Bill Text: HB 0319

HB 0319

2003

CHAMBER ACTION

The Committee on Education K-20 recommends the following:

Committee Substitute

Remove the entire bill and insert:

A bill to be entitled

An act relating to state universities; creating s.

1001.70, F.S.; establishing the Board of Governors;

providing membership and terms of office; amending s.

1001.71, F.S.; revising membership of university boards of

trustees and terms of office; creating s. 1010.10, F.S.;

creating the Florida Uniform Management of Institutional

Funds Act; providing definitions; providing for

expenditure of endowment funds by a governing board;

providing for a standard of conduct; providing investment

authority; providing for delegation of investment

management; providing for investment costs; providing for

release of restrictions on use or investment; providing

for uniformity of application and construction; providing

for retroactive effect; amending s. 1011.94, F.S.,

relating to the Trust Fund for University Major Gifts;

revising provisions relating to use of proceeds; replacing

references to State Board of Education with Board of

Governors; providing limitations on matching funds;

providing effective dates.

Be It Enacted by the Legislature of the State of Florida:

Section 1. Section 1001.70, Florida Statutes, is created

to read:

1001.70 Board of Governors.--Pursuant to s. 7(d), Art. IX

of the State Constitution, the Board of Governors is established

as a body corporate comprised of 17 members as follows: 14

citizen members appointed by the Governor subject to

confirmation by the Senate; the Commissioner of Education; the

chair of the advisory council of faculty senates or the

equivalent; and the president of the Florida student association

or the equivalent. The appointed members shall serve staggered

7-year terms. In order to achieve staggered terms, beginning

July 1, 2003, of the initial appointments, 4 members shall serve

2-year terms, 5 members shall serve 3-year terms, and 5 members

shall serve 7-year terms.

Section 2. Section 1001.71, Florida Statutes, is amended

to read:

1001.71 University boards of trustees; membership.--

(1) Pursuant to s. 7(c), Art. IX of the State

Constitution, each local constituent university shall be

administered by a university board of trustees comprised of 13

members as follows: 6 citizen members appointed by the Governor

subject to confirmation by the Senate; 5 citizen members

appointed by the Board of Governors subject to confirmation by

the Senate; the chair of the faculty senate or the equivalent;

and the president of the student body of the university. The

appointed members shall serve staggered 5-year terms. In order

to achieve staggered terms, beginning July 1, 2003, of the

initial appointments by the Governor, 2 members shall serve 2-

year terms, 3 members shall serve 3-year terms, and 1 member

shall serve a 5-year term and of the initial appointments by the

Board of Governors, 2 members shall serve 2-year terms, 2

members shall serve 3-year terms, and 1 member shall serve a 5-

year term.~~University boards of trustees shall be comprised of~~

~~12 members appointed by the Governor and confirmed by the Senate~~

~~in the regular legislative session immediately following his or~~

~~her appointment. In addition, the student body president elected~~

~~on the main campus of the university pursuant to s. 1004.26~~

~~shall serve ex officio as a voting member of his or her~~

~~university board of trustees.~~There shall be no state residency

requirement for university board members, but the Governor and

the Board of Governorsshall consider diversity and regional

representation.

(2) Members of the boards of trustees shall receive no

compensation but may be reimbursed for travel and per diem

expenses as provided in s. 112.061.

~~(3) The Governor may remove a trustee upon the~~

~~recommendation of the State Board of Education, or for cause.~~

~~(4) Boards of trustees' members shall be appointed for~~

~~staggered 4-year terms, and may be reappointed for additional~~

~~terms not to exceed 8 years of service.~~

(3)~~(5)~~Each board of trustees shall select its chair and

vice chair from the appointed members at its first regular

meeting after July 1. The chair shall serve for 2 years and may

be reselected for one additional consecutive term. The duties of

the chair shall include presiding at all meetings of the board

of trustees, calling special meetings of the board of trustees,

and attesting to actions of the board of trustees~~, and notifying~~

~~the Governor in writing whenever a board member fails to attend~~

~~three consecutive regular board meetings in any fiscal year,~~

~~which failure may be grounds for removal~~. The duty of the vice

chair is to act as chair during the absence or disability of the

chair.

(4)~~(6)~~The university president shall serve as executive

officer and corporate secretary of the board of trustees and

shall be responsible to the board of trustees for all operations

of the university and for setting the agenda for meetings of the

board of trustees in consultation with the chair.

100

Section 3. Effective upon this act becoming a law and

101

operating retroactively to January 7, 2003, section 1010.10,

102

Florida Statutes, is created to read:

103

1010.10 Florida Uniform Management of Institutional Funds

104

Act.--

105

(1) POPULAR NAME.--This section shall be known by the

106

popular name the "Florida Uniform Management of Institutional

107

Funds Act."

108

(2) DEFINITIONS.--As used in this section:

109

(a) "Endowment fund" means an institutional fund, or any

110

part thereof, not wholly expendable by the institution on a

111

current basis under the terms of the applicable gift instrument.

112

(b) "Governing board" means the body responsible for the

113

management of an institution or an institutional fund.

114

115

organization organized and operated exclusively for the

116

advancement of educational purposes, or a governmental entity to

117

the extent that it holds funds exclusively for educational

118

purposes.

119

(d) "Institutional fund" means a fund held by an

120

institution for its exclusive use, benefit, or purposes. The

121

term excludes a fund held for an institution by a trustee that

122

is not an institution. The term also excludes a fund in which a

123

beneficiary that is not an institution has an interest other

124

than possible rights that could arise upon violation or failure

125

of the purposes of the fund.

126

(e) "Instrument" means a will, deed, grant, conveyance,

127

agreement, memorandum, electronic record, writing, or other

128

governing document, including the terms of any institutional

129

solicitations from which an institutional fund resulted, under

130

which property is transferred to or held by an institution as an

131

institutional fund.

132

(3) EXPENDITURE OF ENDOWMENT FUNDS.--

133

(a) A governing board may expend so much of an endowment

134

fund as the governing board determines to be prudent for the

135

uses and purposes for which the endowment fund is established,

136

consistent with the goal of conserving the purchasing power of

137

the endowment fund. In making its determination, the governing

138

board shall use reasonable care, skill, and caution in

139

considering the following:

140

1. Purposes of the institution.

141

2. Intent of the donors of the endowment fund.

142

3. Terms of the applicable instrument.

143

4. Long-term and short-term needs of the institution in

144

carrying out its purposes.

145

5. General economic conditions.

146

6. Possible effect of inflation or deflation.

147

7. Other resources of the institution.

148

8. Perpetuation of the endowment.

149

150

Expenditures made under this paragraph will be considered to be

151

prudent if the amount expended is consistent with the goal of

152

preserving the purchasing power of the endowment fund.

153

(b) A restriction upon the expenditure of an endowment

154

fund may not be implied from a designation of a gift as an

155

endowment, or from a direction or authorization in the

156

instrument to use only "income," "interest," "dividends," or

157

"rents, issues, or profits," or "to preserve the principal

158

intact," or words of similar import.

159

160

instrument if the instrument so indicates by stating, "I direct

161

that the expenditure provision of paragraph (a) of subsection

162

(3) of the Florida Uniform Management of Institutional Funds Act

163

not apply to this gift" or words of similar import.

164

(d) This subsection does not limit the authority of a

165

governing board to expend funds as permitted under other law,

166

the terms of the instrument, or the charter of the institution.

167

(e) Except as otherwise provided, this subsection applies

168

to instruments executed or in effect before or after the

169

effective date of this section.

170

(4) STANDARD OF CONDUCT.--

171

(a) Members of a governing board shall invest and manage

172

an institutional fund as a prudent investor would by considering

173

the purposes, distribution requirements, and other circumstances

174

of the fund. In satisfying this standard, the governing board

175

shall exercise reasonable care, skill, and caution.

176

(b) A governing board's investment and management

177

decisions about individual assets shall be made not in isolation

178

but in the context of the institutional fund's portfolio of

179

investments as a whole and as a part of an overall investment

180

strategy having risk and return objectives reasonably suited to

181

the fund and to the institution.

182

183

consider are:

184

1. Long-term and short-term needs of the institution in

185

carrying out its purposes.

186

2. Its present and anticipated financial resources.

187

3. General economic conditions.

188

4. Possible effect of inflation or deflation.

189

5. Expected tax consequences, if any, of investment

190

decisions or strategies.

191

6. The role that each investment or course of action plays

192

within the overall investment portfolio of the institutional

193

fund.

194

7. Expected total return from income and appreciation of

195

its investments.

196

8. Other resources of the institution.

197

9. Needs of the institution and the institutional fund for

198

liquidity, regularity of income, and preservation or

199

appreciation of capital.

200

10. An asset's special relationship or special value, if

201

any, to the purposes of the applicable gift instrument or to the

202

institution.

203

(d) A governing board shall make a reasonable effort to

204

verify the facts relevant to the investment and management of

205

institutional fund assets.

206

(e) A governing board shall diversify the investments of

207

an institutional fund unless the board reasonably determines

208

that, because of special circumstances, the purposes of the fund

209

are better served without diversifying.

210

(f) A governing board shall invest and manage the assets

211

of an institutional fund solely in the interest of the

212

institution.

213

(5) INVESTMENT AUTHORITY.--In addition to an investment

214

otherwise authorized by law or by the applicable gift

215

instrument, and without restriction to investments a fiduciary

216

may make, the governing board, subject to any specific

217

limitations set forth in the applicable gift instrument or in

218

the applicable law other than law relating to investments by a

219

fiduciary:

220

(a) Within a reasonable time after receiving property,

221

shall review the property and make and implement decisions

222

concerning the retention and disposition of the assets in order

223

to bring the portfolio of the institutional fund into compliance

224

with the purposes, terms, distribution requirements, and other

225

circumstances of the institution and with the requirements of

226

this section.

227

(b) May invest in any kind of property or type of

228

investment consistent with the standards of this section.

229

230

in any pooled or common fund maintained by the institution.

231

(d) May invest all or any part of the institutional fund

232

in any other pooled or common fund available for investment,

233

including shares or interests in regulated investment companies,

234

mutual funds, common trust funds, investment partnerships, real

235

estate investment trusts, or similar organizations in which

236

funds are commingled and investment determinations are made by

237

persons other than the governing board.

238

(6) DELEGATION OF INVESTMENT MANAGEMENT.--

239

(a) Except as otherwise provided by applicable law

240

relating to governmental institutions or funds, a governing

241

board may delegate investment and management functions that a

242

prudent governing body could properly delegate under the

243

circumstances. A governing board shall exercise reasonable care,

244

skill, and caution in:

245

1. Selecting an agent.

246

2. Establishing the scope and terms of the delegation

247

consistent with the purposes of the institutional fund.

248

3. Periodically reviewing the agent's actions in order to

249

monitor the agent's performance and the agent's compliance with

250

the terms of the delegation.

251

(b) In performing a delegated function, an agent owes a

252

duty to the governing board to exercise reasonable care to

253

comply with the terms of the delegation.

254

255

requirements of paragraph (a) are not liable for the decisions

256

or actions of the agent to whom the function was delegated.

257

(d) By accepting the delegation of an investment or

258

management function from a governing board of an institution

259

that is subject to the laws of this state, an agent submits to

260

the jurisdiction of the courts of this state in all actions

261

arising from the delegation.

262

(7) INVESTMENT COSTS.--In investing and managing trust

263

assets, a governing board may only incur costs that are

264

appropriate and reasonable in relation to the assets and the

265

purposes of the institution.

266

(8) RELEASE OF RESTRICTIONS ON USE OR INVESTMENT.--

267

(a) With the written consent of the donor, a governing

268

board may release, in whole or in part, a restriction imposed by

269

the applicable instrument on the use or investment of an

270

institutional fund.

271

(b) If written consent of the donor cannot be obtained by

272

reason of the donor's death, disability, unavailability, or

273

impossibility of identification, a governing board may release,

274

in whole or in part, a restriction imposed by the applicable

275

instrument on the use or investment of an institutional fund if

276

the fund has a total value of less than $100,000 and if the

277

governing board, in its fiduciary judgment, concludes that the

278

value of the fund is insufficient to justify the cost of

279

administration as a separate institutional fund.

280

281

reason of the donor's death, disability, unavailability, or

282

impossibility of identification, a governing board may apply in

283

the name of the institution to the circuit court of the county

284

in which the institution is located for release of a restriction

285

imposed by the applicable instrument on the use or investment of

286

an institutional fund. The Attorney General shall be notified of

287

the application and shall be given an opportunity to be heard.

288

If the court finds that the restriction is unlawful,

289

impracticable, impossible to achieve, or wasteful, it may by

290

order release the restriction in whole or in part. A release

291

under this subsection may not change an endowment fund to a fund

292

that is not an endowment fund.

293

(d) A release under this subsection may not allow a fund

294

to be used for purposes other than the educational purposes of

295

the institution affected.

296

(e) This subsection does not limit the application of the

297

doctrine of cy pres.

298

(9) UNIFORMITY OF APPLICATION AND CONSTRUCTION.--This act

299

shall be so applied and construed as to effectuate its general

300

purpose to make uniform the law with respect to the subject of

301

this act among those states which enact it.

302

Section 4. Section 1011.94, Florida Statutes, is amended

303

to read:

304

1011.94 Trust Fund for University Major Gifts.--

305

(1) There is established a Trust Fund for University Major

306

Gifts. The purpose of the trust fund is to enable each

307

university and New College to provide donors with an incentive

308

in the form of matching grants for donations for the

309

establishment of permanent endowments and sales tax exemption

310

matching funds received pursuant to s. 212.08(5)(j), which must

311

be invested, with the proceeds of the investment used to support

312

university priorities as established by the university board of

313

trustees~~libraries and instruction and research programs, as~~

314

~~defined by the State Board of Education~~. All funds appropriated

315

for the challenge grants, new donors, major gifts, sales tax

316

exemption matching funds pursuant to s. 212.08(5)(j), or eminent

317

scholars program must be deposited into the trust fund and

318

invested pursuant to s. 18.125 until the Board of Governors

319

~~State Board of Education~~allocates the funds to universities to

320

match private donations. Notwithstanding s. 216.301 and pursuant

321

to s. 216.351, any undisbursed balance remaining in the trust

322

fund and interest income accruing to the portion of the trust

323

fund which is not matched and distributed to universities must

324

remain in the trust fund and be used to increase the total funds

325

available for challenge grants. Funds deposited in the trust

326

fund for the sales tax exemption matching program authorized in

327

s. 212.08(5)(j), and interest earnings thereon, shall be

328

maintained in a separate account within the Trust Fund for

329

University Major Gifts, and may be used only to match qualified

330

sales tax exemptions that a certified business designates for

331

use by state universities and community colleges to support

332

research and development projects requested by the certified

333

business. The Board of Governors~~State Board of Education~~may

334

authorize any university to encumber the state matching portion

335

of a challenge grant from funds available under s. 1011.45.

336

(2) The Board of Governors~~State Board of Education~~shall

337

specify the process for submission, documentation, and approval

338

of requests for matching funds, accountability for endowments

339

and proceeds of endowments, allocations to universities,

340

restrictions on the use of the proceeds from endowments, and

341

criteria used in determining the value of donations.

342

(3)(a) The Board of Governors~~State Board of Education~~

343

shall allocate the amount appropriated to the trust fund to each

344

university and New College based on the amount of the donation

345

and the restrictions applied to the donation.

346

(b) Donations for a specific purpose must be matched in

347

the following manner:

348

1. Each university that raises at least $100,000 but no

349

more than $599,999 from a private source must receive a matching

350

grant equal to 50 percent of the private contribution.

351

2. Each university that raises a contribution of at least

352

$600,000 but no more than $1 million from a private source must

353

receive a matching grant equal to 70 percent of the private

354

contribution.

355

3. Each university that raises a contribution in excess of

356

$1 million but no more than $1.5 million from a private source

357

must receive a matching grant equal to 75 percent of the private

358

contribution.

359

4. Each university that raises a contribution in excess of

360

$1.5 million but no more than $2 million from a private source

361

must receive a matching grant equal to 80 percent of the private

362

contribution.

363

5. Each university that raises a contribution in excess of

364

$2 million from a private source must receive a matching grant

365

equal to 100 percent of the private contribution.

366

6. The amount of matching funds used to match a single

367

gift in any given year shall be limited to $3 million. The total

368

amount of matching funds available for any single gift shall be

369

limited to $15 million, to be distributed in equal amounts of $3

370

million per year over a period of 5 years.

371

372

encumber state matching funds for any pledged contributions, pro

373

rata, based on the requirements for state matching funds as

374

specified for the particular challenge grant and the amount of

375

the private donations actually received by the university for

376

the respective challenge grant.

377

(4) Matching funds may be provided for contributions

378

encumbered or pledged under the Eminent Scholars Act prior to

379

July 1, 1994, and for donations or pledges of any amount equal

380

to or in excess of the prescribed minimums which are pledged for

381

the purpose of this section.

382

(5)(a) Each university foundation and New College

383

Foundation shall establish a challenge grant account for each

384

challenge grant as a depository for private contributions and

385

state matching funds to be administered on behalf of the Board

386

of Governors~~State Board of Education~~, the university, or New

387

College. State matching funds must be transferred to a

388

university foundation or New College Foundation upon

389

notification that the university or New College has received and

390

deposited the amount specified in this section in a foundation

391

challenge grant account.

392

(b) The foundation serving a university and New College

393

Foundation each has the responsibility for the maintenance and

394

investment of its challenge grant account and for the

395

administration of the program on behalf of the university or New

396

College, pursuant to procedures specified by the Board of

397

Governors~~State Board of Education~~. Each foundation shall

398

include in its annual report to the Board of Governors~~State~~

399

~~Board of Education~~information concerning collection and

400

investment of matching gifts and donations and investment of the

401

account.

402

403

matching funds may be used to designate an Eminent Scholar

404

Endowed Chair pursuant to procedures specified by the Board of

405

Governors~~State Board of Education~~.

406

(6) The donations, state matching funds, or proceeds from

407

endowments established under this section may not be expended

408

for the construction, renovation, or maintenance of facilities

409

or for the support of intercollegiate athletics.

410

Section 5. Except as otherwise provided herein, this act

411

shall take effect July 1, 2003.

412