Florida Senate - 2011                        COMMITTEE AMENDMENT
       Bill No. SB 1182
                                Barcode 440762                          
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  04/05/2011           .                                

       The Committee on Governmental Oversight and Accountability
       (Ring) recommended the following:
    1         Senate Amendment (with title amendment)
    3         Delete lines 18 - 59
    4  and insert:
    5         Section 1. Subsections (1), (2) and (3) of section 215.44,
    6  Florida Statutes, are amended to read:
    7         215.44 Board of Administration; powers and duties in
    8  relation to investment of trust funds.—
    9         (1) Except when otherwise specifically provided by the
   10  State Constitution and subject to any limitations of the trust
   11  agreement relating to a trust fund, the Board of Administration,
   12  sometimes referred to in this chapter as “board” or “Trustees of
   13  the State Board of Administration,” composed of the Governor as
   14  chair, the Chief Financial Officer, and the Attorney General,
   15  shall invest all the funds in the System Trust Fund, as defined
   16  in s. 121.021(36), and all other funds specifically required by
   17  law to be invested by the board pursuant to ss. 215.44-215.53 to
   18  the fullest extent that is consistent with the cash
   19  requirements, trust agreement, and investment objectives of the
   20  fund. Notwithstanding any other law to the contrary, the State
   21  Board of Administration may invest any funds of any state
   22  agency, any state university or college, any unit of local
   23  government, or any direct-support organization thereof pursuant
   24  to the terms of a trust agreement with the head of the state
   25  agency or the governing body of the state university or college,
   26  unit of local government, or direct-support organization
   27  thereof, or pursuant to the enrollment requirements stated in s.
   28  218.407, and may invest such funds in the Local Government
   29  Surplus Funds Trust Fund created by s. 218.405, without a trust
   30  agreement, upon completion of enrollment materials provided by
   31  the board. The board shall approve the undertaking of
   32  investments subject to a trust agreement before execution of
   33  such trust agreement by the State Board of Administration. The
   34  funds and the earnings therefrom are exempt from the service
   35  charge imposed by s. 215.20. As used in this subsection, the
   36  term “state agency” has the same meaning as that provided in s.
   37  216.011, and the terms “governing body” and “unit of local
   38  government” have the same meaning as that provided in s.
   39  218.403.
   40         (2)(a) The board shall have the power to make purchases,
   41  sales, exchanges, investments, and reinvestments for and on
   42  behalf of the funds referred to in subsection (1), and it shall
   43  be the duty of the board to see that moneys invested under the
   44  provisions of ss. 215.44-215.53 are at all times handled in the
   45  best interests of the state.
   46         (b) In exercising investment authority pursuant to s.
   47  215.47, the board may retain investment advisers or managers, or
   48  both, external to in-house staff, to assist the board in
   49  carrying out the power specified in paragraph (a).
   50         (c) The board shall create an audit committee to assist the
   51  board in fulfilling its oversight responsibilities. The
   52  committee shall consist of three members appointed by the board.
   53  Members shall be appointed for 4-year terms. A vacancy shall be
   54  filled for the remainder of the unexpired term. The committee
   55  shall annually elect a chair and vice chair from its membership.
   56  A member may not be elected to consecutive terms as chair or
   57  vice chair. Persons appointed to the audit committee must have
   58  relevant knowledge and expertise as determined by the board. The
   59  audit committee shall serve as an independent and objective
   60  party to monitor processes for financial reporting, internal
   61  controls and risk assessment, audit processes, and compliance
   62  with laws, rules, and regulations. The audit committee shall
   63  direct the efforts of the board’s independent external auditors
   64  and the board’s internal audit staff. The committee shall
   65  periodically, but at least not less than quarterly, report to
   66  the board and the executive director of the board.
   67         (d) The board shall produce a set of financial statements
   68  for the Florida Retirement System on an annual basis, which
   69  shall be reported to the Legislature and audited by a commercial
   70  independent third-party audit firm under the direction of the
   71  audit committee.
   72         (e)Pursuant to s. 110.205, the board shall establish and
   73  maintain the salaries and benefits of its officers and employees
   74  in a manner consistent with the board’s fiduciary responsibility
   75  to recruit and retain highly qualified and effective key
   76  personnel. At least every 5 years, the Investment Advisory
   77  Council shall cause a total compensation study to be conducted
   78  by a private consulting firm having expertise in salary and
   79  benefits administration of institutional investment entities.
   80  The study shall be designed to determine competitive salary
   81  ranges, other compensation, and benefits for positions within
   82  the board based on comparable public-sector peer investment
   83  entities. The council shall present the total compensation
   84  study, along with its recommendations, to the board. The
   85  recommendations are subject to review and ratification or
   86  reversal by the board. The board may delegate to the executive
   87  director the authority and duty to set staff salaries within the
   88  ranges approved by the board.
   89         (f)(e) The board shall meet at least quarterly and shall
   90  receive reports from the audit committee, the investment
   91  advisory committee, the inspector general, the general counsel,
   92  the executive director, and such other persons or entities as
   93  the board may require about the financial status, operations,
   94  and investment activities of the board.
   95         (3) Notwithstanding any law to the contrary, all
   96  investments made by the State Board of Administration pursuant
   97  to ss. 215.44-215.53 shall be subject to the restrictions and
   98  limitations contained in s. 215.47, except that investments made
   99  by the board under a trust agreement pursuant to subsection (1)
  100  are subject only to the restrictions and limitations contained
  101  in that trust agreement.
  102         Section 2. Section 215.441, Florida Statutes, is amended to
  103  read:
  104         215.441 Board of Administration; appointment of executive
  105  director.—The appointment of the executive director of the State
  106  Board of Administration is shall be subject to the approval by a
  107  majority vote of the Board of Trustees of the State Board of
  108  Administration, and the Governor must vote on the prevailing
  109  side. Such appointment must be reaffirmed in the same manner by
  110  the board of trustees on an annual basis.
  111         (1)Before appointing the executive director, the board
  112  shall appoint a search committee to develop minimum position
  113  requirements, review applications, and make recommendations to
  114  the board with regard to qualified applicants for the position.
  115  At a minimum, the search committee shall consist of at least
  116  three members of the Investment Advisory Council.
  117         (2) The executive director shall, at a minimum, possess
  118  substantial experience, knowledge, and expertise in the
  119  oversight of investment portfolios and must meet any other
  120  requirements determined by the board to be necessary to the
  121  overall management and investment of funds.
  122         (3)The compensation for the executive director shall be
  123  determined by the board, consistent with s. 215.44(2)(d).
  124         Section 3. Subsection (1) of section 215.442, Florida
  125  Statutes, is amended to read:
  126         215.442 Executive director; reporting requirements; public
  127  meeting.—
  128         (1) Beginning October 2007 and quarterly thereafter, the
  129  executive director shall present to the Board of Trustees and
  130  the Investment Advisory Council of the State Board of
  131  Administration a quarterly report to include the following:
  132         (a) The name of each equity in which the State Board of
  133  Administration has invested for the quarter.
  134         (b) The industry category of each equity.
  135         Section 4. Section 215.444, Florida Statutes, is amended to
  136  read:
  137         215.444 Investment Advisory Council.—
  138         (1) There is created A five-member six-member Investment
  139  Advisory Council is created to review the investments made by
  140  the staff of the Board of Administration and to make
  141  recommendations to the board regarding investment policy,
  142  strategy, and procedures.
  143         (2) Beginning February 1, 2011, the membership of the
  144  council shall be expanded to nine members. Beginning July 1,
  145  2011, board membership shall be reduced by not refilling board
  146  positions as the terms of the members expire until board
  147  membership consists of five members. Thereafter, three of those
  148  members shall be appointed by the Governor, one member shall be
  149  appointed by the Chief Financial Officer, and one member shall
  150  be appointed by the Attorney General. Members shall be appointed
  151  for 4-year terms. A vacancy shall be filled for the remainder of
  152  the unexpired term. The council shall annually elect a chair and
  153  a vice chair from its membership. A member may not be elected to
  154  consecutive terms as chair or vice chair. The council shall meet
  155  with staff of the board at least once each quarter and shall
  156  provide a quarterly report directly to the Board of Trustees of
  157  the State Board of Administration at a meeting of the board.
  158         (2) The members of the council shall be appointed by the
  159  board as a resource to the Board of Trustees of the State Board
  160  of Administration and shall be subject to confirmation by the
  161  Senate.
  162         (3) In order to be appointed, an individual must These
  163  individuals shall possess special knowledge, experience, and
  164  familiarity with portfolio management, institutional
  165  investments, and fiduciary responsibilities, have been in a
  166  position that oversaw $1 billion in assets, and may have had
  167  extensive experience in managing or overseeing investment
  168  portfolios or conducting research in any two or more of the
  169  following areas: domestic equities, international equities,
  170  fixed-income securities, cash management, marketable and
  171  nonmarketable alternative investments, or real estate. Members
  172  shall be appointed for 4-year terms. A vacancy shall be filled
  173  for the remainder of the unexpired term. The council shall
  174  annually elect a chair and a vice chair from its membership. A
  175  member may not be elected to consecutive terms as chair or vice
  176  chair.
  177         (4)(3) The council members must undergo regular fiduciary
  178  training as required by the board and must complete an annual
  179  conflict disclosure statement. In carrying out their duties,
  180  council members must make recommendations consistent with the
  181  fiduciary standards applicable to the board.
  182         (5)In addition to the duties in subsection (1), the
  183  council shall approve the investment policy statements of the
  184  board, participate in the selection process regarding an
  185  executive director, obtain periodic compensation studies and
  186  provide recommendations thereon, meet quarterly to review the
  187  investment performance of funds, and perform any other duties as
  188  determined by the board. The council shall meet with board staff
  189  at least once each quarter and provide a quarterly report
  190  directly to the Board of Administration at a meeting of the
  191  board.
  192         (6)(4) The council may create subcommittees as necessary to
  193  carry out its duties and responsibilities and may direct the
  194  executive director to enter into contracts with independent
  195  compensation consultants.
  196         (7) In carrying out the provisions of this subsection, a
  197  member of the council is an officer, employee, or agent of the
  198  state for purposes of the state’s waiver of sovereign immunity
  199  as provided in s. 768.28.
  201  ================= T I T L E  A M E N D M E N T ================
  202         And the title is amended as follows:
  203         Delete lines 3 - 10
  204  and insert:
  205         amending s. 215.44, F.S.; authorizing the board to
  206         invest the assets of a governmental entity in the
  207         Local Government Surplus Funds Trust Fund without a
  208         trust agreement with that governmental entity;
  209         requiring the board to establish and maintain the
  210         salaries of its officers and employees in a manner
  211         consistent with its fiduciary duties; requiring that
  212         the Investment Advisory Council initiate a study at
  213         specified intervals to evaluate compensation;
  214         requiring that the council present the results of such
  215         study to the board; authorizing the board to delegate
  216         certain authority and duties relating to salaries to
  217         the executive director; revising the entities that
  218         submit reports to the board; providing that certain
  219         investments made by the board under a trust agreement
  220         are subject only to the restrictions and limitations
  221         contained in the trust agreement; amending s. 215.441,
  222         F.S.; providing for the creation, operation, and
  223         membership of a search committee for the purpose of
  224         selecting the executive director; providing
  225         requirements for the appointment as executive
  226         director; providing for the determination of the
  227         executive director’s compensation; amending s.
  228         215.442, F.S.; requiring that the executive director
  229         present certain information quarterly to the
  230         Investment Advisory Council; amending s. 215.444,
  231         F.S.; reducing the number of council members and
  232         providing for the appointment of such members;
  233         expanding prerequisites for membership on the council;
  234         providing additional duties of the council;
  235         authorizing the council to create subcommittees and
  236         direct the executive director to enter into certain
  237         contracts; providing that a council member is an
  238         officer, employee, or agent of the state for the
  239         purpose of sovereign immunity; amending s. 215.4755,
  240         F.S.; correcting