HB 1271

CS

CHAMBER ACTION

1	The Committee on State Administration recommends the following:
2
3	Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to state financial matters; amending s.
7	112.363, F.S.; specifying spouse at time of death as
8	beneficiary for purposes of the retiree health insurance
9	subsidy; providing an exception; amending s. 121.4501,
10	F.S., relating to the Public Employee Optional Retirement
11	Program; providing a definition; providing deadlines for
12	certain employees for election and removal from the
13	optional retirement program; requiring an employer to
14	communicate retirement options to employees; authorizing
15	certain employees to change retirement plans under certain
16	circumstances; amending s. 121.591, F.S., relating to
17	benefits payable under the optional retirement program;
18	authorizing the State Board of Administration and the
19	Department of Management Services to cash out certain
20	accounts under certain circumstances; removing the ability
21	of a deceased disabled retiree's beneficiary to receive
22	certain trust fund account balances; amending s. 121.78,
23	F.S.; revising criteria for certain employer
24	contributions; requiring certain participants to repay
25	excess employer contributions under certain circumstances;
26	amending s. 215.47, F.S.; providing that expenditures for
27	acquisition and operation of investments in private equity
28	or other private investment partnerships or limited
29	liability companies shall be included in the cost of the
30	investment; providing criteria for certain fixed income
31	obligations for investments; deleting a provision allowing
32	certain general foreign government-backed investments;
33	amending s. 215.475, F.S.; providing for a Florida
34	Retirement System Defined Benefit Plan Investment Policy
35	Statement instead of a plan; revising provisions to
36	conform; amending s. 215.5601, F.S., to conform; providing
37	an effective date.
38
39	Be It Enacted by the Legislature of the State of Florida:
40
41	Section 1.  Paragraph (e) of subsection (3) of section
42	112.363, Florida Statutes, is amended to read:
43	112.363  Retiree health insurance subsidy.--
44	(3)  RETIREE HEALTH INSURANCE SUBSIDY AMOUNT.--
45	(e)1.  Beginning July 1, 2001, each eligible retiree of the
46	defined benefit program of the Florida Retirement System, or, if
47	the retiree is deceased, his or her beneficiary who is receiving
48	a monthly benefit from such retiree's account and who is a
49	spouse, or a person who meets the definition of joint annuitant
50	in s. 121.021(28), shall receive a monthly retiree health
51	insurance subsidy payment equal to the number of years of
52	creditable service, as defined in s. 121.021(17), completed at
53	the time of retirement multiplied by $5; however, no eligible
54	retiree or beneficiary may receive a subsidy payment of more
55	than $150 or less than $30. If there are multiple beneficiaries,
56	the total payment must not be greater than the payment to which
57	the retiree was entitled. The health insurance subsidy amount
58	payable to any person receiving the retiree health insurance
59	subsidy payment on July 1, 2001, shall not be reduced solely by
60	operation of this subparagraph.
61	2.  Beginning July 1, 2002, each eligible participant of
62	the Public Employee Optional Retirement Program of the Florida
63	Retirement System who has met the requirements of this section,
64	or, if the participant is deceased, his or her spouse who is the
65	participant's designated beneficiary, shall receive a monthly
66	retiree health insurance subsidy payment equal to the number of
67	years of creditable service, as provided in this subparagraph,
68	completed at the time of retirement, multiplied by $5; however,
69	no eligible retiree or beneficiary may receive a subsidy payment
70	of more than $150 or less than $30. For purposes of determining
71	a participant's creditable service used to calculate the health
72	insurance subsidy, a participant's years of service credit or
73	fraction thereof shall be based on the participant's work year
74	as defined in s. 121.021(54). Credit shall be awarded for a full
75	work year whenever health insurance subsidy contributions have
76	been made as required by law for each month in the participant's
77	work year. In addition, all years of creditable service retained
78	under the Florida Retirement System defined benefit program
79	shall be included as creditable service for purposes of this
80	section. Notwithstanding any other provisions of this section,
81	the participant's spouse at the time of the participant's death
82	shall be the beneficiary unless such participant designates a
83	different beneficiary subsequent to the participant's most
84	recent marriage.
85	Section 2.  Paragraphs (j), (k), and (l) of subsection (2)
86	of section 121.4501, Florida Statutes, are redesignated as
87	paragraphs (k), (l), and (m), respectively, a new paragraph (j)
88	is added to said subsection, subsection (4) and paragraph (c) of
89	subsection (15) of said section are amended, and paragraph (h)
90	is added to subsection (10) of said section, to read:
91	121.4501  Public Employee Optional Retirement Program.--
92	(2)  DEFINITIONS.--As used in this part, the term:
93	(j)  "Retiree" means a former participant of the Public
94	Employee Optional Retirement Program of the Florida Retirement
95	System who has terminated employment and has taken a
96	distribution as provided in s. 121.591, except for a mandatory
97	distribution of a de minimis account authorized by the state
98	board.
99	(4)  PARTICIPATION; ENROLLMENT.--
100	(a)1.  With respect to an eligible employee who is employed
101	in a regularly established position on June 1, 2002, by a state
102	employer:
103	a.  Any such employee may elect to participate in the
104	Public Employee Optional Retirement Program in lieu of retaining
105	his or her membership in the defined benefit program of the
106	Florida Retirement System. The election must be made in writing
107	or by electronic means and must be filed with the third-party
108	administrator by August 31, 2002, or, in the case of an active
109	employee who is on a leave of absence on April 1, 2002, by
110	August 31, 2002, or by the last business day of the 5th month
111	following within 90 days after the conclusion of the leave of
112	absence, whichever is later. This election is irrevocable,
113	except as provided in paragraph (e). Upon making such election,
114	the employee shall be enrolled as a participant of the Public
115	Employee Optional Retirement Program, the employee's membership
116	in the Florida Retirement System shall be governed by the
117	provisions of this part, and the employee's membership in the
118	defined benefit program of the Florida Retirement System shall
119	terminate. The employee's enrollment in the Public Employee
120	Optional Retirement Program shall be effective the first day of
121	the month for which a full month's employer contribution is made
122	to the optional program.
123	b.  Any such employee who fails to elect to participate in
124	the Public Employee Optional Retirement Program within the
125	prescribed time period is deemed to have elected to retain
126	membership in the defined benefit program of the Florida
127	Retirement System, and the employee's option to elect to
128	participate in the optional program is forfeited.
129	2.  With respect to employees who become eligible to
130	participate in the Public Employee Optional Retirement Program
131	by reason of employment in a regularly established position with
132	a state employer commencing after April 1, 2002:
133	a.  Any such employee shall, by default, be enrolled in the
134	defined benefit retirement program of the Florida Retirement
135	System at the commencement of employment, and may, by the last
136	business day end of the 5th month following the employee's month
137	of hire, elect to participate in the Public Employee Optional
138	Retirement Program. The employee's election must be made in
139	writing or by electronic means and must be filed with the third-
140	party administrator. The election to participate in the optional
141	program is irrevocable, except as provided in paragraph (e).
142	b.  If the employee files such election within the
143	prescribed time period, enrollment in the optional program shall
144	be effective on the first day of employment. The employer
145	retirement contributions paid through the month of the employee
146	plan change shall be transferred to the optional program, and,
147	effective the first day of the next month, the employer shall
148	pay the applicable contributions based on the employee
149	membership class in the optional program.
150	c.  Any such employee who fails to elect to participate in
151	the Public Employee Optional Retirement Program within the
152	prescribed time period is deemed to have elected to retain
153	membership in the defined benefit program of the Florida
154	Retirement System, and the employee's option to elect to
155	participate in the optional program is forfeited.
156	3.  With respect to employees who become eligible to
157	participate in the Public Employee Optional Retirement Program
158	pursuant to s. 121.051(2)(c)3., any such employee may elect to
159	participate in the Public Employee Optional Retirement Program
160	in lieu of retaining his or her participation in the State
161	Community College Optional Retirement Program. The election must
162	be made in writing or by electronic means and must be filed with
163	the third-party administrator. This election is irrevocable,
164	except as provided in paragraph (e). Upon making such election,
165	the employee shall be enrolled as a participant of the Public
166	Employee Optional Retirement Program, the employee's membership
167	in the Florida Retirement System shall be governed by the
168	provisions of this part, and the employee's participation in the
169	State Community College Optional Retirement Program shall
170	terminate. The employee's enrollment in the Public Employee
171	Optional Retirement Program shall be effective the first day of
172	the month for which a full month's employer contribution is made
173	to the optional program.
174	4.  For purposes of this paragraph, "state employer" means
175	any agency, board, branch, commission, community college,
176	department, institution, institution of higher education, or
177	water management district of the state, which participates in
178	the Florida Retirement System for the benefit of certain
179	employees.
180	(b)1.  With respect to an eligible employee who is employed
181	in a regularly established position on September 1, 2002, by a
182	district school board employer:
183	a.  Any such employee may elect to participate in the
184	Public Employee Optional Retirement Program in lieu of retaining
185	his or her membership in the defined benefit program of the
186	Florida Retirement System. The election must be made in writing
187	or by electronic means and must be filed with the third-party
188	administrator by November 30, or, in the case of an active
189	employee who is on a leave of absence on July 1, 2002, by
190	November 30, 2002, or by the last business day of the 5th month
191	following within 90 days after the conclusion of the leave of
192	absence, whichever is later. This election is irrevocable,
193	except as provided in paragraph (e). Upon making such election,
194	the employee shall be enrolled as a participant of the Public
195	Employee Optional Retirement Program, the employee's membership
196	in the Florida Retirement System shall be governed by the
197	provisions of this part, and the employee's membership in the
198	defined benefit program of the Florida Retirement System shall
199	terminate. The employee's enrollment in the Public Employee
200	Optional Retirement Program shall be effective the first day of
201	the month for which a full month's employer contribution is made
202	to the optional program.
203	b.  Any such employee who fails to elect to participate in
204	the Public Employee Optional Retirement Program within the
205	prescribed time period is deemed to have elected to retain
206	membership in the defined benefit program of the Florida
207	Retirement System, and the employee's option to elect to
208	participate in the optional program is forfeited.
209	2.  With respect to employees who become eligible to
210	participate in the Public Employee Optional Retirement Program
211	by reason of employment in a regularly established position with
212	a district school board employer commencing after July 1, 2002:
213	a.  Any such employee shall, by default, be enrolled in the
214	defined benefit retirement program of the Florida Retirement
215	System at the commencement of employment, and may, by the last
216	business day end of the 5th month following the employee's month
217	of hire, elect to participate in the Public Employee Optional
218	Retirement Program. The employee's election must be made in
219	writing or by electronic means and must be filed with the third-
220	party administrator. The election to participate in the optional
221	program is irrevocable, except as provided in paragraph (e).
222	b.  If the employee files such election within the
223	prescribed time period, enrollment in the optional program shall
224	be effective on the first day of employment. The employer
225	retirement contributions paid through the month of the employee
226	plan change shall be transferred to the optional program, and,
227	effective the first day of the next month, the employer shall
228	pay the applicable contributions based on the employee
229	membership class in the optional program.
230	c.  Any such employee who fails to elect to participate in
231	the Public Employee Optional Retirement Program within the
232	prescribed time period is deemed to have elected to retain
233	membership in the defined benefit program of the Florida
234	Retirement System, and the employee's option to elect to
235	participate in the optional program is forfeited.
236	3.  For purposes of this paragraph, "district school board
237	employer" means any district school board that participates in
238	the Florida Retirement System for the benefit of certain
239	employees, or a charter school or charter technical career
240	center that participates in the Florida Retirement System as
241	provided in s. 121.051(2)(d).
242	(c)1.  With respect to an eligible employee who is employed
243	in a regularly established position on December 1, 2002, by a
244	local employer:
245	a.  Any such employee may elect to participate in the
246	Public Employee Optional Retirement Program in lieu of retaining
247	his or her membership in the defined benefit program of the
248	Florida Retirement System. The election must be made in writing
249	or by electronic means and must be filed with the third-party
250	administrator by February 28, 2003, or, in the case of an active
251	employee who is on a leave of absence on October 1, 2002, by
252	February 28, 2003, or by the last business day of the 5th month
253	following within 90 days after the conclusion of the leave of
254	absence, whichever is later. This election is irrevocable,
255	except as provided in paragraph (e). Upon making such election,
256	the employee shall be enrolled as a participant of the Public
257	Employee Optional Retirement Program, the employee's membership
258	in the Florida Retirement System shall be governed by the
259	provisions of this part, and the employee's membership in the
260	defined benefit program of the Florida Retirement System shall
261	terminate. The employee's enrollment in the Public Employee
262	Optional Retirement Program shall be effective the first day of
263	the month for which a full month's employer contribution is made
264	to the optional program.
265	b.  Any such employee who fails to elect to participate in
266	the Public Employee Optional Retirement Program within the
267	prescribed time period is deemed to have elected to retain
268	membership in the defined benefit program of the Florida
269	Retirement System, and the employee's option to elect to
270	participate in the optional program is forfeited.
271	2.  With respect to employees who become eligible to
272	participate in the Public Employee Optional Retirement Program
273	by reason of employment in a regularly established position with
274	a local employer commencing after October 1, 2002:
275	a.  Any such employee shall, by default, be enrolled in the
276	defined benefit retirement program of the Florida Retirement
277	System at the commencement of employment, and may, by the last
278	business day end of the 5th month following the employee's month
279	of hire, elect to participate in the Public Employee Optional
280	Retirement Program. The employee's election must be made in
281	writing or by electronic means and must be filed with the third-
282	party administrator. The election to participate in the optional
283	program is irrevocable, except as provided in paragraph (e).
284	b.  If the employee files such election within the
285	prescribed time period, enrollment in the optional program shall
286	be effective on the first day of employment. The employer
287	retirement contributions paid through the month of the employee
288	plan change shall be transferred to the optional program, and,
289	effective the first day of the next month, the employer shall
290	pay the applicable contributions based on the employee
291	membership class in the optional program.
292	c.  Any such employee who fails to elect to participate in
293	the Public Employee Optional Retirement Program within the
294	prescribed time period is deemed to have elected to retain
295	membership in the defined benefit program of the Florida
296	Retirement System, and the employee's option to elect to
297	participate in the optional program is forfeited.
298	3.  For purposes of this paragraph, "local employer" means
299	any employer not included in paragraph (a) or paragraph (b).
300	(d)  Contributions available for self-direction by a
301	participant who has not selected one or more specific investment
302	products shall be allocated as prescribed by the board. The
303	third-party administrator shall notify any such participant at
304	least quarterly that the participant should take an affirmative
305	action to make an asset allocation among the optional program
306	products.
307	(e)  After the period during which an eligible employee had
308	the choice to elect the defined benefit program or the Public
309	Employee Optional Retirement Program, or the month following the
310	eligible employee's plan selection effective date, if sooner,
311	the employee shall have one opportunity, at the employee's
312	discretion, to choose to move from the defined benefit program
313	to the Public Employee Optional Retirement Program or from the
314	Public Employee Optional Retirement Program to the defined
315	benefit program. This paragraph shall be contingent upon
316	approval from the Internal Revenue Service for including the
317	choice described herein within the programs offered by the
318	Florida Retirement System.
319	1.  If the employee chooses to move to the Public Employee
320	Optional Retirement Program, the applicable provisions of this
321	section shall govern the transfer.
322	2.  If the employee chooses to move to the defined benefit
323	program, the employee must transfer from his or her Public
324	Employee Optional Retirement Program account and from other
325	employee moneys as necessary, a sum representing the present
326	value of that employee's accumulated benefit obligation
327	immediately following the time of such movement, determined
328	assuming that attained service equals the sum of service in the
329	defined benefit program and service in the Public Employee
330	Optional Retirement Program. Benefit commencement occurs on the
331	first date the employee would become eligible for unreduced
332	benefits, using the discount rate and other relevant actuarial
333	assumptions that were used to value the Florida Retirement
334	System defined benefit plan liabilities in the most recent
335	actuarial valuation. For any employee who, at the time of the
336	second election, already maintains an accrued benefit amount in
337	the defined benefit plan, the then-present value of such accrued
338	benefit shall be deemed part of the required transfer amount
339	described in this subparagraph. The division shall ensure that
340	the transfer sum is prepared using a formula and methodology
341	certified by an enrolled actuary.
342	3.  Notwithstanding subparagraph 2., an employee who
343	chooses to move to the defined benefit program and who became
344	eligible to participate in the Public Employee Optional
345	Retirement Program by reason of employment in a regularly
346	established position with a state employer after June 1, 2002; a
347	district school board employer after September 1, 2002; or a
348	local employer after December 1, 2002, must transfer from his or
349	her Public Employee Optional Retirement Program account and,
350	from other employee moneys as necessary, a sum representing that
351	employee's actuarial accrued liability.
352	4.  Employees' ability to transfer from the Florida
353	Retirement System defined benefit program to the Public Employee
354	Optional Retirement Program pursuant to paragraphs (a) through
355	(d), and the ability for current employees to have an option to
356	later transfer back into the defined benefit program under
357	subparagraph 2., shall be deemed a significant system amendment.
358	Pursuant to s. 121.031(4), any such resulting unfunded liability
359	arising from actual original transfers from the defined benefit
360	program to the optional program shall be amortized within 30
361	plan years as a separate unfunded actuarial base independent of
362	the reserve stabilization mechanism defined in s. 121.031(3)(f).
363	For the first 25 years, no direct amortization payment shall be
364	calculated for this base. During this 25-year period, such
365	separate base shall be used to offset the impact of employees
366	exercising their second program election under this paragraph.
367	It is the legislative intent that the actuarial funded status of
368	the Florida Retirement System defined benefit plan is neither
369	beneficially nor adversely impacted by such second program
370	elections in any significant manner, after due recognition of
371	the separate unfunded actuarial base. Following this initial 25-
372	year period, any remaining balance of the original separate base
373	shall be amortized over the remaining 5 years of the required
374	30-year amortization period.
375	(10)  EDUCATION COMPONENT.--
376	(h)  Pursuant to paragraph (8)(a), all Florida Retirement
377	System employers have an obligation to regularly communicate the
378	existence of the two Florida Retirement System plans and the
379	plan choice in the natural course of administering their
380	personnel functions using the educational materials supplied by
381	the state board and the Department of Management Services.
382	(15)  STATEMENT OF FIDUCIARY STANDARDS AND
383	RESPONSIBILITIES.--
384	(c)  Subparagraph (8)(b)4. and paragraph (15)(b)
385	incorporate the federal law concept of participant control,
386	established by regulations of the United States Department of
387	Labor under s. 404(c) of the Employee Retirement Income Security
388	Act of 1974 (ERISA). The purpose of this paragraph is to assist
389	employers and the State Board of Administration in maintaining
390	compliance with s. 404(c), while avoiding unnecessary costs and
391	eroding participant benefits under the Public Employee Optional
392	Retirement Program. Pursuant to 29 C.F.R. s. 2550.404c-
393	1(b)(2)(i)(B)(1)(viii), the State Board of Administration or its
394	designated agents shall deliver to participants of the Public
395	Employee Optional Retirement Program a copy of the prospectus
396	most recently provided to the plan and, pursuant to 29 C.F.R. s.
397	2550.404c-1(b)(2), or shall provide such participants an
398	opportunity to obtain this information, except that:
399	1.  The requirement to deliver a prospectus shall be deemed
400	to be satisfied by delivery of a fund profile that contains the
401	information that would be included in a summary prospectus as
402	described by Rule 498 under the Securities Act of 1933, 17
403	C.F.R. s. 230.498. When the transaction fees, expense
404	information or other information provided by a mutual fund in
405	the prospectus does not reflect terms negotiated by the State
406	Board of Administration or its designated agents, the
407	aforementioned requirement is deemed to be satisfied by delivery
408	of a separate document described by Rule 498 substituting
409	accurate information; and
410	2.  Delivery shall be deemed to have been effected if
411	delivery is through electronic means and the following standards
412	are satisfied:
413	a.  Electronically-delivered documents are prepared and
414	provided consistent with style, format, and content requirements
415	applicable to printed documents;
416	b.  Each participant is provided timely and adequate notice
417	of the documents that are to be delivered and their significance
418	thereof, and of the participant's right to obtain a paper copy
419	of such documents free of charge;
420	c.(I)  Participants have adequate access to the electronic
421	documents, at locations such as their worksites or public
422	facilities, and have the ability to convert the documents to
423	paper free of charge by the State Board of Administration, and
424	the board or its designated agents take appropriate and
425	reasonable measures to ensure that the system for furnishing
426	electronic documents results in actual receipt, or
427	(II)  Participants have provided consent to receive
428	information in electronic format, which consent may be revoked;
429	and
430	d.  The State Board of Administration, or its designated
431	agent, actually provides paper copies of the documents free of
432	charge, upon request.
433	Section 3.  Section 121.591, Florida Statutes, is amended
434	to read:
435	121.591  Benefits payable under the Public Employee
436	Optional Retirement Program of the Florida Retirement
437	System.--Benefits may not be paid under this section unless the
438	Benefits may not be paid under this section unless the member
439	has terminated employment as provided in s. 121.021(39)(a) or is
440	deceased and a proper application has been filed in the manner
441	prescribed by the state board or the department. The state board
442	or department, as appropriate, may cancel an application for
443	retirement benefits when the member or beneficiary fails to
444	timely provide the information and documents required by this
445	chapter and the rules of the state board and department. In
446	accordance with their respective responsibilities as provided
447	herein, the State Board of Administration and the Department of
448	Management Services shall adopt rules establishing procedures
449	for application for retirement benefits and for the cancellation
450	of such application when the required information or documents
451	are not received. The State Board of Administration and the
452	Department of Management Services, as appropriate, are
453	authorized to cash out a de minimis account of a participant who
454	has been terminated from Florida Retirement System covered
455	employment for a minimum of 6 calendar months. A de minimis
456	account is an account containing employer contributions and
457	accumulated earnings of not more than $5,000 made under the
458	provisions of this chapter. Such cash-out must either be a
459	complete lump-sum liquidation of the account balance, subject to
460	the provisions of the Internal Revenue Code, or a lump-sum
461	direct rollover distribution paid directly to the custodian of
462	an eligible retirement plan, as defined by the Internal Revenue
463	Code, on behalf of the participant.
464	(1)  NORMAL BENEFITS.--Under the Public Employee Optional
465	Retirement Program:
466	(a)  Benefits in the form of vested accumulations as
467	described in s. 121.4501(6) shall be payable under this
468	subsection in accordance with the following terms and
469	conditions:
470	1.  To the extent vested, benefits shall be payable only to
471	a participant.
472	2.  Benefits shall be paid by the third-party administrator
473	or designated approved providers in accordance with the law, the
474	contracts, and any applicable board rule or policy.
475	3.  To receive benefits under this subsection, the
476	participant must be terminated from all employment with all
477	Florida Retirement System employers, as provided in s.
478	121.021(39).
479	(b)  If a participant elects to receive his or her benefits
480	upon termination of employment, the participant must submit a
481	written application to the third-party administrator indicating
482	his or her preferred distribution date and selecting an
483	authorized method of distribution as provided in paragraph (c).
484	The participant may defer receipt of benefits until he or she
485	chooses to make such application, subject to federal
486	requirements.
487	(c)  Upon receipt by the third-party administrator of a
488	properly executed application for distribution of benefits, the
489	total accumulated benefit shall be payable to the participant,
490	as:
491	1.  A lump-sum distribution to the participant;
492	2.  A lump-sum direct rollover distribution whereby all
493	accrued benefits, plus interest and investment earnings, are
494	paid from the participant's account directly to the custodian of
495	an eligible retirement plan, as defined in s. 402(c)(8)(B) of
496	the Internal Revenue Code, on behalf of the participant; or
497	3.  Periodic distributions, as authorized by the state
498	board.
499	(2)  DISABILITY RETIREMENT BENEFITS.--Benefits provided
500	under this subsection are payable in lieu of the benefits which
501	would otherwise be payable under the provisions of subsection
502	(1). Such benefits shall be funded entirely from employer
503	contributions made under s. 121.571, transferred participant
504	funds accumulated pursuant to paragraph (a), and interest and
505	earnings thereon. Pursuant thereto:
506	(a)  Transfer of funds.--To qualify to receive monthly
507	disability benefits under this subsection:
508	1.  All moneys accumulated in the participant's Public
509	Employee Optional Retirement Program accounts, including vested
510	and nonvested accumulations as described in s. 121.4501(6),
511	shall be transferred from such individual accounts to the
512	Division of Retirement for deposit in the disability account of
513	the Florida Retirement System Trust Fund. Such moneys shall be
514	separately accounted for. Earnings shall be credited on an
515	annual basis for amounts held in the disability accounts of the
516	Florida Retirement System Trust Fund based on actual earnings of
517	the Florida Retirement System Trust Fund.
518	2.  If the participant has retained retirement credit he or
519	she had earned under the defined benefit program of the Florida
520	Retirement System as provided in s. 121.4501(3)(b), a sum
521	representing the actuarial present value of such credit within
522	the Florida Retirement System Trust Fund shall be reassigned by
523	the Division of Retirement from the defined benefit program to
524	the disability program as implemented under this subsection and
525	shall be deposited in the disability account of the Florida
526	Retirement System Trust Fund. Such moneys shall be separately
527	accounted for.
528	(b)  Disability retirement; entitlement.--
529	1.  A participant of the Public Employee Optional
530	Retirement Program who becomes totally and permanently disabled,
531	as defined in s. 121.091(4)(b), after completing 8 years of
532	creditable service, or a participant who becomes totally and
533	permanently disabled in the line of duty regardless of his or
534	her length of service, shall be entitled to a monthly disability
535	benefit as provided herein.
536	2.  In order for service to apply toward the 8 years of
537	service required to vest for regular disability benefits, or
538	toward the creditable service used in calculating a service-
539	based benefit as provided for under paragraph (g), the service
540	must be creditable service as described below:
541	a.  The participant's period of service under the Public
542	Employee Optional Retirement Program will be considered
543	creditable service, except as provided in subparagraph d.
544	b.  If the participant has elected to retain credit for his
545	or her service under the defined benefit program of the Florida
546	Retirement System as provided under s. 121.4501(3)(b), all such
547	service will be considered creditable service.
548	c.  If the participant has elected to transfer to his or
549	her participant accounts a sum representing the present value of
550	his or her retirement credit under the defined benefit program
551	as provided under s. 121.4501(3)(c), the period of service under
552	the defined benefit program represented in the present value
553	amounts transferred will be considered creditable service for
554	purposes of vesting for disability benefits, except as provided
555	in subparagraph d.
556	d.  Whenever a participant has terminated employment and
557	has taken distribution of his or her funds as provided in
558	subsection (1), all creditable service represented by such
559	distributed funds is forfeited for purposes of this subsection.
560	(c)  Disability retirement effective date.--The effective
561	retirement date for a participant who applies and is approved
562	for disability retirement shall be established as provided under
563	s. 121.091(4)(a)2. and 3.
564	(d)  Total and permanent disability.--A participant shall
565	be considered totally and permanently disabled if, in the
566	opinion of the division, he or she is prevented, by reason of a
567	medically determinable physical or mental impairment, from
568	rendering useful and efficient service as an officer or
569	employee.
570	(e)  Proof of disability.--The division, before approving
571	payment of any disability retirement benefit, shall require
572	proof that the participant is totally and permanently disabled
573	in the same manner as provided for members of the defined
574	benefit program of the Florida Retirement System under s.
575	121.091(4)(c).
576	(f)  Disability retirement benefit.--Upon the disability
577	retirement of a participant under this subsection, the
578	participant shall receive a monthly benefit that shall begin to
579	accrue on the first day of the month of disability retirement,
580	as approved by the division, and shall be payable on the last
581	day of that month and each month thereafter during his or her
582	lifetime and continued disability. All disability benefits
583	payable to such member shall be paid out of the disability
584	account of the Florida Retirement System Trust Fund established
585	under this subsection.
586	(g)  Computation of disability retirement benefit.--The
587	amount of each monthly payment shall be calculated in the same
588	manner as provided for members of the defined benefit program of
589	the Florida Retirement System under s. 121.091(4)(f). For such
590	purpose, creditable service under both the defined benefit
591	program and the Public Employee Optional Retirement Program of
592	the Florida Retirement System shall be applicable as provided
593	under paragraph (b).
594	(h)  Reapplication.--A participant whose initial
595	application for disability retirement has been denied may
596	reapply for disability benefits in the same manner, and under
597	the same conditions, as provided for members of the defined
598	benefit program of the Florida Retirement System under s.
599	121.091(4)(g).
600	(i)  Membership.--Upon approval of an application for
601	disability benefits under this subsection, the applicant shall
602	be transferred to the defined benefit program of the Florida
603	Retirement System, effective upon his or her disability
604	retirement effective date.
605	(j)  Option to cancel.--Any participant whose application
606	for disability benefits is approved may cancel his or her
607	application for disability benefits, provided that the
608	cancellation request is received by the division before a
609	disability retirement warrant has been deposited, cashed, or
610	received by direct deposit. Upon such cancellation:
611	1.  The participant's transfer to the defined benefit
612	program under paragraph (i) shall be nullified;
613	2.  The participant shall be retroactively reinstated in
614	the Public Employee Optional Retirement Program without hiatus;
615	3.  All funds transferred to the Florida Retirement System
616	Trust Fund under paragraph (a) shall be returned to the
617	participant accounts from which such funds were drawn; and
618	4.  The participant may elect to receive the benefit
619	payable under the provisions of subsection (1) in lieu of
620	disability benefits as provided under this subsection.
621	(k)  Recovery from disability.--
622	1.  The division may require periodic reexaminations at the
623	expense of the disability program account of the Florida
624	Retirement System Trust Fund. Except as otherwise provided in
625	subparagraph 2., the requirements, procedures, and restrictions
626	relating to the conduct and review of such reexaminations,
627	discontinuation or termination of benefits, reentry into
628	employment, disability retirement after reentry into covered
629	employment, and all other matters relating to recovery from
630	disability shall be the same as are set forth under s.
631	121.091(4)(h).
632	2.  Upon recovery from disability, any recipient of
633	disability retirement benefits under this subsection shall be a
634	compulsory member of the Public Employee Optional Retirement
635	Program of the Florida Retirement System. The net difference
636	between the recipient's original account balance transferred to
637	the Florida Retirement System Trust Fund, including earnings,
638	under paragraph (a) and total disability benefits paid to such
639	recipient, if any, shall be determined as provided in sub-
640	subparagraph a.
641	a.  An amount equal to the total benefits paid shall be
642	subtracted from that portion of the transferred account balance
643	consisting of vested accumulations as described under s.
644	121.4501(6), if any, and an amount equal to the remainder of
645	benefit amounts paid, if any, shall then be subtracted from any
646	remaining portion consisting of nonvested accumulations as
647	described under s. 121.4501(6).
648	b.  Amounts subtracted under sub-subparagraph a. shall be
649	retained within the disability account of the Florida Retirement
650	System Trust Fund. Any remaining account balance shall be
651	transferred to the third-party administrator for disposition as
652	provided under sub-subparagraph c. or sub-subparagraph d., as
653	appropriate.
654	c.  If the recipient returns to covered employment,
655	transferred amounts shall be deposited in individual accounts
656	under the Public Employee Optional Retirement Program, as
657	directed by the participant. Vested and nonvested amounts shall
658	be separately accounted for as provided in s. 121.4501(6).
659	d.  If the recipient fails to return to covered employment
660	upon recovery from disability:
661	(I)  Any remaining vested amount shall be deposited in
662	individual accounts under the Public Employee Optional
663	Retirement Program, as directed by the participant, and shall be
664	payable as provided in subsection (1).
665	(II)  Any remaining nonvested amount shall be held in a
666	suspense account and shall be forfeitable after 5 years as
667	provided in s. 121.4501(6).
668	3.  If present value was reassigned from the defined
669	benefit program to the disability program of the Florida
670	Retirement System as provided under subparagraph (a)2., the full
671	present value amount shall be returned to the defined benefit
672	account within the Florida Retirement System Trust Fund and the
673	affected individual's associated retirement credit under the
674	defined benefit program shall be reinstated in full. Any benefit
675	based upon such credit shall be calculated as provided in s.
676	121.091(4)(h)1.
677	(l)  Nonadmissible causes of disability.--A participant
678	shall not be entitled to receive a disability retirement benefit
679	if the disability results from any injury or disease sustained
680	or inflicted as described in s. 121.091(4)(i).
681	(m)  Disability retirement of justice or judge by order of
682	Supreme Court.--
683	1.  If a participant is a justice of the Supreme Court,
684	judge of a district court of appeal, circuit judge, or judge of
685	a county court who has served for 6 years or more as an elected
686	constitutional judicial officer, including service as a judicial
687	officer in any court abolished pursuant to Art. V of the State
688	Constitution, and who is retired for disability by order of the
689	Supreme Court upon recommendation of the Judicial Qualifications
690	Commission pursuant to the provisions of Art. V of the State
691	Constitution, the participant's Option 1 monthly disability
692	benefit amount as provided in s. 121.091(6)(a)1. shall be two-
693	thirds of his or her monthly compensation as of the
694	participant's disability retirement date. Such a participant may
695	alternatively elect to receive an actuarially adjusted
696	disability retirement benefit under any other option as provided
697	in s. 121.091(6)(a), or to receive the normal benefit payable
698	under the Public Employee Optional Retirement Program as set
699	forth in subsection (1).
700	2.  If any justice or judge who is a participant of the
701	Public Employee Optional Retirement Program of the Florida
702	Retirement System is retired for disability by order of the
703	Supreme Court upon recommendation of the Judicial Qualifications
704	Commission pursuant to the provisions of Art. V of the State
705	Constitution and elects to receive a monthly disability benefit
706	under the provisions of this paragraph:
707	a.  Any present value amount that was transferred to his or
708	her program account and all employer contributions made to such
709	account on his or her behalf, plus interest and earnings
710	thereon, shall be transferred to and deposited in the disability
711	account of the Florida Retirement System Trust Fund; and
712	b.  The monthly benefits payable under this paragraph for
713	any affected justice or judge retired from the Florida
714	Retirement System pursuant to Art. V of the State Constitution
715	shall be paid from the disability account of the Florida
716	Retirement System Trust Fund.
717	(n)  Death of retiree or beneficiary.--Upon the death of a
718	disabled retiree or beneficiary thereof who is receiving monthly
719	benefits under this subsection, the monthly benefits shall be
720	paid through the last day of the month of death and shall
721	terminate, or be adjusted, if applicable, as of that date in
722	accordance with the optional form of benefit selected at the
723	time of retirement. The deceased disabled retiree's beneficiary
724	shall also receive the amount of the participant's remaining
725	account balance, if any, in the Florida Retirement System Trust
726	Fund. The Department of Management Services may adopt rules
727	necessary to administer this paragraph.
728	(3)  DEATH BENEFITS.--Under the Public Employee Optional
729	Retirement Program:
730	(a)  Survivor benefits shall be payable in accordance with
731	the following terms and conditions:
732	1.  To the extent vested, benefits shall be payable only to
733	a participant's beneficiary or beneficiaries as designated by
734	the participant. If a participant designates a primary
735	beneficiary other than the participant's spouse, the
736	participant's spouse shall be notified of the designation. This
737	requirement shall not apply to the designation of one or more
738	contingent beneficiaries to receive any benefits remaining upon
739	the death of the primary beneficiary or beneficiaries.
740	2.  Benefits shall be paid by the third-party administrator
741	or designated approved providers in accordance with the law, the
742	contracts, and any applicable board rule or policy.
743	3.  To receive benefits under this subsection, the
744	participant must be deceased.
745	(b)  In the event of a participant's death, all vested
746	accumulations as described in s. 121.4501(6), less withholding
747	taxes remitted to the Internal Revenue Service, shall be
748	distributed, as provided in paragraph (c), to the participant's
749	designated beneficiary or beneficiaries, or to the participant's
750	estate, as if the participant retired on the date of death. No
751	other death benefits shall be available for survivors of
752	participants under the Public Employee Optional Retirement
753	Program, except for such benefits, or coverage for such
754	benefits, as are otherwise provided by law or are separately
755	afforded by the employer, at the employer's discretion.
756	(c)  Upon receipt by the third-party administrator of a
757	properly executed application for distribution of benefits, the
758	total accumulated benefit shall be payable by the third-party
759	administrator to the participant's surviving beneficiary or
760	beneficiaries, as:
761	1.  A lump-sum distribution payable to the beneficiary or
762	beneficiaries, or to the deceased participant's estate;
763	2.  An eligible rollover distribution on behalf of the
764	surviving spouse of a deceased participant, whereby all accrued
765	benefits, plus interest and investment earnings, are paid from
766	the deceased participant's account directly to the custodian of
767	an eligible retirement plan, as described in s. 402(c)(8)(B) of
768	the Internal Revenue Code, on behalf of the surviving spouse; or
769	3.  A partial lump-sum payment whereby a portion of the
770	accrued benefit is paid to the deceased participant's surviving
771	spouse or other designated beneficiaries, less withholding taxes
772	remitted to the Internal Revenue Service, and the remaining
773	amount is transferred directly to the custodian of an eligible
774	retirement plan, as described in s. 402(c)(8)(B) of the Internal
775	Revenue Code, on behalf of the surviving spouse. The proportions
776	must be specified by the participant or the surviving
777	beneficiary.
778
779	This paragraph does not abrogate other applicable provisions of
780	state or federal law providing for payment of death benefits.
781	(4)  LIMITATION ON LEGAL PROCESS.--The benefits payable to
782	any person under the Public Employee Optional Retirement
783	Program, and any contributions accumulated under such program,
784	are not subject to assignment, execution, attachment, or any
785	legal process, except for qualified domestic relations orders by
786	a court of competent jurisdiction, income deduction orders as
787	provided in s. 61.1301, and federal income tax levies.
788	Section 4.  Paragraph (b) of subsection (3) of section
789	121.78, Florida Statutes, is amended to read:
790	121.78  Payment and distribution of contributions.--
791	(3)
792	(b)  If contributions made by an employer on behalf of
793	participants of the optional retirement program or accompanying
794	payroll data are not received within the calendar month they are
795	due, including, but not limited to, contribution adjustments as
796	a result of employer errors or corrections, and if that
797	delinquency results in market losses to participants, the
798	employer shall reimburse each participant's account for market
799	losses resulting from the late contributions. In the event a
800	participant has terminated employment and taken a distribution,
801	the participant is responsible for returning any excess
802	contributions erroneously provided by employers, adjusted for
803	any investment gain or loss incurred during the period such
804	excess contributions were in the participant's Public Employee
805	Optional Retirement Program account. The State Board of
806	Administration, or its designated agent, shall communicate to
807	terminated participants any obligation to repay such excess
808	contribution amounts. However, the State Board of
809	Administration, its designated agent, the Public Employee
810	Optional Retirement Program Trust Fund, the Department of
811	Management Services, or the Florida Retirement System Trust Fund
812	shall not incur any loss or gain as a result of employer
813	correction of such excess contributions. The third-party
814	administrator, hired by the board pursuant to s. 121.4501(8),
815	shall calculate the market losses for each affected participant.
816	When contributions made on behalf of participants of the
817	optional retirement program or accompanying payroll data are not
818	received within the calendar month due, the employer shall also
819	pay the cost of the third-party administrator's calculation and
820	reconciliation adjustments resulting from the late
821	contributions. The third-party administrator shall notify the
822	employer of the results of the calculations and the total amount
823	due from the employer for such losses and the costs of
824	calculation and reconciliation. The employer shall remit to the
825	division the amount due within 10 working days after the date of
826	the penalty notice sent by the division. The division shall
827	transfer said amount to the third-party administrator, who shall
828	deposit proceeds from the 1-percent assessment and from
829	individual market losses into participant accounts, as
830	appropriate. The board is authorized to adopt rules to implement
831	the provisions regarding late contributions, late submission of
832	payroll data, the process for reimbursing participant accounts
833	for resultant market losses, and the penalties charged to the
834	employers.
835	Section 5.  Paragraphs (f), (g), and (i) of subsection (2)
836	of section 215.47, Florida Statutes, are amended to read:
837	215.47  Investments; authorized securities; loan of
838	securities.--Subject to the limitations and conditions of the
839	State Constitution or of the trust agreement relating to a trust
840	fund, moneys available for investments under ss. 215.44-215.53
841	may be invested as follows:
842	(2)  With no more than 25 percent of any fund in:
843	(f)  Certain interests in real property and related
844	personal property, including mortgages and related instruments
845	on commercial or industrial real property, with provisions for
846	equity or income participation or with provisions for
847	convertibility to equity ownership; and interests in collective
848	investment funds. Associated expenditures for acquisition and
849	operation of assets purchased under this provision or of
850	investments in private equity or other private investment
851	partnerships or limited liability companies shall be included as
852	a part of the cost of the investment.
853	1.  The title to real property acquired under this
854	paragraph shall be vested in the name of the respective fund.
855	2.  For purposes of taxation of property owned by any fund,
856	the provisions of s. 196.199(2)(b) do not apply.
857	3.  Real property acquired under the provisions of this
858	paragraph shall not be considered state lands or public lands
859	and property as defined in chapter 253, and the provisions of
860	that chapter do not apply to such real property.
861	(g)  Fixed-income obligations not otherwise authorized by
862	this section issued by foreign governments, or political
863	subdivisions or agencies thereof, supranational agencies,
864	foreign corporations, or foreign commercial entities, provided
865	the obligations are rated investment grade by at least one
866	nationally recognized rating service General obligations backed
867	by the full faith and credit of a foreign government which has
868	not defaulted on similar obligations for a minimum period of 25
869	years prior to purchase of the obligation and has met its
870	payments of similar obligations when due.
871	(i)  Obligations of agencies of the government of the
872	United States, provided such obligations have been included in
873	and authorized by the Florida Retirement System Defined Benefit
874	Total Fund Investment Plan Investment Policy Statement
875	established in s. 215.475.
876	Section 6.  Section 215.475, Florida Statutes, is amended
877	to read:
878	215.475  Investment policy statement plan.--
879	(1)  In making investments for the System Trust Fund
880	pursuant to ss. 215.44-215.53, the board shall make no
881	investment which is not in conformance with the Florida
882	Retirement System Defined Benefit Total Fund Investment Plan
883	Investment Policy Statement, hereinafter referred to as "the
884	statement plan," as developed by the executive director and
885	approved by the board. The statement plan must include, among
886	other items, the investment objectives of the System Trust Fund;
887	permitted types of securities in which the board may invest; and
888	evaluation criteria necessary to measure the investment
889	performance of the fund. As required from time to time, the
890	executive director of the board may present recommended changes
891	in the statement plan to the board for approval.
892	(2)  Prior to any recommended changes in the statement plan
893	being presented to the board, the executive director of the
894	board shall present such changes to the Investment Advisory
895	Council for review. The council shall present the results of its
896	review to the board prior to the board's final approval of the
897	statement plan or changes in the statement plan.
898	Section 7.  Paragraph (a) of subsection (4) of section
899	215.5601, Florida Statutes, is amended to read:
900	215.5601  Lawton Chiles Endowment Fund.--
901	(4)  ADMINISTRATION.--
902	(a)  The board may invest and reinvest funds of the
903	endowment in accordance with s. 215.47 and consistent with an
904	investment policy statement plan developed by the executive
905	director and approved by the board.
906	Section 8.  This act shall take effect July 1, 2004.

CODING: Words stricken are deletions; words underlined are additions.