Senate Bill 110 (2023) — State Board of Administration
SB 110
Florida Bills
Florida Senate - 2023 SB 110 By Senator Hooper 21-00352A-23 2023110__ Page 1 of 10 CODING: Words stricken are deletions; words underlined are additions. A bill to be entitled 1
An act relating to the State Board of Administration; 2 amending s. 215.47, F.S.; revising the types of 3 investments in real property and related personal 4 property which the board may make; authorizing the 5 board and certain affiliated entities and ventures to 6 issue securities and borrow money through specified 7 means; authorizing the board to use the proceeds of 8 loans or financing obligations as loans to or sources 9 of funding for certain entities; requiring the 10 ownership of an entity holding title to real prope rty 11 to be vested in the name of the System Trust Fund; 12 revising the funds in which the state may invest no 13 more than 80 percent of its moneys available for 14 investments; revising the requirements of the proposed 15 plan the board must present to the Investment Advisory 16 Council to invest in unauthorized investments; 17 deleting authorization for the council to obtain 18 independent investment counsel to provide expert 19 advice on board investment activity; requiring the 20 board’s evaluation of an investment to be based so lely 21 on pecuniary factors; defining the term “pecuniary 22 factor”; providing construction; revising the 23 threshold for the amount of the fund which may be 24 invested in alternative investments; authorizing the 25 board and certain affiliated entities to issue 26 securities and borrow money through specified means; 27 reenacting ss. 112.661(5)(a), 218.409(2)(a), 28 420.503(3)(a), and 1002.36(4)(e), F.S., relating to 29
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 2 of 10 CODING: Words stricken are deletions; words underlined are additions. authorized investments, administration of the trust 30 fund, investments the board is permitted to make, and 31 investments made on behalf of the Florida School for 32 the Deaf and the Blind, respectively, to incorporate 33 the amendments made to s. 215.47, F.S., in references 34 thereto; providing an effective date. 35 36 Be It Enacted by the Legislature of the State of Flori da: 37 38
Section 1. Paragraph (
e) of subsection (2) and subsections 39 (3), (6), (10), and (15) of
section 215.47, Florida Statutes, 40 are amended to read: 41 215.47 Investments; authorized securities; loan of 42 securities.—Subject to the limitations and conditions of the 43 State Constitution or of the trust agreement relating to a trust 44 fund, moneys available for investments under ss. 215.44 -215.53 45 may be invested as follows: 46
(2) With no more than 25 percent of any fund in: 47 (
e) Certain interests in real property and related personal 48 property that may be owned through affiliated limited liability 49 entities or joint ventures, which include, but are not limited 50 to, including mortgages and related instruments secured by on 51 commercial or industrial real property, and instruments 52 containing with provisions for equity or income participation or 53 with provisions for convertibility to equity ownership; and 54 interests in real property-related collective investment funds. 55 The State Board of Administration and its affiliated limited 56 liability entities or joint ventures may issue securities and 57 borrow money through loans or other financial obligations, 58
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 3 of 10 CODING: Words stricken are deletions; words underlined are additions. including bonds, equity securities, and other security 59 instruments, any of which may be unsecured, or secured by 60 investments in real property or related cash flows, guaranteed 61 by the related fund, or governed by financial covenants. The 62 proceeds of such loans or financing obligations may be loaned to 63 or otherwise used as a source of funding for affiliated limited 64 liability entities or joint ventures.
Associated expenditures 65 for acquisition and operation of assets purchased under this 66 provision or of investments in private equity or other private 67 investment partnerships or limited liability companies shall be 68 included as a part of the cost of the investment. 69 1. The title to real property, or ownership of the entity 70 holding title to real property, acquired under this paragraph 71 shall be vested in the name of the respective fund. 72 2. For purposes of taxation of property owned by any fund, 73 the provisions of s. 196.199(2)(
b) do not apply. 74 3. Real property acquired under the provisions of this 75 paragraph is shall not be considered state lands or public lands 76 and property as defined in
chapter 253, and the provisions of 77 that
chapter do not apply to such real property. 78
(3) With no more than 80 percent of any fund in equity 79 securities or securities convertible into equity securities of 80 any entity common stock, preferred stock, and interest-bearing 81 obligations of a corporation having an option to convert int o 82 common stock, provided: 83 (
a) The entity corporation is organized under the laws of 84 the United States, any state or organized territory of the 85 United States, or the District of Columbia; or 86 (
b) The entity corporation is listed on any one or more of 87
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 4 of 10 CODING: Words stricken are deletions; words underlined are additions. the recognized national stock exchanges in the United States and 88 conforms with the periodic reporting requirements under the 89 Securities Exchange Act of 1934;. 90 (
c) Not more than 75 percent of the fund may be in 91 internally managed equity securities common stock. 92 93 The board is shall not to invest more than 10 percent of the 94 equity assets of any fund in the equity securities common stock, 95 preferred stock, and interest-bearing obligations having an 96 option to convert into common stock, of any one issuing entity 97 corporation; and the board is shall not to invest more than 3 98 percent of the equity assets of any fund in such securities of 99 any one issuing entity corporation except to the extent a higher 100 percentage of the same issue is included in a nationally 101 recognized market index, based on market values, at least as 102 broad as the Standard and Poor’s Composite Index of 500 103 Companies, or except upon a specific finding by the board that 104 such higher percentage is in the best interest of th e fund. 105
(6) With no more than 5 percent of any fund to be invested 106 as deemed appropriate by the board, notwithstanding investment 107 limitations otherwise expressed in this section.
Before Prior to 108 the board engages engaging in any investment activity not 109 otherwise authorized under ss. 215.44-215.53, excluding 110 investments in publicly traded securities, options, financial 111 futures, or similar instruments, the board shall present to the 112 Investment Advisory Council a proposed plan for such investment. 113 The Said plan must shall include, but is not be limited to, a 114 detailed analysis of the investment, the expected benefits and 115 potential risks of such activity, and the; methods for 116
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 5 of 10 CODING: Words stricken are deletions; words underlined are additions. monitoring and measuring the performance of the investment ; a 117 complete description of the type, nature, extent and purpose of 118 the investment, including description of issuer, security in 119 which investment is proposed to be made, voting rights or lack 120 thereof and control to be acquired, restrictions upon voting, 121 transfer, and other material rights of ownership, and the 122 existence of any contracts, arrangements, understandings, or 123 relationships with any person or entity (naming the same) with 124 respect to the proposed investment; and assurances that 125 sufficient investment expertise is available to the board to 126 properly evaluate and manage such activity.
The Investment 127 Advisory Council may obtain independent investment counsel to 128 provide expert advice with regard to such proposed investment 129 activity by the board, and the board shall defray such costs . 130 (10)(
a) Investments made by the State Board of 131 Administration must shall be designed to maximize the financial 132 return to the fund consistent with the risks incumbent in each 133 investment and must shall be designed to preserve an appropriate 134 diversification of the portfolio. 135 (
b) The board shall discharge its duties with respect to a 136 plan solely in the interest of its participants and 137 beneficiaries. The board in performing the above investment 138 duties shall comply with the fiduciary standards set forth in 139 the Employee Retirement Income Security Act of 1974 at 29 U.S.C. 140 s. 1104(a)(1)(
A) through (C). 141 (
c) The board’s evaluation of an investment may be based 142 only on pecuniary factors, and the board may not subordinate the 143 interests of the participants and beneficiaries to other 144 objectives and may not sacrifice investment return or take on 145
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 6 of 10 CODING: Words stricken are deletions; words underlined are additions. additional investment risk to promote non-pecuniary benefits or 146 goals. The weight given to any pecuniary factor by the board 147 must appropriately reflect a prudent assessment of its impact on 148 risk and returns. As used in this paragraph, the term “pecuniary 149 factor” means a factor that the board prudently determines is 150 expected to have a material effect on the risk or return of an 151 investment, based on appropriate investment horizons co nsistent 152 with the fund’s investment objectives and funding policy. 153 (
d) In the event of any conflict between paragraphs (
b) and 154 (c), paragraph (
c) shall prevail. In case of conflict with other 155 provisions of law authorizing investments, the investment and 156 fiduciary standards set forth in this subsection shall prevail. 157
(15) With no more, in the aggregate, than 30 20 percent of 158 any fund in alternative investments through participation in an 159 alternative investment vehicle as those terms are defined in s. 160 215.4401(3)(a), or in securities or investments that are not 161 publicly traded and not otherwise authorized by this section. 162 The State Board of Administration and its affiliated limited 163 liability entities, which the board may create, own, and use to 164 hold investments and for such other purposes as it deems 165 appropriate, may issue securities and borrow money through loans 166 or other financial obligations, including bonds, equity 167 securities, or other security instruments, any of which may be 168 unsecured, or secured by investments made which are authorized 169 under this subsection or related cash flows, guaranteed by the 170 related fund, or governed by financial covenants. 171
Section 2. For the purpose of incorporating the amendments 172 made by this act to
section 215.47, Florida Statu tes, in a 173 reference thereto, paragraph (
a) of subsection (5) of
section 174
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 7 of 10 CODING: Words stricken are deletions; words underlined are additions. 112.661, Florida Statutes, is reenacted to read: 175 112.661 Investment policies.—Investment of the assets of 176 any local retirement system or plan must be consistent with a 177 written investment policy adopted by the board. Such policies 178 shall be structured to maximize the financial return to the 179 retirement system or plan consistent with the risks incumbent in 180 each investment and shall be structured to establish and 181 maintain an appropriate diversification of the retirement system 182 or plan’s assets. 183
(5) AUTHORIZED INVESTMENTS.— 184 (
a) The investment policy shall list investments authorized 185 by the board. Investments not listed in the investment policy 186 are prohibited. Unless otherwise authorized by law or ordinance, 187 the investment of the assets of any local retirement system or 188 plan covered by this part shall be subject to the limitations 189 and conditions set forth in s. 215.47(1)-(6), (8), (9), (11) and 190 (17). 191
Section 3. For the purpose of incorporating the amendments 192 made by this act to
section 215.47, Florida Statutes, in a 193 reference thereto, paragraph (
a) of subsection (2) of
section 194 218.409, Florida Statutes, is reenacted to read: 195 218.409 Administration of the trust fund.— 196 (2)(
a) The trustees shall ensure that the board or a 197 professional money management firm administers the trust fund on 198 behalf of the participants. The board or a professional money 199 management firm shall have the power to invest such funds in 200 accordance with a written investment policy. The investment 201 policy shall be updated annually to conform to best investment 202 practices. The standard of prudence to be used by investment 203
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 8 of 10 CODING: Words stricken are deletions; words underlined are additions. officials shall be the fiduciary standards as set forth in s. 204 215.47(10), which shall be applied in the context of managing an 205 overall portfolio.
Portfolio managers acting in accordance with 206 written procedures and an investment policy and exercising due 207 diligence shall be relieved of personal responsibility for an 208 individual security’s credit risk or market price chan ges, 209 provided deviations from expectations are reported in a timely 210 fashion and the liquidity and the sale of securities are carried 211 out in accordance with the terms of this part. 212
Section 4. For the purpose of incorporating the amendments 213 made by this act to
section 215.47, Florida Statutes, in a 214 reference thereto, paragraph (
a) of subsection (3) of
section 215 420.503, Florida Statutes, is reenacted to read: 216 420.503
Definitions.—As used in this part, the term: 217 (3) “Authorized investments” means any of the following 218 securities: 219 (
a) Investments permitted under s. 215.47(1) and (2), 220 without regard to any limitation set forth therein. 221
Section 5. For the purpose of incorporating the amendments 222 made by this act to
section 215.47, Florida Statutes, in a 223 reference thereto, paragraph (
e) of subsection (4) of
section 224 1002.36, Florida Statutes, is reenacted to read: 225 1002.36 Florida School for the Deaf and the Blind.— 226
(4) BOARD OF TRUSTEES.— 227 (
e) The board of trustees is invested with full power and 228 authority to: 229 1. Appoint a president, faculty, teachers, and other 230 employees and remove the same as in its judgment may be best and 231 fix their compensation. 232
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 9 of 10 CODING: Words stricken are deletions; words underlined are additions. 2. Procure professional services, such as medical, mental 233 health, architectural, and engineering. 234 3. Procure legal services without the prior written 235 approval of the Attorney General. 236 4. Determine eligibility of students and procedure for 237 admission. 238 5.
Provide for the students of the school necessary 239 bedding, clothing, food, and medical attendance and such other 240 things as may be proper for the health and comfort of the 241 students without cost to their parents, except that the board of 242 trustees may set tuition and other fees for nonresidents. 243 6. Provide for the proper keeping of accounts and records 244 and for budgeting of funds. 245 7. Enter into contracts. 246 8. Sue and be sued. 247 9. Secure public liability insurance. 248 10.
Do and perform every other matter or thing requisite to 249 the proper management, maintenance, support, and control of the 250 school at the highest efficiency economically pos sible, the 251 board of trustees taking into consideration the purposes of the 252 establishment. 253 11. Receive gifts, donations, and bequests of money or 254 property, real or personal, tangible or intangible, from any 255 person, firm, corporation, or other legal entity. However, the 256 board of trustees may not obligate the state to any expenditure 257 or policy that is not specifically authorized by law.
If the 258 bill of sale, will, trust indenture, deed, or other legal 259 conveyance specifies terms and conditions concerning the use of 260 such money or property, the board of trustees shall observe such 261
Florida Senate - 2023 SB 110 21-00352A-23 2023110__ Page 10 of 10 CODING: Words stricken are deletions; words underlined are additions. terms and conditions. 262 12. Deposit outside the State Treasury such moneys as are 263 received as gifts, donations, or bequests and may disburse and 264 expend such moneys, upon its own warrant, for the use and 265 benefit of the Florida School for the Deaf and the Blind and its 266 students, as the board of trustees deems to be in the best 267 interest of the school and its students.
Such money or property 268 does not constitute and may not be considered a part o f any 269 legislative appropriation. 270 13. Sell or convey by bill of sale, deed, or other legal 271 instrument any property, real or personal, received as a gift, 272 donation, or bequest, upon such terms and conditions as the 273 board of trustees deems to be in the best interest of the school 274 and its students. 275 14.
Invest such moneys in securities enumerated under s. 276 215.47(1), (2)(c), (3), (4), and (10), and in The Common Fund, 277 an Investment Management Fund exclusively for nonprofit 278 educational institutions. 279 15. After receiving approval from the Administration 280 Commission, exercise the power of eminent domain in the manner 281 provided in
chapter 73 or
chapter 74. 282