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                               T H E   C A B I N E T 
                          S T A T E   O F   F L O R I D A
                           STATE BOARD OF ADMINISTRATION
                               DEPARTMENT OF REVENUE
                             ADMINISTRATION COMMISSION
                              BOARD OF TRUSTEES OF THE
                           INTERNAL IMPROVEMENT TRUST FUND
                              STATE BOARD OF EDUCATION
                                      VOLUME I
                        The above agencies came to be heard before 
               THE FLORIDA CABINET, Honorable Governor Bush 
               presiding, in the Cabinet Meeting Room, LL-03, 
               The Capitol, Tallahassee, Florida, on Monday, 
               June 26, 2000, commencing at approximately 9:11 a.m. 
                                    Reported by:
                                 LAURIE L. GILBERT
                          Registered Professional Reporter
                              Certified Court Reporter
                            Certified Realtime Reporter
                             Registered Merit Reporter
                              Notary Public in and for
                           the State of Florida at Large
                         ACCURATE STENOTYPE REPORTERS, INC.
                                  100 SALEM COURT
                             TALLAHASSEE, FLORIDA 32301



                        Representing the Florida Cabinet: 
                        JEB BUSH
                        BOB CRAWFORD
                        Commissioner of Agriculture
                        BOB MILLIGAN
                        KATHERINE HARRIS
                        Secretary of State
                        BOB BUTTERWORTH
                        Attorney General
                        BILL NELSON
                        TOM GALLAGHER
                        Commissioner of Education
                                      *   *   *

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
                                    I N D E X
               ITEM                  ACTION                PAGE
               (Presented by Tom Herndon,
                   Executive Director)
                1             Approved                       5
                2             Approved                       5
                3             Approved                      18
                4             Deferred                      56
               (Presented by James A. Zingale, Ph.D.,
                   Executive Director)
                1             Approved                      57
                2             Approved                      58

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
                                     I N D E X
               ITEM                  ACTION                PAGE
               (Presented by Sandra Sartin,
                  Policy Coordinator)
                1             Approved                      59
                2             Approved                      59
                3             Approved                      59
                4             Approved                      60
                5             Approved                      60
                6             Approved                      60
                7             Approved                      60
                8             Approved                      61
                9             Approved                      61
               10             Approved                      61
               11 through 15  Approved                      62
               16             Approved                      62
               17             Approved                      63
               18, 19, and 20 Approved                      63
               21             Approved                      63
               22             Approved                      64
               23             Approved                      64
               24             Approved                      64
               25             Approved                      65
               26             Approved                      65
               27             Approved                      66
               28             Approved                      70
               29             Approved                      70
                        CERTIFICATE OF REPORTER             71
                                     *   *   *







                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           5
                                   June 26, 2000
         1                     P R O C E E D I N G S

         2              (The agenda items commenced at 9:13 a.m.)

         3              GOVERNOR BUSH:  State Board of 

         4          Administration.

         5              MR. HERNDON:  Item Number 1 is approval of 

         6          the minutes of the meeting held June 13th,  

         7          19-- or 2000.

         8              TREASURER NELSON:  I move it.

         9              COMPTROLLER MILLIGAN:  Second.

        10              GOVERNOR BUSH:  Moved and seconded.

        11              Without objection, it's approved.

        12              MR. HERNDON:  Item Number 2 is approval of 

        13          a fiscal determination of an amount not 

        14          exceeding eight million eight hundred thousand 

        15          dollars, Florida Housing Finance Corporation 

        16          multifamily revenue refunding bonds for the 

        17          Falls of Venice Apartment Project.

        18              TREASURER NELSON:  And I'll move that one, 

        19          too.

        20              COMPTROLLER MILLIGAN:  Second.

        21              GOVERNOR BUSH:  Moved and seconded.

        22              Without objection, it's approved.

        23              MR. HERNDON:  Item Number 3 are matters 

        24          that were deferred from the last agenda, and 

        25          are back before you for consideration. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           6
                                   June 26, 2000
         1              We have two inf-- essentially informational 

         2          items this morning.  One is the organizational 

         3          chart, which is contained as part of the budget 

         4          packet. 

         5              A second matter, which is attached, is the 

         6          time line which is dated June 7th, and is our 

         7          most recent revision.

         8              And then finally, Governor, a revised -- I 

         9          want to underscore that -- revised budget for 

        10          the operating year 2000-2001, which begins this 

        11          weekend for the DC portion of the State Board 

        12          of Administration budget.

        13              As you'll recall, you did approve the DB 

        14          portion last time.

        15              We've been very fortunate, I think, in -- 

        16          in having an opportunity to revise this budget 

        17          downwards, because it reflects a great deal  

        18          more insight that we have received as a result 

        19          of some of our bidding processes that we've 

        20          gone through for a general consultant. 

        21              It gave us some insight into the expected 

        22          costs that we were likely to -- to see on some 

        23          of the other RFIs that we were going to 

        24          disseminate a little bit later on.  And it also 

        25          gave us an opportunity to defer some of the 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           7
                                   June 26, 2000
         1          proposed positions that we had.

         2              So the -- the net effect of the revisions, 

         3          owing largely to the two changes in consulting 

         4          costs and postponing positions, is about a 

         5          two million dollar reduction, from 4.5 to 

         6          2.4 million dollars in this -- in this 

         7          particular document.

         8              And I know, Governor, at -- at your 

         9          direction and -- and pleasure, both the 

        10          Division of Retirement are here to speak 

        11          briefly to their component of the budget, as is 

        12          the Department of Banking and Finance. 

        13              If you'd like to go ahead and hear from 

        14          them now, we can go ahead and call them up, and 

        15          then come back to the main --

        16              GOVERNOR BUSH:  Sure.

        17              MR. HERNDON:  -- main item. 

        18              So I think Art Simon is here from the 

        19          Department of Banking and Finance. 

        20              GOVERNOR BUSH:  Art, how are you doing? 

        21              MR. SIMON:  Thank you, Mr. Governor. 

        22              To be brief and to the point, I believe you 

        23          all have a little handout we gave you, which 

        24          sets forth two alternative cost estimates for 

        25          what the impact of the program will be on the 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           8
                                   June 26, 2000
         1          Department. 

         2              The first one assumes that the Department 

         3          has to reprogram its systems to make the 

         4          necessary Federal limit calculations. 

         5              The principal costs this year that would 

         6          have to be addressed by way of the budget is 

         7          the costs of retaining the outside consultants 

         8          to do the computer programming that'll be 

         9          necessary to implement this.  And that's 

        10          carried over into the second year.

        11              But you see down under Chart 2, that we can 

        12          eliminate that expense if the third party 

        13          administrator that is retained to handle the 

        14          program does the Federal budget -- the Federal 

        15          limit calculations.

        16              Not only would this save our Department a 

        17          substantial amount of money, but all of the 

        18          local governments that would have to perform a 

        19          similar type of function would also be relieved 

        20          of the burden of -- of replicating those 

        21          changes in their system.

        22              The other point I would make is that we are 

        23          starting now with the integrated financial 

        24          management system, and we'd like to be able to 

        25          incorporate this capacity into that system so 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION           9
                                   June 26, 2000
         1          we'd have the ability to monitor it in-house. 

         2              And, certainly, it wouldn't make a lot of 

         3          sense for us to be spending a 

         4          million-and-a-half dollars to make changes to a 

         5          legacy system, only to have the -- the same 

         6          amount of money -- really the same changes 

         7          built into the system that's going to replace 

         8          the legacy system in a very short period of 

         9          time. 

        10              So we hope that the third party 

        11          administrator will be able to handle this 

        12          function.  But if not, by about January of this 

        13          year, we will have to be seeking an additional 

        14          appropriation to start retaining the 

        15          programmers that are necessary to implement 

        16          these changes. 

        17              The last time the Department had to do a 

        18          project of a similar nature, which actually was 

        19          less complex than this one, it costed (sic) 

        20          upward of about 1.5 million dollars and took 

        21          18 months.

        22              So we would need to know by around the end 

        23          of the year, or the early part of next year at 

        24          the latest, whether this is something that the 

        25          third party administrator can do. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          10
                                   June 26, 2000
         1              If they do it, the Department's 

         2          responsibility will largely be to -- to monitor 

         3          that function, to do post audit of that 

         4          function.  And we do have some programming 

         5          changes that have to be implemented into our 

         6          systems.  But we can handle that through 

         7          existing resources, existing revenues, and 

         8          existing FTEs.

         9              GOVERNOR BUSH:  Art, the -- is there any 

        10          reason to believe the third party administrator 

        11          could not do this? 

        12              MR. SIMON:  We believe -- there's every 

        13          reason to believe that the third party 

        14          administrator can do it.

        15              GOVERNOR BUSH:  Okay. 

        16              COMPTROLLER MILLIGAN:  Not -- not only can 

        17          do it, I think has to do it --

        18              GOVERNOR BUSH:  Sure.

        19              COMPTROLLER MILLIGAN:  -- or else the costs 

        20          would be extraordinary for the small 

        21          government, small operations, which constitute 

        22          a good deal of the activity.  It has to be done 

        23          by a third party administrator.

        24              MR. SIMON:  Thank you.

        25              MR. HERNDON:  We fully expect, Governor, 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          11
                                   June 26, 2000
         1          to -- to that point, to issue the RFI with that 

         2          as one of the performance criteria that would 

         3          be built into the process.

         4              The next speaker is Ron Poppell, who is the 

         5          Acting Director of the Division of Retirement. 

         6              MR. POPPELL:  Good morning.

         7              Our budget is -- is real low for this next 

         8          year.  We're asking for 1.4 million dollars.  A 

         9          million of that would be for systems 

        10          enhancements.  And that's assuming that we 

        11          cannot get the third party record keeper to 

        12          come to us.  That would be about a 90 percent 

        13          rewrite in my systems that I hope not to make.  

        14          So I hope I don't have to spend that million, 

        15          or -- or a whole lot of that million.

        16              I'm also asking for $300,000 in consulting 

        17          services -- actually $400,000 consulting 

        18          services.  A hundred thousand would be for the 

        19          disability study that we're mandated to do by 

        20          the legislation. 

        21              I should have a dollar figure on that by 

        22          the end of this week.  It looks like that 

        23          study's going to be about $250,000.  But I'm 

        24          going to use 200,000 out of my current year 

        25          budget so that I can get to -- Mercer started 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          12
                                   June 26, 2000
         1          on that. 

         2              We got a scope of work from them last week 

         3          that we are refining, and hopefully I will have 

         4          them working by the end of this week.

         5              The plan right now is to have that study, 

         6          while it's mandated by statute, to have it by 

         7          January 1st.  I'm hoping to have it in hand by 

         8          November 1, so that if I need something in the 

         9          Governor's budget recs, we will have it in 

        10          plenty of time to do that. 

        11              So I'm hoping to save at least $50,000 out 

        12          of that 100,000. 

        13              I also am asking for 300,000 in consulting 

        14          services so that I can get Mercer to help me 

        15          look at my organization, the Division of 

        16          Retirement, and see if I need to be 

        17          organizationally restructured in order to make 

        18          this DC plan work better. 

        19              I also want them to help me in discussions 

        20          with the third party record keeper.  If we're 

        21          going to be sending payrolls for the DC piece 

        22          through this third party record keeper, and if 

        23          this third party record keeper is going to be 

        24          balancing those payrolls, would it make sense 

        25          for the DB portion to also go through this 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          13
                                   June 26, 2000
         1          third party record keeper, and for them to also 

         2          balance the payrolls?  Can they do it cheaper 

         3          than I can do it?

         4              With our reengineered system, we have cut 

         5          down from ten days to four days our ability and 

         6          our -- our speed with balancing payroll.  So 

         7          I'm not sure they can do it quicker or cheaper 

         8          than me.  But if they can, that will free up 

         9          12 positions that I may not need, or I can do 

        10          something else with.  I can put them someplace 

        11          else.

        12              For the second year, I'm asking for 

        13          3.3 million dollars.  Again, another 300,000 

        14          for consulting services, and 3 million in case 

        15          I have to do a complete systems rewrite.

        16              The -- the systems rewrite dollars I 

        17          guesstimated from looking at our current 

        18          contractor, who is KPMG, that we've had on 

        19          contract now for three years, doing our 

        20          reengineering conversion.  We're currently 

        21          paying them $165 an hour.  We've been averaging 

        22          about 1500 hours a month. 

        23              The million dollars for this next year 

        24          would carry me for four months.  The 3 million 

        25          would carry me for a full year next year.  But, 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          14
                                   June 26, 2000
         1          again, I hope not to use a whole lot of that if 

         2          I can get the third party record keeper to 

         3          write their system around my system, rather 

         4          than me having to write mine around them.

         5              GOVERNOR BUSH:  Any questions?

         6              COMPTROLLER MILLIGAN:  Just a quick 

         7          question. 

         8              The -- your budget dollars will come out of 

         9          the FRS? 

        10              MR. POPPELL:  The legislation in Section 25 

        11          allows me to get money out of this 20 million 

        12          dollar pot. 

        13              I will either have to have some kind of 

        14          agreement between us and the SBA for Tom to pay 

        15          it out of his budget, or I will have to do a 

        16          budget amendment to get the money into my 

        17          budget.

        18              COMPTROLLER MILLIGAN:  Okay.  So it's not 

        19          clear yet exactly where those resources are 

        20          going to come from.

        21              MR. POPPELL:  Correct.  I've got to get it 

        22          out of the pot through some mechanism.

        23              COMPTROLLER MILLIGAN:  So when we talk 

        24          about approval of the budget today, we are 

        25          really only talking about approving your 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          15
                                   June 26, 2000
         1          budget, Tom, I presume.

         2              MR. HERNDON:  That's correct.

         3              COMPTROLLER MILLIGAN:  Okay. 

         4              GOVERNOR BUSH:  General, the -- the same 

         5          question I was going to ask related to your -- 

         6          the Division of Banking.  That -- that would 

         7          have to be appropriated, or could -- could it 

         8          be -- just implement --

         9              COMPTROLLER MILLIGAN:  Yes.

        10              GOVERNOR BUSH:  -- the DC plan, why 

        11          couldn't it be taken out of the SBA? 

        12              COMPTROLLER MILLIGAN:  It -- it will have 

        13          to be appropriated.  We have looked at it, and 

        14          it cannot be paid out of the FRS.  It has to be 

        15          appropriated. 

        16              But assuming, and I think it's a valid 

        17          assumption, that the third party administrator 

        18          will do those things that -- that deal with the 

        19          limiting problem, there'll be no costs this 

        20          year.  We'll take it out of hide this next 

        21          fiscal year, and then we'll have it in -- in 

        22          the budget next year.

        23              MR. HERNDON:  Governor, those are the only 

        24          two presentations with respect to the budget 

        25          document itself. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          16
                                   June 26, 2000
         1              As I mentioned at the outset, the -- the 

         2          item that we're asking you to approve this 

         3          morning is the SBA portion of the DC budget, 

         4          not Retirement and not Banking and Finance. 

         5              We will come back to you -- in all 

         6          likelihood, we will need to do a budget 

         7          amendment -- even to reflect essentially a 

         8          contract, if you will, between the SBA and the 

         9          Division of Retirement, we'll need to have a 

        10          budget amendment to consummate that.  And so 

        11          you'll see that at a subsequent point.

        12              GOVERNOR BUSH:  And we're going to -- we're 

        13          going to relook at this in six months? 

        14              MR. HERNDON:  Yes, sir.  Yes, sir, we are. 

        15              In fact, as we start to get into the throws 

        16          of working with some of the consultants and get 

        17          a little bit better insight into the cost 

        18          estimates and so forth for some of the actual 

        19          production, we may be back, you know, at that 

        20          point, whenever that occurs.

        21              GOVERNOR BUSH:  This is a -- this is the 

        22          largest conversion of a -- partial conversion 

        23          of a defined benefit plan to the defined 

        24          contribution plan on the planet.

        25              COMMISSIONER GALLAGHER:  The next one is 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          17
                                   June 26, 2000
         1          social security.

         2              GOVERNOR BUSH:  They -- yeah.  But they may 

         3          not have it.

         4              In any case, I -- I really appreciate what 

         5          y'all are doing.  And -- and I know that this 

         6          Board recognizes the incredible challenge that 

         7          y'all face. 

         8              And I would hope that you'd come regularly 

         9          to give us updates on what's going on, because 

        10          it's -- when you're the first person -- when 

        11          you're a pioneer, you need to have people there 

        12          to provide support.  I -- I know we want this 

        13          to be successful. 

        14              So --

        15              MR. HERNDON:  Yes, sir. 

        16              I anticipate probably at -- at every 

        17          agenda, or at least every other agenda, we'll 

        18          have an update for you, a formal status report 

        19          for you --

        20              GOVERNOR BUSH:  Excellent.

        21              MR. HERNDON:  -- as we move along.

        22              GOVERNOR BUSH:  Yeah.

        23              MR. HERNDON:  So, yes, sir.

        24              COMPTROLLER MILLIGAN:  I move the SBA 

        25          budget.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          18
                                   June 26, 2000
         1              TREASURER NELSON:  Second.

         2              GOVERNOR BUSH:  Moved and seconded.

         3              Any more discussion?

         4              Without objection, it's approved.

         5              MR. HERNDON:  Item Number 4 is a Florida 

         6          Hurricane Catastrophe Fund reinsurance matter 

         7          that was also discussed at some length last 

         8          week. 

         9              As I indicated at that time, our 

        10          Advisory Council was going to meet in the 

        11          interim.  They have met. 

        12              And they have requested, with your 

        13          forbearance, that this matter be deferred this 

        14          morning.  The Advisory Council spent a very 

        15          solid 3 hours thrashing through this whole 

        16          question about reinsurance and the need for it 

        17          and the type of products that are available, 

        18          and so on and so forth, and ultimately 

        19          requested this deferral without intending to 

        20          convey a message necessarily of favor or 

        21          disfavor for the -- for the project. 

        22              They just simply didn't have an opportunity 

        23          to finally resolve their -- their sentiment 

        24          about it.  And we felt like it was appropriate 

        25          to get that -- that opinion before you, before 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          19
                                   June 26, 2000
         1          it's ultimately addressed.

         2              If that's agreeable, then we'll plan on 

         3          being back before you on the 26th at the next 

         4          Cabinet meeting. 

         5              But we did think it would be appropriate to 

         6          spend a few minutes this morning -- again, with 

         7          your forbearance -- and give you a brief 

         8          highlight and a status report, if you will, on 

         9          where this project is, and -- and how things 

        10          have progressed since the last meeting.

        11              So Dr. Nicholson is here to talk you 

        12          through that.

        13              GOVERNOR BUSH:  By the way, this is the 

        14          best graphics that -- that we've had in this 

        15          hall in the last year-and-a-half.  I don't know 

        16          what happened. 

        17              What have you done to make it so I can -- 

        18          we can actually read it for a change?

        19              Whatever you found, keep it.  Tell 

        20          everybody else to use the same --

        21              DR. NICHOLSON:  That's the SBA's projector, 

        22          by the way.

        23              COMPTROLLER MILLIGAN:  Well, they -- 

        24          they -- they have a lot of money.

        25              GOVERNOR BUSH:  That's it.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          20
                                   June 26, 2000
         1              COMMISSIONER CRAWFORD:  They get all the 

         2          money.

         3              TREASURER NELSON:  They -- they get top of 

         4          the line out there.  They --

         5              GOVERNOR BUSH:  Out there at the Hermitage?

         6              TREASURER NELSON:  -- of the agencies.

         7              GOVERNOR BUSH:  Onward.

         8              DR. NICHOLSON:  Thank you, Governor. 

         9              I've prepared a presentation on -- on the 

        10          subject matter.  And it's a little longer than 

        11          the Cabinet Aides cautioned me about.  So if I 

        12          get long, just say, wrap it up, I can wrap it 

        13          up in 2 minutes. 

        14              But I want to -- there are some -- there 

        15          are some important materials here I would like 

        16          to present.

        17              I think to put some things in context -- 

        18          this is -- of course, is an aerial view of 

        19          Hurricane Floyd and -- threatening the coast of 

        20          Florida.  Of course, we were lucky to avoid 

        21          that situation.

        22              To put some things in context, I want to 

        23          talk about the Florida Hurricane Catastrophe 

        24          Fund in terms of being the largest hurricane 

        25          catastrophe reinsurer in the world. 

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                           STATE BOARD OF ADMINISTRATION          21
                                   June 26, 2000
         1              It's considered the backbone of the 

         2          insurance -- property casualty insurance -- 

         3          property insurance industry in Florida.  And a 

         4          number of parties are depending upon it for -- 

         5          for their success.

         6              The maximum debt issuance of 7.36 billion 

         7          has never been done before, and it would be the 

         8          largest municipal issuance ever.

         9              Interest rate movements are highly volatile 

        10          and unpredictable.  Faster loss settlement 

        11          supports public policy goals for faster 

        12          State recovery. 

        13              And I want to note that insurers 

        14          following -- insurers should, and -- and 

        15          probably have improved significantly in terms 

        16          of how they're going to handle claims than 

        17          they -- than they were after Hurricane Andrew.  

        18          So we can expect pretty -- faster claim 

        19          payments.

        20              This chart illustrates the Florida 

        21          insurance marketplace.  You'll note that there 

        22          are roughly 5.3 million risks insured in 

        23          Florida.  Now, that one policyholder may have 

        24          two houses or whatever, and we're counting each 

        25          house -- or location as a risk. 

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                           STATE BOARD OF ADMINISTRATION          22
                                   June 26, 2000
         1              There are 280 insurers that provide the 

         2          property insurance to these policyholders.

         3              On top of that, the Florida Hurricane 

         4          Catastrophe Fund is a mandatory State 

         5          reinsurance program that collects about 

         6          428.2 million dollars of premium, which 

         7          represents twelve-and-a-half percent of the 

         8          overall premiums paid to insurers, which are 

         9          about 3.4 billion total residential premiums.

        10              Participating also in the market are 

        11          private reinsurers, or approximately 140 of 

        12          those that are made up of U.S. reinsurers, 

        13          European reinsurers, and Bermuda reinsurers.  

        14          And they each have about a third of the market 

        15          share of the catastrophe market.

        16              Another entity that's very important to the 

        17          Florida market is the Florida Insurance 

        18          Guarantee Association.  That is the association 

        19          that would help protect policyholders from 

        20          losses should their insurer become insolvent.

        21              I want to provide an overview of how the 

        22          Cat Fund operates, and then get into some 

        23          operational numbers.

        24              It's questions you had asked at the last 

        25          meeting, Governor Bush. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          23
                                   June 26, 2000
         1              And then talk about two products designed 

         2          to manage the risks associated at the loss 

         3          reimbursement product.  Specifically one is a 

         4          liquidity facility, and the other is a bonding 

         5          shortfall type of reinsurance cover. 

         6              Let me note that that reinsurance is really 

         7          a very specialized product.  It's not your 

         8          traditional reinsurance product.  It is one 

         9          based on interest rate volatility and 

        10          movements, and is also known as a double 

        11          trigger type product.  So, therefore, the 

        12          pricing is much lower than what you would find 

        13          with traditional reinsurance.

        14              The way the Florida Hurricane Catastrophe 

        15          Fund operates is, basically insurers are going 

        16          to report their exposure data to us, wherever 

        17          they have insured property around the state. 

        18              You're familiar with the premium formula, 

        19          how that's developed.  Well, the insurers will 

        20          report their exposure to us, we will determine 

        21          their premiums for the Cat Fund, and then their 

        22          coverage is basically a function of their 

        23          premium.  And it's pretty simple. 

        24              I rounded some numbers here.  But their 

        25          retention or deductible, if you will, is 

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                           STATE BOARD OF ADMINISTRATION          24
                                   June 26, 2000
         1          seven times their Cat Fund premium.  And their 

         2          coverage is 25 times their Cat Fund premium. 

         3              So that simple formula defines what a 

         4          company -- an insurance company would -- would 

         5          be entitled to out of the Cat Fund benefits.  

         6          They also have an option of selecting their 

         7          coverage, where they select 45, 75, or 

         8          90 percent coverage.

         9              I'll show you an example in the next slide 

        10          of how that would operate for a company that 

        11          has a million dollars Cat Fund premium, and 

        12          chooses a 90 percent coverage selection option. 

        13              It would have 25 million dollars -- 

        14          25 times the million -- 7 million, roughly, 

        15          retention.  And it would work basically as soon 

        16          as the insurer absorbs the first 7 million 

        17          dollars of losses, then the Cat Fund would 

        18          reimburse 90 percent of those losses, for a 

        19          total of 25 million dollars.

        20              Let me note that the Cat Fund cover, the 

        21          25 million --

        22              GOVERNOR BUSH:  Ninety percent over the 

        23          7 million, or --

        24              DR. NICHOLSON:  Right.

        25              GOVERNOR BUSH:  Okay. 

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                                   June 26, 2000
         1              DR. NICHOLSON:  The Cat Fund cover is 

         2          aggregate cover for the entire hurricane 

         3          season.  So no matter how many hurricanes we 

         4          have, that is the extent of coverage that you 

         5          have, 25 million. 

         6              However, the deductible, or retention, is a 

         7          per occurrence basis.  So if we had three 

         8          hurricanes during the year, you would have to 

         9          absorb the deductible each time before you 

        10          would collect benefits from the Cat Fund.  So 

        11          those are -- those losses would be reported 

        12          separately to us.

        13              COMMISSIONER GALLAGHER:  Do you mind if I 

        14          ask a question? 

        15              GOVERNOR BUSH:  Commissioner Gallagher.  

        16          Please.

        17              COMMISSIONER GALLAGHER:  On -- on the thing 

        18          you just said, you hit 7 million.  Once you hit 

        19          that, then the Cat Fund covers 90 percent of 

        20          the 7 million up to? 

        21              No, 7 million's above --

        22              DR. NICHOLSON:  Seven million.

        23              COMMISSIONER GALLAGHER:  -- the loss 

        24          retention --

        25              DR. NICHOLSON:  Above 7 million.

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                           STATE BOARD OF ADMINISTRATION          26
                                   June 26, 2000
         1              COMMISSIONER GALLAGHER:  And then with a 

         2          max payout of 26 -- or 25.

         3              DR. NICHOLSON:  Right.

         4              TREASURER NELSON:  Jack, put it in 

         5          perspective. 

         6              What is State Farm's premium to you? 

         7              DR. NICHOLSON:  I believe it's about 

         8          68 million dollars.  And the wind pool 

         9          I think's anticipated to have 100 million 

        10          dollar premium. 

        11              The wind pool is easier to work with 

        12          because of the math.  So their -- their total 

        13          Cat Fund recovery would be about 20 -- 

        14          2.5 billion dollars.

        15              But those two companies, the wind pool and 

        16          State Farm, are the two largest insurers that 

        17          participate in the Cat Fund.

        18              TREASURER NELSON:  Well, the wind pool does 

        19          not have as much wind risk as State Farm's 

        20          homeowner policies, does it? 

        21              DR. NICHOLSON:  No, it has more.  In terms 

        22          of our premium and how it's calculated, it 

        23          has -- it has significantly more.

        24              TREASURER NELSON:  I see.  And yours is -- 

        25          is -- is calculated on the basis of risk --

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                                   June 26, 2000
         1              DR. NICHOLSON:  Right. 

         2              So -- so -- and you can understand why.  

         3          They're located along the coast in the high  

         4          risk areas.

         5              TREASURER NELSON:  Okay. 

         6              DR. NICHOLSON:  In terms of operational 

         7          status, I've mentioned there are 

         8          280 participating companies.  Our year-end cash 

         9          balance is projected to be 3.64 billion at 

        10          the -- at the end of 2000. 

        11              Total capacity is limited by law to 

        12          11 billion dollars.  And basically the bonding 

        13          capacity is just the difference between 

        14          11 billion and what we have currently in cash. 

        15              So our bonding capacity is 3.6 billion.  

        16          And we estimate the bonding twice a year.  But 

        17          it's -- it's basically to determine how much in 

        18          terms of assessments that that -- that would be 

        19          required to reach that 7.3 billion. 

        20              In this particular instance this year, 

        21          we're looking at 3.47 percent assessment that 

        22          would be assessed on all property casualty 

        23          insurers, excluding workers' comp writers 

        24          should we need to bond. 

        25              We would only need to bond in a situation 

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                           STATE BOARD OF ADMINISTRATION          28
                                   June 26, 2000
         1          where a hurricane exhausts the cash balance of 

         2          the fund.  So we will use the cash first, and 

         3          then we're required by law to issue revenue 

         4          bonds for the remainder of the capacity.

         5              TREASURER NELSON:  Let me just interject, 

         6          Governor, here.

         7              The 3.47 percent emergency assessment is if 

         8          you had the bond all the way up to the total of 

         9          11 billion dollars.

        10              DR. NICHOLSON:  That's right.

        11              TREASURER NELSON:  And just to put it in 

        12          perspective, this is residential losses only.

        13              GOVERNOR BUSH:  So it'd be --

        14              TREASURER NELSON:  Eleven billion dollars 

        15          is greater than the residential losses of 

        16          Hurricane Andrew, which was 10 billion dollars.

        17              Now, there's an inflation factor in there, 

        18          so it may be equivalent to.

        19              DR. NICHOLSON:  We -- last year, the 

        20          Legislature passed what was known as subsequent 

        21          season legislation.  What this did was 

        22          basically provide a way to recharge the 

        23          Cat Fund should it be wiped out totally by a 

        24          storm in any one season.

        25              In order to do that, they passed an 

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                           STATE BOARD OF ADMINISTRATION          29
                                   June 26, 2000
         1          additional emergency assessment requirement of 

         2          2 percent, which would allow any unused 

         3          assessment in the first season to be used for a 

         4          subsequent season.  So that's where we get 

         5          2.53 percent for subsequent season capacity. 

         6              And right now, we're looking at just short 

         7          of 5 billion dollars, 4.9 billion, that we 

         8          would be able to come back with should the 

         9          Cat Fund be totally wiped out.

        10              GOVERNOR BUSH:  Will that grow over time, 

        11          if there's no bad news this year? 

        12              DR. NICHOLSON:  I'm sorry.  You think --

        13              GOVERNOR BUSH:  Will that grow, that 

        14          capacity for the second -- the -- 

        15              DR. NICHOLSON:  Yes.  Yes.  That -- it'll 

        16          continue to grow.  It is much more sensitive to 

        17          interest rates -- fluctuations than -- than 

        18          initial season capacity because, of course, 

        19          we've got a little bit of cushion in terms of 

        20          the initial season. 

        21              3.47, we can go all the way up to 4.  And 

        22          that benefits us right now, because we -- we 

        23          can absorb a certain amount of interest -- 

        24          interest rate fluctuations before that's cut 

        25          into.

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                                   June 26, 2000
         1              COMMISSIONER GALLAGHER:  Governor?

         2              GOVERNOR BUSH:  Yeah.

         3              COMMISSIONER GALLAGHER:  The -- the 

         4          Cat Fund comes before or after other 

         5          reinsurance?  Does it come in the middle?

         6              DR. NICHOLSON:  Before.  It's -- it's 

         7          primary coverage.

         8              COMMISSIONER GALLAGHER:  It's primary --

         9              DR. NICHOLSON:  Right.

        10              COMMISSIONER GALLAGHER:  -- reinsurance.?

        11              DR. NICHOLSON:  Right.

        12              TREASURER NELSON:  And, Jack, that 

        13          emergency assessment on the second year event 

        14          is only if you have the second year event.

        15              DR. NICHOLSON:  Right.  Yes, sir.

        16              TREASURER NELSON:  Okay. 

        17              DR. NICHOLSON:  Now, this shows the initial 

        18          season capacity.  We aggregated it altogether 

        19          and looked at everybody's retention, you know, 

        20          how much is that going to be.  Because actually 

        21          the way the law works, we work backwards. 

        22              They give us a number in the law, we 

        23          inflate it for growth and exposure, and then we 

        24          determine what each company's retention is.  So 

        25          this is not an industry retention that would 

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                           STATE BOARD OF ADMINISTRATION          31
                                   June 26, 2000
         1          have to be breached before we start paying 

         2          losses, because we could do that if one company 

         3          exceeded its retention. 

         4              But if you combine the capacity, the 

         5          7.36 bonding with the 3.64 cash, that adds up 

         6          to the 11 billion.  Now, in conjunction with 

         7          the private market, we see that the industry on 

         8          the aggregate would absorb about 3.2 billion in 

         9          terms of an underlying retention, and about 1.9 

        10          in terms of the copay. 

        11              So there's about 5 billion dollars that the 

        12          industry would absorb, and the Cat Fund would 

        13          pay 11.  So it's, like, a two-thirds/one-third 

        14          relationship to the top of the Cat Fund. 

        15              We say the top of the Cat Fund, or the 

        16          ground up losses where we would cap out.  But 

        17          it also includes industry participation at 

        18          16 billion dollars.  So this is -- far exceeds 

        19          Hurricane Andrew in terms of our ability to 

        20          manage that type of loss.

        21              GOVERNOR BUSH:  Well, tell me where the 

        22          private reinsurance on that -- what -- what are 

        23          they -- what are they reinsuring, what element 

        24          of this risk? 

        25              DR. NICHOLSON:  Well, they're -- they're 

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                           STATE BOARD OF ADMINISTRATION          32
                                   June 26, 2000
         1          reinsuring the blue areas, all three blue 

         2          areas, the top, the side, and the bottom.  Not 

         3          for every company.  But that is where they 

         4          participate.

         5              GOVERNOR BUSH:  They -- they -- so peo--  

         6          companies will go and get their copayments --




















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                           STATE BOARD OF ADMINISTRATION          33
                                   June 26, 2000
         1              DR. NICHOLSON:  Right.

         2              GOVERNOR BUSH:  -- their exposure -- any of 

         3          the exposure they'll have by-in-large is 

         4          reinsured?

         5              DR. NICHOLSON:  Right.

         6              For example, we don't cover additional 

         7          living expenses.  They may also buy that from 

         8          a -- a reinsurer.

         9              TREASURER NELSON:  And, Governor, that's a 

        10          very important point.  You've hit it on the -- 

        11          on the head, that basically you've got an 

        12          industry that's been willing to come back in to 

        13          Florida and write homeowners insurance, because 

        14          they're protected. 

        15              And in large part, they're protected 

        16          because of this Cat Fund, which you can see 

        17          that even though the Cat Fund's got 11 billion 

        18          bonding capacity, by the time you'd get to the 

        19          top of the total bonding capacity of the 

        20          Cat Fund, the overall industry would have 

        21          16 billion dollars of residential losses, which 

        22          is way, way larger than Hurricane Andrew -- 

        23              GOVERNOR BUSH:  Uh-hum.  

        24              TREASURER NELSON:  -- in residential 

        25          losses. 

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                                   June 26, 2000
         1              And a lot of those losses that the industry 

         2          would suffer over there in the copays and the 

         3          blue line on the bottom, they would have done 

         4          what you said, which is they would have 

         5          protected themselves by buying catastrophe 

         6          reinsurance.

         7              GOVERNOR BUSH:  It must be pretty pricey.

         8              DR. NICHOLSON:  What? 

         9              TREASURER NELSON:  It's a lot less -- I'm 

        10          telling you, it went off --

        11              GOVERNOR BUSH:  It went down --

        12              TREASURER NELSON:  -- the charts right 

        13          after Andrew, and you could hardly get it.

        14              GOVERNOR BUSH:  Sure. 

        15              But this is -- I mean, that's the first 

        16          risk.

        17              TREASURER NELSON:  The lower on the 

        18          chart -- 

        19              GOVERNOR BUSH:  The copayment --

        20              TREASURER NELSON:  -- the higher the 

        21          payment --

        22              GOVERNOR BUSH:  Yeah.

        23              TREASURER NELSON:  -- because of the first 

        24          risk.

        25              DR. NICHOLSON:  The higher up the chart, 

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                           STATE BOARD OF ADMINISTRATION          35
                                   June 26, 2000
         1          of course, with reinsurance in that top blue 

         2          area, the more profit load they build in to 

         3          take that risk, even though the premium is 

         4          smaller.

         5              GOVERNOR BUSH:  Interesting.

         6              DR. NICHOLSON:  I want to talk about 

         7          managing risks associated with the Cat Fund's 

         8          loss reimbursement process.  Start out by just 

         9          looking at uncertainty related to bonding, then 

        10          look at how it impacts us from the -- the -- a 

        11          loss reimbursement process; state the problem; 

        12          and then talk about ways to manage it.

        13              In terms of uncertainty related to bonding, 

        14          if you'll note here on the left, I have a blue 

        15          bar that shows 11 billion dollars of cash.  

        16          We're not there yet. 

        17              If we have a -- if we're fortunate enough 

        18          to have, say, nine or ten years of -- of 

        19          good -- of no storms or no storms that trigger 

        20          the Cat Fund, our cash balance will literally 

        21          grow to 11 billion dollars at the end of 

        22          ten years -- nine or ten years, in which case, 

        23          there would be no need to do any assessments to 

        24          any policyholders after a first storm. 

        25              So this is -- this represents the growth of 

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                           STATE BOARD OF ADMINISTRATION          36
                                   June 26, 2000
         1          the Cat Fund.  That was somewhat what it was 

         2          all about to begin with, to get tax exempt 

         3          status as an entity to grow the funds. 

         4              And -- but with the change in the law last 

         5          year creating subsequent season capacity, and 

         6          limiting the capacity of the Cat Fund, we're 

         7          now at -- where we can actually grow out of 

         8          assessing people.  And we're continuing to do 

         9          that.  You saw that 3.47 percent.  That's kind 

        10          of representative of how we're doing that.

        11              But there is a problem with -- till we get 

        12          there.  And that problem is bonding, and the 

        13          uncertainty associated with bonding.  And it 

        14          has two elements that cause us some concern. 

        15              One would be the timing of when the bonds 

        16          could be issued.  Even though we think we can 

        17          issue bonds very quickly, within, say, 

        18          six weeks or three months of -- of an event, we 

        19          may not want to do that, because at that 

        20          particular time, we may have Dan Rather 

        21          standing on the street corner with rubble 

        22          behind him reporting all the problems that are 

        23          going on.  And that may not send a -- a strong 

        24          message to investors in the bond market.

        25              So it may be that it would be a good idea 

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                                   June 26, 2000
         1          to take time to educate investors and avoid 

         2          that shock impact of the initial event.

         3              The other problem is the amount of bonding 

         4          capacity.  What happens if interest rates 

         5          fluctuate and cut into that 7.36 billion of 

         6          bonding that we're -- we're anticipating. 

         7              That could happen, because of interest rate 

         8          situations where interest rates are volatile; 

         9          it could happen because of the -- the bond 

        10          markets, something there tightens up the 

        11          availability. 

        12              And then --

        13              (Commissioner Crawford exited the room.) 

        14              DR. NICHOLSON:  -- increases the costs; or 

        15          the economy.  Something could happen to the 

        16          economy that also creates a problem.

        17              In terms of the SBA and the State, the 

        18          State is not obligated in any way for any 

        19          shortfall.  We're not obligated in terms of the 

        20          SBA, and you as -- as the Trustees, other than 

        21          to the extent of the -- the assets, which 

        22          include the -- the cash and the bonding.  

        23          That's the extent of our liability.

        24              GOVERNOR BUSH:  We -- wouldn't we -- 

        25          I mean, that -- the State may not be the -- SBA 

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                           STATE BOARD OF ADMINISTRATION          38
                                   June 26, 2000
         1          may not be obligated, but is the State 

         2          obligated where either the reinsurance -- 

         3          reinsurers go belly-up, or the insurance 

         4          companies themselves as structured go belly-up, 

         5          what happens then?

         6              MR. HERNDON:  Morally, but not legally.

         7              GOVERNOR BUSH:  Who's over there?

         8              DR. NICHOLSON:  Morally, but not legally, 

         9          Tom said. 

        10              GOVERNOR BUSH:  Oh.

        11              DR. NICHOLSON:  But I -- I think that this 

        12          was designed to put certain limitations in the 

        13          law to be self-funding.  It's not to -- to, 

        14          you know, tax taxpayers as -- as a result, 

        15          other than what's already built into it.

        16              TREASURER NELSON:  Let me see if I can 

        17          answer your question.

        18              If we get to the point where the storm is 

        19          so massive where all the reinsurance companies, 

        20          and the underlying companies, are going 

        21          belly-up, then --

        22              (Commissioner Crawford entered the room.)

        23              TREASURER NELSON:  -- what we have is the 

        24          equivalent of national economic calamity.

        25              We can stand another Andrew by virtue of 

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                           STATE BOARD OF ADMINISTRATION          39
                                   June 26, 2000
         1          what you're seeing here.  When you get to two 

         2          and three times Andrew, no one state, and no 

         3          one company can withstand that kind of hit. 

         4              And so you -- you have a situation that is 

         5          going to call on the full efforts of the 

         6          Federal government. 

         7              I mean, it would be the equivalent of a 

         8          50 billion dollar hurricane -- insurance loss 

         9          hurricane would be like a 50 billion dollar 

        10          massive earthquake in San Francisco.

        11              So there's a -- there's a point at which 

        12          you just can't continue on an individual 

        13          private market basis to insure against the 

        14          greatest calamity that --

        15              GOVERNOR BUSH:  Well --

        16              TREASURER NELSON:  -- can happen.

        17              GOVERNOR BUSH:  -- it doesn't have to be 

        18          50 billion though for us to begin to feel the 

        19          pressures as it relates to our budget.  I would 

        20          imagine since the commercial market will be 

        21          obliterated with this, and there are no 

        22          protections similar to the -- the Cat Fund. 

        23              So --

        24              TREASURER NELSON:  Well, that's -- that's 

        25          been the whole debate about a national 

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                                   June 26, 2000
         1          Cat Fund.

         2              GOVERNOR BUSH:  Yeah.

         3              TREASURER NELSON:  Or at least 

         4          Senator Mack's approach is to reserve and make 

         5          non-taxable amounts in each company's budgets 

         6          that could be used to offset catastrophe, but 

         7          don't make them pay income tax on it so that 

         8          they have the incentive to reserve for 

         9          catastrophe.

        10              DR. NICHOLSON:  I might add that commercial 

        11          insurance was not a problem after 

        12          Hurricane Andrew.  And I think if you look at 

        13          the number of exposures, it's probably about 

        14          one-tenth the amount of residential exposures.  

        15          And we have not had a crises, particularly in 

        16          that area, other than commercial residential, 

        17          and that is covered in the Cat Fund.

        18              GOVERNOR BUSH:  Okay. 

        19              DR. NICHOLSON:  But there are a number of 

        20          parties that depend upon the Cat Fund.  

        21          Insurance regulators, the Florida Insurance 

        22          Department for one; insurers; reinsurers; 

        23          consumers; rating agencies; and others who 

        24          depend on the -- on the CAT fund; banks, and 

        25          so forth, that insure property in the state.

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                                   June 26, 2000
         1              And if I -- for -- to use an example of the 

         2          impact of a shortfall in the Cat Fund and show, 

         3          this -- this chart needs some explanation, so 

         4          it's not very clear just looking at it.  But 

         5          let me explain what -- what I've got here.

         6              I've shown on -- under short-- shortfall 

         7          and FHCF capacity, I've shown a certain 

         8          percentage from 5 to 25 percent.  But then in 

         9          the other -- the other numbers, what they 

        10          represent is a -- it represents the amount of 

        11          policyholder surplus, or the equity position of 

        12          an insurance company that would be similar to 

        13          this shortfall. 

        14              So if we were to have a shortfall of 

        15          5 percent, the way you would read the chart is, 

        16          there would be 16 companies that would suffer 

        17          25 percent or more reduction -- or possible 

        18          reduction in their surplus. 

        19              If we had a 10 percent shortfall, that 

        20          shortfall would represent the total surplus of 

        21          two companies.  And that's in the second line 

        22          there. 

        23              This is kind of an extreme chart, because 

        24          it's talking about extreme shortfalls.  

        25          These -- these shortfalls are very unlikely, 

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                                   June 26, 2000
         1          but I -- I present them just to show you the 

         2          magnitude of what perhaps could happen.

         3              In terms of the risk to the Cat Fund, I'd 

         4          like to point out that the Cat Fund, in terms 

         5          of reimbursing losses and the way it's 

         6          structured, is basically a pro rata system of 

         7          distribution.  We prorate the total capacity to 

         8          each company based on the premium they pay to 

         9          the Cat Fund.  And that is their coverage 

        10          element.  So they're entitled to that element. 

        11              The problem that we have with -- related to 

        12          bonding is that if we have -- have a shortfall, 

        13          how much do we pay each company? 

        14              It's easy to prorate when you know what 

        15          amount to prorate.  But when you don't know 

        16          that amount, it creates some uncertainty.  So 

        17          more than likely, we would -- we could end up 

        18          overpaying some insurers early, who would be 

        19          giving the cash proceeds, and maybe underpaying 

        20          those later that would be getting the results 

        21          of the bonding proceeds.

        22              There could also be certain time delays 

        23          between the time that it takes bonding proceeds 

        24          to come to the door.  That would basically be 

        25          impacted by the nature and size of the loss.  A 

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                           STATE BOARD OF ADMINISTRATION          43
                                   June 26, 2000
         1          bigger loss, faster loss payments by the 

         2          companies, could -- could entail, you know, a 

         3          bigger shortfall -- or -- or bigger liquidity 

         4          issue than if it were a smaller storm.

         5              So the problem is just the difference 

         6          between estimated and actual bonding capacity.

         7              This shows the significance of the size of 

         8          debt that we would have to be issuing, 

         9          7.36 billion dollars is about 56 percent of the 

        10          State's current tax supported debt of about 

        11          13.1 billion overall.

        12              This chart just illustrates the volatility 

        13          of interest rates.  I won't go into a lengthy 

        14          explanation here.  But interest rates are 

        15          volatile over -- over time certainly.

        16              Now, one of the concerns that we have with 

        17          regard to bonding is the ability to manage and 

        18          to continue to pay claims in a timely and 

        19          sufficient manner.  So the question comes up 

        20          is, how can we get our current structure to 

        21          work like cash? 

        22              How can we make it work like cash so that 

        23          we can be solvent, if you will, up to what's 

        24          called a 100 -- 1 in 100-year event scenario.  

        25          And that's -- that's not past events or future 

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                           STATE BOARD OF ADMINISTRATION          44
                                   June 26, 2000
         1          events, it's this year.  It's the probability 

         2          of success of 99 percent, and failure of 

         3          1 percent.

         4              So it's -- it's really ensuring our 

         5          performance up to a 99 percent level.  So the 

         6          question is how much cash -- additional cash 

         7          would we need to do that; and, secondly, how 

         8          much shortfall protection would we need on our 

         9          bonding to protect in that -- that element?

        10              Under the statute, the law gives the Board 

        11          the ability to purch-- procure reinsurance.  

        12          It's not a requirement.  It just says may 

        13          procure reinsurance.  And also may enter into 

        14          other financial arrangements. 

        15              These are -- this is under a section 

        16          entitled, Additional Powers and Duties.  So I 

        17          think the Legislature put these tools in the 

        18          statute so that it gave -- gave us the ability 

        19          to manage this sort of thing. 

        20              When we see it appropriate, we don't have 

        21          to buy reinsurance, and we haven't bought 

        22          reinsurance heretofore with the Cat Fund.

        23              So in answering the question -- the chart 

        24          that I showed you the shortfall and how much 

        25          liquidity do we need, in terms of additional 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          45
                                   June 26, 2000
         1          liquidity needs, we need about 1.6 billion to 

         2          get us to that 1 in 100 level of security. 

         3              And it -- in terms of bonding shortfall 

         4          needs, we would need 300 million dollars 

         5          shortfall protection to protect against 

         6          interest rate volatility. 

         7              I've showed some other standards of 

         8          managing where if we looked at -- to get to a 1 

         9          in 250-year level of confidence, that's 

        10          basically you would be certain 99.6 percent of 

        11          the time, or 1 in 500-year, which would be 

        12          99.8 percent of the time, that would require 

        13          respectively 4.2 and 5.8 billion of additional 

        14          liquidity needs; or 500 million, 700 million, 

        15          respectfully, for shortfall needs.

        16              So the product that we're talking about 

        17          would enhance our ability to pay claims at the 

        18          1 in a 100-year event scenario, 99 percent 

        19          probably -- probability performance, or a 

        20          1 percent probability of nonperformance.

        21              We still face risks in this -- with either 

        22          of these products.  There's still a risk 

        23          element involved.

        24              They have a liquidity component, as I 

        25          mentioned, and a specialized reinsurance 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          46
                                   June 26, 2000
         1          component that has to do with the -- with 

         2          interest rate volatility.

         3              In terms of the costs, what we're talking 

         4          about here, the bottom line is 7.4 million 

         5          dollars.  That's broken up just about equ-- in 

         6          equal split between the two products:  

         7          300 million dollars of -- of reinsurance 

         8          short-- bonding shortfall coverage would cost 

         9          3.6 million dollars. 

        10              And in terms of the liquidity facility, 

        11          we've priced that out, and there would -- there 

        12          are -- there is a problem right now getting the 

        13          additional 600 million amount.  But we think we 

        14          can get 1 billion for a reasonable cost of 

        15          around 300 -- or excuse me -- 3 million plus 

        16          expenses.

        17              MR. HERNDON:  One year.

        18              DR. NICHOLSON:  For one year.

        19              GOVERNOR BUSH:  And this would reinsure -- 

        20          this would -- this would protect the -- what is 

        21          about the 6 billion -- the non-cash portion to 

        22          get to the 11 billion.

        23              DR. NICHOLSON:  Okay.  What it -- what it 

        24          basically does is provides us -- 

        25              TREASURER NELSON:  No.

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          47
                                   June 26, 2000
         1              COMPTROLLER MILLIGAN:  No.

         2              GOVERNOR BUSH:  No? 

         3              DR. NICHOLSON:  -- more liquidity -- it 

         4          provides us needed liquidity before the bond 

         5          proceeds come to the door.  There may be some 

         6          delay there. 

         7              So what it does is provide us basically 

         8          1 billion dollars extra liquidity so that if we 

         9          have a -- a -- we exhaust our cash, and there 

        10          is a need to delay bonding to maximize our 

        11          bonding capacity, we have 1 billion dollars of 

        12          extra liquidity available.

        13              GOVERNOR BUSH:  Okay. 

        14              DR. NICHOLSON:  We need 1.6 billion to be 

        15          at a 1 in a 100-year level of manage-- that's 

        16          kind of a -- a standard of management for 

        17          insurance companies. 

        18              The Insurance Department, for example, 

        19          requires that of all companies when they build 

        20          their financial structure.  A.M. Best that 

        21          rates insurance companies for policyholder 

        22          purposes and credit purposes, requires a 1 in 

        23          250 level of management security.

        24              TREASURER NELSON:  If I can just interject 

        25          for my two colleagues. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          48
                                   June 26, 2000
         1              Basically Jack is talking about a very 

         2          esoteric part of -- in the case that the big 

         3          one happens, that you have -- that you can't go 

         4          into the market and get all your bonds sold, 

         5          that you have enough cash to reimburse the 

         6          insurance companies quickly.

         7              And what that's going to cost is 

         8          seven-and-a-half million dollars, which means, 

         9          you're going to add on to every homeowners' 

        10          rate an additional one and how much -- 

        11          one-and-a-half -- one-and-a-half percent?

        12              DR. NICHOLSON:  One -- one point two 

        13          nine percent, roughly.

        14              TREASURER NELSON:  -- 1.29 percent.

        15              Now, I'll tell you just from a policy 

        16          standpoint -- and that's what this is a 

        17          discussion, and we're going to vote on this 

        18          next time -- the policy discussion. 

        19              What Jack is trying to get this facility to 

        20          be is much closer to a guarantee fund.  Well, 

        21          that's not the original purpose of this. 

        22              What it was was a catastrophic reinsurance 

        23          fund to offset the losses of massive 

        24          catastrophic losses, instead of guaranteeing to 

        25          everybody that they were going to get immediate 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          49
                                   June 26, 2000
         1          dollars for all their losses. 

         2              That's part of what, Governor, you had 

         3          mentioned, is you go into the private 

         4          marketplace and buy private reinsurance.

         5              So the more and more we get to a point of 

         6          which adding another 1.29 percent that 

         7          consumers are going to pay, the more and more 

         8          we're moving this thing to the -- an absolute 

         9          guarantee, which I have some significant 

        10          reservations about.

        11              DR. NICHOLSON:  Commissioner, I have a cost 

        12          example that Patti here has a little handout I 

        13          didn't include there, because I didn't know the 

        14          question would come up. 

        15              But I'd like to give that to you, and -- 

        16          and kind of answer that question, because 

        17          I think it's important.

        18              COMPTROLLER MILLIGAN:  While you're passing 

        19          that out, Jack, the -- this is a one-year 

        20          policy.

        21              DR. NICHOLSON:  Right.

        22              COMPTROLLER MILLIGAN:  And let's suppose we 

        23          have a year similar to what we've had in the 

        24          past several years, and we pay out some as a 

        25          result of Opal-like storms, which was  

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          50
                                   June 26, 2000
         1          certainly a significant storm, would we want to 

         2          buy this policy next year?  Would we have to 

         3          buy this policy next year?

         4              Well, I know what the answer is already.  

         5          The answer is, no. 

         6              This is a -- this is a one-time to provide 

         7          an absolute guarantee that we can make timely 

         8          payments.  And I will tell you, I have 

         9          reservations. 

        10              But I will also say that folks are still 

        11          looking at it.  And this is an information 

        12          brief.  And I'm anxious to let it continue on 

        13          in its course, and have folks really discuss 

        14          this thing in detail, as they will, and see 

        15          what it comes back with. 

        16              But I do have reservations as to whether or 

        17          not this is really my expected value for a 

        18          7 million dollar cost doesn't quite get up to 

        19          the value that it's apparently going to be 

        20          providing.  And so that's where I am.

        21              DR. NICHOLSON:  We just -- a quick comment 

        22          there.  I -- I'm very careful to say:  This is 

        23          certainly not an absolute guarantee, and that 

        24          we still face significant risks, even with this 

        25          program. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          51
                                   June 26, 2000
         1              What it does do is give us some extra 

         2          cushion, extra financial stability, if you 

         3          will, to respond to higher levels of claims. 

         4              Basically what -- what we're doing is 

         5          saying, if we're able to handle 12.5 billion 

         6          dollar loss today with our current cash and 

         7          capabilities, we'd probably be able to handle 

         8          about 5 billion dollars more with this program, 

         9          in terms of smooth operation of Cat Fund. 

        10              And then we're also able to handle a -- a 

        11          shortfall in -- in capacity.

        12              But it's not -- it's certainly not a -- 

        13          a -- a guarantee of any type, because there's 

        14          still significant risks associated with that.

        15              COMMISSIONER GALLAGHER:  Is -- is there a 

        16          potential middle-of-the-road option, which 

        17          would mean that insurance companies themselves 

        18          could opt into a program that would allow this, 

        19          at the same time guaranteeing them cash in the 

        20          beginning, as opposed to those companies that 

        21          didn't do it? 

        22              Have you looked at scenarios like that? 

        23              DR. NICHOLSON:  We -- we've talked about 

        24          it.  We've talked about things like that.  

        25          That -- that would have to -- that would 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          52
                                   June 26, 2000
         1          require a statutory change, I would think, to 

         2          do that.

         3              COMMISSIONER GALLAGHER:  Okay. 

         4              DR. NICHOLSON:  The -- the example -- on 

         5          the impact on a policyholder -- this is a -- a 

         6          policy that I'm very familiar with.

         7              GOVERNOR BUSH:  It's yours?

         8              DR. NICHOLSON:  It's here in Tallahassee.  

         9          I looked it up over the weekend to see how it 

        10          would affect --

        11              Now, the -- the impact of someone in 

        12          south Florida, since the -- the rating, if 

        13          you'll recall, was basically proportional all 

        14          over the state, would be greater for someone in 

        15          south Florida, or another part of the state. 

        16              I have a rate change here indication of 

        17          minus 6.45 percent.  That was the -- that's in 

        18          the current premium formula.  Rates are going 

        19          down 6.45 percent for the -- the Cat Fund 

        20          portion. 

        21              If my company passed that through to me 

        22          completely, I would be paying, instead of 

        23          ten twenty-six forty-eight, I would be paying a 

        24          thousand seventeen dollars and 

        25          fifty-three cents. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          53
                                   June 26, 2000
         1              So I'm saving $8.95. 

         2              Now, if we implement this proposed program, 

         3          and put in the stabilization charge we talked 

         4          about, the 1.29 percent, that would -- that 

         5          would be a -- still a negative 5.25 percent 

         6          change in the rates.  And I would be paying 

         7          $1,019.19, which is a $7.29 savings. 

         8              So the difference in these two are a 

         9          savings of one sixty-six, one way or the other.  

        10          In each case, I'm saving money from last year, 

        11          because the rates have gone down.

        12              And let -- let me point out that the reason 

        13          the rates have gone down is because we've taken 

        14          coverage away from insurers.  And we reflect 

        15          that in the rates. 

        16              In prior years, not only could insurers 

        17          collect their payout multiple, they could also 

        18          collect any excess that was unused by all 

        19          insurers in the system.  That was a type of -- 

        20          of protection that they had in the past that 

        21          they no longer have today.

        22              So what we're proposing here is we're 

        23          taking out 30 million out of the system and 

        24          saying, well, let's just add back 

        25          seven-and-a-half, to give a little more 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          54
                                   June 26, 2000
         1          security that -- that we -- we no longer -- 

         2          that we no longer have.

         3              GOVERNOR BUSH:  All right.

         4              DR. NICHOLSON:  These are some other cost 

         5          indications for, you know, higher levels of 

         6          security.

         7              But I want to conclude by just talking 

         8          about the long-term management goals of the 

         9          Cat Fund.  I think we need to look at the 

        10          situation every year in terms of the dynamics 

        11          of how the CAT fund changes. 

        12              Every year the cash grows, the bonding 

        13          needs shrink.  Or if we have losses, it could 

        14          be the other way around:  Bonding needs could 

        15          grow, and cash could shrink.

        16              But I think in terms of managing to certain 

        17          accepted levels in the insurance industry and 

        18          regulatory environment, a 1 in a 100-year level 

        19          is kind of a target to shoot for and to 

        20          evaluate where we are today in light of that 

        21          target.  And then address, you know, what -- 

        22          what are our needs.

        23              You asked earlier about, you know, the 

        24          growth and subsequent season capacity.  And 

        25          this kind of illustrates how the Cat Fund will 

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          55
                                   June 26, 2000
         1          grow over the next five years, both initial 

         2          capacity -- capacity, which is level at 11.  

         3          But we're also seeing cash grow and bonding 

         4          shrink. 

         5              And then subsequent season capacity, and 

         6          you're seeing that grow over time.

         7              So that -- that concludes my comments.

         8              GOVERNOR BUSH:  Thank you very much.

         9              MR. HERNDON:  The emergency meeting of the 

        10          Advisory Council that I mentioned at the outset 

        11          is scheduled in the next several days. 

        12              And at that point, we hope to have their 

        13          recommendation, along with ours.  Because, 

        14          frankly, at this point, the staff of the SBA is 

        15          not making a recommendation to you at this 

        16          stage of the game.  It is primarily a product 

        17          that we think worth examining.  But it stands 

        18          recommendation at this point.

        19              So, Governor, with your forbearance, we 

        20          would encourage you to defer this item until 

        21          the next meeting.

        22              GOVERNOR BUSH:  All right.  Do we need a 

        23          motion on that? 

        24              COMPTROLLER MILLIGAN:  Well, I understood 

        25          this --

                        ACCURATE STENOTYPE REPORTERS, INC.

                           STATE BOARD OF ADMINISTRATION          56
                                   June 26, 2000
         1              MR. HERNDON:  I think --

         2              COMPTROLLER MILLIGAN:  -- was an 

         3          information brief.

         4              MR. HERNDON:  This briefing was.  But the 

         5          item was originally scheduled for your 

         6          consideration.

         7              COMPTROLLER MILLIGAN:  Well, I --

         8              MR. HERNDON:  I don't know that --

         9              COMPTROLLER MILLIGAN:  -- I --

        10              MR. HERNDON:  -- you need -- 

        11              COMPTROLLER MILLIGAN:  -- certainly move 

        12          deferral of the item to the -- I think 11 July, 

        13          is it? 

        14              MR. HERNDON:  That's correct.

        15              GOVERNOR BUSH:  Is there a second? 

        16              TREASURER NELSON:  Second.

        17              GOVERNOR BUSH:  Moved and seconded.

        18              Without objection, it's approved.

        19              MR. HERNDON:  That completes the agenda.

        20              GOVERNOR BUSH:  For deferral.

        21              MR. HERNDON:  Thank you. 

        22              (The State Board of Administration Agenda 

        23          was concluded.)

        24                              *   *   *


                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              57
                                   June 26, 2000
         1              GOVERNOR BUSH:  Department of Revenue.

         2              COMMISSIONER GALLAGHER:  Motion on the 

         3          minutes.

         4              GOVERNOR BUSH:  Moved and seconded.

         5              Without objection, it's approved.

         6              Item 2.

         7              DR. ZINGALE:  Only one item on the agenda 

         8          today.

         9              Item 2 deals with the Department's contract 

        10          auditing program.  It's been with us for about 

        11          six years, about 12 to 15 companies that have 

        12          cost about 2 million dollars.  It's part of our 

        13          attempt to privatize some of the audit 

        14          functions, expand our coverage.

        15              This item recommends approval, and requests 

        16          authority to file with the Secretary of State, 

        17          amendments to Chapter 12-25 of the Florida 

        18          Administrative Code relating to the contract 

        19          auditing program.  These are basically 

        20          clarification amendments.

        21              COMMISSIONER GALLAGHER:  Motion on 2.

        22              GOVERNOR BUSH:  Is there a second? 

        23              ATTORNEY GENERAL BUTTERWORTH:  Second.

        24              COMPTROLLER MILLIGAN:  Second.

        25              GOVERNOR BUSH:  Moved and seconded.

                        ACCURATE STENOTYPE REPORTERS, INC.

                               DEPARTMENT OF REVENUE              58
                                   June 26, 2000
         1              Without objection, it's approved.

         2              Do you have a -- any minority -- certified 

         3          minority --

         4              DR. ZINGALE:  I think we do.

         5              GOVERNOR BUSH:  -- auditing firms? 

         6              DR. ZINGALE:  I think we do.  But I will 

         7          check on that for you.

         8              GOVERNOR BUSH:  I heard a yes?

         9              DR. ZINGALE:  We definitely have a yes.

        10              GOVERNOR BUSH:  Okay. 

        11              DR. ZINGALE:  Thank you.

        12              GOVERNOR BUSH:  Thank you, Larry -- Jim, 

        13          I mean. 

        14              (The Department of Revenue Agenda was 

        15          concluded.)

        16                              *   *   *










                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            59
                                   June 26, 2000
         1              GOVERNOR BUSH:  Administration Commission.

         2              COMMISSIONER GALLAGHER:  Motion on the 

         3          minutes.

         4              COMMISSIONER CRAWFORD:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              Item 2.

         8              MS. SARTIN:  Approval of a transfer of 

         9          general revenue appropriation for Agency for 

        10          Health Care Administration.

        11              COMMISSIONER GALLAGHER:  Motion on 2.

        12              GOVERNOR BUSH:  Moved and seconded.

        13              Without objection, it's approved.

        14              MS. SARTIN:  Item 3 is approval of a 

        15          transfer of general revenue appropriation for 

        16          Department of Corrections.

        17              COMMISSIONER GALLAGHER:  Motion on 3.

        18              ATTORNEY GENERAL BUTTERWORTH:  Second.

        19              GOVERNOR BUSH:  Moved and seconded.

        20              Without objection, it's approved.

        21              MS. SARTIN:  Item 4 is approval of a 

        22          transfer of general revenue appropriation for 

        23          the Department of Education, 

        24          Community Colleges.

        25              COMMISSIONER GALLAGHER:  Motion on 4.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            60
                                   June 26, 2000
         1              ATTORNEY GENERAL BUTTERWORTH:  Second.

         2              GOVERNOR BUSH:  Moved and seconded.

         3              Without objection, it's approved.

         4              MS. SARTIN:  Item 5, approval of a transfer 

         5          of general revenue appropriation for Department 

         6          of Legal Affairs.

         7              COMMISSIONER GALLAGHER:  Motion on 5.

         8              ATTORNEY GENERAL BUTTERWORTH:  Second.

         9              GOVERNOR BUSH:  Moved and seconded.

        10              Without objection, it's approved.

        11              MS. SARTIN:  Item 6 is approval of a 

        12          transfer of fixed capital outlay appropriations 

        13          for the Department of Military Affairs.

        14              COMMISSIONER GALLAGHER:  Motion on 6.

        15              ATTORNEY GENERAL BUTTERWORTH:  Second.

        16              GOVERNOR BUSH:  Moved and seconded.

        17              Without objection, it's approved.

        18              MS. SARTIN:  Item 7 is approval of a 

        19          transfer of general revenue appropriation for 

        20          the Parole Commission.

        21              COMMISSIONER GALLAGHER:  Motion on 7.

        22              ATTORNEY GENERAL BUTTERWORTH:  Second.

        23              GOVERNOR BUSH:  Moved and seconded.

        24              Without objection, it's approved.

        25              MS. SARTIN:  Item 8, approval of a transfer 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            61
                                   June 26, 2000
         1          of general revenue appropriation for the 

         2          Department of State.

         3              COMMISSIONER GALLAGHER:  Motion on 8.

         4              ATTORNEY GENERAL BUTTERWORTH:  Second.

         5              COMMISSIONER CRAWFORD:  Second.

         6              GOVERNOR BUSH:  Moved and seconded.

         7              Without objection, it's approved.

         8              MS. SARTIN:  Item 9, approval of a gen-- 

         9          transfer of general revenue appropriation for 

        10          the Agency for Health Care Administration.

        11              COMMISSIONER GALLAGHER:  Motion.

        12              GOVERNOR BUSH:  Is there a second? 

        13              COMMISSIONER CRAWFORD:  Second.

        14              GOVERNOR BUSH:  Moved and seconded.

        15              Without objection, it's approved.

        16              MS. SARTIN:  Item 10 is approval of a 

        17          transfer of general revenue appropriation for a 

        18          reorganization for the Executive Office of the 

        19          Governor and the Agency of Work Force 

        20          Innovation.

        21              COMMISSIONER GALLAGHER:  Motion on 10.

        22              COMMISSIONER CRAWFORD:  Second.

        23              GOVERNOR BUSH:  Moved and seconded.

        24              Without objection, it's approved.

        25              MS. SARTIN:  Items 11 through 15 are 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            62
                                   June 26, 2000
         1          transfers of general revenue appropriations for 

         2          the Department of Children and Families.

         3              COMMISSIONER GALLAGHER:  Motion, 11.

         4              SECRETARY HARRIS:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              MS. SARTIN:  Item 16 is approval of a 

         8          transfer of general revenue appropriation for 

         9          the Departments of Education and Labor and 

        10          Employment Security.

        11              COMMISSIONER GALLAGHER:  Did you -- what 

        12          happened to 12? 

        13              MS. SARTIN:  I --

        14              GOVERNOR BUSH:  All those were together.

        15              COMMISSIONER GALLAGHER:  Oh, 12 -- okay.

        16              MS. SARTIN:  I was doing 11, 12, 13, and --

        17              COMMISSIONER GALLAGHER:  Got you.

        18              MS. SARTIN:  -- 14 as a block.

        19              Okay.

        20              GOVERNOR BUSH:  And 15.

        21              COMMISSIONER GALLAGHER:  Motion on 16.

        22              SECRETARY HARRIS:  Second.

        23              GOVERNOR BUSH:  Moved and seconded.

        24              Without objection, it's approved.

        25              MS. SARTIN:  Okay.  Item 17, approval of 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            63
                                   June 26, 2000
         1          transfer of general revenue appropriation for 

         2          Department of Health.

         3              COMMISSIONER GALLAGHER:  Motion.

         4              SECRETARY HARRIS:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              MS. SARTIN:  Items 18, 19, and 20 are 

         8          approval of transfer of general revenue 

         9          appropriations for the Department of 

        10          Juvenile Justice.

        11              COMMISSIONER GALLAGHER:  Motion, 18, 19, 

        12          20.

        13              ATTORNEY GENERAL BUTTERWORTH:  Second.

        14              GOVERNOR BUSH:  Moved and seconded.

        15              Without objection, it's approved.

        16              MS. SARTIN:  Item 21 is approval of a 

        17          transfer of general revenue appropriation for 

        18          Departments of Labor and Employment Security 

        19          and Management Services.

        20              COMMISSIONER GALLAGHER:  Motion.

        21              COMMISSIONER CRAWFORD:  Second.

        22              SECRETARY HARRIS:  Second.

        23              ATTORNEY GENERAL BUTTERWORTH:  Second.

        24              GOVERNOR BUSH:  Moved and seconded.

        25              Without objection, it's approved.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            64
                                   June 26, 2000
         1              MS. SARTIN:  Item 22 is approval of a 

         2          transfer of general revenue appropriation for 

         3          the Department of Management Services.

         4              COMMISSIONER GALLAGHER:  Motion.

         5              SECRETARY HARRIS:  Second.

         6              COMMISSIONER CRAWFORD:  Second.

         7              ATTORNEY GENERAL BUTTERWORTH:  Second.

         8              GOVERNOR BUSH:  Moved and seconded.

         9              Without objection, it's approved.

        10              MS. SARTIN:  Item 23 is approval to 

        11          establish seven positions in the Department of 

        12          Military Affairs.

        13              COMMISSIONER GALLAGHER:  Motion.

        14              SECRETARY HARRIS:  Second.

        15              GOVERNOR BUSH:  Moved and seconded.

        16              Without objection, it's approved.

        17              MS. SARTIN:  Item 24 is approval of a 

        18          transfer of general revenue appropriations for 

        19          the Departments of State and Education, the 

        20          State University System.

        21              COMMISSIONER GALLAGHER:  Motion on 24.

        22              ATTORNEY GENERAL BUTTERWORTH:  Second.

        23              SECRETARY HARRIS:  Second.

        24              GOVERNOR BUSH:  Moved and seconded.

        25              Without objection, it's approved.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            65
                                   June 26, 2000
         1              MS. SARTIN:  Item 25 is approval for the 

         2          Office of the Comptroller to make temporary 

         3          transfers from trust funds in the 

         4          State Treasury to the general revenue fund.

         5              COMMISSIONER GALLAGHER:  Motion on 25.

         6              ATTORNEY GENERAL BUTTERWORTH:  Second.

         7              GOVERNOR BUSH:  Moved and seconded.

         8              Without objection, it's approved.

         9              MS. SARTIN:  Item 26 is approval for the 

        10          Office of the Comptroller to make temporary 

        11          transfers from trust funds in the 

        12          State Treasury to the Tobacco Settlement 

        13          Clearing Trust Fund.

        14              COMMISSIONER GALLAGHER:  Motion on 26.

        15              ATTORNEY GENERAL BUTTERWORTH:  Second.

        16              GOVERNOR BUSH:  Moved and seconded.

        17              Without objection, it's approved.

        18              MS. SARTIN:  Item 27 is approval for the 

        19          Department of Revenue to make temporary 

        20          transfers from trust funds in the 

        21          State Treasury to the Revenue Sharing Trust 

        22          Fund.

        23              COMMISSIONER GALLAGHER:  Motion on 27.

        24              ATTORNEY GENERAL BUTTERWORTH:  Second.

        25              SECRETARY HARRIS:  Second.

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            66
                                   June 26, 2000
         1              GOVERNOR BUSH:  Moved and seconded.

         2              Without objection, it's approved.

         3              MS. SARTIN:  That's the end of the budget 

         4          actions.  And this is the last time we'll be 

         5          required to bring these type transfers to the 

         6          Administration Commission. 

         7              The Legislature created a new Legislative 

         8          Budget Commission which takes effect July 1.  

         9          After that time, they will approve budget 

        10          transfers, and the Governor will approve other 

        11          actions.

        12              Item 28 -- 

        13              COMPTROLLER MILLIGAN:  I certainly will 

        14          miss all of that, Governor. 

        15              I -- I have to tell you, the one thing I -- 

        16          I really will miss is the -- the hurried 

        17          transfer of money at the end of the fiscal 

        18          year.  I wish there were something we could do 

        19          about that.

        20              MS. SARTIN:  Many of these are transfers 

        21          for next fiscal year.  But --

        22              COMPTROLLER MILLIGAN:  The first eight --

        23              MS. SARTIN:  -- some of --

        24              COMPTROLLER MILLIGAN:  -- were not.

        25              MS. SARTIN:  That's correct.  You're right 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            67
                                   June 26, 2000
         1          about that.

         2              COMPTROLLER MILLIGAN:  Thank you.

         3              MS. SARTIN:  Item 28 is approval of -- for 

         4          Department of Management Services proposed rule 

         5          revisions on recruitment and selection.

         6              COMMISSIONER GALLAGHER:  Motion, 2--

         7              TREASURER NELSON:  Governor, I have a 

         8          question --

         9              GOVERNOR BUSH:  Okay. 

        10              TREASURER NELSON:  -- on this.

        11              GOVERNOR BUSH:  Yes.

        12              TREASURER NELSON:  This is concerning 

        13          affirmative action, and there is a change in 

        14          the definition of affirmative action in this 

        15          rule. 

        16              And I'd like you to tell me what is the 

        17          effect of removing the existing affirmative 

        18          action language in the Rule 60K-3? 

        19              You're adding some different affirmative 

        20          action language in Rule 60K-4, but it seems 

        21          much less proactive and not as strong.

        22              Could you address that, please? 

        23              MS. SARTIN:  Yes.  I'll have someone from 

        24          DMS to address this.

        25              State your name. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            68
                                   June 26, 2000
         1              MS. WILLIAMS:  Okay.

         2              Patty Williams from the Department of 

         3          Management Services.

         4              There really isn't any impact in the change 

         5          of the definition.  The -- there is a whole 

         6          rule, 60L-21, that discusses affirmative action 

         7          in detail.  And -- and the definition of 

         8          affirmative action in that rule is much more in 

         9          detail. 

        10              In moving it from Chapter 3 -- we had it in 

        11          60K-3 -- we had a definition for it, but we 

        12          never actually used it in the text.  So, 

        13          of course, legal counsel told us we didn't need 

        14          to have it in there.

        15              So when we moved it to 60K-4, it only 

        16          refers to when we want to make an appointment 

        17          in a trainee status.  And there's certain 

        18          circumstances under which you can make 

        19          appointments in trainee status. 

        20              And one of those is to -- to meet your -- 

        21          your affirmative action plan.  Maybe you want 

        22          to get more diversity in your work force. 

        23              And so really the effect is not any 

        24          different.  We simplified the definition 

        25          because it's -- it just doesn't go into detail 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            69
                                   June 26, 2000
         1          in this particular rule, like it does in 

         2          60L-21. 

         3              But there was no real impact in changing 

         4          it.

         5              TREASURER NELSON:  All right.  Let me see 

         6          if I can say what you just said.

         7              MS. WILLIAMS:  Okay. 

         8              TREASURER NELSON:  And you tell me if I 

         9          understand you correctly. 

        10              That the Rule 60L-21, which you referred 

        11          to, which is not before us today --

        12              MS. WILLIAMS:  That's correct.

        13              TREASURER NELSON:  -- that that's the rule 

        14          that fully implements all of affirmative action 

        15          provisions in Chapter 110 of the statutes.

        16              MS. WILLIAMS:  In detail, yes, it does.  

        17          Yes. 

        18              TREASURER NELSON:  Is there any --

        19              MS. WILLIAMS:  I think that --

        20              TREASURER NELSON:  -- then the question is:  

        21          In what's before us today, is there any 

        22          weakening with regard to affirmative action in 

        23          what we will be adopting here today? 

        24              MS. WILLIAMS:  No, sir, not at all.

        25              TREASURER NELSON:  Okay. 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            70
                                   June 26, 2000
         1              GOVERNOR BUSH:  Is there a --

         2              COMMISSIONER GALLAGHER:  There's a motion.

         3              GOVERNOR BUSH:  Is there --

         4              COMMISSIONER CRAWFORD:  Second.

         5              GOVERNOR BUSH:  -- a second? 

         6              COMMISSIONER CRAWFORD:  Second.

         7              GOVERNOR BUSH:  Any other discussion?

         8              Moved and seconded.

         9              Without objection, it's approved.

        10              MS. SARTIN:  Item 29 is approval of a -- a 

        11          proposed rule revision for Department of 

        12          Management Services on appointment status 

        13          transfers and separations.

        14              COMMISSIONER GALLAGHER:  Motion on 29.

        15              COMMISSIONER CRAWFORD:  Second.

        16              GOVERNOR BUSH:  Moved and seconded.

        17              Without objection, it's approved.









                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1                    CERTIFICATE OF REPORTER




         5     STATE OF FLORIDA:

         6     COUNTY OF LEON:

         7              I, LAURIE L. GILBERT, do hereby certify that 

         8     the foregoing proceedings were taken before me at the 

         9     time and place therein designated; that my shorthand 

        10     notes were thereafter translated; and the foregoing 

        11     pages numbered 1 through 70 are a true and correct 

        12     record of the aforesaid proceedings.

        13              I FURTHER CERTIFY that I am not a relative, 

        14     employee, attorney or counsel of any of the parties, 

        15     nor relative or employee of such attorney or counsel, 

        16     or financially interested in the foregoing action.

        17              DATED THIS 7TH day of JULY, 2000. 


        20                   LAURIE L. GILBERT, RPR, CCR, CRR, RMR
                             100 Salem Court
        21                   Tallahassee, Florida 32301




                        ACCURATE STENOTYPE REPORTERS, INC.


                               T H E   C A B I N E T 
                          S T A T E   O F   F L O R I D A
                           STATE BOARD OF ADMINISTRATION
                               DEPARTMENT OF REVENUE
                             ADMINISTRATION COMMISSION
                              BOARD OF TRUSTEES OF THE
                           INTERNAL IMPROVEMENT TRUST FUND
                              STATE BOARD OF EDUCATION
                                     VOLUME II
                        The above agencies came to be heard before 
               THE FLORIDA CABINET, Honorable Governor Bush 
               presiding, in the Cabinet Meeting Room, LL-03, 
               The Capitol, Tallahassee, Florida, on Monday, 
               June 26, 2000, commencing at approximately 9:11 a.m. 
                                    Reported by:
                                 LAURIE L. GILBERT
                          Registered Professional Reporter
                              Certified Court Reporter
                            Certified Realtime Reporter
                             Registered Merit Reporter
                              Notary Public in and for
                           the State of Florida at Large
                         ACCURATE STENOTYPE REPORTERS, INC.
                                  100 SALEM COURT
                             TALLAHASSEE, FLORIDA 32301



                        Representing the Florida Cabinet: 
                        JEB BUSH
                        BOB CRAWFORD
                        Commissioner of Agriculture
                        BOB MILLIGAN
                        KATHERINE HARRIS
                        Secretary of State
                        BOB BUTTERWORTH
                        Attorney General
                        BILL NELSON
                        TOM GALLAGHER
                        Commissioner of Education
                                      *   *   *












                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
                                    I N D E X
               ITEM                  ACTION                PAGE
               (Presented by Sandra Sartin,
                  Policy Coordinator)
               30             Approved                     159
               TRUST FUND:
               (Presented by David B. Struhs,
                1             Approved                     161
                2             Approved                     161
                3             Approved                     162
                4             Approved                     162
                5             Approved                     162
                6             Approved                     163
                7             Approved                     163
                8             Approved                     164
                9             Approved                     164
               10             Approved                     166
               11             Withdrawn                    168
               12             Approved                     169
               (Presented by Wayne V. Pierson,
                   Deputy Commissioner)
                              FCAT Results Report          170
                1             Approved                     177
                2             Deferred                     177
                3             Deferred                     177
                4             Deferred                     178
                5             Approved                     178
                6 through 13  Withdrawn                    222
                        CERTIFICATE OF REPORTER            224
                                     *   *   *



                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            75
                                   June 26, 2000
         1                     P R O C E E D I N G S

         2              MS. SARTIN:  Item 30 is a budget appeal by 

         3          the Lee County Sheriff's Office.  I will now 

         4          turn it over to Brad Thomas, Policy Coordinator 

         5          for the Public Safety Unit in the Governor's 

         6          Office of Planning and Budgeting.

         7              MR. THOMAS:  Thank you, Governor and 

         8          Cabinet. 

         9              My name is Brad Thomas.  And this item 

        10          comes to you pursuant to Chapter 30.49 

        11          regarding the Sheriff of Lee County's appeal of 

        12          the 1999-2000 fiscal year budget allocation by 

        13          the Lee County Board of County Commissioners. 

        14              You have the panel recommendation from the 

        15          staff to your Aides.  That panel was comprised 

        16          of Ms. Sunny Phillips from the Comptroller's 

        17          Office, and Mr. Rodney Doss in the Attorney 

        18          General's Office. 

        19              The recommendation of that --

        20              (Treasurer Nelson exited the room.)

        21              MR. THOMAS:  -- before you is that the -- 

        22          this body direct an additional amount of 

        23          funding to the Sheriff that is in your memo of 

        24          $722,889.

        25              And unless there are specific questions 

                        ACCURATE STENOTYPE REPORTERS, INC.

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                                   June 26, 2000
         1          directed to that recommendation, the 

         2          appropriate procedure is for a 10-minute 

         3          presentation by both parties, with further 

         4          presentation to be determined by the Governor.

         5              And at this time then, I would turn over 

         6          the podium to a representative of the 

         7          Lee County Sheriff's Department, unless I might 

         8          answer some questions.

         9              At this time, Mr. Ken Sukhia will make a 

        10          presentation and share his time, if necessary.  

        11          And following him, Chairman John Albion of the 

        12          Lee County Board of County Commissioners will 

        13          make a presentation.

        14              Thank you.

        15              MR. SUKHIA:  Thank you, Brad.

        16              Thanks, Brad. 

        17              Governor and Cabinet members.  I -- I -- 

        18          because we are the moving party here, and have 

        19          moved to appeal, we would ask that we be given 

        20          an opportunity to reserve some time for 

        21          rebuttal following the presentation of the 

        22          County.

        23              We have with us, as you'll understand as I 

        24          begin -- as I present what the issue is, we 

        25          have here today also a representative -- a 

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                                   June 26, 2000
         1          general partner with the auditing firm of MGT, 

         2          a national auditing firm, which is involved in 

         3          this appeal, in the sense that we relied upon 

         4          that firm for a recommendation.

         5              And we ask that if the -- if the Cabinet 

         6          has any questions, or the Administration 

         7          Commission has any questions of the -- of that 

         8          auditor, that those be asked of the auditor.

         9              I have some handouts, and I'd like to ask 

        10          that they be handed out at this time.

        11              GOVERNOR BUSH:  Hence the term, handout.

        12              MS. SUKHIA:  Yes. 

        13              I actually coined that phrase some -- some 

        14          years back.  Ever since people have been using 

        15          it.

        16              COMMISSIONER GALLAGHER:  Probably invented 

        17          the Internet, too, right?

        18              GOVERNOR BUSH:  Now, now.

        19              MR. SUKHIA:  Governor, may I -- may I begin 

        20          by saying that I have been involved since I 

        21          started with the law firm of Fowler, White in 

        22          representing Sheriff McDougall. 

        23              And in 1993, I was here before the 

        24          Administration Commission, at which time we 

        25          were appealing our budget because our -- our 

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                                   June 26, 2000
         1          employees were receiving substantially less 

         2          than comparable law enforcement officials in 

         3          other areas.

         4              When we filed the appeal, we're -- we asked 

         5          for a certain amount, because there's a certain 

         6          amount left of the year.  The appeals are filed 

         7          in October. 

         8              By the time we get to the 

         9          Administration Commission, often we're closing 

        10          in on the end of the year.  And, therefore, the 

        11          amount that we requested at the initial part of 

        12          the appeal becomes less, because, for instance, 

        13          in that instance, we were adding some members 

        14          to the force, but they were not yet on. 

        15              So since we only had three months left of 

        16          the fiscal year, there was less that we were 

        17          requesting.  And, therefore, the amount which 

        18          the Administration Commission awarded us at 

        19          that time, which was $500,000, when, considered 

        20          over the period of the full year, and that we 

        21          only had a quarter of the year left, was really 

        22          an amount equal to 2 million dollars. 

        23              And then it, of course, adjusted our base 

        24          at the beginning of the next year.

        25              So it was a meaningful addition, which the 

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                                   June 26, 2000
         1          Commission presented and gave to us at that 

         2          time.

         3              Now, some years later, in 1998, and -- and 

         4          I think it's important that the Commission 

         5          understand the circumstance.  There -- it's -- 

         6          yes, it's certainly very political.  Certainly 

         7          there are -- there is somewhat of an 

         8          acrimonious spirit, I think, which had existed 

         9          between the Commission and the Sheriff.  And it 

        10          is not the Sheriff's desire to repeatedly knock 

        11          on the door here, if not necessary.

        12              The Sheriff, under Chapter 30.49, 

        13          Subsection (2), is required to submit what he 

        14          believes is a reasonable and necessary budget.  

        15          He's the only constitutional officer who must 

        16          swear under oath that that is reasonable and 

        17          necessary for the performance of his duties.

        18              After we presented the arguments to the 

        19          Commission last time, we filed an appeal to the 

        20          Second Circuit -- or Second District Court of 

        21          Appeal in Lakeland.  The appeal was pending, 

        22          the Court had been -- had set oral argument.  

        23          We were ready to argue it in about 10 days. 

        24              And I received a call from the internal 

        25          General Counsel with the Sheriff's Office 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            80
                                   June 26, 2000
         1          saying that the -- we -- we have reached an 

         2          understanding with the Commission to avoid the 

         3          frequent and repeated coming back to the -- to 

         4          the Administration Commission, though it is our 

         5          right, though we have that statutory right, and 

         6          I believe, obligation, does the Sheriff in 

         7          these circumstances. 

         8              We had an agreement, we had an 

         9          understanding.  And as part of that 

        10          understanding, we dismissed that appeal.  I 

        11          didn't want to do that.  I felt we had a very, 

        12          very solid basis for arguing it, inasmuch as 

        13          the -- an entirely wrong standard was utilized 

        14          by the Commission, and they set an arbitrary 

        15          cap on the increase for the Sheriff's Office, 

        16          which I believe could not be reasonable -- a 

        17          proper assessment of the reasonable and 

        18          necessary expenses for that office.

        19              We dismissed the appeal.  As part of 

        20          that -- that dismissal, both parties agreed -- 

        21          and if you'll look in the package we handed 

        22          out, the very last item -- both parties agreed 

        23          and submitted a joint request to the 

        24          Auditor General's Office for the State of 

        25          Florida to have an independent audit performed 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            81
                                   June 26, 2000
         1          in the Sheriff's Office. 

         2              And this independent audit was designed, 

         3          according to the RFP, to assess -- excuse me -- 

         4          that audit was designed -- the purpose of this 

         5          performance review is to determine whether the 

         6          Lee County Sheriff's Office is adequately 

         7          funded by the Board of County Commissioners  

         8          and is using its resources efficiently and 

         9          effectively.

        10              The Auditor General was involved in 

        11          directing and -- and preparing this RFP.

        12              Members of the MGT management -- or audit 

        13          group -- and, incidentally, the Sheriff had an 

        14          independent audit performed four years before  

        15          by Deloitte & Touche. 

        16              And he said to the Board, he said, look, 

        17          I've had an audit done.  They were in my 

        18          office. 

        19              And they said, no, we're not -- we're not 

        20          going to accept that audit, because you paid 

        21          for that office -- audit, and we know how that 

        22          works. 

        23              So, okay.  So we'll all agree on -- on 

        24          auditors.  Well, actually this was the 

        25          Sheriff's second choice for the auditor.  This 

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                             ADMINISTRATION COMMISSION            82
                                   June 26, 2000
         1          was the first choice for the County and for the 

         2          Auditor General. 

         3              It had to be -- it had to be, you know, 

         4          farmed out because the Auditor General didn't 

         5          have the resources to -- to do it.

         6              They said, we can't accept yours, you paid 

         7          for that.  The County paid for this one.  

         8          $300,000 they paid for this audit, $300,000; 

         9          15 auditors in the Sheriff's Office for 

        10          seven months.  Seven months going through all 

        11          types of documents, sending -- sending memos 

        12          back and forth, people flying in from other 

        13          states. 

        14              But basically seven months, 15 auditors, 

        15          on site, in the Sheriff's Office.

        16              And they -- and their purpose was to 

        17          determine whether the Lee County 

        18          Sheriff's Office was adequately funded by the 

        19          Board of County Commissioners.

        20              Now, this was -- now, certainly, no one, 

        21          and they will say, well, we didn't abdicate 

        22          our -- our responsibility to make an 

        23          independent assessment and so forth. 

        24              Well, of course, they didn't do that.  And 

        25          nor would we do that.  But there was an 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            83
                                   June 26, 2000
         1          understanding.  There was a -- that was the 

         2          whole purpose.  That was everything behind this 

         3          audit.  That's why they were sitting in the 

         4          office for seven months reviewing all of these 

         5          things. 

         6              And that was the -- the -- the purpose for 

         7          it, to make that assessment, so we wouldn't 

         8          have to keep coming back here.  Well, they were 

         9          there in the office.  And the Sheriff's budget, 

        10          proposed budget, was 62.7 million this year. 

        11              Now, let me say, I don't know how those 

        12          figures sound to you.  I've been hearing -- 

        13          you know, just sitting here this morning, 

        14          hearing about, well, I -- I -- we may need 

        15          another 3.1 million, that's just in case, 

        16          you know, we run into some problem down the 

        17          road. 

        18              And then someone else, you know, there'll 

        19          be -- and plus another 3 million on top of 

        20          that, you know, that you never know, we just -- 

        21          we just might need that. 

        22              Now, I -- I may not be properly reiterating 

        23          what -- what was said.  But something to that 

        24          effect. 

        25              And I can tell you that we're talking here 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            84
                                   June 26, 2000
         1          about the audit in the office making this very 

         2          determination.

         3              The auditors said, no.  They said, we -- we 

         4          believe that the Sheriff is entitled to, and 

         5          substantiate an amount of 59.9 million dollars. 

         6              But I want you to know, sirs, and -- and -- 

         7          and Secretary of State, I want you to know that 

         8          the County of Lee has two -- has twice the 

         9          number of -- of residents as does the County of 

        10          Collier.  Collier has a 72 million dollar 

        11          budget for their Sheriff.  Seventy-two million. 

        12              When the -- when your own staff did an 

        13          assessment of comparison between our county and 

        14          eight other counties -- maybe in -- I think it 

        15          was eight other counties, they determined that 

        16          Lee County was eight -- the Sheriff's Office 

        17          was 8.7 percent below comparable counties in 

        18          the amount.  That's roughly 5 million dollars 

        19          below. 

        20              Now, I would note that they did that on the 

        21          basis of 59.9 million.  We've run those 

        22          figures.  They did that on the basis of 

        23          59.9 million, not the amount which is -- which 

        24          comes before us -- before you today.  Not the 

        25          59.9, but based on a lower number.  I believe 

                        ACCURATE STENOTYPE REPORTERS, INC.

                             ADMINISTRATION COMMISSION            85
                                   June 26, 2000
         1          it was something like 57.-- --.6 or something 

         2          like that. 

         3              They did it on the bas-- not -- they did it 

         4          on the basis -- I'm sorry -- on the basis of 

         5          59.9.  If you take it on the basis of what we 

         6          have right now, we're 12.5 percent below.  

         7          That's something like 7 million dollars below. 

         8              So it is not a situation where, ah, this -- 

         9          this guy's got to have it, he's got to have it 

        10          pressed down and overflowing.  He's -- he's 

        11          coming to this Commission with a reasonable 

        12          number.

        13              Incidentally, we -- we had the County -- 

        14          the audit -- one of the things the audit did is 

        15          they assessed the increase in the County's 

        16          budget over this period of time.  And the 

        17          increase in the County's budget was something 

        18          like 22.5 percent over this same period, from 

        19          1993 to 1998.  And the increase in the 

        20          Sheriff's budget was 21 percent. 

        21              Now, that -- the -- and the increase is -- 

        22          and not only that, this is from the staff.  

        23          This is what the staff has said:  That --

        24              (Treasurer Nelson entered the room.)

        25              MR. SUKHIA:  -- that the budget approved by 

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                             ADMINISTRATION COMMISSION            86
                                   June 26, 2000
         1          the Board for the Sheriff for 1999-2000 

         2          represents a two-year increase of 15.2 percent.  

         3          Two-year funding for the County constitutional 

         4          departments, other than the Sheriff, increased 

         5          by 26.9 percent.  Fifteen versus 

         6          twenty-six point nine. 

         7              We concur that over the past two fiscal 

         8          years, the Sheriff has received an average 

         9          annual funding increase of 7.6 percent, while 

        10          other County constitutional departments have 

        11          averaged 13.5 percent increase.

        12              The Sheriff's budget per unincorporated 

        13          population is lower than all but one comparison 

        14          county, and 8.7 percent below the comparison 

        15          county average.

        16              So I -- I just say that so that -- that 

        17          this Board can understand that we're not -- 

        18          we're not knocking on the door because -- 

        19          because we're wanting more and beyond that 

        20          which we believe is necessary and reasonable 

        21          for the functioning of our office.

        22              Well, the Sheriff, when this proposal came 

        23          out --

        24              GOVERNOR BUSH:  Ken, are you going to do 

        25          all this in 10 minutes? 

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         1              MR. SUKHIA:  Governor, I -- I -- I'm going 

         2          to try my very best.  But I -- I don't --

         3              GOVERNOR BUSH:  I just wanted to --

         4              MR. SUKHIA:  Yes, sir.  I -- I know.  I -- 

         5          with the Court -- or with the --

         6              GOVERNOR BUSH:  No, I'm not a -- I'm not a 

         7          judge, I know that. 

         8              Go ahead.  I just want -- you know, we 

         9          don't --

        10              MR. SUKHIA:  I thank you.  Yes, sir, 

        11          Your Honor.

        12              I'll --

        13              GOVERNOR BUSH:  Because I know the Sheriff 

        14          wants to speak as well it looks like.  He's got 

        15          something in his hands.  So --

        16              MR. SUKHIA:  Sure.  And I don't want to -- 

        17          I don't want him to -- to talk.  I'll --

        18              GOVERNOR BUSH:  Oh.

        19              MR. SUKHIA:  No, I'm just kidding.  I'm 

        20          just kidding. 

        21              I'm only joking.

        22              What I -- let me -- let me say though that 

        23          on the -- when -- as soon as the recommendation 

        24          came out from the -- from this auditor, the 

        25          Sheriff reduced his budget request to 

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         1          59.9 million as soon as it happened.  And -- 

         2          and being an honorable, and following their 

         3          understanding.

         4              And I want to ask that one -- there are two 

         5          things that we're appealing from the staff 

         6          recommendation.  The staff said, listen, it was 

         7          inappropriate -- right now in the operation 

         8          budget -- okay, the other stuff is almost -- 

         9          was almost set, because eighty plus percent of 

        10          our budget is -- is staff and personnel. 

        11              And they -- and we have the same increase 

        12          that the County officials have, and that's, 

        13          like, seven point something percent.  So all of 

        14          that goes -- that major chunk of whatever the 

        15          normal increase is is the cop's grant which has 

        16          to be funded.  Otherwise, it's a loss of some 

        17          3 million dollars.  So it must be funded.  

        18          Those type of things. 

        19              This is operating -- is really where the -- 

        20          this is the meat of the thing.  Well, the 

        21          operating budget this year was reduced -- the 

        22          operating budget was reduced by the County 

        23          1.4 million dollars from last year's -- from 

        24          1988-1999 (sic), reduced. 

        25              And the -- and the staff said there was no 

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         1          basis for that reduction.  In their -- in their 

         2          recommendation, they said, we find that there's 

         3          no basis for that reduction, and the Sheriff 

         4          has -- has given adequate information that 

         5          there should be no reduction.  Therefore, it 

         6          should be restored to last year's level.

         7              There -- our first argument -- or our first 

         8          point on -- on this appeal to you is that the 

         9          staff I think did a very fine job and -- but 

        10          they had a -- a limited amount of time.  It's 

        11          not as though they're -- they're -- they're in 

        12          the office for seven months, 15 auditors from 

        13          an independent auditing company. 

        14              And they said, well -- they came up with a 

        15          different figure for the difference in order to 

        16          restore our operating budget. 

        17              But the County, in a letter, which is the 

        18          first letter in front of you there -- in a 

        19          letter requested by Chris Snow -- or submitted 

        20          to Chris Snow, by -- by the County manager, he 

        21          said, what is the difference between our 

        22          operating budget -- their operating budget last 

        23          year and this year. 

        24              And they said it's -- the difference is 

        25          4 -- 1.44 million less.  And it's highlighted 

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         1          there in that letter.  It's 1.44 million less. 

         2              Now, during our appeal, because of the 

         3          emergency situation, and we filed, as we could 

         4          under the statute, with the County Commission 

         5          saying we have an emergency, we can't feed 

         6          our -- our inmates, they gave us 5.5 million 

         7          more.

         8              Okay?  

         9              That's the difference.  It's eight -- 

        10          eight -- if you subtract five hundred -- 5.4 -- 

        11          or not 5.5 million -- they gave us 550,000 

        12          more.  Five hundred and fifty thousand more.  

        13          In other words, we had a 1.4 less, and they 

        14          gave us 550,000. 

        15              So if you subtract that, it's 890,000.  

        16          That is the difference in -- in order to 

        17          restore our operating budget. 

        18              The panel -- or the committee that we 

        19          appeared before, came up with five hundred and 

        20          eighty. 

        21              This is simply to restore us to last year's 

        22          budget.  I mean, how many people come before 

        23          the Commission asking for a zero increase?  

        24          This is what we're asking for.  It's just 

        25          simply to restore us. 

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         1              This is not even to mention the additional 

         2          amount that the audit recommended, which would 

         3          have been another 1.9 million.  This is just to 

         4          restore us. 

         5              And so we urge this Commission, if we 

         6          cannot have this amount, to simply restore our 

         7          budget to levels for 1988-1999 (sic), we will 

         8          be in a crisis situation.  Our money will run 

         9          out in operating, and we will not be able to do 

        10          those essential things which are necessary for 

        11          the -- under our operating budget.  It cannot 

        12          be done.

        13              So there is, indeed, an $890,000 shortfall.  

        14          The panel said it was five hundred and eighty.  

        15          Now, they added to that the reserves.  They 

        16          came up with seven hundred and eighty-eight. 

        17              The total amount is nine hundred -- it's -- 

        18          it's -- excuse me, three hundred and fifty-two 

        19          thousand, which is that difference between the 

        20          amount they recommended.

        21              But, sirs, I'm going to conclude, and I 

        22          would say this:  That there is -- the County, 

        23          when the Sheriff's budget was proposed of 

        24          62.7 million, the County is required to -- to 

        25          set aside a certain amount for that. 

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         1              Lo and behold, in this instance, they added 

         2          four-and-a-half million to that.  We don't know 

         3          why or what for or what's happening to that.  

         4          But they have 67 million dollars set aside -- 

         5          67 million dollars.  There is no issue of an 

         6          increase in taxes.  The taxpayers have already 

         7          paid it.  They have 50 million dollars surplus 

         8          in this county. 

         9              Their budget for operating this year 

        10          increased 26 million dollars.  Increased in 

        11          operating.  And that is 26 percent increase. 

        12              They're talking about a reduction in our 

        13          operating budget.  Their's increased 26 million 

        14          dollars.

        15              Right now we're looking at 58 million, 

        16          or -- thereabouts, for the Sheriff, right now, 

        17          for -- with what you have if you do nothing.  

        18          Fifty-eight million.  We're asking for 350,000 

        19          of that 67 million which they've set aside, 

        20          which -- which we don't know what they're going 

        21          to do with, but they've set aside 67 million.  

        22          We're at the end of our year.  We only have 

        23          three months left.  And we're asking for that 

        24          additional amount.

        25              We thank you.  And we would like to, if --

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         1              ATTORNEY GENERAL BUTTERWORTH:  If I can 

         2          just --

         3              MR. SUKHIA:  Yes, sir.

         4              ATTORNEY GENERAL BUTTERWORTH:  -- just one 

         5          question.

         6              The -- the panel, as you said, is 

         7          recommending an additional 723,000.

         8              MR. SUKHIA:  Yes.

         9              ATTORNEY GENERAL BUTTERWORTH:  How much do 

        10          you want? 

        11              MR. SUKHIA:  We -- we have asked in -- 

        12          beyond what the panel has recommended, we've 

        13          asked for 942,000.

        14              That is -- 

        15              ATTORNEY GENERAL BUTTERWORTH:  Over and 

        16          above?  So -- so you want nine hundred plus the 

        17          seven two two?

        18              MR. SUKHIA:  Yes, sir. 

        19              And that's -- and what that amounts to is 

        20          352,000, which was -- which was the difference 

        21          to bring us up to -- to restore us to the 

        22          1998-98 --99 level. 

        23              And also, remember I said that the audit -- 

        24          that the audit substantiated an appropriate 

        25          amount of 59.9 million for the Sheriff.  That 

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         1          would be an additional 1.9 million, something 

         2          to that effect, or 1.6 million.

         3              The Sheriff --

         4              ATTORNEY GENERAL BUTTERWORTH:  And you mean 

         5          three five two, because you're so much into 

         6          the -- but you only have, what, four more 

         7          months left in this particular --

         8              MR. SUKHIA:  Yes, sir.  That's right.

         9              ATTORNEY GENERAL BUTTERWORTH:  -- fiscal 

        10          year?

        11              MR. SUKHIA:  And -- but on the operating.

        12              But -- but we're asking -- this is 

        13          important, and I appreciate the question, 

        14          General. 

        15              I -- we're -- we're -- the audit -- in 

        16          addition -- obviously, in addition to just 

        17          restoring, they just used that as a base.  In 

        18          addition to restoring, the audience -- audit 

        19          substantiated an increase of 1.9 million in our 

        20          operating budget. 

        21              Which, of course, we're not even -- we're 

        22          talking about now being in a deficit.  They -- 

        23          they said we -- we -- they're entitled to 

        24          1.9 million.  We spent all this time, and 

        25          they're entitled to that. 

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         1              And so when the -- and -- because -- again, 

         2          because we're at the end of our fiscal year, of 

         3          that 1.9 million, the Sheriff needs only 

         4          600,000. 

         5              In other words, we are asking that there be 

         6          some -- there's some -- be some -- imagine 

         7          this.  Imagine if in your budgets, if you had 

         8          had -- had -- I don't know who you deal with, 

         9          but if you had been wrangling or -- or having 

        10          issues with the people who were granting you 

        11          your budgets, and -- and everybody said, well, 

        12          look, why don't we do this --

        13              And I know this never happens up here.  

        14          I -- you know, I -- I know this may come as a 

        15          shock to you -- but sometimes there's wrangling 

        16          over these budgets. 

        17              But -- but if you all agreed and said, 

        18          listen, well, why don't we do this:  Why don't 

        19          we get an independent auditor in here, and 

        20          we'll pay for it.  And -- and we'll all agree 

        21          to this independent audit.  And we'll see what 

        22          happens after that audit is -- is entered. 

        23              And -- and, no, no one -- no one 

        24          necessarily says, okay, we're absolutely, 

        25          constitutionally going to be bound by it. 

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         1              But the Sheriff said at a hearing -- they 

         2          said to the Sheriff, well, if it's below what 

         3          you request, you're going to have to ratchet 

         4          down your request. 

         5              And --

         6              ATTORNEY GENERAL BUTTERWORTH:  Okay.  

         7          Let --

         8              MR. SUKHIA:  Yes.

         9              ATTORNEY GENERAL BUTTERWORTH:  -- me ask 

        10          another question.  I -- I just want to keep 

        11          this thing simple --

        12              MR. SUKHIA:  Yes, sir.

        13              ATTORNEY GENERAL BUTTERWORTH:  -- and I 

        14          appreciate that.  I don't have any handouts to 

        15          give you.

        16              The -- the amount that the -- that the 

        17          panel recommended as seven twenty-three --

        18              MR. SUKHIA:  Yes.

        19              ATTORNEY GENERAL BUTTERWORTH:  -- is that 

        20          really 2 million dollars, or is that really 

        21          seven twenty-three?

        22              MR. SUKHIA:  No.  The --

        23              ATTORNEY GENERAL BUTTERWORTH:  The 

        24          seven twenty-three, if you're talking about 

        25          your same one quarter -- or one-third would -- 

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         1          would, in essence, be almost like a 2.3 million 

         2          dollar increase.

         3              MR. SUKHIA:  Well, you know, our -- our 

         4          budget -- our actual request under the -- under 

         5          the appeal was I think 7 or 8 -- 8 million, 

         6          something to that effect, in order to restore 

         7          because of how -- how much they had reduced us. 

         8              So I don't know, that may work out that 

         9          way, I'm not sure. 

        10              But I -- but -- but keep in mind that our 

        11          original request, had this been decided -- I 

        12          think under the statute, it says within 30 days 

        13          there's to be a decision. 

        14              And -- and -- and it was, like, four or 

        15          five months later that -- that the -- the panel 

        16          met, and that we --

        17              ATTORNEY GENERAL BUTTERWORTH:  Maybe the 

        18          Sheriff --

        19              MR. SUKHIA:  -- had a decision.

        20              ATTORNEY GENERAL BUTTERWORTH:  -- can 

        21          answer that question when he gets up then.  

        22          So -- 

        23              MR. SUKHIA:  And -- and I would -- I would 

        24          want to just make -- note one other thing. 

        25              And that is it if -- when the audit -- when 

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         1          I was saying that -- that when the Sheriff 

         2          asked them, when they talked -- agreed, the 

         3          County Commissioners said, Sheriff, now, you're 

         4          going to have your -- ratchet yours down. 

         5              And he said, well, you know, yeah, by the 

         6          same token, if it's above --

         7              Oh, yeah, we'll -- we'll go up on that. 

         8              So in a -- in an article that appears, 

         9          Commissioner Albion, who is the Chairman of the 

        10          Commission, who argued before -- I don't know 

        11          if he'll be here today -- but he argued before 

        12          the Cabinet folks -- he said, it's all going to 

        13          come down to the audit, he said. 

        14              If the audit says to give him what he asks 

        15          for, and we don't and he appeals, I'd expect 

        16          the Governor and the Cabinet to give it to him.

        17              The same thing for if it says he doesn't 

        18          need it all.  Albion said that if the audit 

        19          says McDougall needs each and every one of the 

        20          66 -- that's what it started out at, 

        21          incidentally.  He went down to 62.7.  Then the 

        22          audit comes out at 59.9, he immediately reduces 

        23          it. 

        24              Can you imagine them arguing this to you if 

        25          the amount they recommended was fifty-four?  

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         1          Oh, you know, what they did?  They wrote 

         2          letters to the Auditor General complaining 

         3          about the audit.  This -- and -- and 

         4          challenging the credibility of MGT, and saying 

         5          that this is a -- that -- well, this is one of 

         6          the lousiest audits we've ever seen.  And -- 

         7          and their credit -- and -- and it's a 

         8          fundamentally flawed, and that --

         9              Now, can you just imagine them being up 

        10          here telling you that if they had to -- if they 

        11          had gone -- 

        12              GOVERNOR BUSH:  Well, maybe they'll -- 

        13          maybe there is someone here, and we'll get a 

        14          chance to hear it.

        15              MR. SUKHIA:  Thank you.

        16              GOVERNOR BUSH:  Sheriff.

        17              MR. McDOUGALL:  Thank you, Governor.

        18              GOVERNOR BUSH:  Good morning.

        19              MR. McDOUGALL:  Good morning.

        20              I'll be very brief, because I -- I know 

        21          we've taken up a lot of your time.

        22              But before I make my -- my announcements, 

        23          I'd like to thank you and -- and 

        24          General Milligan and -- and Mr. Nelson for the 

        25          fine work that you did in restoring for our 

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         1          people the 12 percent that they lost 27 years 

         2          ago in the retirement fund. 

         3              So on behalf of those men and women of our 

         4          agency, we thank you.  I haven't had a chance 

         5          to say that to you officially.  But we are very 

         6          pleased with that.

         7              This whole thing boils down to a -- it's a 

         8          fundamental issue of fairness.  And when I -- 

         9          when I challenged the decision last year before 

        10          the Second District Court of Appeals, they -- 

        11          they voted for certiorari, because they saw 

        12          this as a -- as a compelling interest in the 

        13          area of -- of -- of the separation of powers 

        14          issue. 

        15              Each and every one of us as constitutional 

        16          officers, we derive our just powers, as the 

        17          Constitution says, from the consent of the 

        18          governed.  And -- and the authority that I have 

        19          as the Sheriff, comparable to the authority 

        20          that you have as Governor or -- or Comptroller, 

        21          or Secretary of State or Secretary of 

        22          Agriculture or Commissioner -- whatever 

        23          statutory authority you have, you derive it 

        24          from the Constitution.  That's where I derive 

        25          my power from.

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         1              I am the one that is -- has the -- the 

         2          decision -- I have to make the decision of what  

         3          it is that will make my county safe.  Because 

         4          the people elected me.  I'm in my third term. 

         5              My last election, I had 70.2 percent of the 

         6          vote.  So I had an overwhelming support of the 

         7          people. 

         8              During this audit, the Gulf Coast 

         9          University, our new tenth university, did a -- 

        10          did a survey as part of the audit process.  And 

        11          85 percent of the people in my county that were 

        12          surveyed said, we want the level of service 

        13          that the Sheriff is providing now. 

        14              And 35 percent of that 85 people -- 

        15          85 percent said, we would even be willing to 

        16          pay more money, if necessary, to have these -- 

        17          to have these services provided.

        18              I am a service provider.  I don't make 

        19          widgets.  I am the person, when you hit 9-1-1, 

        20          you don't get the County Commissioner's office, 

        21          you get my office.  And we're scrambling. 

        22              We might have to put up helicopters, we 

        23          might have to get a SWAT team out there 

        24          rolling.  Whatever it takes.  

        25              We don't say to the 2.2 million tourists 

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         1          that are in Lee County, on top of the 400,000 

         2          permanent population, which gives us a daily 

         3          functional population of over 800,000 people, 

         4          when they hit 9-1-1, we don't say, are you a 

         5          permanent resident; are you a tourist; are you 

         6          a Republican; are you a Democrat; are you -- we 

         7          just say, what's the problem, we'll get 

         8          somebody to you right away.  And that -- that's 

         9          what I have to do.

        10              And in -- and in fairness to the County 

        11          Commissioners, I don't want you to think that 

        12          we're here to dump on the County -- because 

        13          we're not.  I'm not trying to -- to take the -- 

        14          the splinter out of -- out of their eye, if I 

        15          have a beam in my own eye.

        16              I'm just saying that sometimes you can't 

        17          see the forest for the trees, and I'm the first 

        18          one to admit that.

        19              And so when we were ready to go to the 

        20          Second DCA last year -- I mean, several years 

        21          ago, when the County came to me, and they said, 

        22          Sheriff, how can we resolve this?  I mean, we 

        23          have to work together.  We work for the same 

        24          people. 

        25              And I said, you know, you're absolutely 

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         1          right.  Let's come up with a -- with some kind 

         2          of a plan, let's come up with some kind of a -- 

         3          a resolution where once and for all, we will 

         4          know -- because they're always saying, what is 

         5          your core level of service? 

         6              You know, why do you have this many people 

         7          over in Bonita Springs; why do you have many -- 

         8          these many deputies in the outlining islands, 

         9          because we have a lot of barrier islands in -- 

        10          in Lee County?

        11              And -- and I said, because we need them.  

        12          I've been in this business for 30 years.  I -- 

        13          I -- I know law enforcement. 

        14              So we decided that we would go jointly to 

        15          the Auditor General of the State of Florida, 

        16          and once and for all do an audit. 

        17              Say, what should the Sheriff's base budget 

        18          be?  With a population of this size, and a -- 

        19          and a county that has 2 million tourists coming 

        20          in every year, what should it be? 

        21              And MGT, the auditing firm that did the 

        22          audit says, we believe that we can substantiate 

        23          59.9 million. 

        24              And I agreed that, okay, then I -- I will 

        25          go along with that as my base.  But the County, 

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         1          they attacked the audit.  Instead of saying, 

         2          well, you know, the -- two of the -- two of the 

         3          County Commissioners, by the way -- in fact, 

         4          one of the Commissioners wrote a letter and 

         5          said the Sheriff is right where he should be.  

         6          I believe what -- the audit is correct. 

         7              But for some reason, we have this stalemate 

         8          that has just -- it's almost like, well, if the 

         9          Sheriff wins, we lose.  And it shouldn't be 

        10          that.  It's not if I win, they lose; or if they 

        11          win, I lose. 

        12              If we don't give the people the services 

        13          that they want and that they have paid for, we 

        14          all lose.  They've paid for the services.  

        15          They've taken 4 million dollars of my budget 

        16          that the people have paid for, and they put it 

        17          aside, and they go -- they called it the 

        18          Taxpayers' Relief Fund. 

        19              But they told me, Sheriff, but if you need 

        20          this, if the audit supports this, we'll give 

        21          you that money.  They haven't done it, and 

        22          that's why we're here.

        23              ATTORNEY GENERAL BUTTERWORTH:  Can I ask -- 

        24              GOVERNOR BUSH:  Yes. 

        25              ATTORNEY GENERAL BUTTERWORTH:  -- a 

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         1          quick --

         2              GOVERNOR BUSH:  Question.

         3              ATTORNEY GENERAL BUTTERWORTH:  -- quick 

         4          question.

         5              Sheriff, let me just -- let me just try and 

         6          make this simple, because I -- I'm having a 

         7          hard time. 

         8              Your -- your original request was, like, 

         9          62.7 million.

        10              MR. McDOUGALL:  Yes.

        11              ATTORNEY GENERAL BUTTERWORTH:  The auditors 

        12          said you're entitled to -- 

        13              MR. McDOUGALL:  Next fiscal -- 

        14              ATTORNEY GENERAL BUTTERWORTH:  -- auditors 

        15          hired by the County say you're entitled to 

        16          59.9 percent.

        17              MR. McDOUGALL:  Yes.

        18              ATTORNEY GENERAL BUTTERWORTH:  Or 

        19          million dollars.

        20              MR. McDOUGALL:  Yes.

        21              ATTORNEY GENERAL BUTTERWORTH:  The County 

        22          gave you 57.6 million.

        23              MR. McDOUGALL:  Yes.

        24              ATTORNEY GENERAL BUTTERWORTH:  Okay.  

        25          The -- the panel is recommending approximately 

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         1          723,000.

         2              MR. McDOUGALL:  Yes.

         3              ATTORNEY GENERAL BUTTERWORTH:  Your 

         4          attorney just said you want an additional 

         5          302,000 over and above that.

         6              Seven hundred --

         7              MR. McDOUGALL:  Three hundred --

         8              ATTORNEY GENERAL BUTTERWORTH:  -- thousand.

         9              MR. McDOUGALL:  -- three hundred and 

        10          fifty-two thousand, yes.

        11              ATTORNEY GENERAL BUTTERWORTH:  Yes.

        12              So that's equivalent to one million and 

        13          seventy-five thousand.

        14              MR. McDOUGALL:  Yes.

        15              ATTORNEY GENERAL BUTTERWORTH:  If you add 

        16          the one million and seventy-five thousand to 

        17          the County's 57.6, that's approximately maybe 

        18          58.7.  You're still 1.2 million dollars below 

        19          what the --

        20              MR. McDOUGALL:  Yes.

        21              ATTORNEY GENERAL BUTTERWORTH:  -- auditor 

        22          has requested.

        23              MR. McDOUGALL:  Yes.

        24              ATTORNEY GENERAL BUTTERWORTH:  So you're 

        25          saying you're willing to accept today 

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         1          1.2 million dollars less than what the auditor 

         2          requested you -- requested, or at least 

         3          substantiated that you needed, at which it was 

         4          also 1.2 million dollars more than what the 

         5          County had -- had given you.

         6              MR. McDOUGALL:  Yes. 

         7              But there's -- there's -- additionally, 

         8          there is the -- to -- to kind of like split the 

         9          difference between what the auditors had agreed 

        10          back when they -- when they -- the audit was 

        11          finalized and where we are right now, eight -- 

        12          nine months into our budget, that we could 

        13          split that difference between the County. 

        14              So -- so it would be an additional 600,000.  

        15          And that would get us up -- because we have a 

        16          base budget going into next year that is a -- 

        17          this is what's critical to me when we're 

        18          starting off next year's budget, that we have a 

        19          base that -- that I can work from.  And 

        20          that's -- and what the auditors supported.

        21              ATTORNEY GENERAL BUTTERWORTH:  Well, the 

        22          Sheriffs, as you know, can move money around 

        23          more so than -- than even --

        24              MR. McDOUGALL:  Uh-hum.

        25              ATTORNEY GENERAL BUTTERWORTH:  -- we can up 

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         1          here in our departments can do it --

         2              MR. McDOUGALL:  Right.  Yes, sir.

         3              ATTORNEY GENERAL BUTTERWORTH:  -- you can 

         4          be -- your five categories and -- doesn't mean 

         5          anything.

         6              But the thing is, do you -- are you going 

         7          to be operating at a deficit at the end of the 

         8          year, if you do not get any -- any relief from 

         9          this Board? 

        10              MR. McDOUGALL:  Yes, I will be.

        11              ATTORNEY GENERAL BUTTERWORTH:  And if so, 

        12          approximately what will that deficit be?

        13              MR. McDOUGALL:  Yes.  And my -- I have 

        14          my -- my auditor here can -- I mean, my 

        15          auditor -- my -- my budget manager here, and he 

        16          can tell you exactly what that dollar figure  

        17          is.

        18              MR. SUKHIA:  And if I could -- if I 

        19          could -- I'm not the auditor fellow, but if I 

        20          could say that it's 952,000 above -- 952,000 

        21          above what the panel recommended. 

        22              And that is comprised of six -- of 352,000 

        23          to -- in order to restore, plus 600,000 of the 

        24          1.9 million which the -- which the auditors 

        25          said we were entitled to. 

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         1              Because we're so late in the year, we're 

         2          not asking for all of that 1.9 million, only 

         3          600,000 of it. 

         4              And it's not just a number picked out of 

         5          the hat for compromise purposes.  That was an 

         6          amount, looking at what we had left of the 

         7          year, and how much of that would be necessary 

         8          in order to keep the helicopter going, to keep 

         9          the gas in --

        10              ATTORNEY GENERAL BUTTERWORTH:  Let me 

        11          ask --

        12              MR. SUKHIA:  -- the cars.

        13              ATTORNEY GENERAL BUTTERWORTH:  -- you're 

        14          now confusing me again. 

        15              Because all I want to know is -- is the 

        16          one million and seventy-five thousand dollars 

        17          what you're asking for today? 

        18              MR. SUKHIA:  No -- no, sir.  It's --

        19              ATTORNEY GENERAL BUTTERWORTH:  I'm sorry.  

        20          I --

        21              MR. SUKHIA:  -- if -- 

        22              ATTORNEY GENERAL BUTTERWORTH:  -- I 

        23          misunderstood you. 

        24              MR. SUKHIA:  -- you have to add 600,000 to 

        25          that.  The total amount is one point six -- 

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         1          one point six seven five seven twenty-four.

         2              GOVERNOR BUSH:  And what does that 

         3          annualize out at for the next year? 

         4              MR. SUKHIA:  That -- what that does is 

         5          it -- it close to restores our base to what the 

         6          auditors had -- had said it should be.  In 

         7          other words, the fifty -- the fifty-nine point 

         8          nine.

         9              GOVERNOR BUSH:  But what -- that doesn't 

        10          answer the question I don't think.

        11              MR. SUKHIA:  Let the audit fellow --

        12              MR. BERGQUIST:  That would annualize out to 

        13          about 1.4 million, the additional 600,000.  If 

        14          we -- if the average daily population --

        15              Bill Bergquist for the record.

        16              If the average daily population in the jail 

        17          were to increase what we originally had 

        18          budgeted, it would be 1.4 million dollars.

        19              GOVERNOR BUSH:  So the -- so the million -- 

        20          the million nine is it, that you're requesting, 

        21          annualizes out at -- the seven fifty--

        22              MR. BERGQUIST:  The additional -- the 

        23          additional 600,000 we're requesting would come 

        24          out to an additional 1.4 million, if our 

        25          operation --

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         1              GOVERNOR BUSH:  And the other is not 

         2          annualized, is it --

         3              MR. BERGQUIST:  No, sir.

         4              GOVERNOR BUSH:  -- the three fifty-two --

         5              MR. BERGQUIST:  That's -- that's just to 

         6          bring us back to what --

         7              GOVERNOR BUSH:  Okay.

         8              MR. BERGQUIST:  -- we were last year.

         9              ATTORNEY GENERAL BUTTERWORTH:  I'm 

        10          concerned about the same thing, Governor, that 

        11          if we do it the wrong way, we end up --

        12              GOVERNOR BUSH:  Creating -- coming back 

        13          next year?

        14              ATTORNEY GENERAL BUTTERWORTH:  Yeah.

        15              Either coming back next year, or -- or put 

        16          him as a base budget with -- which is much more 

        17          than what he wants.  I don't think he wants to 

        18          do that.  So I don't -- I don't think we're --

        19              GOVERNOR BUSH:  Is there -- is there 

        20          anybody here from Lee County? 

        21              MR. ALBION:  Good morning, Governor. 

        22              Good morning to the Cabinet. 

        23              First, I'm John Albion.  I'm Chairman of 

        24          the Lee County Board of County Commissioners.  

        25          I feel perhaps I'm at a dis-- bit of a 

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         1          disadvantage.  I'm not an attorney, as they had 

         2          represented up here, but I'll certainly do my 

         3          best. 

         4              And I did bring a watch just in case, 

         5          because I know that, Governor, you're going to 

         6          have a busy day getting down to Cape Coral 

         7          tomorrow, and we're certainly looking forward 

         8          to your visit.

         9              So let me take a few moments and 

        10          introduce -- I hope that's not funny.

        11              No.  I'm kidding.

        12              Let me introduce the people that we have 

        13          here today.

        14              First we have Don Stilwell, who's our 

        15          County Manager.

        16              We also have Bruce Loucks, who's our 

        17          Assistant County Manager, our Former -- Former 

        18          Budget Director.

        19              Pete Winton, who's a member of our County 

        20          administration.  He's also formerly a CPA with 

        21          a Big 8 auditing firm. 

        22              Tom Wright, who is Assistant County 

        23          Attorney.  He's sitting towards the back.  

        24          And -- in case there are any legal questions, 

        25          we'll have him available.

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         1              And then Keith Arnold, who's our liaison to 

         2          Tallahassee.  And Keith is over here. 

         3              I guess we're kind of spread out around the 

         4          room. 

         5              So -- first let me start out by expressing 

         6          my apologies and our embarrassment.  This 

         7          doesn't belong here.  This issue belongs in 

         8          Lee County.  And I don't think there's anyone 

         9          in this room that would refute that.

        10              But it's unfortunate that this has gone 

        11          through the process now for the third time in 

        12          seven years.  And yet here we are again.

        13              This part of the process is supposed to be 

        14          an extraordinary measure, as we understand 

        15          State statutes.  To have this decided here for 

        16          the third time in seven years by the Governor 

        17          and Cabinet to -- essentially being forced to 

        18          set the budget, makes this chambers the place 

        19          where this budget will have been settled almost 

        20          as often as our own Commission chambers. 

        21              I don't understand how that's 

        22          extraordinary.  As a matter of fact, there are 

        23          no unique circumstances that I've heard about 

        24          that would indicate that this is extraordinary.

        25              So, therefore, we believe this hearing is 

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         1          really about public policy.  It's not about 

         2          numbers.  Should a local agency be regularly 

         3          allowed to circumvent the local budget 

         4          authority concerning the budget?  I would 

         5          expect -- expect us, and 66 other counties, 

         6          would like to know that answer.

         7              Also, how should a Governor and Cabinet, in 

         8          the arena of public policy making, handle a 

         9          local agency who has knowingly created a crisis 

        10          by intentionally spending at the amount 

        11          requested rather than at the amount allocated. 

        12              This agency has already admitted publicly 

        13          that they have been spending at the amount that 

        14          they had requested, not at the amount our Board 

        15          had allocated. 

        16              These actions we believe go beyond State 

        17          law which requires all public agencies in our 

        18          state, to my knowledge, to operate within the 

        19          funds allocated, not the funds requested.

        20              This agency has publicly acknowledged 

        21          spending at the amount requested, again, rather 

        22          than at the amount allocated.

        23              Here's the clincher -- and I will confess 

        24          this bothers me greatly -- if this agency as of 

        25          this Friday, July 1st, had spent at the 

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         1          level -- at the level that had been allocated 

         2          to date, the difference between this agency and 

         3          the Board of County Commissioners would be 

         4          zero.  Literally zero. 

         5              The closest this agency and our Commission 

         6          became -- or got in this disagreement was 

         7          2.2 million dollars.  That was how far the 

         8          Sheriff had come down from where he was.  And 

         9          we had come up from that 2.2 million, $550,000.  

        10          Simple math shows that's 1.65 million dollar  

        11          difference. 

        12              If you take three-quarters of 2.2 million 

        13          dollars, that's 1.65 million, the difference as 

        14          of Friday would be zero.

        15              So, therefore, we have a public policy call 

        16          situation here I believe that truly exists.  So 

        17          what about public safety?  Isn't that really 

        18          what Sheriff's budgets and so on are really 

        19          supposed to be about?

        20              Well, the recommendation from your 

        21          OMB Committee stated that, and I quote from the 

        22          report:  The data -- the data presented in the 

        23          appeal, in the staff analysis, and in the 

        24          presentations by the Sheriff and the Board at 

        25          the panel hearing, do not indicate that the 

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         1          level of funding is compromising public safety, 

         2          end quote.

         3              Further, on page 3, under conclusions, the 

         4          second sentence reads, and again I quote from 

         5          the report:  The external comparison indicated, 

         6          however, that the Sheriff was adequately funded 

         7          when compared to other Sheriff's departments, 

         8          end quote.  Your office, OMB, found that.

         9              So I don't understand why we're here.

        10              I also want to make a quick response to the 

        11          Collier County comparison.  The Collier County 

        12          Sheriff will tell you he's got twice the area 

        13          to cover, or better, in actual geographic 

        14          miles. 

        15              So, therefore, to compare by population 

        16          versus comparing to geographic miles -- I don't 

        17          know what the policy is, but I don't think it's 

        18          right that we be comparing apples to oranges 

        19          like that.  And that's why the Collier County 

        20          budget is higher, and why it's always been 

        21          presented as higher.

        22              Also, by the way, if you remove all the 

        23          municipality populations in Lee County, our 

        24          unincorporated population is very close to 

        25          Collier's unincorporated population.  So maybe 

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         1          there's something there, too.

         2              Let's talk a moment about solutions.  

         3          History, I believe, is on yours and our side.  

         4          In the 1993-94 disagreement, our Board of 

         5          County Commissioners had offered this Sheriff 

         6          $700,000 not to pursue an appeal, above what we 

         7          had offered in the budget process.

         8              This Governor and Cabinet gave $500,000.  

         9          I believe, Mr. Butterworth, you were the one 

        10          that made that recommendation.  And I thought 

        11          it was very justifiable.

        12              Two years ago, there was a unanimous denial 

        13          of the appeal.  Both times this Sheriff's 

        14          Department claimed that crime would 

        15          significantly increase, and they couldn't 

        16          protect our citizens. 

        17              So what was the result?  Crime went down 

        18          each year.  Our true appreciation and 

        19          congratulations first go to those who were 

        20          involved in those last two budget processes, 

        21          those earlier appeals, for backing the local 

        22          authority. 

        23              To the Cabinet members and the Governor 

        24          that were involved, also to your staffs, and 

        25          especially to the deputies and the staff 

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         1          members of the Sheriff's Department that got 

         2          the job done with the dollars that were 

         3          allocated because he didn't get the 700,000, he 

         4          got 500,000 the first time, he got zero the 

         5          second time. 

         6              And according to the survey and the audit 

         7          that they've touted, if you believe the survey, 

         8          it says that the citizens of Lee County are 

         9          satisfied with the level of service.

        10              So, therefore, it seems like we've done our 

        11          job.  That's why this is a local issue.

        12              For a good night's sleep, perhaps, if this 

        13          will help, let me perhaps remind some of you, 

        14          and make others aware, that to my recollection, 

        15          the County Commission has routinely made 

        16          mid-year adjustments in this budget, as needed 

        17          specifically for this agency. 

        18              Since the 1988-89 budget, this -- budget 

        19          year, this budget, the Sheriff's budget, has 

        20          literally better than tripled.  No other 

        21          general fund in Lee County has as much as 

        22          doubled. 

        23              So we've worked with this agency.  As a 

        24          matter of fact, I was the one that recommended 

        25          the $550,000 because of the timing of this 

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         1          process to what his needs were.

         2              We also had given an additional 3.1 million 

         3          from the time of what was agreed to in 

         4          September, to the point where we even offered 

         5          the 550,000. 

         6              So we've not been arbitrary or capricious, 

         7          we've not been negligent, we've not been 

         8          irresponsible or unfair, to either the 

         9          Sheriff's Department, or to the taxpayers, our 

        10          public, who we have to justify as the budget 

        11          authority these dollars.

        12              We are the ones they elected to make this 

        13          decision.  And I'm sorry that it's being pushed 

        14          on you, because you weren't elected to make 

        15          this decision.  You're just being forced into 

        16          it by unfortunately a Sheriff's agency that has 

        17          circumvented the process.

        18              Let me take a moment briefly and talk about 

        19          the audit, because I'm sure that's on some of 

        20          your minds.

        21              GOVERNOR BUSH:  Well, but since that quote 

        22          right behind you is kind of standing out, you 

        23          may want to explain that part, too.

        24              MR. ALBION:  So they're good 

        25          choreographers.  They have it directly behind 

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         1          me.

         2              Let me -- the quote had to do with the fact 

         3          that, as you heard, the Sheriff's request was 

         4          actually 65.5 million is what was written out 

         5          on that June 1st request. 

         6              Frankly, it was -- it was really 

         7          62.7 million, because there were a number of 

         8          grants that were included in there that hadn't 

         9          been included in the past.  That was one of the 

        10          things that actually did help from the audit 

        11          process, to get a clarification of that.

        12              The reason that quote was made was very 

        13          simple.  We could turn around and, frankly, 

        14          continue to help sell newspapers and have 

        15          another disagreement splashing all over the 

        16          pages for a period of time about 62.7 million 

        17          versus 50.7 million, and -- and that huge 

        18          increase. 

        19              Or, frankly, we could pooh-pooh it a little 

        20          bit and push it over to the audit, which is, 

        21          frankly, a lot easier approach, and I will 

        22          confess, it was the easier path. 

        23              And that's why -- and I made it possibly 

        24          stronger than I should have.  But I did it 

        25          because I saw the June 1st submittal come out 

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         1          late in the afternoon, I get a call from the -- 

         2          from reporters, and I've got a choice to make. 

         3              Why are we doing the audit if I don't go 

         4          that direction.  And on the other direction, do 

         5          I really want to be reading about this for four 

         6          or five months instead of getting to the bottom 

         7          line of the numbers, waiting for the audit to 

         8          come out, which didn't come out in a timely 

         9          way, might I add, which made our job even more 

        10          difficult.

        11              So why do we have a problem with the audit 

        12          would be a logical query.  The problem we have 

        13          is that the audit has resource allocations in 

        14          there we think well covered, we think there are 

        15          a lot of good recommendations in the audit. 

        16              The problem is, there aren't cost 

        17          allocations to those recommendations.  That 

        18          bothers us greatly.  We pushed about that.  So 

        19          they came up with an Executive Summary. 

        20              And in the Executive Summary is the only 

        21          place in the entire audit document that 

        22          indicates a reasonable level being 59.9 million 

        23          dollars. 

        24              Yet we were told when pushing about the 

        25          Executive Summary because it was inconsistent 

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         1          with the document, we were told that we should 

         2          just go by the document, because the 

         3          Executive Summary had to be thrown together 

         4          quickly to get it done to meet the time lines. 

         5              And that, therefore, we looked at it and 

         6          said the 59.9 million, how do you justify that?  

         7          It should have been in the document, you should 

         8          be able to see it and understand it, as you 

         9          would with any other audit.

        10              We paid the auditing firm under protest.  

        11          We finally, after being told on March 28th, 

        12          that all the documents were in Tallahassee 

        13          waiting for us, it took us better than 

        14          two months to get the documents from that point 

        15          in time.

        16              As a matter of fact, we just got them in 

        17          the last couple of weeks.  Yet they're all 

        18          there waiting for us.  So we've had concerns 

        19          about this.

        20              We should also point out, as far as the 

        21          audit goes, I challenged the auditor directly 

        22          in our chambers about whether there would be 

        23          any cost savings to our citizens, or whether 

        24          there would be any higher level of service.  

        25          And I think this is an important point. 

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         1              The auditor told us, there would not be a 

         2          cost savings, because some of the 

         3          recommendations would cost less, others would 

         4          cost more.  And there would be no higher level 

         5          of service. 

         6              How do I justify that to the taxpayers?  

         7          So, therefore, we want to get the backup 

         8          information and get to the bottom line of this 

         9          audit, because we don't feel it's complete, 

        10          because the cost allocations aren't there, and 

        11          that is our job.

        12              So if I may move to a close and maybe get 

        13          to questions, we think this is a question of 

        14          public policy. 

        15              Do you want, through this decision, to 

        16          invite all Florida counties to use this august 

        17          body as the end of the budget process?  All 

        18          67 counties? 

        19              Shouldn't an agency be rewarded for 

        20          spending at the amount requested, instead of 

        21          the amount allocated, for creating a crisis 

        22          knowingly? 

        23              History over the last seven years indicates 

        24          the local authority was not negligent, was not 

        25          irresponsible, was not unfair.  Shouldn't 

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         1          extraordinary measure be invoked, unless 

         2          specifically we can be shown to be so unfair, 

         3          because we feel this is an extraordinary 

         4          measure.  Local issues should remain local, 

         5          unless unique circumstances exist.  Such 

         6          circumstances do not exist here. 

         7              Again, my apologies for our having to be 

         8          here at all.  We shouldn't be.

         9              And let me add -- make one other point, 

        10          and -- and really to the Attorney General.  The 

        11          last time we were here, there was concerns 

        12          expressed, of course, about County reserves, 

        13          et cetera.  And I thought that that was a very 

        14          appropriate approach that was taken back then. 

        15              And we made the commitment that if he 

        16          needed the additional funding, to prove it, 

        17          that we would do so.  The Sheriff's already 

        18          said, we have money sitting aside if necessary.

        19              Our Board has always come to the plate and 

        20          done that with this Sheriff, as every year's 

        21          mid-year adjustments proves.

        22              So, therefore, I don't think this is an 

        23          issue in that regard.  I think it should remain 

        24          with the local authority as a public policy 

        25          making body, and we've not turned our back on 

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         1          this Sheriff.  Instead, we've turned around, 

         2          and I think that we've worked with him, and his 

         3          deputies, for a very positive result for our 

         4          citizens, and we ask you to stay with the local 

         5          authority.

         6              GOVERNOR BUSH:  Can you -- can -- go back 

         7          to the quote just one --

         8              MR. ALBION:  Absolutely.

         9              GOVERNOR BUSH:  -- moment.  I --

        10              Was there a -- was -- did the Commission 

        11          make a -- was there a sense that whatever the 

        12          recommendation was made by the auditing -- MGT, 

        13          I guess it was, that you would accept that?

        14              MR. ALBION:  Our feeling was is that we 

        15          thought it would clarify -- a), it would 

        16          clarify the issue; b), we did not, as the 

        17          Sheriff has appropriately stated, neither -- 

        18          neither side abdicated that decision to the 

        19          auditing firm.  We thought it would give us 

        20          that clear indication. 

        21              Without the cost allocation in there, we 

        22          believe the audit is not complete.  That's why 

        23          we paid it under protest.  Our people are going 

        24          to have to try to work with those backup 

        25          numbers.  And if we have to hire somebody else, 

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         1          we may just have to do that, so that we don't 

         2          keep coming back here.  It gets expensive and 

         3          time consuming, for you, as well as for us. 

         4              But we expected to get the cost 

         5          allocations.  What good is an audit for a 

         6          budget authority without it?

         7              GOVERNOR BUSH:  But you did get it in a 

         8          follow-up --

         9              MR. ALBION:  No.  All we got was the one 

        10          sentence saying the 59.9 million was a 

        11          reasonable range.  We don't have the -- if you 

        12          implement ninety of the hundred and forty-three 

        13          recommendations, to pick a number, to the 

        14          fullest degree, what does that mean?  We don't 

        15          know.  First of all. 

        16              Second of all, again, one question the 

        17          auditor stated to my questioning publicly, that 

        18          there will be no cost savings if you were to 

        19          implement all 143 recommendations properly and 

        20          fully, and there would be no higher level of 

        21          service realized by the citizens of Lee County.

        22              GOVERNOR BUSH:  You -- you don't think 

        23          you're backing out of an agreement that would 

        24          have kept this from coming here.

        25              MR. ALBION:  No.  The biggest problem is, 

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         1          we don't think the audit's complete. 

         2              But, no, I don't think we're backing out of 

         3          a deal with it either.  And that's why I think 

         4          your OMB staff I think also --

         5              GOVERNOR BUSH:  What's the OMB staff?

         6              MR. ALBION:  I'm sorry.  I -- maybe I'm 

         7          using the wrong term.  Brad Thomas and --

         8              MR. BOSCAN:  OPB.

         9              GOVERNOR BUSH:  OPB.  Okay.

        10              MR. ALBION:  It may also, if it helps you, 

        11          as far as some of our consternation -- and I've 

        12          got to confess, if you all figured out those 

        13          numbers before, you're far better than me.  

        14          I -- numbers were flying around here a few 

        15          minutes ago. 

        16              But I will tell you that one question at 

        17          that first round about where the cuts would 

        18          effect the level of service, the 

        19          Sheriff's Department said to Brad Thomas, 

        20          Sunny Phillips, and to Rodney Doss, they didn't 

        21          get that far yet.  They didn't know. 

        22              Well, what if one person makes 15,000, 

        23          another person makes 45,000, maybe it's not a 

        24          hundred and sixty.  They don't know.

        25              And that is --

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         1              GOVERNOR BUSH:  Thank you.

         2              MR. ALBION:  -- very troubling to us.

         3              GOVERNOR BUSH:  Any questions?

         4              MR. ALBION:  If we could -- I also have 

         5          Keith Arnold here.  We'd like -- but I'd be 

         6          happy to answer questions also.

         7              SECRETARY HARRIS:  I have a -- I have a few 

         8          questions.

         9              How much has Lee County grown?  I mean, 

        10          it's one of the fastest growing counties in -- 

        11          in the country, you know, I read.  So do you 

        12          know how -- in terms of the population, the 

        13          base, you know, we're listening to some of 

        14          these services. 

        15              I -- my question relates to this:  If there 

        16          are no cost savings, but the -- the audit 

        17          company could actually say there's some that go 

        18          up, there's some that come down. 

        19              It seems to me that if they know that they 

        20          go up or they go down, they should have been 

        21          able to allocate a cost saving -- then you 

        22          could look at which ones actually produce 

        23          savings, or which ones are going to cost more 

        24          so you could see what you're working with. 

        25              I don't really understand why they haven't 

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         1          done that. 

         2              But it would seem to me that this all has 

         3          to do with whether it's going up or down or a 

         4          not greater level of service, and no cost 

         5          savings.  It still seems like you have to 

         6          accommodate a -- a large population growth that 

         7          would indicate an increase in costs.

         8              And then the second question accompanying 

         9          that:  If -- the Sheriff said that the County 

        10          has increased 26 percent -- or 26 million, 

        11          you know, as well. 

        12              Why would -- in terms of the operating 

        13          budget, why would you make that part decrease 

        14          in terms of the budget analysis when the audit 

        15          said that there was no reason for that 

        16          decrease? 

        17              That -- that's really my question.

        18              MR. ALBION:  Well, maybe it'll be easier if 

        19          I answer the second question first. 

        20              One of the -- I think it's a weakness in 

        21          the process is when we do not give the 

        22          Sheriff's agency what they request, then we 

        23          have to say which line items need to be cut or 

        24          whatever, and yet there's only six line items.  

        25          And then whatever -- you're at the mercy of 

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         1          whatever information you get. 

         2              This Sheriff's agency adamantly refused to 

         3          give us any indication of where those dollars 

         4          should be put when we increased first 

         5          3.1 million from where we originally were, and 

         6          then the 550,000. 

         7              They -- the 550,000, they did say put into 

         8          operating, to their credit.  But not the 

         9          3.1 million.  So, therefore, we just wanted to 

        10          make sure that the men themselves were covered 

        11          is -- is how we ended up there.

        12              I'll be candid with you, if I had to do it 

        13          over again, I'd just put it in the Sheriff's 

        14          reserves, and just let him decide that way.  

        15          But we weren't that smart at the time.  So that 

        16          was the first thing as far as those dollars go.

        17              This is an agency that in 12 years has gone 

        18          up -- the increased portion is over 

        19          200 percent.  So they have actually better than 

        20          tripled their budget. 

        21              No one else's general fund -- and we all 

        22          have the same population increase, we have the 

        23          same taxpayers -- the County's has gone up 

        24          130 percent.  And the other departments -- 

        25          and -- and by the way, these other 

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         1          constitutionals, please keep in mind two 

         2          points:  One is that there were certain changes 

         3          in State law, the computers, et cetera, that 

         4          required certain upgrades. 

         5              But that notwithstanding, these budgets are 

         6          significantly smaller than this budget.  So any 

         7          increase is going to have a much higher 

         8          percentage attached to it.  So that's why 

         9          I think those increases look that way.

        10              As far as the County goes though, we've 

        11          been increasing at a significantly smaller way.  

        12          As a matter of fact, our millage for our 

        13          general fund this year, compared to 10 years 

        14          ago, is lower, and has been really steady, or 

        15          on the decline each of those ten years, one. 

        16              Two, we have 400 less employees than we had 

        17          ten years ago, because we've been operating 

        18          efficiently and effectively.  But we've had to 

        19          provide additional resources is why we had the 

        20          increase. 

        21              Well, when we looked at the Sheriff's 

        22          agency, we see that history, I think, is on our 

        23          side.  You stuck with the local authority, the 

        24          citizens are satisfied with the level of 

        25          law enforcement they've received. 

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         1              And why, therefore, would you advocate 

         2          now -- not advocate, but leave the local 

         3          authority?  I think that that would be a 

         4          real -- a policy making call that I think would 

         5          be very odd.

         6              I would also say to you that, therefore -- 

         7          so the reason why we have those increases was 

         8          that.  I don't -- I could stand here all day 

         9          and give you information.

        10              SECRETARY HARRIS:  I --

        11              GOVERNOR BUSH:  Katherine.

        12              SECRETARY HARRIS:  Thanks.

        13              I guess I -- one of my concerns is of -- of 

        14          those other comparable counties, that this 

        15          county is -- is right at the bottom, you know, 

        16          if you're looking at it -- the others are 

        17          8.7 percent higher. 

        18              And Collier, I do think there's merit that 

        19          Collier -- that Lee County has twice the 

        20          population.  I think that that does demand more 

        21          law enforcement.  And there must be a 

        22          percentage concerning land mass as well. 

        23              But I do think certainly that that's an 

        24          appropriate increase in law enforcement as 

        25          well.

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         1              It's really awkward, I think, for us to 

         2          have to deal with this.  You know, you say -- 

         3          you apologized, and -- and I think we all feel 

         4          diffi-- you know, that it's difficult. 

         5              But this a constitutional officer, and it's 

         6          the law that they have the right to do that.  

         7          So I certainly think, you know, that -- that 

         8          from the standpoint that they're here, it's 

         9          appropriate.

        10              But I guess what I find the most difficult 

        11          is the circumstances that it has to come, that 

        12          it's come three times. 

        13              Would you describe the County's 

        14          relationship with the Sheriff -- it was 

        15          described earlier as acrimonious. 

        16              Would you describe it in that regard as 

        17          well?

        18              MR. ALBION:  Well, personally I don't agree 

        19          with that.

        20              First, let me make the statement about 

        21          Collier.  If you're not covering geographic 

        22          area, isn't the other main concern level of 

        23          service based on number of calls?  Not based on 

        24          population, number of calls. 

        25              Because outside of demand, you are 

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         1          patrolling.  That's what I would -- of course, 

         2          you have the jail, too, of course.

         3              SECRETARY HARRIS:  And you have --

         4              MR. ALBION:  But --

         5              SECRETARY HARRIS:  -- then we've had laws 

         6          change that have helped --

         7              MR. ALBION:  Right.

         8              SECRETARY HARRIS:  -- to drive down the -- 

         9          the criminal arrests, and all those kinds of 

        10          things so that our crime has dropped 

        11          dramatically.  So --

        12              MR. ALBION:   Absolutely.

        13              SECRETARY HARRIS:  -- you know, all those 

        14          things are at play.  I understand that.  

        15              MR. ALBION:  Absolutely.

        16              So, therefore, on the Collier situation, I 

        17          would think it's geographic area, or calls for 

        18          service.  And not simply population.  That's my 

        19          opinion.  For whatever that's worth. 

        20              I apologize.  The -- the question --

        21              SECRETARY HARRIS:  The second -- the -- the 

        22          question is, I guess, while we're here --

        23              MR. ALBION:  The acrimony.

        24              SECRETARY HARRIS:  -- of the -- the 

        25          acrimony.  I mean -- I wondered how you 

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         1          would --

         2              MR. ALBION:  Well --

         3              SECRETARY HARRIS:  -- describe the 

         4          relationship.

         5              MR. ALBION:  -- if we have such acrimony 

         6          with the Sheriff, how come we've been doing 

         7          mid-year adjustments every year?

         8              How come -- I was the one that was a third 

         9          vote for the Cops Ahead Grant on our Board.  I 

        10          was the one that recommended $550,000 this 

        11          year. 

        12              We've done mid-year adjustments every year 

        13          that if you don't even include the additional 

        14          grant monies -- check that -- monies required 

        15          because grants run out. 

        16              We've done mid-year adjustments of over 

        17          7 million dollars over the last 10 years.  

        18          We've been doing it every single year as 

        19          requested.

        20              So if we have an acrimonious relationship, 

        21          if it's that bad, why are we doing mid-year 

        22          adjustments?

        23              SECRETARY HARRIS:  I suppose my -- my final 

        24          point would be, so that we don't have this 

        25          happen next year or the following year or the 

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         1          next, is with regard to the audit, as expensive 

         2          as it is, it seems there would have been 

         3          allocations for the -- the points that were 

         4          given. 

         5              If they can say that it goes up or down, 

         6          then obviously, they ought to be able to 

         7          attribute a value, number one, so that you can 

         8          move forward, and with a plan in the future. 

         9              Number two is that in that plan, there 

        10          should be some sort of methodical way to work 

        11          together, and -- between your offices and the 

        12          Sheriff such that we're not having to repeat 

        13          this every year.  Because obviously all we care 

        14          about is that the services are adequately 

        15          funded, and that it doesn't -- I mean, I 

        16          understand politics. 

        17              But this is -- this is getting a little 

        18          ridiculous.

        19              MR. ALBION:  Well, thank you. 

        20              I would -- I would suggest that we feel 

        21          it's very ridiculous at this point, three times 

        22          in seven years without any circumstance 

        23          creating it I -- I find to be very odd.

        24              As far as the agency itself goes -- or the 

        25          situation goes with the audit, we are 

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         1          organizing all those papers -- there's eight or 

         2          nine boxes or something of them right now. 

         3              We know we need to get the cost 

         4          allocations, because that is our side of the 

         5          ledger of the budget authority.  And we're 

         6          doing that now.  And the reason why is because 

         7          it wasn't in there. 

         8              So we -- we don't disagree that a lot of 

         9          the recommendations are very good.  But we have 

        10          problems with understanding what does it all 

        11          mean?

        12              How do I say to a taxpayer, you're not 

        13          going to get a higher level of service, the 

        14          improvements are internal, you're not going to 

        15          get a higher level of service, and there isn't 

        16          going to be a cost savings, but they're doing 

        17          143 changes. 

        18              I -- if I were a citizen, I'd be looking 

        19          and saying, well, okay, what -- what I'd get 

        20          for it, a little more bureaucracy, is that what 

        21          an internal change means?  I don't know. 

        22              That's the problem we have with this whole 

        23          audit situation, as I see it.

        24              If --

        25              GOVERNOR BUSH:  Brad.  Can you come --

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         1              MR. ALBION:  Let's turn --

         2              GOVERNOR BUSH:  -- back? 

         3              MR. ALBION:  -- this over to Keith Arnold.  

         4          He had a couple of comments if --

         5              GOVERNOR BUSH:  Oh, Keith?  Do you want to 

         6          say something?

         7              MR. ARNOLD:  Sure.

         8              MR. ALBION:  Thank you. 

         9              GOVERNOR BUSH:  You bet. 

        10              MR. ARNOLD:  Governor, we're clearly at 

        11          your disposal here.  I can make some concluding 

        12          remarks at the end of the questions if you 

        13          would prefer.  We seem to have moved into the 

        14          Q and A period. 

        15              I mean, I'm -- I'm at your disposal, 

        16          whatever you'd prefer that we do.  I can speak 

        17          for a couple minutes now, or -- or wait to some 

        18          concluding remarks and --

        19              GOVERNOR BUSH:  Go ahead and --

        20              MR. ARNOLD:  Okay.

        21              GOVERNOR BUSH:  We'd like to get on with --

        22              MR. ARNOLD:  I will be very brief then, 

        23          in -- in light of that.

        24              For the record, my name is Keith Arnold.  

        25          I'm here on behalf of the -- the Board of 

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         1          County Commissioners of Lee County. 

         2              And I'd like to make just a couple of 

         3          points, if -- if I may.

         4              I've had the opportunity to work with all 

         5          these gentlemen over the last several years, 

         6          over the last almost two decades with some of 

         7          them.  And I can tell you that all of these men 

         8          are very sincere in their efforts to improve 

         9          the quality of life of Lee County. 

        10              Our Sheriff is very sincere in his efforts 

        11          to improve the criminal justice system, and 

        12          advocate what he sees as a responsible level of 

        13          funding for reducing criminal justice in 

        14          Lee County. 

        15              And I can equally assure you that our Board 

        16          of County Commissioners is trying to do the 

        17          best they can in reconciling the various budget 

        18          issues within our county.

        19              I would submit to you that this comes down 

        20          to more than numbers at this point.  It does 

        21          come down, in fact, to public policy. 

        22              And I think that that's the issue before us 

        23          today.  If you look at it in the context of the 

        24          recommendation, the recommendation is for 

        25          $723,000 almost, from the OPB staff.

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         1              Let's keep that in mind.  Seven hundred and 

         2          twenty-three thousand dollars is less than 

         3          1.2 percent of the entire Sheriff's budget, no 

         4          matter what decision you make today.  No matter 

         5          what decision you make today.

         6              And it seems to me that this 

         7          constitutionally defined and statutorily 

         8          defined process is reserved for those unique 

         9          circumstances where local government is 

        10          indifferent, or is even arrogant as to the 

        11          criminal justice needs of our community.

        12              If local governing officials do not respond 

        13          to the needs of our community as it relates to 

        14          law enforcement, then I think this process has 

        15          been reserved for you to override local 

        16          government decisions. 

        17              But local government, our local government 

        18          in Lee County, has responded in the last 

        19          two years, without your intervention, and 

        20          irrespective of what decision you make today, 

        21          this budget will have increased at least 

        22          21 percent in two years.  At least 21 percent 

        23          in two years, if you recommend zero increase.

        24              The point is, is our local government has 

        25          been responsive to our Sheriff's issues, they 

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         1          have tried to work with our Sheriff, they 

         2          continue to try to work with our Sheriff, they 

         3          continue to respond to our community in trying 

         4          to meet the needs of our citizens as it relates 

         5          to law enforcement.

         6              The final point I'd make to you is I think 

         7          the real overriding point of this whole forum 

         8          today, our Constitution is extremely clear. 

         9              Our Constitution requires every office in 

        10          this state to operate off a balanced budget.  

        11          Requires each of you as local -- as statewide 

        12          elected officials, it requires every state 

        13          agency to do so; it requires every city, all 

        14          400 of them in the state of Florida; it 

        15          requires 67 counties to operate off of a 

        16          balanced budget.  And it requires every single 

        17          constitutional office in this state to operate 

        18          off a balanced budget.

        19              You've heard the issue before us.  And I 

        20          quote Mr. Sukhia:  If you do not approve an 

        21          increase, we will run out of money before the 

        22          end of the year.

        23              The issue, Governor, and members of the 

        24          Cabinet, is whether or not a constitutional 

        25          officer should allow-- be allowed to spend 

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         1          beyond the budget authority given to him.

         2              And I would further suggest to you that 

         3          irrespective of your decision today, this issue 

         4          is in all likely to end up in the courts, 

         5          because we are pushing the constitutional limit 

         6          of a local governing authority, a local 

         7          government official, to appropriate and spend 

         8          unilaterally.

         9              That, ladies and gentlemen, is the issue 

        10          before us.

        11              And that's the one that I think we have to 

        12          struggle with as it relates to the public 

        13          policy of this state:  Should we allow any 

        14          local body, anybody in the state, to totally 

        15          and indifferently spend money in contrast to 

        16          the requirements of our Constitution. 

        17              And I suggest to you -- I humbly suggest to 

        18          you, that that is not permissible. 

        19              Thank you, Governor.

        20              GOVERNOR BUSH:  Thank you.

        21              MR. ARNOLD:  I think both sides will be 

        22          willing to field questions as -- as you see fit 

        23          at this time.

        24              Thank you very much.

        25              GOVERNOR BUSH:  Brad?  

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         1              MR. THOMAS:  Yes, sir.

         2              GOVERNOR BUSH:  Based on what you've heard, 

         3          can you just briefly give us a -- a run-down of 

         4          what you're -- how you -- your team made the 

         5          recommendation.

         6              MR. THOMAS:  Yes, sir. 

         7              The panel attempted to clarify exactly what 

         8          Leon -- excuse me -- Lee County Board of County 

         9          Commissioners funded.  And we went through 

        10          materials and we went through letters, and we 

        11          went through questions that we actually asked 

        12          them. 

        13              And in our document there, you'll see that 

        14          we -- we looked at COLA merit increase and 

        15          other items that the Board of County Commission 

        16          we felt told the Sheriff, you will spend money 

        17          on these items.

        18              We then looked at his base budget from 

        19          98-99, and determined that the Lee County 

        20          Sheriff could not fund those line items that 

        21          the County Commission had told him they were 

        22          funding without reducing his budget in the 

        23          category of sal-- of expenses other than 

        24          salaries, and in the category of reserve for 

        25          contingencies.

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         1              To take a conservative approach, being 

         2          as -- I'm well aware of the legal tensions  

         3          involved in this State statute and in the -- 

         4          and the questions -- the public policy 

         5          questions, we determined the best course was to 

         6          say, what would it take to at least ensure that 

         7          the Sheriff's budget was not reduced? 

         8              Because in looking at internal and external 

         9          factors, that was our final conclusion.  To 

        10          ensure that his expenses category was not 

        11          reduced below the base from the previous 

        12          fiscal year, we determined he needed 

        13          approximately 550,000.  And then in the reserve 

        14          for contingencies, we determined that he was 

        15          entitled to a hundred and eighty-four, 

        16          approximately.

        17              That was our -- our calculation.

        18              GOVERNOR BUSH:  General?

        19              ATTORNEY GENERAL BUTTERWORTH:  Governor, 

        20          unless there are any questions, I don't have --

        21              GOVERNOR BUSH:  Question, Tom? 

        22              COMMISSIONER GALLAGHER:  Yeah.  I just want 

        23          to know:  This -- when was the compromise of 

        24          875,000 offered?

        25              MR. THOMAS:  I'm -- Commissioner, I'm not  

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         1          quite sure of the eight hundred and 

         2          seventy-five figure.

         3              COMMISSIONER GALLAGHER:  Well, I --

         4              SECRETARY HARRIS:  Yeah.  What --

         5              COMMISSIONER GALLAGHER:  -- my information 

         6          says that --

         7              MR. THOMAS:  Yes.

         8              COMMISSIONER GALLAGHER:  -- that the 

         9          County Commission offered a compromise of 

        10          875,000 to avoid an appeal.  And I was just 

        11          wondering when the timing of that was.

        12              MR. THOMAS:  I'm not aware of that, 

        13          Commissioner Gallagher.  What I -- I am aware 

        14          of is the Sheriff filed an emergency appeal for 

        15          2.2 million dollars approximately four to 

        16          six weeks ago. 

        17              The Chairman mentioned that he himself 

        18          recommended the 550,000 in additional funding, 

        19          which they did receive.  I'm -- I guess that 

        20          was in the nature of a compromise, but it was 

        21          not in my understanding a compromise accepted 

        22          by the Sheriff.

        23              COMMISSIONER GALLAGHER:  Well, obviously.

        24              GOVERNOR BUSH:  General.

        25              ATTORNEY GENERAL BUTTERWORTH:  Yes.

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         1              As I understand this, and I have to agree 

         2          with Representative Arnold, I believe both the 

         3          Sheriff and the -- and the County Commission 

         4          has done a wonderful job for Lee County, and -- 

         5          and has taken many, many leadership roles, 

         6          especially in the area of -- of juvenile 

         7          delinquency prevention, and a lot of other 

         8          programs, been very innovative.  And -- and the 

         9          County has been funding them over the years.

        10              I'd like to make a recommendation, 

        11          Governor.  I -- I mean, as a former Sheriff, 

        12          this particular statute was always available to 

        13          us as -- as the Secretary of State has stated.  

        14          And only a few times has it been used in the 

        15          last few years.

        16              But I think what it -- the reason why it's 

        17          there is -- is that law enforcement's the most 

        18          important aspect of why we're -- we have 

        19          governance.  And -- and, therefore, it's out 

        20          there.

        21              But the -- and as Keith said -- 

        22          Keith Arnold said, maybe it should only be used 

        23          in the extremest of areas.  But that is not 

        24          what the statute says.

        25              I believe out of fairness, Governor, 

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         1          that -- that our panel -- to increase the 

         2          expenses by the panel recommendation of five 

         3          thirty-eight one oh seven, I'd move that, plus 

         4          the increase to reserve by the panel of one 

         5          eighty-four seven eighty-two. 

         6              And also add the additional increase and 

         7          expenses to achieve the fiscal year 

         8          1988-99 (sic) base funding, which would be 

         9          three five two eight three five. 

        10              And it's not the -- the million dollars 

        11          that the Sheriff wants, but it's just 

        12          annualized for one-third. 

        13              Which means, if my math is right, Governor, 

        14          I would move the -- the item for one million 

        15          seventy-five thousand seven hundred and 

        16          twenty-four dollars.

        17              GOVERNOR BUSH:  Is there a second? 

        18              TREASURER NELSON:  Second.

        19              GOVERNOR BUSH:  Any discussion?

        20              I have -- since I have -- yeah.

        21              COMMISSIONER CRAWFORD:  Oh, I was just 

        22          going to offer a substitute motion. 

        23              If -- if I -- if I -- if I understand you 

        24          right, you're going beyond what the panel 

        25          recommended.

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         1              ATTORNEY GENERAL BUTTERWORTH:  I -- by 

         2          352,000. 

         3              It appears from -- from how I'm hearing 

         4          this testimony, Bob, is that they're saying 

         5          that -- that the panel recommended that, but in 

         6          order to bring them up to their base, where 

         7          they would not be losing any money from last 

         8          year, or they need an additional $900,000 over 

         9          and above that. 

        10              I think -- so what this ends up being at 

        11          the end is that the Sheriff for this year will 

        12          be getting approximately 58.7 million dollars.  

        13          Not the 59.9 that the auditor may or may not 

        14          have recommended, and not the 57.6 which the 

        15          County had -- had recommended. 

        16              So really it is right -- right between both 

        17          of those, and it's far less than the 

        18          62.7 million dollar request that the Sheriff 

        19          originally wanted.

        20              COMMISSIONER CRAWFORD:  Well --

        21              ATTORNEY GENERAL BUTTERWORTH:  -- what's in 

        22          the order.

        23              COMMISSIONER CRAWFORD:  Yeah.

        24              I -- I would say -- it's hard to figure out 

        25          what -- what's the best thing to do here.  I 

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                                   June 26, 2000
         1          want to rely on the panel and -- and their 

         2          recommendation. 

         3              And -- and, frankly, I'm reluctant to even 

         4          do that.  As the General mentioned, there's 

         5          only rare times in the history of this state 

         6          where this Board has overturned the decision of 

         7          a -- of a County Commission. 

         8              And for -- even though I think it probably 

         9          falls on the County Commission, I would 

        10          probably vote to increase the -- the Sheriff's 

        11          budget. 

        12              But -- but that's not my role here.  I do 

        13          not have the responsibility of raising taxes on 

        14          the taxpayers of Lee County.  That is the 

        15          responsibility of the County Commission.  They 

        16          are the ones that determine the policy level 

        17          of -- of expenditures. 

        18              And for us to step into that role and -- 

        19          and to -- to supersede that responsibility 

        20          I think does take, in my mind, a very 

        21          extraordinary set of -- set of circumstances, 

        22          which it's not a matter that we just disagree 

        23          with what the level could be. 

        24              I think it goes to a -- a higher level, and 

        25          each person has to decide in their own mind 

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                                   June 26, 2000
         1          what -- what that standard is. 

         2              But -- but to me, if you're responsible for 

         3          raising the taxes, you're responsible for the 

         4          spending.  And there's got to be something very 

         5          extraordinary to intervene for us, in my 

         6          opinion, to -- to trample on that fundamental 

         7          principle of -- of government.

         8              Now -- so my -- my motion here would -- 

         9          would, in fact, go a little bit against that, 

        10          and allow for an increase.  But I think it's a 

        11          well thought-out increase, and -- and the one 

        12          the County can live with so the Sheriff will 

        13          get a little bit -- we don't go too far I think 

        14          in -- in trying to second-guess the County.

        15              So I would -- I would make that -- that 

        16          motion.

        17              COMMISSIONER GALLAGHER:  I would second 

        18          that motion, and I'd like to explain why.

        19              In order not to come up here, the County 

        20          did offer the money that they tax the citizens 

        21          of Lee County, a $875,000 compromise. 

        22              This amendment to the motion -- or actually 

        23          this substitute motion goes a little less than 

        24          what the offer was.  So it -- it does still 

        25          make it so it is affordable to the County. 

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                                   June 26, 2000
         1              And it also takes care of what was expected 

         2          to -- was found by the panel to take care of 

         3          the increase in reserve, and also the increase 

         4          to expenses.

         5              And so --

         6              GOVERNOR BUSH:  So this --

         7              COMMISSIONER GALLAGHER:  -- that's why I 

         8          second --

         9              GOVERNOR BUSH:  -- this is a substitute 

        10          motion that will, in essence, accept the 

        11          recommendations made by --

        12              COMMISSIONER GALLAGHER:  -- the panel.

        13              GOVERNOR BUSH:  -- the panel.

        14              ATTORNEY GENERAL BUTTERWORTH:  Governor, if 

        15          I can make some -- 

        16              GOVERNOR BUSH:  Please.

        17              ATTORNEY GENERAL BUTTERWORTH:  -- one more 

        18          comment.

        19              It has not been that -- that we've gone 

        20          with the County Commission or the Sheriff many 

        21          times.  In my -- this is my fourteenth year 

        22          here.  I believe it's only the seventh appeal 

        23          or eighth appeal that's actually come this far. 

        24              There -- there have been a number of 

        25          appeals that have been out there that ended up 

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         1          getting worked out before anything is filed, 

         2          and some that are -- that are worked out before 

         3          it is filed. 

         4              But each and every time that it actually 

         5          has come to this particular Commission, we -- 

         6          we have always given law enforcement an amount, 

         7          but we tried to do it in such a way where it 

         8          would not hurt the County. 

         9              And in one case that we had of a smaller 

        10          county just to the west of here, we ended up 

        11          just funding -- they only had, like, eight 

        12          deputies, but they needed nine.  We all agreed 

        13          with that. 

        14              So we -- we fund that deputy I think on the 

        15          last day of that particular fiscal year, and so 

        16          it didn't cost the County that much money for 

        17          that particular year. 

        18              So -- but we might want to find out from 

        19          Lee County as to how much their reserves are 

        20          right now.  And I think it's -- it's probably 

        21          kind of high.

        22              SECRETARY HARRIS:  Governor.

        23              GOVERNOR BUSH:  Katherine.

        24              SECRETARY HARRIS:  I -- I completely agree 

        25          with Commissioner Crawford, that I don't think 

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         1          we have the role to impose additional taxes 

         2          from this standpoint in Tallahassee. 

         3              But it was my understanding that the 

         4          reserves were there to be able to cover this so 

         5          that that -- that would not occur, there 

         6          wouldn't be additional taxes.

         7              COMMISSIONER GALLAGHER:  Well, I --

         8              COMMISSIONER CRAWFORD:  And my point is 

         9          that -- that it's the Lee County Commission's 

        10          the one that makes the decision on the level of 

        11          taxes.  Therefore, they make the level of -- of 

        12          services expenditures.

        13              It's historically -- I -- back in -- many 

        14          years ago, I worked for an Attorney General, 

        15          Bob Shevin.  And every time a Sheriff -- he was 

        16          Attorney General for eight years during 1970 to 

        17          '78.  Great Attorney General, I thought.

        18              And -- 

        19              ATTORNEY GENERAL BUTTERWORTH:  He was a 

        20          good Attorney General, too. 

        21              COMMISSIONER CRAWFORD:  And you're another 

        22          great --

        23              ATTORNEY GENERAL BUTTERWORTH:  I agree he 

        24          was a great --

        25              COMMISSIONER CRAWFORD:  Well --

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         1              ATTORNEY GENERAL BUTTERWORTH:  -- 

         2          Attorney General.

         3              COMMISSIONER CRAWFORD:  -- and like most 

         4          Attorney Generals, he -- he recog-- he sided 

         5          with the Sheriff on every appeal during that 

         6          eight years. 

         7              And do you know how many passed?  Zero. 

         8              Because Governor Askew and the members of 

         9          that panel recognized the -- the -- the 

        10          responsibility of the County Commission to levy 

        11          taxes, and only if extraordinary circumstances 

        12          exist. 

        13              It's just not a difference of opinion.  

        14          It's got to rise much higher than that.  I may 

        15          disagree with the level of services that the 

        16          County Commission is -- is deciding on.  But at 

        17          the same time, that -- that's their 

        18          responsibility. 

        19              And our -- our responsibility here I think 

        20          is to -- is to only look at things that fall 

        21          into the extraordinary realm. 

        22              Yet, at the same time, in trying to be 

        23          fair, our panel worked real hard; it gives the 

        24          Sheriff some more money; yet, at the same time, 

        25          I think doesn't go too far, and -- and that's 

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         1          why I think it's a good motion. 

         2              But --

         3              GOVERNOR BUSH:  Any other discussion on 

         4          the --

         5              SECRETARY HARRIS:  Yes.

         6              GOVERNOR BUSH:  -- substitute --

         7              SECRETARY HARRIS:  Sorry, Governor.  Yes.

         8              I -- I just -- to understand this motion a 

         9          little better, I have two questions, and -- and 

        10          for the Sheriff.

        11              What -- what really concerned me in the 

        12          testimony by the Commissioner was the fact that 

        13          nothing in the original discussions on -- from 

        14          the Sheriff's Office talked about spending at a 

        15          level that was requested, versus what was 

        16          allocated.

        17              Could you address that concern?  Because, 

        18          obviously, we all work within our budgets in --  

        19              MR. McDOUGALL:  Yes.  I've been --

        20              SECRETARY HARRIS:  -- that concern.

        21              MR. McDOUGALL:  -- I've been Sheriff now -- 

        22          I'm in my 12th year as Sheriff.  And I was 

        23          Sheriff in Charlotte County prior to being 

        24          Sheriff in Lee County. 

        25              And I can tell you, I have never overspent 

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         1          my budget.  It was the assurances that this -- 

         2          that this County Commission gave me -- when I 

         3          brought up to the County Commissioners, you're 

         4          not giving me enough money in my operating 

         5          budget, I'm going to run out of money somewhere 

         6          around April or May, they said, Sheriff, don't 

         7          worry about it.  We're not going to let you run 

         8          out of money. 

         9              As soon as this audit is over -- this whole 

        10          thing centered around the audit.  That is the 

        11          pivotal point of my argument.  I submitted to 

        12          the audit, because I wanted to end this war 

        13          once and for all.  Okay.  I will -- I will -- I 

        14          will go with the audit recommendation -- is. 

        15              When they assured me as soon as this -- 

        16          it's all up to the audit.  If it -- if we don't 

        17          give the Sheriff what the audit says, and 

        18          the -- and he appeals it to the Governor, 

        19          I think the Governor and Cabinet should give it 

        20          to him. 

        21              I -- I took him at his word.  I took the 

        22          Board at their word.  I -- we had -- we had an 

        23          agreement.  Lets (sic) the auditors -- let a 

        24          third party -- the -- the Auditor General of 

        25          the State of Florida, let him cut -- make the 

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         1          decision here of what my base should be. 

         2              And that's why I did what I did.  I would 

         3          never outspend my budget.  I just kept going 

         4          on -- I was spending at the level I was last 

         5          year.

         6              GOVERNOR BUSH:  Any discus-- any other --

         7              MR. McDOUGALL:  And I'm below --

         8              GOVERNOR BUSH:  -- questions?

         9              MR. McDOUGALL:  -- I'm 1.4 million dollars 

        10          below last year's level.  That's where I -- 

        11          that's where the problem is.

        12              GOVERNOR BUSH:  Any other questions?

        13              SECRETARY HARRIS:  Thank you.

        14              GOVERNOR BUSH:  Well, there's a substitute 

        15          motion to accept the recommendations made by 

        16          the panel.  And there's been a second.

        17              All in favor, say aye.

        18              THE CABINET:  Aye.

        19              GOVERNOR BUSH:  How many is -- how many 

        20          ayes are those?

        21              COMMISSIONER CRAWFORD:  Aye.

        22              GOVERNOR BUSH:  All -- all opposed, no.

        23              ATTORNEY GENERAL BUTTERWORTH:  No.

        24              TREASURER NELSON:  No.

        25              GOVERNOR BUSH:  Okay.  So now we're back to 

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         1          the -- General Butterworth's --

         2              COMMISSIONER GALLAGHER:  I mean, what was 

         3          the -- what was the vote? 

         4              GOVERNOR BUSH:  I think it was 5 to 2? 

         5              Is that correct?

         6              SECRETARY HARRIS:  Yes.

         7              GOVERNOR BUSH:  Did you vote, Katherine?

         8              SECRETARY HARRIS:  Yes, I voted -- no, I 

         9          voted to support the substitute amendment.

        10              COMMISSIONER GALLAGHER:  Well, let -- let's 

        11          know what the vote is --

        12              GOVERNOR BUSH:  You voted in favor of --

        13              Let's start over.  Can we have some --

        14              Everybody that's in favor of the substitute 

        15          amendment say aye.

        16              COMPTROLLER MILLIGAN:  Aye.

        17              COMMISSIONER GALLAGHER:  Aye.

        18              COMMISSIONER CRAWFORD:  Aye.

        19              GOVERNOR BUSH:  All opposed.

        20              ATTORNEY GENERAL BUTTERWORTH:  No.

        21              COMPTROLLER MILLIGAN:  No.

        22              GOVERNOR BUSH:  No.

        23              General, did you say no?

        24              COMPTROLLER MILLIGAN:  I said no, yes.

        25              GOVERNOR BUSH:  That's 4 --

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         1              ATTORNEY GENERAL BUTTERWORTH:  No, yes.

         2              GOVERNOR BUSH:  -- to 3.

         3              COMPTROLLER MILLIGAN:  I said no twice.

         4              GOVERNOR BUSH:  The substitute is -- is 

         5          defeated.

         6              We're back on the motion made by 

         7          General Butterworth. 

         8              Any discussion?

         9              This -- this motion would add $352,000 that 

        10          would basically fulfill the Sheriff's 

        11          commitment -- make -- your last statement, this 

        12          would -- would make you whole for this year.

        13              MR. McDOUGALL:  Yes.

        14              GOVERNOR BUSH:  Since you were spending at 

        15          a rate -- assuming that the -- 

        16              MR. McDOUGALL:  That was promised.  Right.

        17              GOVERNOR BUSH:  Any other discussion? 

        18              All in favor of the motion, say aye.

        19              THE CABINET:  Aye.

        20              GOVERNOR BUSH:  All opposed?

        21              COMMISSIONER CRAWFORD:  No.

        22              GOVERNOR BUSH:  Thank you very much.

        23              MR. McDOUGALL:  Thank you, Governor.

        24              GOVERNOR BUSH:  Who's clapping? 

        25              ATTORNEY GENERAL BUTTERWORTH:  I thought 

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                                   June 26, 2000
         1          neither side would -- I thought neither side 

         2          would clap on that one, Governor.

         3              GOVERNOR BUSH:  Yeah.  I --

         4              MR. SUKHIA:  Well, I -- I did want to -- 

         5              GOVERNOR BUSH:  Chairman, am I going to 

         6          need police protection down in Lee County 

         7          tomorrow? 

         8              ATTORNEY GENERAL BUTTERWORTH:  Well, the 

         9          Sheriff was clapping, so you might be 

        10          all right. 

        11              (Discussion off the record.)

        12              (Treasurer Nelson exited the room.) 

        13              (The Administration Commission Agenda was 

        14          concluded.)

        15                              *   *   *











                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1              GOVERNOR BUSH:  Board of Trustees.

         2              MR. STRUHS:  Item 1, acceptance of the 

         3          minutes.

         4              ATTORNEY GENERAL BUTTERWORTH:  Motion on 

         5          the minutes.

         6              GOVERNOR BUSH:  Is there a second? 

         7              COMPTROLLER MILLIGAN:  Second.

         8              Second.

         9              MR. STRUHS:  Item 2, we --

        10              GOVERNOR BUSH:  Moved and seconded.

        11              Without objection, it's approved.

        12              Item 2.

        13              MR. STRUHS:  We're recommending approval to 

        14          grant authority to the St. Johns River Water 

        15          Management District to enter into acquisition 

        16          negotiations for the Emeralda Marsh CARL 

        17          Project.

        18              COMMISSIONER GALLAGHER:  Motion.

        19              GOVERNOR BUSH:  Is there --

        20              ATTORNEY GENERAL BUTTERWORTH:  Second.

        21              GOVERNOR BUSH:  Moved and seconded.

        22              Without objection, approved.

        23              MR. STRUHS:  Item 3, recommending approval 

        24          of a purchase agreement to acquire 703 acres by 

        25          the Department of Agriculture as an addition to 

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                                   June 26, 2000
         1          the Withlacoochee State Forest.

         2              COMMISSIONER GALLAGHER:  Motion.

         3              ATTORNEY GENERAL BUTTERWORTH:  Second.

         4              COMMISSIONER CRAWFORD:  Second.

         5              GOVERNOR BUSH:  Moved and seconded.

         6              Without objection, it's approved.

         7              MR. STRUHS:  Item 4, we're recommending 

         8          approval of the acceptance of an assignment of 

         9          option agreement to acquire two hundred and 

        10          forty-six-and-a-half acres within the 

        11          Perdido Pitcher Plant Prairie CARL Project from 

        12          the Nature Conservancy.

        13              COMMISSIONER GALLAGHER:  Motion.

        14              COMMISSIONER CRAWFORD:  Second.

        15              GOVERNOR BUSH:  Moved and seconded.

        16              Without objection, it's approved.

        17              MR. STRUHS:  Item 5, we're recommending 

        18          approval of an option agreement to acquire 

        19          43.4 acres within the Weedon Island Preserve 

        20          Project under the Greenways and Trails Program.

        21              COMMISSIONER GALLAGHER:  Motion.

        22              COMMISSIONER CRAWFORD:  Second.

        23              GOVERNOR BUSH:  Moved and seconded.

        24              Without objection, it's approved.

        25              MR. STRUHS:  Item 6, recommending approval 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1          of an option agreement to acquire 1.82 acres 

         2          for the benefit of the Department of Highway 

         3          Safety and Motor Vehicles.

         4              COMMISSIONER GALLAGHER:  Motion.

         5              COMMISSIONER CRAWFORD:  Second.

         6              GOVERNOR BUSH:  Moved and seconded.

         7              Without objection, it's approved.

         8              MR. STRUHS:  Substitute Item Number 7 --

         9              GOVERNOR BUSH:  Or 8? 

        10              Did you --

        11              MR. STRUHS:  Pardon me?

        12              GOVERNOR BUSH:  I'm sorry.  We're on 7? 

        13              MR. STRUHS:  Yeah.  I -- it's Substitute 

        14          Item Number 7. 

        15              Recommending approval of an option 

        16          agreement to acquire 11.77 acres within the 

        17          Dade County Archipelago CARL Project for 

        18          Miami-Dade County. 

        19              Archipelago is an unusual term.  It's -- 

        20          it's also known as the Atlantic Coastal Ridge 

        21          Ecosystem.

        22              COMMISSIONER GALLAGHER:  Motion.

        23              COMMISSIONER CRAWFORD:  Second.

        24              GOVERNOR BUSH:  Moved and seconded.

        25              Without objection, it's approved.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1              MR. STRUHS:  Item 8, we're recommending 

         2          approval of an option agreement to acquire a 

         3          32.6 acre island in the Florida Keys ecosystem 

         4          from Jerry J. and Anna L. Israel.

         5              COMMISSIONER GALLAGHER:  Motion.

         6              COMMISSIONER CRAWFORD:  Second.

         7              GOVERNOR BUSH:  Moved and seconded.

         8              Without objection, it's approved.

         9              MR. STRUHS:  On Item Number 9, we're 

        10          recommending approval of an option agreement to 

        11          acquire 5.8 acres within the South Savannas 

        12          CARL Project from Walter Ungermann.

        13              COMMISSIONER GALLAGHER:  Motion.

        14              COMMISSIONER CRAWFORD:  Second.

        15              GOVERNOR BUSH:  Moved and seconded.

        16              Without objection, it's approved.

        17              MR. STRUHS:  Substitute Item 10. 

        18              This is a -- something we're particularly 

        19          proud of.  We've worked with the 

        20          Nature Conservancy in acquiring a conservation 

        21          easement, rather than purchasing property 

        22          fee simple. 

        23              And this -- I think you all believe -- 

        24          agree is a better use of the State's resources.  

        25          It's a nice balance between protecting and 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1          conserving the natural resources, and still 

         2          allowing private use of certain properties.

         3              In this particular agreement, we're 

         4          recommending an option agreement to acquire 

         5          these conservation easements of over 

         6          8,000 acres from Kathryn C. Mills, the Trustee 

         7          of the Mills Ranch Trust, to then designate the 

         8          St. Johns River Water Management District as 

         9          the monitoring agency, to evaluate and amend 

        10          the management policy statement for the 

        11          Ranch Reserve CARL Project.

        12              GOVERNOR BUSH:  This is great.

        13              COMMISSIONER GALLAGHER:  Well, let me ask a 

        14          question now.

        15              We're -- we're taking I guess the use of 

        16          the island, except for oil, gas, and mineral 

        17          interests.  Is that right? 

        18              MR. STRUHS:  That's correct.

        19              COMMISSIONER GALLAGHER:  So although they 

        20          can't use it for anything, they can -- I mean, 

        21          they could potentially --

        22              MR. STRUHS:  The --

        23              COMMISSIONER GALLAGHER:  -- start mining 

        24          sand there or something.

        25              MR. STRUHS:  Well, the -- the -- the terms 

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1          of the agreement which -- which I hope you 

         2          have, are -- are fairly specific in terms of 

         3          what they are and are not allowed to do on the 

         4          property as part of this conservation easement. 

         5              And, in fact, it's -- it's quite 

         6          controlling going down to the detail of how 

         7          many more dwellings they can actually build on 

         8          the property, and numbers of square feet. 

         9              Ess-- essentially the -- the net effect of 

        10          all those conditions is that the property will 

        11          eventually continue to be managed and operated 

        12          as it has been historically.

        13              COMMISSIONER GALLAGHER:  Motion.

        14              COMMISSIONER CRAWFORD:  Second.

        15              GOVERNOR BUSH:  Moved and seconded.

        16              Without objection, it's approved.

        17              This is --

        18              MR. STRUHS:  Yes.

        19              GOVERNOR BUSH:  -- we've had the policy 

        20          discussion about conservation easements and how 

        21          we can extend the reach.  This is probably the 

        22          largest one that we've done.  And we're going 

        23          to allow for a cattle operation -- you know, a 

        24          ranch that has been in existence probably for 

        25          many generations, to continue to do that.  And 

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                                   June 26, 2000
         1          protect a -- a valuable piece of Florida's 

         2          heritage. 

         3              So I think this is an excellent way to 

         4          keep -- keep the focus on what our 

         5          responsibilities at the State level are.

         6              MR. STRUHS:  Yes, sir.

         7              Thank you. 

         8              I think -- I think one thing it does 

         9          demonstrate is that a well-run cattle grazing 

        10          operation can be a very good use of -- of -- of 

        11          land, and you can also conserve the -- the 

        12          natural resources.

        13              By -- by using the conservation easement 

        14          approach, we're paying 41, almost 42 percent of 

        15          what the fee simple value of the land would be.

        16              GOVERNOR BUSH:  And --

        17              COMMISSIONER GALLAGHER:  And -- and we --

        18              GOVERNOR BUSH:  -- so the government's -- 

        19              COMMISSIONER GALLAGHER:  -- don't have to 

        20          manage it.

        21              GOVERNOR BUSH:  -- paying property taxes.

        22              COMMISSIONER GALLAGHER:  Yeah.  And we 

        23          don't have to manage it.

        24              GOVERNOR BUSH:  Receiving it.

        25              COMMISSIONER CRAWFORD:  That's right.

                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1              GOVERNOR BUSH:  And we don't have to manage 

         2          it.

         3              COMMISSIONER GALLAGHER:  Right.

         4              MR. STRUHS:  Right.

         5              GOVERNOR BUSH:  That's right.

         6              I think we did -- did we do it? 

         7              MR. STRUHS:  Okay.

         8              GOVERNOR BUSH:  Moved and seconded.

         9              Without objection, it's approved.

        10              COMMISSIONER GALLAGHER:  We're on 11 now.

        11              MR. STRUHS:  Substitute Item Number 11, 

        12          we'd like to withdraw that agenda item, please.

        13              COMMISSIONER GALLAGHER:  Motion to withdraw 

        14          Number 11.

        15              ATTORNEY GENERAL BUTTERWORTH:  Second.

        16              COMMISSIONER CRAWFORD:  Second.

        17              COMMISSIONER GALLAGHER:  For the one, 

        18          two --

        19              GOVERNOR BUSH:  Motion to withdraw.

        20              COMMISSIONER GALLAGHER:  -- three, 

        21          fourth time.

        22              GOVERNOR BUSH:  There's a motion to 

        23          withdraw and a second. 

        24              Without objection, it's approved.

        25              MR. STRUHS:  Item Number 12, recommending 

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         1          approval of an agreement which provides for the 

         2          purchase of 2,471 acres of land as part of a 

         3          settlement agreement with Ardrenn Suttlemyre in 

         4          Putnam County.

         5              COMMISSIONER GALLAGHER:  Motion on --

         6              COMMISSIONER CRAWFORD:  Second.

         7              GOVERNOR BUSH:  Moved and seconded.

         8              Without objection, it's approved.

         9              MR. STRUHS:  Thank you.

        10              GOVERNOR BUSH:  Thank you, David. 

        11              I thought you were going to be in 

        12          Washington today with the Everglades -- 

        13              No?

        14              MR. STRUHS:  No.  Markup is Wednesday. 

        15              (The Board of Trustees of the Internal 

        16          Improvement Trust Fund Agenda was concluded.)

        17                              *   *   *









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         1              COMMISSIONER GALLAGHER:  Governor, 

         2          before --

         3              COMMISSIONER CRAWFORD:  Is that it?

         4              COMMISSIONER GALLAGHER:  -- we start, I 

         5          would like to let the State Board know a few 

         6          things that happened today.

         7              We --  

         8              GOVERNOR BUSH:  Education.

         9              COMMISSIONER GALLAGHER:  -- we finally got 

        10          our results back on the FCAT.

        11              ATTORNEY GENERAL BUTTERWORTH:  You have our 

        12          attention.

        13              COMMISSIONER GALLAGHER:  May I?

        14              GOVERNOR BUSH:  Yeah.  Please.

        15              COMMISSIONER GALLAGHER:  Quickly, we today 

        16          announced results of the FCAT.

        17              In math, this is the 1999 results in 

        18          stripes.  And the green color is the year 2000 

        19          results. 

        20              And you can see there was quite an increase 

        21          in 5th grade mathematics; in 8th grade 

        22          mathematics, a nice increase; and also in 

        23          10th grade mathematics. 

        24              So we have a -- a very nice increase in

        25          the math.  And as you probably all have read

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         1          in Florida Writes, there was a nice increase 

         2          there that -- that really got all of the 

         3          78 schools that had the potential to be able to 

         4          qualify for opportunity scholarships, got off 

         5          the list.

         6              In -- in reading, there's a little 

         7          different results.  In the 4th grade, you'll 

         8          see that there was a substantial increase in 

         9          4th grade reading, which is where it's most 

        10          important to have the kids concentrate on it.

        11              Reading is a much tougher skill to learn 

        12          than both mathematics and writing.  So it's 

        13          expected you're going to see the reading 

        14          results not move up as fast.

        15              We have somewhat I'd call them a 

        16          disappointment in 8th and 10th grade reading, 

        17          because they -- the scores both de-- decrease 

        18          in both of those. 

        19              One of the problems that you have in both 

        20          8th and 10th grade is that it's harder to learn 

        21          to read at a proficient level when you're in 

        22          8th and 10th grade than it is when, in fact, 

        23          you're in elementary school. 

        24              And that's why the concentration has been, 

        25          and good results are coming out of, elementary 

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                                   June 26, 2000
         1          school reading. 

         2              I want to just bring you up-to-date.  We 

         3          will take the results of the reading, the 

         4          writing, and the math scores, and hopefully, as 

         5          soon as possible, issue the grades on the 

         6          schools. 

         7              But we do know at this point, that at the 

         8          most, there will be 11 F schools in the state.  

         9          And we don't know whether -- whether they will 

        10          be F or not, but they have the potential of 

        11          being F because of their writing results.  They 

        12          could get off the list by having the reading 

        13          and math results above the -- the minimum 

        14          requirement.

        15              If anybody has any questions.

        16              ATTORNEY GENERAL BUTTERWORTH:  Tom, I think 

        17          your chart is not doing justice to what's 

        18          happening, because your -- if you take your 

        19          two ninety-five and your two ninety, it should 

        20          really be very, very close. 

        21              And also your three oh two and your 

        22          two ninety-eight.  You may want to move that --

        23              GOVERNOR BUSH:  Yeah.

        24              ATTORNEY GENERAL BUTTERWORTH:  -- the -- 

        25          the green, because it --

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         1              COMPTROLLER MILLIGAN:  Yeah.  It's a little 

         2          out of whack.  But that's --

         3              ATTORNEY GENERAL BUTTERWORTH:  It really 

         4          is --

         5              COMMISSIONER GALLAGHER:  I mean, if you 

         6          do --

         7              ATTORNEY GENERAL BUTTERWORTH:  Yeah.  

         8          Your -- so really, I mean, if you -- if you can 

         9          do that, I think that -- 

        10              COMMISSIONER GALLAGHER:  Total of 4 points.  

        11          This -- this graph is certainly off.  I agree.

        12              ATTORNEY GENERAL BUTTERWORTH:  Yeah.  So if 

        13          you -- if you can do that, that -- I think will 

        14          help to show -- because you -- 

        15              COMMISSIONER GALLAGHER:  It's only 4 -- 

        16          4 points.

        17              ATTORNEY GENERAL BUTTERWORTH:  I understand 

        18          that the --

        19              GOVERNOR BUSH:  I mean, the -- the 

        20          reading -- 4th grade reading going up is 

        21          higher, and yet it looks like it's smaller. 

        22              ATTORNEY GENERAL BUTTERWORTH:  That's 

        23          right.

        24              GOVERNOR BUSH:  Come on, Gallagher.

        25              COMMISSIONER GALLAGHER:  I agree.  I fully 

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         1          agree.

         2              ATTORNEY GENERAL BUTTERWORTH:  You must 

         3          have a green pen with you, because you always 

         4          have green pens.

         5              COMMISSIONER GALLAGHER:  As a matter of 

         6          fact -- 

         7              GOVERNOR BUSH:  Just color it in.

         8              ATTORNEY GENERAL BUTTERWORTH:  Just color 

         9          in where --

        10              Much higher than that.  It's up -- all the 

        11          way up -- what was it, three oh two? 

        12              COMPTROLLER MILLIGAN:  Actually the 

        13          three oh two needs to come down, Tom.  That's 

        14          the --

        15              COMMISSIONER GALLAGHER:  Does that look 

        16          better?

        17              ATTORNEY GENERAL BUTTERWORTH:  Much better.

        18              But also with the -- with the 8th grade 

        19          also, you -- because you're almost talking 

        20          about the same numbers really.  I mean -- 

        21              COMMISSIONER GALLAGHER:  Actually it's 5.-- 

        22              GOVERNOR BUSH:  This is how you make --

        23              COMMISSIONER GALLAGHER:  --5.

        24              GOVERNOR BUSH:  -- the Tampa Tribune.

        25              COMMISSIONER GALLAGHER:  It should be about 

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         1          5 points -- 

         2              ATTORNEY GENERAL BUTTERWORTH:  That's 

         3          15 points. 

         4              Yeah.  Five points or --

         5              SECRETARY HARRIS:  Five.

         6              ATTORNEY GENERAL BUTTERWORTH:  -- 

         7          six points.

         8              COMMISSIONER GALLAGHER:  The bottom line is 

         9          is that we're doing pretty good. 

        10              Now, one of the things that -- that you 

        11          need to know is that these scores do include 

        12          all of your ESE students, and all your LED 

        13          students.  So it's across-the-board. 

        14              And so these numbers are not the raw 

        15          numbers that are used for the grading.  The 

        16          grading is short those, and short also -- this 

        17          also includes those that have only been in 

        18          school for a week before the test.  We also 

        19          take those off. 

        20              So it will be -- it will be --

        21              GOVERNOR BUSH:  One of the -- one of the 

        22          important points I think on the reading, 

        23          which -- for 4th grade, compared to the -- the 

        24          older grades, is that in elementary school 

        25          4th grade reading, social promotion, you can -- 

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         1          school districts can use the FCAT reading as a 

         2          means of determining whether a child will be 

         3          held back. 

         4              And it's not a requirement.  But I believe 

         5          most districts are using it as they should. 

         6              And I think when you put a focus effort on 

         7          that to say that there's a consequence for a 

         8          family and for the schools to make sure that 

         9          these kids learn, that you've got a pretty 

        10          good -- pretty good increase, whereas the older 

        11          grades, I don't think the social -- it's used 

        12          as a criteria, is it?

        13              COMMISSIONER GALLAGHER:  Well, one of the 

        14          things that -- no, it is not.  And one of the 

        15          things that we need to look at as a Board, in 

        16          my opinion, is some major encouragement to 

        17          eliminate social promotions in our school 

        18          system.  And we're working on some of those 

        19          encouragements, and will be bringing them to 

        20          you.

        21              Now, Wayne, do you want to go ahead?

        22              MR. PIERSON:  Item 1 is minutes of meeting 

        23          of May 9th.

        24              COMMISSIONER GALLAGHER:  Motion on minutes.

        25              ATTORNEY GENERAL BUTTERWORTH:  Second.

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         1              GOVERNOR BUSH:  Moved and seconded.

         2              Without objection, it's approved.

         3              MR. PIERSON:  Item 2 is a charter school 

         4          appeal, which is deferred to September 12th.

         5              COMMISSIONER GALLAGHER:  Motion to defer.

         6              COMMISSIONER CRAWFORD:  Second.

         7              GOVERNOR BUSH:  There's a motion to defer 

         8          and a second. 

         9              Without objection, it's approved.

        10              MR. PIERSON:  Item 3 is a district charter 

        11          proposal for Hills-- Hillsborough County, which 

        12          is deferred to July 11.

        13              COMMISSIONER GALLAGHER:  Motion to defer to 

        14          July 11th.

        15              COMMISSIONER CRAWFORD:  Second.

        16              MR. PIERSON:  Item --

        17              GOVERNOR BUSH:  Motion to defer and a 

        18          second. 

        19              Without objection, it's approved.

        20              MR. PIERSON:  Item 4 is a district charter 

        21          proposal for Sarasota County, which is deferred 

        22          to 7-11.

        23              COMMISSIONER CRAWFORD:  Motion.

        24              SECRETARY HARRIS:  Second.

        25              GOVERNOR BUSH:  There's a motion to defer 

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         1          and a second.

         2              Without objection, it's approved.

         3              MR. PIERSON:  Item 5 is a presentation on 

         4          the district charter proposal for 

         5          Volusia County.

         6              For the Department, Deputy --

         7              COMMISSIONER GALLAGHER:  Let me --

         8              MR. PIERSON:  -- Commissioner, Betty Coxe.

         9              COMMISSIONER GALLAGHER:  Yes. 

        10              Let me just mention for a second, Governor, 

        11          that we have been working with the three 

        12          counties in regards to -- as we mentioned in 

        13          the Sarasota meeting -- in regards to having 

        14          these charter proposals ready for the end of 

        15          this month, hopefully at this meeting. 

        16              And they -- we want to bring them all to 

        17          you at once, if possible.  I think it's very 

        18          good for us to hear from Volusia from their 

        19          standpoint. 

        20              At the same time, we're -- we probably have 

        21          Hillsborough and Volusia pretty close to a -- 

        22          to an agreement on basically a performance 

        23          contract.  And that's what we expect it to be. 

        24              We're a little far apart on Sarasota.  And 

        25          maybe they -- I know the Superintendent's here.  

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         1          He may want to explain how he sees us being far 

         2          apart.  And at the same time, we can explain 

         3          why we see it being far apart.

         4              So we -- can we start now with -- we do 

         5          have Volusia's presentation, Betty? 

         6              MS. COXE:  Yes, sir. 

         7              COMMISSIONER GALLAGHER:  Okay.

         8              MS. COXE:  Good morning, Governor --

         9              GOVERNOR BUSH:  Good morning, Betty.

        10              MS. COXE:  -- members of the State Board.

        11              It's nice to see you this morning. 

        12              We are excited about coming forward to you 

        13          with the charter school district proposals now.  

        14          We do have a presentation. 

        15              Our first one for you today from Volusia 

        16          County.  I think it's important --

        17              (Governor Bush exited the room.)

        18              MS. COXE:  -- to note that all three of our 

        19          counties -- and we have Volusia, Sarasota, and 

        20          Hillsborough -- all three of those have been 

        21          working in their communities about the concept 

        22          of charter school districts. 

        23              Basically that concept is one whereby the 

        24          school district enters into a new arrangement 

        25          with the State Board to offer you results, 

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         1          focused education where they give you 

         2          performance in exchange for what you give them, 

         3          which is more latitude and freedom.

         4              And as occurs with a lot of new programs, 

         5          there is considerable effort needed to work out 

         6          all of the details because we have lots of laws 

         7          in Florida.  And they all exist for good 

         8          reasons.  And we need to be very careful before 

         9          we tell people that it's okay for them not to 

        10          comply with something.

        11              Conversely, the bottom line for us is 

        12          student achievement, and having kids get where 

        13          they need to go.  And if we have laws that are 

        14          serving in any way as barriers to school 

        15          districts being able to produce good results, 

        16          we want to give people freedoms to -- to 

        17          address those issues in various ways.

        18              It's exciting for us today to present to 

        19          you the Superintendent from Volusia County 

        20          Public Schools, Bill Hall, who's going to 

        21          introduce his group to tell you a little bit 

        22          about the Volusia County plan.

        23              MR. HALL:  Good morning. 

        24              I am Bill Hall, Superintendent of 

        25          Volusia County School system.  And I have just 

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         1          completed my 32nd year in education in the 

         2          school district of Volusia County. 

         3              And in view of what took place with 

         4          Lee County, I'm here to change our direction a 

         5          little bit and ask that all the vetoes towards 

         6          Volusia County be reinstituted, and that we be 

         7          given additional -- I'm just kidding you.

         8              Let me thank you seriously for allowing us 

         9          to present our charter district proposal to 

        10          you; and the agreements that we have reached 

        11          with your Cabinet Aides; and, of course, with 

        12          the DOE, and especially Betty Coxe and 

        13          Commissioner Gallagher.

        14              I want to introduce the staff that's behind 

        15          me.  First of all, Deputy Tim Huth; 

        16          Dr. Chris Colwell, who's Assistant 

        17          Superintendent for Curriculum; Rich Kizma, our 

        18          staff attorney, chief negotiator.

        19              And in the audience, Dr. Mary Bennett, who 

        20          is our Government Relations Specialist.

        21              And in their job descriptions, they do 

        22          have -- the last responsibility -- and any 

        23          other duty assigned by the Superintendent.

        24              Volusia County School District is 

        25          61,000 students.  We're the tenth largest 

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         1          school district in the state of Florida.  We're 

         2          probably the 50th largest at last count --

         3              (Governor Bush entered the room.)  

         4              MR. HALL:  -- largest school district in 

         5          the country. 

         6              First of all, let me share with you that 

         7          our agreement was created with countywide 

         8          community involvement.  When we decided that we 

         9          wanted to become a charter district, we went on 

        10          the road and had a number of public meetings 

        11          with our community leaders, and general members 

        12          of the community and parents. 

        13              And as a result of those meetings, we 

        14          developed our first charter district --

        15              (Attorney General Butterworth exited the 

        16          room.) 

        17              MR. HALL:  -- proposal.

        18              Our agreement also addresses the 

        19          Bush/Brogan A+ plan.  We have included some 

        20          extremely high performance goals that address 

        21          the grading of our schools.

        22              In addition, we have addressed what we 

        23          think are the needs of our special education 

        24          population, our ESOL students.  And we've also 

        25          addressed character and value.  And that came 

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         1          from our community input sessions with the 

         2          community.

         3              Our belief in the charter district concept 

         4          is this:  We believe that we can significantly 

         5          increase student achievement faster by becoming 

         6          a charter district.

         7              Commissioner Gallagher released the results 

         8          this morning of the reading and math FCAT 

         9          results.  And our Assistant Superintendent will 

        10          address those.  We've been doing some quick 

        11          analyzing in the audience.  And I am pleased to 

        12          announce that we are pleased with our results, 

        13          even though we want to do much better.

        14              With that brief introduction, I want to 

        15          bring up Tim Huth, our Deputy Superintendent, 

        16          who will talk about the charter district 

        17          proposal that we have submitted to you. 

        18              And also I would like to acknowledge that 

        19          Dr. David Bennett from Sarasota County is in 

        20          the audience.  I believe he is going to 

        21          probably analyze how our presentation goes, and 

        22          be ready to address you on July 11th.

        23              Thank you very much.

        24              MR. HUTH:  Governor, members of the 

        25          Cabinet, I'd like to thank you also for being 

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         1          here today. 

         2              Last year, House Bill 2147 passed 

         3          authorizing up to six pilot districts to become 

         4          charter school districts.

         5              (Attorney General Butterworth entered the 

         6          room.)

         7              MR. HUTH:  And we in Volusia County 

         8          involved a leadership committee of 70 members 

         9          that included PTAs, district advisory committee 

        10          members, our individuals from our bargaining 

        11          units, teachers, cafeteria workers, custodians, 

        12          bus drivers, our business community, making 

        13          sure that we got input from Volusia County 

        14          stakeholders.

        15              On October the 30th, we submitted to the 

        16          Department of Education a pre-charter agreement 

        17          outlining what our focus was, working towards a 

        18          charter agreement proposal that we submitted on 

        19          January the 26th, after it was approved by our 

        20          local School Board.  And it was submitted to 

        21          the Department of Education.

        22              The Volusia County school's vision did 

        23          include two important parts:  Accelerating the 

        24          student learning for each of our students, and 

        25          reaching perfor-- performance goals related to 

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         1          the A+ plan.

         2              Included in, and a very integral part to 

         3          our charter agreement was a management plan 

         4          that we have listed as a phase-in period.  And 

         5          we included a list of 18 State statutes that 

         6          you have in front of you today that we saw in 

         7          rules and regulations from which our 

         8          School Board wanted exemptions from. 

         9              And they are outlined to you in your 

        10          information packet.  Some of them include the 

        11          waiving of categorical funds so that we can 

        12          move the dollars that we see best meets the 

        13          program needs within our school system.  And we 

        14          will give you examples of that in a moment.

        15              Also, we have included performance goals.  

        16          And the performance goals, we feel, are very 

        17          rigorous.  And we had discussions from our 

        18          community about whether to set them at a low 

        19          level that we could reach and feel good about, 

        20          or set them at a very high level, and see 

        21          whether we can hit that high target. 

        22              And the -- under the performance goals, I'd 

        23          like to have Chris Colwell come forward and 

        24          speak to some of our 29 performance goals. 

        25              DR. COLWELL:  Thank you, Mr. Huth.

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         1              My name is Chris Colwell.  I'm 

         2          Assistant Superintendent with Volusia County 

         3          Schools.

         4              As Mr. Huth said, in the Vol-- in the 

         5          Volusia County charter district proposal, there 

         6          are currently 29 performance goals.  Our 

         7          performance goals deal in three basic areas:  

         8          One, high expectations; two, expectations that 

         9          have yearly benchmarks; and, three, a community 

        10          consensus for all the goals.

        11              We believe these goals are rigorous, but, 

        12          frankly, we believe that a world class school 

        13          system must reach towards world class 

        14          standards.  Our 29 goals are targeted for all 

        15          schools.  Our 29 goals are targeted for all 

        16          students.  We are particularly proud that ten 

        17          of our goals target special population schools 

        18          specifically.

        19              As Mr. Hall said, our goals are tied also 

        20          to parent involvement and are values based.  We 

        21          believe that yearly benchmarks must be clearly 

        22          identifiable and measurable. 

        23              And we believe that these goals should be 

        24          aimed at specific and fixed performance 

        25          targets.

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         1              We believe that, in short, our action in 

         2          order to be effective, must be directed towards 

         3          clearly defined ends, and we believe -- we 

         4          believe these goals speak for themselves.

         5              We have held a series of town meetings 

         6          throughout Volusia County; we've had a 

         7          leadership committee consisting of many, many 

         8          teachers, parents, administrators, and business 

         9          leaders.

        10              Our leadership committee, as well as our 

        11          community, has endorsed these goals.

        12              In short, these 29 performance goals are 

        13          clearly defined, have the highest academic 

        14          rigor, are endorsed by our community, and 

        15          benefit all students.

        16              The philosophy of the Volusia County 

        17          charter district proposal regarding these 

        18          goals, and the rigor of these goals, is that we 

        19          would rather reach towards the highest goals, 

        20          and perhaps not succeed in each and every one, 

        21          than reach towards average goals and succeed.

        22              MR. HUTH:  In addition to the performance 

        23          goals that Dr. Colwell spoke to, we wanted to 

        24          deregulate our schools, give the individual 

        25          schools more authority. 

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         1              And under that, we identified 14 areas by 

         2          which schools could immediately come out from 

         3          under the umbrella of central control.  And 

         4          they would be in the area of fiscal management, 

         5          where we could have the dollars go right to the 

         6          school, and they make site-based decisions. 

         7              Or how they may set hours of instruction, 

         8          or out-servicing of services themselves.

         9              Instructional materials selection that they 

        10          think'll best meet their students' population. 

        11              How we do procedures and protocol 

        12          district-wide on the academic improvement plans 

        13          for individual students would be another area 

        14          that at -- that local school would like to see 

        15          changed, they could come forward and submit 

        16          that request to the leadership, and have a 

        17          waiver from those procedures and protocols.

        18              And we know that over the next couple of 

        19          years, as our schools become more confident in 

        20          this -- this environment by which they can 

        21          waive some of the School Board regulations that 

        22          they see will be meeting -- that are 

        23          cumbersome, that we'll have more than the 

        24          14 that are currently submitted before you 

        25          today.

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         1              Another component to this was also 

         2          performance contracts.  And that was one of the 

         3          items that we worked with the Department of 

         4          Education on.  And Rich Kizma, our staff 

         5          attorney, would like to speak to a couple of 

         6          those points. 

         7              MR. KIZMA:  The performance contract was 

         8          basically described in the earlier statement as 

         9          an agreement that exchanges statutory and rule 

        10          exemption for the agreement to make perform-- 

        11          meet performance goals included in the proc-- 

        12          in the proposal.

        13              That, in essence, is what the agreement is 

        14          here.  Usually when we talked about charter 

        15          schools in the past, we've talked about 

        16          individual charter school, and you've had a 

        17          charter or a contract between the school board 

        18          and that individual organization.

        19              Well, this charter district expands that 

        20          whole concept out much wider, and, therefore, 

        21          requires an agreement between the State Board 

        22          of Education and the School Board here. 

        23              In essence, this performance contract 

        24          exists as a similarity to a charter that you 

        25          have on an individual school basis.

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         1              The performance contract draft before you 

         2          have -- and, again, that -- one of the 

         3          frustrating parts about doing something new, 

         4          of course, is that there's no draft out there 

         5          that's a -- there's nothing to copy.  So what 

         6          you have in front of you is just what we have 

         7          been able to come up with in working 

         8          cooperatively with the Department of Education.

         9              It establishes the relationship of the 

        10          parties, showing that there's a less 

        11          restrictive environment for the school district 

        12          to function in, but also recognizes that each 

        13          party continues to have separate duties and 

        14          responsibilities, which each must carry out. 

        15              It also talks about the waivers.  It 

        16          identifies the limits of the waivers that are 

        17          available.  It lists those that'll be utilized 

        18          upon the initiation of the contract.  And also 

        19          though establishes a process for expanding that 

        20          list, as the statute does recognize that the 

        21          charter school district may be something that's 

        22          phased in over time within the three-year 

        23          project. 

        24              And, again, as Mr. Huth described, the 

        25          charter -- the performance contract also 

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         1          includes the goals.  So it's -- covers both the 

         2          waivers and the goals.

         3              GOVERNOR BUSH:  Can I -- well, go ahead.  

         4          I'm -- I'm going to show tremendous 

         5          self-restraint, and not ask a question.

         6              MR. HUTH:  We know that this has been a 

         7          year process.  We started back last August 

         8          working with our community.  And it generated a 

         9          tremendous amount of input at town meetings. 

        10              We had eight town meetings throughout our 

        11          large geographic county.  And we had well over 

        12          500 individuals provide direct input, both 

        13          written and verbal, to what they would like to 

        14          see us, as a charter district, and what it 

        15          would represent to them.

        16              From their input, we gleaned the items that 

        17          were of highest priority, and that's what we 

        18          put in to the perf-- the contract, our 

        19          agreement, and with what we looked at as far as 

        20          on our first initial attempt of identifying 

        21          waivers that our community saw, and they would 

        22          like to see us submit. 

        23              That's how we arrived at the 18 waivers, 

        24          and how we arrived at the first 14 deregulation 

        25          items, was through community input.  And that 

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         1          was very important to us, because we wanted 

         2          buy-in from our stakeholders, because this is 

         3          new territory. 

         4              We looked across the country at any other 

         5          charter districts, and there are none.  And so 

         6          we were going to be creating the template by 

         7          which we think other districts will follow. 

         8              And so to that end, we have worked with 

         9          members in Hillsborough County and in 

        10          Sarasota County, and so collaboratively trying 

        11          to come together with some thinking processes 

        12          that were outside of the box under this new 

        13          freedom.

        14              And to that end, Mr. Hall would like to 

        15          summarize a couple of things, and then we'll 

        16          take questions. 

        17              MR. HALL:  In summarizing, let me just say 

        18          several things.

        19              First of all, we have included in our 

        20          charter district proposal our vision.  Second 

        21          of all, we have included a management plan; 

        22          third, high expectation performance goals; 

        23          three, a performance contract.

        24              And in summarizing why we want to be a 

        25          charter school district:  In the 32 years that 

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         1          I have been in the School District of 

         2          Volusia County, and as a professional educator, 

         3          I believe the charter district legislation is 

         4          perhaps the most important piece of legislation 

         5          that's been passed by the Florida State 

         6          Legislature.

         7              It provides an opportunity for us to go 

         8          where no other district has gone.  The same is 

         9          true for Hillsborough County and 

        10          Sarasota County. 

        11              It provides us an opportunity to say, here 

        12          are the expectations that we will achieve by 

        13          this year and by this time. 

        14              It also provides us an opportunity to ask 

        15          for waivers from what we consider to be 

        16          cumbersome rules and regulations that take up 

        17          time.  And time is money.

        18              It also, in my opinion, is the most 

        19          significant piece of legislation that will 

        20          allow any school district to accelerate -- and 

        21          I want to emphasize -- accelerate student 

        22          achievement faster than what we normally would 

        23          be able to do.

        24              And as we've analyzed our test results 

        25          today briefly in the audience, we're headed 

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         1          towards that goal.  We believe that as a 

         2          charter district, we will accelerate that 

         3          student achievement much more rapidly than what 

         4          we'll do as a normal school district.

         5              And with that, once again, let me thank you 

         6          for allowing us to make our presentation. 

         7              And I think we were within our 15-minute 

         8          allocation time. 

         9              Let me thank Commissioner Gallagher and his 

        10          staff, particularly Betty Coxe; and also your 

        11          Cabinet Aides for listening to us over this 

        12          past year.

        13              Thank you very much.

        14              We're open for questions.

        15              GOVERNOR BUSH:  Any questions?

        16              I have a few.

        17              Why -- 29 goals.  It seems like -- and they 

        18          were -- and, by the way, I -- they were 

        19          excellent.

        20              I coul-- I couldn't think of one that I 

        21          wouldn't have added, you know, that -- you 

        22          covered the entire range of things that I think 

        23          people want, and what I know educators want. 

        24              And -- and I applaud particularly the fact 

        25          that you did not leave behind the ESE kids, 

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         1          which sometimes are left behind in this 

         2          process. 

         3              And so I -- I -- I have no criticism of 

         4          what you're measuring and what your 

         5          expectations are.  I wonder if it's too many 

         6          though. 

         7              I mean, as an insti-- should you talk 

         8          about -- are you -- you worried with 29 

         9          different things that you're aspiring to, that 

        10          you might get three-quarters of the way to all 

        11          of them, instead of 100 percent of the way to 

        12          ten of them?

        13              MR. HUTH:  We sure did.  And actually we 

        14          had more than 29, and we cut down from there. 

        15              And that was a difficult task because, once 

        16          again, we valued our community input.  And as 

        17          they did that, we at the district office were 

        18          more thinking along the lines of pretty much 

        19          just A+ plan when we started this effort. 

        20              And then we heard from ESOL students; from 

        21          ESE; then we heard about, what about parent 

        22          commitment and involvement?  Shouldn't they be 

        23          held accountable to some sort of a goal for 

        24          themselves? 

        25              And so how could we leave those things out? 

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         1              And actually we combined some of the ones 

         2          that we received requests on, and got them to 

         3          the 29.  And you're exactly right.  I mean, 

         4          continually -- even as late as driving up last 

         5          night, we're saying, wow, 29.  You know, what 

         6          if we make 28 of them, and not the 29th, is 

         7          that a success? 

         8              Hey, our answer is, yes, I think that's a 

         9          tremendous success.  And it's ambitious, and 

        10          it's going to be a challenge.  But, you know, 

        11          we're going to work -- 

        12              GOVERNOR BUSH:  I think some of them are 

        13          self-fulfilling.

        14              MR. HUTH:  Yes, they are.

        15              GOVERNOR BUSH:  If you achieve some of 

        16          them, you're going to make it easier to achieve 

        17          the reading and math and others as well.  I -- 

        18          so it's not a -- it's not necessarily a 

        19          contradiction. 

        20              But generally I would think that the 

        21          management gurus would suggest that you're -- 

        22          when you focus, 29 would not be necessarily a 

        23          definition of focus.

        24              MR. HUTH:  I appreciate that.  We --

        25              GOVERNOR BUSH:  Anyway.

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         1              MR. HUTH:  -- recognize that.

         2              GOVERNOR BUSH:  I could not -- the -- I 

         3          tried to read the -- most of the proposal over 

         4          the weekend, and -- and I -- can you 

         5          describe -- there's -- there's two -- you have 

         6          a waiver process with the Department of 

         7          Education on particular rules?

         8              And you mentioned it in the presentation, 

         9          that there's some specific ones that you're 

        10          seeking through the contract. 

        11              And then you have a series of Board rules 

        12          at the local level. 

        13              Which ones are the more profoundly 

        14          important ones for this to work? 

        15              MR. HUTH:  Well, I think ones that we like 

        16          to see from the State Board waivers.  

        17          For instance, I mentioned the one about waiving 

        18          categorical funding.

        19              To give you --

        20              (Secretary Harris exited the room.)

        21              MR. HUTH:  -- a brief example, we have an 

        22          instructional materials categorical fund to buy 

        23          textbooks.

        24              GOVERNOR BUSH:  Uh-hum.  

        25              MR. HUTH:  And we've spent our money and 

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         1          had dollars left over.  Every student in our 

         2          county had the textbook required for the 

         3          course, so they were not without. 

         4              Then we still had dollars left over. 

         5              Well, what we wanted to do was move those 

         6          dollars into art teacher's accounts for things 

         7          that they need, like, for their instructional 

         8          materials; if I'm a ceramics teacher, clay. 

         9              Well, we couldn't move that money into the 

        10          art account because of the restrictions on how 

        11          the categorical dollars for instructional 

        12          materials must be sent -- be spent.  It must be 

        13          a textbook, it must be -- have a list of 

        14          instructions, it has to have a certain design 

        15          to it. 

        16              And we had to work with vendors for them to 

        17          come up with an instructional text to go along 

        18          with the clay that we wanted to buy so we could 

        19          have -- we spent two months trying to get into 

        20          the mode of providing instructional materials 

        21          for teachers other than a textbook. 

        22              That would be an example of --

        23              GOVERNOR BUSH:  How -- that's a great one.  

        24          I'm glad -- that's exactly what I was thinking 

        25          you were going to respond.

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         1              And -- and how many waivers are you 

         2          proposing to begin with? 

         3              MR. HUTH:  There's 18 to begin with right 

         4          now.  And that's a -- an initial start.  And we 

         5          expect over the next couple of years, we'll 

         6          identify others.

         7              GOVERNOR BUSH:  I think it would be 

         8          appropriate, Commissioner, to take this 

         9          process, and -- and apply it -- or help the 

        10          other 64 districts as well --

        11              COMMISSIONER GALLAGHER:  Well --

        12              GOVERNOR BUSH:  There is a waiver process 

        13          irrespective of --

        14              COMMISSIONER GALLAGHER:  Yeah.

        15              GOVERNOR BUSH:  -- irregardless --

        16              COMMISSIONER GALLAGHER:  I was just going 

        17          to --

        18              GOVERNOR BUSH:  -- of school districts -- 

        19              COMMISSIONER GALLAGHER:  I was just going 

        20          to ask you a question.

        21              Did you look at the ability for you to 

        22          apply for a waiver in regards to the 

        23          categories?  I know there's some things you 

        24          cannot get waivers on. 

        25              Is that one of the ones you cannot --

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         1              MR. HUTH:  That was one of the ones that we 

         2          could not.

         3              COMMISSIONER GALLAGHER:  But the new 

         4          charter district will allow us to --

         5              MR. HUTH:  That's correct.

         6              COMMISSIONER GALLAGHER:  -- to do this.

         7              And what we need to do is look at the 

         8          ability to waive other ones with good reason --

         9              GOVERNOR BUSH:  I mean, there's a great 

        10          example of -- I don't think anybody would argue 

        11          that there shouldn't be some flexibility, 

        12          whether you're a charter school district or 

        13          not, to be able to manage that money.  I mean, 

        14          that --

        15              COMMISSIONER GALLAGHER:  Well --

        16              GOVERNOR BUSH:  -- it might be good to have 

        17          these best practices or just suggestions that 

        18          you've -- since you're -- you've gone through a 

        19          process of venting these ideas with real people 

        20          and teachers and educators who you've asked 

        21          their opinion. 

        22              I think it's of great value to --

        23              COMMISSIONER GALLAGHER:  Share that.

        24              GOVERNOR BUSH:  -- Lee County School 

        25          District or --

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         1              MR. HUTH:  Share that.

         2              COMMISSIONER GALLAGHER:  One of our --

         3              GOVERNOR BUSH:  -- Dade County.

         4              COMMISSIONER GALLAGHER:  -- one of our past 

         5          historic problems is that legislators hear the 

         6          complaints that each child doesn't have a book; 

         7          and although in the last three years plus, we 

         8          have funded every single request that the 

         9          districts have asked for in regards to it, some 

        10          districts have spent their money and have 

        11          excess money; others don't have excess money, 

        12          and --

        13              GOVERNOR BUSH:  Right.

        14              COMMISSIONER GALLAGHER:  -- the kids don't 

        15          have books.

        16              So I don't know how you answer the question 

        17          we've been trying to answer for three years.  

        18          When you give them all the money they ask for, 

        19          and yet they still don't have the books, I 

        20          can't answer that question --

        21              GOVERNOR BUSH:  You need to be -- 

        22              COMMISSIONER GALLAGHER:  -- but I do know 

        23          that if they have --

        24              GOVERNOR BUSH:  -- armed with the truth.

        25              COMMISSIONER GALLAGHER:  -- excess, they 

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         1          ought to be able to spend it on something else.

         2              GOVERNOR BUSH:  We need to be armed with 

         3          the truth, and this is the truth.  And this 

         4          will help us with --

         5              COMMISSIONER GALLAGHER:  In this district.

         6              GOVERNOR BUSH:  -- with the Legislature.

         7              COMMISSIONER GALLAGHER:  For this district.

         8              GOVERNOR BUSH:  Well, but there are other 

         9          examples -- 

        10              COMMISSIONER GALLAGHER:  I would think so.  

        11          No, I -- listen, I'm -- I'm all for being able 

        12          to waive as --

        13              GOVERNOR BUSH:  I want the --

        14              COMMISSIONER GALLAGHER:  -- much of the --

        15              GOVERNOR BUSH:  -- let's tell the 

        16          Legislature to stop trying to micromanage 

        17          how -- how schools operate, and focus, as they 

        18          have, I think, on funding and -- and having 

        19          high expectations.

        20              COMMISSIONER GALLAGHER:  Inc--

        21              GOVERNOR BUSH:  So -- 

        22              COMMISSIONER GALLAGHER:  Including, 

        23          you know, naming all the reading programs and 

        24          everything else that they micromanage.

        25              GOVERNOR BUSH:  Yep.

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         1              Any -- I have -- I have a couple more 

         2          questions.

         3              The -- the pay, that -- that is not a 

         4          waiver that you sought or could seek, I'm not 

         5          sure which.

         6              COMMISSIONER GALLAGHER:  They could.

         7              GOVERNOR BUSH:  Performance pay? 

         8              MR. HUTH:  We feel that they -- we could.

         9              GOVERNOR BUSH:  Why can --

        10              MR. HUTH:  You know, when we put this 

        11          package together, it was prior to the 

        12          legislative session --

        13              DR. COLWELL:  And we do have in the school 

        14          deregulation piece, Governor, two issues, which 

        15          we're very excited about, that go directly to 

        16          that. 

        17              One is the opportunity for 11-month and 

        18          12-month teacher contracts.

        19              GOVERNOR BUSH:  Right.

        20              DR. COLWELL:  And also the opportunity for 

        21          the superintendent to award bonus pay for 

        22          teachers.  And that's under the school --

        23              GOVERNOR BUSH:  That's part of your plan.

        24              DR. COLWELL:  -- deregulation piece.

        25              Yes, sir.  That's in the plan.

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         1              COMMISSIONER GALLAGHER:  So you're going to 

         2          put -- it's already in there, or you're going 

         3          to add it?

         4              MR. HUTH:  It's in there.

         5              DR. COLWELL:  It is in the plan right now 

         6          that you have in front of you.

         7              COMMISSIONER GALLAGHER:  So there's a bonus 

         8          program in the plan.

         9              DR. COLWELL:  There is an -- there is an 

        10          opportunity for the superintendent to do that.

        11              GOVERNOR BUSH:  That was the -- that would 

        12          be my one piece of constructive criticism of 

        13          the plan is that you -- you've set -- the 

        14          process you all went through was extraordinary. 

        15              You covered the areas that I think are 

        16          important to make -- to see rising student 

        17          achievement, as the superintendents ultimately 

        18          say is the one goal that -- that is the main 

        19          objective here. 

        20              But the -- there is no alignment of 

        21          economic interests for all the people that are 

        22          required to make this happen to be successful.

        23              I mean, that can take the form of bonuses.  

        24          But it also can take a -- the form of, as the 

        25          law requires, a percentage of the increases 

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         1          that teachers receive tied to student 

         2          achievement. 

         3              Principals again I think clearly, if you're 

         4          going to give them more freedom, they have a 

         5          higher responsibility.  There may be -- be some 

         6          possibilities of higher pay for principals 

         7          based on performances since you're asking them 

         8          to do more.

         9              By the way, I think they might need a 

        10          little bit more development work if you're 

        11          going to give them the -- similar to what 

        12          Sarasota's going to go through -- you --

        13              (Secretary Harris entered the room.)

        14              GOVERNOR BUSH:  -- you're turning -- you 

        15          may turn principals into entrepreneurs in these 

        16          plans.  And you've got to -- they have to have 

        17          certain skill sets, I think, of leaders now, 

        18          not as much being managers waiting for the memo 

        19          from the home office; they have to actually 

        20          carry out the mission now.  And -- and that may 

        21          require some alignment of pay as well.

        22              And I just throw that out as a suggestion, 

        23          that all of these -- we should align -- we 

        24          should establish what the objectives are, and 

        25          we should align, frankly, everybody's pay, in 

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         1          State government and -- and in school districts 

         2          across-the-board towards achieving what we say 

         3          is our priority.

         4              MR. HUTH:  We appreciate that, and -- and 

         5          we recognize it.  And -- and we say that we're 

         6          going to phase in different parts because we 

         7          don't look at this year to be the end. 

         8              We're going to identify some legislature 

         9          (sic) that comes up next year that we feel we 

        10          may want to waive from.  And we would get with 

        11          the Department of Education and identify what 

        12          that might be -- 

        13              GOVERNOR BUSH:  Prewaivers? 

        14              MR. HUTH:  Yeah.  Well --

        15              COMMISSIONER GALLAGHER:  Well, wait till 

        16          the law passes, then get the waiver.

        17              MR. HUTH:  Yes.  Exactly. 

        18              And we see this as evolving and continuing 

        19          to be a fluid plan.  And the issues you brought 

        20          up is something that we recognize, especially 

        21          when House Bill 63 passed this year with the 

        22          whole range of performance goals and -- and 

        23          contracts that could come about. 

        24              And as Chris said, the 11-month contract 

        25          and 12-month for the teacher, that would be 

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         1          something that would be truly beneficial, 

         2          increase in pay, recognizing their effort, 

         3          you know, and commitment that they would have 

         4          to make. 

         5              And so I think we will see these things 

         6          coming forward, and we will be working with DOE 

         7          to identify those items.

         8              GOVERNOR BUSH:  I have one more question.  

         9          And that is, how are you going to -- is there a 

        10          constant feedback process with your -- what you 

        11          called stakeholders? 

        12              MR. HUTH:  Yes, there is.

        13              In fact, if this was approved today -- 

        14          well, or July the 11th, what we would -- our 

        15          next step is to get back to our leadership 

        16          committee, and give them the input that we've 

        17          received from this State Board of Education, 

        18          and then we would be getting back through Board 

        19          meetings and additional town meetings with 

        20          follow-up questions that they may have on 

        21          what's next, and then ask them for any 

        22          additional ideas that they may have.

        23              So this is going to be an ongoing process.

        24              COMMISSIONER GALLAGHER:  How many -- how 

        25          many schools do you think are going to 

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         1          participate in your program? 

         2              MR. HUTH:  Under the deregulation? 

         3              COMMISSIONER GALLAGHER:  Right.

         4              MR. HUTH:  With the 14 items that are out 

         5          there, we'll have some risk takers that might 

         6          try to do and request all 14. 

         7              I see some of them looking at the umbrella 

         8          waiver of State statutes first, and then 

         9          picking maybe which ones that they would feel 

        10          comfortable in instituting this first year. 

        11              It might be waiving our protocol and 

        12          requirements for the AIPs, the Academic 

        13          Improvement Plans, where they think it's maybe 

        14          too much paperwork, and reduce it down.  And 

        15          what they would come in is let us know what 

        16          they would do in place of that. 

        17              We still want the communication to get to 

        18          the parent, but they might have a better way of 

        19          doing it, other than the protocols that we 

        20          currently have set forward for all of our 

        21          schools. 

        22              And I think we'll see those immediately.

        23              COMMISSIONER GALLAGHER:  Well, those are 

        24          some of the things that make a lot of people 

        25          the most nervous, too, when, in fact --

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         1              MR. HUTH:  Uh-hum.

         2              COMMISSIONER GALLAGHER:  -- you eliminate 

         3          a -- a written plan for an individual student 

         4          that -- that needs a plan.

         5              MR. HUTH:  Well, we're -- we're saying 

         6          we're still going to have that.  But they may 

         7          give a vehicle that's different than the one we 

         8          created.

         9              COMMISSIONER GALLAGHER:  Okay.  

        10          That's fair.

        11              MR. HUTH:  Yeah.  I see that happening 

        12          across our 66 schools.

        13              COMMISSIONER GALLAGHER:  And I want you to 

        14          know, our goal is not to have legislation pass 

        15          that -- that adds more restrictions and -- and 

        16          causes more paperwork.  I can tell you from our 

        17          standpoint.

        18              MR. HUTH:  I'm sure you've heard about 

        19          that.

        20              Yes.

        21              GOVERNOR BUSH:  Any other questions or 


        23              Commissioner, would you like to hear from 

        24          the Superintendent of Sarasota?

        25              COMMISSIONER GALLAGHER:  I would.

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         1              GOVERNOR BUSH:  This is deferred till 

         2          July 11th, is that -- 

         3              COMMISSIONER GALLAGHER:  That's correct.

         4              We're going to try and take the three up on 

         5          July 11th. 

         6              We're real close to a final agreement 

         7          signed with Volusia.  Of course, pending Board 

         8          approval. 

         9              But we're real close to a product that we 

        10          believe the Board's going to approve for -- 

        11          with Volusia. 

        12              Hillsborough, we're closer, and we hope to 

        13          be a lot closer --

        14              We have a ways to go on Sarasota, in my 

        15          opinion, anyway.  Maybe the Superintendent may 

        16          disagree.  But we certainly -- I'm glad to hear 

        17          from him.

        18              SECRETARY HARRIS:  Governor --

        19              GOVERNOR BUSH:  Yes.

        20              SECRETARY HARRIS:  -- with regard to 

        21          Sarasota, I think that there's not been the 

        22          communication going back and forth.  But 

        23          I think they're making a lot more progress. 

        24              And -- and the Superintendent has said that 

        25          he'll be up here for the next two weeks working 

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         1          diligently with your staff.  And I think 

         2          hopefully that we'll both be able to come to 

         3          the table, and we'll be a lot more far -- 

         4          they'll be a lot more farth-- a lot farther 

         5          ahead by then.

         6              COMMISSIONER GALLAGHER:  We hope so. 

         7              We can hear from him right now.

         8              DR. BENNETT:  Thank you for the invitation.

         9              Governor, and members of the State Board of 

        10          Education, Commissioner Gallagher. 

        11              The Secretary of State has really offered 

        12          up my -- my commentary on the situation.  That 

        13          is simply that we are prepared to meet and work 

        14          diligently with representatives of the 

        15          Department of Education to come to a conclusion 

        16          such that you have before you on July 11th. 

        17              A rep-- a representative recommendation for 

        18          that is consistent with the Department of 

        19          Education's view, and also our view.

        20              I'm unaware at this point in time of any 

        21          differences between the Department and us, 

        22          and because we've not had an opportunity to 

        23          have any conversation whatsoever in this 

        24          matter. 

        25              But we've had conversations with 

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         1          representatives of the Department here today, 

         2          and they've -- they've pledged to work with us.  

         3          And we will look forward to working with them, 

         4          and working to a resolution, being back before 

         5          you on July 11th.

         6              Thank you very much.

         7              COMMISSIONER GALLAGHER:  Well, let -- let 

         8          me just fill you in on what the law says, and 

         9          what we're expecting to have happen.

        10              One of them is that if you request an 

        11          exemption from a statute or rule, that you give 

        12          the reason for it so that we can have some kind 

        13          of a quid pro quo. 

        14              We don't -- we don't hold you to that 

        15          statute; you, in trade, give us some kind of 

        16          student performance. 

        17              And as you're probably aware, we have 

        18          almost all of Chapter 228; this is the list of 

        19          all the exemptions they want from 230; this is 

        20          the list of all the exemptions -- the 

        21          individual statute of 231; here's 232's 

        22          exemptions; here's 233's exemptions; there's 

        23          two on 234; here's all of 235's, educational --

        24              So all of these exemptions with no -- what 

        25          we get in return.  And so that's one of the 

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         1          beginnings of what we need to do.

         2              We're interested in how we're going to -- 

         3          and Volusia's is a good example on what they 

         4          show they're going to do with school 

         5          performance and student performance within 

         6          their district, in trade for, you know, being a 

         7          charter district. 

         8              And -- and also in the -- the measurement 

         9          that is going to be used will be not a school 

        10          district driven measurement that includes 

        11          socioeconomic background, but a measurement 

        12          that every other school and student has used in 

        13          this state, which is going to be the FCAT, 

        14          reading, writing, math.

        15              I just want to make myself clear on that.  

        16          This Board has spoken very strongly on that, 

        17          and I just wanted to reiterate it.

        18              And if you're here for two weeks, and you 

        19          can get it done, I'm going to be thrilled.

        20              DR. BENNETT:  And, Commissioner Gallagher, 

        21          in that packet, you'll -- elsewhere in that 

        22          packet, you'll see our stated reason for 

        23          seeking those exemptions. 

        24              And also you'll see a letter addressed to 

        25          you in February that made it very clear that we 

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         1          are not seeking any exemption whatsoever from 

         2          the State measurement techniques.

         3              COMMISSIONER GALLAGHER:  And we're also not 

         4          looking forward to you having your own 

         5          technique also to say, well, ours is really 

         6          better than the State's is.

         7              DR. BENNETT:  And, again, all that language 

         8          was specifically exempted from the proposal, as 

         9          communicated in that letter in February.

        10              COMMISSIONER GALLAGHER:  I saw -- I have 

        11          copies of the letter in February.

        12              Each -- each law exemption that you request 

        13          should have a reason for that particular -- not 

        14          if you'd exempt us from that one, or all of 

        15          them, you know, we'll be free, and we'll be 

        16          able to do a lot of great things. 

        17              It's got to be specific to the individual 

        18          statute, and that's what the law requires.  And 

        19          so I hope that y'all will work on that.

        20              DR. BENNETT:  Okay.

        21              GOVERNOR BUSH:  Any other questions?

        22              Thank you, Superintendent.

        23              COMMISSIONER GALLAGHER:  I'd like to move 

        24          that Items 6 through 13 be withdrawn so that we 

        25          can work out some amendments that need to be 

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         1          done, and also work with JAPC and others on how 

         2          to bring and keep track of what is a 

         3          Commissioner and what is a Board rule.

         4              ATTORNEY GENERAL BUTTERWORTH:  Second.

         5              GOVERNOR BUSH:  There's a motion and a 

         6          second to defer -- defer Item 6 --

         7              MR. PIERSON:  Withdraw.

         8              GOVERNOR BUSH:  -- through 13 --

         9              COMMISSIONER GALLAGHER:  Withdraw. 

        10              MR. PIERSON:  Withdraw.

        11              COMMISSIONER GALLAGHER:  Withdraw.  Because 

        12          we may have to --

        13              GOVERNOR BUSH:  Withdraw?

        14              COMMISSIONER GALLAGHER:  -- we have to 

        15          bring them back completely different.

        16              GOVERNOR BUSH:  When are you going to bring 

        17          them back? 

        18              COMMISSIONER GALLAGHER:  How soon? 

        19              MR. PIERSON:  They'll have to go through 

        20          the complete administrative process.  The -- 

        21          the problem is, some of these rules are going 

        22          to be split into Commissioner's rules, unless 

        23          we can get a ruling from JAPC that we don't 

        24          have to.

        25              Some of them are going to be Commissioner's 

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         1          rules, some are going to --

         2              COMMISSIONER GALLAGHER:  See --

         3              MR. PIERSON:  -- be Board rules --

         4              COMMISSIONER GALLAGHER:  -- here -- here's 

         5          a -- 

         6              MR. PIERSON:  There are amendments already 

         7          to some -- that are voluminous because of some 

         8          of the outside --

         9              COMMISSIONER GALLAGHER:  We do have some 

        10          pretty major amendments. 

        11              But one of the problems that we have in 

        12          education probably only, and we ran into this 

        13          problem when we did the beverage approval. 

        14              And that is that we have rules that the 

        15          Commissioner has the authority to move on, and 

        16          rules that require the State Board to move. 

        17              My personal opinion, and what makes all the 

        18          sense in the world, is that if I choose as a 

        19          Commissioner to bring one to the State Board,  

        20          and the State Board's approve it, well, my -- 

        21          what's the difference between me doing it 

        22          myself, and the State Board doing it?

        23              I mean, my goodness, if I -- I wouldn't 

        24          have brought it here if I didn't want it.  

        25          Which is what I did in the -- in the beverage 

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         1          approval for the high school kids to buy Cokes.

         2              That is a rule that I could have done as a 

         3          Commissioner rule.  I thought it was of high 

         4          enough significance that the Board should -- I 

         5          wanted some -- some -- some --

         6              ATTORNEY GENERAL BUTTERWORTH:  Cover.

         7              COMMISSIONER GALLAGHER:  -- you can call it 

         8          cover.  I was willing to do it on my own.  

         9          But --

        10              GOVERNOR BUSH:  Yeah.

        11              COMMISSIONER GALLAGHER:  -- it's an 

        12          issue --

        13              GOVERNOR BUSH:  I remember that.

        14              COMMISSIONER GALLAGHER:  I mean, I -- I 

        15          still get the heat for bringing it, one way or 

        16          the other. 

        17              But I -- 

        18              GOVERNOR BUSH:  They still --

        19              COMMISSIONER GALLAGHER:  -- I wanted -- 

        20              GOVERNOR BUSH:  -- call me --

        21              COMMISSIONER GALLAGHER:  -- I thought it 

        22          was --

        23              GOVERNOR BUSH:  -- Coca-Cola boy out at -- 

        24          in the --

        25              COMMISSIONER GALLAGHER:  I thought it was 

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         1          an issue that -- that should be discussed, and 

         2          that -- in an open setting, as opposed to a -- 

         3          you know, a rule hearing. 

         4              And --

         5              GOVERNOR BUSH:  Were you going to need 

         6          cover on this one, or not? 

         7              Because I want -- I want to give you cover 

         8          on this one. 

         9              COMMISSIONER GALLAGHER:  This --

        10              GOVERNOR BUSH:  This is --

        11              COMMISSIONER GALLAGHER:  There are some 

        12          areas here that are very important that should 

        13          be discussed among this Board.

        14              GOVERNOR BUSH:  I agree.

        15              COMMISSIONER GALLAGHER:  And what we're 

        16          going to ask JAPC to -- for -- for their -- 

        17          you know, I guess advice and consent, is that a 

        18          rule brought by the Commissioner is 

        19          obviously -- it can -- can be a Commissioner's 

        20          rule or a Board rule, so that we don't have to 

        21          nitpick down here where there's maybe one 

        22          little section where this area could be done by 

        23          the Commissioner, and another one has to be 

        24          done by the Board. 

        25              And now, what we're going to go spend a 

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                                   June 26, 2000
         1          whole bunch of time is to make sure all these 

         2          are separated so that anybody wants to 

         3          challenge them, they could use one of these 

         4          little nit-picking, you know, process things, 

         5          as --

         6              GOVERNOR BUSH:  Right.

         7              COMMISSIONER GALLAGHER:  -- opposed to the 

         8          other. 

         9              Now, if -- if -- I mean, so what we're -- 

        10          the real truth is we're withdrawing them so 

        11          that we can go through all this, and which is 

        12          going to be very time consuming, nit-picking, 

        13          and still could leave some opening for somebody 

        14          that wants to challenge.  Which I'd prefer not 

        15          to have.

        16              I think that if the Commissioner brings a 

        17          rule to the Board, and somebody wants to say, 

        18          well, that really -- the Commissioner had the 

        19          authority himself, so what? 

        20              I mean, if I brought it, I voted for it, I 

        21          want it, the Board also votes for it, I don't 

        22          see how that can hurt anything.

        23              Maybe the Attorney General can help us on 

        24          an opinion with this, because it's --

        25              GOVERNOR BUSH:  He's voluntarily doing 

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         1          this, puts himself subject to -- subject to 

         2          a -- to a suit -- to a -- being contested.

         3              ATTORNEY GENERAL BUTTERWORTH:  But if 

         4          everybody votes for it, then he's -- and he's 

         5          voting for it, I mean, he just basically --

         6              COMMISSIONER GALLAGHER:  How can that not 

         7          be a Commissioner's rule, right?

         8              ATTORNEY GENERAL BUTTERWORTH:  Yeah.  

         9          That's a -- can be a Commiss-- can be a 

        10          Commissioner's rule, but -- but if we vote no, 

        11          and you vote yes, it could still be a 

        12          Commissioner's rule.

        13              COMMISSIONER GALLAGHER:  That's correct.

        14              ATTORNEY GENERAL BUTTERWORTH:  Right.

        15              COMMISSIONER GALLAGHER:  But I'm not trying 

        16          to -- you know, I -- I can't imagine that I'd 

        17          want to take a stand that the other six of you 

        18          disagree with.  I mean, I just not -- that's --

        19              ATTORNEY GENERAL BUTTERWORTH:  You're 

        20          asking --

        21              COMMISSIONER GALLAGHER:  -- not my --

        22              ATTORNEY GENERAL BUTTERWORTH:  -- for 

        23          advice, but you're asking for it in a -- in -- 

        24          in the sunshine. 

        25              It may very well be, Governor, that -- that 

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         1          if he was to ask us -- it could be a 

         2          Commissioner's rule, but since we sit as -- as 

         3          the State Board of Education, he wants our -- 

         4          our input, but he can't talk to us 

         5          individually, so he really has to talk to us up 

         6          here.

         7              COMMISSIONER GALLAGHER:  Which is what I 

         8          did on the Coke rule basically.

         9              And -- I should say beverage --

        10              GOVERNOR BUSH:  Soft drink rule.

        11              COMMISSIONER GALLAGHER:  Soft drink rule.

        12              Pepsi.  I'm sorry, Pepsi, Dr. Pepper.  I 

        13          don't want to miss anybody.

        14              Anyway, that's -- if -- if we could get -- 

        15          maybe our Department could get some help with 

        16          your Department on this, and maybe with JAPC, 

        17          we can get this straightened out.

        18              The Secretary of State's office was 

        19          involved last time because they -- they accept 

        20          all the filing of the rules.  And if we could 

        21          get that smoothed over, we won't have to do as 

        22          much work on these -- technical work that -- 

        23          that really takes up a lot of time and get 

        24          us -- really doesn't -- 

        25              GOVERNOR BUSH:  These were good --

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         1              COMMISSIONER GALLAGHER:  -- get us 

         2          anywhere.

         3              GOVERNOR BUSH:  -- these were good rules, 

         4          and a lot of people -- a lot of families with 

         5          kids with --

         6              COMMISSIONER GALLAGHER:  And I want to get 

         7          them passed as soon as possible. 

         8              Now, would -- I tell you what we'll do. 

         9              Let's do this:  Let's defer them.  And if 

        10          we find we've got to do brand new ones, between 

        11          what happens with the Attorney General's Office 

        12          and JAPC and everything else, we can still 

        13          bring new ones. 

        14              I mean, that's not going to stop us from 

        15          doing that.  But if we can bring these as -- as 

        16          deferred, and if -- if we can't get them fixed 

        17          the way they need to be, we'll redo them.

        18              How's that? 

        19              That -- that way they're still alive.

        20              GOVERNOR BUSH:  There's a motion to defer.

        21              Is there a second? 

        22              ATTORNEY GENERAL BUTTERWORTH:  Second.

        23              GOVERNOR BUSH:  Without objection, it is -- 

        24          it is approved.

        25              Thank you, Commissioner.

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         1              COMMISSIONER GALLAGHER:  Thank you. 

         2              ATTORNEY GENERAL BUTTERWORTH:  That's it?

         3              GOVERNOR BUSH:  That's it.

         4              COMMISSIONER CRAWFORD:  That's it.  

         5          All right.

         6              (The State Board of Education Agenda was 

         7          concluded.)

         8                              *   *   *

         9              (The Cabinet meeting was concluded at 

        10          12:20 p.m.)
















                        ACCURATE STENOTYPE REPORTERS, INC.

                                   June 26, 2000
         1                    CERTIFICATE OF REPORTER




         5     STATE OF FLORIDA:

         6     COUNTY OF LEON:

         7              I, LAURIE L. GILBERT, do hereby certify that 

         8     the foregoing proceedings were taken before me at the 

         9     time and place therein designated; that my shorthand 

        10     notes were thereafter translated; and the foregoing 

        11     pages numbered 72 through 223 are a true and correct 

        12     record of the aforesaid proceedings.

        13              I FURTHER CERTIFY that I am not a relative, 

        14     employee, attorney or counsel of any of the parties, 

        15     nor relative or employee of such attorney or counsel, 

        16     or financially interested in the foregoing action.

        17              DATED THIS 7TH day of JULY, 2000. 


        20                   LAURIE L. GILBERT, RPR, CCR, CRR, RMR
                             100 Salem Court
        21                   Tallahassee, Florida 32301




                        ACCURATE STENOTYPE REPORTERS, INC.