Florida Senate - 2011                        COMMITTEE AMENDMENT
       Bill No. SB 1182
                                Barcode 927814                          
                              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 Committee
   77  shall cause a total compensation study to be conducted by a
   78  private consulting firm having expertise in salary and benefits
   79  administration of institutional investment entities. The study
   80  shall be designed to determine competitive salary ranges, other
   81  compensation, and benefits for positions within the board based
   82  on comparable public-sector peer investment entities. The
   83  council shall present the total compensation study, along with
   84  its recommendations, to the board. The recommendations are
   85  subject to review and ratification or reversal by the board. The
   86  board may delegate to the executive director the authority and
   87  duty to set staff salaries within the ranges approved by the
   88  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 Committee.
  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 Committee of the State Board of Administration a
  131  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. Effective January 1, 2012, section 215.444,
  136  Florida Statutes, is amended to read:
  137         (Substantial rewording of section. See
  138         s. 215.444, F.S. for present text.)
  139         215.444Investment Committee.—
  140         (1) A five-member Investment Committee is created to review
  141  the investments made by the staff of the Board of
  142  Administration.
  143         (2)Three of those members shall be appointed by the
  144  Governor, one member shall be appointed by the Chief Financial
  145  Officer, and one member shall be appointed by the Attorney
  146  General. Members shall be appointed for 4-year terms. A vacancy
  147  shall be filled for the remainder of the unexpired term. The
  148  committee shall annually elect a chair and a vice chair from its
  149  membership. A member may not be elected to consecutive terms as
  150  chair or vice chair.
  151         (3) In order to be appointed, an individual must possess
  152  special knowledge, experience, and familiarity with portfolio
  153  management, institutional investments, and fiduciary
  154  responsibilities, have been in a position that oversaw $1
  155  billion in assets, and may have had extensive experience in
  156  managing or overseeing investment portfolios or conducting
  157  research in any two or more of the following areas: domestic
  158  equities, international equities, fixed-income securities, cash
  159  management, marketable and nonmarketable alternative
  160  investments, or real estate.
  161         (4) The committee members must undergo regular fiduciary
  162  training as required by the board and must complete an annual
  163  conflict disclosure statement. In carrying out their duties,
  164  committee members are deemed named fiduciaries and must make
  165  recommendations consistent with the fiduciary standards
  166  applicable to the board.
  167         (5)The committee shall approve the investment policy
  168  statements of the board as provided in ss. 215.475,
  169  121.4501(14), 215.5601(4)(a), and 218.409(2)(d), participate in
  170  the selection process regarding an executive director, obtain
  171  periodic compensation studies and provide recommendations
  172  thereon, meet at least quarterly to review the investment
  173  performance of funds, and perform any other duties as determined
  174  by the board. Decisions of the committee may be overturned only
  175  by a unanimous vote of the Board of Administration. The
  176  committee shall meet with board staff at least once each quarter
  177  and provide a quarterly report directly to the Board of
  178  Administration at a meeting of the board.
  179         (6) The committee may create subcommittees as necessary to
  180  carry out its duties and responsibilities and may direct the
  181  executive director to enter into contracts with independent
  182  compensation consultants.
  183         (7) In carrying out the provisions of this section, a
  184  member of the committee is an officer, employee, or agent of the
  185  state for purposes of the state’s waiver of sovereign immunity
  186  as provided in s. 768.28.
  188  ================= T I T L E  A M E N D M E N T ================
  189         And the title is amended as follows:
  190         Delete lines 3 - 10
  191  and insert:
  192         amending s. 215.44, F.S.; authorizing the board to
  193         invest the assets of a governmental entity in the
  194         Local Government Surplus Funds Trust Fund without a
  195         trust agreement with that governmental entity;
  196         requiring the board to establish and maintain the
  197         salaries of its officers and employees in a manner
  198         consistent with its fiduciary duties; requiring that
  199         the Investment Advisory Council initiate a study at
  200         specified intervals to evaluate compensation;
  201         requiring that the council present the results of such
  202         study to the board; authorizing the board to delegate
  203         certain authority and duties relating to salaries to
  204         the executive director; revising the entities that
  205         submit reports to the board; providing that certain
  206         investments made by the board under a trust agreement
  207         are subject only to the restrictions and limitations
  208         contained in the trust agreement; amending s. 215.441,
  209         F.S.; providing for the creation, operation, and
  210         membership of a search committee for the purpose of
  211         selecting the executive director; providing
  212         requirements for the appointment as executive
  213         director; providing for the determination of the
  214         executive director’s compensation; amending s.
  215         215.442, F.S.; requiring that the executive director
  216         present certain information quarterly to the
  217         Investment Committee; amending s. 215.444, F.S.;
  218         deleting provisions relating to the Investment
  219         Advisory Council and creating the five-member
  220         Investment Committee to assume the duties of the
  221         former council; providing for terms of members and the
  222         appointment of such members; providing prerequisites
  223         for membership on the committee; providing duties of
  224         the committee; authorizing the committee to create
  225         subcommittees and direct the executive director to
  226         enter into certain contracts; providing that a
  227         committee member is an officer, employee, or agent of
  228         the state for the purpose of sovereign immunity;
  229         amending s. 215.4755, F.S.; correcting