The Florida Senate

218.503  Determination of financial emergency.--

(1)  Local governmental entities, charter schools, and district school boards shall be subject to review and oversight by the Governor, charter school sponsor, or the Commissioner of Education, as appropriate, when any one of the following conditions occurs:

(a)  Failure within the same fiscal year in which due to pay short-term loans or failure to make bond debt service or other long-term debt payments when due, as a result of a lack of funds.

(b)  Failure to pay uncontested claims from creditors within 90 days after the claim is presented, as a result of a lack of funds.

(c)  Failure to transfer at the appropriate time, due to lack of funds:

1.  Taxes withheld on the income of employees; or

2.  Employer and employee contributions for:

a.  Federal social security; or

b.  Any pension, retirement, or benefit plan of an employee.

(d)  Failure for one pay period to pay, due to lack of funds:

1.  Wages and salaries owed to employees; or

2.  Retirement benefits owed to former employees.

(e)  An unreserved or total fund balance or retained earnings deficit, or unrestricted or total net assets deficit, as reported on the balance sheet or statement of net assets on the general purpose or fund financial statements, for which sufficient resources of the local governmental entity, as reported on the balance sheet or statement of net assets on the general purpose or fund financial statements, are not available to cover the deficit. Resources available to cover reported deficits include net assets that are not otherwise restricted by federal, state, or local laws, bond covenants, contractual agreements, or other legal constraints. Fixed or capital assets, the disposal of which would impair the ability of a local governmental entity to carry out its functions, are not considered resources available to cover reported deficits.

(2)  A local governmental entity shall notify the Governor and the Legislative Auditing Committee, a charter school shall notify the charter school sponsor and the Legislative Auditing Committee, and a district school board shall notify the Commissioner of Education and the Legislative Auditing Committee, when one or more of the conditions specified in subsection (1) have occurred or will occur if action is not taken to assist the local governmental entity, charter school, or district school board. In addition, any state agency must, within 30 days after a determination that one or more of the conditions specified in subsection (1) have occurred or will occur if action is not taken to assist the local governmental entity, charter school, or district school board, notify the Governor, charter school sponsor, or the Commissioner of Education, as appropriate, and the Legislative Auditing Committee.

(3)  Upon notification that one or more of the conditions in subsection (1) exist, the Governor or his or her designee shall contact the local governmental entity or the Commissioner of Education or his or her designee shall contact the district school board to determine what actions have been taken by the local governmental entity or the district school board to resolve the condition. The Governor or the Commissioner of Education, as appropriate, shall determine whether the local governmental entity or the district school board needs state assistance to resolve the condition. If state assistance is needed, the local governmental entity or district school board is considered to be in a state of financial emergency. The Governor or the Commissioner of Education, as appropriate, has the authority to implement measures as set forth in ss. 218.50-218.504 to assist the local governmental entity or district school board in resolving the financial emergency. Such measures may include, but are not limited to:

(a)  Requiring approval of the local governmental entity's budget by the Governor or approval of the district school board's budget by the Commissioner of Education.

(b)  Authorizing a state loan to a local governmental entity and providing for repayment of same.

(c)  Prohibiting a local governmental entity or district school board from issuing bonds, notes, certificates of indebtedness, or any other form of debt until such time as it is no longer subject to this section.

(d)  Making such inspections and reviews of records, information, reports, and assets of the local governmental entity or district school board. The appropriate local officials shall cooperate in such inspections and reviews.

(e)  Consulting with officials and auditors of the local governmental entity or the district school board and the appropriate state officials regarding any steps necessary to bring the books of account, accounting systems, financial procedures, and reports into compliance with state requirements.

(f)  Providing technical assistance to the local governmental entity or the district school board.

(g)1.  Establishing a financial emergency board to oversee the activities of the local governmental entity or the district school board. If a financial emergency board is established for a local governmental entity, the Governor shall appoint board members and select a chair. If a financial emergency board is established for a district school board, the State Board of Education shall appoint board members and select a chair. The financial emergency board shall adopt such rules as are necessary for conducting board business. The board may:

a.  Make such reviews of records, reports, and assets of the local governmental entity or the district school board as are needed.

b.  Consult with officials and auditors of the local governmental entity or the district school board and the appropriate state officials regarding any steps necessary to bring the books of account, accounting systems, financial procedures, and reports of the local governmental entity or the district school board into compliance with state requirements.

c.  Review the operations, management, efficiency, productivity, and financing of functions and operations of the local governmental entity or the district school board.

2.  The recommendations and reports made by the financial emergency board must be submitted to the Governor for local governmental entities or to the Commissioner of Education and the State Board of Education for district school boards for appropriate action.

(h)  Requiring and approving a plan, to be prepared by officials of the local governmental entity or the district school board in consultation with the appropriate state officials, prescribing actions that will cause the local governmental entity or district school board to no longer be subject to this section. The plan must include, but need not be limited to:

1.  Provision for payment in full of obligations outlined in subsection (1), designated as priority items, that are currently due or will come due.

2.  Establishment of priority budgeting or zero-based budgeting in order to eliminate items that are not affordable.

3.  The prohibition of a level of operations which can be sustained only with nonrecurring revenues.

(4)  Upon notification that one or more of the conditions in subsection (1) exist, the charter school sponsor or the sponsor's designee shall contact the charter school governing body to determine what actions have been taken by the charter school governing body to resolve the condition. The charter school sponsor has the authority to require and approve a financial recovery plan, to be prepared by the charter school governing body, prescribing actions that will cause the charter school to no longer be subject to this section. The Department of Education shall establish guidelines for developing such plans.

(5)  A local governmental entity or district school board may not seek application of laws under the bankruptcy provisions of the United States Constitution except with the prior approval of the Governor for local governmental entities or the Commissioner of Education for district school boards.

History.--s. 8, ch. 79-183; s. 54, ch. 89-169; s. 1180, ch. 95-147; s. 27, ch. 96-324; s. 29, ch. 97-96; s. 132, ch. 99-251; s. 1, ch. 2001-354; s. 35, ch. 2004-305; s. 5, ch. 2006-190; s. 6, ch. 2007-6.