The Florida Senate

215.5601  Lawton Chiles Endowment Fund.--

(1)  SHORT TITLE.--This section may be cited as the "Lawton Chiles Endowment Fund."

(2)  DEFINITIONS.--As used in this section:

(a)  "Board" means the State Board of Administration established by s. 16, Art. IX of the State Constitution of 1885 and incorporated into s. 9(c), Art. XII of the State Constitution of 1968.

(b)  "Endowment" means the Lawton Chiles Endowment Fund.

(c)  "Earnings" means all income generated by investments and the net change in the market value of assets.

(d)  "State agency" or "state agencies" means the Department of Health, the Department of Children and Family Services, the Department of Elderly Affairs, or the Agency for Health Care Administration, or any combination thereof, as the context indicates.

(3)  LEGISLATIVE INTENT.--It is the intent of the Legislature to:

(a)  Provide a perpetual source of funding for the future of state children's health programs, child welfare programs, community-based health and human services initiatives, and biomedical research activities.

(b)  Ensure that enhancement revenues will be available to finance these important initiatives.

(c)  Use tobacco settlement moneys to ensure the financial security of vital health and human services programs.

(d)  Encourage the development of community-based solutions to strengthen and improve the quality of life of Florida's most vulnerable citizens.

(e)  Provide funds for cancer research and public-health research for diseases linked to tobacco use.

(4)  LAWTON CHILES ENDOWMENT FUND; CREATION; PURPOSES AND USES.--

(a)  There is created the Lawton Chiles Endowment Fund, to be administered by the State Board of Administration. The endowment shall serve as a clearing trust fund not subject to termination pursuant to s. 19(f), Art. III of the State Constitution and shall be funded by settlement moneys received from the tobacco industry. The endowment fund shall be exempt from the service charges imposed by s. 215.20.

(b)  Funds from the endowment shall be distributed by the board to trust funds of the state agencies in the amounts indicated by reference to the legislative appropriations for the state agencies, except as otherwise provided in this section.

(c)  The state agencies shall use the funds from the endowment to enhance or support increases in clients served or in program costs in health and human services program areas.

(d)  The Secretary of Health, the Secretary of Children and Family Services, the Secretary of Elderly Affairs, and the Director of Health Care Administration shall conduct meetings to discuss program priorities for endowment funding prior to submitting their budget requests to the Executive Office of the Governor and the Legislature. The purpose of the meetings shall be to gain consensus for priority requests and recommended endowment funding levels for those priority requests. An agency head may not designate a proxy for these meetings.

(e)  Funds from the endowment may not be used to supplant existing revenues.

(f)  When advised by the Revenue Estimating Conference that a deficit will occur with respect to the appropriations from the Tobacco Settlement Trust Fund in any fiscal year, the Governor shall develop a plan of action to eliminate the deficit. Before implementing the plan of action, the Governor must comply with the provisions of s. 216.177(2). In developing the plan of action, the Governor shall, to the extent possible, preserve legislative policy and intent, and, absent any specific directions to the contrary in the General Appropriations Act, any reductions in appropriations from the Tobacco Settlement Trust Fund for a fiscal year shall be prorated among the purposes for which funds were appropriated from the Tobacco Settlement Trust Fund for that year.

(5)  ADMINISTRATION OF THE ENDOWMENT.--

(a)  The board is authorized to invest and reinvest funds of the endowment in those securities listed in s. 215.47, in accordance with the fiduciary standards set forth in s. 215.47(9) and consistent with an investment plan developed by the executive director and approved by the board. Costs and fees of the board for investment services shall be deducted from the earnings accruing to the endowment.

(b)  The endowment shall be managed as an annuity. The investment objective shall be long-term preservation of the real value of the principal and a specified regular annual cash outflow for appropriation, as nonrecurring revenue. The schedule of annual cash outflow shall be included within the investment plan adopted pursuant to paragraph (a).

(c)  The board shall establish a separate account for the funds of the endowment. The board shall design and operate an investment portfolio that maximizes the financial return to the endowment, consistent with the risks inherent in each investment, and that is designed to preserve an appropriate diversification of the portfolio.

(d)  No later than February 15, 2000, the board shall report on the financial status of the endowment to the Governor, the Speaker of the House of Representatives, the President of the Senate, the chairs of the respective appropriations and appropriate substantive committees of each chamber, and the Revenue Estimating Conference. Thereafter, the board shall make a status report to such persons no later than August 15 and February 15 of each year.

(e)  Accountability for funds from the endowment which have been appropriated to a state agency and distributed by the board shall reside with the state agency. The board is not responsible for the proper expenditure or accountability of funds from the endowment after distribution to a state agency.

(f)  The board may collect a fee for service from the endowment no greater than that charged to the Florida Retirement System.

(6)  AVAILABILITY OF FUNDS.--

(a)  Funds from the endowment shall not be available for appropriation to a state agency until July 1, 2000. Beginning July 1, 2000, the maximum annual amount of endowment funds that may be appropriated shall be in accordance with the following, based on earnings averaged over 3 years:

1.  Beginning July 1, 2000, no more than a level of spending representing earnings at a rate of 3 percent.

2.  Beginning July 1, 2001, no more than a level of spending representing earnings at a rate of 4 percent.

3.  Beginning July 1, 2002, no more than a level of spending representing earnings at a rate of 5 percent.

4.  Beginning July 1, 2003, and thereafter, no more than a level of spending representing earnings at a rate of 6 percent.

(b)  Notwithstanding the provisions of s. 216.301 and pursuant to s. 216.351, all unencumbered balances of appropriations as of June 30 or undisbursed balances as of December 31 shall revert to the endowment's principal.

(7)  ENDOWMENT PRINCIPAL; APPROPRIATION OF EARNINGS.--The following amounts are appropriated from the Department of Banking and Finance Tobacco Settlement Clearing Trust Fund to the Lawton Chiles Endowment Fund for Health and Human Services:

(a)  For fiscal year 1999-2000, $1.1 billion;

(b)  For fiscal year 2000-2001, $200 million;

(c)  For fiscal year 2001-2002, $200 million; and

(d)  For fiscal year 2002-2003, $200 million.

History.--s. 1, ch. 99-167.