STATE OF FLORIDA
STATE BOARD OF EDUCATION
DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS
BOARD OF TRUSTEES
STATE BOARD OF ADMINISTRATION
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 Tuesday, March 26, 2002
commencing at approximately 9:10 a.m.
Registered Merit Reporter
Certified Realtime Reporter
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FL 32301 (850)878-2221
the Florida Cabinet:
CHARLES H. BRONSON
Commissioner of Agriculture
Commissioner of Education
* * *
I N D E X
(Presented by Wayne V. Pierson)
ITEM ACTION PAGE
2 Deferred 14
3 Approved 12
4 Approved 13
5 Approved 13
OF AGRICULTURE AND CONSUMER SERVICES
(Presented by Mark Berrigan)
2 Approved 15
(Presented by David B. Struhs)
1 Approved 17
2 Deferred 17
3 Approved 17
4 Approved 10
5 Approved 26
BOARD OF ADMINISTRATION
(Presented by Coleman Stipanovich)
2 Approved 28
3 Report 28
4 Report 44
5 Report 40
6 Approved 52
CERTIFICATE OF REPORTER 53
1 P R O C E E D I N G S
agenda items commenced at 9:20 a.m.)
BUSH: Department of Education.
GALLAGHER: Move it.
BUSH: Moved and seconded.
objection, it's approved.
PIERSON: Item 2 is a charter school
which is requesting deferral through
of the school board and the applicant.
GALLAGHER: Motion to defer to
BUSH: There is a motion to defer to
23rd, 2000 and a second. Without objection,
item is deferred.
PIERSON: Item 3 is a statewide emergency
plan for 2002. Secretary Seibert of the
of Community Affairs is here to speak
SEIBERT: Good morning, Governor,
of the Cabinet. This will be a short
It is loaded with good news, but with a
1 The good news is that every couple of
I need to report to you about how we are
on reducing the deficit of appropriate
good news is that we have made
strides in reducing that deficit.
have reduced it by approximately 30 percent
the last time I made this presentation.
have done that in large part because
Governor and this legislature have made it
priority. We have put in dollars for the
time each year starting in 1999, state
to create more spaces, and have been
effective at utilizing federal dollars as
do it two ways. One, you retrofit
secondly, when you build new
if it's appropriate, you make sure
they are weather resistant.
are some communities where they have
been able to declare victory, where
are surpluses of shelter spaces. And
of those counties are particularly
because they are in the middle of the
1 state, and it's where people go to when they
the coastal areas. Osceola, Lake,
Counties are actually in surpluses.
a third of the spaces that we have
have been through new public schools
designed and constructed to meet the
me give you the warning, Members of
Cabinet. The warning is that, as you know,
have high growth in coastal areas, so you
getting more people being placed in the
that the retrofitting will
harder as time goes on. You retrofit
easiest places first; so that option will
lastly, we need to be more vigilante
the construction of new facilities.
construction of new educational
is in large part a local function.
an Auditor General's report recently has
that even when they should have been
to the higher standards, a significant
requires more coordination than what
1 we have seen in the past and perhaps even some
the legislation that's recently passed
going to highlight that coordination
local governments and school boards
help us add back to the list of things we
in general, good news, but we need to
to be aggressive.
GALLAGHER: Steve, I would like to
out that in 1993, in fact, that was right
Hurricane Andrew, the legislature passed a
that mandated that the state not have a
deficit by 1998.
GALLAGHER: And the shelter deficit
every single year from '93 to 2001.
is the first year that we have had a
since 1997, when the criteria actually
effective, only 71 schools have been
with the design criteria, another 29 are
and only 34 counties have completed or
beginning to implement the design criteria
we only have 34 counties that basically
1 have even started the process to build the
in a design that meets the shelter
I don't know what needs to be done, but
think it's a major concern.
you look at the counties that have
shelter space to accommodate a
four or five, you've got Brevard,
Gilchrist, Lake, Osceola, Seminole and
you can imagine the problem most of
are going to have with a hurricane.
than Franklin, you don't have -- and
-- you don't really have anybody sitting
-- and Charlotte -- sitting really right on
water where you have a big problem.
there are some counties that have no
space whatsoever. And I think that's a
I just think that we need to put the
on. I think one of the problems is
have the Department of Community Affairs
here responsible for this area and a very
area, and you have the Department of
over here sort of -- they work
1 together when the report gets given, but
it seems to me nobody is talking.
BUSH: I was going to say the Growth
Bill that passed I think gives us a
opportunity to put some teeth into this
of school construction being tied to
space, which is the state policy. But if
not being done, then it's useless.
GALLAGHER: In the school board
I will just tell you, that it does cost
2 to 4 percent more to build the school to
the criteria. And the districts look at it
an unfunded mandate, and it probably is; and in
case, maybe there should be some kind of an
BUSH: It's not an unfunded mandate
the state provides more money for school
than any state in the country, is my
GALLAGHER: I am with you. I am
telling you how they look at it. Somehow or
maybe the criteria should be that they
build the schools that are compliant or get a
not to because they already have enough
1 In other words, we are doing it the wrong
Instead of telling them: Please do this,
ought to be saying: You do build them all
back in the '50s and '60s, all the
were built as shelters. And all of a
it became cheaper not to, and they just
away from it.
think we need to go back to: You must
this as a shelter unless you have the
to show that you have the required
in your county.
SEIBERT: As the Governor said, may
have a great opportunity right now to
it a level. We have got coordination that
starting to happen, and let me say our
as an agency with the Department
Education has been wonderful.
have worked together on a number of
in the last couple of years. So the
I think is substantially
and this is obviously a focus of our
public safety is our most --
GALLAGHER: Steve, the issue isn't
1 with you and the Department of Education
because schools get built by
And they are their own constitutional
and they make their own decisions on how to
it, unless there is a tie in with the money.
that would be a -- then we turn into a
manager, saying: Here's the funds,
it to this criteria until you get what
that's really not something you have
do, but I think it is something that needs
be done through the department and the
SEIBERT: You also may see, though,
starting in 1999, the state got serious about
funding. And that's the most exciting thing.
that, I have heard the Governor speak on this.
GALLAGHER: We have seen it move
other way. So good things are happening, so I
want to take away from the thing, it's just
so frustrating to take so long.
BUSH: Another exciting bit of news,
Bronson will appreciate this, is that
had a groundbreaking for widening 192 in
County, so we can get all of those people
1 out of Brevard over to Osceola where there is a
is a lot to do as it relates to
routes, making sure people's homes
secure, because you can't -- we have
with our last major experience, when we
the largest evacuation in the history of
occur, it's difficult; I will be polite
more people can prepare their own homes
then have shelter space in their own
and then have good evacuation
to the hinderlands where there may be
is the right strategy. And we are
there. We had a huge problem we never
and now we are working on it.
GALLAGHER: Move item 3.
BUSH: Is there a second?
BUSH: Moved and seconded. Without
it's approved. Thank you.
SEIBERT: Thank you Governor and
PIERSON: Item 4 is a new rule
Assessment of Limited English
1 Proficient Students. Bernardo Garcia is here if
BUSH: Who is here?
PIERSON: Bernardo Garcia.
GALLAGHER: Move item 4.
BUSH: Moved and seconded. Without
PIERSON: Item 5 is an amended rule,
Cooperative Projects and Activities.
rule was amended after it was published, so
needs to be approved as amended.
GALLAGHER: Move item 5 as amended.
BUSH: There is a motion and a
The item is approved as amended.
1 GOVERNOR BUSH: Department of Agriculture.
GALLAGHER: Governor, before they
I noticed at the last meeting when I came
with my Fire Marshal badge on, Jeff Jones was
jealous about that badge I had.
so I don't want him to feel
if he would step over here a
only am I giving you a badge, not only
you going to have a badge, but you get a
JONES: Do I get a gun now, too?
GALLAGHER: We are not going that
JONES: Thank you.
BUSH: Clearly you made his day.
GENERAL BUTTERWORTH: Governor,
is a full employment, as you can tell.
GALLAGHER: Where is the
when we need him?
BUSH: Item 1.
GALLAGHER: Motion on the minutes.
BUSH: Is there a second?
BUSH: Moved and seconded. Without
1 objection, it's approved.
BERRIGAN: Item 2, consideration of
to issue a 10-year sovereignty
land aquaculture lease of 100 feet by
feet in the overlying water column. The
is Mr. Monty Dale. The lease is located
the Florida Keys, Monroe County.
GALLAGHER: For the huge sum of
a year. God Bless America, we spent $4,000
processing this. I move it.
BERRIGAN: I understand.
BUSH: Pretty expensive on a per
GALLAGHER: At a hundred feet, I am
it is. I move item 2.
BUSH: There is a motion. Is there
BUSH: Moved and seconded. Without
hopefully is going to turn out to be
good business for a lot of people who have
displaced in other areas and create a new
industry for our state.
if we can lease it for free, I would be
1 happy to do it if these guys and gals make a
and live independently and be
BERRIGAN: Thank you.
1 GOVERNOR BUSH: Thank you. Board of
GALLAGHER: Motion on the minutes
BUSH: Moved and seconded. Without
GALLAGHER: Deferring to April 9
BUSH: There is a motion to defer
seconded. Without objection, it's approved.
STRUHS: Item 3, we are recommending
it's an option agreement to acquire
12 acres in the Bald Point Florida Forever
BUSH: Moved and seconded. Without
STRUHS: Item 4, recommending approval of
acquisition of the Wekiva-Ocala Greenway
is a very important Florida back bear
1 habitat, and we are making some really great
in building that connector between the
National Forest in the north and Rock
in the south.
is 95 percent of the priced value.
BUSH: Move on number 4.
BUSH: Moved and seconded. Without
STRUHS: Item 5, recommending approval of
conservation easement. Like the black bear item
approved, this is dealing with panther
made some great progress these last
months in building the panther habitat
southwest Florida. That continues down that
using the conservation easement.
GENERAL BUTTERWORTH: Motion on 5.
BUSH: Moved and seconded. Without
MILLIGAN: I have a question,
property or land is put under a
1 conservation easement, can that land be sold as
STRUHS: Well, if we put the conservation
on it as a state, then obviously those
belong to the state. What you may be
to is when a private interest purchases
MILLIGAN: Yes, of course.
STRUHS: In that case, it's usually done
part of the permit condition. It has a permit
MILLIGAN: If this land is under a
easement and the owner chooses to
a portion of it as mitigation to some private
can that be done?
MILLIGAN: It can be?
STRUHS: Yes, but not the conservation
that would be held by the state. In this
MILLIGAN: They could sell the land,
They could sell the land to somebody and
conservation easement continues?
MILLIGAN: Can they sell the land to
1 someone for mitigation reasons?
BRONSON: Governor, if I can --
thing that I want to -- and I think I see
the General is going here. If you have a
easement that the state has paid for,
cannot take that same piece of land and do --
hope not -- and sell as an independent right to
has to be another piece of land on the
piece of property. In other words, if I
got 3,000 acres and I put 2,000 in a
easement, that gives me a thousand
that I could put into mitigation but not
2,000 acres the state has a conservation
STRUHS: That's correct.
MILLIGAN: While you can sell it, you
sell it for mitigation purposes?
STRUHS: Right. I think maybe where I
confused is who "they" was. If "they" is the
if it's a state conservation easement, it
be sold for mitigation.
it's a private land holding, another
interest could purchase it or purchase
1 a conservation easement on it for purposes of
but not something that is sold by
MILLIGAN: Maybe we can sit down and
about that sometime. That mitigation
continues to be an interesting evolution
this case, we are getting a
easement maybe for all of it,
not, because of 340 acres, that may, in
be used for mitigation purposes. It's --
kind of a -- mitigation can be a two-edge
here if you are not careful.
GALLAGHER: I have a question.
we are saying here is that we are paying for
GALLAGHER: The owner still owns
land, but down the land, if he chooses to, he
use the land he owns that we have a
easement on as mitigation for some
property we would be working with?
MILLIGAN: They are saying, no. They
finally say no.
1 TREASURER GALLAGHER: I thought we were
MILLIGAN: Yes, initially, but now
are saying no.
GALLAGHER: How do we know that he
STRUHS: How do we know, what?
GALLAGHER: How do we know that he
use this land that we have a conservation
on as a mitigation trade?
STRUHS: Because the state, the Board of
would own the conservation easement.
the Board of Trustees could determine if that
easement could be utilized for some
GALLAGHER: You see, the idea is
he's got a conservation easement, he still
the land, and we want to trade him for
-- he wants to trade us for something
uses that as the trade, is what I think
Milligan is talking about. I sort of
like the answer myself.
do we know that won't be traded, or is
something we might want to trade? If we do,
we want to deduct the amount we paid
1 already for the conservation easement?
is trying to do something back there.
STRUHS: If the state owns the
easement, it's a right that belongs
the state. So how that right might be utilized
the future would obviously rest with the owner
the easement, which would be the state, not
the owner of the underlying title.
GALLAGHER: But when we mitigate,
usually get title of land for title of land or
of land for availability use, some other
that may be under water. Right?
STRUHS: When we mitigate?
GALLAGHER: Yeah, when we mitigate
-- somebody wants to develop an area, and we
no, it's got swamp, we are not going to let
do it unless you give us a trade for it,
STRUHS: Right, but we are not doing the
The private interest is doing the
GALLAGHER: Exactly. So he takes
land we have a conservation easement on and
I will give you that land in trade for
able to develop this. What stops that?
1 MR. STRUHS: I think, if I understand the
correctly, if the state owns a
easement on a parcel, and then in the
some other private interest wants to do
type of development on that same parcel --
GALLAGHER: Not development.
STRUHS: A different parcel?
GALLAGHER: Right. And they are
in order to let us to develop the other
the guy that owns this land that has a
easement on it donates the land to
STRUHS: He has the underlying title?
STRUHS: I think at that point, the state
want to exercise its judgment as to whether
not accepting the underlying simple fee title
land to which they already have a conservation
would have any benefit to the state or
it should count towards mitigation. That
be a future land use decision for a future
GALLAGHER: One of the problems
we have is we could easily be making that
and not even realize it has a conservation
1 easement on it.
STRUHS: I think that's highly unlikely
all the conservation easements are
as part of the title.
MILLIGAN: I don't know. It's a
squirrly, I think. I would just like to
out more about it. We don't need to beat a
already moved this and seconded it, and
don't have any problem with that.
I sure would like to have a better --
would like to be more comfortable with the
that when we put -- when we purchase an
that the land that is involved, which
still owned by the property owner, cannot be
to provide some sort of mitigation service
another private party by selling him that
as mitigation land.
STRUHS: I understand.
MILLIGAN: I would just like to be
with that. And if necessary, maybe we
to put that in the contract that we --
STRUHS: In the easement itself.
GALLAGHER: In the easement, we can
1 put that this may not -- the property may not be
for mitigation with a state or local
That will work. And then I think I
MILLIGAN: I would be comfortable,
let's not hold this up. I am not
to do anything with this. I don't think
need to --
GALLAGHER: Does the easement
have a problem with adding that to it?
STRUHS: The easement seller is here, and
can put that question to the seller.
BUSH: Where is the easement seller?
STRUHS: Represented by Dean Sonders --
GALLAGHER: He has no problem with
There you have it.
you very much.
will move the item with the additional
BUSH: Moved and seconded. Without
the item as modified, soon to be
1 MR. STRUHS: On the subject of conservation
generally, I will use this opportunity
a quick advertisement.
-- is it June or July -- June 17th, 18
19 we are having a fairly major national
on all these particulars in terms of
to do good conservation easements,
it right here in Florida.
STRUHS: We will hope to see, if not
at least your cabinet aides being able
attend that conference. Thank you.
BUSH: Thank you, David.
1 GOVERNOR BUSH: State Board of
Commissioner Crist, welcome.
is over. Perfect timing.
GALLAGHER: I move the minutes for
27 and March 12.
BUSH: There is a motion on the
BUSH: Thank you. Moved and
Without objection, it's approved.
STIPANOVICH: Good morning, members. Tom
asked me to pinch hit for him today.
you may recall, at one of the previous
he mentioned that he would be meeting
the chairman of the SEC, Harvey Pitt, and
Council for Institutional Investors. That
postponed until this week, so he is in
D.C., working on some corporate
issues post Enron.
digress a moment, Governor, the minutes
April 1, there were a couple of items on
that Commissioner Gallagher, for example,
brought up, increasing the capacity limit
the area of Florida Hurricane Capacity Fund
Mr. Herndon did write a letter to both
Senate president and the House and got a
in their bill, they did -- in the
Property Insurance Corporation bill,
did add some language that would give the
the ability to factor in at some
in time the ability to raise more cash
would have to be subject to the approval
the final thing for follow up was
Butterworth had made a comment about
possibility of increasing FRS service
percentages for employees who do not
a raise in a given year.
Mr. Herndon got in touch with Erin
the director of DOR, and she has her
looking into it.
we heard recently from your office
with what came out -- and of course, the
is not approved yet -- but with what
out of the House and Senate in terms of
codes, that may not be as much an
1 So, that's the follow up on the 27th
2, as you know, we met with Alliance
February -- on March 7th, and then on the
we had our good cause item where we met
Alliance to get an update. And we left
meeting with the trustees' decision not to
legal action until the Attorney General's
we wanted to continue to pursue the
firms in terms of who would represent us
we decide to sue.
the Governor had in particular
requests. And in response to those
pursuant to your direction, we had
and imposed a time line on Alliance
respond to us as a result of that meeting to
us some information.
have failed to do that with a
we gave them of March 20th. And we
not real optimistic that we'll be getting
information from them, Governor.
final item was to move forward with a
on the selection of a law firm
assist us in securing recoupment of our
1 losses from Alliance.
March 13th, Mr. Herndon forwarded to
our recommendation along with an
of the process that was utilized to
BUSH: Coleman, can you explain the
STIPANOVICH: Yes. To briefly summarize
the general counsel had discussion with
firms about their qualifications and
and strategy, the legal strategy and
they would use in pursuing litigation
a result of those conversations, the
was to invite four teams of law firms
give presentations and that consisted of
different law firms.
law firms that came and gave
Governor, were the Tom Grady and
and Associates; and Johnson, Blakely,
law firm; the Tew Cardnas law firm, Gray
law firm and Beggs Lane law firm. So
were the ones that came and conducted
BUSH: What was the fourth one?
1 MR. STIPANOVICH: The fourth one was Beggs
Lane, I believe it's Colton, Mingstein,
and Toll and Levin, et al.
BUSH: Levin law firm.
STIPANOVICH: The key personnel
in these interviews, the executive
myself, the chief of domestic equities
a number of other people, including the
there were representatives from
Butterworth's office that participated
all the interviews.
the firms were exceptionally
in particular the first three firms
I just mentioned were very qualified.
was some discussion in terms of strengths
weaknesses of each law firm, in terms of
legal theories that they laid out, and so
and so forth.
it was a tough decision, but we did
up with a recommendation that's in your
for the Gray and Harris -- Grady and
Johnson, Blakely, Pope law firm,
BUSH: The Gray and -- say that
STIPANOVICH: It's the Grady and
Johnson, Blakely, Pope law firm.
BUSH: I thought he said Gray
STIPANOVICH: And again, this is -- there
also the Tew Cardinas law firm and Gray Harris
firm gave very good presentations, and were a
close second and third, but if we had to come
with a recommendation, that's where we are
Governor. But again, all three law firms
did a good job and outstanding and there is
and cons for each.
example, the Gray Harris law firm has
local presence in the Panhandle, and that's
factored in. So that's where we are on
MILLIGAN: I just might comment that
do, in the securities business, do a lot of
with the Grady law firm particularly and have
them to be really top drawer in terms of
business. And that's, of course, what
is all about.
do a little bit with the Burns people
1 in Tampa, but not as much. And they certainly
a very strong reputation in the securities
BUSH: One of the -- first of all, I
pleased that we are going to hire a firm
that -- while that doesn't mean we are
going to be engaged in litigation,
the report that Alliance has not been
with information as promised, it kind
sets the stage for it, I would assume.
decision I guess will be made once
law firm is hired, the strategy I guess is
get a recommendation on how to proceed.
is always talk about the north --
district, this court needing to have some
of local experience. I am not -- I don't
if that's true or not. How did you factor
STIPANOVICH: Well, there was no doubt
one of the things that should work to our
-- and I am certainly not a lawyer, but
-- in our contract it's required that they try
in the Panhandle. I forget the circuit,
pardon me, but it would be one of three
here in the Panhandle.
1 So we think, of course -- and that's one
we have that in our contract -- that
work to our advantage versus say trying
in New York City.
that, again, in terms of some
with -- I will say this; that the
and Associates and Johnson, Blakely, Pope
firm has engaged someone locally that has a
presence and practice here locally that
those kind of relationships and knows a lot
those folks that work in the courts and that
of thing. So that aids them a little bit
that one consideration.
you know, where we are now is we are
to propose and start working with them on
compensation structure. We have been working
closely with the Attorney General's office
he has his views on that and Commissioner
has made his remarks at the last
meeting about not paying these law
for really doing nothing, should we be
to work something out on a fairly short
line and without a whole lot of effort.
we have a long way to go in terms of
out a compensation structure. And our
1 compensation structure is going to be very
It's not going to be what these
firms are used to seeing.
if we were to go with the number 1
if that didn't work out, we are
to move to number 2 and number 3 in
discussions and how we would
this; because we are not interested
paying legal fees.
at same time, Governor, we don't want
be a penny wise and pound foolish. This is
a commodity. Basically, possibly -- there
some suggestions we bid it out and that's
again, dealing with law firms and
at their experience and qualifications,
is more to it than just the bottom line
terms of what we would ask them to.
BUSH: General Butterworth, you want
make any comments?
BUTTERWORTH: Thank you, Governor.
Mr. Stipanovich has stated, we are
hopefully with the agency insofar as
to a contract that would be appropriate.
think the last thing anybody here wants to do
1 is pay somebody 25 percent of what the Attorney
office might be able to come up with.
I think the law firms understand that.
we have to basically blend the contracts.
as long as we can work with you on
up with a contract, we feel we will come
with something that's very reasonable.
the law firms, you are absolutely
they are all very, very well qualified
have an excellent working relationship with
GALLAGHER: Well, I fully agree.
I look at the first three -- and really, I
at it as four because I look at Grady as top
Guy Burns, who obviously is going to be the
lawyer for Johnson Blakely, top notch; I look
Tom Tew, top notch; I look at your past deputy,
notch and having a good knowledge of this
because -- you get a whole firm, but I
naming those four people, you got a team
I would like to have known that that's the
we had, because they all are strong.
those -- especially, my knowledge of
1 those individuals.
so, I would like to see us take the
of what each one of those individuals
to the table. They are not all in the
law firm, unfortunately, but that's okay,
you know they are all pretty strong egos.
MILLIGAN: Wouldn't that be a useful
to allow to evolve and allow the SBA to move
with their negotiations and see how that
then I think Coleman has been very
that this is a major negotiation here,
if we don't get what we need and the right
of the right people, then we'll
someplace else, which maybe will expand
think what they are recommending right
I think is the place to start and let them
the work, with the Attorney General's
participating. I think we can get the
mix of people and the right contract.
GALLAGHER: I said what I think,
this was for discussion. I know you are just
to work with them. The one thing all of
don't want to do is pay a percentage on what
1 the Attorney General's office gets as an offer.
MILLIGAN: We don't want to preclude
options for the SBA to pursue if they think
need to go down a different track. I think
this stage, I would approve -- I move approval
them negotiating towards a contract with Grady
Burns as recommended.
GALLAGHER: I would like to leave
even more open than that; that they can talk to
of them and see if there is --
MILLIGAN: I think he said they are
to talk to all of them. Didn't I understand
to say that?
STIPANOVICH: We certainly have talked to
of them, and we can continue to do that to
up both on, General Milligan, your question
thing we did look at, is kind of
that is who are the principals
would be involved in trying this case. As
know, that would be very important, and what
their caseload. ?
this something -- this is a big case,
is there something -- do they have other
on their plate? What would be the depth
1 of their resources?
these are things we have explored to
extent. But we could continue to look
those type of variables, but we have done
considerable amount of that already.
BUSH: I don't think you are guys
saying the same thing.
MILLIGAN: Not exactly, but we are
terribly far off. I certainly would not
the flexibility of the SBA to talk to
GALLAGHER: This was for
If we don't have a motion, they sort
an idea of where we are all coming from and let
STIPANOVICH: We would be happy to,
to continue discussions and see --
MILLIGAN: Let it roll right now.
STIPANOVICH: But this is where we are.
MILLIGAN: That would probably help
Butterworth in his negotiations.
BUSH: I just urge a little bit
-- there is a time sensitivity here in the
that I thought for a while that Alliance is
going to be particularly cooperative, and they
1 haven't been. And that gives me concern.
just think that if we can move with a
on a law firm or -- I think you
did your due diligence, you could have come
with a different result of firms. They all
excellent firms. There is a real interest
this, which is a good sign, I think.
need to negotiate the price for the
and whether we need to look at a
or not, I would keep that open.
I would pursue this quickly. I don't think
needs to be -- the next meeting I hope we
actually an recommendation with something
than just saying: Can we now pursue it?
GALLAGHER: This was on here for
so that's what we are doing. We are
contingency only, right?
STIPANOVICH: Yes, we are. There has
discussion, I think the folks in the
office we have been talking to has
very eloquently the idea of an hourly
some phase, at least in terms of leading up
making some determination, if there would be
early settlement. And in that way you might
a lot of money on an hourly fee.
1 I will tell you in the compensation
that we have, it has various
and it's really base on a time line
to when this thing might settle and the
it's kind of an equation that has a
parts to it that we are very aggressive
the front end in terms of what the law firms
get. And it's miniscule compared to what
are used to getting. That's going to be
proposal, and we will be making that.
BUSH: When do you start in earnest
to negotiate the fee schedule?
STIPANOVICH: When we leave this room
BUSH: That's good. That's the best
I could think of.
STIPANOVICH: We have our marching
We want to get the finger on the trigger
whenever you all are ready to give us the order
fire, we'll be on the firing line.
BUSH: I am sure if I was
with you, I am sure that would be --
GALLAGHER: I think you gave us
3 report or not?
1 MR. STIPANOVICH: Yes.
brief, we had four bills this year
we actually turned out doing very well. We
up with no amendments and our bills
We had three bills that passed in the
and one bill that passed in the Senate.
House Bill 807, defined contribution
sponsored by Representative Fasano
and there are a number of elements of
which are in your package, but the
is that it established a disability
program under the DC plan and updates
rates for the FLS/DC plan
Bill 2134, the clearing trust fund,
by Senator Sanderson was, of course,
that we needed to have done. And it
the FRS contributions clearing trust
to be administered by DMS.
House Bill 1973, retirement
rates, was sponsored by the Fiscal
Council and Senator Lacasa, and
in essence, revises the contribution
and introduces a blended rate for DB and
1 Finally, as you know, the important bill,
935 in the House, the public records
bill, passed which creates a public
exemption to maintain the
of all participates and their
BUSH: Thank you. And item 4.
GALLAGHER: I think he just did 4.
BUSH: I thought that was 3.
STIPANOVICH: That would be item 4, the
status update, Governor, I believe.
have, since we met last, we have mailed
158,000 packets to the state employees.
actually started on March 18th the
that would follow up and which they
make their investment decisions as an
of the first three months, having to do
the outreach and making the choice
which is what the packets address.
that has gone fairly well; some
but we are working on that. So each
thereafter should only get better.
have completed the asset transition
contract, and it has been sent to the
1 vendor. And that's really the only outstanding
we have in terms of the noninvestment
still are working on finalization of
unbundled/bundled contracts. We don't see
problems on the unbundled side. We
have already signed a couple
we have several more that are in
we'll be signing.
on the bundled providers side, we just
some hang ups on the stable value funds,
specifically. And what we have found out,
our surprise, is that the concern
Gallagher's expressed about
we were told that there was not
to be an issue and we found out there is
illiquidity issues in these products.
at the same time, I understand the
allows us to have those illiquidity
if there is some derived benefit that
offset that illiquidity.
we are being open minded, Governor, in
to work with these folks and see if we
work this out. But that's where we are.
at some point in time we may be coming back
1 to you with a recommendation.
GALLAGHER: We have a stable value
that we are doing at the -- that's sort of a
GALLAGHER: Is it one or two?
STIPANOVICH: Actually, I think --
GALLAGHER: Combine it to be
STIPANOVICH: Yes, each of the providers
believe all have a stable value fund, so there
some redundancy there.
again, a stable value fund -- and I
want to characterize it literally as
but you know, it's much like a money
fund. So this is not rocket science.
liquidity is a primary objective, there
other ways that we can get around that. But
did approve a number of stable value funds
the providers and that seems to be the
up right now.
GALLAGHER: We only have two that
the access problem, right?
STIPANOVICH: Commissioner, I am not
surely. I haven't been involved in that
1 kind that of detail of those discussions, but I
there is actually several. I mean three.
GALLAGHER: Three out of five?
STIPANOVICH: Yes. I could be off one,
I think it's at least three, could be four.
are all very similar. Some of the
literally are measured in days, if not
and others may like months. I don't know
we are into the years, but that would certainly
GALLAGHER: Keep working, see how
BUSH: Any other questions?
MILLIGAN: Just a quick question.
engines, are they on schedule to be up
STIPANOVICH: General, they are. As you
you experienced a situation where there is a
dealing with folks a certain age and over.
won't mention ages.
MILLIGAN: That's all right. That is
all right, doesn't bother me.
STIPANOVICH: But 65 and over, so we are
that glitch. But there are a couple
but they are not something we think are
BUSH: How did you find out that,
MILLIGAN: I know somebody 65 and
tried it out and fell on its rear end.
STIPANOVICH: Finally, just to give
MILLIGAN: It's a good test for the
BUSH: We better get it fixed. I
know anybody in this room over 65.
GALLAGHER: I don't know anybody
65, so I don't know who talk to.
BUSH: Don't say that in Florida.
STIPANOVICH: We already sent out notices
notified these people of the glitch, that it
be fixed. We posted something on the
so they are informed we're on top of that
we'll be trying to correct the problem.
let me make a comment -- and
keep in mind this is a very, very small
but we have had some folks that have
some elections. And actually I think the
is about 2300 roughly. And just to kind
give you a broad break down, it looks like
1 now we are running at about 10 percent that are
an investment plan.
we started out this process, we
know how many that was going to be,
it was going to be 10 percent or
again, this is a very small sample.
state employees. It may not be the same
of profile of the next two groups.
we also think that, as has been
out to us, when you get that choice
that basically says -- some of this is so
back and white, it's DB for you.
we think a lot of that is where it's
clear, there is no second guessing,
DB, and those folks have gone ahead and
moving into that system. And the other
are going to have to think about the more
that may -- 10 percent may be the low
I just kind of wanted to update you on
GALLAGHER: If you would, as you
people that start moving in, I think it's very
that you collect demographics on them:
1 Age, time in the system, all those kinds of
so we see who is attracted to it and who
not. And I think those kinds of things would
very worthwhile to collect, or you may be doing
STIPANOVICH: We are doing that.
the IC mentioned that at the meeting we
a few days ago. So we are going to try to get
much of that information as we can begin to
some early projections about better
what the demographics are and profile
the folks choosing the investment plan.
BUSH: Any other comments?
for the next SBA meeting, if you
could give us a report on the work that you
doing on early warning detection
if there is anything that we can do
at best practices across the state,
the country to, given the volatility of
of these stocks now, that create serious
mostly downs, in some of these companies;
must be a way that we can at least have a
where we red flag volatility in the
so that we can address these issues with
investment managers without actually making
1 the investment decisions.
seems like this is something that's
to be with us for a while, as it relates
some of these accounting issues or just the
volatility of the marketplace
know you all are looking at that and it
be great to get a report on that.
STIPANOVICH: Yes, we are. Governor and
you can be assured that we have been
on that nonstop.
we had an IC meeting, actually it was
longest IC meeting I think we had and I
been around the IC for a lot of years, and
think it was the longest meeting that we had
the history of the IC. It ended close to
o'clock in the afternoon, and that was the
we are working with our consultants and
staff, and we are trying to be very
in looking at this on a strategic
and a tactical basis. And we'll
have something for you.
BUSH: All right. Item 6.
STIPANOVICH: Yes, sir. Item 6, well, I
1 think we have the report by the executive
Governor; that's simply the normal
you get and fund activity analysis.
Gallagher's appointment of
Savaldy to the Florida Hurricane
Advisory Council that you had the
up material in your packet and his resume,
you would need to take action on that.
GALLAGHER: Motion on 6.
BUSH: Moved and seconded. Without
the cabinet members could stay, we are
to take a picture again with Secretary
here for the South Com resolution.
proceedings concluded at 10:15 a.m.)
OF FLORIDA )
OF LEON )
SANDRA L. NARGIZ, RMR, CRR, certify that I
authorized to and did stenographically report the
herein, and that the transcript is a true
complete record of my stenographic notes.
further certify that I am not a relative,
attorney or counsel of any of the parties,
am I a relative or employee of any of the parties'
or counsel connected with the action, nor am I
interested in the action.
my hand and official seal this 2nd
of April, 2002.
L. NARGIZ, RMR, CRR
100 SALEM COURT
24 TALLAHASSEE, FL 32301