HomeMy WebLinkAbout2001 04 23 Consent E Consulting Services
COMMISSION AGENDA
ITEM E
CONSENT XX
INFORMATIONAL
PUBLIC HEARING
REGULAR
April 21, 2001
Meeting
MGR V /DEPT~
Al Ithori 7.ati on
REQUEST:
The Finance Department requesting the Commission approve a "Proposal for Banking and
Treasury Consulting Services" performed by Public Financial Management in an amount not to
exceed $9,500 as a supplemental appropriation from fund balance - $4,750 from the General
Fund fund balance and $4,750 from the Enterprise Fund fund balance and give authority to the
City Manager to enter into a contract with Public Financial Management for said services.
PURPOSE:
The purpose ofthis Agenda Item is to gain Commission approval for consulting services related
to the City's banking and treasury function.
CONSIDERATIONS:
1) Both staff review and the auditor's management letter comments indicate a need for a
comprehensive review of our entire banking and treasury function. The attached proposal
outlines a number of services that staff feel would be beneficial to the City such as a:
. Thorough review of the City's banking needs including cash flow requirements, analysis
of our current banking services and recommendations for improvements to the services,
rates and fees currently offered by Bank of America as compared to that generally offered
by other banking institutions.
. Analysis of our current internal controls and procedures over investments, and
recommendations, if necessary, to improve the safeguarding of those investments as well
as any possible performance improvements.
. Revisions, if applicable, to the City's current Investment Policy in accordance with the
revised Florida Statute 218.415 regarding allowable investment vehicles, known as the
"Local Government Investment Policy Act" as provided for by Chapter 200-264, Laws of
Florida.
. Preparation of a Pension Investment Policy in accordance with the new Florida Statute
112.661 as provided for by Chapter 200-264, Laws of Florida. Verbiage is expected in the
new Pension Plan documents regarding investments; however, a true "policy" is desired.
2) Normally, a Proposal for Banking and Treasury Consulting Services would include an RFP
for banking services. This proposal, specifically the tasks and related fee, has been adjusted
to remove the RFP process. Instead, it is the wish of staff that the current services offered by
Bank of America and their related rates and fees simply be benchmarked against that
normally offered by other banking institutions to ensure that we are receiving the best rates
and fees as agreed previously.
3) Public Financial Management currently serves as the firm that provides financial advisory
services to the City.
FUNDING:
Staffrequests a supplemental appropriation from fund balance - $4,750 from the General Fund
fund balance and $4,750 from the Enterprise Fund fund balance.
A TT ACHMENTS:
. Public Financial Management's "Proposal for Banking and Treasury Consulting Services"
. Public Financial Management's "Investment Insights" regarding the new Florida
investment law
. Florida League of Cities letter dated 9/19/2000 regarding required investment policies for
pension funds and general public funds
. Chapter 200-264, Laws of Florida
. City of Winter Springs Investment Policy adopted October 1, 1995
RECOMMENDATION:
The Finance Department recommends that the City Commission approve the proposal for
banking and treasury consulting services with Public Financial Management and authorize the
City Manager to enter into a contract for said services.
COMMISSION ACTION:
i' ~
City of Winter Springs, Florida
Proposal for
Banking and Treasury
Consulting Services
April 3, 2001
Public Financial Management
201 South Orange Ave, Suite 720
Orlando, Florida 32801
407.648.2208 phone
404.648.1323 fax
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T able of Contents
Firm Profile
Scope of Services
II
Team, Tasks and Timeframe
III
Compensation
IV
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Our goal is to provide
the highest quality
advice to our clients so
they are able to raise,
invest and manage the
resources they need in
the most cost-effective
manner possible.
Firm Profile
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History of the Firm
Public Financial Management, Inc. ("PFM") was founded in 1975 on the
principle of providing sound independent financial advice to state and
local governments. Today PFM is the nation's leading municipal financial and
investment advisory firm with offices throughout the United States.
PFM has three primary business activities: (i) transaction management
related to debt issuance; (ii) investment advice and portfolio management
related to bond proceeds and working capital and; (iii) strategic consulting
related to operating and capital budgets. With this comprehensive
orientation, PFM is unique among financial advisors in that it is involved in all
aspects of a government's finances.
PFM does not trade or underwrite securities. PFM serves only one interest-
that of its clients. PFM is involved in the capital markets on a daily basis and
offers its clients professional resources which equal or surpass those of any
investment banking firm without the conflict of interest that underwriting firms
bring to the table. PFM's only business is providing financial, investment and
consulting advice to its clients.
Financial Advisor
As a financial advisor, PFM engages in capital planning, revenue forecasting
and evaluation, resource allocation, debt management policy, and debt
transaction management (including structuring, documentation, and
execution). PFM delivers a depth of experience and skill that helps clients
resolve the myriad of technical and financial issues that are routinely
confronted during the capital formation process. PFM's national reputation
and its consistent growth in business activity from $5 billion in debt
management in 1986 to $9.3 billion in 1998 reflects our clients' recognition of
our capabilities and value.
Investment Advisor
As an investment manager, PFM brings a comprehensive spectrum of
services to the business of money management. PFM manages both state-
oriented investment pools and individual client portfolios designed to earn
competitive yields while maximizing safety and liquidity. Services include:
timely and market driven portfolio management, portfolio design, cash
management, state-of-the-art accounting and arbitrage rebate calculation
services. The value of this service to clients is evident in the growth of assets
under management from $1 billion in 1986 to more than $10 billion in 2000.
Steven Alexander, CCM, Senior Managing Consultant, leads PFM's
Southeast investment management practice. Mr. Alexander is located in our
Orlando office and will be available to the City of Winter Springs. Accounting
and technical support will also be provided from the Harrisburg, Pennsylvania
office, the headquarters of PFM's investment management practice.
Banking and Treasury Services I 3
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The investment
advisory business is a
business of ideas.
PFM's culture is
designed to explore
these ideas and push
them to the limits of
their effectiveness. It
is these ideas; rather
than our resume, that
set us apart from our
competition.
Scope of Services
Banking and Treasury Services i 4
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Scope of Services
PFM has assisted numerous clients in assessing the overall health of their
Treasury operations by thoroughly reviewing their banking needs, investment
policies, internal controls and procedures to identify risk areas and possible
performance improvements. These evaluations take into account the client's
stated needs and consider enhancements that may be possible. Because
PFM specializes in advising not-for-profit and public enterprises on matters
related to financial operations, we have tailored our research capabilities and
resources to meet needs in this area, which enhances our ability to provide
comprehensive cash management services review for the City of Winter
Springs ("City").
Banking Arrangements
While there are considerable differences in the needs for certain banking
services amongst various public entities, there are a number of common
services used by most.
These basic services include:
. Checking Accounts with either Controlled Disbursement or Check
Presentment
. Lockbox Services
. Disbursements by Electronic Funds Transfer "Sweep" or Zero
Balance Accounts
. Short-Term Investments
. Automated Balance Reporting Services
. Account Reconciliation
PFM has extensive experience in assisting our clients in determining the
optimum combination of services to meet their needs and evaluating the
services offered by competing banks.
An important part of the work that we do for these clients is to evaluate the
cost of various bank services. Because of the many different methods of
paying for bank services, including both "hard" and "soft" dollar payments, it
is not always easy to compare directly the services offered by different banks.
Such differences can have a dramatic effect on the bottom line cost and
should be an important component of an evaluation of banking services.
PFM's review of banking arrangements is all encompassing. We evaluate
our client's needs; we research legal requirements and/or restrictions; 'Ne
analyze existing banking relationships; we review how bank services fi"t into
the cash management and investment systems; and we make specific
recommendations as to how the entire system can be improved upon as
required. This thorough analysis has consistently allowed us to help many of
our clients to significantly reduce banking costs, increase earnings and
improve the interaction between local banks and staff.
Banking and Treasury Services I 5
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PFM has become the
nation1s leading
financial advisory firm
by providing clients
with extensive and
superior service
Our services to the City would include a review of existing treasury operations
and banking needs, the development of a Request for Proposal to select a
bank(s) to perform specific functions, analysis of proposals submitted in
response to that RFP and assistance with the implementation of any new
banking arrangements.
Cash Flow Analysis
The first step to evaluating banking and treasury arrangements is to meet
with staff to discuss cash flow requirements. This would include an analysis
of historical cash flow patterns, any predictable seasonality, and any known or
anticipated large-scale capital projects or unusual funding needs. Built into
our analysis is a degree of conservatism, which provides a cushion for the
inevitable unanticipated cash need. Understanding your cash flow needs is a
primary consideration and would become the basis for determining an
appropriate maturity schedule. By targeting specific maturities to specific
cash flow needs, interest rate risk can be significantly reduced. A secondary
objective of this analysis is to identify that portion of funds not needed for the
immediate future.
This "core" portfolio can then be safely invested in somewhat longer-term
securities (1 to 5 years depending on cash flow projections, portfolio
guidelines and risk tolerance) that have historically achieved higher rates of
return over time, without adversely affecting the liquidity of the overall
portfolio.
To conduct this analysis, PFM has developed a sophisticated cash flow
model that evaluates historical cash flow patterns. PFM designed the model
to identify the portion of the portfolio needed for liquidity purposes and the
"core" that could be invested longer-term. Based on seasonal trends and a
selected growth rate, the model projects future liquidity needs and the change
in the core balance. In addition, the model builds in a liquidity cushion to
account for unforeseen changes in cash flow patterns or to be prepared
should emergency cash flow needs arise. The chart that follows provides an
example of the results of this analysis.
Analysis ot Core Portfolio
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30,ooo.oeo
25,000,OCO
'20,000,000
15,000,00"
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CJActu11 Liquidity B Actual CUI:-.ion CActull Cora
OProjeclod Liquidity IDProjoclod Cushion rllProjoctod Core
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Banking and Treasury Services I 6
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Custodial Arrangements
An important component of a Treasury operation is the safekeeping of
securities. The portfolio is generally secured through contract with a third party
to provide custodial services and securities safekeeping for both book-entry
and physical securities. The custodian serves several functions including:
. Protection against potential fraud and embezzlement;
. Calculation of the market value of portfolio holdings;
. Provision of reports of portfolio holdings, transactions and income;
. Facilitation of portfolio trading; and
. A single source of information on portfolio holdings for auditors and rebate agents,
Many custodians also provide additional services that can help their clients to
maximize yield. For instance, investment transactions can be coordinated with
disbursements activity by using a "sweep account" to insure that all available
funds are fully invested.
As part of this engagement, we will review existing custodial arrangements,
assess need for changes, assist in developing an RFP for custodial and/or
trustee services (if necessary), analyze proposals submitted in response to
that RFP, supervise the orderly transfer of securities to the new custodian and
coordinate the activities of the custodian with both the in-house
accounting/reconciliation function and other banking services.
Since the cost, quality and level of services provided can differ considerably
between various custodians, it is important to carefully review each potential
custodian's capabilities and the satisfaction of existing customers. We have
reviewed proposals from banks at both local and national levels and are
thoroughly familiar with the range of services offered and potential costs and
benefits associated with each option. Further, we can insure that activities of
the custodian are properly coordinated with the bank, or banks, providing cash
management services. (Although using the same bank for both cash
management and custodial services is often simpler, it is possible to use more
than one bank.)
Investment Policy Statement
An important component of a Treasury operation is the development of a
sound Investment Policy. PFM will review the current investment policy to
ensure that the policy meets standard guidelines of sound investment
management practices, but also customize the policy to meet the needs of the
City. The review and development of an investment policy includes:
Evaluate investment objectives;
. Evaluate reporting requirements;
. Determine risk tolerance levels;
. Review and evaluate current portfolio; and
. Provide investment recommendations as to legal investments under Florida law,
Internal Controls
The development and maintenance of a comprehensive system of internal
controls and procedures is critical to the management of any the City's cash
and investment program. Internal controls and procedures should be designed
to control risk, limit the potential for fraud, embezzlement, error and poor
judgment, and provide sufficient documentation to confirm the attainment of
investment objectives. We will review the City's current operations to measure
the extent to which they meet these objectives, and provide any appropriate
recommendations regarding the documentation of transactions and strategies,
segregation of duties, security safekeeping and third-party custody
requirements, and portfolio performance reporting procedures.
Banking and Treasury Services I 7
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To give real service
you must add
something, which cannot
be bought or measured
with money.
And that is sincerity
and integrity.
Team, Tasks & Timeframe
Banking and Treasury Services I 8
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Project Team
PFM is committed to assigning a team of top investment professionals to
work on this important project. Steven Alexander, CCM, a Senior Managing
Consultant who specializes in treasury and banking systems consulting, will
serve as the primary account representative in our engagement with the City.
In this capacity, Mr. Alexander will coordinate all phases of the project, from
information gathering, RFP development, review of cash and investment and
internal controls. Ms. Barbara Fava, Managing Director, who is responsible
for PFM's national treasury management practice, would provide cash
management and banking technical support and review. Debbie Goodnight,
a CPA responsible for PFM's investment accounting group, who would
provide additional support on accounting and auditing standards, as
necessary, would assist the engagement team. Mr. Gerry Kaufman,
Consultant, will provide technical and analytical support for this project.
Finance Director
Engagement Manager
Steven Alexander, CCM
Senior Managing Consultant
Sandy Moyle
Staff
Barbara Fava
Managing Director
Debra Goodnight, CPA
Senior Managing Consultant
Jerri Turak
Senior Associate
Banking and Treasury service$1 9
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To accomplish the services described above, we would expect to perform the
following tasks in two integral parts:
Task 1 Preliminary Review
Gain an understanding of the City's treasury operations and practices through
a review of written policies, procedures, contracts, and agreements.
Additionally, develop a cash flow model of the City's operating funds to
determine which bank and investment tools best meets the needs of the
City's.
Task 2 Interview Officials and Key Staff
Discuss treasury policies and procedures with appropriate employees.
Interviews will focus on the following key areas:
. internal controls . disbursement methods
. segregation of duties . reporting requirements
. collection procedures . security custody
. payment instruments . short-term investment options
. cash concentration . collateral requirements (on deposits)
. cash flow and liquidity . bank fees
requirements
We would also attempt to identify other areas where officials and/or staff
believe more attention is needed and obtain additional information and/or
documentation that may be required.
Task 3 Evaluate and provide recommendations
regarding the City's current use of banking and custodial
servIces
Taking into consideration the information garnered in Tasks 1 and 2, PFM will
make recommendations for any changes to the existing use of banking and
custodial services. This analysis will identify:
1. Areas where additional services could be beneficial
2. Unnecessary services that can be eliminated
3. When earnings on cash or sweep balances can be improved
4. Where there are opportunities'to reduce the overall cost of banking
services
5. Areas where internal controls should be tightened
6. And when operations can be streamlined
This review will also focus on areas where new technology and state-of-the-
art banking services may be of value.
Task 4 Review of Investment Policy and Internal
Controls
We will work with the City to review the current Investment Policy and
operational procedures to ensure that the policy is in accordance with Florida
Law.
Banking and Treasury Services 110
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Projected Time Frame
PFM is able to accomplish the tasks described above in a very short timeframe. When
necessary, it is possible to complete the RFP process and bank selection within 45
days.
Week
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Task 3: Evaluate Current
Services
Start Date:
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Compensation
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Compensation
As a leader in the national finance market and a major presence in the public
finance arena, PFM offers our clients unrivaled expertise in banking and
Treasury management services analysis. We believe PFM can offer a unique
combination of expertise, objectivity, creativity, and commitment to an
engagement with the City's. Our goal is to work with our clients to ensure
that they realize the maximum economic benefit possible.
For the scope of services outlined in this proposal, PFM proposes hourly
rates (as stated below) and not to exceed a fee of $9,500. In addition, travel
expenses and accommodations will be on an actual basis.
Special Analysis
Special analyses beyond the scope of services described herein will be
undertaken on a task-order basis under which PFM and the City's will
negotiate a fixed fee, task fee or hourly rate for each special analysis task
prior to undertaking the task.
Hourly Billing Rates
The following are the current hourly billing rates applicable to staff of PFM:
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Consultants 150
Banking and Treasury Services 113
Public Financial Management
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New Florida Investment Law
Concerning the investment of public funds
On June 14. 2000, Governor Jeb Bush signed into law revisions to Section 218.415,
Florida Statutes, known as the "Local Government Investment Policy Act," The new
revisions eliminate a number of existing investment statues for municipalities, counties,
school districts, and special districts by consolidating authorized investments for all local
governments into Section 218.415, Florida Statutes. The major effects of the revisions
on local governments include the following:
· A written investment policy is now required for the investment of assets from any
local retirement system plan
. Annual training requirements for local government investment officials
. Audit reports are required to contain investment policy compliance information
. Auditor General shall notify the Joint Legislative Auditing Committee if a local
government does not comply with the law after notification
. The Department of Revenue, the Department of Banking and Finance, and the
Department of Community Affairs may enforce local government compliance with
the law by withholding certain revenues
· Effective date for the law is October 1, 2000
Public Financial Management ("PFM") works exclusively for municipalities, counties,
school districts, and special districts providing investment advice and portfolio
management services. Given the recent legislative changes, we would like to
familiarize you with our investment capabilities. PFM's Investment Advisory Group
serves as investment adviser to nearly 200 clients across the country and manages
roughly $13 billion in public funds. We focus exclusively on providing short and
intermediate-term fixed-income portfolio management services to local government
agencies.
PFM provides a full range of investment advisory services including:
. Investment policy review and development
. Historic cash flow analysis
. Active portfolio management
. Monthly portfolio reports for staff and board members (available on-line)
. Quarterly investment performance and strategy review
. Bond proceeds management and arbitrage rebate tracking
PFM is able to bring professional resources and investment services to your local
government and provide you with investment solutions. For additional information,
please contact Steven Alexander, CCM in PFM's Orlando Investment Management
office at 1-800-695-4736.
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[nvestl11ent Insights -
::: 2000 Public l'inancial M:lnal!CmCIH
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FLORIDA LEAGUE OF CITIES, INC.
301 South Bronough Street, Suite 300 . Post Office Box 1757 . Tallahassee, FL 32302-1757
Telephone (850) 222-9684 . Suncom 278-5331 . Fax (850) 222-3806. Web site: www.flcities.com
TO:
Municipal Finance Officers
FROM:
Steve Wofford, DirectoI4.A )
Department of Financial <Services
SUBJECT:
Required Investment Policies for Pension Funds and General Public Funds:
Chapter 2000-264, Laws of Florida
DATE:
September 19,2000
During the 2000 Legislative Session, the Florida Legislature passed CS/SB 372 relating to the
investment of public funds, which is also referred to as Chapter 2000-264, Laws of Florida. A copy
of Chapter 2000-264, Laws of Florida, is enclosed for your review. This law provides that local
governments must adopt a written investment policy to invest the assets of any local retirement
system or plan (pension plan), and must either adopt a written investment plan for the investment of
general funds or must invest only in investments listed by statute. Chapter 2000-264, Laws of
Florida, becomes effective as of October I, 2000, and your local government may need to take action
to be in compliance with this law.
PENSION PLANS
Chapter 2000-264, Laws of Florida, creates a new section 112.661, Florida Statutes, which states,
"Investment of the assets of any local retirement system or plan must be consistent with a written
investment policy adopted by the board." The reference to "board" is a reference to the board having
operational control over the local retirement system or plan. This new section 112.661, Florida
Statutes, lists 17 different provisions that the investment policy must address. Each pension board in
your city should be notified as to the requirement to adopt an investment policy and a copy of
Chapter 2000-264, Laws of Florida, should also be provided to each board as guidance.
GENERAL PUBLIC FUNDS
Chapter 2000-264, Laws of Florida, amends current section 218.415, Florida Statutes, regarding local
government investment policies. All existing local government investment policies will need to be
reviewed in conjunction with the amendments to section 218.415, Florida Statutes, to ensure that the
investment policies comply with the additional statutory requirements. Local governments are
required to have an investment policy for any public funds in excess of the amounts needed to meet
current expenses and the investment policies must comply with all of the requirements in section
218.415( 1 )-( 16), Florida Statutes; or must meet the alternative investment guidelines contained in
section 218.415( 17), Florida Statutes.
President Scott Maddox, Mayor, Tallahassee + First Vice President Scott Black, Mayor, Dade City
Second Vice President Carmela Starace, Councilwoman, Royal Palm Beach
Executive Director Michael Sittig + General Counsel Harry Morrison, Jr.
CITY OF WINTER SPRINGS
INVESTMENT POLICY
SCOPE AND PURPOSE
This policy applies to all financial investments of the City of Winter Springs (City),
including bond funds and excluding pension funds and deferred compensation assets.
It is the purpose of this policy to provide direction to effectively manage the City's
financial investments.
PRUDENCE
The standard of prudence to be used will be the "prudent person" rule which states that,
investments should be made with judgment and care, under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in management of their own affairs, not
for speculation., but for investment, considering the probable safety of their capital as well as the
probable income to be derived from the investment. This rule will be applied in the context of
managing all portfolios.
OBJECTIVES
A. Safety - The foremost objective of the City's investment policy is the preservation of
capital.
B. Liquidity - The City's investment portfolio and/or portfolio management strategy will
provide sufficient cash to meet the City's projected operating and capital requirements to
insure orderly conduct of the City's business affairs.
C. Return on Investment - The investment program will seek to augment returns consistent
with risk limitations identified herein and prudent investment principles.
DELEGA nON OF AUTHORITY
Management responsibility for the investment program is hereby delegated to the
Finance Director, who will establish written procedures for the operation of the investment
program, consistent with this investment policy and approved by the City Manager. Such
procedures will include explicit delegation of authority to persons responsible for the investment
transactions. No person may engage in an investment transaction except as provided under the
terms of this policy and the procedures established by the Finance Director. The Finance
Director will be responsible for all transactions undertaken and will establish a system of
controls to regulate the activities of the investment staff.
1
ETHICS AND CONFLICT OF INTEREST
Officers and employees involved in the investment process will not engage in nor give
the appearance of engaging in personal business activity that could conflict with proper
execution of the investment policy, or which could impair their ability to make impartial
investment decisions.
REPORTING
The City Manager will submit to the City Commission an annual report with infonnation
sufficient to provide a comprehensive review of investment activity and perfonnance for the
year. This information will include but not be limited to, securities by class or type, book value,
interest income earned and market value as of the report date. A monthly report will be
submitted to the City Manager by the Finance Director.
FINANCE COMMITTEE
A meeting of the Finance Committee consisting of the City Manager, Finance Director
and Financial Advisors will be held at least semi-annually.
The Finance Committee will:
A. review investment strategies;
B. review written investment procedures;
C. discuss market conditions;
D. review the report to ensure compliance with this policy.
BANK SELECTION
A. Depository Services - Depository services will be obtained through a process of fonnal
request for proposal on a periodic basis, no less than every (5) five years. In selecting the
necessary depositories, the credit-worthiness of the institutions will be carefully
considered. The Finance Committee will review prospective depositories' credit
characteristic and financial history and make a recommendation for the City Commission
for approval.
B. Investment Services - Bank selection for investment services will be as follows:
Bank Approvals - Certificates of deposit purchased under the authority of this policy
will be purchased only from Qualified Public Depositories of the State of Florida as identified
by the State Treasurer. in accordance with Chapter 280 of the Florida Statutes.
2
All approved investment and banking institutions transacting repurchase agreements will
be required to execute and perform as stated in a master repurchase agreement provided by the
City.
SAFEKEEPING AND CUSTODY
All investments purchased by the City under this policy will be properly designated as
assets of the City and will be protected through the use of a custody/safekeeping agreement.
The City will enter into a formal agreement with an institution of such size and expertise,
as is necessary to provide the services needed to protect and secure the investment assets of the
City.
All securities purchased by the City under this policy will be purchased only in U.S.
Denominated funds using the "delivery versus payment" (D. V.P.) or "payment versus delivery"
method, to insure that funds or securities are not released until all criteria relating to the specific
transaction are met.
A UTHORIZED INVESTMENTS
The authorized investments shall mean any of the following, if and to the extent that the
same are legal investments of the City as to the proceeds of Bond issues and other Specified
Funds.
1) direct obligations of (including obligations issued or held in book entry form on
the books of) the Department of Treasury of the United States of America;
2) obligations of any of the following federal agencies which obligations represent
full faith and credit of the United States of America., including:
Export-Import Bank
Farmers Home Administration
General Services Administration
U. S. Maritime Administration
Small Business Administration
Government National Mortgage Association (GNMA)
U. S. Department of Housing & Urban Development (PHA"S)
Federal Housing Administration
3) bonds, notes or other evidences of indebtedness rated "AAA" by Standard &
Poor's Corporation and "Aaa" by Moody's Investor Services issued by the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation with remaining maturities not exceeding three years;
3
4) U. S. dollar denominated deposit accounts, federal funds and banker's acceptances
with domestic commercial banks which have a rating on their short term
certificates of deposit on the date of purchase of "A-I" or "A-I +" by Standard &
Poor's and "P-I" by Moody's and maturing no more than three hundred sixty
(360) days after the date of purchase. (Ratings on holding companies are not
considered as the rating of the bank);
5) commercial paper which is rated at the time of purchase in the single highest
classification, "A-l+" by Standard and Poor's and "P-I" by Moody's Investor
Services and which matures not more than two hundred seventy (270) days after
the date of purchase;
6) investment in a money market fund rated "AAAm" or "AAAm--G" or better by
Standard & Poor's Corporation;
7) insured Certificates of Deposit and Time Deposits received as required by
Chapter 280, Florida Statutes;
8) in the Local Government Surplus Funds Trust Fund (The State Board of
Administration "SBA") created pursuant to Chapter 218, Part IV of the Florida
Statutes.
INTERNAL CONTROLS
The Finance Director will establish a system of internal controls, which will be
documented in writing. The internal controls will be reviewed and approved by the Finance
Committee. The controls will attempt to prevent losses of public funds arising from fraud..
employee error, misrepresentation by third parties, or imprudent actions by employees and
officers of the City.
The internal controls will be reviewed by the City's independent auditors as a part of the
annual financial audit.
PORTFOLIO COMPOSmON AND DIVERSIFICATION
Schedules" A" and "B" (attached) establish parameters on the purchase and sale of
investments in the operating portfolio and other City Funds.
EXISTING INVESTMENTS
Any investments currently held that do not meet the guidelines of this policy will be
exempted from the requirements of this policy. At maturity or liquidation, such monies so
invested will be reinvested only as provided for in this policy.
4
EFFECTIVE DATE
This policy will become effective immediately upon its adoption by the City.
Signature
Date
5
~CHEDULE "A"
Operating Portfolio composition and diversiti.cati2n
Authorized Authorized Maturity
Investments Bank Range
U. S.
Treasury All 10 years
Securities
Certificates of Bank 1 year
Deposit
Agencies All 10 years
Repurchase Depository Over
Agreements. bank Night
Commercial
Paper All 270 days
(Prime)
SBA SBA Overnight
Bankers
Acceptances As Rated 90 days
. Repurchase Agreement (Repo) Collateral required will be at level of 102% of
Treasury Securities, Agencies and Instrumentalities whose maturity do no exceed
10 years.
6
SCHEDULE "8"
Portfolio composition and diversification of bond funds
Authorized Investments for Debt Service Funds
Debt Service funds pertaining to principal and interest are covered under Schedule "A".
The following represents investments allowable for construction and debt service reserve funds.
Any other related bond funds not included here may only be invested in security listed in this
schedule, maturity and limits will be set based on the type of account. The issuer restriction is
the same as Schedule "A".
Maturity of construction funds are based on cash flow and may be invested in
Repurchase Agreements, U. S. Treasury Securities, Fully Guaranteed U. S. Federal Agencies
and Federal Instrumentalities and Commercial paper as specified under authorized investments
item 5. Repurchase agreements may be used as stated in Schedule "A".
Debt Service Reserves (DSR) maturity schedules may not exceed the maturity or call
date of the bonds, as determined by the Financial Advisor. These DSR funds may be invested in
U. S. Treasury Securities, Fully Guaranteed U. S. Federal Agencies and Federal
Instrumentalities.
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An act relating to investment of public funds;
amending s. 112.625, F.S.; revising and
providing definitions under the Florida
Protection of Public Employee Retirement
Benefits Act; creating s. 112.661, F.S.;
requiring that investment of the assets of any
local retirement system or plan be consistent
with a written investment policy; specifying
requirements for such policies with respect to
scope, investment objectives, performance
measurement, investment standards, maturity and
liquidity requirements, portfolio composition,
risk and diversification, rate of return,
third-party custodial agreements, master
repurchase agreements, bid requirements,
internal controls, continuing education
requirements, reporting and filing
requirements, and valuation of illiquid
investments; requiring that such policies list
authorized investments and prohibiting
investments not so listed; amending s. 218.415,
F.S.; revising requirements relating to local
governments' investment policies; revising the
funds to which written investment policies
apply and revising requirements relating to
bids, internal controls, and reporting;
specifying authorized investments for those
local governments that adopt a written
investment policy; prohibiting investments not
listed in such policy; requiring continuing
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education for officials responsible for
investment decisions; revising the list of
authorized investments for those local
'governments that do not adopt a written
investment policy; providing requirements with
respect to the disposition and sale of
securities, and funds subject to preexisting
contracts; providing for preemption of
conflicting laws; providing that audits of
local governments shall report on compliance
with said section; providing powers and duties
of the Joint Legislative Auditing Committee,
the Department of Revenue, the Department of
Banking and Finance, and the Department of
Community Affairs to enforce compliance;
amending s. 11.45, F.S.; revising authority of
the Department of Revenue and the Department of
Banking and Finance to follow up on, entities
that fail to submit required audits; amending
s. 218.32, F.S.; revising authority of the
Department of Banking and Finance to follow up
on entities that fail to file annual financial
reports; amending s. 218.38, F.S.; revising
authority of the Department of Revenue and the
Department of Banking and Finance to follow up
on entities that fail to verify or file certain
information; amending ss. 28.33 and 219.075,
F.S.; providing for application of s. 218.415,
F.S., to investment of county funds by clerks
of the circuit courts and investment of surplus
funds by county officers; amending s. 159.416,
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1 F.S.; providing for application of s. 218.415,
2 F.S., to investments made in connection with a
3 pool financing program under the Florida
4 Industrial Development Financing Act; amending
5 s. 236.24, F.S.; deleting provisions that
6 specify requirements with respect to investment
7 of surplus funds by school boards; amending s.
8 236.49, F.S.; providing for application of s.
9 218.415(16), F.S., to investment of surplus
10 funds derived from school district bond issues;
11 amending s. 237.211, F.S.; correcting a
12 reference; repealing ss. 125.31, 166.261, and
13 218.345, F.S., which specify requirements with
14 respect to investment of surplus funds by
15 counties, municipalities, and special
16 districts, s. 230.23(10) (k), F.S., which
17 provides requirements with respect to adoption
18 of investment policies by school boards, and s.
19 237.161(5), F.S., which authorizes school
20 boards to invest surplus assets as obligations
21 for a period of 1 year; providing an effective
22 date.
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24 Be It Enacted by the Legislature of the State of Florida:
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26 Section 1. Subsections (7) and (8) of section 112.625,
27 Florida Statutes, are amended, and subsection (9) is added to
28 said section, to read:
29 112.625 Definitions.--As used in this act:
30 (7) "Statement value" means the value of assets in
31 accordance with s. 302(c) (2) of the Employee Retirement Income
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1 Security Act of 1974 and as permitted under regulations
2 prescribed by the Secretary of the Treasury. Assets for which
3 a fair market value is not provided shall be excluded from the
4 assets used in the determination of annual funding cost.
5 (8) "Named fiduciary L" "board," or "board of trustees"
6 means the person or persons so designated by the terms of the
7 instrument or instruments, ordinance, or statute under which
8 the plan is operated.
9 (9) "Plan sponsor" means the local governmental entity
10 that has established or that may establish a local retirement
11 system or plan.
12 Section 2. Section 112.661, Florida Statutes, is
13 created to read:
14 112.661 Investment policies.--Investment of the assets
15 of any local retirement system or plan must be consistent with
16 a written investment policy adopted by the board. Such
17 policies shall be structured to maximize the financial return
18 to the retirement system or plan consistent with the risks
19 incumbent in each investment and shall be structured to
20 establish and maintain an appropriate diversification of the
21 retirement system or plan's assets.
22 (1) SCOPE.--The investment policy shall apply to funds
23 under the control of the board.
24 (2) INVESTMENT OBJECTIVES.--The investment policy
25 shall describe the investment objectives of the board.
26 (3) PERFORMANCE MEASUREMENT.--The investment policy
27 shall specify performance measures as are appropriate for the
28 nature and size of the assets within the board's custody.
29 (4) INVESTMENT AND FIDUCIARY STANDARDS.--The
30 investment policy shall describe the level of prudence and
31 ethical standards to be followed by the board in carrying out
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1 its investment activities with respect to funds described in
2 this section. The board in performing its investment duties
3 shall comply with the fiduciary standards set forth in the
4 Employee Retirement Income Security Act of 1974 at 29 U.S.C.
5 s. 1104 (a) (1) (A) - (C). In case of conflict with other
6 provisions of law authorizing investments, the investment and
7 fiduciary standards set forth in this section shall prevail.
8 (5) AUTHORIZED INVESTMENTS.--
9 (a) The investment policy shall list investments
10 authorized by the board. Investments not listed in the
11 investment policy are prohibited. Unless otherwise authorized
12 by law or ordinance, the investment of the assets of any local
13 retirement system or plan covered by this part shall be
14 subject to the limitations and conditions set forth in s.
15 215. 47 (1), (2), ( 3), ( 4), (5), ( 6), (7), ( 8 ), ( 10), and (16).
16 (b) If a local retirement system or plan has
17 investments that, on October I, 2000, either exceed the
18 applicable limit or do not satisfy the applicable investment
19 standard, such excess or investment not in compliance with the
20 policy may be continued until such time as it is economically
21 feasible to dispose of such investment. However, no additional
22 investment may be made in the investment category which
23 exceeds the applicable limit, unless authorized by law or
24 ordinance.
25 (6) MATURITY AND LIQUIDITY REQUIREMENTS.--The
26 investment policy shall require that the investment portfolio
27 be structured in such manner as to provide sufficient
28 liquidity to pay obligations as they come due. To that end,
29 the investment policy should direct that, to the extent
30 possible, an attempt will be made to match investment
31
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1 maturities with known cash needs and anticipated cash-flow
2 requirements.
3 (7) PORTFOLIO COMPOSITION.--The investment policy
4 shall establish guidelines for investments and limits on
5 security issues, issuers, and maturities. Such guidelines
6 shall be commensurate with the nature and size of the funds
7 within the custody of the board.
8 (8) RISK AND DIVERSIFICATION.--The investment policy
9 shall provide for appropriate diversification of the
10 investment portfolio. Investments held should be diversified
11 to the extent practicable to control the risk of loss
12 resulting from overconcentration of assets in a specific
13 maturity, issuer, instrumen~, dealer, or bank through which
14 financial instruments are bought and sold. Diversification
15 strategies within the established guidelines shall be reviewed
16 and revised periodically, as deemed necessary by the board.
17 (9) EXPECTED ANNUAL RATE OF RETURN.--The investment
18 policy shall require that, for each'actuarial valuation, the
19 board determine the total expected annual rate of return for
20 the current year, for each of the next several years, 'and for
21 the long term thereafter. This determination must be filed
22 promptly with the Department of Management Services and with
23 the plan's sponsor and the consulting actuary. The department
24 shall use this determination only to notify the board, the
25 plan's sponsor, and consulting actuary of material differences
26 between the total expected annual rate of return and the
27 actuarial assumed rate of return.
28 (10) THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment
29 policy shall provide appropriate arrangements for the holding
30 of assets of the board. Securities should be held with a third
31 party, and all securities purchased by, and all collateral
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1 obtained by, the board should be properly designated as an
2 asset of the board. No wi~hdrawal of securities, in whole or
3 in part, shall be made from safekeeping except by an
4 authorized member of the board or the board's designee.
5 Securities transactions between a broker-dealer and the
6 custodian involving purchase or sale of securities by transfer
7 of money or securities must be made on a "delivery vs.
8 payment" basis, if applicable, to ensure that the custodian
9 will have the security or money, as appropriate, in hand at
10 the conclusion of the .transaction.
11 (11) MASTER' REPURCHASE AGREEMENT.--The investment
12 policy shall require all approved institutions and dealers
13 transacting repurchase agreements to execute and perform as
14 stated in the Master Repurchase Agreement. All repurchase
15 agreement transactions shall adhere to the requirements of the
16 Master Repurchase Agreement.
17 (12) BID REQUIREMENT.--The investment policy shall
18 provide that the board determine the approximate maturity date
19 based on cash-flow needs and market conditions, analyze and
20 select one or more optimal types of investment, and
21 competitively bid the security in question when feasible and
22 appropriate. Except. as otherwise required by law, the most
23 economically advantageous bid must be selected.
24 (13) INTERNAL CONTROLS.--The investment policy shall
25 provide for a system of internal controls and operational
26 procedures. The board shall establish a system of internal
27 controls which shall be in writing and made a part of the
28 board's operational procedures. The policy shall provide for
29 review of such controls by independent certified public
30 accountants as part of any financial audit periodically
31 required of the board's unit of local government. The internal
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controls should be desiqned to prevent losses of funds which
might arise from fraud, error, misrepresentation by third
parties, or imprudent actions by the board or employees of the
unit of local government.
(14) CONTINUING EDUCATION.--The investment policy
shall provide for the continuing education of the board
members in matters relating to investments and the board's
responsibilities.
(15) REPORTING.--The investment policy shall provide
for appropriate annual or more frequent reporting of
investment activities. To that end, the board shall prepare
periodic reports for submission to the qoverning body of the
unit of local gove~nment which shall include investments in
the portfolio by class or type, book value, income earned, and
market value as of the report date. Such reports shall be
available to the public.
17 (16) FILING OF INVESTMENT POLICY.--Upon adoption by
18 the board, the investment policy shall be promptly filed with
19 the Department of Management Services and the plan's sponsor
20 and consulting actuary. The effective date of the investment
21 policy, and any amendment thereto, shall be the 31st calendar
22 following the filing date with the plan sponsor.
23 (17) VALUATION OF ILLIQUID INVESTMENTS.--The
24 investment policy shall provide for the valuation of illiquid
25 investments for which a generally recognized market is not
26 available or for which there is no consistent or generally
27 accepted pricing mechanism. If those investments are utilized,
28 the investment policy must include the criteria set forth in
29 s. 215.47(6), except that submission to the Investment
30 Advisory Council is not required. The investment policy shall
31 require that, for each actuarial valuation, the board must
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1 verify the determination of the fair market value for those
2 investments and ascertain that the determination complies with
3 all applicable state and federal requirements. The investment
4 policy shall require that the board disclose to the Department
5 of Management Services and the plan's sponsor each such
6 investment for which the fair market value is not provided.
7 Section 3. Section 218.415, Florida Statutes, is
8 amended to read:
9 218.415 Local government investment
10 policies.--Investment activity by a unit of local government
11 must be consistent with a written investment plan adopted by
12 the governing body, or in the absence of the existence of a
13 governing body, the respective principal officer of the unit
14 of local government and maintained by the unit of local
15 government or, in the alternative, such activity must be
16 conducted in accordance with tl.e il,ve.5tluel,t ':lu.idel~1!e.!l .!let
17 forti, ill subsectionl.l2l-H.-5t-. Any such unit of local
18 government shall have an investment policy for any public
19 funds in excess of the amounts needed to meet current expenses
20 as provided 'in subsections(I)-(16) (1) (14), or shall meet
21 the alternative investment guidelines contained in subsection
22 (17)~. Such policies shall be structured to place the
23 highest priority on the safety of principal and liquidity of
24 funds. The optimization of investment returns shall be
25 secondary to the requirements for safety and liquidity. Each
26 unit of local government shall adopt policies that are
27 commensurate with the nature and size of the public funds
28 wi thin its LI.ei:r custody.
29 (1) SCOPE.--The investment policy shall apply to funds
30 under the control of the unit of local government in excess of
31 those required to meet current expenses. The investment policy
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1 shall not apply to pension funds, including those funds in
2 chapters 175 and 185.L' tru~t fUlIds,or funds related to the
3 issuance of debt where there are other existing policies or
4 indentures in'effect for such funds.
5 (2) INVESTMENT OBJECTIVES.--The investment policy
6 shall describe the investment objectives of the unit of local
7 government. Investment objectives shall include safety of
8 capital, liquidity of funds, and investment income, in that
9 order.
10 (3) PERFORMANCE MEASUREMENT.--The investment poLicy
11 ullit of local gove.dUller.t shall specify develop performance
12 measures as are appropriate for the nature and size of the
13 public funds within the Tts custody of the unit of local
14 government.
15 (4) PRUDENCE AND ETHICAL STANDARDS.--The investment
16 policy shall describe the level of prudence and ethical
17 standards to be followed by the unit of local government in
18 carrying out its investment activities with respect to funds
19 described in this section. The unit of local government shall
20 adopt the Prudent Person Rule, which states that: "Investments
21 should be made with judgment and care, under circumstances
22 then prevailing, which persons of prudence, discretion, and
23 intelligence exercise in the management of their own affairs,
24 not for speculation, but for investment, considering the
25 probable safety of their capital as well as the probable
26 income to be derived from the investment."
27 (5) LISTING OF AUTHORIZED INVESTMENTS.--The investment
28 policy shall list investments authorized by the governing body
29 of the unit of local government, subject to the provisions of
30 subsection (16)illve.::>tmelIts. Investments not listed in the
31 investment policy are prohibited. If the policy authorizes
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1 investments in derivative products, the policy must require
2 that !l,u~t be .:>peGifiG~lly ~uLl.o.L~zed ill LLe ~u\1e~tlllel,t pl~I'
3 01,,1 '"O}' be GOl,.:>idered ouly if the unit of local government's
4 officials responsible for making investment decisions or chief
5 financial officer have ~ developed sufficient understanding
6 of the derivative products and have ~ the expertise to
7 manage them. For purposes of this subsection, a "derivative"
8 is defined as a financial instrument the value of which
9 depends on, or is derived from, the value of one or more
10 underlying assets or index or asset values. If the policy
11 authorizes investments in 'fl.", u~e of reverse repurchase
12 agreements or other forms of leverage, the policy must limit
13 the investments ~L~ll be prollibiLed or l~lllited by ~uve~tlllel,t
14 policy to transactions in which wllere the proceeds are
15 intended to provide liquidity and for which the unit of local
16 government has sufficient resources and expertise.
17 (6) MATURITY AND LIQUIDITY REQUIREMENTS.--The
18 investment policy shall require that the investment portfolio
19 is structured in such manner as to provide sufficient
20 liquidity to pay obligations as they come due. To that end,
21 the investment policy should direct that, to the extent
22 possible, an attempt will be made to match investment
23 maturities with known cash needs and anticipated cash-flow
24 requirements.
25 (7) PORTFOLIO COMPOSITION.--The investment policy
26 shall establish guidelines for investments and limits on
27 security issues, issuers, and maturities. Such guidelines
28 shall be commensurate with the nature and size of the public
29 funds within the custody of the unit of local government.
30 (8) RISK AND DIVERSIFICATION.--The investment policy
31 shall provide for appropriate diversification of the
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1 investment portfolio. Investments held should be diversified
2 to the extent practicable to control the risk of loss
3 resulting from overconcentration of assets in a specific
4 maturity, issuer, instrument, dealer, or bank through which
5 financial instruments are bought and sold. Diversification
6 strategies within the established guidelines shall be reviewed
7 and revised periodically, as deemed necessary by the
8 appropriate management staff.
9 (9) AUTHORIZED INVESTMENT INSTITUTIONS AND
10 DEALERS.--The investment policy should specify the authorized
11 securities dealers, issuers, and banks from whom the unit of
12 local government may purchase securities.
13 (10) THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment
14 policy shall provide appropriate arrangements for the holding
15 of assets of the unit of local government. Securities should
16 be held with a third party; and all securities purchased by,
17 and all collateral obtained by, the unit of local government
18 should be properly designated as an asset of the unit of local
19 government. No withdrawal of securities, in whole or in part,
20 shall be made from safekeeping, except by an authorized staff
21 member of the unit of local government. Securities
22 transactions between a broker-dealer and the custodian
23 involving purchase or sale of securities by transfer of money
24 or securities must be made on a "delivery vs. payment" basis,
25 if applicable, to ensure that the custodian will have the
26 security or money, as appropriate, in hand at the conclusion
27 of the transaction.
28 (11) MASTER REPURCHASE AGREEMENT.--The investment
29 policy ul1it of 10Gol '::joveL:lUuent shall require all approved
30 institutions and dealers transacting repurchase agreements to
31 execute and perform as stated in the Master Repurchase
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1 Agreement. All repurchase agreement transactions shall adhere
2 to the requirements of the Master Repurchase Agreement.
3 (12) BID REQUIREMENT.--The investment policy shall
4 require that the unit of local government's staff determine
5 the approximate maturity date based on cash-flow needs and
6 market conditions, analyze and select one or more optimal
7 types of investment, and competitively bid the security in
8 question when feasible and appropriate. Except as otherwise
9 required by law, the bid deemed to best meet the investment
10 objectives specified in subsection (2) must be selected.AfLer
11 the ubi L of loc.al go 4eL,I1"ebt oS Lafi l,o~ deteu"ibed LLe
12 app:t:oh';'lllote lllatuLiLJ dote bo~ed 01, c.a~l, flow ueed~ 6l,d mOLket
13 c.ol,diL';'ou~ oud 1.0.,5 al,ol:yzed oud ~elec.ted vile or more vptimal
14 type~ of ';'bve~tlllellL, tLe ~ec.ur';'ty ii, qU<:::stiOI' ~I,all, wI,ell
15 fea~ible alld appropriote, be cOlLlpetiL';'vely b';'d.
16 (13) INTERNAL CONTROLS.--The investment policy shall
17 provide for a system of internal controls and operational
18 procedures. The unit of local government's officials
19 responsible for making investment decisions or chief financial
20 officer shall, by JallUary 1, IJ9G, establish a system of
21 internal controls which shall be in writing and made a part of
22 the governmental entity's operational procedures. The
23 investment polic~ shall provide for review of such controls by
24 independent auditors as part of any financial audit
25 periodically required of the unit of local government. The
26 internal controls should be designed to prevent losses of
27 funds which might arise from fraud, employee error,
28 misrepresentation by third parties, or imprudent actions by
29 employees of the unit of local government.
30 (14) CONTINUING EDUCATION.--The investment policy
31 shall provide for the continuing education of the unit of
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1 local government's officials responsible for making investment
2 decisions or chief financial officer. Such officials must
3 annually complete 8 hours of continuing education in subjects
4 or courses of study related to investment practices and
5 products.
6 (15)f++T REPORTING.--The investment policy shall
7 provide for appropriate annual or more frequent reporting of
8 investment activities. To that end, the governmental entity's
9 officials responsible for making investment decisions or chief
10 financial officer ,shall prepare periodic reports for
11 submission to the legislative and governing body of the unit
12 of local government, which shall include securities in the
13 portfolio by class or type, book value, income earned, and
14 market value as of the report date. Such reports shall be
15 available to the public.
16 (16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT
17 POLICIES.--Those units of local government electing to adopt a
18 written investment policy as provided in subsections (1)-(15)
19 may by resolution invest and reinvest any surplus public funds
20 in their control or possession in:
21 (a) The Local Government Surplus Funds Trust Fund or
22 any intergovernmental investment pool authorized pursuant to
23 the Florida Interlocal Cooperation Act as provided in s.
24 163.0l.
25 (b) Securities and Exchange Commission registered
26 money market funds with the highest credit quality rating from
27 a nationally recognized rating agency.
28 (c) Interest-bearing time deposits or savings accounts
29 in qualified public depositories as defined in s. 280.02.
30 (d) Direct obligations of the United States Treasury.
31 (e) Federal agencies and instrumentalities.
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1 (f) Securities of, or other interests in, any open-end
2 or closed-end management-type investment company or investment
3 trust registered under the Investment Company Act of 1940, 15
4 U.S.C. ss. 80a-l et seq., as amended from time to time,
5 provided that the portfolio of such investment company or
6 investment trust is limited to obligations of the United
7 States Government or any agency or instrumentality thereof and
8 to repurchase agreements fully collateralized by such United
9 States Government obligations, and provided that such
10 investment company or investment trust takes delivery of such
11 collateral either directly or through an authorized custodian.
12 (g) Other investments authorized by law or by
13 ordinance for a county or a municipality.
14 (h) Other investments authorized by law or by
15 resolution for a school district or a special district.
16 i!2lTT&t AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT
17 POLICY ALPERNATIVE INVE3PMENT GUIDELINEG.--Those units of
18 local government electing not to adopt a written investment
19 policy in accordance with investment policies developed as
20 provided in subsections (1)-(15) may invest or reinvest any
21 surplus public funds in their control or possession in:rn
22 addiLiol! Lo 0.... ";'U lieu of e~Labli~!.i1l9 ~ .4riLtel! ";'1!ve~LHlel!t
23 pl~ll ill uc.c.ordOI!c.e witl! iuve~tI"eut poli\.....;.e~ developed pU.L~Uaut
24 Lo su.bsec.tiohS (1) (14), 0. uuit of local gOl1enl1'lleut ele\...Lil!g
25 Lo c.ohduc.t ";'l!vesLmel,t ac.L";'vity out~ide tl,e fr~I"ewo....k. provided
26 by tl!.~s po.rt ~l!~ll do so ul!der tI,e guidelille~ .5et fOLt!. ";'U
27 Ll!i.:!> sec.tiou. Tl.e Ul,it of loc.al gOl:le.L,J1ueut I,,~y il!vesL ill Ll!e
28 followil!g ih~ trtm,ehL~ al!d maY d";' vesL .;. L~elf of ~uc.l!
29 il,ve~LmeI,L~, aL prevoiliug morket pL';'c.e~ 0,( r~te~, ~ubje(.L to
30 t!.e limito.tiol!~ of L!.i~ .5ec.tiol!.
31
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(a) The Local Government Surplus Funds Trust Fund, or
any intergovernmental investment pool authorized pursuant to
the Florida Interlocal Cooperation Act, as provided in s.
163.01.
(b) Securities and Exchange Commission registered
money market funds with the highest credit quality rating from
a nationally recognized rating agen~y.
(c) Interest-bearing time deposits or savings accounts
in ~tote ecrt~fied qualified public depositories, as defined
in s. 280.02.
(d) Certificotes of depo~it il! sLote eeL L~fied
quolified public depo~itories, 0.;) defiued ill .;). 200.02.
~ieT Direct obligations of the U.S. Treasury.
([) PedeLol ogeueie~ oud iu~trLl1he"tol~ ties.
The securities listed in paragraphs (cr and.,(d), (e), ol!d (f)
17 shall be invested to provide sufficient liquidity to pay
18 obligations as they come due h,Otc.l! il!vest.1Llellt !llotl1J..~tie.;) w-ith
19 CULreut e^peI!~e.s.
20 (18) SECURITIES; DISPOSITION.--
21 Every security purchased under this section on
22 the governing body of a unit of local government
23 be properly earmarked and:
24 1. If registered with the issuer or its agents, must
25 immediately placed for safekeeping in a location that
26 protects the governing body's interest in the security;
27 2. If in book entry form, must be held for the credit
28 governing body by a depository chartered by the Federal
29 Government, the state, or any other state or territory of the
30 United States which has a branch or principal place of
31 business in this state as defined in s. 658.12, or by a
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1 national association organized and existing under the laws of
2 the United States which is authorized to accept and execute
3 trusts and which is doing business in this state, and must be
4 kept by the depository in an account separate and apart from
5 the assets of the financial institution; or
6 3. If physically issued to the holder but not
7 registered with the issuer or its agents, must be immediately
8 placed for safekeeping in a secured vault.
9 (b) The unit of local government's governing body may
10 also receive bank trust receipts in return for investment of
11 surplus funds in securities. Any trust receipts received must
12 enumerate the various securities held, together with the
13 specific number of each security held. The actual securities
14 on which the trust receipts are issued may be held by any bank
15 depository chartered by the Federal Government, this state, or
16 any other state or territory of the United States which has a
17 branch or principal place of business in this state as defined
18 in s. 658.12, or by a national association organized and
19 existing under the laws of the United States which is
20 authorized to accept and execute trusts and which is doing
21 business in this state.
22 (19) SALE OF SECURITIES.--When the invested funds are
23 needed in whole or in part for the purposes originally
24 intended or for more optimal investments, the unit of local
25 government's governing body may sell such investments at the
26 then-prevailing market price and place the proceeds into the
27 proper account or fund of the unit of local government.
28 (20) PREEXISTING CONTRACT.--Any public funds subject
29 to a contract or agreement existing on October 1, 2000, may
30 not be invested contrary to such contract or agreement.
31
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1 (21) PREEMPTION.--Any provision of any special act,
2 municipal charter, or other law which prohibits or restricts a
3 local governmental entity from complying with this section or
4 any rules adopted under this section is void to the extent of
5 the conflict.
6 (22) AUDITS.--Certified public accountants conducting
7 audits .of units of local government pursuant to s. 11.45 shall
8 report, as part of the audit, whether or not the unit of local
9 government has complied with this section.
10 (23) AUDITOR GENERAL; REVIEW.--During the Auditor
11 General's review of audit reports of units of local
12 government, the Auditor General shall contact those units of
13 local government not in compliance with this section and
14 request evidence of corrective action. If the unit of local
15 government does not provide the Auditor General with evidence
16 of corrective action within 45 days after the date it is
17 requested, the Auditor General shall then notify the Joint
18 Legislative Auditing Committee of any unit of local government
19 not in compliance with this section. Following notification of
20 failure by a local government to comply with this section, a
21 hearing may be scheduled by the committee. If a hearing is
22 scheduled, the committee shall determine which units of local
23 government will be subjected to further state action. If the
24 committee finds that one or more units of local government
25 should be subjected to further state action, the committee
26 shall:
27 (a) In the case of a county, municipality, or district
28 school board, request the Department of Revenue and the
29 Department of Banking and Finance to withhold any funds not
30 pledged for bond debt service satisfaction which are payable
31 to such governmental entity. The Department of Revenue and the
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1 Department of Banking and Finance are authorized to implement
2 the provisions of this paragraph. The committee, in its
3 request, shall specify the date such action shall begin, and
4 the request must be received by the Department of Revenue and
5 the Department of Banking and Finance 30 days before the date
6 of the distribution mandated by law.
7 (b) In the case of a special district, notify the
8 Department of Community Affairs that the special district has
9 failed to comply with this section. Upon receipt of
10 notification, the Department of Community Affairs shall
11 proceed pursuant to the provisions specified in ss. 189.421
12 and 189.422.
13 Section 4. Paragraph (a) of subsection (3) of section
14 11.45, Florida Statutes, is amended to read:
15 11.45 Definitions; duties; audits; reports.--
16 (3) (a)l. The Auditor General shall annually make
17 financial audits of the accounts and records of all state
18 agencies, as defined in this section, of all district school
19 boards in counties with populations of fewer than 125,000,
20 according to the most recent federal decennial statewide
21 census, and of all district boards of trustees of community
22 colleges. The Auditor General shall, at least every other
23 year, make operational audits of the accounts and records of
24 all state agencies, as defined in this section. The Auditor
25 General shall, at least once every 3 years, make financial
26 audits of the accounts and records of all district school
27 boards in counties with populations of 125,000 or more. For
28 each of the 2 years that the Auditor General does not make the
29 financial audit, each district school board shall contract for
30 an independent certified public accountant to perform a
31 financial audit as defined in paragraph (1) (b). This section
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1 does not limit the Auditor General's discretionary authority
2 to conduct performance audits of these governmental entities
3 as authorized in subparagraph 3. A district school board may
4 select an independent certified public accountant to perform a
5 financial audit as defined in paragraph (1) (b) notwithstanding
6 the notification provisions of this section. In addition, a
7 district school board may employ an internal auditor to
8 perform ongoing financial verification of the financial
9 records of a school district, who must report directly to the
10 district school board or its designee. The Auditor General
11 shall, at a minimum, provide to the successor independent
12 certified public accountant of a district school board the
13 prior year's working papers, including documentation of
14 planning, internal control, audit results, and other matters
15 of continuing accounting and auditing significance, such as
16 the working paper analysis of balance sheet accounts and those
17 relating to contingencies.
18 2. Each charter school established under s. 228.056
19 shall have an annual financial audit of its accounts and
20 records completed within 12 months after the end of its fiscal
21 year by an independent certified public accountant retained by
22 it and paid from its funds. The independent certified public
23 accountant who is selected to perform an annual financial
24 audit of the charter school shall provide a copy of the audit
25 report to the district school board, the Department of
26 Education, and the Auditor General. A management letter must
27 be prepared and included as a part of each financial audit
28 report. The Auditor General may, pursuant to his or her own
29 authority or at the direction of the Joint Legislative
30 Auditing Committee, conduct an audit of a charter school.
31
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1 3. The Auditor General may at any time make financial
2 audits and performance audits of the accounts and records of
3 all governmental entities created pursuant to law. The audits
4 referred to in this subparagraph must be made whenever
5 determined by the Auditor General, whenever directed by the
6 Legislative Auditing Committee, or whenever otherwise required
7 by law or concurrent resolution. A district school board,
8 expressway authority, or bridge authority may require that the
9 annual financial audit of its accounts and records be
10 completed within 12 months after the end of its fiscal year.
11 If the Auditor General is unable to meet that requirement, the
12 Auditor General shall notify the school board, the expressway
13 authority, or the bridge authority pursuant to subparagraph 5.
14 4. The Office of Program Policy Analysis and
15 Government Accountability within the Office of the Auditor
16 General shall maintain a schedule of performance audits of
17 state programs. In conducting a performance audit of a state
18 program, the Office of Program Policy Analysis and Government
19 Accountability, when appropriate, shall identify and comment
20 upon alternatives for accomplishing the goals of the program
21 being audited. Such alternatives may include funding
22' 'techniques and, if appropriate, must describe how other states
23 or governmental units accomplish similar goals.
24 5. If by July 1 in any fiscal year a district school
25 board or local governmental entity has not been notified that
26 a financial audit for that fiscal year will be performed by
27 the Auditor General pursuant to subparagraph 3., each
28 municipality with either revenues or expenditures of more than
29 $100,000, each special district with either revenues or
30 expenditures of more than $50,000, and each county agency
31 shall, and each district school board may, require that an
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1 annual financial audit of its accounts and records be
2 completed, within 12 months after the end of its respective
3 fiscal year, by an independent certified public accountant
4 retained by it and paid from its public funds. An independent
5 certified public accountant who is selected to perform an
6 annual financial audit of a school district must report
7 directly to the district school board or its designee. A
8 management letter must be prepared and included as a part of
9 each financial audit report. Each local government finance
10 commission, board, or council, and each municipal power
11 corporation, created as a separate legal or administrative
12 entity by interlocal agreement under s. 163.01(7), shall
13 provide the Auditor General, within 12 months after the end of
14 its fiscal year, with an annual financial audit report of its
r5 accounts and records and a written statement or explanation or
16 rebuttal concerning the auditor's comments, including
17 corrective action to be taken. The county audit shall be one
18 document that includes a separate audit of each county agency.
19 The county audit must include an audit of the deposits into
20 and expenditures from the Public Records Modernization Trust
21 Fund. The Auditor General shall tabulate the results of the
22 audits of the Public Records Modernization Trust Fund and
23 report a summary of the audits to the Legislature annually.
24 6. The governing body of a municipality, special
25 district, or charter school must establish an auditor
26 selection committee and competitive auditor selection
27 procedures. The governing board may elect to use its own
28 competitive auditor selection procedures or the procedures
29 outlined in subparagraph 7.
30 7. The governing body of a noncharter county or
31 district school board that retains a certified public
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1 accountant must establish an auditor selection committee and
2 select an independent certified public accountant according to
3 the following procedure:
4 a. For each noncharter county, the auditor selection
5 committee must consist of the county officers elected pursuant
6 to s. l(d), Art. VIII of the State Constitution, and one
7 member of the board of county commissioners or its designee.
8 b. The committee shall publicly' announce, in a uniform
9 and consistent manner, each occasion when auditing services
10 are required to be purchased. Public notice must include a
11 general description of the audit and must indicate how
12 interested certified public accountants can apply for
13 consideration.
14 c. The committee shall encourage firms engaged in the
15 lawful practice of public accounting who desire to provide
16 professional services to submit annually a statement of
17 qualifications and performance data.
18 d. Any certified public accountant desiring to provide
19 auditing services must first be qualified pursuant to law. The
20 committee shall make a finding that the firm or individual to
21 be employed is fully qualified to render the required
22 services. Among the factors to be considered in making this
23 finding are the capabilities, adequacy of personnel, past
24 record, and experience of the firm or individual.
25 e. The committee shall adopt procedures for the
26 evaluation of professional services, including, but not
27 limited to, capabilities, adequacy of personnel, past record,
28 experience, results of recent external quality control
29 reviews, and such other factors as may be determined by the
30 committee to be applicable to its particular requirements.
31
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1 f. The public must not be excluded from the
2 proceedings under this subparagraph.
3 g. The committee shall evaluate current statements of
4 qualifications and performance data on file with the
5 committee, together with those that may be submitted by other
6 firms regarding the proposed audit, and shall conduct
7 discussions with, and may require public presentations by, no
8 fewer than three firms regarding their qualifications,
9 approach to the audit, and ability to furnish the required
10 services.
11 h. The committee shall select no fewer than three
12 firms deemed to be the most highly qualified to perform the
13 required services after considering such factors as the
14 ability of professional personnel; past performance;
15 willingness to meet time requirements; location; recent,
16 current, and projected workloads of the firms; and the volume
17 of work previously awarded to the firm by the agency, with the
18 object of effecting an equitable distribution of contracts
19 among qualified firms, provided such distribution does not
20 violate the principle of selection of the most highly
21 qualified firms. If fewer than three firms desire to perform
22 the services, the committee shall recommend such firms as it
23 determines to be qualified.
24 i. If the governing board receives more than one
25 proposal for the same engagement, the board may rank, in order
26 of preference, the firms to perform the engagement. The firm
27 ranked first may then negotiate a contract with the board
28 giving, among other things, a basis of its fee for that
29 engagement. If the board is unable to negotiate a
30 satisfactory contract with that firm, negotiations with that
31 firm shall be formally terminated, and the board shall then
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undertake negotiations with the second-ranked firm. Failing
accord with the second-ranked firm, negotiations shall then be
terminated with that firm and undertaken with the third-ranked
firm. Negotiations with the other ranked firms shall be
undertaken in the same manner. The board, in negotiating with
firms, may reopen formal negotiations with anyone of the
three top-ranked firms, but it may not negotiate with more
than one firm at a time. The board shall also negotiate on the
scope and quality of services. In making such determination,
the board shall conduct a detailed analysis of the cost of the
professional services required in addition to considering
their scope and complexity. For contracts over $50,000, the
board shall require the firm receiving the award to execute a
truth-in-negotiation certificate stating that the rates of
compensation and other factual unit costs supporting the
compensation are accurate, complete, and current at the time
of contracting. Such certificate shall also contain a
description and disclosure of any understanding that places a
limit on current or future years' audit contract fees,
including any arrangements under which fixed limits on fees
will not be subject to reconsideration if unexpected
accounting or auditing issues are encountered. Such
certificate shall also contain a description of any services
rendered by the certified public accountant or firm of
certified public accountants at rates or terms that are not
customary. Any auditing service contract under which such a
certificate is required must contain a provision that the
original contract price and any additions thereto shall be
adjusted to exclude any significant sums by which the board
determines the contract price was increased due to inaccurate
or incomplete factual unit costs. All such contract
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1 adjustments shall be made within 1 year following the end of
2 the contract.
3 j. If the board is unable to negotiate a satisfactory
4 contract with any of the selected firms, the committee shall
5 select additional firms, and the board shall continue
6 negotiations in accordance with this subsection until an
7 agreement is reached.
8 8. At the conclusion of the audit field work, the
9 independent certified public accountant shall discuss with the
10 head of each local governmental entity or the chair's designee
11 or with the chair of the district school board or the chair's
12 designee, or with the chair of the board of the charter school
13 or the chair's designee, as appropriate, all of the auditor's
14 comments that will be included in the audit report. If the
15 officer i~ not available to discuss the auditor's comments,
16 their discussion is presumed when the comments are delivered
17 in writing to his or her office. The auditor shall notify each
18 member of the governing body of a local governmental entity
19 for which deteriorating financial conditions exist which may
20 cause a condition described in s. 218.503(1) to occur if
21 actions are not taken to address such conditions.
22 9. The officer's written statement of explanation or
23 rebuttal concerning the auditor's comments, including
24 corrective action to be taken, must be' filed with the
25 governing body of the local governmental entity, district
26 school board, or charter school within 30 days after the
27 delivery of the financial audit report.
28 10. The Auditor General, in consultation with the
29 Board of Accountancy, shall adopt rules for the form and
30 conduct of all financial audits subject to this section and
31 conducted by independent certified public accountants. The
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1 Auditor General, in consultation with the Department of
2 Education, shall develop a compliance supplement for the
3 financial audit of a district school board conducted by an
4 independent certified public accountant. The rules for audits
5 of local governmental entities and district school boards must
6 include, but are not limited to, requirements for the
7 reporting of information necessary to carry out the purposes
8 of the Local Government Financial Emergencies Act as stated in
9 s. 218.501.
10 11. Any local governmental entity or dis~rict school
11 board financial audit report required under subparagraph 5. or
12 charter school financial audit report required under
13 subparagraph 2. and the officer's written statement of
14 explanation or rebuttal concerning the auditor's comments,
15 including corrective action to be taken, must be submitted to
16 the Auditor General within 45 days after delivery of the audit
17 report to the local governmental entity, district school
18 board, or charter school, but no later than 12 months after
19 the end of the fiscal year. If the Auditor General does not
20 receive the financial audit report within the prescribed
21 period, he or she must notify the Legislative Auditing
22 Committee that the governmental entity or charter school has
23 not complied with this subparagraph. Following notification of
24 failure to submit the required audit report or items required
25 by rule adopted by the Auditor General, a hearing must be
26 scheduled by rule of the committee. After the hearing, the
27 committee shall determine which governmental entities or
28 charter schools will be subjected to further state action. If
29 it finds that one or more governmental entities or charter
30 schools should be subjected to further state action, the
31 committee shall:
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1 a. In the case of a local governmental entity,
.2 district school board, or charter school, request the
3 Department of Revenue and the Department of Banking and
4 Finance to withhold any funds not pledged for bond debt
5 service satisfaction ,which are payable to such governmental
6 entity or charter school until the required financial audit is
7 received by the Auditor General. The Department of Revenue and
8 the Department of Banking and Finance are authorized to
9 implement the provisions of this sub-subparagraph. The
10 committee, in its request, shall specify the date such action
11 shall begin, and the request must be received by the
12 Department of Revenue and the Department of Banking and
13 Finance 30 days before the date of the distribution mandated
14 by law.
15 b. In the case of a special district, notify the
16 Department of Community Affairs that the special district has
17 failed to provide the required audits. Upon receipt of
18 notification, the Department of Community Affairs shall
19 proceed pursuant to ss. 189.421 and 189.422.
.20 12.a. The Auditor General, in consultation with the
21 Board of Accountancy, shall review all audit reports submitted
22 pursuant to subparagraph'11. The Auditor General shall request
23 any significant items that were omitted in violation of a rule
24 adopted by the Auditor General. The items must be provided
25 within 45 days after the date of the request. If the Auditor
26 General does not receive the requested items, he or she shall
27 notify the Joint Legislative Auditing Committee.
28 b. The Auditor General shall notify the Governor and
29 the Joint Legislative Auditing Committee of any audit report
30 reviewed by the Auditor General which contains a statement
31 that the local governmental entity or district school board is
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1 in a state of financial emergency as provided in s. 218.503.
2 If the Auditor General, in reviewing any audit report,
3 identifies additional information which indicates that the
4 local governmental entity or district school board may be in a
5 state of financial emergency as provided in s. 218.503, the
6 Auditor General shall request appropriate clarification from
7 the local governmental entity or district school board. The
8 requested clarification must be provided within 45 days after
9 the date of the request. If the Auditor General does not
10 receive the requested clarification, he or she shall notify
11 the Joint Legislative Auditing Committee. If, after obtaining
12 the requested clarification, the Auditor General determines
13 that the local governmental entity or district school board is
14 in a state of financial emergency as provided in s. 218.503,
15 he or she shall notify the Governor and the Joint Legislative
16 Auditing Committee.
17 c. The Auditor General shall annually compile and
18 transmit to the President of the Senate, the Speaker of the
. 19 House of Representatives, and the Joint Legislative Auditing
20 Committee a summary of significant findings and financial
21 trends identified in audits of local governmental entities,
22 district school boards, and charter schools performed by the
23 independent certified public accountants.
24 13. In conducting a performance audit of any agency,
25 the Auditor General shall use the Agency Strategic Plan of the
26 agency in evaluating the performance of the agency.
27 Section 5. Paragraph (e) of subsection (1) of section
28 218.32, Florida Statutes, is amended to read:
29 218.32 Annual financial reports; local governmental
30 entities.--
31 (1)
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CS for SB 372, 1st Engrossed
1 (e) If the department does not receive a completed
2 annual financial report from a local governmental entity
3 within the required period, it shall notify the Legislative
4 Auditing Committee of the failure to report. Following receipt
5 of notification of failure to report, the committee shall
6 schedule a hearing for the purpose of receiving additional
7 testimony addressing the failure of local governmental
8 entities to comply with the reporting requirements of this
9 section. After the hearing, the committee shall determine
10 which local governmental entities will be subjected to further
11 state action. If it finds that one or more local governmental
12 entities should be subjected to further state action, the
13 committee shall:
14 1. In the case of a county or municipality, request
15 the Department of Revenue and the Department of Banking and
16 Finance to withhold any funds not pledged for bond debt
17 service satisfaction which are payable to the county or
18 municipality until the required annual financial report is
19 received by the department. The Department of Revenue and the
20 Department of Banking and Finance are authorized to implement
21 the provisions of this subparagraph. The committee', in its
22 request, shall specify the date such action shall begin, and
23 the request must be received by the Department of Revenue and
24 the Department of Banking and Finance 30 days before the date
25 of distribution mandated by law.
26 2. In the case of a special district, notify the
27 Department of Community Affairs that the special district has
28 failed to provide the required annual financial report. Upon
29 notification, the Department of Community Affairs shall
30 proceed pursuant to ss. 189.421 and 189.422.
31
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1 3. In the case of a special district that is a
2 component unit and that did not provide the financial
3 information required by paragraph (b) to the applicable
4 reporting entity, notify the Department of Community Affairs
5 that the special district has failed to provide the required
6 financial information. Upon notification, the Department of
7 Community Affairs shall proceed pursuant to ss. 189.421 and
8 189.422.
9 Section 6. Paragraph (a) of subsection (3) of section
10 218.38, Florida Statutes, is amended to read:
11 218.38 Notice of bond issues required; verification.--
12 (3) If a unit of local government fails to verify
13 pursuant to subsection (2) the information held by the
14 division, or fails to provide the information required by
15 subsection (1), the division shall notify the Legislative
16 Auditing Committee of such failure to comply. Following
17 receipt of such notification of failure to comply with these
18 provisions, a hearing shall be scheduled by the committee for
19 the purpose of receiving testimony addressing the failure of
20 units of local government to comply with the requirements of
21 this section. After the hearing, the committee shall
22' determine which units of local government will be subjected to
23 further state action. If it finds that one or more units of
24 local government should be subjected to further state action,
25 the committee shall:
26 (a) In the case of a unit of local government, request
27 the Department of Revenue and the Department of Banking and
28 Finance to withhold any funds not pledged for bond debt
29 service satisfaction which are payable to such governmental
30 entity. The Department of Revenue and the Department of
31 Banking and Finance are authorized to implement the provisions
31
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1 of this paragraph. The committee, ln its request, shall
2 specify the date such action shall begin, and the request must
3 be received by the Department of Revenue and the Department of
4 Banking and Finance 30 days before the date of the
5 distribution mandated by law.
6 Section 7. Section 28.33, Florida Statutes, is amended
7 to read:
8 28.33 Investment of county funds by the clerk of the
9 circuit court.--The clerk of the circuit court in each county
10 shall invest county funds in excess of those required to meet
11 expenses as provided in s. 218.415.1116ke 61. esLi1ll6te of l.is or
12 beL project",d fiu6bc";'61 I.eeds for tbe cOuuty 6ud ~b611 ";'l!vest
13 o.uy fUl.ds iu de~igboLed depo.::>itory b611h.~ ill illteLesL beo..L;'ug
14 ceL tific.6Les or ill 6by d';'.::e\...t oblig6L';'0"s of Lb", Uu';'ted :Jtates
15 iu cOlnpl";'6uce wiLL fedeLel 10.;46 relat';'ll':l to Lece.i..pt of 61.d
16 1i\I.i..Ll.d'::6wal of depo.::>';'t". All ';'llVe.::>tu,ellts '!'1.611 be opeu fo.:: bid
17 to all qu61if";'ed Jepo~i LOLie'!' .;." t1,e cOuuLy. orL.: c.l",rk .::>1.0.11
18 selecL Ll.e Li':jI.e~ L 6.bd be.::> t Lid fOL d",po.::>i L. All bids
19 rec.eiITed by tLe clerk 61,011 ill\...lude, buL I.oL be liuliLed Lo,
20 tI.e iuteresL .caLe to be e6nled 6bd tLe toL61 6mOLwL of dollor
21 .teLULll Lv be jJoiJ to tl.", .:.lerk. III LLe evebL of 6. like bid
22 betyqeeu Lwo o.c n,OLe L61.k.::>, t1.e 1ll0l!",}!.::> 61.all b", divided aud
23 depos.i.. Led .i..u e6c.l. bauk, .::>0 10ug o~ tLe total il.teres L iu\...OIne
24 f.cUlll tbe d3..\1";'ded dep06it6 ;4";'11 hoL be le6.::> tl.eu tI.e toL61
25 il.terest iucolne 1.6d tl.e depo!>it.::> hoL beel! dlvided. If 6t t1,e
26 t.i.lw:::: of bid tbe dol16r r",tUrl. Ou direct oblig6Liou!> of ti.e
27 PeJeL61 GOllerulueuL .i.~ greo.te.c Lbal. Ll,,,, l,lgbest. bauk reLurh,
28 Ll.el. tl.e clerk !>I.all iI",le6t ";'h Ll.e 1''';'':jbeL reLU.LH secuL.i.ty.
29 HOueys deposited iu Ll,e regi!>try of Ll,e COurL 051.0.11 be
30 deposited";'b ihtere6t beariu':j ce.ctif.i.cotes 6L t1.e Ji.::>cretion
31 of the cle.ck, subject Lo Ll,e 6bulle gllidelil.es. No clerk
32
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ENROLLED
2000 Legislature
CS for S8 372, 1st Engrossed
1 investing such funds shall be liable for the loss of any
2 interest when circumstances require the withdrawal of funds
3 placed in a time deposit and needed for immediate payment of
4 county obligations. III o.llY COullty w-l,e.l.e lOCal bo.llk!> J::efu~e to
5 biJ Ou !>ecthillg !>l:l.cl, ",0I1e:y 011 iutere!>t be6riu':j c.e.l. L.i.f.i.c.o.Le!>,
6 ll,e c.lerk n,6Y reque!> L o.lld rec.ei ve bid!> fro", ballk~ ill oll,er
7 c.OuIlLle~ witL.i.ll ti,e ~to.Le o.lld lL,o.ke ~l:l.GL depo!>.i.t!> Lo tLe
8 !>l:l.c.c.e!>~fl:l.l bidder.Except for interest earned on moneys
9 deposited in the registry of the court, all interest accruing
10 from moneys deposited shall be deemed income of the office of
11 the clerk of the circuit court investing such moneys and shall
12 be deposited in the same account as are other' fees and
13 commissions of the clerk's office. The clerk may invest
14 moneys deposited in the registry of the court and shall retain
15 as income of the office of the clerk and as a reasonable
16 investment management fee 10 percent of the interest accruing
17 on those funds with the balance of such interest being
18 allocated in accordance with the interest of the depositors.
19 Eo.c.L c.lerk .51,0.11, 0.6 .50011 d!> t-'Lo.cLico.bl<:: o.fte.l. the ellJ of tl,e
20 fi.5C61 yeo.L, repo.l. L to ll,e coullty gove.l.llillg o.utLuri ty LLe
21 toto.l illtere~t <::o.rIled Oil all illVe~L",ellt", dU;'::'.i.ll':j tL<:: pLeceding
22 yea.l..
23 Section 8. Subsection (9) of section 159.416, Florida
24 Statutes, is amended to read:
25 159.416 Pool financings.--
26 (9) Proceeds of bonds and moneys held for the payment
27 of debt service on bonds, including, but not limited to,
28 amounts held in the loan fund, any reserve fund, or debt
29 service fund for the bonds, may be invested in investments
30 authorized by or pursuant to an ordinance or resolution
31 providing for the issuance of the bonds or any trust agreement
33
CODING:Words ",tric~ell are deletions; words underlined are additions.
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 or trust indenture or other instrument approved by such
2 ordinance or resolution, including, but not limited to,
3 investments described in s. 218.415 ~5. 20.JJ, 12~.Jl,
4 IGG.2Gl, 210.J4~, 21:).07::', 6ud 2JG.24 al1d d,apteJ.. 200. The
5 acquisition of any debt obligation or investment contract or
6 investment agreement of any bank, savings and loan
7 association, insurance company, registered broker-dealer, or
8 other financial institution shall be deemed to be an
9 investment and not a loan and therefore need not meet the
10 criteria of subsections (5), (6), and (7).
11 Section 9. Section 219.075, Florida Statutes, is
12 amended to read:
13 219.075 Investment of surplus funds by county
14 officers.--
15 (1) (a) Except when another procedure is prescribed by
16 law or by ordinance as to particular funds, a tax collector or
17 any other county officer having, receiving, or collecting any
18 money, either for his or her office or on behalf of and
19 subject to subsequent distribution to another officer of state
20 or local government, while such money is in excess of that
21 required to meet current expenses surplu.:. to Cu..::reut ueed.:. of
22 I,i~ 0":: bet: o[L..ce or is pending distribution, shall invest
23 such money, without limitation, as provided in s. 218.415.Tn7
24 1. The LocQI Go~erlln,~ut 311..::plu~ Plll.do!> T,,::u.:.L Pul.d, as
25 created by ~. 210.405,
26 2. DOl1do!>, l1ote6, or oLl.e..:: obligo.tiol1o!> o[ tl.e Uuited
27 3taLe.:. gua"::6.uteed by tI.e UuiteJ 3Lo.te.s 0":: fo..:: whicl, tl.e credit
28 o[ tl,e Ul1ited 3to.te~ i~ pledged [0":: the p6yllleut of Ll,e
29 principo.l 6ud intere5L 0":: divideud5,
30 J. II,tere.st beo.J..ihg tilll~ depo~its or 60.\li1196 QCCOUl1t.s
31 ill b6.l1ks or90.11iz;ed under Ll.e 10..45 o[ Ll.i~ sLQte, 1u l1atiouo.l
34
CODING:Words .:>Lrickel1 are deletions; words underlined are additions.
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 bo.l,ks orgo.lli2'.eJ UI,de..: tl,e 16>4.:> of tl,e Ulli ted ::; La Le.:> o.l1d dO~l1g
2 bl1.:>~l1es.:> o.lld .s~tuated ~u tl,i~ .:>taLe, ii, .:>aviug~ o.l1J 100.11
3 a~~oc.io.tiol'~ ~h~c.L o...:e dllde..: .:>LAte ~dp",....vis~ou, 0.... ill f",de..:o.l
4 savil,g.s o.l,d 100.1l o..ssoc.~o.tiol1s loc.o.ted ii, tl.~~ ~taLe o.l,d
5 or'::jo.l,~Led uude.... fede....o.l 10..4 611d fede..:o.l .:>upe.... v i~iou, pro v ided
6 tLat auY .suc.l, depo~it.s o...:e ~ec.ured by c.ollo.teral a~ mo.y be
7 presc.ribed by lo.w, or
8 4. Jecuritie~ of, 0.... oLl,er ~l,ter"'.:>t.s iu, o.l,y opel, eI,d
9 or c.lo~ed el,d mo.llagemel,t Ljpe ~uve.:>LIlLeut C.Oll(pauy 0": iuv"'.:>tllLel,t
10 tru~t ..:egi~te..:ed w,de.... tl.e II,ve.:>l1LLeut COIlLPo.l,y Ac.L of 1940, 1~
11 U.J.C. .s~. 000. 1 eL ~eq., o.~ o.meuded [.,::Om time to tilLLe,
12 p..:o v ~ded tile po.... Lfol~o of ~uGl, ~l,ve.:> Lmeut COILLpal,y or.
13 ~l1vestILLellL trusL i.:> l~mited Lo obl~gatioll':> of the Uuited
14 Jt6te6 GO>JeLIllLLellL 0.... 611Y o.'jeuc.y 0": iu~t.Ll:l1LLdltal~Ly tLereuf 611d
15 to rep..rrL-llo.se agreelLLeut~ f",lly c.ollo.te":Alized by 6ucl, UlliLed
16 JLo.te.:> GoVe....lilLLellt obl~gaLiol1.s o.ud t-'ruvided ~..rc.l, ~Uve~tnlent
17 C.OmpauY 0": ilI11",~tnlellL L,,:u.:>t Lo.kes delivery of .suc.L c.ollateL61
18 eitl,er direc.tly or LLro..rgl. o.u o.utl.oriL.ed c.",.stod~au.
19 (b) These investments shall be planned so as not to
20 slow the normal distribution of the subject funds. The
21 investment earnings shall be reasonably apportioned and
22 allocated and shall be credited to the account of, and paid
23 to, the office or distributee, together with the principal on
24 which such earnings accrued.
25 (2) Except when another procedure is prescribed by
26 law, ordinance, or court order as to particular funds, the tax
27 collector shall, as soon as feasible after collection, deposit
28 in a bank designated as a depository of public funds, as
29 provided in s. 658.60, all taxes, fees, and other collections
30 received by him or her and held prior to distribution to the
31 appropriate taxing authority. Immediately after such funds
35
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ENROLLED
2000 Legislature
C5 for 5B 372, 1st Engrossed
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have cleared and have been properly credited to the tax
collector' s Il.~.~ OL her account, the tax collector shall invest
such funds according to the provisions of s. 218.415 thTs
~ecL~oll. The earnings from such investments shall be
apportioned at least quarterly on a pro rata basis to the
appropriate taxing authorities. However, the tax collector
may deduct therefrom such reasonable amounts as are necessary
to provide for costs of administration of such investments and
deposits.
(3) The State Board of Administration may establish a
schedule and guidelines to be followed by tax collectors
making deposits aud il,ve,Stnlel,ts under the provisions of
subsection (2).
(4) 'fl,e provi.::>..i.ol's of tl,i.::> ~eL.L..i.ol, ore ~ubject to tLe
provi.::>iol1~ of ~. 210.41::'.
Section 10. Section 236.24, Florida Statutes, is
amended to read:
236.24 Sources of district school fund.--
i+T The district school fund shall consist of funds
derived from the district school tax levy; state
appropriations; appropriations by county commissioners; local,
.state, and federal school food service funds; any and all
other sources for school purposes; national forest trust funds
and other federal sources; and gifts and other sources.
(2) (0) Ullle.!>.!> otl,erwi~e auLl1or..i.zed by low OJ: by
o.tdiI,al,ce, eac.l, .::>c.l,ool board .!>Lall, by re.::>oluL..i.ol1 Lo be
o.dopted fro", tiIue Lo ti",e, illvesL aI,d re..i.I,vesL OilY sdJ:plu.!>
public fl1ud.!> ill i L~ cOutrol OJ: t-'o~'se~'sioll ill.
1. 'fI,e Local GOlleL,l1ueut JUJ..t-'lu.::> PUud.::> 'fru.!> L PUud,
2. NegoL..i.able d~.rect obligat..i.ol1's of, OL obl..i.gatiol1.!>
the pril1cipal 611d il1tere.!>t of wLicl, ore ull(..Ollditiollo.lly
36
CODING:Words ~tL..i.ckel, are deletions; words underlined are additions.
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 gu~.couteed by, tl,e Ul1it<::d :JLate.;:> Gvve.1.11weI,t oL tLe tLen
2 pr<::v~ilil,g llLort-et p.cice [o.c ~ucL ~e"uriti.e~,
3 J. 111teLe.;:>t beo.ciug LillLe depo~i.ts or ~~vi.l,g.;:> occouuts
4 iI, qu61ifi.ed public depo.:>i.Lo.cie.;:> ~s defil,ed il,.5. 200.02,
5 4 . ObL_g~ tiOI,.:> of tl,e fede.co1 fo.ulL credi. t bOI,t-s, tLe
6 PedeLol BOme Lv~11 Ilort';joge CO.1.po.coLiol', il,c1udil,g feder~l 1I0nle
7 LOd11 nOL tgoge Corpor~ tiOl, p~.c ti."i.po. ti.OI, ce.1. ti.f i.co tes, o.c tLe
8 Ped<::r~l IImlLe LO~11 DO-uk 0.1. i.t~ di.:>tLi.Gt bo.llL!> or obli.goLiol's
9 '::juo..col,Leed by tLe GOve.Lll1llel,t N~Liouol Hort'::jo.ge ASSOGio.tivu,
10 ~. Ob1i.g~Lio11s of tI,<:: Peder~l NoL';'01101 HOLtg~ge
11 A.ssoc.i.otiol', illC1ud';'I,';j fede.col Notiol,61 f-1ortgoge A~sociotiol,
12 POL Li.cipo Li.ou "er Lifico Le.5 oud n.OL 19~ge p~.;:>~ through
13 c<::.cLi.fiGot<::~ gUo.r~ute<::d by lLe fede.c~1 Notioll01 r1orLgo.ge
14 A~.soGiotiou, or
15 G. :3eGuritie~ of, or oLl,e.c il,terest.:> ii" o.l1Y opel, eI,d
16 0.1. closed euJ lll~uo.gemel,t type i.I,\1esLm<::uL COmp011Y or i.I,vestweI,t
17 L.cu.:>L regi.:>te.ced Ul,deL LLe Iuve~tlllel,L COh(Po.llY AcL o[ 1940, 1~
18 U.:3.C. 05.:>. 000. 1 et seq., 0..;:> o.mel,ded frOm time to Li.llLe,
19 provi.ded Ll,e po.ctfoli.o of .:>ucl, L,ve.:>tmel,t ,,01l1p6I,y or
20 il1ve.;:>tllLel.t t.cu~t ';'05 1illLited to obl';'gotiol1.5 of tl,e Ul.';'ted
21 :Jto.te.::> GOVeL'llllellt or auY o.gel,Cy or il,~t.1.UllLellt0.1iLy tLe.ceof o.l,d
22 Lv ....<::f>Llr"J.o.~e ogr<::ellLeut.:> fully collo.Ler~liz:ed by ~ucL Ul.';'ted
23 :Jlot<::~ GOVerllllLeuL obligoti.ou.:>, ol,d p.covi.deJ ~LlGL iuve.:>Lw<::ut
24 GOIlLPo.11}l o.c ';'IHeslllLeut trusL takes delivery of suc.l. co11~Le.co.l
25 eitl,e.c direcLly 0.1. tl,rougl, 0.11 ll.uLl,oriz;ed GU.:>tOdi.o.l,.
26 (b) 1. :JeGurities purc.l,osed by o.11Y suc.l. .5,,1.001 bo~rd
27 ul1de.c tLe o.u.tl,or i. ty of Ll,i.:> low .sl,oll be deli. vered by tLe
28 .::>elleL Lo tLe .5cLo01 boo1:d or ';'t~ ~ppoiuted .5ofekeepeL. The
29 .so.fek<::epe.c ~I.~ll be a yuo.li.fied bo.llt- 0.1. tru~t COmf>Ol,}'
30 c.l,~rLe.ced Lo op<::1:~te 605 .5uc.l, by Ll.e :Jtot<:: of P10.cido, o.l1}'
31 oLLe.c .;:>Lote 01: LeLLito.cy o[ tLe Uuiled :Jtote~, or tLe UuiLed
37
CODING:Words ~L.cicken are deletions; words underlined are additions.
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 :Jtotes GOveulllLeut, thot 1,0..;:> 0. Lro.l1el. or pLillGipo.l ploee of
2 busille~~ ill tl.i~ .;:>to.te 0..5 def';"l1<::d ill .;:>. G~0.12. 'P!.e ~o[ekeeper
3 sl.~11 i.:>sue doeu.1llel1toLiol. for eoel. tro.us~ctiOl., o.l.d 0. .lLoutl.l)'
4 sLotellLel.t deto.i1il1g 0.11 tro.l1so,-Lious fo.c tl.e pe.ciod.
5 2. :Jecurit';'es 1-'1.y~ie~lly delivered to tl.e sel.ool board
6 051.011 be p10.Ged ';"11 0 sofe depo.:>iL bOA iu ~ bOl.t- v.c oLl,er
7 ';'uo5 ti tutiOl. lvco te:d wi tl.il. the COul1ty ~I.d duly 1i.eel.o5ed al.d
8 i"sured. H';"t!.d.cow~ls frollL ~ueb s~fe depo.::>';"t bo..... s!.~11 be 'ouly
9 by pe.csol.~ duly ~ut!.orL.ed by resolutiol, of the ~e!.ool bOo..cd.
10 J. 'Pl.e sG!.001 bo~rd mo.y 0150 receive b~l.k L.cust
11 .ceeeipt~';"11 retUrl, fOL iUVe.;:>tllLel1L of .surplus fu"ds i."
12 secuLi.ties. Al,y trust reGeipLs Lee<::ived hlL..lSt euun.er~Le tl.e
13 vorious secur';'tie~ I.eld togetl.e.c will. tl.e specifi.c llLl1lcber of
14 e~el. secu:LiLy l.eld. 'PI.e ~etu~1 .;:>eeuri.tie.5 01. wl.ie!. t!.e LLuSt
15 recei1-'ts OLe i.::>.;:>u.ed m~y be I.eld by ~llY b~l.k depo.;:>itory
16 G!.~Ltered by L!.e Ullited :JLote.$ GOveni111el,L, tl.e :Jt~Le of
17 Plo.cid6., o.c ~l,'y ot!.e:r ~t~te or te.criLoLY of tl.e U"ited :Jt~Les,
18 tl.~L !.O.::> a br~l1c.l. 0.1. pril1eipo1 p10ce of bu~ille.;:>~ i.l. tl.';'o5 .$t~te
19 ~~ defil.ed ';'1, ~. G~0.12, or Ll,eir desi.gu~ted ogellts.
20 (el H!.el, Ll,e llLOI1<::'y illve.5ted ill suc.l. seeu.citi.e~ is
21 lleeded it, wbole: or ill porL [or tLe pU.1.f>o~e.;:> ori'::lil,~11'y
22 il.tel,ded, Ll,e se!.001 bo~.cd i.s ~utl,o.ci.z;ed to sell .::>uel, ~ecuLi.ty
23 or se,-uLiti<::~ ~L tl.e tl,el, prevo.ilil1';j llL~rkeL price ol1cl to p~':1
24 tl,e proGeed.s of suc.l, ~ole il1Lo Ll.e prope..: ~ceOul1t or fu"d of
25 the sc.l.ool boo.1.d.
26 (d) Por tl,e pu.cpo.5e.5 of tl,is l~w, the terIlL "surplus
27 fUl.ds" is defilled ~~ fUlld.s i.11 Oil}' geI,erol o.c ~peci~l ~GeOu"t
28 or [uud of tl,e sc.l,ool bo~rd, held or cOI,trolled by tl.e .;:>cl.ool
29 board, ~l.iel, fUl1ds ore 110t re~~ol,o.bly COl1t~h(pl~ Led Lo be
30 r,eeded fo..: tl,e p(lLpose~ intel,ded w';'t!,il. 0 .ceo.sou~ble Li.r"e f":OI"
31 the d~te of suc.l, iI,vestnlellL.
38
CODING:Words ~t.cicken are deletions; words underlined are additions.
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 (e) AllY ~uLplu~ public fUud.;:> ~ubject Lo 0. GOl,L.c~cL or
2 ~'::j.Leenlel1t 011 Lhe d~Le vi thi..!> el'o.ctnlel1L .;:>1,011 110t be il,ve:~Led
3 cOI,LLo..cy to sucl, COlltL~Ct o.c ~greelllel1t.
4 (f) 'Phe provi.~ivl',;:> of tl,i.s .:>ubsecti.oll ore .:>upplelllel1to.l
5 to Ol,y ol1d ~ll other low.!> ..:el~Li.ug to tl.e legal illVe.;:>LIuellL~ by
6 SG!.ovl bOo..cds.
7 (J) Illvestlllellt.:> luo.de pUL.5U~I,t to tl,i.::> .5ecLivll 1ll0.y be
8 i.ll book el,t.cy fO":lll ol1d luOY be ullde..c repu..:cl,o.se ~greellle:uts.
9 (4) 'P!.e p.co\1i.!>ioll~ of tl.is .5ectiou are .subjecL to tl,e
10 provi.~iol1.;:> of ~. 210.41~.
11 Section 11. Paragraph (a) of subsection (2) of section
12 236.49, Florida Statutes, is amended to read:
13 236.49 Proceeds; how expended.--The proceeds derived
14 from the sale of said bonds shall be held by the school board
15 and shall be expended by the board for the purpose for which
16 said bonds were authorized for said school district, and shall
17 be held and expended in the manner following:
18 (2) Allor any part of the fund derived from the
19 proceeds of any such bond issue that in the judgment of the
20 school board is not immediately needed may be placed in the
21 following securities maturing not later than the time when the
22 funds are reasonably expected to be needed:
23 (a) In investments listed in s. 218.415(16)ouLl.oLi.....ed
24 ii, .;:>. 2JG.24(2) (0) fo.c tl,e: di..:>l.Li.ct ~cl,ool fUl,d.
25 Section 12. Paragraph (b) of subsection (6) of section
26 237.211, Florida Statutes, is amended to read:
27 237.211 School depositories; payments into and
28 withdrawals from depositories.--
29 (6) EXEMPTION FOR SELF-INSURANCE PROGRAMS AND
30 THIRD-PARTY ADMINISTERED EMPLOYEES' FRINGE BENEFIT PROGRAMS.--
31
39
CODING:Words ~tLicken are deletions; words underlined are additions:
~
ENROLLED
2000 Legislature
CS for SB 372, 1st Engrossed
1 (b) The school board is authorized to contract with an
2 insurance company or professional administrator who holds a
3 valid certificate of authority issued by the Department of
4 Insurance to provide any or all services that a third-party
5 administrator is authorized by law to perform. Pursuant to
6 such contract, the school board may advance or remit money to
7 the administrator to be deposited in a designated special
8 checking account for paying claims against the school board
9 under its self-insurance programs, and remitting premiums to
10 the providers of insured benefits on behalf of the school
11 board and the participants in such programs, and otherwise
12 fulfilling the obligations imposed upon the administrator by
13 law and the contractual agreements between the school board
14 and the administrator. The special checking account shall be
15 maintained in a designated district school depository. The
16 school board may replenish such account as often as necessary
17 upon the presentation by the service organization of
18 documentation for claims or premiums due paid equal to the
19 amount of the requested reimbursement. Such replenishment
20 shall be made by a warrant signed by the chair of the board
21 and countersigned by the superintendent. Such replenishment
22 may be made by electronic, telephonic, or other medium, and
23 each transfer shall be confirmed in writing and signed by the
24 superintendent or his or her designee. The provisions of
25 strict accountability of all funds and an annual audit by an
26 independent certified public accountant as provided in s.
27 230.23(10)~+rTshall apply to this subsection.
28 Section 13. Sections 125.31, 166.261, and 218.345,
29 Florida Statutes, paragraph (k) of subsection (10) of section
30 230.23, Florida Statutes, and subsection (5) of section
31 237.161, Florida Statutes, are repealed.
40
CODING:words stricken are deletions; words underlined are additions.
ENROLLED
2000 Legislature CS for SB 372, 1st Engrossed
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Section 14. This act shall take effect October 1,
41
CODING:Words ~trickeI, are deletions; words underlined are additions.