 215.47, F.S., in references
35 thereto; providing an effective date.
36
37 Be It Enacted by the Legislature of the State of Florida:
38
39 Section 1. Paragraph (e) of subsection (2) and subsections
40 (3), (6), (10), and (15) of section 215.47, Florida Statutes,
41 are amended to read:
42 215.47 Investments; authorized securities; loan of
43 securities.—Subject to the limitations and conditions of the
44 State Constitution or of the trust agreement relating to a trust
45 fund, moneys available for investments under ss. 215.44-215.53
46 may be invested as follows:
47 (2) With no more than 25 percent of any fund in:
48 (e) Certain interests in real property and related personal
49 property that may be owned through affiliated limited liability
50 entities or joint ventures, which include, but are not limited
51 to, including mortgages and related instruments secured by on
52 commercial or industrial real property, and instruments
53 containing with provisions for equity or income participation or
54 with provisions for convertibility to equity ownership; and
55 interests in real property-related collective investment funds.
56 The State Board of Administration and its affiliated limited
57 liability entities or joint ventures may issue securities and
58 borrow money through loans or other financial obligations,
59 including bonds, equity securities, and other security
60 instruments, any of which may be unsecured, or secured by
61 investments in real property or related cash flows, guaranteed
62 by the related fund, or governed by financial covenants. The
63 proceeds of such loans or financing obligations may be loaned to
64 or otherwise used as a source of funding for affiliated limited
65 liability entities or joint ventures. Associated expenditures
66 for acquisition and operation of assets purchased under this
67 provision or of investments in private equity or other private
68 investment partnerships or limited liability companies shall be
69 included as a part of the cost of the investment.
70 1. The title to real property, or ownership of the entity
71 holding title to real property, acquired under this paragraph
72 shall be vested in the name of the respective fund.
73 2. For purposes of taxation of property owned by any fund,
74 the provisions of s. 196.199(2)(b) do not apply.
75 3. Real property acquired under the provisions of this
76 paragraph is shall not be considered state lands or public lands
77 and property as defined in chapter 253, and the provisions of
78 that chapter do not apply to such real property.
79 (3) With no more than 80 percent of any fund in equity
80 securities or securities convertible into equity securities of
81 any entity common stock, preferred stock, and interest-bearing
82 obligations of a corporation having an option to convert into
83 common stock, provided:
84 (a) The entity corporation is organized under the laws of
85 the United States, any state or organized territory of the
86 United States, or the District of Columbia; or
87 (b) The entity corporation is listed on any one or more of
88 the recognized national stock exchanges in the United States and
89 conforms with the periodic reporting requirements under the
90 Securities Exchange Act of 1934;.
91 (c) Not more than 75 percent of the fund may be in
92 internally managed equity securities common stock.
93
94 The board is shall not to invest more than 10 percent of the
95 equity assets of any fund in the equity securities common stock,
96 preferred stock, and interest-bearing obligations having an
97 option to convert into common stock, of any one issuing entity
98 corporation; and the board is shall not to invest more than 3
99 percent of the equity assets of any fund in such securities of
100 any one issuing entity corporation except to the extent a higher
101 percentage of the same issue is included in a nationally
102 recognized market index, based on market values, at least as
103 broad as the Standard and Poor’s Composite Index of 500
104 Companies, or except upon a specific finding by the board that
105 such higher percentage is in the best interest of the fund.
106 (6) With no more than 5 percent of any fund to be invested
107 as deemed appropriate by the board, notwithstanding investment
108 limitations otherwise expressed in this section. Before Prior to
109 the board engages engaging in any investment activity not
110 otherwise authorized under ss. 215.44-215.53, excluding
111 investments in publicly traded securities, options, financial
112 futures, or similar instruments, the board shall present to the
113 Investment Advisory Council a proposed plan for such investment.
114 The Said plan must shall include, but is not be limited to, a
115 detailed analysis of the investment, the expected benefits and
116 potential risks of such activity, and the; methods for
117 monitoring and measuring the performance of the investment; a
118 complete description of the type, nature, extent and purpose of
119 the investment, including description of issuer, security in
120 which investment is proposed to be made, voting rights or lack
121 thereof and control to be acquired, restrictions upon voting,
122 transfer, and other material rights of ownership, and the
123 existence of any contracts, arrangements, understandings, or
124 relationships with any person or entity (naming the same) with
125 respect to the proposed investment; and assurances that
126 sufficient investment expertise is available to the board to
127 properly evaluate and manage such activity. The Investment
128 Advisory Council may obtain independent investment counsel to
129 provide expert advice with regard to such proposed investment
130 activity by the board, and the board shall defray such costs.
131 (10)(a) Investments made by the State Board of
132 Administration must shall be designed to maximize the financial
133 return to the fund consistent with the risks incumbent in each
134 investment and must shall be designed to preserve an appropriate
135 diversification of the portfolio.
136 (b) The board shall discharge its duties with respect to a
137 plan solely in the interest of its participants and
138 beneficiaries. The board in performing the above investment
139 duties shall comply with the fiduciary standards set forth in
140 the Employee Retirement Income Security Act of 1974 at 29 U.S.C.
141 s. 1104(a)(1)(A) through (C).
142 (c) The board’s evaluation of an investment may be based
143 only on pecuniary factors, and the board may not subordinate the
144 interests of the participants and beneficiaries to other
145 objectives and may not sacrifice investment return or take on
146 additional investment risk to promote non-pecuniary benefits or
147 goals. The weight given to any pecuniary factor by the board
148 must appropriately reflect a prudent assessment of its impact on
149 risk and returns. As used in this paragraph, the term “pecuniary
150 factor” means a factor that the board prudently determines is
151 expected to have a material effect on the risk or return of an
152 investment, based on appropriate investment horizons consistent
153 with the fund’s investment objectives and funding policy.
154 (d) In the event of any conflict between paragraphs (b) and
155 (c), paragraph (c) shall prevail. In case of conflict with other
156 provisions of law authorizing investments, the investment and
157 fiduciary standards set forth in this subsection shall prevail.
158 (15) With no more, in the aggregate, than 30 20 percent of
159 any fund in alternative investments through participation in an
160 alternative investment vehicle as those terms are defined in s.
161 215.4401(3)(a), or in securities or investments that are not
162 publicly traded and not otherwise authorized by this section.
163 The State Board of Administration and its affiliated limited
164 liability entities, which the board may create, own, and use to
165 hold investments and for such other purposes as it deems
166 appropriate, may issue securities and borrow money through loans
167 or other financial obligations, including bonds, equity
168 securities, or other security instruments, any of which may be
169 unsecured, or secured by investments made which are authorized
170 under this subsection or related cash flows, guaranteed by the
171 related fund, or governed by financial covenants.
172 Section 2. For the purpose of incorporating the amendments
173 made by this act to section 215.47, Florida Statutes, in a
174 reference thereto, paragraph (a) of subsection (5) of section
175 112.661, Florida Statutes, is reenacted to read:
176 112.661 Investment policies.—Investment of the assets of
177 any local retirement system or plan must be consistent with a
178 written investment policy adopted by the board. Such policies
179 shall be structured to maximize the financial return to the
180 retirement system or plan consistent with the risks incumbent in
181 each investment and shall be structured to establish and
182 maintain an appropriate diversification of the retirement system
183 or plan’s assets.
184 (5) AUTHORIZED INVESTMENTS.—
185 (a) The investment policy shall list investments authorized
186 by the board. Investments not listed in the investment policy
187 are prohibited. Unless otherwise authorized by law or ordinance,
188 the investment of the assets of any local retirement system or
189 plan covered by this part shall be subject to the limitations
190 and conditions set forth in s. 215.47(1)-(6), (8), (9), (11) and
191 (17).
192 Section 3. For the purpose of incorporating the amendments
193 made by this act to section 215.47, Florida Statutes, in a
194 reference thereto, paragraph (a) of subsection (2) of section
195 218.409, Florida Statutes, is reenacted to read:
196 218.409 Administration of the trust fund.—
197 (2)(a) The trustees shall ensure that the board or a
198 professional money management firm administers the trust fund on
199 behalf of the participants. The board or a professional money
200 management firm shall have the power to invest such funds in
201 accordance with a written investment policy. The investment
202 policy shall be updated annually to conform to best investment
203 practices. The standard of prudence to be used by investment
204 officials shall be the fiduciary standards as set forth in s.
205 215.47(10), which shall be applied in the context of managing an
206 overall portfolio. Portfolio managers acting in accordance with
207 written procedures and an investment policy and exercising due
208 diligence shall be relieved of personal responsibility for an
209 individual security’s credit risk or market price changes,
210 provided deviations from expectations are reported in a timely
211 fashion and the liquidity and the sale of securities are carried
212 out in accordance with the terms of this part.
213 Section 4. For the purpose of incorporating the amendments
214 made by this act to section 215.47, Florida Statutes, in a
215 reference thereto, paragraph (a) of subsection (3) of section
216 420.503, Florida Statutes, is reenacted to read:
217 420.503 Definitions.—As used in this part, the term:
218 (3) “Authorized investments” means any of the following
219 securities:
220 (a) Investments permitted under s. 215.47(1) and (2),
221 without regard to any limitation set forth therein.
222 Section 5. For the purpose of incorporating the amendments
223 made by this act to section 215.47, Florida Statutes, in a
224 reference thereto, paragraph (e) of subsection (4) of section
225 1002.36, Florida Statutes, is reenacted to read:
226 1002.36 Florida School for the Deaf and the Blind.—
227 (4) BOARD OF TRUSTEES.—
228 (e) The board of trustees is invested with full power and
229 authority to:
230 1. Appoint a president, faculty, teachers, and other
231 employees and remove the same as in its judgment may be best and
232 fix their compensation.
233 2. Procure professional services, such as medical, mental
234 health, architectural, and engineering.
235 3. Procure legal services without the prior written
236 approval of the Attorney General.
237 4. Determine eligibility of students and procedure for
238 admission.
239 5. Provide for the students of the school necessary
240 bedding, clothing, food, and medical attendance and such other
241 things as may be proper for the health and comfort of the
242 students without cost to their parents, except that the board of
243 trustees may set tuition and other fees for nonresidents.
244 6. Provide for the proper keeping of accounts and records
245 and for budgeting of funds.
246 7. Enter into contracts.
247 8. Sue and be sued.
248 9. Secure public liability insurance.
249 10. Do and perform every other matter or thing requisite to
250 the proper management, maintenance, support, and control of the
251 school at the highest efficiency economically possible, the
252 board of trustees taking into consideration the purposes of the
253 establishment.
254 11. Receive gifts, donations, and bequests of money or
255 property, real or personal, tangible or intangible, from any
256 person, firm, corporation, or other legal entity. However, the
257 board of trustees may not obligate the state to any expenditure
258 or policy that is not specifically authorized by law. If the
259 bill of sale, will, trust indenture, deed, or other legal
260 conveyance specifies terms and conditions concerning the use of
261 such money or property, the board of trustees shall observe such
262 terms and conditions.
263 12. Deposit outside the State Treasury such moneys as are
264 received as gifts, donations, or bequests and may disburse and
265 expend such moneys, upon its own warrant, for the use and
266 benefit of the Florida School for the Deaf and the Blind and its
267 students, as the board of trustees deems to be in the best
268 interest of the school and its students. Such money or property
269 does not constitute and may not be considered a part of any
270 legislative appropriation.
271 13. Sell or convey by bill of sale, deed, or other legal
272 instrument any property, real or personal, received as a gift,
273 donation, or bequest, upon such terms and conditions as the
274 board of trustees deems to be in the best interest of the school
275 and its students.
276 14. Invest such moneys in securities enumerated under s.
277 215.47(1), (2)(c), (3), (4), and (10), and in The Common Fund,
278 an Investment Management Fund exclusively for nonprofit
279 educational institutions.
280 15. After receiving approval from the Administration
281 Commission, exercise the power of eminent domain in the manner
282 provided in chapter 73 or chapter 74.
283 Section 6. This act shall take effect July 1, 2023.