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. 25 26 Be It Enacted by the Legislature of the State of Florida: 27 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. 164 (5) APPOINTMENT OF EXECUTIVE OFFICERS AND GENERAL 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.