Florida Senate - 2021                                     SB 758
       By Senator Diaz
       36-00774-21                                            2021758__
    1                        A bill to be entitled                      
    2         An act relating to the fiduciary duty of care for
    3         appointed public officials and executive officers;
    4         providing a directive to the Division of Law Revision
    5         to create part IX of ch. 112, F.S.; creating s.
    6         112.89, F.S.; providing legislative findings and
    7         purpose; defining terms; establishing standards for
    8         the fiduciary duty of care for appointed public
    9         officials and executive officers of specified
   10         governmental entities; requiring training on board
   11         governance beginning on a specified date; requiring
   12         the Department of Business and Professional Regulation
   13         to contract for or approve a training program or
   14         publish a list of approved training providers;
   15         specifying requirements for such training; authorizing
   16         training to be provided by in-house counsel for
   17         certain governmental entities; requiring appointed
   18         public officials and executive officers to certify
   19         their completion of the annual training; requiring the
   20         department to adopt rules; providing exceptions to the
   21         training requirement; specifying requirements for the
   22         appointment of executive officers and general counsels
   23         of governmental entities; specifying standards for
   24         legal counsel; providing an effective date.
   26  Be It Enacted by the Legislature of the State of Florida:
   28         Section 1. The Division of Law Revision is directed to
   29  create part IX of chapter 112, Florida Statutes, consisting of
   30  s. 112.89, Florida Statutes, to be entitled “Fiduciary Duty of
   31  Care for Appointed Public Officials and Executive Officers.”
   32         Section 2. Section 112.89, Florida Statutes, is created to
   33  read:
   34         112.89 Fiduciary duty of care.—
   35         (1) LEGISLATIVE FINDINGS AND PURPOSE.—The Legislature finds
   36  that appointed public officials and executive officers acting on
   37  behalf of governmental entities owe a fiduciary duty to the
   38  entities they serve. The Legislature finds that codifying a
   39  fiduciary duty of care will require that appointed public
   40  officials and executive officers stay adequately informed of
   41  affairs, perform due diligence, perform reasonable oversight,
   42  and practice fiscal responsibility regarding decisions involving
   43  corporate and proprietary commitments on behalf of the entity
   44  they serve.
   45         (2) DEFINITIONS.—
   46         (a) “Appointed public official” means either a “local
   47  officer” as defined in s. 112.3145(1)(a)2. or a “state officer”
   48  as defined in s. 112.3145(1)(c)2. and 3.
   49         (b) “Department” means the Department of Business and
   50  Professional Regulation.
   51         (c) “Executive officer” means the chief executive officer
   52  of a governmental entity to which an appointed public official
   53  is appointed.
   54         (d) “General counsel” means the chief legal counsel of a
   55  governmental entity to which an appointed public official or an
   56  executive officer is appointed or hired.
   57         (e) “Governmental entity” means the entity, or a board, a
   58  council, a commission, an authority, or other body thereof, to
   59  which an appointed public official or an executive officer is
   60  appointed or hired.
   61         (3) FIDUCIARY DUTY OF CARE.—Each appointed public official
   62  and executive officer owes a fiduciary duty of care to the
   63  applicable entity he or she serves in accordance with law and
   64  has a duty to:
   65         (a) Act in accordance with the laws, ordinances, rules,
   66  policies, and terms governing his or her office or employment.
   67         (b) Act with the care, competence, and diligence normally
   68  exercised by a reasonably prudent person in similar corporate
   69  and proprietary circumstances.
   70         (c) Act only within the scope of his or her authority.
   71         (d) Refrain from conduct that is likely to damage the
   72  financial or economic interests of the governmental entity.
   73         (e) Use reasonable efforts to maintain documentation in
   74  accordance with applicable laws.
   75         (f) Maintain reasonable oversight of any delegated
   76  authority and discharge his or her duties with the care that a
   77  reasonably prudent person in a like business position would
   78  believe appropriate under the circumstances, and must:
   79         1. Become reasonably informed in connection with any
   80  decisionmaking function;
   81         2. Become reasonably informed when devoting attention to
   82  any oversight function;
   83         3. Keep reasonably informed concerning the affairs of the
   84  governmental entity; and
   85         4. Keep reasonably informed concerning the performance of
   86  the governmental entity’s executive officers or other officers,
   87  agents, or employees.
   88         (4) TRAINING REQUIREMENT.—
   89         (a) Beginning January 1, 2022, each appointed public
   90  official and executive officer shall complete a minimum of 5
   91  hours of board governance training for each term served.
   92         1. An appointed public official or executive officer
   93  holding office or employed by a governmental entity on January
   94  1, 2022, shall complete the 5 hours of board governance training
   95  before the expiration of his or her term of service. If an
   96  appointed public official or executive officer is employed under
   97  a contract that does not specify a termination date for
   98  employment, the public official or executive officer shall
   99  complete the 5 hours of training by January 1, 2023, and once
  100  every 4 years thereafter for the duration of their employment.
  101         2. An appointed public official or executive officer who is
  102  appointed, reappointed, or hired after January 1, 2022, shall
  103  complete the 5 hours of board governance training within 180
  104  days after the date of his or her appointment, reappointment, or
  105  hire.
  106         (b) By January 1, 2022, the department shall:
  107         1. Contract for or approve a board governance training
  108  program that includes an affordable web-based electronic media
  109  option; or
  110         2. Publish a list of approved board governance training
  111  providers on its website. A provider may include a Florida
  112  College System institution, a state university, a nationally
  113  recognized entity specializing in board governance education, or
  114  any other entity deemed qualified by the department as capable
  115  of providing the minimum training requirements specified in this
  116  subsection.
  117         (c) The board governance training programs must provide, at
  118  a minimum, educational materials and instruction on the
  119  following:
  120         1. Generally accepted corporate board governance principles
  121  and best practices; corporate board fiduciary duty of care legal
  122  analyses; corporate board oversight and evaluation procedures;
  123  governmental entity responsibilities; executive officer
  124  responsibilities; executive officer performance evaluations;
  125  selecting, monitoring, and evaluating an executive management
  126  team; reviewing and approving proposed investments,
  127  expenditures, and budget plans; financial accounting and capital
  128  allocation principles and practices; and new governmental entity
  129  member orientation.
  130         2. The fiduciary duty of care and obligations imposed upon
  131  appointed public officials and executive officers pursuant to
  132  this section.
  133         (d) A governmental entity complies with the training
  134  requirement under this subsection by providing a department
  135  approved program or contracting with a provider listed by the
  136  department under subparagraph (b)2. However, for governmental
  137  entities with annual revenues of less than $300,000, board
  138  governance training may be provided by in-house counsel of the
  139  governmental entity or the unit of government that created the
  140  governmental entity, if applicable, so long as the training
  141  complies with the minimum course content established by
  142  department rule.
  143         (e) Within 30 days after completion of the board governance
  144  training, each appointed public official and executive officer
  145  shall certify, in writing or electronic form and under oath, to
  146  the department that he or she:
  147         1. Has completed the training required by this subsection;
  148         2. Has read the laws and relevant policies applicable to
  149  his or her position;
  150         3. Will work to uphold such laws and policies to the best
  151  of his or her ability; and
  152         4. Will faithfully discharge his or her fiduciary
  153  responsibility, as imposed by this section.
  154         (f) The department shall adopt rules to implement this
  155  subsection.
  156         (g) This subsection does not apply to appointed public
  157  officials and executive officers who:
  158         1. Serve governmental entities whose annual revenues are
  159  less than $100,000;
  160         2. Hold elected office in another capacity; or
  161         3. Complete board governance training involving fiduciary
  162  duties or responsibilities which is required under any other
  163  state law.
  165  COUNSELS.—The appointment of any executive officer or general
  166  counsel is subject to approval by a majority vote of the
  167  governmental entity.
  168         (6) STANDARDS FOR LEGAL COUNSEL.—All legal counsel employed
  169  by a governmental entity must represent the legal interests and
  170  positions of the governmental entity and not the interest of any
  171  individual or employee of the governmental entity, unless such
  172  representation is directed by the governmental entity.
  173         Section 3. This act shall take effect July 1, 2021.