Florida Senate - 2025                        COMMITTEE AMENDMENT
       Bill No. SB 498
       
       
       
       
       
       
                                Ì263874GÎ263874                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: RS            .                                
                  03/12/2025           .                                
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       The Committee on Judiciary (Grall) recommended the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Section 655.97, Florida Statutes, is created to
    6  read:
    7         655.97 Lawyer or law firm trust account interest rates.—
    8         (1)A financial institution may hold funds in an interest
    9  bearing trust account of a lawyer or law firm in which the
   10  institution remits interest or dividends on the balance of the
   11  deposited funds to an entity established by the Supreme Court
   12  for the purpose of providing or facilitating the provision of
   13  free legal services to low-income individuals or other purposes
   14  authorized by the Supreme Court. If the institution holds such
   15  an account, it must quarterly select one of the two interest
   16  rate alternatives to determine the interest it will pay to the
   17  entity established by the Supreme Court:
   18         (a)The first interest rate alternative must be set at the
   19  highest interest rate or dividend generally available from the
   20  institution to its comparable business or consumer accounts or
   21  nonmaturing deposit accounts, provided that the trust account
   22  meets or exceeds the same minimum balance or other account
   23  requirements.
   24         1. If a financial institution chooses to pay the rate
   25  alternative provided in this paragraph, it must submit a rate
   26  validation sheet and affidavit to the Chief Financial Officer by
   27  the tenth day of each quarter attesting that it will pay at
   28  least the same interest on the lawyer or law firm trust accounts
   29  that it is paying on its comparable business or consumer
   30  accounts or nonmaturing deposit accounts.
   31         2. The affidavit must attest that the rate information
   32  submitted on the rate validation sheet is true and factual.
   33         3.The Chief Financial Officer shall verify that the rate
   34  validation sheet and affidavit have been received by the
   35  Department of Financial Services.
   36         (b)The second interest rate alternative must be set at 25
   37  percent of the federal funds target rate determined by the
   38  Federal Open Market Committee of the Federal Reserve System or
   39  0.25 percent, whichever is higher, net of fees.
   40         1.Each December 1, March 1, June 1, and September 1, the
   41  Chief Financial Officer shall determine the interest rate of the
   42  second interest rate alternative. The rate alternative
   43  determined by the Chief Financial Officer is effective on the
   44  following January 1, April 1, July 1, and October 1,
   45  respectively.
   46         2. Within 3 days after determining the interest rate under
   47  this paragraph, the Chief Financial Officer shall inform the
   48  entity established by the Supreme Court of the determined
   49  interest rate for the upcoming quarter.
   50         (2)This section does not apply to interest rates
   51  established by written contract or obligations unrelated to IOTA
   52  accounts.
   53         Section 2. This act shall take effect upon becoming a law.
   54  
   55  ================= T I T L E  A M E N D M E N T ================
   56  And the title is amended as follows:
   57         Delete everything before the enacting clause
   58  and insert:
   59                        A bill to be entitled                      
   60         An act relating to trust fund interest for purposes
   61         approved the Supreme Court; creating s. 655.97, F.S.;
   62         establishing two quarterly interest rate alternatives
   63         for financial institutions to pay to an entity
   64         established by the Supreme Court for the purpose of
   65         providing free legal services to low-income
   66         individuals and other purposes approved by the Supreme
   67         Court; requiring financial institutions to attest that
   68         it will pay a certain interest rate; requiring the
   69         Chief Financial Officer to set an interest rate;
   70         providing applicablity; providing an effective date.
   71  
   72         WHEREAS, in September 1981, the Florida Supreme Court
   73  implemented the nation’s first Interest on Trust Accounts (IOTA)
   74  Program, establishing a vital funding source for civil legal
   75  aid, justice system improvements, and public service programs
   76  for law students, and
   77         WHEREAS, Funding Florida Legal Aid (FFLA), formerly known
   78  as The Florida Bar Foundation, and the Florida Bankers
   79  Association cooperated for decades to sustain the program and
   80  encourage participation, and
   81         WHEREAS, in March 2023, the Florida Supreme Court adopted
   82  new rules requiring lawyers to secure interest rates based on
   83  the Wall Street Journal Prime Rate, compelling banks to pay
   84  higher rates for IOTA accounts than for similar accounts, and
   85         WHEREAS, 44 states, the District of Columbia, and Puerto
   86  Rico have mandatory IOTA programs modeled after Florida’s pre
   87  2023 system, while 5 states and the U.S. Virgin Islands operate
   88  voluntary or opt-out programs, and
   89         WHEREAS, the 2023 rule change made Florida an outlier
   90  compared to other jurisdictions where IOTA rates are typically
   91  benchmarked against interest-bearing checking account rates, and
   92         WHEREAS, the Wall Street Journal Prime Rate serves as a
   93  benchmark for lending and is not used to set deposit account
   94  rates, and
   95         WHEREAS, the 2023 rule change resulted in banks paying
   96  higher rates on funds in IOTA accounts, resulting in record
   97  revenues, exceeding $279 million, paid to FFLA during the 2023
   98  2024 fiscal year, nearly four times the prior peak rate, and far
   99  exceeding average annual interest revenues, and
  100         WHEREAS, in October 2024, the Florida Supreme Court
  101  authorized FFLA to hold nearly $143 million in reserve, and
  102         WHEREAS, it is in the best interests of this state for the
  103  Legislature to establish statutory benchmarks for IOTA rates to
  104  ensure regulatory safety, fairness, and sustainability, similar
  105  to the quarterly interest rate determinations made by the Chief
  106  Financial Officer for interest paid on court judgments, NOW,
  107  THEREFORE,