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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
                              VOTE ON AUTHORIZATION OF
                              DIVISION OF BOND FINANCE
                              STATE BOARD OF EDUCATION
                              BOARD OF TRUSTEES OF THE
                           INTERNAL IMPROVEMENT TRUST FUND
                           STATE BOARD OF ADMINISTRATION
                                      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 Wednesday, 
               May 30, 2001, commencing at approximately 9:13 a.m. 
                                    Reported by:
                               LAURIE L. GILBERT COX
                          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

2 APPEARANCES: Representing the Florida Cabinet: JEB BUSH Governor CHARLES H. BRONSON Commissioner of Agriculture BOB MILLIGAN Comptroller KATHERINE HARRIS Secretary of State BOB BUTTERWORTH Attorney General TOM GALLAGHER Treasurer CHARLIE CRIST Commissioner of Education * * * ACCURATE STENOTYPE REPORTERS, INC.
3 May 30, 2001 I N D E X ITEM ACTION PAGE VOTE ON AUTHORIZATION OF TEMPORARY DUTY: 1 Approved 4 DIVISION OF BOND FINANCE: (Presented by J. Ben Watkins, III, Director) 1 Approved 5 2 Approved 7 3 Approved 7 4 Approved 8 DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES: (Presented by Fred O. Dickinson, III, Executive Director) 1 Approved 9 2 Approved 9 3 Approved 9 4 Approved 15 STATE BOARD OF EDUCATION: (Presented by Wayne V. Pierson, Deputy Commissioner) 1 Approved 16 2 Deferred 112 3 Approved 162 4 Approved 162 CERTIFICATE OF REPORTER 163 * * * ACCURATE STENOTYPE REPORTERS, INC.
VOTE ON AUTHORIZATION/TEMP DUTY 4 May 30, 2001 1 P R O C E E D I N G S 2 (The agenda items commenced at 9:50 a.m.) 3 GOVERNOR BUSH: The next vote for the 4 Authorization of Temporary Duty for Former 5 Parole Commissioners. 6 As you know, the statutes authorize the 7 Florida Parole Commission to assign temporary 8 duties to former Commissioners, with the 9 approval of the Governor and the Cabinet. 10 At this time, I'd like to seek that 11 approval. 12 All in favor of -- in the -- I don't know 13 if you all received the list of the -- 14 COMPTROLLER MILLIGAN: We did. 15 GOVERNOR BUSH: -- former Commissioners 16 that could serve, if called upon. 17 All in favor -- 18 TREASURER GALLAGHER: I move approval. 19 GOVERNOR BUSH: -- say aye. 20 THE CABINET: Aye. 21 GOVERNOR BUSH: All opposed? 22 Very good. 23 (The Vote on Authorization of Temporary 24 Duty for Former Parole Commissioners Agenda was 25 concluded.) ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 5 May 30, 2001 1 GOVERNOR BUSH: The next Cabinet meeting 2 will be held on June 12th, 2001. 3 Division of Bond Finance. 4 MR. WATKINS: Good morning, Governor. 5 Item Number 1 is approval of the minutes of 6 the May 15 meeting. 7 COMPTROLLER MILLIGAN: Move. 8 TREASURER GALLAGHER: Motion. 9 COMMISSIONER CRIST: Motion. Whatever. 10 GOVERNOR BUSH: Is there a second? 11 Moved and seconded. 12 Without objection, it's approved. 13 MR. WATKINS: Item Number 2 is a resolution 14 authorizing the competitive sale of up to 15 50 million dollars in Florida Forever Bonds. 16 This is the inaugural issue, the first series 17 of bonds for Florida Forever, which is the 18 successor to the Preservation 2000 program. 19 And at this -- unlike the way the program 20 was implemented in the past, at this Board's 21 directive, we are moving to a more 22 cost-effective methodology for implementing the 23 program. 24 And what I mean by that is we are selling 25 smaller increments of bonds based on cash needs ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 6 May 30, 2001 1 for closing land transactions as a way to 2 better match our borrowings with our cash 3 needs. 4 GOVERNOR BUSH: Is there an additional cost 5 of breaking down these tranches in -- I mean, 6 one-sixth the size of the bond offering, does 7 it create an additional expense? 8 MR. WATKINS: Governor, it's minimal. It's 9 less than $100,000 per issue in printing costs 10 and rating agency fees, and things like that. 11 So in relation to the grand scheme of how 12 much we are saving by not having to pay 13 interest on debt service on money that's not -- 14 that's sitting there, it -- it is -- the return 15 on that investment is significant, dramatic. 16 GOVERNOR BUSH: Plus it also makes sure -- 17 makes -- allows us to -- to ensure that the 18 balance in these accounts is less than what the 19 Legislature would want to try to grab. 20 MR. WATKINS: Correct. 21 GOVERNOR BUSH: Technical -- 22 MR. WATKINS: There's not a lot of 23 unused -- 24 GOVERNOR BUSH: Really high tech, you know, 25 kind of bond finance stuff. I know you ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 7 May 30, 2001 1 reporters may not understand that part. But -- 2 MR. WATKINS: There's not a lot of unused 3 cash sitting around. That's what we're 4 avoiding by doing that. 5 GOVERNOR BUSH: Thank you, Ben. 6 Did we have a -- a motion and a second on 7 this? 8 COMMISSIONER BRONSON: So move. 9 COMMISSIONER CRIST: Second. 10 GOVERNOR BUSH: Moved and seconded. 11 Without objection, it's approved. 12 Item 3. 13 MR. WATKINS: Item 3 is a resolution 14 authorizing the redemption prior to maturity of 15 bonds that we had issued on behalf of the 16 Jacksonville Transportation Authority. 17 GOVERNOR BUSH: Is there a motion? 18 Second. 19 COMMISSIONER BRONSON: So move. 20 SECRETARY HARRIS: Second. 21 COMMISSIONER CRIST: Second. 22 GOVERNOR BUSH: Moved and seconded. 23 Without objection, it's approved. 24 MR. WATKINS: Item Number 4 is a report of 25 award on the competitive sale of seven million ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 8 May 30, 2001 1 seven hundred and seventy thousand dollars of 2 Board of Regents parking facility revenue bonds 3 for construction of a parking facility for the 4 University of Central Florida. 5 The bonds were awarded to the low bidder at 6 a true interest cost of 4.86 percent. 7 COMMISSIONER CRIST: Motion. 8 TREASURER GALLAGHER: Second. 9 COMMISSIONER BRONSON: Second. 10 GOVERNOR BUSH: Moved and seconded. 11 Without objection, it's approved. 12 MR. WATKINS: Thank you. 13 GOVERNOR BUSH: Thank you, Ben. 14 (The Division of Bond Finance Agenda was 15 concluded.) 16 * * * 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 9 May 30, 2001 1 GOVERNOR BUSH: Department of 2 Highway Safety. 3 MR. DICKINSON: Good morning, Governor. 4 Item 1 is approval of the minutes from the 5 November 16th, 2000, meeting. 6 TREASURER GALLAGHER: Motion on minutes. 7 ATTORNEY GENERAL BUTTERWORTH: Second. 8 SECRETARY HARRIS: Second. 9 GOVERNOR BUSH: Moved and seconded. 10 Without objection, it's approved. 11 MR. DICKINSON: Item 2 is the approval of 12 our quarterly report for the quarter ending 13 December 2000. 14 TREASURER GALLAGHER: Motion. 15 ATTORNEY GENERAL BUTTERWORTH: Second. 16 GOVERNOR BUSH: Moved and seconded. 17 Without objection, it's approved. 18 MR. DICKINSON: Item 3 is quarterly report 19 for the quarter ending March 2001. 20 TREASURER GALLAGHER: Motion. 21 ATTORNEY GENERAL BUTTERWORTH: Second. 22 SECRETARY HARRIS: Second. 23 GOVERNOR BUSH: Moved and seconded. 24 Without objection, it's approved. 25 MR. DICKINSON: And Item 4 is a -- for ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 10 May 30, 2001 1 information purposes, the legislative 2 accomplishments, if you will, Governor. And I 3 want to point out that those are just what's 4 passed. 5 I don't think any of them are on your desk 6 yet. But we'll be working with your staff to 7 see how we want to go from there. 8 GOVERNOR BUSH: That was the -- is this 9 the -- the bill that was attached to the 10 transportation bill? 11 MR. DICKINSON: Yes, sir. That's one of 12 them. There are a number of items on there. 13 We had revisions to the .02 law for the 14 drinking and the minors, which requires them to 15 go to school if they're caught from between 16 .05 and .08; selective service registration. 17 There are a number of laws that -- racial 18 profiling that do impact our Department. And 19 we just thought we'd bring them to our 20 attention. 21 There's a law that passed that orders the 22 Department to suspend driver's license for 23 those convicted of retail theft, misdemeanor 24 felony, whatever. 25 And, yes, sir, that big bill. It's about ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 11 May 30, 2001 1 20 pages just of the title which deals with the 2 DOT and Highway Safety package. 3 TREASURER GALLAGHER: And, of course, the 4 new license plate. We couldn't go through a 5 session without a new license plate. 6 GOVERNOR BUSH: The golf one. 7 ATTORNEY GENERAL BUTTERWORTH: Really? 8 COMMISSIONER CRIST: Golf. 9 MR. DICKINSON: Golf tag. 10 TREASURER GALLAGHER: More -- 11 GOVERNOR BUSH: Very important. 12 ATTORNEY GENERAL BUTTERWORTH: That's 13 right. 14 COMMISSIONER CRIST: Why not? 15 ATTORNEY GENERAL BUTTERWORTH: I have a 16 question, Governor. 17 GOVERNOR BUSH: Yes. 18 ATTORNEY GENERAL BUTTERWORTH: Fred, 19 I mean, as you know -- hopefully everybody 20 knows, unfortunately, the state of Florida 21 leads the fatalities in this country for the -- 22 the combination of the Ford Explorer and the 23 Firestone tire. 24 According to the St. Pete Times, I believe 25 they said there's been at least 43 fatalities ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 12 May 30, 2001 1 that we know of in the state of Florida, and 2 28 of those occurring after this tire was 3 recalled in Saudi Arabia, and other countries 4 that have a -- a hot climate. 5 Just last week, Ford expanded a recall well 6 beyond the -- what the Firestone did with the 7 original 6 million tires, just -- by doing 8 better than 13 million tires, I believe at the 9 urging, not only of this Attorney General, but 10 the -- every Attorney General in the country. 11 We're very, very concerned with the hot 12 weather coming up. This is when we have most 13 of the fatalities. 14 What are you doing now, Fred? I know that 15 patrol on these rollovers I think is going to a 16 more expansive type of investigations so we can 17 be early warning. Because the -- the hot 18 weather, the heat builds up within a tire, then 19 a tire separates. 20 And people going to Disney, traveling on 21 I-4 or I-75, or whatever, after about an hour 22 or so the tire gets -- gets bad. 23 And now these tires are a year older, 24 people having traded themselves out of it. So 25 it's a real, real serious -- could be a ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 13 May 30, 2001 1 potentially serious issue. 2 So -- 3 MR. DICKINSON: Governor, if I may. 4 General, we've got really two -- two 5 different prongs we're going down. As you 6 said, the troopers are really the first guys 7 that see what's going on out there. And we've 8 encouraged that reporting mechanism, which is 9 also detailed on the crash report. 10 However, we've gone back -- and -- and like 11 I said, we have a tire section, but we've also 12 gone back on the rollovers, in assistance with 13 your office, to -- to see what some statistics 14 look like there. 15 And, quite frankly, with or without the 16 tire separation, Ford and the Chevy Blazer have 17 demonstrated about a four times more likely 18 turnover ratio than all other SUVs. And the 19 SUVs are about twice as likely as normal cars 20 to rollover. 21 So the statistics are pretty strong in that 22 regard. We're working with your staff to 23 crunch them even further. 24 And in that regard, I know you'd asked 25 about this earlier. We also have a new ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 14 May 30, 2001 1 check-off on our driver distraction as a 2 causation factor. And this has just started 3 this year. 4 So out of a total of 52,000 plus crashes, 5 we had 331 check-offs for driver distraction, 6 which is 6/10 of 1 percent. Here again, it's 7 just the start of a new program. So we're 8 going to have some gear-up time, some training. 9 But cell phones accounted for 22 percent of 10 those distractions; inattentive driver, 11 reading, you know, looking at another crash, 12 checking out somebody on the highway, is 13 30 percent; passenger child distraction, 14 9 percent; and secondary equipment, messing 15 with the radio, air conditioning, whatnot, 16 about 9 percent. Food and beverage was 17 3 percent. 18 So as we go along, we're going to probably 19 have that distraction clear up a little bit, 20 and we'll be able to give you some better 21 figures. But we will continue to work with you 22 on the rollovers and the tire separation. 23 GOVERNOR BUSH: There's a motion. 24 Is there a second? 25 ATTORNEY GENERAL BUTTERWORTH: Second. ACCURATE STENOTYPE REPORTERS, INC.
HIGHWAY SAFETY AND MOTOR VEHICLES 15 May 30, 2001 1 GOVERNOR BUSH: Moved and seconded. 2 Without objection, it's approved. 3 Thank you. 4 MR. DICKINSON: Thank you, Governor. 5 GOVERNOR BUSH: Thanks a lot. 6 (The Department of Highway Safety and 7 Motor Vehicles Agenda was concluded.) 8 * * * 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 16 May 30, 2001 1 GOVERNOR BUSH: State Board of Education. 2 TREASURER GALLAGHER: Motion on the 3 minutes. 4 COMMISSIONER BRONSON: Second. 5 GOVERNOR BUSH: Moved and seconded. 6 Without objection, it's approved. 7 Item 2. 8 MR. PIERSON: Item 2 is a charter school 9 appeal: Empowering Young Minds Academy, 10 Incorporated, versus, Duval County 11 School Board. 12 For the record, the State Board of 13 Education considers appeals of denials of 14 charter school applications pursuant to 98-186, 15 Laws of Florida. 16 Florida law authorizes School Boards to 17 grant approval to applicants who wish to 18 operate charter schools within their District. 19 The law allows an applicant who's been 20 not -- denied a charter, the right to appeal 21 the School Board's decision to the State Board 22 of Education. 23 Based on the written record and oral 24 argument presented, the State Board must vote 25 to recommend acceptance or rejection of the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 17 May 30, 2001 1 appeal to the School Board. The vote requires 2 a simple majority of the members, and by 3 vote -- and by law is not subject to provisions 4 of the Administrative Procedures Act. 5 The following requirements apply to the 6 applicant, the District School Board, and their 7 representatives. 8 The appeal must be based on errors the 9 applicant charges the School Board made in its 10 decision to deny the charter. The written 11 arguments submitted by the applicant to the 12 State Board is limited to discussion of those 13 errors. 14 The record of this proceeding is limited to 15 the written arguments, the charter school 16 application itself, and transcripts of meetings 17 before the District School Board. 18 At this hearing, representatives of each 19 party must give oral argument limited to a 20 summary of the written arguments previously 21 submitted to the State Board. 22 Each side has been requested to limit its 23 summary to 10 minutes. After the summaries are 24 presented, a vote will be taken, a written 25 recommendation of the vote will be returned to ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 18 May 30, 2001 1 the District School Board. 2 GOVERNOR BUSH: Thank you, Wayne. 3 MR. PIERSON: For some reason, I'm 4 extremely nervous this morning. 5 Representing the Duval County School Board 6 is Karen Chastain. 7 GOVERNOR BUSH: Good morning. 8 MS. CHASTAIN: Good morning. 9 Good morning. My name is Karen Chastain. 10 I'm with the Office of General Counsel of the 11 City of Jacksonville. And we represent the 12 Duval County School District in this matter. 13 It is regrettable that I'm here before you 14 today as to this matter. 15 It is not something that the District has 16 savored or enjoyed. We take no pleasure in the 17 decision to close any school, be it one of our 18 public schools, or be it a charter school. 19 I believe this is the first time we've 20 appeared before you today as to the specific 21 issue for the nonrenewal or the termination of 22 an existing charter school. However, you've 23 seen us before as to applications. 24 There are numerous reasons to terminate 25 this charter. In fact, we've been questioned ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 19 May 30, 2001 1 by some why we didn't terminate it sooner. But 2 I will tell you, that's because we wanted to 3 afford the school ample opportunity to cure its 4 defaults, and unfortunately they've not done 5 so. 6 I will tell you that even today, many of 7 these defaults still exist, and are still not 8 cured. 9 For the past 18 months or so, the District 10 has sent repeated written notices outlining 11 problems to be resolved. Therefore, there's 12 been ample notice and ample opportunity for 13 this school to cure its problems. 14 This culminated in the March 6, 2001, 15 default letter sent by Superintendent Fryer 16 outlining a list of serious concerns, 17 violations of contract, violations of law; 18 ultimately concluding, and the staff 19 recommending termination of this charter. 20 The District Board unanimously accepted 21 staff's recommendation at its March 20th 22 meeting to terminate. 23 That same night, the District renewed three 24 other charters that were up for renewal, and 25 unfortunately also voted to terminate another ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 20 May 30, 2001 1 charter for different reasons. However, that's 2 not before you today. 3 The reasons in the March 6th letter involve 4 the school's failure to comply with the law and 5 the contract. And it covers the entire 6 spectrum that I can imagine with the operation 7 of a charter school, or any business, for that 8 matter. 9 There was failure to fingerprint all 10 employees and Board members as clearly required 11 by the law. And today that problem still 12 exists, not all employees are fingerprinted. 13 There was problems with teacher 14 certification. When the District receives a 15 course master and a roster listing who was in 16 the classroom, what instructional personnel, 17 the District would review its records, and 18 check with the Department of Education to see 19 if such person, in fact, had a certificate; or 20 even so, could obtain a certificate if it was 21 possible; and nonetheless still found that 22 instructional personnel were not able to obtain 23 certification. All is set forth in the 24 March 6th letter. 25 There are numerous issues that concern the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 21 May 30, 2001 1 health, safety, and welfare of the students. 2 Failure to provide due process where students 3 are involuntarily withdrawn from the school, 4 which is a nice way of saying expelled; 5 problems with providing services to ESE 6 students as federally-mandated by Federal law, 7 and those services not being delivered; 8 transportation issues, such as failure of 9 drivers to have the appropriate licensure to 10 safely transport students. 11 And I will tell you today that that still 12 exists. Just last month the District notified 13 the school that one of the drivers did not have 14 the license that he needed to have, and 15 directed the school to no longer permit that 16 driver to transport students. 17 Since that direction, we've observed this 18 driver continuing to transport students, 19 notwithstanding his failure to have the 20 appropriate licensure. 21 There's been serious and comprehensive 22 financial and mismanagement issues, as well as, 23 last, but not least -- this is a school -- 24 academic performance. 25 I've already discussed briefly the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 22 May 30, 2001 1 fingerprinting and certification, and I've 2 already described to you that some of those 3 problems still exist today, and that the school 4 is presently in an uncured state of default. 5 Historically, the school has not complied 6 with this requirement notwithstanding repeated 7 notices. Therefore, we do not believe that 8 this cou-- will be complied with in the future. 9 I've already described to you the 10 situations involving due process, delivery of 11 services to ESE students, transportation 12 issues. 13 There's also been problems with food 14 service. I mean, in effect, this affects the 15 entire operation of the school. 16 Let me describe to you briefly some of the 17 academic reasons. In the March 6th letter, the 18 District analyzed last year's FCAT scores, 19 because that's what we had available at that 20 time, and found that the school was among the 21 lowest performer of all the schools in the 22 district. 23 Significantly, the District has also looked 24 at the standards of achievement that the school 25 contracted for in its charter, and we have ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 23 May 30, 2001 1 found that the school has not attained the 2 student gains that it contracted for and said 3 it would attain. 4 The school's annual report where it 5 includes a self-assessment of its performance 6 in some cases read the data inversely so that 7 when it says it's at the top performance at 8 Level One, unfortunately Level One means that 9 it's at the bottom. 10 The District has followed the same student 11 population, those that go from grade 6, 7, and 12 8 -- I think it's about 65 students -- and 13 unfortunately found little gain. 14 According to our information, we're not 15 sure what the school uses for standards of 16 measuring progress, whether it's a Pupil 17 Progression Plan, or a Dropout Prevention Plan. 18 But standards certainly must be in place 19 for this student body population, which is an 20 at-risk population. 21 We've also heard stories from teachers 22 where there has been pressure to give grades 23 higher than what has, in fact, been earned. 24 But, again, this is what others are telling us. 25 We -- we haven't been able to go into and look ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 24 May 30, 2001 1 and evaluate the school's performance as to 2 that matter. 3 In the March 6th letter, there were 4 problems outlined with access to the school so 5 that the District could monitor. There were 6 problems noted with compliance with the public 7 meetings laws and the public records law which 8 is mandated by the charter school statute. 9 And there's also been noncompliance with 10 technical issues such as annual reports and 11 reporting of student information. 12 Last, there were outlined numerous reasons 13 for termination as to the finances of the 14 school. The March 6th letter outlined a 15 negative fund balance at one point, and to 16 date, it has been increasing. 17 When we look at the March 31, 2001, 18 quarterly report, the negative fund balance -- 19 this is a third quarter report, by the way, 20 because the fiscal year begins July 1 -- the 21 negative fund balance is increasing from 22 quarter to quarter. 23 There are a lack of internal controls as 24 set forth in the charter school's annual 25 financial statements. Each year contains ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 25 May 30, 2001 1 management comments from the auditors. 2 And during the District's monitoring of the 3 school, the District reached the same 4 conclusions as to the lack of internal controls 5 and the audited financial statements. And the 6 management comments simply confirm and 7 corroborate the District's findings. 8 Some of these problems exist year after 9 year. So when the Academy says, well, we can 10 fix this in the future, in this case, we have 11 the instance of looking back at the past 12 operation, seeing that this promise was made 13 before; yet the problems were, in fact, not 14 corrected. 15 For example, in 1998 to 1999, and then the 16 next year, 1999-2000, several of the same 17 management comments for lack of internal 18 controls are repeated as uncorrected 19 notwithstanding the prior year's statements 20 from the school that they would, in fact, be 21 corrected. 22 There were also issues that weren't noted 23 in the management comments, such as failure to 24 revise the budget procedures such that if the 25 budget is changed from year-to-year during the ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 26 May 30, 2001 1 course of the year, that the governing board of 2 the school considers and approves such 3 variances. 4 It's really about the governing board 5 keeping an eye on what's going on at the 6 school. But Board minutes showed that that did 7 not happen. 8 There were also issues of payroll advances 9 being in a prior management comment. Although 10 it did not appear in this last management 11 comment, if you look at the annual report and 12 the audit, you show that -- we find that 13 payroll advances for employees are, in fact, 14 increasing, notwithstanding the prior statement 15 by the school that this practice would be 16 terminated. 17 Also in the March 6th letter, it was noted 18 again from the management comments that the 19 school had failed to pay payroll taxes, 20 although now the school says that they've 21 gotten a refund. However, we're not sure why 22 this occurred in the first place. 23 There were NSF fines for bouncing checks 24 that have been occurring since 1998. The 25 school now says that this has been taken care ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 27 May 30, 2001 1 of, because they have a line of credit from 2 a -- a national bank in the amount of $50,000. 3 However, if you look at the third quarter 4 financial statement this year, that $50,000 5 line of credit is overdrawn to $59,000. So the 6 overdraft protection is also overdrawn. 7 The management comments found that there 8 was a failure to keep a running balance in the 9 checkbook. In the Academy's appeal, they say 10 that's because the District fails to provide 11 funds timely, and that's why the school bounces 12 checks. 13 I would submit to you that if you don't 14 keep a running balance in your checkbook, and 15 you don't know how much money you have, that's 16 why you bounce checks. 17 Also as to the general allegation of the 18 District not timely providing funds, we've 19 looked at our practices, we've looked at our 20 records, and we have found that that is not the 21 case. 22 In some cases, we provide funds in advance. 23 So when the school failed to make payroll at 24 the end of March, and blamed the District for 25 failure to provide funds, that was an ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 28 May 30, 2001 1 inaccurate statement, because the District, 2 in fact, provided the funds in advance, and 3 also before the District received the money 4 from the State. 5 The cumulative effect of all of these 6 problems supports the legal conclusion that the 7 charter be terminated, according to the charter 8 school statute, for failure to meet 9 generally-accepted standards of fiscal 10 management. 11 I think I've described a comprehensive 12 array of problems. There's a significant 13 amount of detail in the March 6th letter, and 14 also in the appeal. 15 And today the school is still in an uncured 16 event of default. This is not a case where we 17 sent one notice one time as to one technical 18 issue. Instead, we sent repeated notices about 19 substantive and serious issues, and 20 unfortunately, they were not corrected. And it 21 put the District in a position of having to 22 take the action that it did. 23 The District respects the State directive 24 of school choice. And currently there are 25 three existing charter middle schools, two of ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 29 May 30, 2001 1 which were renewed on the night of March 20th. 2 In contract negotiations with these 3 schools, we've offered to these same middle 4 schools to increase their cap so that these 5 parents, if they so choose, may elect to send 6 their children to another charter middle 7 school. 8 With that, I'd be happy to answer any 9 questions that you might have. 10 GOVERNOR BUSH: Thank you. 11 Any questions? 12 MS. CHASTAIN: Thank you. 13 GOVERNOR BUSH: Let's hear from Empowering 14 Young Minds Academy, Inc. 15 MR. THOMPSON: Governor Bush, members of 16 the Cabinet, my name is William L. Thompson, 17 Jr., Bill Thompson. 18 I'm a lawyer in Orange Park, Florida. I 19 grew up in Jacksonville. I'm representing 20 Empowering Young Minds Academy. 21 I have with me Barbara Funches, the 22 principal; Steve DuVal, Marsha Fields of the 23 CPA firm; Clem Robinson, a Parent Teachers 24 Association Chair; and a couple of the parents. 25 I'm sorry we didn't have more parents. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 30 May 30, 2001 1 Most of them have two jobs, and can't get over 2 here on -- on a workday. 3 Empowering Young Minds Academy, of course, 4 is a charter school, and it has been terminated 5 by a reason set forth in a letter dated 6 March 6th. Of course, you've heard about 7 things that are not in that letter today, but 8 we will try to stick to the letter. 9 Empowering Young Minds did not have an 10 opportunity to correct the problems identified 11 in the March 6th letter, although other charter 12 schools were given that opportunity in writing. 13 The letter was given out to the press on 14 the morning before school on the day that FCATs 15 were given so that when the children came to 16 school to take their FCATs, Channel 4, 17 Channel 12: What do you think about your 18 school closing? 19 A very, very disheartening situation. The 20 kind of situation we have to deal with. 21 In the transcriptions that you received 22 from the March 20th meeting, the only time that 23 we had to comment was on the public hearing 24 before the meeting, 3 minutes. We tried to do 25 the best we can. Of course, that wasn't ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 31 May 30, 2001 1 transcribed. All you had transcribed was the 2 argument of the School Board. 3 I have noticed lately an increased use in 4 this country of what is known as demonization: 5 False statements, misleading statements, 6 distorted statements, statements of -- some 7 statement of fact used to support distorted 8 conclusions to create the false reality of a 9 bad situation. 10 I have learned that the process actually is 11 studied in a course at Yale University. And 12 while I may be able to recognize it, I don't 13 deal with it very well, and neither does 14 Empowering Young Minds, unfortunately. We 15 tried to attack it head-on, we tried to answer 16 all the issues, we've tried to summarize. 17 Today we will address specific questions, 18 if you have any. We're going to focus on some 19 key issues. 20 All new 2000-2001 teachers now -- and all 21 directors now have been fingerprinted. 22 All of them are either on a path to 23 certification, or have been certified. The 24 non-certifi-- all of them have a four-year 25 degree, except two. One has been a ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 32 May 30, 2001 1 choir director for 20 years, and one is a 2 substitute teacher formerly from the District. 3 The new teachers who were not getting 4 fingerprinted, have been terminated. The new 5 employees who do not get fingers (sic) have 6 been terminated. 7 From now on, third party -- independent 8 third party, no person will be a director 9 unless fingerprinted, no teacher will be paid 10 unless fingerprinted. 11 Marsha Fields at DuVal Horne CPAs will 12 check every one of them, and nobody will be 13 paid unless fingerprinted. 14 Empowering Young Minds is a middle school 15 with -- a middle school with 375 students. 16 Over the years, they've served 1275 students. 17 These students -- virtually every one of these 18 students have failed in public school. 19 They come to Empowering Young Minds at 20 least one grade behind, with few exceptions in 21 the lowest 25th quartile. They cannot read -- 22 some of them can't -- barely read their name. 23 They cannot do their times tables in some 24 cases. They come in as sixth graders from the 25 entity that says, we're not progressing them. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 33 May 30, 2001 1 Some of the sixth graders are fourteen and 2 sixteen years old. Now, Empowering Young Minds 3 records indicates that the students are 4 progressing. 5 Do we get -- do we take somebody who can't 6 do their times tables, and by ninth grade, 7 they're doing calculus? No. 8 Do we take somebody that can barely read 9 their name, and by the ninth grade, they can 10 read? Our records indicate that we at least 11 are generally doing that. 12 We're keeping the students in school. Now, 13 I don't consider those items with these 14 students to be lack of success. 15 Empowering Young Minds has never been an 16 F school, and they have had testimony before 17 the School Board from Dr. Alex Penn Williams 18 that proper standards for performance can be 19 put into a new contract. They don't have 20 proper standards today. The standards today in 21 the contract refer to tests that aren't given 22 anymore. 23 Empowering Young Minds has an independent 24 certified public accountant experienced in 25 public audits. This auditor has stated in the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 34 May 30, 2001 1 last audit that there are no material 2 deficiencies. 3 Now, for an auditor, no material 4 deficiencies is a very important statement. 5 This auditor is required to specify material 6 deficiencies under Florida law and audit rules. 7 There have been no allegations that DuVal Horne 8 CPAs have misrepresented the financial 9 integrity of Empowering Young Minds. And I do 10 not see how a third party, even the supervisor, 11 can say there was fiscal irresponsibility, when 12 the auditor says that there are no material 13 misstatements. To me, it's a -- it -- it 14 doesn't work. 15 There are four reasons that a school can be 16 denied their -- renewal of their charter. 17 They've been generally stated: Failure to meet 18 performance, generally accepted fiscal 19 management, violation of law. 20 Empowering Young Minds has not violated 21 these prohibitions. It just hasn't happened. 22 Are there problems? 23 Yes. 24 Does a middle school with the lowest 25 quart-- lowest 25 percent quartile students who ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 35 May 30, 2001 1 can barely read have problems? 2 Absolutely. 3 Are there kids at school? 4 Yes. 5 Is there room for improvement? 6 Absolutely. 7 Do we want to improve? 8 Absolutely. 9 There just is no good reason to refuse to 10 renew this charter. There is nothing that 11 can't be fixed, there is nothing that can't be 12 fixed easily. 13 I know we only have a short period of time, 14 and I would like to introduce Mr. Steve DuVal 15 to provide some information. 16 I know that the financial responsibility 17 part is very important. And I would like to 18 allow him to address that, and then I would 19 like to come back and -- and -- and finalize 20 for you. 21 Thank you. 22 MR. DuVAL: Thank you. 23 My name is Steve DuVal with DuVal Horne and 24 Company CPAs. I started in practice in 1972. 25 And I've audited large entities and small ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 36 May 30, 2001 1 entities. 2 And one of the errors -- or the major error 3 in the financial area that I think the District 4 made was their conclusion due to a lack of 5 segregation of duties that this is a material 6 weakness with the schools. 7 If you read all the audit material on small 8 entities, segregation of duties is a problem 9 due to size alone, not due to lack of good 10 financial management. 11 The District has a large staff that can 12 segregate their duties. They have people that 13 can do that. A small entity cannot. 14 And as auditors, we are -- we have to go in 15 and use alternative methods to determine if the 16 financial integrity is there. 17 If it's a large entity, we look at internal 18 control, we test internal control, and then 19 make our conclusions. 20 With a small entity, we do -- do not do 21 that. We look at every single transaction -- 22 or most of the transactions. We look at the 23 checks, we look at the invoices, we trace 24 things. 25 And based on that type of method, we can ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 37 May 30, 2001 1 conclude -- and that's part of the standard 2 auditing procedures -- we can conclude if 3 there's a problem. 4 We concluded there was not. 5 I think it's ironic that they -- through 6 their monitoring procedures, that they found 7 this. We have a specific program that we 8 follow, a written standard program that you use 9 that's modified for each entity. 10 I did not see where the District went 11 through those same procedures. They merely 12 took our comments, and then said, based on 13 these comments, we see a problem. There is no 14 problem. 15 The school, like any small business, 16 sometimes they don't do things the way it 17 should be done. That's why you have auditors 18 that come in. We try to correct them, we try 19 to help them. And they've made tremendous 20 progress over this time. 21 There's many other items that were 22 mentioned earlier that were not addressed in 23 the March 6th letter. I mean, I'm trying to 24 stick to the March 6th letter, which is 25 basically the internal control. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 38 May 30, 2001 1 I'm at the end of the presentation. I'm 2 willing to answer any question you may have. 3 Thank you very much. 4 GOVERNOR BUSH: Yes, sir. 5 MR. THOMPSON: Sorry. 6 Now, Ms. Funches is here if you have any 7 questions about students, and she'll be happy 8 to address them. 9 The students at Empowering Young Mind 10 (sic), as I said, have a history of failure at 11 public schools. 12 I have personally been to the school on 13 numerous occasions. Although it is certainly a 14 middle school, the students seem attentive. 15 My son and I went to the school one 16 Saturday to explain to a room full of students 17 the concept of nonsectarian. Because charter 18 schools have to be nonsectarian. 19 The questions from the student (sic) were 20 on point and insightful. These are not dumb or 21 bad kids. They are not failures. 22 They have some success and hope at 23 Empowering Young Minds. Nevertheless, in my 24 opinion and experience of the principal, the 25 alternatives for these children are less likely ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 39 May 30, 2001 1 to include public school, and more likely to 2 include drugs, jail, early death. That's why 3 I'm involved. 4 Ms. Funches knows. She spent ten years in 5 juvenile. 6 Empowering Young Mind (sic) Academy meets 7 all of the requirements of Section 228.056. It 8 requests the State Board of Education to remand 9 to the School Board with a written 10 recommendation that the charter school -- that 11 the School Board renew the charter. 12 The fate of the existing 275 students, and 13 the thousands of future students, is in your 14 hands. I know whatever your judgment is, it 15 will be the right one. 16 Thank you very much. 17 GOVERNOR BUSH: Thank you. 18 Any questions? 19 To either the District -- 20 Yes. 21 COMPTROLLER MILLIGAN: I -- I have a 22 question, Governor, really for the 23 representative from the School District, 24 Mrs. Chastain -- Ms. Chastain. 25 That's a fairly serious statement in terms ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 40 May 30, 2001 1 of the financial stat-- financial aspects of 2 the school made by Mr. Horne, and flies in the 3 face of what you had to say. 4 And -- I mean, he's an independent CPA, and 5 has certainly a lot of credibility. And -- and 6 I'd like to try to understand the variance. 7 MS. CHASTAIN: Yes, sir. Thank you. 8 Through the Chair. 9 If I understand Mr. Horne's -- or 10 excuse me -- Mr. DuVal's comments correctly, 11 he's saying that based on their analysis of -- 12 of the school -- and they're the ones who 13 perform the tests and conduct the audit -- the 14 District is not challenging the auditor's 15 conclusions. 16 Instead -- instead the District is looking 17 at what the auditor found and noted in his 18 management comments. The District is also 19 infusing its interaction with the school. 20 And based on the reports that the auditor 21 prepares, which shows a negative fund balance 22 that is increasing every quarter; shows bounced 23 checks; failure to segregate duties, which was 24 not the only reason, it was one of many; 25 failure to pay payroll taxes, and the like, ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 41 May 30, 2001 1 these same conclusions that the auditors 2 reached also support the District's conclusions 3 that this school does not properly manage their 4 finances, and, therefore, falls within the 5 statutory and contractual requirement that for 6 this failure, the charter may be terminated. 7 Some of the District's interactions have 8 been receipt of -- requests for funding that 9 include altered receipts. For example, there 10 was a landscaping invoice for $200 where a 11 1 was added, making it $1,200. 12 The District also receives repeated 13 requests for funds for things that cannot be 14 funded, according to State law. 15 These are the problems that we have in 16 working with this school, which has been in 17 operation for four years. There's no learning 18 curve at this point anymore. There shouldn't 19 be any reason for not knowing what the 20 requirements of the contract, and what the 21 requirements of law are. Yet, nonetheless, the 22 school says, please give us another chance, we 23 promise to do better next year. 24 Sadly, we have not found that to be the 25 case, notwithstanding repeated notice, and ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 42 May 30, 2001 1 opportunity to cure a variety of these 2 problems. 3 The difference with the other schools is 4 that they took those notices to heart, and they 5 corrected their problems. 6 Sadly, this school did not, and for the 7 reasons I set forth, not -- not the least of 8 which is financial, they -- they are presently 9 in an uncured state of default right now. 10 For example, for the fingerprinting, the 11 requirement is not just that teachers be 12 fingerprinted, all employees must be 13 fingerprinted. That's clearly set forth in the 14 statute. That is not the case today. 15 GOVERNOR BUSH: Didn't they say -- 16 MS. CHASTAIN: So -- 17 GOVERNOR BUSH: -- that they are 18 fingerprinting now every -- all employees? 19 Mr. Thompson, didn't you say that? 20 MR. THOMPSON: Barbara Funches. 21 GOVERNOR BUSH: Please come up to the -- 22 Just -- 23 MS. FUNCHES: Good morning, Governor Bush. 24 The employees at Empowering Young Minds 25 have been fingerprinted. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 43 May 30, 2001 1 GOVERNOR BUSH: Okay. 2 MS. FUNCHES: The problem with the 3 fingerprinting is not the fact that they were 4 not fingerprinted. 5 The problem was, we went to the 6 Jacksonville Sheriff's Office to have the 7 fingerprinting done because we did not get back 8 timely responses on those people who may have 9 had some criminal activity. 10 After we received everything from the 11 District on employees who were fingerprinted in 12 '97, '98, and '99, I wound up terminating 13 people. 14 And that was the reason that they're saying 15 that we were not fingerprinted, because we 16 didn't go through the District. 17 We then, after learning that, okay, 18 everyone has to go through the District, we 19 then sent people to the District, teachers. 20 They never said anything about me having to 21 have to send my other people through the 22 District. They were only concerned about 23 teacher fingerprinting. 24 GOVERNOR BUSH: So the answer is yes. 25 MS. FUNCHES: Yes, sir. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 44 May 30, 2001 1 GOVERNOR BUSH: Okay. 2 You -- I'm -- please finish, if you -- 3 COMPTROLLER MILLIGAN: Yeah. 4 I'd like to understand. Three hundred and 5 seventy-five students. And -- and what will 6 happen to these 375 students if this school 7 closes? 8 MS. CHASTAIN: Through the Chair. 9 Some of these students will be graduating. 10 I believe their graduation is tonight. So it's 11 not -- I don't know how many of those are 12 eighth graders that would be leaving the 13 Academy anyway. 14 I believe for the remaining, I'm going to 15 guess, in excess of 200, maybe 250, what the 16 District is working on with its existing 17 charter schools is to ensure that their 18 physical plant allows the capacity, according 19 to fire safety and, you know, other regulations 20 that apply. 21 And we're encouraging these schools that if 22 they so desire, to please increase their 23 student enrollment cap such that the existing 24 students at Empowering Young Minds, should it 25 be closed, may choose to go to a different ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 45 May 30, 2001 1 charter school. 2 For example, one of the charter schools 3 that was renewed is located in the same 4 shopping center. So it's -- it's physically 5 proximate to this -- 6 GOVERNOR BUSH: Is this -- 7 MS. CHASTAIN: -- school. 8 GOVERNOR BUSH: -- in the Gateway? 9 MS. CHASTAIN: The Gateway Shopping Center 10 in Jacksonville. And it's Daniel Payne 11 Academy, for example. 12 It's my understanding that another charter 13 school is looking at this -- this premises. So 14 there's a possibility that these premises could 15 continue. 16 GOVERNOR BUSH: This next year? 17 MS. CHASTAIN: Yes, sir. 18 GOVERNOR BUSH: Can they grant a charter 19 in -- in June for -- 20 MS. CHASTAIN: No, sir. An -- 21 GOVERNOR BUSH: -- August? 22 MS. CHASTAIN: No, sir. An existing 23 charter school would relocate to the shopping 24 center. 25 GOVERNOR BUSH: Okay. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 46 May 30, 2001 1 MS. CHASTAIN: Excuse me. 2 With respect to the -- the statement that 3 this school did not have an opportunity to 4 cure, I respectfully disagree with that 5 statement. 6 The school received numerous notices about 7 the fingerprinting and the requirement and the 8 individuals that we lacked data on. And 9 inexplicably, for the most part, we did not get 10 a response. To the extent that we have 11 received a response, sadly, it's been after the 12 March 6th letter. 13 But the previous numerous -- more than 14 ten written notices to reply were not responded 15 to, and were not corrected, even though the 16 other charter schools did. 17 Therefore, this school did have opportunity 18 to cure, it did have notice. And it also had 19 an informal hearing for the District Board on 20 April 26th where they had an opportunity at 21 that point to present whatever type of reply 22 they wanted to -- to provide. 23 Therefore, the statements that they didn't 24 have an opportunity at the March 20th hearing, 25 they may believe that, but they certainly had a ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 47 May 30, 2001 1 full and fair opportunity on April 26th, at 2 their request, in front of the District Board, 3 where -- and after that presentation, 4 unfortunately, the District Board voted to 5 terminate them again, after listening to the 6 school's presentation on April 26th. 7 So we believe that we provided ample 8 opportunity and notice to cure, and, sadly, 9 it's not happened. 10 GOVERNOR BUSH: Any other questions? 11 MS. CHASTAIN: Thank you. 12 GOVERNOR BUSH: I have -- I have a few. 13 You -- you might stick around -- 14 MS. CHASTAIN: Okay. 15 GOVERNOR BUSH: -- because there may be 16 some other questions as well. 17 The -- a lot of -- there's been a lot of 18 discussion about inputs here, a lot of not 19 filling out this form, not fingerprinting, not 20 doing this, all of which is -- is important, 21 I'm sure. 22 I'd be interested in getting your views 23 about how the students did academically, and 24 I'd like to get the views of the school as 25 well. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 48 May 30, 2001 1 And, you know, to the standards that we 2 expect, and also annual -- what the -- if 3 there's a means of measuring annual student 4 learning gains, which there should be, frankly, 5 since the test -- the baseline test was last 6 year. I'm not sure you have the accurate 7 information for this year yet. 8 But whatever information you have about 9 what the contract says about academic 10 performance, and how you view how they did. 11 And then I'd -- if I could have the school as 12 well. 13 Because that, to me's -- the rest of this 14 stuff's kind of -- 15 COMMISSIONER CRIST: It's not as relevant. 16 GOVERNOR BUSH: Not as relevant. Let's -- 17 that's a better way of saying it. 18 MS. CHASTAIN: Thank you. 19 With respect to the performance of this 20 school, the March 6th letter used last year's 21 FCAT data, and found that they were among the 22 lowest performers. 23 Now the reply to that is is this is a -- a 24 student body population of -- of significantly 25 challenged students so that, in and of itself, ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 49 May 30, 2001 1 is not as surprising or as compelling to you as 2 some of the other information might be. 3 However, when I look to the contract and 4 the items that the school agreed and stated 5 that it would achieve, we have looked at those 6 items, and we have found that the school has 7 not attained those achievements. 8 I also want to point out for the record 9 that this is not the second year this school 10 has been in operation. Baseline should have 11 been established years ago. The school first 12 opened in 1997, had a one-year contract. That 13 one-year contract was then renewed for a 14 three-year contract. And we're now at the 15 conclusion of that third year -- 16 GOVERNOR BUSH: What are the -- 17 MS. CHASTAIN: -- for a total of -- 18 GOVERNOR BUSH: -- what are -- 19 MS. CHASTAIN: -- four. 20 GOVERNOR BUSH: -- the specific academic 21 requirements in this contract? 22 MS. CHASTAIN: Yes, sir. 23 At least 65 percent of 8th grade students 24 in every ethnic group will score 3 or higher on 25 the Florida Writing Assessment. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 50 May 30, 2001 1 GOVERNOR BUSH: Oh, Florida Writes? 2 MS. CHASTAIN: Yes, sir. 3 GOVERNOR BUSH: That's possible. 4 MS. CHASTAIN: I am told by the District 5 that this -- this did not happen. 6 Another criteria -- 7 GOVERNOR BUSH: What percen-- do you know 8 what percentage it -- 9 MS. CHASTAIN: No, sir, I don't have the 10 exact percentage. But it was not 65 percent. 11 Another criteria is that 7th grade students 12 will score at or above the 50th percentile on 13 the reading comprehension and mathematic 14 concepts and applications of the Terra Nova 15 Assessment. 16 I believe when the Terra Nova Assessment 17 was administered, this did not happen. 18 Since the contract was written, this test 19 is no longer used. 20 I am told that the Terra Nova was a more 21 difficult test than the FCAT NRT. When we look 22 at the FCAT NRT, we don't find this 23 50th percentile passage rate, with an easier 24 test, if you will. 25 Another -- ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 51 May 30, 2001 1 GOVERNOR BUSH: So 50 percent of the 2 students have to be at Level Three, is that 3 what you said? I'm sorry? 4 MS. CHASTAIN: It's -- what the criteria is 5 is that 7th grade students will score at or 6 above the 50th percentile. 7 GOVERNOR BUSH: On average, is that -- 8 MS. CHASTAIN: It did not give us a 9 percentage. What we did find for the FCAT NRT 10 was that it was about 18.3 percent scored at or 11 above the 50th percentile. 12 GOVERNOR BUSH: Okay. I wonder how the 13 middle schools in Duval County did. That's a 14 pretty high standard. I'm -- 15 MS. CHASTAIN: Respectfully, they -- they 16 did better. If you'll give me a moment, I 17 could probably dig out the information. 18 But -- but again, it's looking to the 19 contract and what the goal was, and finding 20 that the goal was not achieved. 21 Another assessment is that 65 percent of 22 8th grade students will score at or above the 23 50th percentile on the CTBS. 24 Again, the CTBS is no longer administered 25 by the District. I'm not sure if the school ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 52 May 30, 2001 1 has administered the CTBS, and what their 2 findings would be. 3 But, again, using a similar test, such as 4 the FCAT, we find that in reading, not 5 65 percent, but only 17.7 percent scored at or 6 above the 50th percentile in reading, and 7 8.5 percent scored at or above the 8 50th percentile in math. 9 Again, that's far below the 65 percent as 10 stated in the contract. 11 Another criteria is that at least 12 65 percent of 6th grade students -- it's a 13 similar -- it's 6th and 8th grade. I gave you 14 the 8th grade numbers. 15 Again, for reading, instead of 65 percent, 16 it was only 14.8 percent; and for math, 17 25 percent. 18 GOVERNOR BUSH: Thank you. 19 COMMISSIONER CRIST: Governor -- 20 GOVERNOR BUSH: Yeah. Maybe -- maybe we 21 should -- how about if we ask the school to -- 22 COMMISSIONER CRIST: Sure. 23 GOVERNOR BUSH: -- comment on the -- how 24 they measure achievement. And -- 25 MS. FUNCHES: Initially, when we first ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 53 May 30, 2001 1 started with the charter school -- 2 Excuse me. Governor Bush. 3 Initially, when we first started with the 4 charter school, we neg-- we sat with the 5 District for two straight years attempting to 6 get baseline data, which is what's in my 7 contract, that we establish a baseline. 8 We worked closely with Testing. They gave 9 us information, we used that information at 10 annual reports. They said that the information 11 that we used in annual reports were false, but 12 all this information came from the District. 13 On yesterday, I contacted 14 Dr. Alice Penn Williams, who's been working 15 with me now for about six months looking at 16 test data. And we went back, and this is her 17 findings of what she sent to me last night. 18 Standardized test scores of the original, 19 because we looked at the students who were in 20 the 6th grade in 1997-98 who had stayed with 21 that school for three years. So I don't know 22 where the 65 students came from. But we only 23 had 32 students who stayed with us for 24 three years, and four of those students were 25 ESE students. So you couldn't count them in ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 54 May 30, 2001 1 looking at whether or not they gained anything. 2 Well, they grad-- the 28 EYMA students who 3 graduated from the 8th grade last year were 4 analyzed for gains in reading and in math. 5 Their 5th grade baseline scores earned at the 6 District schools were compared to their 6th and 7 7th grade scores, which were earned at EYMA. 8 Results show that while students did not 9 gain a complete year's worth of learning in a 10 year's worth of time in math -- and I'll go 11 back and -- and talk about the math -- they did 12 so in reading. 13 It is important to note that only national 14 percentile scores were available as a gains 15 indicator, and that 8th grade scores 16 represented in the national percentile were not 17 available. 18 Therefore, only 3 set of scores were able 19 to be compared. National percentiles are not 20 accurate indicators of gain, as they do not 21 follow a linear progression. 22 In addition, it is difficult at best to 23 assess the impact of EYMA's reading and math 24 programs based on only 28 students. It is 25 clear, however, that the 28 students, most at ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 55 May 30, 2001 1 the lowest level of achievement, who entered 2 EYMA in 1997, and graduated in 2000, gained 3 three years in their reading levels from the 4 end of the 5th grade to the end of the 5 7th grade. 6 So our students did gain something in 7 reading. And that was because we went back and 8 took direct instruction with just -- which is 9 an elementary concept, and had to bring that 10 into a middle school. 11 And we had to fine-tune that so that the 12 middle school students would not become bored 13 with the direct instruction. We had a whole 14 day of -- I mean, a whole half a day for almost 15 five months of literacy block to help these 16 children to come up to standards so that they 17 would be able to read, and they would not fall 18 short when it was time for the FCAT, like we 19 had seen in previous years. 20 My students at EYMA, when I looked at how 21 the students were progressing, and when I 22 look -- research -- before I even did the 23 charter school -- which I was in juvenile, I 24 was in and out of public schools. 25 And my students on my -- my case load were ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 56 May 30, 2001 1 always getting locked up, they were in the 2 middle school. And when you take them back to 3 middle school, they're old kids. 4 I have those -- some of those kids now, 5 fourteen and fifteen years old in the 6 6th grade. 7 Now I'm trying to take a child who has no 8 math foundation, from elementary school, and 9 teach pre-Algebra and Algebra I, just so that 10 they can come to the table when it's time for 11 them to take the FCAT test. 12 So their math, to me, even though it looks 13 like they're not gaining anything as far as a 14 standardized test, if Johnny didn't know his 15 time tables, and now they can say their 16 time tables, from 3 to 12, that's a gain. 17 If they don't know how to add, if they 18 don't know how to subtract, decimals, percent-- 19 changing it to a percentage, these children 20 didn't have a clue. 21 The majority of my 6th graders that came 22 into the school this year, the majority, we had 23 to put up time table charts for 6th graders, 24 because they didn't know their time tables -- 25 GOVERNOR BUSH: But why did you -- why did ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 57 May 30, 2001 1 you agree to standards that -- my guess is that 2 the Duval County -- 3 MS. FUNCHES: That's what -- 4 GOVERNOR BUSH: -- middle school system -- 5 MS. FUNCHES: -- happened. 6 GOVERNOR BUSH: -- most of the 7 middle schools couldn't have complied with 8 either. 9 MS. FUNCHES: Well, when we were 10 negotiating, it was, like, this is what you're 11 going to have to do if you want to get this 12 contract. 13 And so when we went back to the table -- 14 GOVERNOR BUSH: So you knew you weren't 15 going to achieve it? 16 MS. FUNCHES: We knew it, and we went back 17 to the table last year with the charter school 18 coordinator, with Dr. Hamilton and Dr. Bucci 19 from New York out of the Commission of 20 Education's office, sat down with the District 21 to attempt to revise the standards. And we 22 were told, you're either going to make the 23 State standards on the FCAT and the 24 Florida Writes, or we're not going to 25 renegotiate. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 58 May 30, 2001 1 That's why the standards are still the 2 same. And my students have gained on the 3 Florida Writes. The first year in 97-98, we 4 were a 2.9; the next year, we were a 3.0, 5 I believe; the next year we went up to a 3.3. 6 And this year's Florida Writes, we were at a 7 3.1. 8 So we did gain on our Florida Writes. 9 GOVERNOR BUSH: Commissioner, did you have 10 a -- 11 COMMISSIONER CRIST: I -- yeah. To the 12 previous speaker actually. The -- yes -- 13 GOVERNOR BUSH: Karen? Ms. Chastain? 14 COMMISSIONER CRIST: Yeah. Please. 15 It was just concerning the contract. You 16 were citing what the -- what percentages they 17 were supposed to hit. And I was curious as to 18 what the time line was toward achieving those. 19 Sixty-five percent on Florida Writes; 20 fifty percent on the something, Tassa Nova -- I 21 don't know what it was. 22 MS. CHASTAIN: Yes, sir. 23 GOVERNOR BUSH: Terra Nova. 24 MS. CHASTAIN: Terra Nova. 25 COMMISSIONER CRIST: Terra Nova. Casanova. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 59 May 30, 2001 1 Terra Nova. 2 MS. CHASTAIN: Terra Nova. 3 COMMISSIONER CRIST: Whatever. Super Nova. 4 MS. CHASTAIN: One of those tests. 5 COMMISSIONER CRIST: Nova Southeastern. 6 Whatever. 7 MS. CHASTAIN: My favorite is the 8 bossa nova. 9 COMMISSIONER CRIST: I'm sorry? The 10 bossa nova? 11 MS. CHASTAIN: The bossa nova. 12 COMMISSIONER CRIST: God bless you. 13 Anyway, my curiosity is, if you -- if you 14 can cite it, the provision of the contract and 15 what it said, if it's -- if you can cite it. 16 MS. CHASTAIN: Yes, sir. 17 Again -- on the same page, it starts out by 18 saying: Baselines will be established using 19 data from the 1997 through 1998 school year so 20 that the school will demonstrate annual 21 incremental progress equal to, but not less 22 than 1/5 the difference between the original 23 baseline, and then the three-year goal. 24 COMMISSIONER CRIST: Could you read the 25 three-year goal part? The -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 60 May 30, 2001 1 MS. CHASTAIN: The three-year goals were 2 those criteria that I had outlined, that 3 ultimately concluding in the 50th percentile, 4 the 65 percent at the 50th percentile, 5 et cetera. 6 So this didn't contemplate that in year 1 7 these goals would be achieved. What it 8 contemplated was progress through each year -- 9 measured progress, ultimately culminating in 10 these -- these goals. 11 COMMISSIONER CRIST: When? 12 MS. CHASTAIN: This year. 13 COMMISSIONER CRIST: This year. 14 MS. CHASTAIN: Yes, sir. 15 COMMISSIONER CRIST: So they're -- so then 16 they're not goals anymore. 17 MS. CHASTAIN: If I understand your 18 question correctly, I -- I believe I agree with 19 you, that this was the objective to be 20 obtained. And what the District is saying is 21 that the District -- the objective was not, 22 in fact, attained. 23 COMMISSIONER CRIST: Okay. I think -- that 24 was my question. 25 Thanks. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 61 May 30, 2001 1 MS. CHASTAIN: Thank you. 2 GOVERNOR BUSH: Yes. General? 3 ATTORNEY GENERAL BUTTERWORTH: I had a 4 question of the school, if I could. 5 Ma'am? Yes. 6 How many students are -- do you have now in 7 the school? 8 MS. FUNCHES: Three hundred and 9 seventy-five. 10 ATTORNEY GENERAL BUTTERWORTH: Three 11 hundred and seventy-five? 12 MS. FUNCHES: Yes, sir. 13 ATTORNEY GENERAL BUTTERWORTH: And how many 14 are graduating right now? 15 MS. FUNCHES: We may have about 90 that 16 will graduate this evening. 17 ATTORNEY GENERAL BUTTERWORTH: Ninety? 18 MS. FUNCHES: Yes. Out of 145 F-- 19 8th graders. 20 ATTORNEY GENERAL BUTTERWORTH: Okay. So 21 they will go -- then go on to high school 22 hopefully. 23 MS. FUNCHES: Yes, sir. 24 ATTORNEY GENERAL BUTTERWORTH: Okay. 25 The -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 62 May 30, 2001 1 TREASURER GALLAGHER: I just wondered what 2 happened to the difference. Ninety that 3 graduated, and 175? So -- 4 MS. FUNCHES: No, no. A hundred and 5 forty-five. 6 TREASURER GALLAGHER: Ninety out of a 7 hundred and forty-five are graduating? 8 MS. FUNCHES: Yes. 9 GOVERNOR BUSH: What happened to the 10 other -- 11 ATTORNEY GENERAL BUTTERWORTH: That's the 12 next question -- 13 GOVERNOR BUSH: -- 55? 14 TREASURER GALLAGHER: That's -- 15 ATTORNEY GENERAL BUTTERWORTH: -- right. 16 MS. FUNCHES: They're going to have to go 17 to summer school. And for some of them, 18 they're going to have to do the 8th grade over 19 again. I'm -- 20 GOVERNOR BUSH: It's the A+ plan. 21 COMMISSIONER CRIST: Yes, it is. 22 GOVERNOR BUSH: Yeah. We're not -- 23 COMMISSIONER CRIST: Not socially -- 24 GOVERNOR BUSH: -- no more social 25 promotion. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 63 May 30, 2001 1 COMPTROLLER MILLIGAN: Absolutely. 2 COMMISSIONER CRIST: That's right. 3 GOVERNOR BUSH: That's -- and 4 Duval County's public schools deserve credit 5 for this as well. I mean, charter schools are 6 public schools, but they're doing the exact 7 same thing. 8 And the Superintendent deserves praise. 9 He's one of the leaders in this around the 10 state for not tolerating kids that haven't 11 learned, and a chance to -- they've got to 12 either get it right in summer, or they're going 13 to -- 14 MS. FUNCHES: That's right. 15 GOVERNOR BUSH: -- have to come back. 16 ATTORNEY GENERAL BUTTERWORTH: But the next 17 question would be of the -- of the 18 School District, what percentage of your 19 8th graders are going on to -- to 9th grade, 20 and what percentage are going to summer school 21 and/or staying? 22 MS. CHASTAIN: By the look on my face, I do 23 not have that data. I'm sorry. 24 GOVERNOR BUSH: That's a Jeopardy question. 25 MS. CHASTAIN: Exactly. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 64 May 30, 2001 1 ATTORNEY GENERAL BUTTERWORTH: Jeopardy 2 question. 3 MS. CHASTAIN: Final Jeopardy. 4 GOVERNOR BUSH: But it's a -- it's a -- 5 it's higher in Duval County, because they have 6 a policy that is less tolerant for passing kids 7 on. I know that. I don't know what the 8 percentage would be. 9 ATTORNEY GENERAL BUTTERWORTH: Well, if, 10 in fact, it's the same percentage, the school's 11 doing a pretty good job if it's -- you know, 12 they're -- we don't know. 13 TREASURER GALLAGHER: Well, one of the -- 14 one of the things that happens here is each 15 year that you do this, what ends up happening 16 is that the students that get into 8th grade 17 were ready for 8th grade. 18 ATTORNEY GENERAL BUTTERWORTH: Right. 19 TREASURER GALLAGHER: So they should have a 20 much higher percentage getting into 9th grade. 21 ATTORNEY GENERAL BUTTERWORTH: Well, I 22 understand that. 23 GOVERNOR BUSH: Ultimately. 24 Can I -- can I ask a question of Mr. DuVal? 25 Just -- there's been allegations of a -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 65 May 30, 2001 1 or -- or -- not an allegation, a statement that 2 there's a deficit in the school's funding. I'm 3 not sure what the term was. But that troubles 4 me. A growing deficit. 5 MR. DuVAL: There was a -- there's a 6 deficit in the fund balance, and -- 7 GOVERNOR BUSH: That's what it was. 8 Deficit in the fun-- growing deficit in the 9 fund balance. 10 How do you have a fund balance that's gro-- 11 in deficit to begin with, and how does it keep 12 growing? 13 MR. DuVAL: Well, the -- the reason there's 14 a deficit in the fund balance is that the -- 15 there's so many accruals that we would make by 16 the end of the year. 17 When that -- when those accruals take 18 place -- for example, if there's capital outlay 19 money that's due to the school where they have 20 not received it, when you book that entry, then 21 the fund balance becomes positive at that 22 point. 23 And that's -- and that's -- so we -- we 24 don't know by the end of the year if it will be 25 positive or not. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 66 May 30, 2001 1 GOVERNOR BUSH: So this is not a cash -- 2 you're on an accrual basis. You don't -- this 3 is not a cash -- 4 MR. DuVAL: That's correct -- 5 GOVERNOR BUSH: -- deficit. 6 MR. DuVAL: And -- and we don't know the 7 accrual amount at this point. We will know 8 what it is by the end of the -- the audit 9 period, which is June 30th. 10 TREASURER GALLAGHER: Now -- wait a second. 11 You have a cash deficiency, but in an 12 accrual method, you say it may not be. 13 MR. DuVAL: No -- 14 GOVERNOR BUSH: No. 15 MR. DuVAL: -- the fund balance is not 16 cash. Fund balance -- if -- if you -- let's -- 17 if you have a regular business, you have assets 18 minus liabilities equal your -- your capital, 19 your owner's equity. That's what the fund 20 balance is -- 21 GOVERNOR BUSH: Okay. So it's not a -- 22 MR. DuVAL: -- on a balance sheet. That is 23 not cash. Okay. There -- there's a big 24 difference, and there's a misunderstanding by a 25 lot of people. Fund -- accounting is -- is a ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 67 May 30, 2001 1 term for governmental units. Different -- 2 GOVERNOR BUSH: It would be the equivalent 3 of net worth. 4 MR. DuVAL: Equals net worth, 5 that's correct. 6 GOVERNOR BUSH: All right. 7 MR. DuVAL: Okay? 8 And that can be -- and in -- in some 9 entities, they have negative balances, but 10 they're -- they're well-run. They just have 11 high depreciation. Not in this case, but in 12 other entities. 13 So it's -- so in this case, at the end of 14 the year, when we make the accrual for the -- 15 any receivables, there is a possibility -- 16 again, without knowing what the number is, I 17 can't tell you. But it probably will be 18 positive at that point. 19 As it happened in the prior year. It was a 20 negative fund balance in the prior year. When 21 we found out the exact number, we could accrue 22 the right number, it turned out to be a 23 positive fund balance at that point. 24 TREASURER GALLAGHER: Now, that -- 25 MR. DuVAL: And that's -- that's normal. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 68 May 30, 2001 1 And that's the way that -- that you do things. 2 GOVERNOR BUSH: It also could lead to a -- 3 a -- I mean, if it continues -- if it's 4 growing, that -- that could -- that could lead 5 to a problem, right? 6 MR. DuVAL: Well, yes, it will -- is 7 leading to a problem, because if -- if the 8 funds are not received from capital outlay, it 9 would be a problem, because the District's 10 policy is, before they will give you any money 11 for capital improvements, you have to spend 12 that money out of your regular operating 13 account -- 14 GOVERNOR BUSH: Oh. 15 MR. DuVAL: -- and provide them a copy of 16 the invoice. And that -- that is a problem. 17 And -- 18 GOVERNOR BUSH: Ms. Chastain has a comment. 19 MR. DuVAL: -- in fact -- if I can finish. 20 Dr. -- or Steven Bright, who's their budget 21 director, and I have talked about this -- the 22 budget director for Duval County. 23 And he said, if they had to do that, they 24 would have a problem, too. 25 TREASURER GALLAGHER: Sure they would. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 69 May 30, 2001 1 MR. DuVAL: So -- 2 Thank you. 3 GOVERNOR BUSH: Could I just -- one more -- 4 one more quick question. 5 Are you aware of any financial 6 improprieties, any -- any theft, any 7 negligence, any gross mismanagement of the 8 financial accounts of the school? 9 MR. DuVAL: No, sir. My -- my license -- 10 and I -- the only thing I'm good at is being an 11 accountant. I want to keep my license. 12 So we looked at it very carefully. And I 13 take it very seriously when we do this. I've 14 audited county governments where I had 15 differences with them, and -- and had to resign 16 because they did not like my opinion. 17 I believe in strongly that's my duty to say 18 exactly what it is. 19 GOVERNOR BUSH: Okay. 20 MR. DuVAL: Thank you. 21 GOVERNOR BUSH: Would you like to comment 22 on the -- 23 TREASURER GALLAGHER: Could I ask him one 24 more -- 25 GOVERNOR BUSH: Yeah. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 70 May 30, 2001 1 TREASURER GALLAGHER: -- question? 2 GOVERNOR BUSH: Yeah. Commiss-- I'm sorry. 3 Commissioner. 4 TREASURER GALLAGHER: This is not a huge 5 enterprise, and it looks to me like because of 6 the lack of property insurance for contents -- 7 apparently it was left out of the policy that 8 was purchased, they ended up with a $200,000 9 damage from a -- from a plumbing flood. 10 How is that loss going to affect the 11 balance sheet of this institution? 12 MR. DuVAL: Of course, they've spent the 13 money to correct those problems. And that -- 14 and that's one of the reasons why we have a -- 15 a problem right now with cash flow, because 16 they had to spend the money to get the school 17 corrected. 18 The insurance policy -- as part of the 19 auditor -- our audit procedures, we have to 20 follow what the contract says, and -- and do 21 they have the insurance in place based on the 22 contract. And they did have the insurance in 23 place. 24 But for contents, they do not have enough 25 coverage. The insurance agent assured the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 71 May 30, 2001 1 school that they did have the coverage, and, 2 in fact, they're -- we're -- we're in a lawsuit 3 now -- the attorney's in a lawsuit with the 4 insurance company under discovery to see if we 5 can -- they can recover that money. 6 If they recover that money, again, that 7 will be a -- a -- help the -- 8 TREASURER GALLAGHER: Sure. 9 MR. DuVAL: -- fund balance become 10 positive. So -- 11 TREASURER GALLAGHER: They're suing -- 12 they're suing the -- the company or the agent? 13 MR. DuVAL: The agent and the company for 14 the representation. And -- at least that's my 15 understanding. The attorney's here. He'll -- 16 TREASURER GALLAGHER: Yeah. He's -- 17 MR. DuVAL: -- tell you exactly. 18 TREASURER GALLAGHER: -- about to say 19 something behind you. So if you'll give him a 20 chance, he'll -- 21 MR. DuVAL: Okay. 22 MR. THOMPSON: About to have a 23 heart attack. 24 MR. DuVAL: I -- I don't want to talk about 25 legal matters. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 72 May 30, 2001 1 MR. THOMPSON: The -- the insurance company 2 is -- is probably going to be limited to -- 3 TREASURER GALLAGHER: The contract. 4 MR. THOMPSON: -- to the contract. 5 Although -- 6 TREASURER GALLAGHER: What company is it? 7 MS. FUNCHES: Pan America. 8 MR. THOMPSON: Excuse me? 9 MS. FUNCHES: Pan America. 10 MR. THOMPSON: Pan America. 11 We -- we have given them the -- the notice 12 of -- of filing lawsuit against them, however. 13 And we have -- we've given the agent -- 14 we've gotten the policy for the agent. And, 15 yes, it's the agent who is the one who is 16 responsible for the problem. 17 The agent was Isaiah Rumlin in 18 Jacksonville. 19 TREASURER GALLAGHER: Yeah. 20 GOVERNOR BUSH: Commissioner. 21 COMMISSIONER BRONSON: Well, I -- having 22 started out in the teaching profession, I'm a 23 little bit concerned, too, because I know how 24 this works in the public school system, because 25 I was in vocational education. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 73 May 30, 2001 1 And I know I got an awful lot of the kids 2 that the other teachers didn't want to have to 3 break up their class to handle all the time. 4 So I ended up with them. 5 And I ended up raising about a 6 million dollars in State and Federal funds 7 through that overburdening classroom of those 8 children. 9 Now, some of those children would never 10 meet the criteria -- never meet the criteria 11 that was put on this school. Now, I'm -- I'm 12 saying that if the school agreed to this, that 13 was -- I'm not sure you should have -- you 14 should have agreed to that based on the fact 15 that what you just told me a while ago was that 16 this school, unlike the average public school 17 system which has A+ students and F students, 18 and you average it together, and that's what 19 you're going to come up with as a standard for 20 that school. 21 You're starting out with probably an upper 22 base of a C student with an extra low F student 23 that's -- that sometimes can't even read. So 24 you're already starting out with a big crutch 25 here. You're never going to meet the standards ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 74 May 30, 2001 1 that -- that was agreed to. 2 And I -- so I -- I'm having -- I'm trying 3 to work through my mind here the -- the parts 4 that I'm concerned about, Governor, is -- is 5 the financial part and the fact that what I 6 read was is that a lot of these teachers or 7 people working at the school have not been 8 fingerprinted. That -- that concerned me. 9 And those were the issues that concerned me 10 the most. 11 And then -- but when it comes down to 12 debating on the issues of whether you should 13 have made the standard cut under that proposal 14 tells me, you were working off of an awful low 15 group of students that are having a hard time 16 understanding, learning, reading, mathematics. 17 And I don't see how in the world they could 18 ever meet that standard, based on the fact that 19 you probably started with an upper level C, at 20 the most, maybe even a lower level C, as your 21 upper grade for these students. 22 And the other thing that I'm worried about, 23 Governor, is where are these children going to 24 go when this school closes down? 25 Are they going to quit school? Is the -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 75 May 30, 2001 1 is the -- is the school system going to be able 2 to absorb these children and put them into 3 similar programs where they're willing to 4 learn, or are they just going to give up and be 5 on the streets, and -- and get into crime and 6 some of these other issues. 7 So I'm trying to work this out. This is my 8 first time of dealing with this. 9 GOVERNOR BUSH: Welcome. Welcome. 10 COMMISSIONER BRONSON: And -- so -- 11 ATTORNEY GENERAL BUTTERWORTH: You've 12 analyzed it very well. You've analyzed -- 13 COMMISSIONER BRONSON: But I -- 14 ATTORNEY GENERAL BUTTERWORTH: -- it very 15 well. 16 COMMISSIONER BRONSON: -- but I like to 17 separate the wheat from the chaff because -- 18 GOVERNOR BUSH: That's an ag expression. 19 COMMISSIONER BRONSON: Yeah. 20 But I -- I'd like -- 21 GOVERNOR BUSH: Mr. Thompson -- 22 COMMISSIONER BRONSON: -- I'd like the 23 answer to -- 24 GOVERNOR BUSH: -- would you like to -- 25 COMMISSIONER BRONSON: -- some of those ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 76 May 30, 2001 1 questions. 2 TREASURER GALLAGHER: Rightfully so. And 3 rightfully so. 4 GOVERNOR BUSH: Legitimate. 5 MR. THOMPSON: I would -- I have two 6 comments. One is I would request that you 7 consider that this is one of the first charters 8 in Duval County. 9 And -- and the standards -- standards 10 are -- in the -- in the early years -- I mean, 11 we're -- we're -- we're continuing to grope and 12 to grow and to -- to understand. And -- and 13 obviously we're asking from indulgence -- some 14 indulgence on the contract standard. 15 The students have been physically 16 reassigned to Ribault Middle and Paxon Middle. 17 To the extent that other charter schools may 18 take them is problematic. 19 (Secretary Harris exited the room.) 20 MR. THOMPSON: If they have the capacity, 21 obviously they're going to increase the number 22 of students, which I know the Superintendent 23 is -- is -- doesn't like to do. 24 And if somebody else moves into that space, 25 it may be. I mean, the -- the -- I think the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 77 May 30, 2001 1 reality though is -- is a little bit more grim 2 than that. 3 If -- if you want to ask Mr. Robinson of 4 the PTO, I mean, he may have a better idea. He 5 has children there. But I -- I'm not -- I'm -- 6 I'm concerned with -- 7 GOVERNOR BUSH: Yeah, Tom. 8 TREASURER GALLAGHER: Are -- let me ask a 9 question. 10 Do you -- is the -- is the lease on the 11 property, is that where the school's going to 12 be next year? I mean, you have an existing, 13 continuing lease, or do you have to move 14 somewhere else? 15 MR. THOMPSON: We're -- we're -- how many 16 years do you have to go on your lease? 17 MS. FUNCHES: 2003. 18 TREASURER GALLAGHER: Okay. So you're 19 still in the -- 20 MR. THOMPSON: Yeah. 21 TREASURER GALLAGHER: -- same place. 22 GOVERNOR BUSH: Ms. Chastain, would you 23 like to comment? 24 MS. CHASTAIN: If I could. Thank you. 25 Thank you. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 78 May 30, 2001 1 I was taking notes like a mad person back 2 there, so I have a variety of things I'd like 3 to discuss. 4 First of all -- 5 GOVERNOR BUSH: If you could just answer 6 their -- there was enough -- 7 MS. CHASTAIN: There were a few. 8 GOVERNOR BUSH: Yeah. 9 MS. CHASTAIN: With respect to the 10 allegation that the District coerced the school 11 into setting these standards, I do not believe 12 that to be the case. But, nonetheless, those 13 were the standards that were contracted for. 14 With respect to the concern as to where are 15 these students going to -- to go should this 16 school be closed, the District shares that 17 concern as well. 18 I -- I think if there's anything we have in 19 common is that we all are concerned about the 20 welfare of these students and what -- what the 21 future holds for them. 22 Whether these students will go back to the 23 traditional public schools, the -- the District 24 is prepared to take that. 25 But significantly, these -- these students ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 79 May 30, 2001 1 have chosen to be at a charter school, and we 2 have three other middle charter schools that we 3 believe can absorb the bulk of -- maybe not 4 all -- but the bulk of these students. 5 And we are working with those charter 6 schools to make sure that that can, in fact, 7 happen. Because the District is very concerned 8 about the parents being able to continue their 9 choice, and to make the decision that they -- 10 they choose for their -- their children. 11 GOVERNOR BUSH: Commissioner? 12 COMMISSIONER BRONSON: One question. And I 13 would appreciate it. 14 The -- the other charter schools, are they 15 dealing with primarily the same type -- 16 (Secretary Harris entered the room.) 17 COMMISSIONER BRONSON: -- students that 18 we're talking about here? Are they the same 19 lower end 25 percent student that we're talking 20 about here with the same potential problems 21 from home and other places that these children 22 are going through? 23 Or are these different schools that -- that 24 handle a different type of -- of student? 25 And -- and -- and the other -- and to ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 80 May 30, 2001 1 follow that up, if you took these same 2 25 percent lower end students, and kept them in 3 the public school system as a group -- as 4 they've done here, would -- do you think in 5 your -- in your mind, do you think the public 6 school system would have a -- any higher 7 average grade on these FCAT scores and all than 8 what -- what they're doing here? 9 MS. CHASTAIN: As to your first question, 10 the other charter schools I believe also serve, 11 maybe not exactly the same, but generically 12 speaking, an at-risk population. 13 So it may not exactly be apples to apples, 14 but it's -- it's pretty close. It's not as if 15 the charter schools that we have are equivalent 16 to the Julliard or -- you know, performing arts 17 or something like that. 18 It's -- it's pretty much serving at-risk 19 students. So we believe that that would be 20 a -- a comparable move. 21 With respect to your second question as to 22 how these students might perform in other 23 traditional public schools within the District, 24 that's -- that's hard to say. 25 But I -- I can tell you this: To the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 81 May 30, 2001 1 extent that we have compared this school's 2 performance, not with District Schools that 3 would have the variety of a student population, 4 or your A+ students, as well as your lesser 5 end -- lesser end population, or at-risk, we 6 have also conducted an analysis of 7 similarly-situated students using a definition 8 of at-risk students, specifically one where the 9 student population are those receiving free or 10 reduced lunches, you know, using that 11 definition of at-risk. 12 And we have found that in some cases, 13 district schools that have a higher percentage 14 of this at-risk population, have done, not 15 remarkably better. I mean, I need to be candid 16 with you, but have done better. 17 So it's really -- 18 GOVERNOR BUSH: Some of them? 19 MS. CHASTAIN: Some of them have -- 20 GOVERNOR BUSH: Which means that some 21 haven't. 22 MS. CHASTAIN: Some have not. Maybe one or 23 two. But for the most part, most of them 24 have -- have done better with a higher 25 percentage of at-risk students, which should ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 82 May 30, 2001 1 have harmed the District school in that regard, 2 using that -- 3 COMMISSIONER CRIST: You said for the most 4 part they have done better. 5 How much of the most part? Can you define 6 that a little more clearly for us? 7 MS. CHASTAIN: I don't have my hands on a 8 table. But -- but specifically in some cases 9 with specific tests, whether it's the -- I 10 can't remember if it's the math or the reading, 11 using last year's data, I believe this school 12 was at the lowest. 13 (Commissioner Bronson exited the room.) 14 MS. CHASTAIN: In other cases, they were 15 among the lowest, but not the lowest. 16 And then if you generalized, some of our 17 schools have done better. And I don't know 18 if -- if this one -- I don't believe is at the 19 bottom. Actually there -- there may be another 20 charter school that is. 21 GOVERNOR BUSH: Is there any other 22 questions? 23 We've thoroughly discussed -- 24 COMPTROLLER MILLIGAN: Well, other -- 25 GOVERNOR BUSH: -- this. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 83 May 30, 2001 1 COMPTROLLER MILLIGAN: -- other than she 2 chose not to refute the -- Mr. DuVal's 3 assessment of the financial situation. 4 MS. CHASTAIN: Thank you. 5 I -- I plan to, so I -- 6 COMPTROLLER MILLIGAN: Okay. 7 MS. CHASTAIN: -- I appreciate the segue. 8 Thank you. 9 With respect to the financial analysis, one 10 thing that disturbs -- disturbs me, and -- and 11 I don't understand, is this repeated allegation 12 that the District owes the school money. And I 13 cannot find the basis for this -- this 14 statement. 15 There are Department of Education -- there 16 are statutes and there are rules and 17 regulations as to how these funds may be spent. 18 With respect to capital outlay and 19 SIT funds, those funds can only be used for 20 specific purposes. And specifically they 21 cannot be used for operating expenses such as 22 payroll. 23 There are laws, there are memorandum 24 outlining the guidelines. And the District, 25 because it's the State's money, follows those ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 84 May 30, 2001 1 guidelines, and is actually using the DOE 2 requirements as to how funds are provided. 3 So, for example, when the school says that 4 its owed money from capital outlay, it may be 5 that the District is holding the capital outlay 6 money that is allocable to this school. But 7 until the school makes a request in accordance 8 with the DOE memorandum, the -- the money is 9 then turned over after -- 10 GOVERNOR BUSH: But you're not -- 11 MS. CHASTAIN: -- proper -- 12 GOVERNOR BUSH: -- aw-- are you aware of 13 use of capital outlay dollars for operating 14 expenses, or just -- this is just a -- 15 you know, a -- filling out a form the right way 16 to get -- get reimbursed. 17 MS. CHASTAIN: Sometimes it is filling out 18 the form in a correct way to get reimbursed and 19 following the guidelines. In which case, if we 20 find that something is not in order, we 21 immediately notify the school, you -- you 22 forgot -- 23 GOVERNOR BUSH: How about -- 24 MS. CHASTAIN: -- to impose -- 25 GOVERNOR BUSH: -- this school? ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 85 May 30, 2001 1 MS. CHASTAIN: This school in particular. 2 GOVERNOR BUSH: This school, is there 3 any -- you have concerns that they're using 4 capital outlay dollars for operating expenses, 5 is that what you're saying? 6 MS. CHASTAIN: With respect to the timing 7 of teachers not gett-- getting their payroll 8 met in March, there were pending requests for 9 the purchase of a van, which would have been an 10 appropriate expenditure under the capital 11 outlay requirements. 12 That van had not yet been purchased, so 13 what we did is we -- 14 (Commissioner Bronson entered the room.) 15 MS. CHASTAIN: -- cut the check -- after 16 talking with DOE representatives, we cut the 17 check directly to the vendor, to make sure that 18 the school could use the funds in an 19 appropriate way, and purchase the van in 20 accordance with their request. 21 With respect to -- there's also something 22 known as the 2 percent rule, which puts a cap 23 on the amount of public funds -- a combination 24 of capital outlay, SIT, and the other funding 25 source. After a complicated formula, the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 86 May 30, 2001 1 2 percent rule, in effect, limits the amount of 2 funds that can be spent on repairing, 3 renovating, altering leased premises. 4 GOVERNOR BUSH: Uh-hum. 5 MS. CHASTAIN: There was a significant 6 amount of work that the school undertook, to 7 the tune of about $279,000 renovating their 8 lease premises at the end of 1999. 9 In 1998, before that, the District informed 10 the school in writing of the existence of the 11 2 percent rule. The school then entered into a 12 contract with a -- with a contractor for this 13 significant amount of renovations. 14 And subsequent to that point, the 15 accounting firm acknowledged that the 2 percent 16 rule applied, and that the school has exceeded 17 its cap -- it can spend no more money through 18 2003 actually -- it covers the life of the 19 lease -- for any further alterations to the 20 leased premises. 21 Notwithstanding that, there -- there -- 22 continue to be requests for capital outlay and 23 SIT funds for renovations to leased premises 24 which we cannot find. It's not our money. 25 It's the State's money, and -- and we have -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 87 May 30, 2001 1 we need to follow the law as foll-- as far as 2 those disbursements. 3 Some of this may be the result of the flood 4 damage from last year. To the extent that 5 flood damage occurred and they're having a 6 claim with their insurance company, what the 7 District did find are textbooks, furniture, and 8 computers, those things that are not subject to 9 the 2 percent rule. But we cannot find 10 requests to repair -- 11 (Commissioner Crist exited the room.) 12 MS. CHASTAIN: -- the flooring -- 13 GOVERNOR BUSH: Okay. 14 MS. CHASTAIN: -- and the like. 15 GOVERNOR BUSH: But the point is that 16 you're doing your job, they -- they've not used 17 the money inappropriately, because you all have 18 not either allowed them to do it, or they 19 haven't -- they haven't requested to do so. 20 MS. CHASTAIN: That's the goal. 21 GOVERNOR BUSH: Okay. 22 MS. CHASTAIN: Thank you. 23 GOVERNOR BUSH: Any other discussion? 24 Maybe we should wait for the Commissioner 25 of Education to come back. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 88 May 30, 2001 1 Let's have a discussion. He ought to be 2 here -- 3 TREASURER GALLAGHER: I -- 4 GOVERNOR BUSH: -- for the vote. 5 TREASURER GALLAGHER: -- think a motion -- 6 GOVERNOR BUSH: He should probably be here 7 for the -- for the close here. 8 ATTORNEY GENERAL BUTTERWORTH: Maybe he 9 left for a reason. 10 GOVERNOR BUSH: Oh, no. That's in the 11 Legislature they do that. 12 ATTORNEY GENERAL BUTTERWORTH: Oh, the 13 Legislature. He's a former legislator. 14 COMPTROLLER MILLIGAN: Well, while -- while 15 we're killing time, there's a parent or two 16 here, aren't there? 17 Maybe one of them would like to -- 18 GOVERNOR BUSH: Would you -- 19 COMPTROLLER MILLIGAN: -- say something. 20 GOVERNOR BUSH: -- like to speak? 21 MR. CLEM ROBINSON: My name's 22 Clem Robinson. 23 GOVERNOR BUSH: Mr. Robinson, how you 24 doing? 25 MR. CLEM ROBINSON: Great, Governor. How ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 89 May 30, 2001 1 you doing? 2 GOVERNOR BUSH: I'm happy that you're here 3 with us. 4 MR. CLEM ROBINSON: I -- I serve as the PTO 5 President for Empowering Young Minds Academy. 6 I have a student there, an 8th grade student 7 who's going to graduate this year. 8 After I kept him two years in the public 9 school, at the school -- Northwestern Middle 10 School where he constantly was in trouble, 11 constantly being picked on, constantly was not 12 meeting my expectation that I feel he should 13 do. 14 So I put him in Empowering Young Minds. As 15 the District will say, the kid's not learning. 16 Well, my kid came there pretty well on a 17 C level. He -- he mastered algebra -- through 18 the help of Empowering Young Minds, he mastered 19 English. Tough teachers, stayed on top of him, 20 made sure he did what he had to do. 21 My concern is that on March 6th when this 22 letter came out to close the school was that my 23 son, and several other students were in the 24 middle of taking the FCAT test. 25 The School Board did not respect the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 90 May 30, 2001 1 parents nor the students by putting this 2 information out to the media first during the 3 day. About 8:00 o'clock in the morning, the 4 media would have had the information. 5 I arrived to the school to see my son to 6 get him -- find out what's going on. I got 7 a -- got a news bulletin telling me, they're -- 8 they're closing this charter school down. 9 I've got a concern with that problem. 10 I've got a concern with Duval County, where 11 they -- they continue to do things -- 12 (Commissioner Crist entered the room.) 13 MR. CLEM ROBINSON: -- that -- I believe 14 they shouldn't do. 15 And 375 kids got to go somewhere. Where 16 are you going to put them at? 17 In -- in the School Board meeting, I asked 18 the same question of the School Board, where 19 are you going to put the kids at? If you close 20 the school, where are you going to put the 21 kids? 22 We'll put them somewhere. We'll put them 23 in another public school. 24 GOVERNOR BUSH: Right. 25 MR. CLEM ROBINSON: Governor, Cabinet, they ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 91 May 30, 2001 1 won't make it. 2 I go to this school every day. The kids 3 are behind the 8 ball already. They won't make 4 it in regular public school. 5 They need a charter school that, 6 number one, meet (sic) their needs on their 7 level. Meet what -- meet them where they are, 8 bring them up to where they need to be. 9 Empowering Young Mind has done this. Grant 10 you -- I've been to Daniel Payne. I've been 11 down to Daniel Payne, I talked with the 12 principal down there, I talked to some of the 13 kids down there. 14 I'm telling you, please, sir, please, 15 ma'am, Empowering Young Mind (sic) need to stay 16 around. 17 GOVERNOR BUSH: Thank you, sir. 18 We appreciate you coming. And all the 19 family members that -- make it all the way to 20 Tallahassee. 21 SECRETARY HARRIS: Governor -- 22 GOVERNOR BUSH: Yes. 23 SECRETARY HARRIS: -- I have a question. 24 When I read this first -- this information 25 when we were briefing on this, the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 92 May 30, 2001 1 fingerprinting, the financial issues, and 2 certainly the low achievements were of great 3 concern. 4 There's such differing opinions, and that's 5 real frustrating to kind of not get to the -- 6 to the bottom of the actual tests as they 7 compare to the rest of the school district 8 percentages, or -- or some of these other -- 9 other issues. 10 But obviously there is improvement. If 11 we -- if we vote today to accept the 12 School Board's decision, and the school is 13 closed, if -- if we don't, then what is the -- 14 what happens, is it -- for how long? 15 How long is the renewal, is it just one 16 year so we could address -- 17 GOVERNOR BUSH: No. I mean, this is -- 18 actually this is a topic that I wanted to bring 19 up after the end of this. 20 Because if we vote -- if we vote to deny 21 the School District's recommendation to close 22 it, they -- it goes -- as I understand it, it 23 goes back to them, doesn't it? And they can do 24 it again. 25 TREASURER GALLAGHER: And have, in some -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 93 May 30, 2001 1 GOVERNOR BUSH: And they have in every -- 2 TREASURER GALLAGHER: Not this one, but 3 other -- 4 GOVERNOR BUSH: Well -- 5 TREASURER GALLAGHER: -- school boards. 6 GOVERNOR BUSH: -- what they've done in 7 every recent case where we have remanded it 8 back down to the District is they have done 9 what they did the first time. 10 I mean, we've -- we've -- we're -- we've 11 spent an hour-and-a-half on this. We don't 12 ult-- ultimately -- we don't have the ultimate 13 say. And maybe -- maybe we shouldn't. 14 But one of the things that we could do, if 15 we vote to -- we go against the Duval County 16 recommendation here is to ask the Department of 17 Education to monitor this at least, and to 18 either provide assistance, or to go to the 19 School Board meeting, and represent the 20 District's -- the Board of Education's view, at 21 a minimum. Because I don't think we've done 22 that. 23 And, you know, it's -- it's a little 24 frustrating, because we do spend a lot of time 25 on these, and -- and we end up -- ultimately ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 94 May 30, 2001 1 the District has the right to politely take our 2 views and ignore them. 3 TREASURER GALLAGHER: Well, they are a 4 constitutional body that has that authority. 5 SECRETARY HARRIS: Well, that was my 6 concern. And I didn't want to just end it. 7 I wondered if we could have it extended -- 8 you know, I mean, if -- if we rejected the -- 9 their -- I just needed to know what the process 10 was, because it -- it just doesn't seem -- 11 if -- if we wanted it to move forward, and -- 12 and if we could watch it more closely, then 13 perhaps some of the financial issues could be 14 rectified to our satisfaction, as well as 15 making certain that we follow up on the 16 fingerprinting and some of the other specific 17 issues of concern and safety. 18 GOVERNOR BUSH: Well, I think the way this 19 would work would be that the -- the 20 School Board at their next meeting would -- 21 would take up this issue, and they could either 22 renew the contract or not. 23 TREASURER GALLAGHER: Let -- if I may 24 mention something here. This may get into the 25 unusual. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 95 May 30, 2001 1 But what ends up happening if the school -- 2 the charter school would -- doesn't -- 3 you know, we, let's say, go along with them 4 staying, and they go back to Duval, and Duval 5 turns them down. They do have the ability to 6 go to Circuit Court. 7 And one of the problems with a 8 charter school doing that is, of course, how 9 much it costs. 10 And one of the things we might want to look 11 at is if we disagree with the School District 12 on the decision that they've made, even though 13 they -- and they may make it again, we may want 14 to put ourselves in a position to assist in 15 that challenge legally. 16 I just throw that out to think about. Not 17 I recommend it today, but something we should 18 think about -- 19 GOVERNOR BUSH: Like that tobacco thing. 20 TREASURER GALLAGHER: -- because -- and I 21 do drop those things periodically. 22 But -- but it's something that we should 23 look at if we truly disagree with what the 24 School Board ends up doing, we should maybe, 25 you know, back up the schools -- this one or ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 96 May 30, 2001 1 others. 2 We do have one, by the way, in 3 Circuit Court right now, Berkley from 4 Polk County. 5 GOVERNOR BUSH: Right. 6 TREASURER GALLAGHER: And we -- that -- 7 that's something I think we -- if -- if we feel 8 that strongly, we should back them up, because 9 they don't have the money to pay for the legal 10 costs to go to Circuit Court. 11 GOVERNOR BUSH: Well, one of the issues I 12 think that would come up is the timing -- I'm 13 not sure what the law would say -- 14 General, I don't know -- 15 -- if -- this would still not -- a court 16 challenge wouldn't -- 17 ATTORNEY GENERAL BUTTERWORTH: I don't know 18 if it'd be stayed or not. 19 GOVERNOR BUSH: I mean, if it's not stayed, 20 then the school won't be able to -- 21 TREASURER GALLAGHER: Right. That's true. 22 GOVERNOR BUSH: -- continue, which is the 23 timing issue of doing this stuff in June. 24 TREASURER GALLAGHER: Well, the reason 25 Berkley works is because it's already a public ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 97 May 30, 2001 1 school trying to convert. 2 GOVERNOR BUSH: Exactly. 3 TREASURER GALLAGHER: So it -- it's going 4 to be there anyway. 5 GOVERNOR BUSH: Any other discussion? 6 COMPTROLLER MILLIGAN: Governor -- 7 GOVERNOR BUSH: Yes. 8 COMPTROLLER MILLIGAN: -- I do think it's a 9 very -- a very good point to ask the 10 Commissioner of Education and his department 11 to -- to really get more involved in this -- 12 this, and others, particularly those that we 13 may remand, and be a -- a strong player, and 14 have representation, and convey our concerns, 15 and -- and try to bring some -- some different 16 focus on it than perhaps has been brought on. 17 GOVERNOR BUSH: Well -- 18 COMMISSIONER CRIST: It's almost like 19 becoming an intervenor in the process, and 20 an -- and an advocate for at least expressing 21 the view of the State Board of Education. And 22 I think it would be appropriate -- 23 GOVERNOR BUSH: Very -- 24 COMMISSIONER CRIST: I'm ready to make a 25 motion when you want -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 98 May 30, 2001 1 TREASURER GALLAGHER: Well, it -- 2 COMMISSIONER CRIST: -- one, Governor. 3 TREASURER GALLAGHER: -- we can do the mo-- 4 I just have -- 5 GOVERNOR BUSH: Let's do the -- 6 TREASURER GALLAGHER: -- one other comment. 7 One of the things that I -- I think we as a 8 Board have been frustrated with, and it -- 9 certainly shows here, is the lack of knowledge 10 that we get from the two parties in regards to 11 how the students are doing. 12 SECRETARY HARRIS: Uh-hum. 13 TREASURER GALLAGHER: And it is, in the 14 ability of the Department of Education to -- 15 who does track and can track those students, 16 and can get test scores from the school, and 17 they can give us a -- a layout in a manner that 18 would give us the -- the -- the knowledge that 19 we want on how these individual students have 20 done. 21 Which we're not -- we're getting no solid 22 data, we're getting, you know, this is what we 23 think. And they're -- you know, they're doing 24 well, but we don't have solid individual 25 student data. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 99 May 30, 2001 1 I think that would help us a lot in trying 2 to analyze how well -- 3 GOVERNOR BUSH: Good point. 4 TREASURER GALLAGHER: -- the school's 5 doing. 6 And I think if that data would be brought 7 to us in a manner -- there's certain things 8 that can be public, and certain things can't, 9 depending on how many students there are, 10 et cetera, and how they -- how well they did. 11 So they don't get individual data out. 12 But I do think that the -- 13 GOVERNOR BUSH: That's a good point. 14 TREASURER GALLAGHER: -- the Department can 15 look at that, and give us that kind of 16 information. 17 And I'd be a lot more comfortable 18 continuing a school that I saw some solid -- 19 SECRETARY HARRIS: Exactly. 20 TREASURER GALLAGHER: -- increases, than 21 one that I hear the school saying, we're doing 22 great; and the -- and the School Board saying, 23 we're doing terrible. 24 And -- and we're just in the middle, not 25 having a -- any real data, when real data is ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 100 May 30, 2001 1 available to us. 2 SECRETARY HARRIS: Yeah. 3 GOVERNOR BUSH: And remember -- 4 SECRETARY HARRIS: That's very -- 5 GOVERNOR BUSH: -- in this particular case, 6 and this will be the way it is in every case, 7 I guess, the data that the School District used 8 was the data they had available, which was last 9 year's tests. 10 Now the new tests have come in, which could 11 validate or not validate their -- their 12 thinking at the time they had to make that 13 decision in March. 14 So the information that the Department of 15 Education can give us would be a -- very 16 useful, because it's kind of an open-ended 17 question without knowing how the test scores 18 were this year. 19 SECRETARY HARRIS: Does the Department have 20 any information available today? I mean -- 21 TREASURER GALLAGHER: Well, they're -- 22 SECRETARY HARRIS: -- for this -- 23 TREASURER GALLAGHER: -- not going to have 24 it today. This is -- this takes a lot of -- 25 GOVERNOR BUSH: No. ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 101 May 30, 2001 1 TREASURER GALLAGHER: -- computer runs 2 and -- 3 SECRETARY HARRIS: Oh, does it? 4 TREASURER GALLAGHER: -- everything else to 5 come up with. 6 I mean, we -- we could possibly hold up and 7 have them do some runs, and let us know how 8 the -- 9 SECRETARY HARRIS: It's just very 10 frustrating to make a decision when financially 11 there are differing opinions; on the -- on 12 the -- on the educational results, there are 13 differing opinions. And it's just -- 14 COMPTROLLER MILLIGAN: Well, that -- that's 15 certainly information that could be carried 16 back to Duval County if we chose to remand 17 this. And part of the deliberation that -- in 18 the process that the Commissioner of Education 19 and his people would be involved in. 20 ATTORNEY GENERAL BUTTERWORTH: Is there a 21 timetable, Governor, do you know on this? I 22 can't recall if we have to -- 23 GOVERNOR BUSH: I -- 24 ATTORNEY GENERAL BUTTERWORTH: -- if we 25 have to respond in X number of days or not on ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 102 May 30, 2001 1 one of these -- 2 SECRETARY HARRIS: But every time we've 3 remanded back to Jacksonville -- to Duval, 4 rather -- it -- it's always been the same, 5 that -- that they've -- 6 TREASURER GALLAGHER: But, see, we'd do 7 better to remand it, and see -- and have some 8 student data that said, look, these students 9 did this -- did this -- 10 GOVERNOR BUSH: Right. 11 TREASURER GALLAGHER: -- and we're -- and 12 that's why we want you to look at this that 13 they did, and, you know -- 14 GOVERNOR BUSH: Mr. Robinson -- 15 TREASURER GALLAGHER: -- give y'all a shot. 16 GOVERNOR BUSH: -- are you representing the 17 Duval County School District? 18 MR. JAMES ROBINSON: No, sir. I'm 19 representing the Department of Education. 20 GOVERNOR BUSH: Give us the time -- what is 21 the time table? 22 MR. JAMES ROBINSON: You get 30 calendar 23 days. 24 GOVERNOR BUSH: From -- 25 MR. JAMES ROBINSON: From the date of the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 103 May 30, 2001 1 receipt of -- of the Board's decision. 2 GOVERNOR BUSH: Is when Duval has to 3 respond back. 4 MR. JAMES ROBINSON: They have to have 5 their hearing -- 6 GOVERNOR BUSH: What about our timing? 7 MR. JAMES ROBINSON: Your timing is 8 60 days -- 9 GOVERNOR BUSH: And when did -- when did 10 that start? 11 MR. JAMES ROBINSON: From the date of the 12 decision. 13 GOVERNOR BUSH: Well, we're already past 14 60 days. 15 TREASURER GALLAGHER: That's not unusual. 16 GOVERNOR BUSH: I say we move forward. 17 I think the timing of this is really 18 related to the school year if the 19 Duval County -- depending on what we do here, 20 but -- 21 MR. JAMES ROBINSON: Governor -- 22 SECRETARY HARRIS: And how -- 23 MR. JAMES ROBINSON: -- 60 days from -- 24 SECRETARY HARRIS: -- how long would it 25 take -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 104 May 30, 2001 1 MR. JAMES ROBINSON: -- the date of the 2 appeal. The receipt -- our receipt of the 3 appeal, the filing with the agency clerk of the 4 appeal. And I believe we're within our 5 time frame. 6 May 4th. So -- 7 TREASURER GALLAGHER: We received it 8 May 4th? 9 GOVERNOR BUSH: Wow. 10 COMMISSIONER CRIST: That's rather 11 efficient -- 12 TREASURER GALLAGHER: Well then -- 13 COMMISSIONER CRIST: -- then, isn't it? 14 SECRETARY HARRIS: How long would it take 15 to do the runs, to see where -- 16 TREASURER GALLAGHER: Oh, the deadline -- 17 SECRETARY HARRIS: -- the -- 18 TREASURER GALLAGHER: -- was May 4th. 19 SECRETARY HARRIS: -- the actual -- 20 TREASURER GALLAGHER: -- so we're supposed 21 to have it back to them by then. 22 MS. CASTILLE: We have to act by May 4th. 23 TREASURER GALLAGHER: By May 4th. 24 MR. JAMES ROBINSON: May 4th was the 25 receipt date. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 105 May 30, 2001 1 GOVERNOR BUSH: No. No. 2 Say it again now. 3 Jim? May 4th is when we received -- 4 MR. JAMES ROBINSON: May 4th was the date 5 that the agency clerk received the filing, the 6 appeal. 7 GOVERNOR BUSH: So we have 60 days from 8 then. 9 MR. JAMES ROBINSON: Which we're timely. 10 TREASURER GALLAGHER: Yeah. So we get till 11 July 4th. 12 ATTORNEY GENERAL BUTTERWORTH: So we can -- 13 TREASURER GALLAGHER: So why don't we hold 14 this off for two weeks, and find out some real 15 student data? 16 SECRETARY HARRIS: How -- how long would it 17 take to get that kind of data? You said to do 18 the runs and -- 19 TREASURER GALLAGHER: Depends on what 20 resources you put at it. 21 ATTORNEY GENERAL BUTTERWORTH: I think 22 staff will -- 23 TREASURER GALLAGHER: It depends -- 24 ATTORNEY GENERAL BUTTERWORTH: -- do it in 25 the amount of time you -- you give them. I ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 106 May 30, 2001 1 mean, it's like a -- it's like a term paper. A 2 term paper tak-- it's, like, 24 hours. 3 SECRETARY HARRIS: Well, they -- the former 4 Commissioner of -- of Education said that it 5 took -- took a long time to do. I just 6 wondered what the time frame -- 7 TREASURER GALLAGHER: Well, not a long 8 time. It's just that they -- some -- some of 9 the data they may have to go to get -- from the 10 school. 11 GOVERNOR BUSH: Here's -- here's a more -- 12 a practical issue, which is that these families 13 need to know what they're going to be doing 14 with their children, and the School District 15 needs to know, and the school needs to know. 16 And I -- I don't know if we wait 17 two weeks -- 18 COMMISSIONER CRIST: What we accomplish. 19 GOVERNOR BUSH: Well, we wait -- we -- 20 we -- and then the School Dist-- the 21 School District may not have a meeting some-- 22 I mean, we don't meet in July, right, or -- 23 they may not meet -- I don't know. 24 I mean, we may have a timing issue that is 25 a -- is a problem. I mean, most ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 107 May 30, 2001 1 school districts don't meet in July, do they? 2 Don't they give the -- 3 TREASURER GALLAGHER: Do we know when -- 4 GOVERNOR BUSH: Ms. Chastain, where'd you 5 go? 6 TREASURER GALLAGHER: She disappeared. 7 GOVERNOR BUSH: She's over there now. 8 TREASURER GALLAGHER: Oh. 9 When is the next Duval County School Board 10 meeting? 11 GOVERNOR BUSH: Can you give us a -- a 12 sense of the logistics of this? 13 MS. CHASTAIN: Sorry to disappear on you. 14 We meet the first and third Tuesday of each 15 month. I know that we have a meeting the first 16 Tuesday in June and the third in June. 17 I do not know what the schedule is in July, 18 if we have meetings scheduled or not. I -- I 19 simply don't know. 20 GOVERNOR BUSH: So -- 21 MS. CHASTAIN: But -- but in any event, to 22 respect the -- the statutory process and the 23 time line, we would convene a special meeting 24 if we had to. 25 GOVERNOR BUSH: But we could also -- I ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 108 May 30, 2001 1 don't how you notice these, but you could -- if 2 you have a meeting the third week of June, we 3 could meet in June -- on June 12th -- 4 TREASURER GALLAGHER: June 12th. 5 GOVERNOR BUSH: Is there a -- a notice 6 requ-- 7 TREASURER GALLAGHER: Well, I'll -- I'll 8 move that we wait till June 12th, and get some 9 information on how the students have done so we 10 could more comfortably send a writ-- a message 11 back to the school board based on some data 12 that we have. 13 MS. CHASTAIN: Respectfully -- 14 SECRETARY HARRIS: Governor -- 15 MS. CHASTAIN: -- the information I gave 16 you with the percentiles was the 2000-2001 -- 17 I believe it was this year's test scores. 18 Please recall that when the March 6th 19 letter came out, certainly we didn't have this 20 year's results. 21 TREASURER GALLAGHER: Under-- understand 22 our concern is not directly with what your 23 contract is, it's internal on have the students 24 proceeded well or not? 25 And we -- I think all of us recognize, ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 109 May 30, 2001 1 that's a tough contract to meet. 2 GOVERNOR BUSH: Yes. 3 TREASURER GALLAGHER: A laudable goal, but 4 tough. 5 SECRETARY HARRIS: I'm sorry. I just don't 6 remember the process. 7 What -- if we remand it back, can we do it 8 with recommendations? Is there anything else 9 we -- you know -- 10 GOVERNOR BUSH: Well, we -- 11 SECRETARY HARRIS: I mean, if we're going 12 to wait two weeks, then we -- we -- 13 TREASURER GALLAGHER: What we do is we send 14 it back, and say, we recommend that you 15 don't -- can't -- that you renew the -- the 16 contract; or we say that we agree that you 17 close it. And -- 18 GOVERNOR BUSH: Or we have -- 19 TREASURER GALLAGHER: -- all we have to do 20 is the -- 21 GOVERNOR BUSH: -- a hearing. 22 So I mean, the only time it would require 23 school -- 24 Yes. 25 MR. JAMES ROBINSON: Governor. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 110 May 30, 2001 1 Excuse me. I'm told by the clerk's office 2 that it would be prudent to request both 3 parties to voluntarily defer until the date 4 that you choose to hear it again, so that we 5 don't run into a default lapse in -- in time. 6 TREASURER GALLAGHER: That's a good idea. 7 MR. JAMES ROBINSON: So -- 8 COMMISSIONER CRIST: Do they voluntarily do 9 that? 10 TREASURER GALLAGHER: Well, we've got 11 Ms. Chastain to tell us if she -- 12 COMMISSIONER CRIST: How about on the 13 record? 14 TREASURER GALLAGHER: -- wait two weeks. 15 SECRETARY HARRIS: She might not be able 16 to -- 17 MS. CHASTAIN: On behalf of the District, 18 we have no problem with that. And I would just 19 wonder with the school and their time frame, 20 I think it's more pressing for them, to be 21 candid. 22 GOVERNOR BUSH: Would you like to -- 23 I mean, we can vote right now, too. 24 COMMISSIONER CRIST: I'm sure we can. 25 GOVERNOR BUSH: Take your chances. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 111 May 30, 2001 1 ATTORNEY GENERAL BUTTERWORTH: And it's a 2 unanimous School Board. 3 TREASURER GALLAGHER: So you've got 4 two weeks is what you have to wait. 5 ATTORNEY GENERAL BUTTERWORTH: When does 6 summer school start? 7 MR. THOMPSON: We have -- we have -- we 8 have two issues: One -- one is the -- one is 9 the -- the -- the farther along we go, the 10 farther -- the closer to the next school year 11 we get should any -- effect a decision to 12 occur. 13 And -- and the second issue is just the 14 cost of getting over here and explaining to my 15 wife again why I'm doing all this. 16 GOVERNOR BUSH: That seems like a secondary 17 issue. 18 COMPTROLLER MILLIGAN: It does. 19 MR. THOMPSON: Absolutely. 20 GOVERNOR BUSH: Well, I mean, you've got 21 to -- 22 MR. JAMES ROBINSON: I didn't hear -- 23 GOVERNOR BUSH: No, there wasn't a -- 24 TREASURER GALLAGHER: There wasn't -- 25 COMMISSIONER CRIST: I didn't hear it ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 112 May 30, 2001 1 either. So -- 2 TREASURER GALLAGHER: Let's hear if you've 3 agreed to extend or not. Notwithstanding your 4 wife getting mad at you, have you agreed to 5 extend? 6 MR. THOMPSON: We will -- we will agree to 7 any action that you deem appropriate, sir. 8 TREASURER GALLAGHER: No. You've got to 9 say if you'll agree -- 10 MR. THOMPSON: Yes. 11 TREASURER GALLAGHER: -- independent -- 12 okay. 13 GOVERNOR BUSH: Very good. 14 TREASURER GALLAGHER: I move we extend it 15 till June 12th, and get some student data. 16 GOVERNOR BUSH: Is there a second? 17 ATTORNEY GENERAL BUTTERWORTH: Second. 18 SECRETARY HARRIS: Second. 19 COMMISSIONER BRONSON: Second. 20 GOVERNOR BUSH: Any objections? 21 Motion pass. 22 Thank you very much for coming. And I hope 23 you have a wonderful graduation night. 24 MS. FUNCHES: Thank you. 25 ATTORNEY GENERAL BUTTERWORTH: Governor, ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 113 May 30, 2001 1 maybe in the future, maybe staff should be 2 looking at this beforehand, and knowing what 3 our -- I think staff knows now what our -- 4 TREASURER GALLAGHER: Yeah. You need to -- 5 ATTORNEY GENERAL BUTTERWORTH: -- our -- 6 TREASURER GALLAGHER: -- get started on 7 these. 8 ATTORNEY GENERAL BUTTERWORTH: -- problems 9 are, I think that Commissioner Bronson hit 10 the -- hit it right on the -- hit the nail 11 right on the head with -- with his questions 12 that he had, and staff should be prepared to 13 advise us on those issues. 14 GOVERNOR BUSH: Very good. 15 COMMISSIONER CRIST: Very good. 16 TREASURER GALLAGHER: And now the -- the 17 next. 18 GOVERNOR BUSH: Start. 19 (Governor Bush exited the room.) 20 TREASURER GALLAGHER: You're in charge. 21 MR. PIERSON: Wayne -- 22 COMMISSIONER CRIST: Wayne. 23 MR. PIERSON: Item 3 is another charter 24 school appeal, Frank Sganga Charter School, 25 Incorporated, versus Volusia County Schools. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 114 May 30, 2001 1 TREASURER GALLAGHER: -- walk outside, or 2 you'll never hear. 3 MR. PIERSON: Representing the -- 4 COMMISSIONER CRIST: Excuse me, Wayne. 5 MR. PIERSON: -- charter school -- 6 COMMISSIONER CRIST: Excuse me. We can't 7 hear you. 8 If we could take the discussion outside, 9 that'd be great. 10 MR. PIERSON: It's another charter school 11 appeal, Frank Sganga Charter School, versus, 12 Volusia County Schools. 13 Representing Frank Sganga Charter School is 14 Gary Early. 15 ATTORNEY GENERAL BUTTERWORTH: Wayne, are 16 we dealing with the same 10 minutes like we did 17 the last time on each side? 18 MR. PIERSON: Yes, sir. 19 (Treasurer Gallagher exited the room.) 20 COMMISSIONER CRIST: Good morning. 21 MR. EARLY: Good morning. 22 I was going to say, good morning, Governor, 23 and members of the Cabinet. But I guess I just 24 get to say, good morning members of the Cabinet 25 and -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 115 May 30, 2001 1 COMMISSIONER CRIST: Oh, I'd bid him good 2 morning -- 3 MR. EARLY: -- greet the Governor when he 4 comes back. 5 My name is Gary Early. I'm with the law 6 firm of Akerman, Senterfitt in Tallahassee, and 7 I'm here on behalf of the Frank Sganga Charter 8 School. 9 My remarks are going to be extraordinarily 10 brief because there are people who are going to 11 be able to answer your questions and provide 12 you information that will step up. 13 They include Mr. Giovannoni, and 14 Principal Adewumi of the -- of the 15 Sganga Charter School. 16 We also have several -- or a number of 17 parents and students here. 18 I understand that there may be some 19 procedural issues that will prevent them 20 from -- from addressing the Board of Education. 21 There are a couple that wanted to, and -- and 22 if they don't, that's okay. 23 But I -- I -- I do want their -- their 24 presence here in support of the school to -- to 25 be neither discounted or dismissed by this ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 116 May 30, 2001 1 Board. They are interested in this school in 2 support of -- of the school. 3 (Governor Bush entered the room.) 4 MR. EARLY: Based on the meeting that we 5 had with your Aides last week, it became fairly 6 apparent to us that the -- that the issues of 7 concern, and that the issues that we should 8 focus on are those of student performance and 9 financial management of the school. 10 There are a number of issues that are 11 addressed in the briefs that we believe are 12 entirely secondary, and that we also believe 13 were withdrawn -- if -- if not formally 14 withdrawn, at least the -- the recognition of 15 their secondary status was acknowledged by 16 Volusia County. 17 And we're not going to address those, but 18 the individuals appearing here today will be 19 able to answer any question that you have. 20 There -- there has been an issue that's 21 been raised subsequent to the action of the 22 Volusia County School Board, and it deals with 23 the -- an alleged termination of the lease 24 space. 25 We -- Frank Sganga Charter School believes ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 117 May 30, 2001 1 that we have a binding lease to the existing 2 space. We are current on our payments. There 3 is no reason that we have seen, based on a 4 review of that lease for a termination. 5 But we will represent to you today, and 6 Mr. Giovannoni will -- will be able to give you 7 a -- further information. 8 We will represent to you today that the 9 school does have acceptable alternative space 10 available to it -- 11 (Treasurer Gallagher entered the room.) 12 MR. EARLY: -- if this becomes of a concern 13 to the Board. 14 The -- the -- Frank Sganga Charter School 15 is striving, to the best of its abilities, and 16 we think in the spirit that charter schools 17 were -- were authorized, to meet the public 18 purpose of providing quality education to the 19 students of the state of Florida. 20 We believe that the information that will 21 be provided today will demonstrate that this 22 school is providing quality education for 23 children who have -- who -- who may have been 24 overlooked by the public school system. 25 We will give you information today that ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 118 May 30, 2001 1 shows that the scores are going up, and we ask 2 that you consider not only the raw scores that 3 you're looking at, with -- with a recognition 4 that -- that a good many of the students in 5 this school are -- are probably students that 6 would have ended up in Commissioner Bronson's 7 class. 8 But don't look at only the raw scores that 9 are presented. Look at the rates of 10 improvement. And we -- we have data today that 11 we will give -- show you to show the rates of 12 improvement of these children. 13 We also will be prepared to -- to discuss 14 issues of financial management. This school 15 has undergone DOE audit procedures, and have 16 come through with a finding of compliance with 17 all applicable financial standards. 18 We hope at the conclusion of this process 19 that you will agree, and you will vote to -- 20 you'll vote to recommend to Volusia County that 21 they renew the charter so that this school 22 can -- can continue its mission of educating 23 these children. 24 And with that, I'm going to yield the floor 25 to Mr. John Giovannoni of the Frank Sganga ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 119 May 30, 2001 1 Charter School, and he will be able to -- to 2 give you any information that you believe 3 necessary today. 4 Thank you very much. 5 GOVERNOR BUSH: Thank you. 6 MR. GIOVANNONI: Good afternoon, Honorable 7 Governor Bush, and the Cabinet of the great 8 State of Florida. I am truly pleased to be 9 here today. 10 On behalf -- and I'm very proud to be here 11 today as the Board Chairman of the Frank Sganga 12 Charter School located in New Smyrna Beach, 13 Florida. 14 Standing behind me is a wonderful gentleman 15 who joined our Board, the fifth man to join our 16 Board -- or fifth person to join our Board 17 four years ago, who not only serves as our 18 principal, but also as the minister -- serves 19 our community as the minister of the 20 Mount Olive Primitive Baptist Church also in 21 New Smyrna Beach. 22 Now, if -- if my folks wouldn't mind, if 23 you'd all stand just a moment. All our 24 students, teachers, and parents came 280 miles 25 from Edgewater and Oak Hill and ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 120 May 30, 2001 1 New Smyrna Beach. 2 GOVERNOR BUSH: Welcome. 3 MR. GIOVANNONI: Like to introduce 4 Mrs. Edwards as our math teacher; Mrs. Stretar, 5 if you'd raise your hand, also one of our 6 faculty members; and Mrs. Adewumi over here. 7 And also sitting over here with the large 8 notebook is Ms. Donna Poling, our Deputy Chief 9 Financial Officer, with 20 years experience in 10 nonprofit and educational accounting. 11 And Dr. Alexandra Penn Williams from the 12 USF Charter School Center, who -- the center 13 was very helpful to provide her services in 14 helping us analyze our student scores. 15 Now, again, I'm just going to reiterate, 16 this whole lease issue came up rather 17 interestingly in the past month. 18 And -- but I have conferred with 19 Mr. Adewumi; and my Vice-Chairman, Mr. Howard; 20 and with our PTO President, Mr. Melanson, who's 21 sitting back there. And we now have one, and 22 an alternative location lined up. 23 The story of how this letter came to us is 24 rather interesting, and of itself may be of 25 interest. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 121 May 30, 2001 1 Now, I will briefly comment on the fact 2 that I believe the public record clearly shows 3 that the Notice of Final Agency Action was, 4 in fact, a justification for a decision made as 5 early as October of 2000, a month before the 6 program review was started, and two months 7 before it was presented to the School Board on 8 January 9. 9 I would be willing to discuss that. The 10 evidence in the newspapers and spoken in front 11 of us on the public record is clear; and 12 I believe to anyone with experience in 13 political matters, rather convincing. 14 Now, Ms. Poling and I are respectively -- 15 she is the Deputy Chief Financial Officer and 16 I'm the Chief Financial Officer of the 17 corporation. 18 We're both agents enrolled to practice, 19 proof of the United States Treasury, and I'm a 20 Certified Management Accountant and a former 21 CFO in industry. 22 And we have spent the last two years 23 lugging those heavy notebooks around the city 24 of Tallahassee catching poor DOE staffers 25 unawares, and like grandparents with pictures ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 122 May 30, 2001 1 of their grandchildren, showing off our 2 wonderful accounting system. 3 And if you're willing to risk the danger, 4 it'll be like talking to an engineer who's just 5 brought -- built a new machine. 6 I will answer you clearly that we are proud 7 of our standard, we have had -- just had our 8 second audit completed a year ago. There were 9 no management letter items at all. 10 When I turned a copy of that to somebody 11 over at the Auditor General's Office, they 12 said, gee, there must be a problem. 13 Something's wrong. 14 I said, no, we're perfect. 15 And I was only half joking. We have worked 16 hundreds of extra hours each year to make our 17 charter school the exemplary fiscal management 18 charter school in the state of Florida. And 19 rather than burden you with all that now, I 20 invite your questions. 21 The most important matter before us is the 22 participation and quality of the education for 23 our students. 24 I'd like to show you a few quick visuals if 25 someone could -- and the one I want to grab ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 123 May 30, 2001 1 first is this one. 2 Thank you, Mr. Adewumi. 3 And we -- 4 GOVERNOR BUSH: We can't see that. 5 MR. GIOVANNONI: -- can pass these around, 6 but let me tell you what they say. 7 This is a listing -- and I picked these up 8 from the -- 9 GOVERNOR BUSH: Why don't we look at them? 10 I -- there's no way -- 11 MR. GIOVANNONI: Okay. In fact, we'll pass 12 them around. 13 GOVERNOR BUSH: -- sixteen years old. 14 MR. GIOVANNONI: I picked up from the 15 Florida DOE site. And you'll notice some of 16 the test scores there in the percentage of 17 improvement. 18 And, Mr. A, if you'd -- 19 GOVERNOR BUSH: Why -- 20 MR. GIOVANNONI: -- let them see these -- 21 GOVERNOR BUSH: Why don't you ask -- why 22 don't you start -- start with where -- 23 MR. GIOVANNONI: Let me tell you -- let me 24 tell you what -- let me tell you -- 25 GOVERNOR BUSH: Start with -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 124 May 30, 2001 1 MR. GIOVANNONI: -- what the -- 2 GOVERNOR BUSH: -- what the contract says, 3 or your -- 4 MR. GIOVANNONI: Well, the contract -- 5 because I didn't under-- I was the one who 6 negotiated it. 7 The contract does not have specific goals 8 in it, other than two very general ones, for 9 this reason. I didn't understand -- because 10 I'm a noneducator -- exactly how to measure 11 these things. 12 What we agreed with the District we would 13 do is look at the kind of students we got, and 14 negotiate some goals, which we've done in each 15 of the two years. 16 GOVERNOR BUSH: And what were those goals? 17 MR. GIOVANNONI: They were specific 18 performance goals on the FCAT for the 4th, 5th, 19 and 8th grade. 20 GOVERNOR BUSH: And what were the goals? 21 MR. GIOVANNONI: If -- 22 GOVERNOR BUSH: Has the District -- 23 MR. GIOVANNONI: -- my attorney would be -- 24 GOVERNOR BUSH: -- what -- 25 MR. GIOVANNONI: -- nice enough to bring ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 125 May 30, 2001 1 up -- 2 GOVERNOR BUSH: -- how was he -- 3 MR. GIOVANNONI: -- the annual report? I 4 apologize. 5 ATTORNEY GENERAL BUTTERWORTH: That's the 6 $100 question. 7 GOVERNOR BUSH: This is what we need to 8 get -- 9 TREASURER GALLAGHER: We've got -- we've 10 got that pretty much here. 11 MR. GIOVANNONI: Right. This is -- 12 TREASURER GALLAGHER: -- not -- 13 GOVERNOR BUSH: Not where they -- 14 TREASURER GALLAGHER: -- are supposed to 15 be. 16 GOVERNOR BUSH: -- contractually need to 17 be. 18 MR. GIOVANNONI: Okay. Our goals -- okay. 19 This is the third year. 20 Okay. For the year 1999-2000, 21 Florida Writes in 4th grade, 60 percent will 22 score greater than equal to 3. 23 GOVERNOR BUSH: Equal than 2.3, is that 24 what you said? 25 MR. GIOVANNONI: No. Sixty percent of the ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 126 May 30, 2001 1 students would score greater than or equal 2 to 3. 3 GOVERNOR BUSH: Three. Okay. 4 MR. GIOVANNONI: Okay. In the 8th grade, 5 45 percent of the students would score greater 6 than or equal to 3. 7 FCAT reading, 4th grade, 60 percent would 8 score greater than or equal to 2; and 9 40 percent will score greater than or equal 10 to 3. 11 And the FCAT reading in the 8th grade, 12 65 percent would score greater than or equal to 13 2; and 40 percent greater than or equal to 3. 14 F-- 15 GOVERNOR BUSH: How did you do? 16 MR. GIOVANNONI: Well, give me a moment, 17 and I will flip back and tell you exactly how 18 we did. 19 There were three goals in the 4th grade 20 that were not measurable, and that's a bone of 21 contention between us and the District. 22 Because the number of 4th graders tested was 23 only eight. 24 Now, under the Department of Education 25 rules, populations less than nine are not ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 127 May 30, 2001 1 supposed to be analyzed for a number of 2 reasons, statistical validity being one of 3 them. 4 So we didn't miss -- make those three 5 goals. But part of the problem was, in some 6 cases, one-half of a student would have swung 7 it, because eight students -- one student is 8 25 percent. 9 GOVERNOR BUSH: Right. 10 MR. GIOVANNONI: So -- I'm sorry. One 11 student is twelve-and-a-half percent. I 12 apologize. Yes. 13 Sorry. This is a math school, and I messed 14 that up. 15 Now -- 16 GOVERNOR BUSH: The financial auditor. 17 MR. GIOVANNONI: -- of the remaining seven 18 goals -- of the remaining seven goals, we made 19 six. 20 GOVERNOR BUSH: So you made six, one -- 21 MR. GIOVANNONI: And we missed one by 22 one-and-a-half students. 23 TREASURER GALLAGHER: Well, you want to go 24 through each one of those for me? 25 MR. GIOVANNONI: Okay. Just a moment. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 128 May 30, 2001 1 GOVERNOR BUSH: Is there a requirement in 2 the contract that you make them all? 3 MR. GIOVANNONI: No. In fact, when we 4 negotiated this, Dr. Colwell said to us that 5 they understood that we would not necessarily 6 make them all, particularly in the first year. 7 Bear in mind, I understand from some of our 8 consultants, that our first cohort, 4th through 9 8 entered about the 43rd -- 34th percentile. 10 Charter schools are supposed to be doing 11 this kind of work. This is not an apology or 12 an excuse. These are the people we're trying 13 to help, because they need the help. 14 Now, the school report card for academic 15 year 1999-2000 is done by me. Let's look at 16 the 4th grade -- well, we -- there's no point 17 in looking at the 4th grade. 18 Let's go to the 8th grade, because that's 19 easy to see. 20 Our goal was 65 percent being greater than 21 or equal to 2, and 78 percent did that. 22 Our goal was 35 percent greater than or 23 equal to 3 in FCAT math. Forty-three percent 24 accomplished that. 25 TREASURER GALLAGHER: Say -- read -- do ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 129 May 30, 2001 1 that again. This is in 5th grade, right? 2 MR. GIOVANNONI: I'm sorry. Eighth grade. 3 TREASURER GALLAGHER: Eighth grade. 4 MR. GIOVANNONI: Eighth grade. And the 5 Level Two is raw scores between 280 and 308, 6 for instance. 7 Now, we have 65 percent was the goal that 8 would meet greater than or equal to 2 on FCAT 9 math in the 8th grade. We had 78 percent 10 accomplish that. 11 TREASURER GALLAGHER: All right. Let -- 12 let me read something, and you can maybe 13 counter this. 14 Twenty-seven percent of grade 8 students 15 scored below expectation Level One in reading. 16 And 30 percent of students scored at 17 Level Three or higher. And no students scored 18 a Four or Five. 19 Now, those results ranked eighth out of 20 twelve schools. 21 GOVERNOR BUSH: Salud. 22 TREASURER GALLAGHER: And I -- I'm -- if I 23 remember correctly, eighth out of 11 or 24 12 schools, your school tied -- there was two 25 other schools, so there's three schools that ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 130 May 30, 2001 1 were eighth. So you really were last. 2 Because three -- two other schools ranked 3 the same as you did in Volusia County. 4 MR. GIOVANNONI: I mean, that may well be 5 true. And -- and I -- among the analyses we 6 performed over here, I did not do that. 7 What we're looking at over here is what 8 Dr. Penn Williams did, and what we did in 9 connection with the FCAT for this year, the 10 scores of which have just been released. 11 But that may well be true. And I would 12 tell you that our argument in this area is that 13 we are not only improving, but there is 14 significant individual gain scores by the 15 students who stay with us one year or longer. 16 And in the briefing document -- in the 17 briefing document, there's the report by 18 Dr. Penn Williams pointing out that our first 19 two cohort groups, which are the first two 20 groups that entered the school the first year, 21 and then the second year, that we were 22 achieving individual and average class gains 23 greater than the average in what they call the 24 NCEs, or the normed curve equivalents. 25 Now, what that means is -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 131 May 30, 2001 1 GOVERNOR BUSH: What does that mean? 2 MR. GIOVANNONI: What that means is -- and 3 Dr. Penn Williams, if I stumble badly, you 4 promise to save me. 5 What that means is that if they had just 6 had one year of knowledge gained on -- on the 7 national norm, then there would have been a 8 flat curve. Okay? 9 Our curve is positive -- has a positive 10 slope. So for our average students that were 11 measured on these reading tests, as a 12 for instance, we were getting more than one 13 year of learning in one year of being with us. 14 And our students are, in fact, catching up. 15 It takes -- it -- only in this third year 16 do we see some interesting things with the FCAT 17 where, for instance -- let me give you an 18 example of something we saw in the third year. 19 In raw score, I got a total of 15, 20 including Flagler County average, 21 Volusia County average, statewide average, and 22 all the middle schools in Volusia County that 23 were reporting. 24 Now, we were 15th on raw score. But if you 25 took our gain from the previous year, we were ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 132 May 30, 2001 1 ninth; if you took the percentage of gain, we 2 were eighth. 3 In other words, if you look at the gain 4 scores, both on the FCAT and on the 5 standardized reading tests, our gains are 6 picking up significantly each year, and this 7 year, we're quite proud -- now, this particular 8 chart that was prepared by Dr. Penn Williams -- 9 and here's the point: 10 A normal gain over a year's time would be a 11 flat or horizontal line. What you're looking 12 at is a line with a positive slope. That 13 means, those students as a whole -- that group 14 that's averaged are learning more than average 15 in one year. 16 And if you see the raw DRP scores in our 17 annual report, which I passed out last 18 September to all the Cabinet members, what 19 you'll see is that our students started behind 20 in the DRP, but almost caught up or passed the 21 rest of these students, and on the normed 22 average. 23 GOVERNOR BUSH: What's a DRP? 24 MR. GIOVANNONI: Degrees of Reading Power 25 Test administered throughout Volusia District. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 133 May 30, 2001 1 GOVERNOR BUSH: Yes, Commissioner. 2 COMMISSIONER BRONSON: I guess my question 3 would be: What -- at what point do you count 4 the students taking the test at whatever grade 5 level in your school? 6 In other words, if you've just received a 7 student in the 4th grade or 8th grade or 8 whatever that actually came from another 9 school, or another school system even, are they 10 averaged in with the students that you've had 11 on a -- for a -- for one year to -- to find out 12 whether your students -- I mean, is it -- is 13 there a way to find out whether your students 14 on the average are doing better than the 15 students you just received who are coming to 16 your school for a particular reason? 17 MR. GIOVANNONI: The current rule from the 18 Department of Education is that students have 19 to be there for the October FTE count to be 20 picked up in the school's average. 21 Now, we have not had the data before us to 22 do a discriminate function to look at the ones 23 coming in. Bear in mind, we're a 4 to 8 24 school, which is a nonnormal grade spread. 25 So all our 4th graders are brand new. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 134 May 30, 2001 1 They've never been to us before. And we do 2 have intake of students in each level. It's 3 not like we're closed. We're open enrollment. 4 And, no, we have not had the data -- and I 5 know that Dr. Colwell testified that they had 6 tried to do it as well. And it's tough to do 7 because when we started the -- in 3rd grade, 8 there was not, for instance, an FCAT test. So 9 we don't have something to go against. 10 In the future, as the FCAT program filters 11 out throughout the system, we should be able to 12 actually track that, and we're hoping this year 13 to do it for the first time. 14 GOVERNOR BUSH: You will. 15 MR. GIOVANNONI: That's right. And we 16 think that's important. 17 GOVERNOR BUSH: So do we. 18 MR. GIOVANNONI: Good. We're on the -- 19 TREASURER GALLAGHER: We're almost -- 20 MR. GIOVANNONI: -- same team on that. 21 TREASURER GALLAGHER: We're almost in the 22 same position on this one as we are on -- 23 GOVERNOR BUSH: Well, you know -- 24 TREASURER GALLAGHER: -- the other one. 25 GOVERNOR BUSH: -- I -- I made the mistake ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 135 May 30, 2001 1 of -- of temporarily leaving the room, and the 2 Volusia County School District didn't get a 3 chance to speak first? Or -- you want to 4 speak, I assume. 5 MR. GRAHAM: We're waiting. 6 GOVERNOR BUSH: Okay. I just want to make 7 sure you're here. 8 TREASURER GALLAGHER: Oh, they're here. 9 GOVERNOR BUSH: Any questions? 10 There -- if you have a -- a -- are you -- 11 you want to continue, do you have -- 12 MR. GIOVANNONI: Well, there's -- 13 GOVERNOR BUSH: -- more to talk about? 14 MR. GIOVANNONI: -- there's a couple other 15 quick charts I wanted to show you to make a -- 16 a point about the percentages again. 17 Get me the -- 18 Okay. Mrs. Poling did these, and she's 19 much better at -- 20 (Attorney General Butterworth exited the 21 room.) 22 MR. GIOVANNONI: -- graphics than I am. 23 But these show the percentage rates of 24 improvement in the two sets of 8th grade scores 25 last year and this year. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 136 May 30, 2001 1 But one is in math and one is in reading. 2 And you'll notice where our school is is about 3 in the middle of the pack. In fact, in the 4 math grade, I believe we exceed the County 5 average percentage improvement. And absolute 6 numbers were very close. 7 GOVERNOR BUSH: Where are you? 8 Okay. Continue. We've got -- 9 MR. GIOVANNONI: Thank you, sir. 10 Let's just briefly cover the fact, like 11 many charter schools, we are dealing with 12 students who are challenged. 13 But what I've discovered, that doesn't mean 14 there's anything wrong with that student. It 15 means that they have just missed -- somehow 16 the -- the current educational system, even in 17 home schooling, private schooling, whatever, 18 didn't fit them, and they do come to us 19 significantly behind. 20 But what we're showing is that once you dig 21 in, and when you're there for two or 22 three years, and you concentrate on it, you do 23 see -- begin to see significant gains in 24 catching up. 25 And we don't want to excuse bad ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 137 May 30, 2001 1 performance. To the contrary. And if you look 2 at Penn Williams' work as well, you'll see that 3 bit by bit, we have been moving them along. 4 And as we gain steam, we're looking forward to 5 very healthy gains. 6 We're not satisfied with what we have here. 7 Our Board -- 8 (Attorney General Butterworth entered the 9 room.) 10 MR. GIOVANNONI: -- and our faculty, I will 11 tell you, are not the kind of people who would 12 take even this measure of improvement as -- as 13 adequate. 14 But what we're showing is that what we're 15 doing is working for those students that need 16 our kind of help. 17 And I would invite any questions. And 18 Mr. A would also be willing to respond as well. 19 COMMISSIONER BRONSON: What -- what is the 20 average size of your class in this -- in this 21 particular school? 22 MR. ADEWUMI: About 12. 23 COMMISSIONER BRONSON: Okay. So you're -- 24 you're giving a lot more hands-on -- 25 MR. ADEWUMI: Yes. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 138 May 30, 2001 1 COMMISSIONER BRONSON: -- individual -- 2 MR. ADEWUMI: Yes, we do. 3 COMMISSIONER BRONSON: I -- I forgot to ask 4 that of the other -- of the other school. 5 GOVERNOR BUSH: Okay. If you could just 6 bear with us. Maybe we should hear from the 7 Volusia County -- 8 MR. ADEWUMI: Yes. 9 GOVERNOR BUSH: -- School Board. And -- 10 and then we'll open it up for questions. How 11 about that? 12 MR. GIOVANNONI: Rich. 13 MR. GRAHAM: Governor Bush, members of the 14 Cabinet, I'm Dick Graham -- excuse me. I 15 represent the Volusia County School Board. 16 With me today is Ms. Judy Conte, the Board 17 Chairman; Mr. William Hall, the Superintendent 18 of schools; Mr. Tim Huth, 19 Deputy Superintendent -- 20 GOVERNOR BUSH: Brought out all the big 21 dogs. 22 MR. GRAHAM: -- Dr. Chris Colwell, the 23 Assistant Superintendent in charge of 24 Curriculum and School Improvement Services; 25 Mr. Rich Kizma, Chief Counsel; and ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 139 May 30, 2001 1 Dr. Mary Bennett, Governmental Relations 2 Specialist. 3 I had a prepared presentation, but I see 4 what you're interested in is student 5 performance, and I do have Dr. Chris Colwell 6 here. I'm going to call him up in a minute. 7 I -- I have a few comments to make on it. 8 But he has the details on the testing and the 9 results and things I think that your questions 10 have showed you're interested in. 11 One thing -- 12 GOVERNOR BUSH: Let's go just -- 13 MR. GRAHAM: -- I would like to -- 14 GOVERNOR BUSH: -- Mr. Graham, if you could 15 just focus also on any kind of financial -- 16 COMPTROLLER MILLIGAN: Yes. 17 GOVERNOR BUSH: -- improprieties or 18 financial issues, I think it -- that might be 19 another -- 20 MR. GRAHAM: Okay. 21 GOVERNOR BUSH: -- area of concern. 22 MR. GRAHAM: The financial improprieties 23 are not the measure grounds for the 24 School Board's nonrenewing the charter. 25 There are some financial improprieties that ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 140 May 30, 2001 1 are mentioned, hopefully have been corrected -- 2 most of them. There are some problems with use 3 of categorical funds for noncategorical 4 expenses, problems with capital outlay and 5 SIT fund applications, and -- and getting those 6 funds in a timely basis. 7 But that's not the primary focus of -- of 8 the School Board's reasons. 9 We do have some very serious problems which 10 were raised in the order of the School Board 11 and in the briefs that we've submitted, and in 12 our discussions with your Aides dealing with 13 some very significant deficiencies in the area 14 of ESE education. 15 In every chart -- ESE chart that was 16 reviewed at the evaluation, there were 17 deficiencies noted. 18 As of the filing of the briefs before this 19 Board, 10 of the 15 areas where deficiencies 20 were noted have not been corrected -- at least 21 had not been responded to favorably by the 22 appellant. So we assume those are ongoing. 23 We have some serious problems with charter 24 agreements to provide curriculum such as music, 25 art, and physical education, which were not ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 141 May 30, 2001 1 provided, or -- and -- and grades were not 2 given for these particular subjects. 3 We have problems with teacher certification 4 that was not done properly. We have a problem 5 with background checks that were not conducted 6 in accordance with the charter agreement, and 7 with State law, and we have many other 8 deficiencies which were noted in the evaluation 9 that was conducted by the School Board staff in 10 December of 2000. 11 At the outset, I'm -- would like to say 12 that the Sganga School was notified at a 13 meeting on November 10 of 2000 that this 14 evaluation would take place. 15 They were given the exact questions that 16 would be asked, the information that would 17 be -- be requested at the time, and given 18 almost a month to prepare for the evaluation. 19 They were essentially given the answers to 20 the test before the test. When the staff went 21 down there on December 4th, these serious 22 problems still existed. 23 Now, the State statute requires that the 24 School Board, at least 90 days prior to the 25 termination date of a charter, which this was a ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 142 May 30, 2001 1 three-year charter, in its deliberations on 2 whether to renew the charter, to do this 3 evaluation, which was done in accordance with 4 State law. 5 The statute also says that we are not, as a 6 School Board, to continue to sponsor and to 7 renew a charter for a charter school that has 8 failed in certain areas such as student 9 performance, fiscal mismanagement, violation of 10 statute, and other good cause. 11 And we have outlined in our reasons 12 before -- in the School Board order which are 13 on appeal here, violations in every one of 14 those areas. 15 I -- we did thoroughly go over this -- most 16 of this with -- with your Aides last week, and 17 they had some very pertinent questions to -- to 18 some of these issues, and I assume that they've 19 briefed you on them. 20 I -- and -- and in an effort to save time, 21 I won't go into all of them. But I will -- I 22 do want to get to the student performance area, 23 because as opposed to the -- the Duval group 24 which we heard before us, we didn't set high 25 standards for the Sganga School. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 143 May 30, 2001 1 We allowed them in the annual evaluation -- 2 annual report that they -- we go through every 3 year by statute, for the 1998-1999 school year, 4 at the conclusion of that year, to set their 5 own goals for the 2000-2001 -- or the 1999-2000 6 school year. 7 Those goals, had they been achieved, the 8 school would have performed at a level of D. 9 So, therefore, it was important and -- to 10 the School Board, and it was communicated to 11 the school that we expected them to reach all 12 of those goals because that would even then 13 leave them at a D level. They not make four of 14 the ten goals. 15 They have consistently on the FCAT scores, 16 ranked either last or tied for last, or right 17 at the bottom of all our schools. 18 The scores for this year -- I know that 19 that's not in the record on this appeal, but I 20 know you're interested in them. The reason 21 that you continued the last case is so you 22 could evaluate them. 23 We do have them, we have evaluated them, 24 they've been out a couple of weeks. They 25 essentially showed no improvement. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 144 May 30, 2001 1 So the bottom line on student performance 2 is the Sganga School has performed 3 substandardly in every grade level, in every 4 subject for all three years of its existence. 5 And that's the bottom line. 6 I have Dr. Colwell here, who is our 7 Assistant Superintendent in charge of 8 curriculum. He is the one responsible for the 9 School District for evaluating these scores, 10 for assisting the school in preparing for the 11 FCAT test, and the other State-required 12 standardized tests. 13 And I know that you probably have some 14 specific questions you'd like to go over with 15 him. Or I would like for him to have the 16 opportunity to review the performance -- 17 student performance over these three years. 18 GOVERNOR BUSH: Welcome, Doctor. 19 DR. COLWELL: Thank you, Governor Bush, and 20 members of the Cabinet. Appreciate the 21 opportunity to speak to you this morning. 22 I think Mr. Giovannoni is correct, and as 23 you were working with Duval, I can understand 24 the frustration in looking at longitudinal 25 data, with lots of different tests as we -- as ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 145 May 30, 2001 1 districts move from different kinds of 2 standardized tests to different kinds of State 3 assessments. 4 I will make a -- like to make a couple of 5 brief statements before attempting to answer 6 your -- any of your questions. 7 First of all, from the purpose of the -- 8 the charter that our School Board entered into, 9 we believe that it was extremely important to 10 deal specifically with FCAT, in other words, 11 the State accountability plan. 12 So we have no issues with the DRP test and 13 the CAT tests which are given at the school. 14 We see some gains in those scores that they 15 give. 16 However, that is not what our contract 17 deals with in year 2 and year 3. We deal with 18 FCAT reading, FCAT writing, and FCAT 19 mathematics. We established some goals for the 20 2000 year, the year that was a year ago, 21 recognizing that the -- the school had some 22 performance issues. 23 And for that deliberate reason, although, 24 as a charter district, our goals are clearly 25 that each and every school will have a grade of ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 146 May 30, 2001 1 B or higher no later than 2003, and C or higher 2 no later than this year. We did establish 3 goals, and we agreed to goals that, if they 4 were all met, would come in with a grade of D. 5 The school was not able to meet all of 6 those goals. And we do think it's a 7 significant issue when you've got goals that if 8 you meet them, will bring you to a D standard, 9 wanting to give the school some time to improve 10 student perfor-- 11 GOVERNOR BUSH: But they weren't grad-- 12 the -- the school wasn't graded because of the 13 size of the -- 14 DR. COLWELL: Yeah. We don't have an issue 15 with the 4th grade. I agree with 16 Mr. Giovannoni. 17 I think when you've got a population of -- 18 of less than ten, the State Department of 19 Education has statistics that show that it's 20 inappropriate to analyze those. 21 I have -- the District has no issues 22 with -- 23 GOVERNOR BUSH: Are there -- 24 DR. COLWELL: -- their 4th grade -- 25 GOVERNOR BUSH: -- is the 8th grade the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 147 May 30, 2001 1 same -- same issue, population size, not -- 2 DR. COLWELL: No. Their -- their middle 3 school population is much bigger, and those 4 scores are reported by the State, and we did 5 analyze -- 6 GOVERNOR BUSH: And what were they graded? 7 DR. COLWELL: -- the scores. 8 GOVERNOR BUSH: What were they graded in 9 the middle school? 10 DR. COLWELL: For the year 2000, their goal 11 was to be -- have 60 percent of their 12 population at 2 or higher. Their actual 13 performance was 40 percent. That was in -- 14 GOVERNOR BUSH: What was the school's 15 grade? 16 DR. COLWELL: If the school had received a 17 grade, it would have been a grade of D. 18 GOVERNOR BUSH: Also we didn't -- it's not 19 broken up by -- 20 DR. COLWELL: The State -- 21 GOVERNOR BUSH: -- entry -- 22 DR. COLWELL: -- the State did not provide 23 a grade for Frank Sganga Middle School 24 separated out for the '99-2000 school year. 25 GOVERNOR BUSH: I'm sorry. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 148 May 30, 2001 1 DR. COLWELL: However, if we look at the 2 data, it is clear to us that if the grade had 3 been given, it would have been a grade of D, 4 primarily dealing with issues of reading and 5 writing more than issues of -- 6 GOVERNOR BUSH: Is this for last year? 7 DR. COLWELL: That's for last year. 8 TREASURER GALLAGHER: What -- what was 9 the -- if you use the 8th grade for the 10 middle school grade, what would it have been? 11 DR. COLWELL: It would have been a D. 12 For 8th grade writing, they would have 13 ranked twelfth out of our 12 middle schools; 14 for 8th grade mathematics, they would have 15 ranked eighth out of our 12 -- 12 schools; and 16 for 8th grade reading, they would have ranked 17 eight out of 12 -- eighth out of our 12 18 schools. 19 TREASURER GALLAGHER: How -- how many -- 20 how many schools were D in Volusia County? 21 DR. COLWELL: We had one elementary school. 22 The neighboring middle school was rated 23 an A. 24 We also did -- I know some issues have come 25 up on the 2001 data. And that -- that was ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 149 May 30, 2001 1 obviously an issue to us, and we looked at it. 2 And as we established our goals for this year, 3 recognizing that last year, we had agreed to 4 goals, that if reached, would only achieve a D. 5 We wanted to move the school to goals that 6 would reach a C level. So the goals that were 7 established and are in the annual report for 8 this year call for the school to be at a C 9 level. 10 And the -- the Frank Sganga Charter School, 11 we had good negotiations with them on the 12 goals. And I felt that there was comfort level 13 to agree to those goals. 14 We do have the all curriculum student 15 results. Those have been out for a couple of 16 weeks. Now, that is not the results that will 17 be released soon that disaggregate out 18 exceptional ed populations -- 19 GOVERNOR BUSH: This afternoon -- 20 DR. COLWELL: -- in that -- 21 GOVERNOR BUSH: -- at 1:30. 22 DR. COLWELL: Our analysis of the 23 all curriculum group scores, in other words, 24 when we count every student, show that the 25 school would not reach its goals for this year ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 150 May 30, 2001 1 to be a C. 2 We show them having student performance, 3 which would continue to be in the D level, and 4 would continue to rank at the end of -- at the 5 bottom end of our districts. 6 For example, in reading, grade 6 for this 7 year on the FCAT, they would rank 12th out of 8 our 12 schools; in grade 7 reading, they would 9 rank 12th out of our 12 schools; and 10 grade 8 reading, they would rank 11th out of 11 our 12 schools; in mathematics -- this is on 12 the NRT -- grade 6, 12 out of 12; grade 7, 13 12 out of 12; grade 8, 12 out of 12. 14 However, we should really look at the FCAT 15 reading and writing and math, because those 16 were the goals stated in the charter district. 17 In grade 8 reading, for this year based on 18 all curriculum analysis, they would rank 12 out 19 of 12; grade 8 mathematics, 12 out of 12; 20 grade 8 writing, 12 out of 12. 21 A couple of other just real brief comments. 22 The school does, in their analysis, include 23 two schools that I am not including. And to be 24 fair, I should mention that. 25 Their analysis includes Riverview School ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 151 May 30, 2001 1 and Euclid Avenue School, which are alternative 2 schools. The reason we do not include them in 3 our analysis is those schools are not designed 4 for students to remain at that population. 5 Our goal is to move them in and out over 6 nine-week periods. We do have students that 7 remain 18 weeks. And on some occasions, we'll 8 have students remain an entire year. 9 Those are students that are -- have been 10 referred there by our student placement 11 committee. 12 Also, Mr. Giovannoni in -- in their 13 analysis, they are correct when they talk about 14 some of the gain scores. The problem that we 15 have with those gain scores is that, 16 for example, if the school moved up 4 or 17 5 percentile points this year on FCAT 18 mathematics, say, from a 270 to a 275, and the 19 District also moved up 5 points, what you're 20 not seeing is that the District movement 21 started here, and went to here; where this 22 school's movement started very low, and moved, 23 but still remains very low. 24 Our issues really come down to this: Our 25 concern is that the issues are systemic in that ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 152 May 30, 2001 1 they tend to cross subject areas. 2 We will have schools from time to time 3 that'll have a particular area in reading or 4 writing or mathematics. These areas appear to 5 cross them. They appear to cross grade levels, 6 and they don't appear to be improving over 7 time. 8 We think the teachers are working hard. We 9 are not -- we have very real concerns about 10 whether the curriculum -- the instructional 11 materials are in place so that these students 12 can meet the FCAT graduation requirements by 13 grade 10. 14 GOVERNOR BUSH: Commissioner. 15 COMMISSIONER BRONSON: I -- thank you. 16 Oh, I'm sorry. 17 GOVERNOR BUSH: I'm sorry. 18 Commissioner Bronson. 19 TREASURER GALLAGHER: Okay. Go ahead. 20 COMMISSIONER BRONSON: Thank you. 21 I -- I'm still having a hard time with all 22 this. And -- and one of the things that I'm 23 having a hard time with is, I would like to 24 know -- and maybe -- maybe you can give this to 25 me, maybe you can't. And I'd like to know this ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 153 May 30, 2001 1 on all these issues. 2 What is percentage of SLD students in -- in 3 the school that we're talking about, as 4 compared to the general population of the -- of 5 the -- 6 GOVERNOR BUSH: SLD being -- 7 COMMISSIONER BRONSON: Slow learning 8 disability students -- 9 GOVERNOR BUSH: ESE -- 10 COMMISSIONER BRONSON: -- ESOL program 11 students that -- where -- where English is not 12 their main language. 13 I mean, there's a lot of factors involved 14 here in whether some of these charter schools 15 can meet the same criteria that the general 16 populace of the -- of the public school system 17 is going to meet. 18 I -- 19 DR. COLWELL: Yes, sir. 20 COMMISSIONER BRONSON: -- I'd -- I'd like 21 to compare all that to see where we are, not 22 take a school -- and -- and I'm not saying -- I 23 don't even know what the population of this 24 particular school is. 25 If you've got a population of SLD students ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 154 May 30, 2001 1 at 60 percent of your school, that's going to 2 make a big difference on how -- how much -- how 3 much harder it's going to be -- 4 GOVERNOR BUSH: Why don't you -- 5 COMMISSIONER BRONSON: -- to get these 6 children up to speed. 7 DR. COLWELL: Yes, sir. 8 I -- I cannot give you specific data. I 9 can tell you that the school has a lower 10 percentage of free and reduced lunch students 11 than -- 12 GOVERNOR BUSH: What's -- what's the number 13 of ESE kids -- how many students are there? 14 MR. GIOVANNONI: Ninety-nine, of which 15 23 are ESE. 16 GOVERNOR BUSH: That's a high percentage. 17 COMMISSIONER BRONSON: Twenty-seven. 18 DR. COLWELL: District-wide, I believe we 19 run about 17 percent. 20 GOVERNOR BUSH: ESE? 21 DR. COLWELL: Yes, sir. 22 GOVERNOR BUSH: And -- so this is higher. 23 TREASURER GALLAGHER: But those -- those 24 scores aren't counted when you -- 25 GOVERNOR BUSH: Well, they were counted ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 155 May 30, 2001 1 as -- 2 DR. COLWELL: The analysis we've done for 3 2001 would include those -- 4 GOVERNOR BUSH: Yes, it does. 5 DR. COLWELL: -- in comparison to the 6 other, the analysis for 2000 would not. 7 TREASURER GALLAGHER: How many charter 8 schools are in Volusia? 9 DR. COLWELL: There are currently two 10 charter schools in Volusia. The Reading Edge 11 Academy just received a five-year renewal. 12 In addition, we have two other charter 13 schools whose applications have been approved. 14 GOVERNOR BUSH: Are there -- the -- you 15 brought up something that gave me -- I don't 16 know, maybe it was -- Mr. Graham may have 17 brought it up, gave me some concerns about ESE 18 children about not providing -- it sounded like 19 the implication was they were not providing ESE 20 services. 21 DR. COLWELL: The issues that we have -- 22 there were a total of 15 issues. As I 23 understand in the rebuttal, five of those 24 issues were contested. 25 The issues that I see from my office of ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 156 May 30, 2001 1 being most serious would fall into three areas. 2 We had some students in our program review who 3 had IEP services listed that were not being 4 provided -- 5 GOVERNOR BUSH: Any parents -- this -- cut 6 to the chase here. 7 Any parents express concerns about their 8 children not receiving IEP services, which the 9 Federal law requires? 10 DR. COLWELL: Not to my office. 11 COMMISSIONER CRIST: To anybody else's 12 office? 13 DR. COLWELL: What we have done, I think 14 fairly successful with Mr. Adewumi and 15 Mr. Giovannoni, is try very hard to route 16 parent concerns. So I have had parent concerns 17 come in. 18 I've tried to route them to the principal, 19 and then to the director of the school, because 20 we -- we honor the governance process that we 21 established. 22 GOVERNOR BUSH: But you know for a fact -- 23 I mean, this is a subject that's very -- 24 difficult one for all school districts. 25 And if -- if there are no parent complaints ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 157 May 30, 2001 1 about this issue -- I mean, I -- I don't know 2 another place where you could say -- 3 DR. COLWELL: I guess -- 4 GOVERNOR BUSH: -- that. I mean, this is 5 a -- these -- these parents are very mobilized, 6 they're very energized, they know what their 7 rights are, they -- they -- they let me have 8 it. I know that. So I'm sure they'll let the 9 superintendent have it. 10 So if there's not a problem in the 11 school -- I mean, if -- I mean, if there is a 12 problem in the school, it would become pretty 13 evident -- 14 DR. COLWELL: Well -- 15 GOVERNOR BUSH: Wouldn't it? 16 DR. COLWELL: Well, obviously our concern 17 would be that if we know we have compliance 18 issues, and they're compliance issues dealing 19 with students having IEP services not provided, 20 or students receiving services for which they 21 are not listed on the IEP, it's the kind of 22 thing that we certainly would not expect to see 23 in other schools, and would be an issue for us. 24 And continue -- 25 GOVERNOR BUSH: You'd also have parents ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 158 May 30, 2001 1 validating your concerns, I would think. 2 MR. GRAHAM: Governor, could I raise one 3 additional issue? 4 GOVERNOR BUSH: Sure. 5 MR. GRAHAM: Be very brief. 6 And this was not in the record on appeal, 7 but it was raised by the appellants earlier, 8 and it's an issue that we have to face. 9 And that is their lease. We have been 10 notified by the -- have received a copy of a 11 notice by the attorney for the church which 12 leases the school site to the Sganga School 13 that as of August 31 of this year, that lease 14 will be terminated -- or it will not be renewed 15 under its terms. 16 Now, we've suggested that Mr. Giovannoni 17 leave a copy of the lease up here for 18 General Butterworth, or someone else to review 19 to see. They claim that they have a right to 20 renew. 21 We -- we are neutral in that. We don't 22 interfere with their lease. But we do know 23 about the notice. 24 And as of yesterday, in a conversation with 25 the attorney, I've been advised that if they ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 159 May 30, 2001 1 intend to rent for the month of September of 2 2001, it will be returned to them. 3 So that's -- we can't in good faith let you 4 make a decision without knowing that. Because 5 it's a very critical issue. 6 GOVERNOR BUSH: Yes, sir. 7 MR. ADEWUMI: Governor Bush, 8 Adewale Adewumi is my name. 9 On the lease issue that was just raised, we 10 have a lease with the church that is for 11 five years, and renewable after that. 12 Suddenly we received a letter from them 13 about two or three days before the brief was 14 filed that the lease would not be renewed. 15 We had contact with the pastor of the 16 church as of last week, and his response was, I 17 never said we couldn't talk about it. And if 18 we are going to stay at that specific location, 19 we have the lease in place. 20 Now when this started, we immediately went 21 out, and three or four alternative sites were 22 located. And any one of them would fit. We're 23 just waiting to finish with this hearing. And 24 when we return home, we will go and begin to 25 pursue this. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 160 May 30, 2001 1 But it is a certainty that we have a place 2 to go, even if this lease does not continue. 3 Thank you. 4 GOVERNOR BUSH: Thank you. 5 Any questions or comments? 6 All right. There is a -- how do I say this 7 motion? This -- there's a motion to -- 8 TREASURER GALLAGHER: We don't have a 9 motion. 10 GOVERNOR BUSH: We don't have a motion. 11 But the motion would be to approve the 12 District's recommendation not to renew the 13 charter. 14 ATTORNEY GENERAL BUTTERWORTH: I'd make 15 that motion, Governor. 16 GOVERNOR BUSH: There's a motion. 17 Is there a second? 18 TREASURER GALLAGHER: Second. 19 GOVERNOR BUSH: Moved and seconded. 20 All in favor, say aye. 21 THE CABINET: Aye. 22 GOVERNOR BUSH: All opposed? 23 No. 24 THE CABINET: No. 25 GOVERNOR BUSH: The ayes have it? ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 161 May 30, 2001 1 Did everybody vote? 2 TREASURER GALLAGHER: I didn't hear it. 3 SECRETARY HARRIS: I -- 4 GOVERNOR BUSH: The ayes were -- 5 TREASURER GALLAGHER: It was two to 6 nothing. 7 SECRETARY HARRIS: I didn't hear the -- 8 GOVERNOR BUSH: Can we do this over again? 9 COMMISSIONER CRIST: Let's do it again. 10 GOVERNOR BUSH: The -- the motion is to 11 accept the District's recommendation not to 12 renew the charter. 13 All in favor, say aye. 14 THE CABINET: Aye. 15 TREASURER GALLAGHER: Aye. 16 SECRETARY HARRIS: Aye. 17 COMMISSIONER BRONSON: Aye 18 ATTORNEY GENERAL BUTTERWORTH: Aye. 19 GOVERNOR BUSH: All opposed, no. 20 No. 21 COMMISSIONER CRIST: No. 22 COMPTROLLER MILLIGAN: No. 23 GOVERNOR BUSH: It is 4 to 3 to approve the 24 District's recommendation. 25 Thank you all for coming. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 162 May 30, 2001 1 (Discussion off the record.) 2 MR. PIERSON: Item 4 is an amended rule for 3 6A-1.0453, Educational Program Audits. 4 GOVERNOR BUSH: Is there a motion? 5 COMPTROLLER MILLIGAN: Second. 6 I move that. 7 TREASURER GALLAGHER: Second. 8 GOVERNOR BUSH: Moved and seconded. 9 Without objection, it's approved. 10 GOVERNOR BUSH: Thank you. 11 (The State Board of Education Agenda was 12 concluded.) 13 * * * 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
163 May 30, 2001 1 CERTIFICATE OF REPORTER 2 3 4 5 STATE OF FLORIDA: 6 COUNTY OF LEON: 7 I, LAURIE L. GILBERT COX, do hereby certify 8 that the foregoing proceedings were taken before me 9 at the time and place therein designated; that my 10 shorthand notes were thereafter translated; and the 11 foregoing pages numbered 1 through 162 are a true and 12 correct 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 8TH day of JUNE, 2001. 18 19 20 21 22 23 LAURIE L. GILBERT COX, RPR, CCR, CRR, RMR 24 100 Salem Court Tallahassee, Florida 32301 25 850/878-2221 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 Representing: VOTE ON AUTHORIZATION OF TEMPORARY DUTY FOR FORMER PAROLE COMMISSIONERS DIVISION OF BOND FINANCE DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES STATE BOARD OF EDUCATION BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND DEPARTMENT OF ENVIRONMENTAL PROTECTION SITING BOARD STATE BOARD OF ADMINISTRATION 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 Wednesday, May 30, 2001, commencing at approximately 9:13 a.m. Reported by: LAURIE L. GILBERT COX 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 850/878-2221
165 APPEARANCES: Representing the Florida Cabinet: JEB BUSH Governor CHARLES H. BRONSON Commissioner of Agriculture BOB MILLIGAN Comptroller KATHERINE HARRIS Secretary of State BOB BUTTERWORTH Attorney General TOM GALLAGHER Treasurer CHARLIE CRIST Commissioner of Education * * * ACCURATE STENOTYPE REPORTERS, INC.
166 May 30, 2001 I N D E X ITEM ACTION PAGE BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND: (Presented by David B. Struhs, Secretary) 1 Approved 177 Substitute 2 Approved 177 3 Approved 177 4 Approved 196 Substitute 5 Approved 197 6 Withdrawn 199 Substitute 7 Approved 199 8 Approved 200 DEPARTMENT OF ENVIRONMENTAL PROTECTION SITING BOARD: (Presented by David B. Struhs, Secretary) 1 Approved 202 2 Approved 203 STATE BOARD OF ADMINISTRATION: (Presented by Tom Herndon, Executive Director) 1 Approved 220 2 Approved 221 3 Approved 221 4 Deferred 234 5 (A) and (B) Approved 240 6 Approved 241 CERTIFICATE OF REPORTER 242 * * * ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 167 May 30, 2001 1 P R O C E E D I N G S 2 GOVERNOR BUSH: Board of Trustees. 3 MR. STRUHS: Good morning. 4 Item Number 1 is a conservation easement. 5 And I just wanted to reflect for a moment 6 that the last time you gathered as the Board of 7 Trustees, Secretary Harris asked a number of 8 questions about conservation easements as the 9 land conservation strategy here in the state of 10 Florida. 11 And we did respond to you with -- with a 12 letter that -- 13 SECRETARY HARRIS: Thank you for your 14 letter. 15 MR. STRUHS: Yes. 16 SECRETARY HARRIS: Appreciate it. 17 MR. STRUHS: -- which outlined some of the 18 work that has been done. We shared it with 19 your colleagues on the Board. 20 One thing that we left out of the letter 21 that I'd like to brag a little bit about is 22 that over the last two years here in Florida, 23 we have completed five conservation easements, 24 for a total of a little more than 70,000 acres. 25 And those were easements which fully ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 168 May 30, 2001 1 protect the State's interests in conserving 2 that land. And we're doing it at just a little 3 bit more than $1,000 an acre. 4 So clearly a very economic approach to 5 conservation, because it keeps the land in 6 private ownership, keeps it on the tax rolls, 7 but protects the public interests that we're 8 trying to preserve. 9 GOVERNOR BUSH: David, are we comfortable 10 with these percentages? 11 I mean, this is kind of new territory, so 12 it's hard to -- are the conservation easements 13 the same interest in the title so we can create 14 kind of a -- a standard that will apply? 15 MR. STRUHS: Yes. I -- I think we are 16 becoming more and more sophisticated in 17 understanding the value of conservation 18 easements, and how you determine their value. 19 I'm sure you've noted in reading this 20 particular item, Item 1 that's before you now, 21 is that depending on which appraised value you 22 use, we're getting what we desire for either 23 55 percent or 48 percent of the appraised fee 24 value. 25 Another way to look at that is figuring out ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 169 May 30, 2001 1 what you think the conservation easement value 2 is. If you did that, according to our experts, 3 this item would be acquired for about 4 87 percent of the conservation easement value. 5 But it is -- it is a -- an emerging art, an 6 emerging science. And I think we have 7 demonstrated -- 8 GOVERNOR BUSH: -- scientific is my point. 9 MR. STRUHS: -- I think we've demonstrated 10 sort of a growing sophistication in using this 11 kind of strategy. 12 SECRETARY HARRIS: Secretary, with Seattle 13 and some of the other examples, have -- have 14 they demonstrated that kind -- is it still just 15 a growing interest? 16 I mean, obviously you want to protect 17 private property rights ownership, and you 18 don't in any way want to impede. This -- 19 I think it's a matter of education 20 across-the-board as well so that people 21 understand who may wish their property to -- to 22 continue on agricultural or -- or like it that 23 way, that they at least have the information, 24 and know this would be accessible to them as 25 well. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 170 May 30, 2001 1 MR. STRUHS: One of the things we've been 2 contemplating, which -- which actually came to 3 us after your comments two weeks ago, was 4 potentially to have a national conference here 5 in Florida that we -- 6 SECRETARY HARRIS: Great. 7 MR. STRUHS: -- would host on conservation 8 easements where we could bring in leading 9 experts from other jurisdictions, and learn -- 10 SECRETARY HARRIS: That'd be fantastic. 11 MR. STRUHS: -- how they're doing that. 12 And bringing the private sector, as well as 13 the public sector, to see if we are really 14 using state of the art techniques in 15 determining how you do the valuation -- how you 16 get the interest that you want, and -- and 17 still be protecting the private property 18 interests. 19 SECRETARY HARRIS: Would that include -- I 20 mean, after that, would that include some kind 21 of survey or understanding of the areas that -- 22 that would be -- be best, but still with the 23 extraordinary sensitivity to the private 24 property owners that in -- in no way is their 25 property going to be taken or -- or would we ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 171 May 30, 2001 1 be -- 2 MR. STRUHS: Yes. 3 SECRETARY HARRIS: -- pushing that, but 4 they would have the availability to have access 5 to this opportunity. 6 MR. STRUHS: Yes. Exactly right. Exactly 7 right. 8 So I think -- again, Florida two years ago 9 at least -- 10 (Commissioner Crist exited the room.) 11 MR. STRUHS: -- for our CARL program, we 12 had zero conservation easements. And over the 13 last two years, we've done five. So we -- we 14 are on a steep learning curve. 15 But I think Florida has emerged from being 16 a laggard, to now being a leader in utilizing 17 these kinds of techniques. And it's now time 18 to work with other states to see how we're -- 19 how we're -- compare -- 20 SECRETARY HARRIS: We're -- I mean, I'm 21 just interested in terms of 70,000 acres. In 22 terms of the CARL lands, I mean, we've 23 purchased, you know -- 24 MR. STRUHS: Millions. 25 SECRETARY HARRIS: -- millions. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 172 May 30, 2001 1 MR. STRUHS: Million-and-a-half. 2 SECRETARY HARRIS: Yeah. 3 And so I just didn't know that 70,000 4 compared -- I mean, but it's -- we're moving 5 forward. But now we've become the leader? 6 I mean, we're that -- that's considered 7 aggressive? I don't really have it in context, 8 so I understand how significant -- 9 MR. STRUHS: I wouldn't -- 10 SECRETARY HARRIS: -- 70,000 acres is. 11 MR. STRUHS: -- call us a leader in terms 12 of actual acreage. 13 SECRETARY HARRIS: Uh-hum. 14 MR. STRUHS: But in terms of an emerging 15 leader. I mean, going from zero to five over 16 the course of just two years has -- has clearly 17 been recognized as -- as turning a corner by a 18 very important state, a state that is 19 recognized nationally as a leader in land 20 conservation. 21 SECRETARY HARRIS: I just think -- I think 22 this is such an extraordinary opportunity and 23 so important for Florida. And I appreciate 24 your leadership. 25 And a conference would really highlight ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 173 May 30, 2001 1 the issue, and maybe we could escalate the -- 2 the science and the learning curve. 3 MR. STRUHS: And we would -- we would 4 obviously appreciate your office's involvement 5 in participating -- 6 SECRETARY HARRIS: Whatever we can do. 7 MR. STRUHS: -- participating in that. 8 Anyway, thank you for allowing me that 9 opportunity -- 10 COMMISSIONER BRONSON: Mr. -- 11 MR. STRUHS: -- to brag a little bit. 12 COMMISSIONER BRONSON: Mr. Secretary, I 13 need to ask a question -- 14 MR. STRUHS: Yes, sir. 15 COMMISSIONER BRONSON: -- too. 16 I've -- I've had some concerns based on the 17 number of cattle grazing on State lands. And 18 it's -- some of the -- some of the figures I've 19 heard are just unreal. The -- the cow per 20 acre, which most cattlemen know what that land 21 will take. 22 We're not going to get into a situation on 23 these easements where somebody from the State's 24 going to come in and try to tell a cattleman 25 who's -- who's had that property for ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 174 May 30, 2001 1 generations or -- or their family has, and 2 they what -- they know what the carrying 3 capacity of that land is -- 4 MR. STRUHS: Right. 5 COMMISSIONER BRONSON: -- that now because 6 of this easement, we want you to -- to reduce 7 your cattle by -- by 50 percent or whatever on 8 this property. 9 We're not -- we're not going to -- 10 you're -- you're keeping hold -- 11 MR. STRUHS: You -- 12 COMMISSIONER BRONSON: -- of that, right? 13 You're not -- 14 MR. STRUHS: -- you -- you -- it's an 15 excellent question, because it actually gets to 16 this item before you today. 17 Specifically, we want to rely on the best 18 expertise of the land managers who are there 19 and operating cattle on the property now. 20 Of course, what you do in the conservation 21 easement is you -- you then constrain the -- 22 the head of cattle to that existing number. 23 But that existing number is the one that is 24 determined by the -- by the land -- 25 GOVERNOR BUSH: You do that -- you do that ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 175 May 30, 2001 1 before you sign the easement. 2 MR. STRUHS: Yes, sir. 3 GOVERNOR BUSH: I mean, so -- you can't 4 change the conditions of the easement after 5 you've signed it. 6 COMMISSIONER BRONSON: But, Governor, what 7 I was getting to is -- 8 GOVERNOR BUSH: That's a taking. 9 COMMISSIONER BRONSON: -- you can -- you 10 can say in the easement that you can graze 11 cattle, but I just didn't want them to come 12 back and -- and figure out then they want to 13 change the number of cattle. 14 And that's -- that's what I want to make 15 sure. Because there's a lot of people who 16 might want to go -- 17 GOVERNOR BUSH: That's a good question. 18 (Commissioner Crist entered the room.) 19 COMMISSIONER BRONSON: -- into these 20 easement programs, but they don't want to go 21 into it knowing they're going to keep it for 22 cattle grazing, and then have somebody change 23 the figures on them after they've -- 24 GOVERNOR BUSH: Secretary Struhs -- 25 COMMISSIONER BRONSON: -- after they've -- ACCURATE STENOTYPE REPORTERS, INC.

TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 176 May 30, 2001 1 GOVERNOR BUSH: -- can you answer that? 2 MR. STRUHS: Well, we -- one -- one of the 3 things that we do in -- in negotiating these 4 terms is we rely on the best management 5 practices as established by the Florida 6 Cattlemen's Association in -- in cooperation 7 with the -- the State agencies. 8 GOVERNOR BUSH: But the -- to the -- to the 9 point, you sign a conservation easement, it has 10 a specific cattle -- number head per acre, 11 whatever it is -- 12 MR. STRUHS: Right. 13 GOVERNOR BUSH: -- it can't change after 14 you've signed the easement. 15 MR. STRUHS: That's correct. 16 GOVERNOR BUSH: Okay. Move on. 17 We haven't got the count -- 18 MR. STRUHS: So we were -- we're 19 recommending approval of Item Number 1. 20 GOVERNOR BUSH: Item 1? 21 Are you asking for -- are you starting now 22 in the agenda? 23 COMPTROLLER MILLIGAN: Motion. 24 MR. STRUHS: Yes. Item Number 1 -- 25 TREASURER GALLAGHER: Second. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 177 May 30, 2001 1 MR. STRUHS: -- recommending approval. 2 GOVERNOR BUSH: Moved and seconded. 3 Without objection, it's approved. 4 Item 2. 5 MR. STRUHS: Item 2 is -- is two option 6 agreements to acquire thirty-six-and-a-quarter 7 acres within Spruce Creek CARL Project. 8 Recommending approval. 9 TREASURER GALLAGHER: Motion. 10 SECRETARY HARRIS: Second. 11 COMMISSIONER BRONSON: Second. 12 COMMISSIONER CRIST: Second. 13 GOVERNOR BUSH: Moved and seconded. 14 Without objection, it's approved. 15 MR. STRUHS: Item 3 is a purchase agreement 16 to acquire 44.7 acres within the Lake Jackson 17 Mounds Archaeological State Park. 18 TREASURER GALLAGHER: Motion. 19 ATTORNEY GENERAL BUTTERWORTH: Second. 20 COMMISSIONER BRONSON: Second. 21 GOVERNOR BUSH: Moved and seconded. 22 Without objection, it's approved. 23 MR. STRUHS: Item 4 is an option agreement 24 for the West Orange Trail Phase III in 25 Orange County. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 178 May 30, 2001 1 This is -- actually, a very interesting 2 project, one of the more popular trails in the 3 state of Florida with 60,000 users per month. 4 Nineteen miles of the trail are now open, and 5 being used. And when it's finally complete, 6 there will be 30 miles total. 7 This -- 8 COMPTROLLER MILLIGAN: Governor -- 9 MR. STRUHS: -- this fulfills the State's 10 agreement as part of a multiparty agreement 11 with -- with Orange County. 12 GOVERNOR BUSH: General Milligan. 13 COMPTROLLER MILLIGAN: Well, it -- I -- I 14 agree that this is probably a great trail. 15 But as we've talked about this before, 16 I mean, we're paying $100,000 for an acre that 17 runs approximately 28. 18 GOVERNOR BUSH: Feet long by 14 feet wide. 19 And, you know -- and, fortunately, one of them 20 goes by a 7-Eleven store here, and -- 21 GOVERNOR BUSH: Oh, this is the same one 22 we've -- 23 COMPTROLLER MILLIGAN: Oh, absolutely. 24 Absolutely. 25 GOVERNOR BUSH: Is it back again? ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 179 May 30, 2001 1 COMPTROLLER MILLIGAN: Well, it's -- it's 2 another piece of that pie. 3 SECRETARY HARRIS: Another piece of it. 4 COMPTROLLER MILLIGAN: And -- 5 GOVERNOR BUSH: The same 7-Eleven though. 6 COMPTROLLER MILLIGAN: It's -- it's -- it's 7 the same 7-Eleven problem. You know, the folks 8 down there are going to have a hard time 9 understanding how we're paying $100,000 an acre 10 for a piece of property that's 14 feet wide. 11 MR. STRUHS: Gives a whole new definition 12 to the 7-Eleven test, doesn't it? 13 COMPTROLLER MILLIGAN: Yeah. 14 GOVERNOR BUSH: Well, what -- what's the 15 answer though? I mean, this is a benefit -- 16 I -- 17 TREASURER GALLAGHER: Well, I mean, how -- 18 you can't -- you can't look at -- at -- at an 19 acreage cost when it's a -- when it's basically 20 a road right-of-way. 21 GOVERNOR BUSH: And this is a -- this is a 22 trail. 23 TREASURER GALLAGHER: Well, and -- 24 GOVERNOR BUSH: This is a -- this is an 25 amenity. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 180 May 30, 2001 1 TREASURER GALLAGHER: Probably was a 2 railroad at one time, wasn't it? 3 COMPTROLLER MILLIGAN: No. 4 MR. STRUHS: This one actually is not. 5 COMPTROLLER MILLIGAN: No, no. 6 MR. STRUHS: And, interestingly, it -- it 7 would have been much easier for -- 8 COMPTROLLER MILLIGAN: It's -- 9 MR. STRUHS: -- us had it been a rail-- 10 COMPTROLLER MILLIGAN: Well, yeah. We -- 11 we've been through that before, too. 12 The -- you know, the idea of -- that 13 this -- that this trail is going to pass 14 through a piece of commercial property, or for 15 that matter, residential property -- 16 TREASURER GALLAGHER: Might apply. 17 COMPTROLLER MILLIGAN: -- in a commercial 18 property sense, it probably enhances the value 19 of that commercial property. 20 GOVERNOR BUSH: That's -- that's my point. 21 COMPTROLLER MILLIGAN: It doesn't detract 22 from it. But we are -- we are paying for it as 23 if it were a nice piece of useable commercial 24 property. 25 GOVERNOR BUSH: The 7-Eleven's going to ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 181 May 30, 2001 1 have 60,000 people that walk by it, or ride 2 their bike by. 3 COMPTROLLER MILLIGAN: Yeah. Absolutely. 4 MR. STRUHS: That's a lot of Slurpies. 5 COMPTROLLER MILLIGAN: And it just doesn't 6 make any sense to me. 7 MR. STRUHS: A couple of responses to that. 8 One is because Federal money is being used 9 as a part of this project construction, as -- 10 as you well know, using ISTEA -- ISTEA monies 11 from the Federal Department of Transportation, 12 if we -- if we utilize the Federal dollars, we 13 are required to pay 100 percent of the value. 14 And I would also -- 15 COMPTROLLER MILLIGAN: Of the appraised 16 value. 17 The question is really -- 18 MR. STRUHS: Yes, sir. 19 COMPTROLLER MILLIGAN: -- the appraisal, 20 not the fact that we have to live with the 21 Federal requirement. 22 I mean, how do you -- how do you judge 23 a piece of property that -- as was just pointed 24 out, goes in front of a 7-Eleven, and will put 25 thousands of people by there -- I've forgotten ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 182 May 30, 2001 1 the number already of what you said -- 2 MR. STRUHS: Sixty -- 3 COMPTROLLER MILLIGAN: -- already use it, 4 but it's a huge number. 5 MR. STRUHS: Sixty thousand a month. 6 COMPTROLLER MILLIGAN: That are going to be 7 popping in there buying Cokes and -- 8 GOVERNOR BUSH: Slurpies. 9 COMPTROLLER MILLIGAN: -- and -- 10 TREASURER GALLAGHER: Slurpies. 11 COMPTROLLER MILLIGAN: -- and whatever. 12 TREASURER GALLAGHER: Slurpies. 13 COMPTROLLER MILLIGAN: And -- 14 TREASURER GALLAGHER: A lot of Slurpies. 15 COMPTROLLER MILLIGAN: -- and we're paying 16 the commercial value of that land? 17 MR. STRUHS: I -- the other -- the other 18 comment I wanted to make was -- 19 GOVERNOR BUSH: Is this frontage -- I mean, 20 describe this property. How does it -- 21 COMPTROLLER MILLIGAN: It's -- 22 GOVERNOR BUSH: -- relate -- 23 COMPTROLLER MILLIGAN: -- it's both, 24 Governor. Some of it is kind of -- runs 25 parallel to the road, and other -- kind of ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 183 May 30, 2001 1 ducks in behind some of the property. 2 GOVERNOR BUSH: Between the road and the -- 3 and the commercial property? 4 COMPTROLLER MILLIGAN: Some of it. And 5 some of it goes to the rear of the commercial 6 property. 7 GOVERNOR BUSH: Okay. Thank you. 8 MR. STRUHS: One of the -- one of the 9 things I wanted to point out -- and I might 10 need some help getting the precise numbers -- 11 but a good portion of this amount of money is 12 actually used to -- trying to think of the 13 right term -- to -- to make whole -- to make -- 14 to make -- to -- to correct any negative 15 effects we may have on the property. 16 For example, the 7-Eleven -- 17 GOVERNOR BUSH: Sorry. 18 MR. STRUHS: -- there's a -- there's a -- 19 there's a vacuum -- you know, one of these 20 coin operated vacuums you can vacuum out your 21 car. Part of that requires that they pay to 22 actually put that piece of equipment up and -- 23 and relocate -- 24 COMPTROLLER MILLIGAN: No. I understand 25 that. I understand that. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 184 May 30, 2001 1 MR. STRUHS: And I believe it's somewhere 2 approximately 45 percent in some cases of the 3 money is actually not for the acquisition of 4 the land, but actually moving curbs, moving 5 utilities, moving lamp posts, that sort of 6 thing. 7 Am I correct on that? 8 MS. ARMSTRONG: It's 43 percent. 9 MR. STRUHS: Forty-- it's 43 percent. 10 GOVERNOR BUSH: How long has this 11 commercial property -- I mean, who came up with 12 the idea of building -- connect-- the trail and 13 the connection to the parks and all this is a 14 wonderful idea. 15 But who came up with the idea of -- of 16 aligning this trail through property where it's 17 2 bucks a foot? 18 MR. STRUHS: Well, the alignment -- 19 GOVERNOR BUSH: Is it not so long ago as 20 the commercial values may have gone up 21 afterwards, or is this -- 22 MR. STRUHS: I think the alignment, 23 we're -- probably determined about ten years 24 ago when this project began in 1991. 25 MS. ARMSTRONG: By the County. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 185 May 30, 2001 1 MR. STRUHS: By the County. By the County. 2 And we -- we actually have a representative 3 here from Orange County who could probably 4 speak to that more directly if you'd care to 5 hear that. 6 GOVERNOR BUSH: If he dare come up. 7 MR. STRUHS: If you dare. 8 GOVERNOR BUSH: Welcome. 9 I was just joking. 10 MR. THOMAS: Thank you, Governor. 11 I'm Bill Thomas. I'm a Senior Planner with 12 Orange County Parks and -- 13 GOVERNOR BUSH: Oh, you were -- 14 MR. THOMAS: -- Recreation. 15 We -- we had done a study in this area. We 16 looked at several alternative corridors to try 17 to get through this area. 18 One of them was the utility corridor, some 19 others were through some residential areas. 20 Sometimes it's -- it's difficult to put these 21 trails through residential areas. A lot of 22 times, the -- the residents, you know, are 23 concerned about, you know, loss of privacy and 24 stuff and property values, even though studies 25 have shown that those don't really pan out. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 186 May 30, 2001 1 We looked at about three or four different 2 corridors, then we arrived at this one as -- 3 (Commissioner Bronson exited the room.) 4 MR. THOMAS: -- as being the -- the 5 easiest, and actually the -- the cheapest of 6 getting through. It was a long existing 7 transportation corridor. 8 One -- one thing you have to remember, 9 to -- to make these connections, sometimes you 10 have to go through areas that are not that 11 attractive. This is going to connect some very 12 attractive portions of the corridor. 13 But to -- to be honest, this is not that 14 attractive of -- a segment of the trail. But 15 it's -- it's a vital link. It's one that has 16 to be made. 17 But we did study alternatives, and this was 18 the best of the -- the alternatives that we 19 studied. 20 GOVERNOR BUSH: I mean, we're buying -- 21 we're buying a 14-foot right-of-way, 22 easement -- 23 MR. THOMAS: Right. 24 GOVERNOR BUSH: -- for this trail. How 25 long -- I mean, what exists now that you could ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 187 May 30, 2001 1 use, is there sidewalks? 2 MR. THOMAS: There's a 5-foot sidewalk 3 along the -- 4 GOVERNOR BUSH: So we're -- 5 MR. THOMAS: -- road that's there. 6 GOVERNOR BUSH: -- gaining -- we're gaining 7 9 feet of extra bicycle room or something? 8 I mean -- 9 MR. THOMAS: Right. 10 GOVERNOR BUSH: -- at 2 bucks a foot. 11 TREASURER GALLAGHER: Well, if you -- the 12 sidewalk already has an easement, right? 13 So we're just buying an easement here? 14 We're buying the property. 15 MR. THOMAS: We're -- we're actually 16 purchasing the property. We're going from a 17 5-foot sidewalk to a -- a 14-foot wide 18 landscaped trail. 19 TREASURER GALLAGHER: Why wouldn't we just 20 do an easement for the 14 feet? I mean, why 21 would we buy the property? 22 I mean, certainly that's what happened to 23 the sidewalk, right? 24 Isn't the sidewalk an easement? 25 MR. THOMAS: The sidewalk's a public ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 188 May 30, 2001 1 right-of-way. 2 TREASURER GALLAGHER: Public right-of-way? 3 MR. THOMAS: We're adding to the -- 4 TREASURER GALLAGHER: Property owner -- 5 MR. THOMAS: -- existing -- 6 TREASURER GALLAGHER: -- sort of -- 7 MR. THOMAS: -- public -- 8 TREASURER GALLAGHER: -- owns it, but they 9 have to give up that part for sidewalk. And 10 how much does the County pay for that when they 11 put the sidewalk in? 12 MR. THOMAS: Well, actually when we -- we 13 built the road, the -- the right-of-way for the 14 sidewalk was purchased along with the road. 15 TREASURER GALLAGHER: And so now we're 16 going in a little closer to the property? 17 MR. THOMAS: We're taking some additional 18 property. We're using as much of the 19 right-of-way as we can. 20 But to expand the sidewalk out the 14 feet 21 to meet the grade, to -- to meet all the 22 engineering requirements that -- we have to buy 23 the additional property. 24 We're -- we're trying to create something 25 more than just a sidewalk. We're trying to ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 189 May 30, 2001 1 create a linear park. Even though it's in an 2 urban area, with the additional land, we're 3 able to do more with amenities. 4 GOVERNOR BUSH: This is why I'm a little 5 confused, because we're paying -- we're paying 6 the -- the -- the price of a commercial 7 property that enhances the commercial property 8 that we're buying it from -- 9 (Commissioner Bronson entered the room.) 10 GOVERNOR BUSH: -- at a -- at -- you know, 11 we're -- seem like they win twice. 12 ATTORNEY GENERAL BUTTERWORTH: Governor, 13 DOT does this all the time. 14 GOVERNOR BUSH: Oh, I know. That's why 15 I'm -- 16 ATTORNEY GENERAL BUTTERWORTH: They spend 17 much more money per mile than this -- 18 COMPTROLLER MILLIGAN: You know, that -- 19 that doesn't make it right though. Or doesn't 20 make -- 21 TREASURER GALLAGHER: It's just -- 22 COMPTROLLER MILLIGAN: -- it something we 23 want to -- 24 TREASURER GALLAGHER: -- more of a park. 25 COMPTROLLER MILLIGAN: -- endorse. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 190 May 30, 2001 1 MR. THOMAS: We -- we would have liked to 2 have paid a lot less. But we have to pay what 3 the appraisers tell us it's worth. And -- 4 GOVERNOR BUSH: Yeah. But what -- what 5 could -- 6 TREASURER GALLAGHER: Get a new appraiser. 7 ATTORNEY GENERAL BUTTERWORTH: Right. 8 GOVERNOR BUSH: I just -- 9 COMPTROLLER MILLIGAN: You've already 10 purchased this, I believe, haven't you? 11 MR. THOMAS: Yes, sir. The -- this was 12 a -- 13 COMPTROLLER MILLIGAN: I mean, you're 14 looking -- you're looking to recover what 15 you've already spent. 16 MR. THOMAS: Right. Under the agreement we 17 had signed with the State. 18 It was a very fragmented corridor. The 19 State wouldn't have had the resources to go in 20 there and negotiate with all the different 21 owners. So the County took the lead, 22 reassembled the corridor. And now we're -- 23 we're hoping to be able to sell to the State 24 under the agreement what we had purchased. 25 GOVERNOR BUSH: Well, I -- I concur with ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 191 May 30, 2001 1 General Milligan that the -- complying with 2 Federal law is fine, 100 percent of appraisal, 3 if that's what they require, that's -- 4 that's -- that's okay. 5 But to suggest that the appraisal -- 6 appraised property for an already developed 7 piece of land, which at least in the -- front 8 of the 7-Eleven, that's the case, is the -- is 9 2 bucks a foot, when you're enhancing the 10 property, and they can't develop it anymore 11 than what they have, I just -- I've -- I've 12 got -- I respectfully disagree. 13 And -- but you know me -- oh, you don't 14 know me. 15 Secretary Struhs knows me. I just -- I -- 16 I think when we're the only buyer of something, 17 that somehow the appraisal ought to be a little 18 bit different than -- than if it's a green 19 field, you know, that has development rights 20 that would generate a $2 a foot price. 21 COMPTROLLER MILLIGAN: Well, I -- I guess 22 really how do we -- how do we send the right 23 signal so that they -- in -- in Orange County, 24 or wherever it may be, appreciates the concern 25 that we have, and tries to deal with these ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 192 May 30, 2001 1 appraisers on a -- a more realistic way? 2 ATTORNEY GENERAL BUTTERWORTH: Well, 3 Governor -- 4 GOVERNOR BUSH: Yes, General. 5 ATTORNEY GENERAL BUTTERWORTH: -- if, 6 in fact, it's the -- the 7-Eleven, I don't know 7 how many 7-Eleven type of situations there are, 8 but let's just buy everything that's not in 9 front of a -- a commercial establishment. 10 GOVERNOR BUSH: Well, maybe -- maybe that 11 would be the appropriate thing. 12 TREASURER GALLAGHER: They built this nice 13 trail onto the sidewalk, and back onto the 14 trail again. And you'll automatically be 15 pulled into that 7-Eleven because you're on 16 this little sidewalk, and you have to go get 17 something to drink. 18 COMMISSIONER CRIST: Well, Circle K is 19 going to get upset with us if we continue doing 20 this. 21 MR. STRUHS: And, General Milligan, to 22 respond to your question or comment. 23 In terms of going forward with 24 Orange County, or for that matter, any other 25 county that we're engaged as a partner in trail ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 193 May 30, 2001 1 building, I think the way to -- to fix the 2 problem would be to perhaps go back and revisit 3 these multiparty agreements so that there's an 4 expectation up front as to what the Board of 5 Trustees is willing, or is not willing, to -- 6 to provide as a partner. 7 And -- and that's something that probably 8 has not been done -- at least in this case for 9 a decade. 10 COMPTROLLER MILLIGAN: Yeah. I -- I mean, 11 I have a lot of trouble with this one. But I 12 also have trouble not approving it, because we 13 have reached an agreement with them. 14 So it is really how do we -- how do we 15 continue to get ourselves into this problem, 16 and how do we get out of it? 17 MR. STRUHS: Yes, ma'am. 18 GOVERNOR BUSH: How much -- how much has 19 Orange County put up in this? 20 TREASURER GALLAGHER: Well, right now a 21 half a million dollars if we don't approve it. 22 MR. THOMAS: I believe we have about 23 $570,000 on this particular parcel we're 24 conveying. 25 GOVERNOR BUSH: No. I mean, in general. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 194 May 30, 2001 1 Are we -- are we -- 2 TREASURER GALLAGHER: We're buying them 3 out. 4 GOVERNOR BUSH: -- are we putting up money 5 in this, or you're just -- you're being our -- 6 TREASURER GALLAGHER: Conduit. 7 GOVERNOR BUSH: -- conduit. 8 MR. THOMAS: Oh, no. We'll -- we'll wind 9 up paying a lot more for the property than what 10 we're getting from the State. Some of these 11 are -- are still in litigation -- 12 GOVERNOR BUSH: Is the County putting up 13 money in the trails program? 14 MR. THOMAS: Yes, sir. 15 MR. STRUHS: Yes. 16 GOVERNOR BUSH: Okay. 17 TREASURER GALLAGHER: Plus Federal, plus 18 us. 19 MR. THOMAS: Right. 20 MR. STRUHS: Yes. And while -- 21 GOVERNOR BUSH: So you're feeling our pain 22 on the price. 23 MR. THOMAS: We're -- we're probably paying 24 more than the State is, yes, sir. 25 GOVERNOR BUSH: Oh. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 195 May 30, 2001 1 MR. STRUHS: I would -- 2 GOVERNOR BUSH: Actually you're paying it. 3 MR. STRUHS: For -- for -- for the -- for 4 the record, I went back and asked. And during 5 the history of this project thus far, to date, 6 the State has paid 1.1 million dollars, up to 7 this point, just as a point of interest. 8 But back to the policy issue that -- that 9 General Mulligan -- I'm sorry, General Milligan 10 raised, I -- I think what we could do is -- 11 is -- is perhaps go back and -- and pull all 12 these multiparty agreements with local 13 governments for trail development, review them 14 all with an eye towards what the Board of 15 Trustees would view as appropriate or not in 16 terms of contribution, perhaps actually fold it 17 into our more focused attention on the use of 18 conservation easements -- 19 COMPTROLLER MILLIGAN: I -- I think -- 20 I think it makes good sense, David, and I hope 21 you will -- and would recommend that you do 22 that. 23 TREASURER GALLAGHER: It's getting late. 24 I'd like to move the item. 25 GOVERNOR BUSH: Is there a second? ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 196 May 30, 2001 1 ATTORNEY GENERAL BUTTERWORTH: Second. 2 COMMISSIONER BRONSON: Second. 3 SECRETARY HARRIS: Second. 4 MR. STRUHS: We will do that. 5 COMPTROLLER MILLIGAN: Well, the fact that 6 it's late is not as important as solving this 7 issue and addressing this issue. And I -- I 8 hope we'll see something back on it, David. 9 GOVERNOR BUSH: There's a motion and a 10 second. 11 Any objections? 12 Motion passes by a landslide. 13 MR. STRUHS: And I -- I would point out 14 that Ms. Jena Brooks, who is sitting behind me, 15 and is the new Director of our Greenways and 16 Trails Program, who is known to many of you, 17 appreciates your -- your support on this item 18 as well. 19 TREASURER GALLAGHER: The first one she 20 brings to the Cabinet almost went down. 21 COMMISSIONER CRIST: But didn't. 22 GOVERNOR BUSH: Item 5. 23 MR. STRUHS: Item 5, approval subject to 24 receipt of an easement appraisal acceptable to 25 DEP, Bureau of Appraisal, a request for six ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 197 May 30, 2001 1 nonexclusive utilities easements. 2 These are easements on dry land. This is 3 not sovereign submerged land, rather dry land, 4 as owned by State agencies for the siting of 5 the Gulfstream Natural Gas System. 6 The properties include one parcel owned by 7 Recreation and Parks; one owned by the Board of 8 Trustees, and leased to a private agricultural 9 interest; two that are held by the Fish and 10 Wildlife Conservation Commission; one by IFAS; 11 and another parcel managed by the Bureau of 12 Mine Reclamation. 13 TREASURER GALLAGHER: Motion on 5. 14 COMMISSIONER BRONSON: Second. 15 GOVERNOR BUSH: Second. 16 Moved and seconded. 17 Any discussion? 18 What's the price that we get when we give 19 out the easement? Nothing? 20 TREASURER GALLAGHER: No, we get -- we get 21 some. 22 GOVERNOR BUSH: We get the utility? 23 TREASURER GALLAGHER: We get money. I 24 don't know how much, but we get it. 25 COMPTROLLER MILLIGAN: Peanuts. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 198 May 30, 2001 1 SECRETARY HARRIS: I need to recuse myself 2 on this one. My family will be -- 3 GOVERNOR BUSH: Okay. 4 MR. STRUHS: There -- there's -- there's 5 a -- there's actually a difference between 6 siting a utility -- or -- or -- or a 7 nonutility -- 8 GOVERNOR BUSH: By law we're -- 9 MR. STRUHS: By law. 10 GOVERNOR BUSH: -- we have less, much less. 11 MR. STRUHS: Yes. 12 GOVERNOR BUSH: There's a motion and a 13 second. 14 Without objection -- 15 Secretary Harris is abstaining -- 16 SECRETARY HARRIS: Yes. 17 GOVERNOR BUSH: Is that what you want to 18 do, abstain? 19 SECRETARY HARRIS: Yes. 20 GOVERNOR BUSH: -- the -- the motion is 21 approved. 22 TREASURER GALLAGHER: Move to withdraw 23 Item Number 6. 24 MR. STRUHS: Thank you. 25 GOVERNOR BUSH: Motion to withdraw. ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 199 May 30, 2001 1 Is there a second? 2 COMMISSIONER BRONSON: Second. 3 GOVERNOR BUSH: Moved and seconded. 4 Without objection, the motion is withdrawn. 5 MR. STRUHS: Substitute Item 7, we're 6 seeking affirmation that a proposed public 7 sailing school is consistent with an existing 8 dedication, modifying that dedication to add a 9 number of special conditions, and authorizing 10 the severance of 500 cubic yards of sovereign 11 material. 12 Recommending approval. 13 TREASURER GALLAGHER: Motion on 7. 14 GOVERNOR BUSH: Is there a second? 15 SECRETARY HARRIS: Second. 16 GOVERNOR BUSH: Moved and seconded. 17 Without objection, it's approved. 18 MR. STRUHS: Item 8, we are requesting to 19 publish a notice of proposed rulemaking for 20 amendments to the rules that determine what is 21 a sufficient upland interest to be able to 22 apply for and gain a sovereignty submerged land 23 lease. 24 Essentially what we are doing is putting 25 this out for a public review and public comment ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 200 May 30, 2001 1 through the normal rulemaking process. One of 2 the effects is that it would actually allow 3 easements to be considered an adequate 4 controlling interest to apply for and secure a 5 sovereign submerged lease. 6 If -- if you have questions about this, we 7 can go into more detail. Obviously this issue 8 will come back to you again for final approval 9 once it's gone through the rulemaking process. 10 I would also point out that this rule that 11 we're proposing to go forward with has been in 12 the works for some two years, is the result of 13 a consensus that was achieved by a broad based 14 Technical Advisory Committee, and has already 15 been reviewed during three separate public 16 workshops. 17 COMPTROLLER MILLIGAN: Move Item 8. 18 ATTORNEY GENERAL BUTTERWORTH: Second. 19 GOVERNOR BUSH: Moved and seconded. 20 Without objection, it's approved. 21 MR. STRUHS: I -- I would beg your 22 indulgence to go back to Item 1, and -- and 23 just for the record, state that there was this 24 morning one change in -- in the terms with the 25 Grimes family. ACCURATE STENOTYPE REPORTERS, INC.

TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 201 May 30, 2001 1 It's a -- it's a clarifying amendment only. 2 And it has been shared with your Cabinet Aides, 3 and, indeed, maybe with you. 4 It was initialed and signed off on by the 5 landowner this morning. It doesn't affect any 6 substantive issues, but it just is a clarifying 7 amendment. 8 It's letter G on page 5. 9 GOVERNOR BUSH: Very good. 10 MR. STRUHS: Thank you. 11 TREASURER GALLAGHER: Is there a motion 12 on 8? 13 GOVERNOR BUSH: We did it, I think. 14 TREASURER GALLAGHER: We did it? Okay. 15 (The Board of Trustees of the Internal 16 Improvement Trust Fund Agenda was concluded.) 17 * * * 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 202 May 30, 2001 1 GOVERNOR BUSH: Siting Board. 2 MR. STRUHS: Oh, that's me. I'm sorry. 3 GOVERNOR BUSH: That's okay. 4 TREASURER GALLAGHER: Motion on the 5 minutes. 6 COMMISSIONER CRIST: Second. 7 GOVERNOR BUSH: Moved and seconded. 8 Without objection, it's approved. 9 Item 2. 10 MR. STRUHS: Item 2 is a consideration of 11 an order to be executed -- executed by the 12 Siting Board adopting the Administrative Law 13 Judge's recommended order, recommending the 14 Siting Board grant full and final certification 15 to the Florida Power Corporation's Hines Energy 16 Complex for -- 17 (Secretary Harris exited the room.) 18 MR. STRUHS: -- Power Block 2. 19 I would point out that this is a project 20 that has been approved by a variety of State 21 agencies, including the Public Service 22 Commission, the Department of Environmental 23 Protection, the Department of 24 Community Affairs, the Southwest Florida Water 25 Management District, the Fish and Wildlife ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 203 May 30, 2001 1 Conservation Commission, the Department of 2 Transportation, and the Central Florida 3 Regional Planning Council. 4 Your role, of course, as the Siting Board 5 is to make sure that all these various 6 regulatory agencies have, indeed, coordinated 7 their work and come together with a -- a 8 unified plan. And that is what you have before 9 you today. 10 So we're recommending approval of this 11 item. 12 I've also been advised that there are -- 13 there's counsel here from the Florida Power 14 Corporation that may wish to speak to the item, 15 if -- if necessary. 16 COMMISSIONER BRONSON: Move the item. 17 COMPTROLLER MILLIGAN: Second. 18 TREASURER GALLAGHER: Second. 19 GOVERNOR BUSH: Moved and seconded. 20 Any discussion? 21 The motion passes. 22 MR. STRUHS: Thank you. 23 GOVERNOR BUSH: The item passes. 24 Just -- can I make a statement for the 25 record here, just related to this item that I'd ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 204 May 30, 2001 1 like to suggest that the interests of the 2 ratepayer should be considered carefully in the 3 event that the Florida Supreme Court overturns 4 the separate need determination for this 5 power plant. 6 This issue's outside of our jurisdiction. 7 It's in the responsibility of the Public 8 Service Commission, which has the statutory 9 authority and responsibility to consider 10 Florida Power Corporation's ability to recover 11 costs from ratepayers and related issues. 12 And I trust their ability to -- 13 (Secretary Harris entered the room.) 14 GOVERNOR BUSH: -- do so, but I wanted to 15 state -- put that on the record. 16 State Board of Administration. 17 Are you -- we have something here? 18 MS. BROOKS: We have a speaker. 19 GOVERNOR BUSH: A speaker? 20 MS. BROOKS: On the last item. 21 MR. STRUHS: Yeah. I'm -- I'm sorry, 22 ladies and gentlemen. I was advised that there 23 was a -- counsel here from Florida Power Corp., 24 was not advised that there was counsel from 25 another business interest here who wanted to ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 205 May 30, 2001 1 speak to the item. 2 That was an oversight on my part. I 3 apologize. 4 GOVERNOR BUSH: Let's let him speak if he's 5 come. 6 Who's -- who's -- 7 TREASURER GALLAGHER: Panda. 8 GOVERNOR BUSH: Welcome. 9 MR. BERTRON: Thank you. 10 My name is Andy Bertron. And I'm here on 11 behalf of Panda Energy. 12 As some of you may know, Panda Energy 13 submitted a bid to propose this -- to construct 14 this proposed power plant. 15 And I fully understand your concerns, and 16 agree with you, that the Power Plant Siting Act 17 requires the PSC and the Supreme Court to 18 resolve issues related to the need 19 determination. 20 We're simply here today to point out that 21 the underlying need determination upon which 22 the -- 23 GOVERNOR BUSH: Salud. 24 MR. BERTRON: -- proposed certification is 25 based is not yet final, and is still in ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 206 May 30, 2001 1 dispute. Both Panda Energy and 2 Florida Power Corporation have appealed that 3 need determination to the Florida Supreme Court 4 where it's still pending. Both parties have 5 issues. 6 That puts you in the unfortunate position 7 of being asked to certify a power plant where 8 the underlying need determination on which it's 9 based -- the very basis for building that 10 power plant, is not yet final. 11 I'm not asking you to resolve those issues. 12 TREASURER GALLAGHER: That's why the 13 Governor made his statement. 14 MR. BERTRON: Fine. 15 TREASURER GALLAGHER: And I think it stands 16 for what we all think. 17 MR. BERTRON: And we're here -- 18 GOVERNOR BUSH: Actually, there -- there 19 was a deter-- wasn't there a -- a determination 20 made, but it's under appeal. 21 TREASURER GALLAGHER: Right. 22 MR. BERTRON: Correct. 23 GOVERNOR BUSH: So that there was a 24 final -- 25 MR. BERTRON: Correct. ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 207 May 30, 2001 1 GOVERNOR BUSH: -- determination. 2 MR. BERTRON: We're here simply to point 3 out what the consequences are to ratepayers. 4 If you proceed today to certify while that need 5 determination is on appeal, and ultimately it's 6 reversed, as it was in the Duke case, there 7 will be adverse consequences, we believe, to 8 ratepayers because this plant is being built in 9 rate base, meaning that as the plant is 10 constructed, the costs will be billed to 11 ratepayers. 12 If you approve with no conditions or no 13 other qualifications to ensure that ratepayers 14 are protected, and the Supreme Court reversed, 15 you'll have the very real possibility of a half 16 completed plant. 17 And the question then will be who's going 18 to pay the cost? 19 And at this point -- 20 (Comptroller Milligan exited the room.) 21 MR. BERTRON: -- I submit to you it's going 22 to fall on the backs of ratepayers. 23 Now, I think you have some options though. 24 You have authority in the Power Plant 25 Siting Act, under Section 403.511, to impose ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 208 May 30, 2001 1 conditions. 2 And I think it's simply a matter of making 3 clear in your final order -- make it 4 conditioned upon and effective upon the 5 Supreme Court's affirmation, if that's what 6 they do, of the need determination. 7 Alternatively, I think you can make clear 8 in your final order, should you approve, that 9 FPC essentially proceeds at its own risk, and 10 that if FPC is determined to be wrong by the 11 Supreme Court, then FPC, and not ratepayers, 12 will bear the cost of any half completed plant. 13 And I'm sure that whatever you do, you'll 14 have ratepayers' best interests at heart. 15 SECRETARY HARRIS: I have a question. 16 GOVERNOR BUSH: Yes. 17 SECRETARY HARRIS: I thought the most 18 appropriate remedy for this was for Panda to 19 seek a stay. I thought that was the most 20 logical response for you to do. I don't 21 understand why that hasn't been done. 22 MR. BERTRON: And -- and I did not 23 represent Panda in the underlying 24 Public Service Commission proceedings. 25 I can tell you this much, that they looked ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 209 May 30, 2001 1 at the similar situation, which was the Duke 2 case -- 3 SECRETARY HARRIS: But it's not a similar 4 situation at all. You're in -- 5 (General Milligan entered the room.) 6 SECRETARY HARRIS: -- a completely 7 different position. 8 MR. BERTRON: Right. 9 SECRETARY HARRIS: I mean, it's not similar 10 at all. 11 MR. BERTRON: Yeah. 12 If -- like Florida Power Corp. when it 13 challenged Duke's need determination, it 14 proceeded to the Supreme Court and did not seek 15 a stay. And it likewise -- 16 SECRETARY HARRIS: But it is not the same, 17 because Duke allowed it to -- you dec-- they 18 decided to -- what is -- what is the word -- 19 MR. BERTRON: To stipulate? 20 SECRETARY HARRIS: What -- they waived -- 21 they waived that ability. So, I mean, you're 22 not in the same position whatsoever, so you 23 can't look at -- and I thought they'd backed 24 off that position a lot, because you're not in 25 a similar position as Duke as -- whatsoever. ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 210 May 30, 2001 1 MR. BERTRON: Yeah. 2 I -- I'll just assume for -- for purposes 3 of argument that Panda could have sought a 4 stay. I -- I don't know whether they would 5 have been able to attain one. 6 SECRETARY HARRIS: I think you could still 7 get -- you could still do it. I mean, there's 8 no -- there's no real deadline on it. I mean, 9 that seems the most -- 10 MR. BERTRON: One the -- 11 SECRETARY HARRIS: -- significant -- 12 MR. BERTRON: If it really is -- 13 SECRETARY HARRIS: -- important appropriate 14 remedy. 15 MR. BERTRON: Well, I -- perhaps for FPC. 16 But for Panda, Panda will obtain its remedy or 17 not in the Supreme Court, they'll grant 18 whatever relief to Panda they're going to 19 grant, and it will either go back to the PSC, 20 or it won't. 21 My concern here is more on behalf of 22 ratepayers who ultimately -- 23 TREASURER GALLAGHER: I am so glad -- 24 MR. BERTRON: -- will be served -- 25 TREASURER GALLAGHER: -- Panda is looking ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 211 May 30, 2001 1 out -- 2 MR. BERTRON: -- by this plant. 3 TREASURER GALLAGHER: -- for the 4 ratepayers. 5 GOVERNOR BUSH: We're all -- 6 TREASURER GALLAGHER: I really -- tell your 7 client, we are so happy that they're working -- 8 looking out for our ratepayers. 9 I guess if they'd have been out in 10 California, that's what they'd have said there, 11 too, and the ratepayers are getting hurt pretty 12 bad out there because they didn't build the 13 plants they should have built. 14 So you want us to get in the same position 15 here, to protect the ratepayers? 16 MR. BERTRON: I'm suggesting that we take 17 some action here to protect the ratepayers. 18 TREASURER GALLAGHER: Well, like 19 California's were protected? 20 MR. BERTRON: No, sir. I'd submit it's a 21 very different -- 22 TREASURER GALLAGHER: That's how you'd end 23 up. 24 Unfortunately, we -- we either approve it, 25 or we don't. We don't do it with caveats. And ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 212 May 30, 2001 1 we've done it. 2 GOVERNOR BUSH: That's -- I think your 3 recommendation's based on what the legal 4 counsel of the Department has said is -- the 5 suggestion's, while maybe interesting ones, are 6 not appropriate for us to do that we are 7 constrained with the agenda item in front of 8 us, which is why I made the statement. Because 9 I do concur with your point that -- that there 10 should be -- ratepayers need to be taken into 11 consideration in these issues. 12 Is there -- we've already -- actually -- 13 TREASURER GALLAGHER: We've done it. 14 GOVERNOR BUSH: -- we've done it. I 15 just -- if anybody wants to reconsider, we can 16 do that. 17 But if not, we'll -- we'll move on. 18 COMMISSIONER CRIST: I have a question for 19 the Secretary. 20 GOVERNOR BUSH: Okay. 21 Thank you. 22 COMMISSIONER CRIST: It's -- it's a 23 friendly question, David. 24 How many more plants are, you know, in line 25 to be built any time soon in Florida? ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 213 May 30, 2001 1 Do you know? 2 MR. STRUHS: I thought you said it was a 3 friendly question. 4 COMMISSIONER CRIST: Well, I thought -- 5 it's intended to be. 6 TREASURER GALLAGHER: You know, you're 7 supposed to -- he's -- he's supposed to have 8 the answer when you ask him a friendly one. 9 COMMISSIONER CRIST: I'm sorry. Are there 10 a few? 11 TREASURER GALLAGHER: When'd you stop 12 beating your wife? 13 COMMISSIONER CRIST: I have a sister who 14 happens to live in California, and I'm 15 concerned that we don't have the kind of 16 situation that she's dealing with in southern 17 California. So -- 18 GOVERNOR BUSH: We don't. No, sir. 19 MR. STRUHS: Okay. There are -- there are 20 currently three new plants pending for approval 21 by the Power Plant Siting Board in the state of 22 Florida. 23 COMMISSIONER CRIST: Any time frame as to 24 when they'll get to us for approval? 25 MR. STRUHS: Actually let me introduce ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 214 May 30, 2001 1 Mr. Buck Oven, who -- who actually is the 2 Director of the -- 3 COMMISSIONER CRIST: Yes, sir. 4 MR. STRUHS: -- Power Plant Siting Program 5 for the Department. 6 TREASURER GALLAGHER: Good move. 7 MR. OVEN: Calpine's plant, it will come 8 before you either the last meeting in June, or 9 the first meeting in August. 10 COMMISSIONER CRIST: Yes, sir. 11 MR. OVEN: The Orlando Utilities Commission 12 expansion could come in late August or early 13 September. 14 And then the JEA Brandy Branch expansion 15 should come before you probably in February. 16 COMMISSIONER CRIST: I'm informed 17 there's -- Enron wants to do one in south 18 Florida somewhere? Do you know anything about 19 that? 20 MR. OVEN: The Enron projects in south 21 Florida are outside the Siting Act, will not 22 come before you. 23 TREASURER GALLAGHER: Yeah. Those are 24 private. 25 COMMISSIONER CRIST: I see. ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 215 May 30, 2001 1 GOVERNOR BUSH: They're below the -- below 2 the threshold. There's many, many projects 3 that are building capacity below the -- 4 whatever the megawatt threshold is, 75 or -- 5 MR. OVEN: They are either below the 6 75 megawatt threshold for steam, or they have 7 no steam at all, and are -- 8 COMMISSIONER CRIST: Okay. 9 MR. OVEN: -- completely outside the Act. 10 COMMISSIONER CRIST: Okay. 11 GOVERNOR BUSH: So it's a single -- 12 COMMISSIONER CRIST: Any idea how many of 13 those there are? 14 MR. OVEN: In the last two years, we have 15 been looking at -- or are still looking at 16 something like 17,000 megawatts of capacity 17 since '99. So there's been a lot of permitted 18 and a lot more being permitted. 19 COMMISSIONER CRIST: So we're -- 20 MR. OVEN: I don't know how much is being 21 built. But a lot -- 22 COMMISSIONER CRIST: We're moving along, so 23 we're powered up. 24 MR. OVEN: We're not California. 25 COMMISSIONER CRIST: I know that. I don't ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 216 May 30, 2001 1 want to be. That's all. 2 Thank you. 3 GOVERNOR BUSH: That doesn't -- I mean, 4 that's a -- that's not the most efficient way 5 of building capacity for a state like Florida, 6 in my opinion. 7 MR. OVEN: Yes, sir, that's correct. 8 One of those units may never be built. Or 9 they're being permitted so that if the statute 10 were changed, they'll probably convert those 11 plants to the combined cycle and move forward 12 with them. 13 But there's only so much need for peaking 14 units. 15 GOVERNOR BUSH: All right. 16 MR. OVEN: So a lot of these probably will 17 not be built. But they are permitted. 18 TREASURER GALLAGHER: California has a lot 19 of need for peaking units. 20 COMMISSIONER CRIST: So I guess -- I mean, 21 the question -- the question is, do we have a 22 plan to, you know, do this before we have a 23 situation -- 24 GOVERNOR BUSH: Secretary Struhs can answer 25 that one. ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 217 May 30, 2001 1 MR. STRUHS: The answer is: Really for the 2 first time in -- in anybody's recent memory, 3 thanks to actions in the Legislature and the 4 Governor, through Executive Order appointing 5 the Energy 20/20 Study Commission, we are now 6 about a third of the way through public 7 processing, which we're trying to develop a 8 plan for the State's consideration. 9 And these are precisely the kinds of 10 issues -- policy issues that are being 11 deliberated. Progress is -- has been good. 12 And -- and it's -- it's a -- a wide group 13 of interests, both residential users, 14 commercial users of power, utility industry, 15 the independent power producers, all coming 16 together to see if we can't come back by 17 December of this year with some consensus views 18 on -- on how to resolve some of these policy 19 issues. 20 So we are -- we are on schedule, and -- and 21 look forward to having that done by December. 22 COMMISSIONER CRIST: Thank you, Secretary. 23 Thank you for your indulgence, Governor. 24 GOVERNOR BUSH: No. It's an important 25 subject. And -- and it -- one of the things ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 218 May 30, 2001 1 that -- I think one of the ironies is the fact 2 that we're probably the -- if we're not the 3 most regulated marketplace for the utility 4 industry, we're close to it, has provided some 5 short-term protection. 6 But it's -- it's a false -- in my opinion, 7 a false situation in the sense that we have to 8 build capacity, and in the open marketplace, 9 I think we can build capacity faster. 10 So the questions become, how do you move to 11 that -- a new marketplace. And that's fraught 12 with a lot of policy challenges for us related 13 to stranded costs versus stranded benefits, 14 protection of the consumer. 15 These are issues that are very complex, and 16 we're going to be methodical in how we go about 17 it. 18 But the good news is that we're not on the 19 same power grade as California. That's the 20 best news. 21 And the second best news is that we have 22 reserves built today that would allow us to 23 sustain any kind of -- we can continue to grow, 24 we can -- I'm -- I'm looking for the 25 Florida Power Corp. guys to make sure that ACCURATE STENOTYPE REPORTERS, INC.
DEP SITING BOARD 219 May 30, 2001 1 we're shaking forward like this -- that we can 2 have -- we can have our typical summer kind of 3 conditions, and we're not going to see anything 4 remotely close to what we had in -- what we see 5 in California with brownouts and blackouts. 6 Good. Good. 7 COMMISSIONER CRIST: The jury agrees. 8 I guess we're done. 9 (Discussion off the record.) 10 (The Department of Environmental Protection 11 Siting Board Agenda was concluded.) 12 * * * 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 220 May 30, 2001 1 (Commissioner Bronson, 2 Attorney General Butterworth, 3 Commissioner Crist, and Secretary Harris exited 4 the room.) 5 GOVERNOR BUSH: Tom Herndon. 6 MR. HERNDON: Item Number 1 is the minutes 7 of the meeting of May 15th. 8 TREASURER GALLAGHER: Motion on minutes. 9 GOVERNOR BUSH: Uh-oh. 10 Oh, there you are. 11 COMPTROLLER MILLIGAN: I'm here. 12 GOVERNOR BUSH: Disappeared. 13 COMPTROLLER MILLIGAN: I'm just waiting 14 till things settle down a little bit. 15 GOVERNOR BUSH: You want to sec-- move 16 the -- second the -- 17 COMPTROLLER MILLIGAN: I'll second the 18 minutes. Yeah. That's not a big deal. 19 GOVERNOR BUSH: Moved and seconded. 20 Without objection, it's approved. 21 MR. HERNDON: Item Number 2 is approval of 22 a fiscal sufficiency of an amount not exceeding 23 50 million dollars, State of Florida, 24 Department of Environmental Protection, 25 Florida Forever Revenue Bonds. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 221 May 30, 2001 1 COMPTROLLER MILLIGAN: And I'll move that 2 one. 3 TREASURER GALLAGHER: Second. 4 GOVERNOR BUSH: Moved and seconded. 5 Without objection, it's approved. 6 MR. HERNDON: Item Number 3 is a request of 7 the Trustees by the staff of the State Board to 8 approve filing the Investment Policy Statement 9 which was approved -- last approved at your 10 February 27th, 2001, meeting. 11 We've gone through, as you know, extensive 12 rulemaking starting back in Panama City last 13 year, and are before you today. 14 The most recent hearing we had back in 15 April resulted in three changes which are 16 enumerated, and I would characterize as -- as 17 primarily clarification. 18 We're ready to move forward with the 19 rulemaking process, if you approve that. 20 TREASURER GALLAGHER: Motion on 3. 21 COMPTROLLER MILLIGAN: Second. 22 GOVERNOR BUSH: Moved and seconded. 23 Without objection, it's approved. 24 MR. HERNDON: Item Number 4 is to recommend 25 that -- the dissolution of any nonstatutory ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 222 May 30, 2001 1 based restrictions on the investment authority 2 of the State Board of Administration. 3 As a corollary to that proposal, we would 4 also request your authorization to make any 5 corresponding change to the total fund 6 investment plan as needed to reflect the 7 elimination of any nonstatutory based 8 restriction. 9 Needless to say, this does have the effect 10 of removing the only current policy based 11 restriction at the Board, which is tobacco. 12 We do have some folks here who would like 13 to speak to that subject. 14 And, Governor, members, if it's your 15 pleasure, we can go ahead and have them come 16 now. 17 GOVERNOR BUSH: Yeah. Please. 18 MR. HERNDON: Okay. I have two that I'm 19 aware of: Mr. Kennedy and Ms. Olsen. 20 MS. OLSEN: Thank you. 21 Good afternoon. 22 GOVERNOR BUSH: Good afternoon. 23 MS. OLSEN: It's been a long morning, so 24 I'm going to keep my comments brief. 25 My name is Brenda Olsen, and I'm the ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 223 May 30, 2001 1 Assistant Executive Director for the 2 American Lung Association. 3 I'm here today to speak on behalf of the 4 Triagency Coalition on Smoking or Health, which 5 consists of the American Cancer Society, the 6 American Heart Association, and the 7 American Lung Association. 8 I'd like to, of course, begin my comments 9 by thanking the State Board of Administration 10 for giving us this opportunity to express our 11 concerns about your consideration of dissolving 12 the restrictions on investing in tobacco 13 stocks. 14 Although we recognize the State Board of 15 Administration has a fiduciary responsibility 16 to maximize the returns for the State pension 17 fund, we believe moral and ethical obligations 18 sometimes rise above those fiduciary 19 responsibilities. 20 We believe this is one of those times. 21 By its own admission, the tobacco industry 22 markets an addictive and deadly product. 23 Today, in this country, 3,000 children will 24 start smoking. And 1,000 of those will die 25 prematurely as a direct result of their ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 224 May 30, 2001 1 addiction. 2 In Florida, tobacco will claim more than 3 29,000 people this year alone. We believe the 4 State should not share in the profiting from 5 the destruction of so many lives. 6 Whether it chooses to acknowledge it or 7 not, we believe this state has a responsibility 8 to protect the health of its residents. 9 Oftentimes, these responsibilities calls upon 10 the State to display leadership in rejecting 11 activities, that while legal, to us are morally 12 offensive. 13 The tobacco industry's willful and 14 methodical addiction of Florida's children to 15 its deadly product constitutes a business 16 practice so reprehensible as to outweigh any 17 marginal gain reinvestment in tobacco stocks 18 might provide to the State's pensioners. 19 We again ask for your leadership, and we 20 urge you to reject the proposal to remove the 21 nonstatutory limitations on State investments 22 on tobacco stocks. 23 Thank you. 24 GOVERNOR BUSH: Thank you. 25 I -- just a -- can I have a -- ask you a ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 225 May 30, 2001 1 question, because -- 2 MS. OLSEN: Sure. 3 GOVERNOR BUSH: -- you -- you said 4 something that surprised me a bit. 5 You didn't believe the State should profit 6 from -- I don't know the exact wording -- but 7 the tobacco companies' operations. 8 What about the 550 or 600 million dollars 9 of taxes that we receive and the tobacco 10 settlement? I mean, we're profiting in very 11 good ways for all sorts of people because of 12 that. 13 Is that different than -- 14 MS. OLSEN: I -- I do see it -- we do see 15 it as different, because you're investing in -- 16 in a company's business, as opposed to other -- 17 other means. The tobacco settlement was 18 because of a -- a court case in which the 19 tobacco industry settled with -- with the 20 State of Florida. 21 And, of course, taxes are levied on -- on 22 a -- a number of different products. But when 23 you start talking -- talking about investing in 24 a -- in a company that has a product that when 25 used as intended, kills, it becomes a different ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 226 May 30, 2001 1 matter, in our view. 2 GOVERNOR BUSH: That's an interesting 3 dilemma. Because I -- I would guess that the 4 American Lung Association, American Cancer 5 Society, would like for us, as a country, to 6 ban cigarette smoking, wouldn't you, make it 7 illegal? 8 MS. OLSEN: We -- we've -- we've never -- 9 we've never had that position where we think 10 that it should be banned. 11 GOVERNOR BUSH: No? 12 MS. OLSEN: But we work very hard to keep 13 the youth from our -- our country to keep from 14 becoming addicted to this product. 15 We -- we've seen prohibition. We saw 16 prohibition in alcohol, and it doesn't keep 17 people from using the product. 18 And so it's important for us as a state, 19 and as organizations, to do everything we can 20 to convince our -- our constituents -- 21 GOVERNOR BUSH: Absolutely. 22 MS. OLSEN: Not to use the product. 23 GOVERNOR BUSH: It is a -- it is a dilemma, 24 because -- 25 MS. OLSEN: It -- we realize -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 227 May 30, 2001 1 GOVERNOR BUSH: -- we're -- we get about a 2 billion -- 3 MS. OLSEN: -- that. 4 GOVERNOR BUSH: -- dollars of revenue from 5 something that is legal, but also is harmful. 6 It's a -- and it has health costs that -- that 7 are significant. 8 It's a -- there's no easy answer on this. 9 TREASURER GALLAGHER: Well, I -- you know, 10 I recognize this problem. I want -- just want 11 to remind some people here that in 1992, I 12 moved the resolution that eliminated smoking in 13 the Capitol and other buildings that the 14 Governor and Governor and Cabinet had authority 15 over. 16 So just to let you know, I'm -- I'm in your 17 direction, I believe in what you're working 18 toward. I also realize that we have a -- the 19 fiduciary responsibility that you mentioned. 20 COMPTROLLER MILLIGAN: And -- and that -- 21 MS. OLSEN: And we -- we recognize how 22 difficult this decision must be for you. 23 COMPTROLLER MILLIGAN: And that's really 24 the -- the -- the horns of the dilemma that 25 you're on. You have your Trustee ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 228 May 30, 2001 1 responsibility and from what the law says you 2 must do, versus what you may think personally, 3 or for that matter, in your responsibilities in 4 your elected position. 5 And -- and unfortunately they don't always 6 match up. And -- so it is -- it's -- it's a 7 very difficult decision. 8 MS. OLSEN: Thank you. 9 GOVERNOR BUSH: Thank you for coming. 10 MR. HERNDON: Trustees, let me just make 11 one point of clarification. I think it's 12 important to -- to be clear about this. 13 The fact that this restriction may be 14 lifted by your action does not necessarily 15 imply that we will this afternoon begin to 16 invest in tobacco stocks. 17 What you're basically doing by removing the 18 restriction is leaving the investment decision 19 in the hands of the investment professionals 20 that we hire on your behalf. 21 There may be ultimately investments in 22 tobacco. I certainly don't want to -- to 23 discount that. That certainly is a likely 24 outcome, given the performance of the sector as 25 a whole from an investment point of view. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 229 May 30, 2001 1 But it's not necessarily a direct 2 one-to-one correlation with your decision here 3 today. 4 The other point that -- that is worth 5 mentioning here, because it -- this item is 6 couched in the sense of -- of dissolving this 7 former policy statement. 8 So it will operate to eliminate the policy 9 statement in all of the Board's equity 10 portfolios. So that means not only the Florida 11 Retirement System, but other equity portfolios 12 where we have that kind of exposure. 13 And one of those is, of course, the 14 Lawton Chiles Tobacco Endowment. And I want to 15 be clear that -- that your action today does 16 have that effect. And, of course, they can be 17 severable decisions if you would like that to 18 be the case. 19 But -- 20 COMPTROLLER MILLIGAN: So we don't -- we 21 don't know enough, Tom. You and I have talked 22 about this already. And we -- we don't know 23 enough about what it would mean to exclude the 24 Lawton Chiles portion of this. 25 What we do know is that it would probably ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 230 May 30, 2001 1 cost them something. But we don't -- we don't 2 really know. 3 GOVERNOR BUSH: Why would it cost? 4 MR. HERNDON: Well, what we have done -- 5 and -- and recognizing the -- the age of some 6 of these products -- for example, the 7 Lawton Chiles Endowment came along after this 8 policy was put in place -- 9 GOVERNOR BUSH: So they have no tobacco. 10 MR. HERNDON: Beg your pardon? 11 GOVERNOR BUSH: They have no tobacco stock. 12 MR. HERNDON: Well, they don't have any 13 tobacco stocks. The Board approved that 14 decision. 15 But what we have done as a consequence is 16 we invest in index products, for example, where 17 tobacco stocks are excluded. Those are custom 18 indexes designed only for us, and for very few 19 other clients. 20 If we take the FRS out of those indexes, 21 which is the lion's share of the money -- 22 GOVERNOR BUSH: Okay. 23 MR. HERNDON: -- the costs to the remaining 24 parties in the index goes up. 25 GOVERNOR BUSH: Got it. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 231 May 30, 2001 1 TREASURER GALLAGHER: Goes way out of 2 whack. 3 GOVERNOR BUSH: I got it. I got it. I got 4 it. 5 MR. HERNDON: So it -- it does have some 6 nuances on a very practical level that we 7 haven't explored pending your decision. 8 GOVERNOR BUSH: Why wouldn't you explore 9 them before we have to make a decision? 10 MR. HERNDON: Well -- 11 GOVERNOR BUSH: I mean, look at the crowd 12 here. 13 TREASURER GALLAGHER: Here's the thing 14 that's -- 15 GOVERNOR BUSH: You're -- you're asking us 16 to make a decision that may have -- I got -- I 17 got real problems with the -- the 18 Chiles Endowment being a part of this, just -- 19 COMPTROLLER MILLIGAN: And -- 20 GOVERNOR BUSH: -- an endowment. 21 COMPTROLLER MILLIGAN: -- and -- and so do 22 I. And it turns out it is the only one 23 apparently that we're -- that we're talking 24 about that would be a problem. 25 MR. HERNDON: That's correct. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 232 May 30, 2001 1 COMPTROLLER MILLIGAN: External to the FRS. 2 I mean, there are other funds that they handle. 3 But this is the only one that would be a 4 problem. 5 MR. HERNDON: And what -- what we have 6 suggested, General, with -- with your 7 permission -- 8 COMPTROLLER MILLIGAN: Yes. Please. 9 MR. HERNDON: -- let us pursue some of 10 these specifics, because we've been reluctant 11 up to this point to tip our hand to our vendors 12 to say, you know, we're going to back out 13 without knowing exactly what's going to happen. 14 Let us explore some of these issues with 15 respect to the Chiles Foundation. You can lift 16 the restriction on the FRS, and we can bring 17 you back a separate recommendation with respect 18 to the Chiles Endowment -- 19 TREASURER GALLAGHER: Why don't you -- 20 MR. HERNDON: -- at a later time. 21 TREASURER GALLAGHER: -- make a motion for 22 everything but that till we get more 23 information? 24 GOVERNOR BUSH: And if you're lifting 25 the -- I mean, that may have a -- in -- in my ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 233 May 30, 2001 1 particular case, it may have an impact on my 2 decision if -- if there's no way -- I mean, 3 we're in conflict here with -- 4 TREASURER GALLAGHER: Fiduciary 5 responsibility. 6 GOVERNOR BUSH: -- fiduciary responsibility 7 again. If the Chiles Endowment is impacted, 8 I -- I don't know if it could be impacted in 9 a -- by a huge magnitude based on -- 10 COMPTROLLER MILLIGAN: We -- we just don't 11 know. 12 GOVERNOR BUSH: Do -- but if there is a -- 13 a problem of it, then that might have an impact 14 on my decision on the first vote. 15 COMPTROLLER MILLIGAN: Well, I -- why don't 16 we defer it? 17 I don't see any problem with deferring it 18 really. Do you, Tom? Deferring it. 19 MR. HERNDON: No. There's -- you're not 20 under any kind of timetable or anything -- 21 COMPTROLLER MILLIGAN: No. 22 MR. HERNDON: -- like that. 23 COMPTROLLER MILLIGAN: I mean, it's popped 24 up quickly -- 25 GOVERNOR BUSH: This is all -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 234 May 30, 2001 1 COMPTROLLER MILLIGAN: -- two weeks ago. 2 GOVERNOR BUSH: -- this was Gallagher's 3 stream of consciousness thing. 4 COMPTROLLER MILLIGAN: I -- 5 TREASURER GALLAGHER: Then I have -- 6 COMPTROLLER MILLIGAN: -- I'll -- I'll move 7 that we defer it till -- to the next meeting, 8 assuming that you can look at what the impact 9 is on particularly the -- 10 GOVERNOR BUSH: That'll really disappoint 11 everybody in the room. 12 COMPTROLLER MILLIGAN: Well, sorry about 13 that, but I -- 14 TREASURER GALLAGHER: They -- they'll get 15 to write the story another time. 16 GOVERNOR BUSH: They may write it now and 17 write it again. 18 TREASURER GALLAGHER: They will. 19 COMPTROLLER MILLIGAN: So I move 20 deferral -- 21 TREASURER GALLAGHER: Second. 22 COMPTROLLER MILLIGAN: -- till the 12th. 23 GOVERNOR BUSH: There's a motion and a 24 second. 25 The item is deferred. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 235 May 30, 2001 1 Can I ask a question? 2 TREASURER GALLAGHER: Have we got another 3 little -- 4 GOVERNOR BUSH: Yeah. Tom. 5 TREASURER GALLAGHER: I do. 6 MR. HERNDON: Yes, sir. 7 GOVERNOR BUSH: When this policy decision 8 was made -- 9 MR. HERNDON: Yes, sir. 10 GOVERNOR BUSH: -- five or six years ago, 11 did you liquidate -- 12 MR. HERNDON: Yes, sir. 13 GOVERNOR BUSH: -- all these indi-- 14 COMPTROLLER MILLIGAN: Right. 15 GOVERNOR BUSH: So there are no -- there's 16 no -- 17 MR. HERNDON: No, sir. And, in fact, we've 18 had to contract for customized indexes of which 19 there are very few other participants. And 20 that's why the cost is high for us, compared to 21 our normal -- 22 TREASURER GALLAGHER: And there's probably 23 been a -- not only that cost figured in, but 24 there's probably been a difference in our yield 25 based on -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 236 May 30, 2001 1 COMPTROLLER MILLIGAN: Yeah. You don't 2 want to really go there I don't think. 3 TREASURER GALLAGHER: Well, sometimes there 4 is, sometimes there isn't. Depending on when 5 you bought and when you sold. 6 COMPTROLLER MILLIGAN: Well, I know that. 7 MR. HERNDON: Item Number 5, Governor, 8 members, two parts to Item 5(A) and 5(B), and 9 this is the Hurricane Catastrophe Fund premium 10 formula for 2001-2002 contract year that we've 11 discussed before. 12 It was originally before you on May 15th, 13 and was deferred pending the Governor's action 14 on the additional mitigation dollars in the 15 appropriations bill. 16 And I read in the paper where you got it -- 17 of the appropriations bill, and then -- 18 GOVERNOR BUSH: I don't know -- 19 MR. HERNDON: -- the Senate took it back -- 20 GOVERNOR BUSH: Yeah. 21 MR. HERNDON: -- apparently. 22 TREASURER GALLAGHER: They took it back. 23 MR. HERNDON: So you still don't have any 24 item -- any action. I don't know whether it's 25 your -- ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 237 May 30, 2001 1 GOVERNOR BUSH: I hope we'll get it today. 2 MR. HERNDON: -- wish to defer it, or -- or 3 what at this point. The item is before you for 4 your pleasure. 5 TREASURER GALLAGHER: I'll move Item 5. 6 It -- it allows flexibility, according to your 7 decisions, Governor. 8 COMPTROLLER MILLIGAN: I'll second that. 9 GOVERNOR BUSH: Yeah. I -- there's a -- 10 are we deferring, is that what you're doing? 11 TREASURER GALLAGHER: No. We're on the 12 next one, and we're -- moved and seconded. 13 GOVERNOR BUSH: All right. I -- I just -- 14 for the record, I'm getting e-mails now from 15 people based on information apparently that 16 Dr. Nicholson gave that says that there's going 17 to be 47.3 percent, 35.8 percent increases in 18 Jacksonville and Pensacola homeowners insurance 19 because of this. 20 Have you seen this? 21 TREASURER GALLAGHER: No, I have not. 22 GOVERNOR BUSH: You know. It's welcome to 23 my world. 24 But I -- it -- for the record, at least we 25 can clarify that that information must have ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 238 May 30, 2001 1 been not accurately -- may have been given out 2 accurately, but it may not have been inputted 3 properly by the realtors and others that are 4 concerned about this. 5 TREASURER GALLAGHER: I don't know -- is 6 this the realtors sending this out? 7 GOVERNOR BUSH: Yeah. 8 TREASURER GALLAGHER: Florida Association 9 of Realtors? 10 I don't know where they got that particular 11 information. It could or could not be true, I 12 just don't know. 13 Do you know, Jack? 14 DR. NICHOLSON: I -- I think what had 15 happened is the -- the press had picked -- 16 picked up the 4 percent -- 4.14 percent 17 increase that we had talked about in terms of 18 the Cat Fund rates, interpreted that to mean 19 that consumers would pay as much as 4 percent 20 higher. 21 And that's not a correct interpretation 22 since the CAT fund is only a small part of what 23 the consumer pays. 24 COMPTROLLER MILLIGAN: Exactly. 25 GOVERNOR BUSH: Thank you. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 239 May 30, 2001 1 Your -- 2 TREASURER GALLAGHER: But what-- whatever 3 is charged to the companies, which -- because 4 this is a company based deal, will be passed on 5 automatically to the consumers. And it will 6 not be a flat 4 percent, it will be different 7 based on -- 8 GOVERNOR BUSH: I have -- 9 TREASURER GALLAGHER: -- who those people 10 are. 11 GOVERNOR BUSH: -- an -- I have an e-mail 12 from Dr. Nicholson that says that -- that the 13 average cost exposure unit could be expressed 14 as $3.69 cents a year. And that's assuming 15 that all of it is passed on I guess. 16 DR. NICHOLSON: We -- we have approximately 17 5.4 million exposure units accounted for in 18 terms of the Cat Fund exposure. That would 19 include a house, a mobile home, apartments, 20 condominiums. So we count each exposure unit, 21 as opposed to the policyholder. 22 If you divide the 5.4 million into 23 20 million, that works out, on average, three 24 point six nine dollars a year. 25 GOVERNOR BUSH: Thank you. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 240 May 30, 2001 1 DR. NICHOLSON: Average is not quite 2 descriptive of what -- 3 GOVERNOR BUSH: Because it -- varies -- 4 DR. NICHOLSON: -- goes on overall. 5 GOVERNOR BUSH: -- a little bit. 6 DR. NICHOLSON: But it is an average 7 number. 8 TREASURER GALLAGHER: Well, it could vary a 9 lot in certain areas. 10 DR. NICHOLSON: Right. 11 TREASURER GALLAGHER: Unfortunately, 12 Miami -- 13 GOVERNOR BUSH: Okay. 14 TREASURER GALLAGHER: -- is one of the ones 15 that varies a lot. 16 GOVERNOR BUSH: There's a -- a motion and a 17 second. 18 COMPTROLLER MILLIGAN: Yeah. 19 GOVERNOR BUSH: Without objection, it's 20 approved. 21 MR. HERNDON: And Item Number 6 is the fund 22 activity analysis for the month of March 2001. 23 TREASURER GALLAGHER: Motion. 24 GOVERNOR BUSH: Second? 25 COMPTROLLER MILLIGAN: Second. ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 241 May 30, 2001 1 GOVERNOR BUSH: Moved and seconded. 2 Without objection, it's -- 3 COMPTROLLER MILLIGAN: We didn't have to 4 approve -- 5 MR. HERNDON: Thank you. 6 COMPTROLLER MILLIGAN: -- that though I 7 don't know. 8 GOVERNOR BUSH: Oh, we didn't -- 9 COMPTROLLER MILLIGAN: -- it is for 10 information. 11 TREASURER GALLAGHER: We did. 12 COMPTROLLER MILLIGAN: Information, but we 13 approved it. 14 (The State Board of Administration Agenda 15 was concluded.) 16 * * * 17 (The Cabinet meeting was concluded at 18 12:48 p.m.) 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC.
242 May 30, 2001 1 CERTIFICATE OF REPORTER 2 3 4 5 STATE OF FLORIDA: 6 COUNTY OF LEON: 7 I, LAURIE L. GILBERT COX, do hereby certify 8 that the foregoing proceedings were taken before me 9 at the time and place therein designated; that my 10 shorthand notes were thereafter translated; and the 11 foregoing pages numbered 161 through 241 are a true 12 and correct 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 8TH day of JUNE, 2001. 18 19 20 21 22 23 LAURIE L. GILBERT COX, RPR, CCR, CRR, RMR 24 100 Salem Court Tallahassee, Florida 32301 25 850/878-2221 ACCURATE STENOTYPE REPORTERS, INC.