Florida Cabinet Meeting Report: September 29
Sep 29, 2009
The Florida Cabinet met in Tallahassee on Tuesday, September 29, 2009, during which agenda items were considered from various State agencies. To view the complete meeting agenda, click here. Below is a summary of corresponding Cabinet actions:
Florida Department of Highway Safety and Motor Vehicles
The Governor and Cabinet appointed Julie Jones to serve as the Executive Director of the Florida Department of Highway Safety and Motor Vehicles. Ms. Jones, who formerly served as the Chief Law Enforcement Officer with the Florida Fish and Wildlife Commission, is replacing Electra Bustle, who announced her resignation last month.
Florida Division of Bond Finance
A representative from the Division of Bond Finance presented the following items, both of which were approved by the Cabinet with minimal discussion:
- Adoption of a resolution authorizing the issuance and sale of $245 million worth of Florida Department of Transportation (“DOT”) Right-of-Way Acquisition and Bridge Construction Refunding Bonds. These bonds will be funded from fuel tax revenues.
- Adoption of a resolution authorizing the issuance and sale of $205 million worth of DOT Turnpike Revenue Refunding Bonds. These bonds will be funded from tolls and other Florida Turnpike System revenues.
A report was given on the award to J.P. Morgan Securities Inc. of the contract to sell $156 million in State Board of Education Public Education Capital Outlay Refunding Bonds.
Florida Department of Revenue
The Department of Revenue presented the following item, which was approved by the Cabinet with minimal discussion:
- Approval to file and certify amendments to regulations that are expected to promote better compliance with state tax rules and forms pertaining to food and beverage sales.
State Board of Administration
State Board of Administration (“SBA”) Executive Director Ash Williams reported that the Florida Retirement System Trust Fund has increased 16.3 percent to date. Florida Chief Financial Officer Alex Sink then asked the Cabinet to consider two issues for approval:
- The Cabinet needs to encourage the Florida Senate to do a better job of confirming the members of the SBA’s Investment Advisory Council.
- CFO Sink would like to see a strengthening of the State’s oversight of the Florida Pension Fund through the approval of three items:
- Expansion of the SBA Board of Trustees through legislative action. CFO Sink would like to see one or more members added who have proven investment experience. In addition, she would like to see one or more members added who participate in the Florida Retirement System.
- Fiduciary training of all SBA Board of Trustees members to improve their understanding of financial markets and their individual responsibilities.
- Conducting of regular external audits
No seconds to CFO Sink’s motion to implement these changes were made. Florida Attorney General Bill McCollum then commented on CFO Sink’s suggestions, saying that he thought it would be best for Mr. Williams to submit the ideas for discussion to both his SBA team and the Investment Advisory Council and report back to the Cabinet.
Attorney General McCollum suggested that changing the composition of the Board of Trustees would require a constitutional amendment. Governor Charlie Crist agreed with this, but CFO Sink disagreed. The next Investment Advisory Council meeting is scheduled in December 2009.
The next Cabinet meeting is scheduled for October 13, 2009.
A press release from the Florida Division of Financial Services about CFO Sink’s proposed SBA overisght reforms is reprinted below.
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TALLAHASSEE- Florida CFO Alex Sink today recommended reforms to strengthen and enhance the oversight of the state’s public pension fund, including a proposal to expand the Board of Trustees, but her motions were delayed until December by the other two members of the SBA Board, Governor Crist and Attorney General McCollum.
CFO Sink noted her decades of business experience and the recent governance study when laying out reasoned arguments for reforming the oversight structure of the $110 billion pension fund so many Floridians depend on for a secure retirement. She also pledged to work with Florida Legislators to move forward with Legislation to expand the Board of Trustees.
“The SBA governance structure is long overdue for a change and the recent governance study clearly showed that the SBA’s Board of Trustees should include more than just three elected officials,” said CFO Sink. “My recommendations continue the reforms I have taken the lead on since coming into office to improve the transparency, accountability and oversight of the SBA, and I was disappointed that they were not brought to a vote.”
CFO Sink offered three recommendations to strengthen the oversight and accountability of Florida’s $110 billion public pension fund at today’s Cabinet meeting:
- Expansion of the Board of Trustees – CFO Sink proposed recommending to the Florida Legislature that they expand the membership of the Board of Trustees, to include one or more members with extensive relative investment experience or knowledge and one or more members who is a beneficiary or participant in the Florida Retirement System.
- Fiduciary Training – CFO Sink proposed requiring each Trustee and each member of the Audit Committee, Investment Advisory Council and Participant Local Government Advisory Council to undergo annual training in fiduciary responsibilities and associated ethical requirements relevant to their roles.
- Regular, Independent Audits – CFO Sink proposed that the Audit Committee develop recommendations for regular external audits of the SBA which should focus on financials, compliance, internal controls, and operations.
These recommendations were validated by a Board-directed study of best practices of 15 other state pension funds and numerous private sector investment professionals presented to the SBA Board of Trustees earlier this month. The study was from an initiative by CFO Sink to bring a more modern, businesslike approach to the oversight and management of the SBA. The report can be read here.
“As one of the SBA’s three trustees, and the only current trustee with previous business experience, I have long argued that it takes more than three elected officials to oversee the $110 billion fund that our police officers, teachers and other state employees depend on for a secure retirement,” CFO Sink continued. “These three proposals were taken from the findings of an in-depth study of public pension funds around the country and private sector experts – and I will continue to push for these needed reforms.”
In March of 2008, CFO Sink presented her ten point plan designed to toughen the SBA’s financial safeguards, increase transparency in SBA communications and strengthen board oversight, which included recommendations such as Board of Trustee expansion.
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