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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, April 23, 2002
commencing at approximately 9:20 a.m.

Reported by:


Registered Professional Reporter
Registered Merit Reporter
Certified Realtime Reporter

TALLAHASSEE, FL 32301 (850)878-2221


Representing the Florida Cabinet:


Secretary of State


Commissioner of Agriculture

Attorney General

Commissioner of Education


* * *



(Presented by Tom Herndon)


1 Approved 4
2 Report 4
3 Report 7
4 Report 28
5 Deferred 39

(Presented by Wayne Pierson)


1 Report 40
2 Approved 69
3 Withdrawn 69
4 Denied 85

(Presented by Eva Armstrong)


1 Approved 86
2 Approved 86
3 Approved 87
4 Approved 91
5 Approved 108


1 P R O C E E D I N G S

2 (The agenda items commenced at approximately 9:20 a.m.)

3 GOVERNOR BUSH: The next Cabinet meeting will

4 be held May 7, 2002.

5 State Board of Administration. We've

6 changed the line up.

7 COMPTROLLER MILLIGAN: Move the minutes.


9 GOVERNOR BUSH: Moved and seconded. Without

10 objection, it's approved.

11 MR. HERNDON: Item number 2 is an

12 implementation status report number 17. And we

13 passed out this morning the most recent

14 statistical update to your offices.

15 And I just wanted to call to your

16 attention a couple of aspects of that

17 statistical report.

18 You will notice in that first box, in the

19 second half of that first box where it reads:

20 Group 2, eligible district school board

21 employees, that we now have mailed a little

22 over 35 percent, 102,000 employee kits to

23 school board employees, so we are starting the

24 enrollment process -- excuse me, we are

25 starting the mailing process for the school

1 employees.

2 And we are very pleased with the way

3 that's going. I was in Jacksonville yesterday,

4 had the opportunity to visit City Street, who

5 is our third-party administrator and record

6 keeper and also doing the fulfillment on

7 employee kits, and was very pleased to see how

8 that's going.

9 The other point I wanted to make has to do

10 with yesterday's newspaper column about

11 enrollment in PEORP, and that is simply to

12 express a very strong caution about reading

13 statistics at this very early stage in the

14 process.

15 I know the newspaper column certainly was

16 accurate. And as you will see in the second

17 box of information here, we had a total of

18 7,000 employees who have made enrollment

19 decisions. And the vast majority of those

20 folks are staying in the defined benefit plan.

21 But this is not even the tip of the

22 iceberg. This is the tip of the tip of the

23 iceberg, and it is so early to draw any kind of

24 conclusions from that information. And we

25 generally believe that most of the employees

1 who are exercising their choice now are the

2 people for whom this is a no-brainer decision.

3 They have been in the system 29 and a half

4 years, they know what they are going to do,

5 they are not wasting any time, they are just

6 clearing the deck, so to speak.

7 And so to draw conclusions from that about

8 this is the way the program is going to go I

9 think is really very risky.

10 I am not going to go through the rest.

11 You see we have about 24,000 people who signed

12 up now form the workshops; I had the

13 opportunity to attend one of those the other

14 day. It's a full action-packed two hours. I

15 would certainly encourage you to go to any of

16 those if you get the opportunity to do so.

17 And thus far, everything seems to be

18 moving along fairly smoothly.

19 We know that the big crunch will come in

20 July and August when people start to actually

21 exercise their enrollment choices in a much

22 more competent and progressive fashion. And

23 then we are going to see the call volumes

24 really jump up and everything else when we

25 really start to kind of hit the hurdle at that

1 point. But right now, so far so good.

2 Everything seems to be going well.

3 That's just for your information, Governor

4 and Members.

5 Item number 3 is a status report on our

6 continued discussions with the bundled

7 providers on some contract issues. And the

8 first item that I wanted to draw to your

9 attention has to do with the stable value

10 funds.

11 There are four of those products that are

12 under consideration. Each of them has

13 presented some unique aspects to it. In all

14 cases we have been very concerned about some of

15 the restrictions, some of the liquidity

16 restrictions that existed in some of these

17 products, and heretofore we had been assured

18 there would not be any of those; that, in fact,

19 there would be no equity loss provisions, and

20 so forth.

21 Now, of course, we are finding that upon

22 examination of the specific details in the

23 contracts, that they are, in fact, there and

24 they do impose some barriers to smooth movement

25 of employees in and out of some of these

1 products.

2 That's a real concern to us. And we are

3 continuing to negotiate. It looks like at

4 least two of the vendors have gotten their

5 products squared away.

6 One is a little bit more problematic, but

7 we think is going to be successful. And the

8 final one, the one that has been the subject of

9 some correspondence here lately, is much more

10 problematic and we are still working on that

11 and hope to have that resolved.

12 But what we also are saying, by virtue of

13 this communication to you, and hopefully you

14 would agree, is that it's our intention to go

15 forward with the contracts, excluding the

16 stable value element right now; do a side

17 letter on the stable value contracts with those

18 vendors that meet the various tests, and then

19 perhaps come back to you -- and I don't say

20 this as a prediction so much, but as a

21 speculation -- that we may come back to you and

22 say: We were unable to come to an agreement.

23 Here's the issue; it's your decision whether to

24 include them or not include them, and go from

25 that point on a very specific product basis.

1 TREASURER GALLAGHER: If I may. Two things.

2 One, we didn't discuss when we were doing these

3 contracts, or when we were approving the vendors

4 for different funds, something that I noticed in

5 your report to us, which is a credit quality

6 standard.

7 And I know we discussed that there would

8 be certain places where the staff would find

9 that either the return -- and I guess we ought

10 to look at the credit quality also -- would

11 quite possibly cause a recommendation to us to

12 drop a particular fund that would be out there.

13 MR. HERNDON: Right.

14 TREASURER GALLAGHER: We have a stable value

15 product that sort of has slipped in its credit

16 rating here.

17 Did you make a -- is the staff basically

18 going along with the recommendation by Mercer,

19 that a double A-minus or an AA3 is the cutoff

20 point that we are going to allow an investor

21 to -- I mean fund to operate?

22 MR. HERNDON: There are ways that you can

23 augment that credit standard, credit rating, that

24 doesn't necessarily go to the underlying credit of

25 the company.

1 As you know, you can go out and get some

2 sort of credit enhancement on the open market

3 and bolster the credit rating.

4 So the answer to your question is: Yes,

5 but we also recognize that the company may not

6 be able to do much about the underlying credit

7 rating, but they can do something to augment or

8 enhance their credit rating by securing another

9 line of credit or credit facility of some sort.

10 So we do believe that there is a minimum

11 level of creditworthiness that is appropriate

12 and generally speaking we think it is the level

13 that Mercer has identified. And we are still

14 in the negotiations with that particular

15 company about that.


17 understand something. Normal mutual funds don't

18 have a credit rating, do they? Maybe they do.

19 MR. HERNDON: The companies that sponsor them

20 typically would have a credit rating.

21 TREASURER GALLAGHER: But I was under the

22 impression that the particular stable value

23 product, consistent with the 401(k) market's

24 prevailing practice and the fact they are targeted

25 to conserve -- it's not the product, it's the

1 company that has this --

2 MR. HERNDON: It's the company that sponsors

3 the product.

4 TREASURER GALLAGHER: Actually the company

5 just went public, so it probably has something to

6 do with that.

7 MR. HERNDON: That's correct.

8 TREASURER GALLAGHER: I recognize what you

9 are doing there.

10 And I was thinking for some reason or

11 other you were putting it on that particular

12 product, and I was getting concerned they had a

13 credit rating on a mutual fund, or at least I

14 didn't know how they did that.

15 Secondly, I am not going to be

16 particularly upset if some of these stable

17 value funds aren't available if, in fact, they

18 are not liquid. I would like them to be

19 available and be liquid. And I know that we

20 are working through that.

21 And I also think that there is lots of

22 undeclared fees in these for various reasons,

23 and I guess we are working on getting through

24 to those.

25 MR. HERNDON: By and large we think we have

1 now all the information that will allow us to make

2 full disclosure on all the fees, and so forth. As

3 you correctly point out, some of them have some

4 fee structures that are quite camouflaged by the

5 nature of the product.

6 But we do have the information. The

7 biggest concern has been the equity losses that

8 are in some of these products, which has the

9 effect of restricting liquidity for 90 days,

10 120 days, maybe even longer in some cases. And

11 that can be a real problem for the employee

12 who's trying to get their money out and they

13 can't.

14 TREASURER GALLAGHER: It's been a problem of

15 mine from Day One with things like annuities and

16 others that have penalties. We have a stable

17 value product that we have put together for

18 employees, so we do have one that's available

19 that's run by other managers.

20 MR. HERNDON: Right.

21 TREASURER GALLAGHER: And I think -- I am

22 glad to continue working with them. And I think

23 they need to realize they have to fix this problem

24 that they should have known in the beginning

25 existed.

1 MR. HERNDON: Well, we suspect that it was

2 probably known, just not to us as clearly as we

3 would have liked.

4 Let me say again, we think that with two

5 of the companies we have stepped over the

6 hurdle. We've got a few minor little details,

7 but fundamentally we have addressed the

8 problem.

9 One is a lot closer to the finish line,

10 and one is still back not too far out of the

11 starting gate on this particular product.

12 And we want to continue to work with them,

13 but as I was saying, we will go forward with

14 the contracts with the other folks, but we need

15 to get these contracts in place and have a

16 clear understanding on all the parts.

17 If we are unable to reach some

18 satisfactory accord, we'll come back to you

19 with a recommendation and explicitly detail the

20 issue. And the board will have an opportunity

21 to make a decision about whether to include or

22 not include that product.

23 And we have the latitude in our website

24 and our literature, and so forth, to just

25 simply say when a person is enrolling and they

1 want to pick Company A stable value fund, it's

2 not currently available and it's blocked until

3 that time that it either is brought under

4 acceptable terms or maybe never available.

5 So we do have that capacity.

6 GOVERNOR BUSH: If you change the deal at

7 all, would we open it up to bid again?

8 MR. HERNDON: No, sir. That's certainly not

9 our expectation. It's certainly not the way we

10 have ever approached this program.

11 It's always been with the expectation that

12 products will come and go out of the system.

13 In fact, the next item that I don't mean to

14 jump over, but as a classic example of the kind

15 of thing that can happen.

16 If you look at 3B, which is the Aetna

17 Small Company Fund, here the entire management

18 team that Aetna had managing this particular

19 product left; they just went to another firm.

20 So there is nobody there to actually

21 administer the product any longer. And Aetna

22 has proposed some alternatives to us.

23 We are looking at those. We have some

24 concerns about those products in terms of

25 performance, and so forth. But in a situation

1 like that, which does happen in this industry,

2 there is no history because the product is now

3 a nullity. So what do you do?

4 You advise your members that this product

5 is no longer available, and we either map them

6 over literally from Product A to Product A1,

7 which is a similar product offered perhaps by a

8 different company, or we tell the company, in

9 this case Aetna: You have the opportunity to

10 propose a substitution that meets standards

11 that the board agreed upon.

12 TREASURER GALLAGHER: Well, that only more

13 emphasizes why it's important not to have a

14 penalty sitting on -- because you could end up

15 with a stable value fund, the managers walk like

16 here or some other thing happen, and we come to

17 the conclusion that we would rather not be

18 approving them for employees to put their money

19 in.

20 And at that point, people ought to be able

21 to get it out and move it. And I guess if they

22 want to leave it, they probably should have

23 that choice, too, possibly depending on how bad

24 the situation is; but having the penalty there

25 for them would be really a fiduciary problem of

1 ours.

2 So I just want to help a little bit and

3 send a message that, you know, these penalties

4 are just not going to get it as far as this

5 particular trustee is concerned.

6 GOVERNOR BUSH: General Milligan, you have

7 any --


9 watching this pretty close, and I certainly

10 support what the Commissioner is saying, we need

11 to protect the investors from penalties. And

12 that's a good signal to send. We've sent it

13 before and we'll send it again. And it may help

14 with the negotiations, may not.

15 TREASURER GALLAGHER: If we don't have all

16 those stable value funds to pick from, that's not

17 going to break my heart. I would rather have good

18 solid ones than have ones that could penalize our

19 pensioners.

20 MR. HERNDON: Yes, sir. We'll bring back a

21 report to you.

22 Finally, with respect to item 3C on the

23 Fidelity Intermediate Duration Bond Pool, we

24 have worked out those details with the legal

25 folks at Fidelity, and that's no longer an

1 issue. And we are pleased to have that product

2 in the system and look forward to a good

3 relationship there.

4 TREASURER GALLAGHER: How did you take care

5 of that?

6 MR. HERNDON: Beg your pardon?

7 TREASURER GALLAGHER: How are we fixing that?

8 MR. HERNDON: The legal folks at Fidelity

9 have agreed to make the changes in their

10 restrictions, and so forth, to eliminate the

11 problems that we had. And so there are no notice

12 requirements, and so forth, as we identified here.

13 They just removed those retroactively from the

14 contract.


16 MR. HERNDON: We are all set there. We do

17 expect to hopefully come back to you, either in

18 two weeks or not too much longer, because again,

19 recognize that enrollment will start June 1; so

20 we've got be in a position to say to people this

21 product is either available or not available based

22 on the decisions that you make. And apparently

23 someone wishes to speak.


25 MR. TURNER: Thank you, Governor, Members of

1 the Cabinet, my name is Richard Turner. I am

2 associate general counsel with VALIC, one of the

3 five bundled providers that you selected here last

4 year to be a part of the PEORP. And we are very

5 excited about that opportunity. We are excited

6 about serving the Florida public employees in yet

7 another way in meeting their retirement needs.

8 We have been working diligently and

9 continuously with Kevin Seacrest and his team,

10 and we look forward to continuing to do that to

11 bring the bundled provider component of the

12 PEORP into operation on time, on schedule.

13 And as part of that negotiating the

14 contracts, we would encourage the Trustees to

15 move forward with the bundled providers, with

16 both the contract negotiations and with all of

17 the investment options for VALIC, all the

18 investment options that have been proposed

19 simultaneously as opposed to separating them

20 out and considering them separately.

21 And as I said, we are confident that we

22 can bring all those details to a closure in

23 time for June 1st.

24 We came to you last year, VALIC came to

25 you last year with a stable value product that

1 had no restrictions on participant transfers.

2 And we remain committed to providing a stable

3 value option, which imposes no transfer

4 restrictions on participants. And so that is

5 our continued commitment.

6 The structure of the PEORP itself has

7 evolved during the contract negotiation

8 process. If I could just use the terminology

9 of the RFP process.

10 The PEORP structure for bundled providers

11 has moved from a moderate/significant services

12 approach, which were two of the three

13 categories that were used for the evaluation by

14 Mercer as well as by Calen, more or much closer

15 to a no service or low service approach.

16 And in response to that evolution and in

17 response to that change, we have worked with

18 INVESCO, our investment manager -- I will

19 introduce you in just a second to Steve

20 LeLaurin from INVESCO.

21 We have worked with INVESCO and continue

22 to work with the SBA, we have proposed an

23 alternative, a stable value structure that

24 preserves the very important component that you

25 as Trustees have been talking about this

1 morning and throughout this process, having no

2 participant level transfer restrictions.

3 And we have -- what we have -- the way we

4 have proposed to do that is to skip an

5 intermediate step and move directly to a step

6 that was contemplated in our RFP from the

7 outset, which is to move directly to a separate

8 account, stable value option, rather than

9 investing initially directly in INVESCO's IRT

10 and then gradually moving to a separate

11 account. We had proposed to start with a

12 separate account option immediately. And that

13 separate account option would have no

14 restrictions on participant level transfers.

15 It preserves our commitment that we have

16 made to you, and it meets that objective that

17 you've just been talking about in the last

18 couple of minutes.

19 In order to answer any questions that you

20 might have about the approach that we are

21 proposing -- and I would just, if I could

22 underscore the importance of stable value

23 options. In retirement plans, on a national

24 basis they constitute between 15 and 20 percent

25 of participant allocations in defined

1 contribution plans, including 401(k) plans.

2 They are very important.

3 And looking at the spot rates, if you

4 will, for what we have proposed to Kevin and to

5 his team to staff, it represents approximately

6 200 basis points higher, current returns with A

7 spot rates than a standard enhanced money

8 market similar to the enhanced money market

9 option that is currently offered on the

10 unbundled side of the program.

11 But to answer any questions that you may

12 have about the structure that we proposed, I

13 have brought with me Steve LeLaurin.

14 Steve is an industry stable value expert.

15 He is responsible at INVESCO for negotiating

16 the underlying stable value investment

17 contracts for stable value separate accounts

18 totalling about $32 billion in assets.

19 Steve has been in the industry for over 30

20 years and wanted to make sure that you had his

21 expertise available to answer any questions

22 that you may have about the proposal that we

23 have put to forth to Kevin Seacrest and his

24 team.

25 GOVERNOR BUSH: Are there any questions?


2 My understanding is that the way you are

3 working toward having a liquid availability to

4 the participants is that you would have a line

5 of credit that you would borrow against in

6 order to release dollars that may be in GCS or

7 whatever else so that you could get people that

8 their money back; is that correct?

9 MR. LeLAURIN: That's sort of correct, yes,

10 sir.

11 TREASURER GALLAGHER: You want to clarify?

12 MR. LeLAURIN: Yes. What we have arranged

13 for is something that's actually been in place for

14 about five years with about 25 billion of assets

15 that my firm manages for stable value clients.


17 MR. LeLAURIN: Billion. The feature is

18 actually referred to as an advanced feature. It's

19 a feature inside an investment contract that

20 provides for the issuer of the contract to provide

21 funds solely for the purpose of liquidity inside

22 the plan in advance of when we were able to

23 liquidate a particular investment.

24 It's really not the same thing as a line

25 of credit. It has an appearance that looks

1 like that, but it is not.

2 TREASURER GALLAGHER: But what you are going

3 to do is you are advancing funds; you are not

4 giving the person back their investment to put

5 somewhere else. You are sort of lending them

6 their own money so that they can put their

7 investment somewhere else. And my guess is

8 somebody's got to pay interest on that. Who would

9 that be?

10 MR. LeLAURIN: Actually the participants

11 actually get their cash at the moment they elect

12 in the plan, they get their cash out; and in the

13 management of the overall stable value option, we

14 end up going to a variety of sources to arrive at

15 that cash.

16 In some cases there is liquid assets

17 already in the portfolio and in other cases we

18 liquidate other investments and get settlement

19 on those right away. And other cases we take

20 this advance down and get cash to settle the

21 participant's needs.

22 TREASURER GALLAGHER: I have that part down.

23 What I am wondering is who pays the interest?

24 MR. LeLAURIN: The remaining fund pays the

25 interest that accrues on that. But the fund is

1 also continuing to earn interest on the underlying

2 assets that haven't yet been liquidated, so it may

3 be there is no cost over time.

4 TREASURER GALLAGHER: Let's say you have a

5 nonperforming GCS, you are going -- how is that --

6 are you going to borrow money on that and give

7 people back their money too?

8 MR. LeLAURIN: In a situation where there is

9 a nonperforming asset in the portfolio, the whole

10 stable portfolio -- that means all of the

11 participants in it -- have to bear the effect of

12 that over time. And when there is a nonperforming

13 asset, that then the other assets are available to

14 meet the liquidity needs of the participants.

15 TREASURER GALLAGHER: So if a large number of

16 employees, of our employees wanted to pull out, it

17 could certainly affect all the others that are

18 still in there?

19 MR. LeLAURIN: That's correct. That's a

20 characteristic of all stable value funds. But

21 that effect is both directions.

22 When participants leave, it has an effect

23 on the remaining return for the remaining

24 participants and that could be a beneficial or

25 it could be a detrimental. On the average it

1 works out to be not very much difference at

2 all.

3 MR. TURNER: If I could, Commissioner, and

4 Steve, please correct me if I am incorrect. My

5 understanding is that, as Steve mentioned, the

6 structure that we are talking about and what you

7 focused on, Commissioner, with the -- you referred

8 to as an advanced feature -- as Steve mentioned,

9 that's something that's been within INVESCO

10 separate accounts for the last five years as I

11 recall and has not been drawn upon a single time.

12 And that's because of INVESCO's expertise at

13 managing the liquidity of the fund in order to

14 meet the needs of the participants.

15 What it does do, however, Commissioner, is

16 to guarantee that liquidity in the event that

17 even something that INVESCO, the leading stable

18 value product provider in the country, even if

19 it's something that they had not anticipated,

20 there is a guarantee participants will have

21 access to their funds.

22 TREASURER GALLAGHER: Another question.

23 These are pension monies that are invested;

24 obviously they are not taxable, but they are --

25 because of some of the transactions you are doing

1 in there, could end up being taxed; is that

2 correct?

3 MR. LeLAURIN: No, sir, they may not.

4 TREASURER GALLAGHER: Nothing in the fund

5 gets taxed?

6 MR. LeLAURIN: That's correct, nothing gets

7 taxed.

8 That issue has come up because the issue

9 about leverage and whether or not a line of

10 credit constitutes leverage, and there may be

11 some tax associated with that.

12 But the structure that we have designed,

13 this advanced structure, is carefully designed

14 to specifically avoid any tax issues at all.

15 In fact, we got outside counsel opinion that

16 validates that.

17 GOVERNOR BUSH: Any other questions?

18 TREASURER GALLAGHER: The only other thing is

19 when you do have a credit involved and it does

20 appear to be somewhat leveraged, it almost looks

21 like you are stepping into hedged-fund territory.

22 MR. LeLAURIN: We look at this advance

23 feature as really a standby backup that is only

24 there for the purpose of being able to ensure a

25 hundred percent that participants' needs for

1 transfers are met. It's something that has

2 actually been available for five years, as Richard

3 said, but has not been utilized. And we don't

4 anticipate utilizing it for the Florida plan.


6 MR. TURNER: Commissioner, if I could,

7 neither VALIC nor INVESCO would ever propose

8 anything that even resembled a hedged-fund.

9 GOVERNOR BUSH: Clearly stated for the

10 record. Thank you.

11 MR. TURNER: Thank you.

12 MR. HERNDON: As you might imagine, Members,

13 we have a somewhat different point of view about

14 some of these issues than the company does. But

15 the upshot of it all is that we'll continue to

16 negotiate with them and hopefully resolve these

17 problems and bring back to your recommendation,

18 either go forward or not, as the case may be.

19 TREASURER GALLAGHER: Tom, I don't have it in

20 front of me, but it seems to me this particular

21 product was a very good producer yieldwise.

22 MR. HERNDON: I don't recall offhand,

23 Commissioner. My recollection is that it's

24 competitive. It wasn't the best performer of the

25 group, as I recall. We can get you that

1 information easily.

2 TREASURER GALLAGHER: I have it back in the

3 office.

4 MR. HERNDON: I don't recall either.

5 Item number 4 is approval of a

6 recommendation to proceed with filing

7 litigation against Alliance Capital Management.

8 I believe the Trustees have a recommendation

9 that was forwarded to you from our outside

10 counsel which you all considered and approved

11 two weeks ago which we, of course, endorsed and

12 believe that's the appropriate next step to

13 take in this process.

14 If the Trustees are in agreement and are

15 able to sign the authorization letter, which we

16 have given you here this morning, the case will

17 be filed here in Leon County Circuit Court.

18 TREASURER GALLAGHER: It was my belief that

19 we approved this lawsuit, subject to it being

20 written and it could have been delivered to us to

21 be signed, not necessarily here, but we are here

22 so we'll sign it. At least I will.

23 GOVERNOR BUSH: Is green ink legal in

24 litigation?


1 works on notes when I go to the bank.

2 COMPTROLLER MILLIGAN: I've got a quick

3 question.

4 The fee structure, as I understand it, is

5 5 percent if a negotiated agreement is reached.

6 MR. HERNDON: Right.

7 COMPTROLLER MILLIGAN: And it goes to 7 and a

8 half percent --

9 MR. HERNDON: Correct.

10 COMPTROLLER MILLIGAN: -- if we file. And

11 then if some sort of agreement is not reached

12 within 60 days, we go on to the first trial, it

13 goes 10 percent.

14 I am not much in this business of legal

15 things, but has there been any effort to

16 negotiate with Alliance at 5 percent to see if

17 we could do something?

18 MR. HERNDON: I can't speak for what the

19 Attorney General has underway, so let me kind of

20 take that off the table.

21 COMPTROLLER MILLIGAN: I am not talking about

22 the Attorney General. I am talking about this

23 contract.

24 MR. HERNDON: I just want to be clear, I

25 don't know what they may be doing.

1 And you will recollect that there is some

2 language in the contract that refers back to if

3 there is a settlement that comes about as a

4 result of their activities, and that's the only

5 reason I mention that.

6 We made an effort to have some discussion

7 with Alliance.

8 COMPTROLLER MILLIGAN: Who made an effort?

9 MR. HERNDON: The board has, and through the

10 board I guess you could say our counsel as well by

11 talking to Alliance officials, but that has not

12 proven to be successful.

13 COMPTROLLER MILLIGAN: Tell me a little bit

14 about the effort, Tom.

15 MR. HERNDON: The effort took place primarily

16 in the form of a face-to-face meeting we had with

17 the Alliance officials, at which point we tried to

18 impress on them how concerned we were about the

19 outcome of this whole situation and the overall

20 dissatisfaction we had with the result, and hope

21 that they would do the right thing and make us

22 whole, or at least make an offer to compensate us

23 in some fashion for our losses.

24 We also requested, as you will recall,

25 some specific information from them that might

1 be revealing about --

2 COMPTROLLER MILLIGAN: That was prior to

3 hiring a legal agency that --

4 MR. HERNDON: That's correct. That was prior

5 to hiring the firm. That's correct.

6 COMPTROLLER MILLIGAN: Has the firm done

7 anything to negotiate?

8 TREASURER GALLAGHER: If I was the firm, I

9 wouldn't do anything until I had the contract.

10 COMPTROLLER MILLIGAN: I beg your pardon?

11 TREASURER GALLAGHER: I said if I was the

12 firm, I wouldn't do anything until I had a

13 contract, and we just did that today. Maybe they

14 did but --

15 COMPTROLLER MILLIGAN: Maybe I am missing

16 something here. This document that we are about

17 to sign authorizes them to file, right?

18 MR. HERNDON: That's correct.

19 TREASURER GALLAGHER: We did the contract two

20 weeks ago. I apologize.

21 COMPTROLLER MILLIGAN: My question is still,

22 have they done anything?

23 MR. HERNDON: The answer is between two weeks

24 ago and today, I am not aware of any dialogue

25 between the law firm and Alliance. There may be

1 some, but I am not aware of it.

2 GOVERNOR BUSH: I think the point was, at

3 least I thought the point was, that we would

4 negotiate a contract with the firm; they would

5 make their recommendation about whether we should

6 file suit or not. They have done that, and now

7 they are ready to proceed.

8 COMPTROLLER MILLIGAN: Then having anything

9 in the contract that dealt with 5 percent for a

10 negotiated agreement was a waste of time?

11 TREASURER GALLAGHER: They can still

12 negotiate after you file the suit.

13 COMPTROLLER MILLIGAN: Of course, you can and

14 it's at 7 and a half percent now, not 5 percent.

15 We are not talking about nickels and dimes

16 here. We are talking about a lot of money, and

17 we are talking about what kind of effort does

18 one expect for the money that we may have to

19 pay these people or they may acquire as a

20 result of the lawsuit.

21 TREASURER GALLAGHER: I fully agree with you

22 there, except this should have been discussed

23 before we signed the contract instead of --

24 COMPTROLLER MILLIGAN: What are you talking

25 about? We signed a contract that clearly defined

1 what the fee structure was.

2 Now we are being asked to file or to sign

3 an agreement to go ahead and file. And I am

4 just asking a question: Where is the

5 negotiations in the first phase of this

6 contract that we had? I don't hear anything

7 about negotiations.

8 MR. HERNDON: I am not aware there have been

9 any negotiations. I can't speak for the firm

10 obviously, but I do know that they --

11 GOVERNOR BUSH: They are working for you. If

12 you don't know about it, it hasn't happened.

13 MR. HERNDON: That's correct. What I was

14 going to say is I do know the firm has been very

15 responsible. If there is any subsequent

16 settlement proposal that comes about as a direct

17 result of the activities that are essentially

18 terminus of where we are now, I don't think they

19 are going to hold us up on this, but I understand

20 your point, General.

21 COMPTROLLER MILLIGAN: I presume if we sign

22 this thing or if it's agreed to, that they will

23 file before the sun sets?

24 MR. HERNDON: Yes, sir.

25 COMPTROLLER MILLIGAN: Now we are immediately

1 at 7 and a half percent, and now we are still

2 negotiating because we haven't gone to kind of

3 negotiate because we haven't gone to court yet.

4 And if we get an agreement 60 days before we go to

5 court, then we pay them 7 and a half percent. I

6 just don't understand.

7 GOVERNOR BUSH: That's because we are trying

8 to leverage the best possible settlement for the

9 pension fund, giving them the authority to sue

10 allows them to negotiate. They don't have to file

11 suit. We are giving the authority to do so.

12 COMPTROLLER MILLIGAN: I understand that, but

13 my understanding is they will file today. As a

14 matter of fact, my understanding is that as soon

15 as they get this, they will walk across the street

16 and file.

17 MR. HERNDON: Counsel is here, Governor and

18 Members. It might be beneficial to hear from them

19 directly.

20 COMPTROLLER MILLIGAN: I would like to know

21 what we have done to negotiate a settlement, if

22 there has even been a smidgeon of an attempt.

23 MR. BURNS: It is our assessment at this

24 point --

25 GOVERNOR BUSH: State your name.

1 MR. BURNS: My name is Guy Burns, and I am

2 one of the two co-counsels that was hired to

3 represent the SBA on this matter.

4 We have assessed the situation that we

5 believe that presuit negotiations would be

6 futile. We've come to that conclusion on a

7 couple different directions.

8 One is that there was contact between not

9 only our client and Alliance, which they have

10 now, Alliance has essentially abandoned and

11 refused to furnish any further documents to our

12 client after specific requests and specific

13 deadlines.

14 Secondly, within the last couple of weeks,

15 there was contact by an attorney for Alliance

16 with a nonlawyer representative of one of the

17 staff of one of the Trustees, and I think the

18 Governor's counsel referred that lawyer to us

19 and said if he had any documents that he wanted

20 to share or information he wanted to share,

21 that he should contact us directly. And that

22 was about 10 days ago. That hasn't happened.

23 Finally, there have been various news

24 reports, the latest of which appeared in the

25 New York Times and Wall Street Journal this

1 morning, which Alliance is quoted as, when they

2 heard this item was on the agenda, apparently

3 somebody called them and asked them for their

4 response and a gentleman by the name of John

5 Myers is quoted in both publications as saying

6 they would be extremely disappointed if Florida

7 filed suit and they would defend themselves

8 vigorously; and went on to suggest they had a

9 great track record over a number of years with

10 Florida, and that the Alliance situation needs

11 to be taken in context with the entire

12 landscape of their relationship.

13 Of course, our feeling is that that is

14 much like the bus driver who drives across town

15 successfully for a number of years, but then on

16 one occasion gets drunk and mows down people

17 and thinks he should be held harmless for the

18 act because he drove safely for a number of

19 years.

20 Our belief is that Alliance is sending

21 signals they are not really interested in

22 negotiation.

23 TREASURER GALLAGHER: Maybe we can go halfway

24 between the two. I don't have a problem with

25 signing today; in fact, I've already done it. But

1 I do think that it would be -- if you would carry

2 out the contract as General Milligan has pointed

3 out -- in better stead if you would at least give

4 them an opportunity working with our staff to have

5 a shot at negotiations.

6 And short of that, I would like you to

7 notify us of whatever happened in that

8 negotiation; and at that point, after notifying

9 us, we would go ahead and say file.

10 And I think the General points out a very

11 valid point. And short of that, maybe he is

12 absolutely right, two weeks for 5 percent just

13 didn't get it. He is right on target.

14 COMPTROLLER MILLIGAN: I will accept that, if

15 we have your agreement that you will make a real

16 honest effort to open negotiations and to

17 negotiate prior to filing this document, and that

18 you will notify us before you file that you have,

19 in fact, attempted negotiations and they have

20 failed.

21 MR. BURNS: Certainly. Absolutely you are

22 our client, we want to do exactly what you want us

23 to do and we'll be happy to proceed along that

24 contract.

25 COMPTROLLER MILLIGAN: I understand what the

1 contract says you will do and I certainly hope

2 that's what you would do.

3 GOVERNOR BUSH: By signing this we are

4 empowering you to deal with Alliance with the

5 certainty --

6 TREASURER GALLAGHER: Stronger negotiate

7 when --

8 COMPTROLLER MILLIGAN: I don't have any

9 problem with that as long as we move forward along

10 with an attempt to negotiate before we file.

11 TREASURER GALLAGHER: Do make sure you have

12 one of our staff with you when you are --

13 COMPTROLLER MILLIGAN: You can send it down

14 to me and I will sign it.

15 MR. BURNS: We have been and we'll continue

16 to work closely with the SBA staff to make sure

17 they are -- we are getting firm direction and we

18 know exactly where we are.

19 GOVERNOR BUSH: Go out and do battle. Thank

20 you.

21 MR. HERNDON: Item number 5 is a discussion

22 of the executive director's succession, which we

23 postponed at the end of last meeting's convening.

24 TREASURER GALLAGHER: I would like to -- I

25 guess we can continue discussion, but I still

1 haven't had a chance to finish my discussion that

2 I started with Coleman because of time restraints.

3 So if I could, I would like to hold off on moving

4 forward on this for another couple of weeks until

5 I get a chance to do that.

6 GOVERNOR BUSH: I think I would concur with

7 that. I was told that the FDLE background checks

8 are not complete either. So it just wasn't --

9 almost everything was complete, but it had not

10 gotten to -- so there is a motion to defer.


12 GOVERNOR BUSH: For two weeks. Is there a

13 second?

14 TREASURER GALLAGHER: There was a second.

15 End of discussion.

16 MR. HERNDON: Thank you.

17 GOVERNOR BUSH: Thank you, Tom.









1 GOVERNOR BUSH: Department State Board of

2 Education.

3 MR. PIERSON: Good morning.

4 Item 1 is a report from Hillsborough

5 County Public Schools Charter District on their

6 contract, and Dr. Donnie Evans, assistant

7 superintendent for instruction, is here to

8 present.

9 GOVERNOR BUSH: There were more people here

10 for the SBA meeting than we knew.

11 MR. EVANS: Welcome, Governor Bush and

12 Cabinet Members. In September 2000 you entered

13 into an agreement with the school board --

14 GOVERNOR BUSH: Could we have -- if you are

15 going to talk, can you go back outside, please.

16 Thank you.

17 MR. EVANS: You entered into a charter

18 agreement with the School Board of Hillsborough

19 County that enabled us to become a charter

20 district.

21 Literally that agreement allowed the

22 district waivers from 20 state statutes or

23 state board rules in exchange for

24 accountability for meeting 19 performance

25 goals.

1 It's important to note that each of those

2 performance goals are goals that either were or

3 have been included in the district's strategic

4 plan. You should have a folder that includes,

5 among other things, a copy of the district

6 strategic plan. All those goals in our charter

7 district agreement are included in that

8 strategic plan.

9 It should also be noted that while there

10 may be some goals in the strategic plan that

11 are not a part of our charter district

12 agreement, that our charter district agreement

13 or charter district status enables us, it

14 continues to enable us to meet all of the goals

15 that you see in that strategic plan and all

16 those goals as you sign also are aligned with

17 our five district priorities, which includes

18 reading -- reading is our top priority as a

19 school district -- technology, ensuring that we

20 have current and up-to-date technology,

21 internal and external communication, safe,

22 caring orderly environments, and staff

23 recruitment, retention and development.

24 So as you look at the evaluation

25 instrument that you see there reflecting

1 performance in our district along those 19

2 performance goals, then what you are literally

3 seeing in part is an evaluation of our

4 strategic plan.

5 What we would like to do today is to

6 provide updated information regarding that

7 evaluation. You have a complete report in your

8 packet, but you also have an executive summary

9 in that report, in the evaluation report.

10 And I want to simply highlight some of the

11 information in that executive summary and then

12 provide you updated information specific to the

13 actual waivers. In other words, what kinds of

14 outcomes, student and teacher outcomes, have we

15 realized as a result of implementation of the

16 waivers?

17 First, I will call your attention to the

18 executive summary that's a part of the

19 evaluation of our strategic plan and should be

20 the first two pages in the annual report. And

21 I will simply note that when you look at the

22 goals that are in our charter district

23 agreement and also in our strategic plan, we

24 met most of them. And literally is what the

25 executive summary tells you, and it delineates

1 that goal by goal.

2 With our reading goals, you will see that

3 we have met all but one of those. We met goals

4 for graduation rates; we met goals for

5 attendance rates. And the only goal we didn't

6 meet was our reading goal for tenth grade on

7 FCAT. We missed that by one percentage point.

8 That's our goal, I emphasize that. I

9 think we have a goal there for 77 percent

10 students scoring at the particular level on

11 FCAT and 76 acquired that. And of course, we

12 realize that's a goal we are going to have to

13 revisit because that goal was predicated on the

14 preexisting model for determining school

15 grades.

16 Since that model has changed, we'll be

17 changing that goal and updating it. So the

18 next time you see our strategic plan you will

19 see a different goal representing that

20 particular item.

21 TREASURER GALLAGHER: How about you going

22 further than that? Are you telling me instead of

23 having a reduction in these schools, which you did

24 very well with starting off here, now you are

25 going to reevaluate that because the grades

1 changed and you are going to allow more D schools?

2 Is that what you are saying?

3 MR. EVANS: No. What I am saying is we had

4 goals based on level one, level two, level three,

5 and so on, aligned with performance on FCAT but

6 also reflective of the preexisting grading system.

7 The grading system has changed. And so as we

8 reexamine each of the goals in our strategic plan,

9 we will change them to make them consistent with

10 the new grading system. Then literally the goal

11 will reflect, rather than level one and two, level

12 three and above.

13 TREASURER GALLAGHER: You are really not

14 changing the plan as it shows to decrease ones,

15 twos and increase threes, fours and fives; is that

16 correct?

17 MR. EVANS: Yes, that's correct.

18 TREASURER GALLAGHER: Which we can call

19 letters if we wanted to. You are not going to

20 change that, you are just going to adjust what the

21 numbers are?

22 MR. EVANS: Yes, sir.

23 With regards to our goal associated with

24 ACT and SAT, we fell slightly short of our goal

25 with one exception. The component of that goal

1 relating to the performance of African-American

2 students on ACT, we did meet, actually we

3 exceeded that goal.


5 goal, did you also have the goal the pretraining,

6 practice exercise?

7 MR. EVANS: Absolutely, we have increased

8 that.

9 TREASURER GALLAGHER: Have we seen an

10 increase because of that, of the scores of the

11 African-American students?

12 MR. EVANS: Yes. At the beginning of this

13 year -- and looking at the information that you

14 shared, this is information that we determined as

15 a result of the evaluation we did last summer --

16 we instituted the beginning of this year a more

17 comprehensive approach to preparing students with

18 test-taking skills as well as looking at classes

19 where they acquire the content associated with

20 performance on SAT and ACT.

21 And we've engaged in a number of

22 activities that are already being reflected in

23 performance of students who have taken SAT and

24 ACT thus far this year. The scores are up

25 significantly.

1 TREASURER GALLAGHER: I just want to put a

2 little cue in for the Governor because that was a

3 major party of his One Florida, and I am glad to

4 hear it's working.

5 GOVERNOR BUSH: Actually, Hillsborough I

6 think is one of the counties that's taking more

7 full advantage of the PSA, PSAT funding, than

8 other districts. You did it two years in row

9 which allows you to begin to see the benefits of

10 that.

11 TREASURER GALLAGHER: You are doing the same

12 thing with ACT; is that correct?

13 MR. EVANS: Yes, we are. It's helped us

14 tremendously.

15 GOVERNOR BUSH: Do we pay for the ACT?

16 MR. EVANS: No, you pay for SAT.

17 TREASURER GALLAGHER: Why would you not take

18 advantage of the payment? I know a lot of

19 students -- why wouldn't you take advantage of --

20 GOVERNOR BUSH: I didn't know we pay for it.

21 TREASURER GALLAGHER: That's what I am

22 asking.

23 MR. EVANS: We were not aware we could use

24 funding for ACT; we use it for SAT.

25 TREASURER GALLAGHER: You can't, I don't

1 think.

2 MR. EVANS: We provide the funding for ACT

3 component and we are doing that complementary to

4 what we are doing with the SAT.


6 also?

7 MR. EVANS: Absolutely.

8 With regards to our communications goals,

9 as you can see, we have met or exceeded all of

10 the communication goals. We have met or

11 exceeded our technology goals, our staff

12 recruitment, development and retention goals,

13 as well as our safe caring and orderly

14 environment goals.

15 We are waiting determination for whether

16 we'll acquire the seal of Best Financial

17 Practices. That is one of the goals we

18 included in our charter district agreement.

19 As you know, or as you may know, we were

20 visited earlier this year and under review by a

21 partner and should be hearing very soon with

22 regards to whether or not we've met that goal.

23 In addition to the information that you

24 have reflecting performance on those goals, I

25 wish to highlight information specific to the

1 waivers that should be included in a table that

2 is in your packet. And that table lists the

3 waivers that we have or the statutes from which

4 we have waivers as well as the state board

5 rules, and it provides updated information that

6 in many cases take the form of student outcomes

7 and teacher outcomes, or in some cases cost

8 savings as well that we realized as a result of

9 the institution of these waivers.

10 And I will mention a few. I won't cover

11 them all. I think the table you have is fairly

12 explicit and hopefully clear in noting the

13 either the status of implementation or the

14 current outcomes.

15 I will call attention to Florida Statute

16 232.245(21) and our major outcome there has to

17 do with attendance rates. Attendance has

18 increased significantly. We feel extremely

19 proud of that. You have the specific data on

20 the tables showing the extent to which

21 attendance has increased as a result of

22 institution of that waiver.

23 With regards to State Board Rule

24 6A-105.03, that has resulted in a tremendous

25 expansion of our alternative certification

1 program, bringing in teachers who are -- who

2 have degrees but may not be certified and

3 providing a vehicle through which they can

4 acquire certification while teaching in our

5 district. We have 218 people participating in

6 that program.

7 TREASURER GALLAGHER: I will mention that is

8 another thing that you all were leaders on in the

9 whole state. And back what I said over here, we

10 thought it was a great one to have other districts

11 look at and follow. And I don't know if any have,

12 but I hope they have because it really is a very

13 good thing to help people earn some money while

14 they are getting certification. And there are

15 many people that have other degrees that would

16 love to teach and that opportunity you are giving

17 them. I hope it's going to work out well.

18 You have 250 so far?

19 MR. EVANS: 218. And it is working very

20 well. We appreciate the opportunity.

21 TREASURER GALLAGHER: Have you lost many?

22 MR. EVANS: Not very many. Retention is very

23 high.

24 TREASURER GALLAGHER: How many have actually

25 got certified to date?

1 MR. EVANS: I can't give you a number how

2 many actually have been certified. A significant

3 number.

4 TREASURER GALLAGHER: Congratulations. It's

5 a good program.

6 MR. EVANS: With Florida Statute 230.2316, we

7 realize the small cost savings. But even more

8 importantly, the cost savings is important. Even

9 more importantly, though, is that we have

10 increased face-to-face interactions between

11 parents of those youngsters and our personnel, our

12 teachers and our administrators, as it relates to

13 youngsters going into our dropout prevention

14 programs, and we feel that is very, very

15 significant.

16 Florida Statute 236.081 has facilitated

17 108 middle school students taking more than

18 four semesters of technical career courses,

19 high interest courses. And these are

20 students -- we really were placing great

21 emphasis on this particular waiver in the

22 middle school. As you know, middle school

23 students can be quite challenging, and we want

24 to connected them to the schools early. And we

25 had a number of students who we felt had the

1 potential for dropping out.

2 But allowing them the opportunity to take

3 these courses we think has impacted on our

4 potential dropout rate.

5 With regards to Florida Statute 229.592

6 and State Board Rule 6A-109.981, you have in

7 your packet a table I think that provides

8 substantive outcome information that we are

9 extremely proud of that relates directly to

10 that waiver.

11 It reflects on FCAT and NRT scores for

12 2001, and it has additional data on it as well,

13 but I want to call attention specifically to

14 that. And the table I am alluding to is headed

15 Hillsborough County Public Schools FCAT Grades

16 '98 through 2001 and FCAT/NRT 2001. The table

17 at the bottom reflects our percentile scores

18 and I emphasize percentile scores for grades

19 three through eight.

20 I will call your attention first to the

21 math scores. The lowest percentile you see

22 represented there is a 66 percentile for our

23 standard curriculum students, through the 73rd

24 percentile scores, which means literally that

25 in mathematics, our students score at or above

1 the upper third in the nation in those grades.

2 And that is significant when you consider our

3 population is almost 50 percent for reduced

4 lunch students, low SCS, if you will.

5 We are extremely proud of those. You look

6 at our reading scores, you don't see a

7 percentile score there less than 50 percent.

8 In fact, most are 60 percent or above. Again

9 we are extremely proud.

10 Again, when we look at this, there is some

11 room for improvement and we are working on

12 that. And as we reexamine our strategic plan

13 we'll revise our goals to adjust for that and

14 institute additional strategies to continue

15 improvement.

16 TREASURER GALLAGHER: That goes to prove what

17 everybody on this board has said for quite a

18 while; that your superintendent and your board

19 agrees with that we had some trouble bringing some

20 other people on board -- that every child can

21 learn; doesn't matter what the socioeconomic

22 background is. If you spend the time with them,

23 they too will learn. If you do it early enough,

24 they have got a great chance for life. You are

25 making it happen.

1 GOVERNOR BUSH: Are you including the ESE

2 kids in that category, since there is no open

3 publicity of that recently?

4 TREASURER GALLAGHER: Is that is a yes?

5 MR. EVANS: Yes, we are. The data you have

6 here are for standard curriculum students, the

7 students that contribute to the school grade. But

8 yes, we are including our ESE students in what we

9 are doing. And we are seeing tremendous

10 improvement.

11 We did a separate exercise, our school

12 board, reviewing the performance of our ESE

13 students, in particular as a result of an

14 evaluation of our ESE programs. And we are

15 very, very proud of the performance of our

16 students.

17 But the last item I will mention from that

18 particular table -- and there is more and I

19 will respond to any question you might have

20 regarding any of those items -- relates to our

21 charter conversion goal.

22 We had, as you know, a goal for

23 instituting six conversions or converting six

24 of our typical schools to charter status, and I

25 mentioned to you when I visited with you last

1 that we --

2 TREASURER GALLAGHER: Excuse me one second.

3 Are you finished talking about the statute

4 waivers?

5 MR. EVANS: Yes, sir, unless you have

6 questions about any of them.

7 TREASURER GALLAGHER: No, I just wanted to

8 make sure I was off this document and on to the

9 next.

10 MR. EVANS: The item I mentioned I think is

11 an attachment to that particular document. It's

12 probably the last page in that same document with

13 regard to the schools that we are currently

14 working with to convert.

15 We are working with three elementary

16 schools and one middle school who have

17 expressed a desire and are working with us to

18 complete a proposal for becoming charter

19 status. And, of course, at their request they

20 want to engage in a planning activity with us

21 that actually will take them into next year and

22 then begin full operation as a charter school

23 the following fall, the fall of 2003.

24 GOVERNOR BUSH: Have you gone through the

25 economics of this yet, of the split between the

1 district and the schools in terms of the funding?

2 MR. EVANS: That's being negotiated. Of

3 course, they are entitled to 95 percent, just as

4 the charter district -- charter statute suggests.

5 But we are giving them the opportunity to take

6 full advantage of the district as it relates to

7 our offices and negotiate that 95, 90, depending

8 on how much they want to depend on us for

9 services, direct services; and that's the

10 determining factor.

11 TREASURER GALLAGHER: Let me just reiterate

12 something we talked about I guess back in

13 September when you -- I am sorry, in February,

14 when we had two conversions remanded.

15 I don't think -- I can speak for myself,

16 but I think the rest of the board pretty much

17 agrees that converting the adult educational

18 centers and technical career centers aren't

19 what we were sort of considering, at least this

20 guy wasn't considering conversions. We are

21 looking for elementary school, middle school,

22 and high school conversions. That's what I am

23 going to count in the six.

24 MR. EVANS: We heard that message loud and

25 clear.


2 reiterate it. And I see you are working on four,

3 as I will call it, regular K-12 schools.

4 MR. EVANS: Yes, sir.

5 TREASURER GALLAGHER: That's good. So if we

6 can get those four and get two more next year, you

7 will be right where you need to be.

8 MR. EVANS: That's correct, yes, sir.

9 The last comment I will make --

10 GOVERNOR BUSH: On that issue, it would be

11 helpful I think for us and the legislature,

12 certainly because of their policy-making role, to

13 have -- if we could develop some BEST practices on

14 conversions of regular public schools to

15 independent charter school status and the do's and

16 don't's and how this works.

17 Ultimately I think most people, when given

18 the choice, do you think that principals and

19 teachers and parents ought to be defining the

20 vision of the school and being responsible and

21 have the power to run the schools, and that the

22 politicians and bureaucracies take a step back,

23 I think it's a 90 percenter in our state.

24 And the conversions really is a good way I

25 think to fulfill that vision. But we had, if

1 you look at the number of -- these are still

2 public schools -- but conversion o public

3 schools to charter school status, there is a

4 handful compared to the thousands of regular

5 schools.

6 I think it's a good opportunity. And if

7 you in this process that you are going through,

8 if you kind of develop BEST practices about how

9 to do it, it would be very helpful for the rest

10 of the state.

11 MR. EVANS: Yes, sir. If I may note, with

12 some of our schools -- and this is a challenge as

13 it relates to site lease management and poses some

14 interesting questions when we look at conversions.

15 When we look at how our schools operate and when

16 we compare the funds that are generated by the

17 students in the schools versus the expense of

18 operating that school, in some cases we have

19 schools operating in excess of a hundred percent.

20 In fact, as high as 141, 142 percent and some

21 lower.

22 And so reconciling that presents a

23 challenge for us as we approach them and work

24 with them and look at 95 percent of revenue as

25 a marker. It's one of the challenges we are

1 confronted with and has to be taken into

2 consideration.

3 The last comment that I will make,

4 addresses perhaps the greatest benefit as we

5 perceive it with regards to the charter

6 district status.

7 I think in Hillsborough County, in

8 particular, we have taken great pride in

9 thinking out-of-the-box with much of what we

10 do. And when you look at our strategic plan

11 you see a number of strategies associated with

12 those goals that reflect in our opinion

13 out-of-the-box thinking.

14 But charter district status has helped us

15 to more freely, if you will, think out of the

16 box.

17 State statute, which we often used -- and

18 I use "we" in a pejorative sense -- it is no

19 longer an excuse for not doing something, for

20 not deviating, if you will, and trying new and

21 different things. And for us, that has been

22 the greatest benefit to this whole effort and

23 we appreciate it.

24 TREASURER GALLAGHER: You are absolutely

25 right. However, when -- I always heard that the

1 reason -- the excuse that was given; my answer was

2 that the Commissioner has the ability to waive

3 right now, has had it for the last four years, to

4 waive any of those if any district would ask.

5 And so usually superintendents and

6 administration get in trouble when they use

7 that statute because if I ever had a chance

8 when the complaint comes to me, when I am out

9 travelling around, I tell them: Look, it's as

10 easy as requesting a waiver.

11 And other than, obviously health and

12 safety we don't waive for those, but I don't

13 know of a time that a district asked for a

14 waiver and didn't get it.

15 MR. EVANS: That has been the case for us.

16 We asked for a number prior to acquiring charter

17 district status and have gotten them. But still,

18 there is the tendency to say we can't do that

19 because the law doesn't allow it.

20 TREASURER GALLAGHER: That's why the waiver

21 is there to stop that. It's obviously not stopped

22 yet.

23 MR. EVANS: Correct. We appreciate this

24 opportunity.

25 GOVERNOR BUSH: Any questions? Are there any

1 other waivers that you would seek? May as well

2 ask you right now, sounds like there is a good --

3 TREASURER GALLAGHER: The good news of his is

4 his charter lets him pretty much waiver whatever

5 he wants. He gets to do it without getting

6 permission.

7 MR. EVANS: Yes. And there are additional

8 waivers. I believe we generated a list and, in

9 fact, are in conversation with our senior staff

10 and our school board that there are additional

11 waivers that will be --

12 TREASURER GALLAGHER: I like to see them

13 coming this way. That's a good thing because we

14 know that when you sit and have 2,000 pages of

15 statutes --

16 GOVERNOR BUSH: 1,800.

17 TREASURER GALLAGHER: I am sorry, 1,800, it's

18 getting smaller.

19 GOVERNOR BUSH: 1,876.

20 TREASURER GALLAGHER: Is there some reason

21 for that number? Did you just take it out until

22 you got there.

23 GOVERNOR BUSH: The Speaker loves James

24 Madison.

25 TREASURER GALLAGHER: I can understand. I

1 guess it depends on how big you make the print,

2 right, how many pages you got? Senator probably

3 had 4,000.

4 What you are doing, I think, should help

5 in the future for the state to look at, and one

6 of those waivers that you are asking for, and

7 really wonder in the future years, the new

8 school board and everything else, whether they

9 should recommend maybe removing them from the

10 statutes in trade for what you are doing, which

11 is higher student achievement.

12 MR. EVANS: Yes. Thank you.

13 GOVERNOR BUSH: Thank you very much. Thank

14 you for the presentation.

15 Item 2.

16 MR. PIERSON: Is a request to increase

17 Miami-Dade County's Charter school cap. The two

18 speakers, Hernando Zulueta from Academia

19 Corporation and Mr. Merrett Stierheim,

20 superintendent, Dade County schools.

21 MR. ZULUETA: Good morning, Governor, Members

22 of the Board. My name is Hernando Zulueta. I am

23 here representing the applicants that are

24 requesting a waiver to the 28 school cap that

25 currently exists in the state statute as with

1 regards to charter schools in Miami-Dade County.

2 As you were aware, the statute has a 28

3 charter school limit for counties with 100,000

4 students or more. Dade County, with

5 approximately 360,000 students, falls under

6 that.

7 Dade County has already in the past

8 approved 18 charter schools which are currently

9 operating in Dade County with about 5,500

10 schools.

11 There are six charters that are scheduled

12 to open in the coming year. But there are also

13 28 contracts that have been approved beyond --

14 I am sorry, 17 beyond the statutory cap. And I

15 am here today on behalf of the applicants, with

16 the support of the district, I am happy to say,

17 requesting that the cap be waived.

18 GOVERNOR BUSH: Is there one applicant for

19 all these?

20 MR. ZULUETA: No. Actually there are a

21 number of different applicants. I just happen to

22 be representing them. I was anointed with that

23 duty.

24 I can list -- for example, I am here on

25 behalf of the matter of Easton Academy, that's

1 operates with Central Market in East Little

2 Havana as well as in Hialeah Gardens, and we

3 are doing a high school in Hialeah Gardens and

4 an elementary school in East Little Havana; the

5 Miami Childrens Museum Charter School which is

6 going to open in the future on Watson Island,

7 Summerset Academy, which has been operating in

8 Broward and now will be operating in Dade;

9 Thelma and Theodore Gibson Charter School,

10 which would be opening in the west part of

11 Coconut Grove; the North Dade Community Charter

12 School, which would be in Opa Locka; the

13 Acamedia Academy which will be on Coral Way,

14 it's a Greek version type charter school, small

15 school, a hundred students, so that's an

16 example.

17 Also the Miami-Dade Charter Schools, Inc.

18 which is working -- which is the United

19 Teachers of Dade which are proposing nine

20 charter schools about Dade County, actually

21 eight charter schools throughout the county.

22 TREASURER GALLAGHER: Let me just say for the

23 record, I am glad you are doing this. If you look

24 at the whole past history -- and I can't tell you

25 what it is this year, but a year or two ago, we

1 had I will say unexpected because we planned for

2 students, you plan for how many you think you are

3 going to have and the state a couple of years ago,

4 after September count or August whatever it was,

5 we ended up with 45,000 new students. And Dade

6 County ended up with 17 or 19,000 of those, which

7 in any reasonable district would mean 17 new

8 schools; if you had a thousand-student schools,

9 and we try not to have a thousand-student schools.

10 So it's virtually impossible for Dade

11 County to catch up with what's happening to

12 build 17 schools in a year. In fact, it takes

13 more than a year to build a school; three years

14 by the time you plan and get the property and

15 design it and build it.

16 So this truly is a way for your district

17 and others, but primarily Dade, to catch up

18 with the needs of facilities; because each of

19 these charter schools has to provide their own

20 facility and they can do it -- an individual

21 entrepreneur can do it a lot quicker, make it

22 quicker than a school board can build a

23 facility.

24 I can tell you I am very supportive of

25 this because I recognize that you need a lot

1 more than 28 schools or you need a lot more

2 than 50, really, when you really look at it.

3 Anyway, you can move these students out of

4 these overcrowded classrooms into charter

5 schools as long as you are making sure they are

6 delivering the education product that we want,

7 that's a good thing.

8 GOVERNOR BUSH: Superintendent, would you

9 like to speak?

10 MR. STIERHEIM: Thank you, Governor, good

11 morning everyone.

12 Yes, we are together on this issue with

13 the applicants. The school board hit its cap

14 on April 17, 28, and as was indicated we have

15 17 applications from three separate companies

16 or firms. And all of those, I might add, we

17 believe at the staff level meet the criteria

18 that we have established with the board.

19 We are not asking you to approve that

20 criteria. But we felt that it was in the best

21 interest of the system and the children and the

22 charter schools to have reasonable criteria

23 which is consistent with our interpretation of

24 the state statutes.

25 Parenthetically, I have distributed

1 through your staff, and I hope you have an

2 opportunity to read it, a position paper that I

3 had staff do on the subject of charter schools;

4 because as a relatively new superintendent -- I

5 have been there now the long term of six

6 months -- I was surprised that there was no

7 analysis done by the school system. And I

8 think you will find that a scholarly review,

9 not -- neither pro nor con, talking about

10 advantages, disadvantages, with an extensive

11 bibliography, it's really -- I compliment the

12 staff. And without influence I think they did

13 a good job.

14 So we are asking that you approve this on

15 a case-by-case basis, even though we recognize

16 that at this point we feel we will be

17 recommending all 17. But we think it's prudent

18 that we evaluate each school based on the

19 criteria and then present that to the school

20 board for their consideration.

21 Be happy to answer any questions if you

22 have any.

23 GOVERNOR BUSH: Are there any questions?

24 COMMISSIONER CRIST: Yes. I was just

25 curious, are you asking that we approve all 17

1 applicants today?

2 MR. STIERHEIM: Actually the board action was

3 that it be done on a case-by-case basis. And I

4 think you will find this successful, after we are

5 through with this, and we'll right on beyond the

6 17.

7 It just happens we have 17 applications

8 that are under review right now. So our

9 recommendation and the action of the school

10 board was unanimous in requesting that you

11 approve extending the cap on a case-by-case

12 basis.

13 TREASURER GALLAGHER: I would like to move

14 item 2.

15 COMPTROLLER MILLIGAN: Just so I understand,

16 we are essentially saying we are increasing the

17 cap from 28 by 17, adding 17 to the cap; is that

18 right?

19 GOVERNOR BUSH: I think what we are doing is

20 exempting the 17 from the cap cap, and they can --

21 they will approve them on a case-by-case basis.

22 MR. STIERHEIM: That's correct.

23 COMPTROLLER MILLIGAN: Next year, if you come

24 back and you want more, either we'll change the

25 law or --

1 MR. STIERHEIM: I am confident we'll be back.

2 TREASURER GALLAGHER: What we are doing right

3 now is they approved 28 schools which is 10 over

4 their cap, so they can't really let them open

5 unless we approve that.

6 COMPTROLLER MILLIGAN: I understand. I just

7 want to make sure we are all on the same

8 wavelength.

9 MR. PIERSON: They had 28, which is their

10 cap. What we are increasing is the cap be raised

11 to 45 to allow them to consider the other 17.

12 MR. STIERHEIM: On a case-by-case basis.

13 MR. PIERSON: But the request is to increase

14 the cap to 45.

15 GOVERNOR BUSH: Okay. That's not what I

16 have.

17 TREASURER GALLAGHER: I move to increase the

18 cap to 45.


20 GOVERNOR BUSH: Moved and seconded. Any more

21 discussion?

22 COMMISSIONER BRONSON: Should we make,

23 specifically make it specific that they can do a

24 school by school --

25 TREASURER GALLAGHER: Case by case, the law

1 says that already.

2 GOVERNOR BUSH: Moved and seconded. Without

3 objection, it's approved. Thank you.

4 Representative, are you here for this

5 matter?

6 REPRESENTATIVE: To monitor the situation.

7 TREASURER GALLAGHER: It's always good to

8 have monitors.

9 MR. PIERSON: Item 3 is a charter school

10 appeal which is requested to be withdrawn by the

11 charter school.

12 TREASURER GALLAGHER: Motion to withdraw.

13 GOVERNOR BUSH: Is there a second?


15 GOVERNOR BUSH: Moved and seconded. Item 3

16 is withdrawn or deferred?

17 MR. PIERSON: Withdrawn.

18 GOVERNOR BUSH: -- withdrawn.

19 MR. PIERSON: Item 4 is a charter appeal, The

20 Believer School of Learning versus Bradford County

21 School Board. The appeal is brought to the state

22 board pursuant to section 228.056, Florida

23 Statutes.

24 The board has the option to approve the

25 appeal and remand the application back to the

1 school board or to deny the appeal and uphold

2 the school Board.

3 Lee Ellen Clark is here representing the

4 school board -- I am sorry, representing the

5 charter school, and superintendent Buddy

6 Paterson is here for the school board.

7 GOVERNOR BUSH: Good morning.

8 MS. CLARK: Good morning. How are you?

9 GOVERNOR BUSH: I am doing well.

10 MS. CLARK: Thank you so very much.

11 My name is Ellen Clark. I represent the

12 Believer School of Learning. I am here to

13 appeal the decision of the Bradford County

14 school board.

15 I was looking at the letter that they had

16 written to affirm their denial. I want to just

17 respond to the three different reasons for

18 their denial.

19 The budget -- just give me a few minutes.

20 GOVERNOR BUSH: Sure. Take your time.

21 MS. CLARK: Thank you.

22 All right. Thank you.

23 They were concerned about the money that I

24 had allocated for the furniture.

25 Being started as a new school, some of the

1 luxuries I had not anticipated buying, like a

2 fax machine, overhead projector, copy machine.

3 I felt as though the $10,000 would be

4 sufficient because the place that I intend to

5 move into, that place is already established.

6 There is already a day care there. Some of the

7 things are already established there in the

8 school.

9 And the person that is renting the

10 building now, she told me she would leave that

11 stuff there so that I may be able to use.

12 That's why I wasn't -- my first year I wasn't

13 looking to buy a fax machine. I wasn't looking

14 to buy a copy machine, neither an overhead

15 projector. My first objective was just have

16 what is necessary for the students to be

17 educated.

18 The next thing, in looking at the student

19 desks and chairs and stuff like that, I know we

20 do have a Florida Surplus place there in

21 Starke, Florida, and I believe I can go there

22 and find what I am looking for in order for the

23 students to sit in if we don't have enough

24 chairs there at the building.

25 And they said about the allocation for

1 $40,000 for staff development.

2 I was looking at that, and my rationale

3 behind that was the fact that I was

4 anticipating using the School of Tomorrow

5 curriculum. After meeting with the

6 representative of that particular curriculum, I

7 knew that I had to pay $2,000 in order to go

8 out to Texas and be taught that particular

9 curriculum. And they told me it would take two

10 weeks. And I knew I would have to take whoever

11 would be teaching in the school along to learn

12 the curriculum.

13 And also, I thought about other

14 development, the time we would get together as

15 a staff and different things like that so we

16 could discuss the things of the school, so we

17 could make sure we were doing the good of the

18 school.

19 Now there is a great concern about the

20 $496 for the budget. The $496 for the budget,

21 it might seem unrealistic to each and every one

22 of you, but I have gone back; if I had to

23 resubmit this proposal, I would only resubmit a

24 hundred dollars.

25 The reason I would only resubmit a hundred

1 dollars is because after doing some more

2 in-depth checking, I find out that most of the

3 check printing and all the other stuff could be

4 done on a computer. I don't have to hire

5 anyone to go out and do that for me.

6 So I feel as though the hundred dollars

7 would be sufficient.

8 I did not submit a letter from the

9 accountant that had agreed to do my audit for

10 $100, but he did give me a letter. But I

11 understand I can't give that to you.

12 But if any of the members here would like

13 to see it, I did bring forth the letter. The

14 person that has stated that he would do that,

15 he is an accountant for a very large firm. He

16 is about to retire. And he believes in my

17 vision.

18 He believed that the schools in Bradford

19 County need an add-on attraction. He has

20 worked for the School Board of Bradford County

21 for a term of two years and he understands what

22 all the students need.

23 Now the part here about hiring a salary

24 for the A's, the paraprofessional, it states

25 here that you cannot hire them for minimum

1 wage. I am not aware of that, but I do know

2 that there are enough people in the county, in

3 Bradford County, that need jobs. And I do

4 believe that they would take a job at minimum

5 wage.

6 Okay?

7 Now the biggest issue I have seen is the

8 curriculum. The curriculum that I hatched over

9 was a Christian base, but I went back and,

10 Governor Bush, I looked over your proposal, the

11 one that you were co-founder of.

12 GOVERNOR BUSH: That was pretty smart.

13 MS. CLARK: Oh, yes.

14 And I noticed that in your proposal you

15 listed the atlas. And I did a little bit

16 research and one thing I found -- I figured out

17 for myself: If you are going to teach a school

18 properly, there is no way that you can use one

19 curriculum.

20 They stated about the Academy of Reading,

21 the SRA, Direct Instruction. I worked in the

22 school system for one year as a professional

23 teacher. I worked for the School Board of

24 Bradford County ever since 1994. As a

25 subteacher, I decided to go ahead, get my

1 Bachelor's degree so that I can come back and

2 teach. I am presently now enrolled getting my

3 Master's degree in VE education. I intend to

4 go back and get my Ph.D. in VE education.

5 There is a need and I can see there is a need.

6 Now I went back and I went and I pulled up

7 curriculums. There are so many curriculums out

8 there. The one that I chose, this particular

9 one -- and no, I won't use that curriculum

10 because it is Christian based. God forbid.

11 And I said that jokingly. Okay?

12 The particular school I got this from,

13 this particular curriculum from, this

14 particular school, the school that's located in

15 Bradford County, this particular school has

16 been chosen as one of the six schools to go to

17 Washington, D.C. to the Department of Education

18 to discuss their curriculum with them because

19 their school is higher in this particular area.

20 GOVERNOR BUSH: But you can see how the

21 School of Tomorrow curriculum on its website, it

22 has as the five guiding principles, number 5, the

23 spirit -- number 5, the spiritual relationship of

24 all believers in the Lord Jesus Christ, living a

25 life of righteous work, separated from the world,

1 witnessing of his saving grace through the

2 ministry of the Holy Spirit -- might not pass the

3 constitutional test.

4 MS. CLARK: You are correct. Thank you.

5 GOVERNOR BUSH: There is no single word in

6 that that I would disagree with, but it's just not

7 I am not sure public school settings would be an

8 inappropriate place for that to be a guiding

9 principle.

10 MS. CLARK: And I agree with you, because I

11 don't want to force my beliefs on anyone. Okay.

12 The plan to require parents to volunteer.

13 I thought about that. Let me -- I did not

14 mention some of the other curriculums that I

15 have looked at and considered.

16 First of all, Governor Bush, I looked at

17 the Atlas to see what it was about. I think

18 that's a good curriculum. And from my

19 understanding, it is designed for

20 low-functioning students.

21 I looked at also the Saxon, I looked at

22 the High Scope, I looked at Apple, and I also

23 looked at Montessori. And I am very impressed

24 with the Montessori.

25 Now back to the governance and

1 maintenance. It was stated that they had a

2 problem trying to figure out how we were going

3 to govern the school, what kind of management

4 we were going to have.

5 My idea, which might be confusing, that I

6 would have a school board. The school board

7 would consist at the present of five members.

8 And after I reviewed what they had noted on my

9 application, they said one of the people that

10 was one of my applicants resume had deceased,

11 but I thought about that. The rest of them

12 hadn't deceased. If one had deceased, so. You

13 got the rest of them you could talk to. Okay?

14 Now maybe I am looking at it wrong. Maybe

15 I am. I don't know. But I do realize he told

16 me he had not reviewed his --

17 GOVERNOR BUSH: That's kind like a detail, if

18 it was the only thing, we probably could rectify

19 it.

20 MS. CLARK: Thank you so very much.

21 GOVERNOR BUSH: That happens occasionally.

22 MS. CLARK: I am glad you realize that.

23 GOVERNOR BUSH: I will make a prediction to

24 you: Everyone in this room it's going to happen

25 to.

1 MS. CLARK: Thank you. What I -- let me --

2 they said they didn't see where I explained good

3 enough where the Believer School of Learning would

4 be innovative.

5 The reason I feel that the Believer School

6 of Learning would be innovative, first of all,

7 it would be a pain-staking school. I know that

8 when I was working in the school system, when a

9 student come into the classroom, if they are

10 ESE, yes, you are set aside, but the majority

11 of the time they have got to keep up with the

12 rest of the class.

13 The teacher has a certain agenda she is

14 trying to keep up with. She is teaching to the

15 entire class, not on one-on-one. And I feel

16 with a Believer school of Learning, if a

17 student in and that student can work at their

18 own pace, that student would be able to grasp

19 more, it would be more advantageous for that

20 particular student.

21 That's why I feel my school would be

22 innovative and good for the students.

23 GOVERNOR BUSH: Commissioner Bronson has a

24 question.

25 COMMISSIONER BRONSON: Thank you, Governor.

1 I guess the big question would be, it

2 sounds like what you had applied for with your

3 curriculum, and so forth, and your management

4 plan is a little different than what you are

5 explaining a little bit to us now. You want to

6 go into another -- or change that or modify

7 that to some degree.

8 Don't you think you would -- if you are

9 going to change and modify based on what

10 your -- what you originally set in, you are

11 going to have to go back to the school board

12 with those changes and modifications to

13 reapply, it seems to me, if you are going to

14 change the plan from your original goal.

15 MS. CLARK: Okay, sir. My management plan

16 did not change.

17 GOVERNOR BUSH: I am sorry, say that again.

18 MS. CLARK: My management and government plan

19 did not change. To me, the biggest thing is

20 here --

21 And I looked back over my comments to the

22 reviewers' questions, and I do know that the AB

23 School of Learning was one of the ones that I

24 was considering, because I was also considering

25 the Montessori at the same time. Okay?


2 COMMISSIONER BRONSON: It still seems to me

3 like what you are saying is you are looking at a

4 number of plans, but your curriculum and all is

5 going to change to some degree depending on which

6 plan you decide to accept.

7 And I am hearing -- I don't know, maybe I

8 am getting it wrong, but I am hearing you are

9 starting out one way, and you are kind of

10 moving over to maybe one of the other plans,

11 which means your curriculum is going to change

12 a little bit, which means you would have to

13 resubmit that, it seems to me.

14 MS. CLARK: No. No, sir.

15 GOVERNOR BUSH: How many students have you

16 had signed up for your school?

17 MS. CLARK: I have not had any sign up, sir,

18 because of the denial. I didn't want to build the

19 people's hopes up.

20 GOVERNOR BUSH: How big was the school to

21 have been?

22 MS. CLARK: 45 students.

23 GOVERNOR BUSH: 45 students?

24 MS. CLARK: Yes.

25 GOVERNOR BUSH: I had 20.

1 MS. CLARK: The school board came back and

2 asked me about having 20 students. They asked me

3 how would I prepare my budget if I only had 20

4 students, but my cap was 45.

5 GOVERNOR BUSH: All right. Maybe, unless you

6 have some other comments that you think would be

7 important for us to hear, maybe we could hear from

8 the Bradford County School District.

9 MS. CLARK: Okay.

10 GOVERNOR BUSH: Do you have anything else you

11 would like to add?

12 MS. CLARK: The only other thing that I

13 notice here was about the dismissal plan. They

14 stated it was unrealistic. I guess when I read

15 the school board asked me about how would I

16 dismiss the students; I thought they were

17 referring to how would I dismiss them every day.


19 MS. CLARK: I responded to that. Okay?

20 Thank you.

21 GOVERNOR BUSH: Yes, ma'am. Thank you.

22 Mr. Patterson.

23 MR. PATERSON: It's Mr. Paterson. I get

24 called a lot of things, trust me. I would like to

25 thank the Governor and representatives of the

1 state board for allowing me to be here.

2 And I like to commend Ms. Clark, she is a

3 Bradford County native and she is a hard

4 worker, and she is loves children, she is very

5 dedicated. We'll get there yet. We are still

6 working with her on this and she does a good

7 job.

8 I would like to ask Ms. Eugenia Whitehead

9 to step up here with me because she can answer

10 some questions I may not be able to because she

11 is the curriculum director of Bradford.

12 She's worked hand in hand with Ms. Clark,

13 and has dealt with this a little bit more. But

14 besides, I am not going to go over the

15 reasons -- I am not going to go over the

16 reasons so much, I think you are aware of them,

17 why we denied the process.

18 But as superintendent I know I speak for

19 the school board, we encourage a lot of new

20 approaches in Bradford County in our school

21 system. We are starting -- involved in the

22 Florida Reading Initiative.

23 GOVERNOR BUSH: Yes, you are.

24 MR. PATERSON: -- with 500 teachers coming. I

25 hope you attend June 3 and bring your staff.

1 GOVERNOR BUSH: I hope I am going to be

2 there. I was excited about the invite.

3 MR. PATERSON: We'll promise we'll treat you

4 right.

5 GOVERNOR BUSH: You know what, if you don't

6 get tried in Bradford County, the option is always

7 not good.

8 MR. PATERSON: I am aware we have a prison

9 system. I won't go there.

10 But anyhow, I hope you can come anyway.

11 The reading initiative, our goal in three years

12 is to have a hundred percent literacy in our

13 school system.

14 GOVERNOR BUSH: You are doing great work. We

15 are real proud of you.

16 MR. PATERSON: We are also working with the

17 grant through Santa Fe, we are going to be one of

18 the four school districts in the nation to use

19 mentors from Santa Fe Community College to work

20 with our science and math teachers K through 12

21 through technology.

22 We got a very strong school, home school

23 program. Out of 4,000 students, we have over

24 close to 100 students that are home schooling.

25 We work hand-in-hand with those parents.

1 GOVERNOR BUSH: When you say they are home

2 schooled, they are home schooled separate and

3 apart from the public school, or you allow for --

4 they are public school students you help pay

5 for --

6 MR. PATERSON: No, they are taught at home.

7 And some of them may take certain classes at the

8 school for certain requirements, but they still

9 must pass the criteria and the test and such.

10 But anyhow, what I am trying to tell you

11 is let you know we think out of the box. We

12 are willing to try anything new. Our board is

13 open to the charter school concept, with the

14 education and welfare of our students in mind

15 first.

16 And my goal and my responsibility is to

17 look out for the students of our school system,

18 our employees and that's what we are doing. We

19 denied this application.

20 We are willing to assist Ms. Clark in

21 reapplying. We offer our services again. The

22 key being we want her to be successful, also,

23 because if she is successful, then our students

24 are successful. And we can all achieve

25 together and meet the state goals.

1 So if I can answer any questions; if

2 Ms. Whitehead can answer any questions.

3 GOVERNOR BUSH: Any questions? I think you

4 must have done a very good job.

5 MR. PATERSON: Thank you. I will see you June

6 3rd.

7 GOVERNOR BUSH: Is there any other comments?

8 Is there a motion?

9 TREASURER GALLAGHER: I move deny the item.


11 GOVERNOR BUSH: There is a motion to deny and

12 a second. Any other discussion? Without

13 objection, the motion is denied.

14 And Ms. Clark, don't take this as

15 rejection; simply take it as the school

16 district's willingness to work with you to come

17 up with a strategy that will create a win-win

18 for the kids in Bradford County. Appreciate

19 you all coming.







1 GOVERNOR BUSH: Board of Trustees?

2 MS. ARMSTRONG: Good morning. You get Eva

3 Armstrong, director of the Division of State Lands

4 this morning. Secretary Struhs is in Washington

5 meeting with the Secretary of Energy today.

6 We have item 1 as the minutes.


8 GOVERNOR BUSH: There is a motion, is there a

9 second?


11 GOVERNOR BUSH: Moved and seconded. Without

12 objection, it's approved.

13 MS. ARMSTRONG: Item 2 is an option agreement

14 for an acquisition of an inholding within the

15 Blackwater River State Forest negotiated by the

16 Division of Forestry. They got a great price at

17 65 percent of value.



20 GOVERNOR BUSH: Moved and seconded. Without

21 objection, it's approved.

22 MS. ARMSTRONG: Item 3 is an easement, a

23 30-foot wide easement for private access and

24 utility services, again within the Blackwater

25 River State Forest.

1 It is for a small parcel, it's on the

2 .93 acres. The folks are going to build a

3 house and they have a legal statutory way of

4 necessity. The cost will be $984, per value.



7 GOVERNOR BUSH: Moved and seconded. Without

8 objection, it's approved.

9 MS. ARMSTRONG: Second substitute item 4 is a

10 50-year lease to the Division of Recreation and

11 Parks for the construction of maintenance of what

12 will be the Lake Okeechobee Scenic Trail. We

13 have -- I can go through it in detail or answer

14 questions.

15 GOVERNOR BUSH: Why don't you give us a

16 little description?

17 MS. ARMSTRONG: Just a little description?

18 Great.

19 There currently is a maintenance road

20 around the entire dike around Lake Okeechobee,

21 and the plan is to create a recreational trail

22 that will be used by multiple users. You would

23 have skaters, bike riders, hikers, horse track.

24 And the Department of Transportation --

25 GOVERNOR BUSH: A horse track?

1 MS. ARMSTRONG: Horse track, horseback

2 riding.

3 GOVERNOR BUSH: You had my full support until

4 then.

5 TREASURER GALLAGHER: There is going to be no

6 racing or betting.

7 MS. ARMSTRONG: Let me clarify, it is for

8 riding of horses.

9 The Department of Florida Department of

10 Transportation has $12.5 million, they are

11 going to start two phases to initially pave the

12 trail in two areas.

13 It is what we consider to be an immediate

14 economic stimulus to the area. We are

15 including five counties in this project. And

16 the Corps of Engineers is also working with us

17 on this project.

18 TREASURER GALLAGHER: Is the plan that there

19 will be rental horses available or you have to

20 bring your own?

21 MS. ARMSTRONG: That hasn't been worked out.

22 We just want to make sure if people have horses

23 and they want to be able to ride along the dike,

24 they can.

25 DOT when they paved, for the pavement

1 itself, will also have -- there is enough width

2 to create either a space to the right or left

3 where you have hikers and horseback riders so

4 they are not on the pavement.

5 GOVERNOR BUSH: Would the expansion of these

6 two segments that are on this -- well, that's not

7 a good picture. I can't see it very well, but the

8 expansion that you are proposing will go totally

9 around the lake?

10 MS. ARMSTRONG: Yes, eventually we will. The

11 DOT will cover the first 60 miles and then our

12 Department of Environmental Protection will be

13 seeking an additional 12.5 million over five years

14 to complete it.

15 The Corps of Engineers is suring up the

16 dike on one side and we are staying away from

17 that until that project is complete.

18 GOVERNOR BUSH: That's smart. Any other


20 MS. ARMSTRONG: DOT is here if you need more

21 information about the specifics.

22 GOVERNOR BUSH: Yes, better picture. Thank

23 you.

24 COMMISSIONER BRONSON: I guess my question

25 would be, you mentioned all the counties that are

1 involved in this. But there will be, if someone

2 starts out, there is going to be places where they

3 can actually get off the dike, go into whatever

4 town they are closest to, and then back on the

5 dike and back around and so they will be able to

6 get off camp.

7 MS. ARMSTRONG: Right, there be amenities.

8 The dollar cost is not just for the pavement

9 itself, but is for rest rooms, parking facilities,

10 the whole ball of wax.

11 GOVERNOR BUSH: Charlie is wondering where

12 you get off the trail and get a beer and come

13 back?

14 COMMISSIONER CRIST: Are we talking about

15 Lake Okeechobee?


17 COMMISSIONER CRIST: I was briefed about the

18 trail yesterday, and it's interesting to me. I

19 actually tried to look at the lake once when I was

20 driving from Clewiston to cross over to the east

21 coast, and it's hard. You have to walk up this

22 like 35-foot incline. Is this going to make the

23 access easier?

24 MS. ARMSTRONG: Yes, it should. The dollar

25 amount includes access points parking. We won't

1 be building something that goes straight up that

2 steepest side of the dike. But we are working

3 also with all the cities within those counties so

4 the public, when they come in to bike or go

5 horseback riding, have easy access to that trail.


7 GOVERNOR BUSH: And this connects to the

8 Florida Scenic Trail?

9 MS. ARMSTRONG: It will become part of the

10 Florida Scenic Trail, yes, sir.

11 GOVERNOR BUSH: That's great. Any other

12 discussion? Is there a motion?

13 TREASURER GALLAGHER: Motion on the fourth

14 amendment, is that what it was, the fourth

15 amendment?

16 MS. ARMSTRONG: Oh, gosh, how many

17 amendments?


19 MS. ARMSTRONG: Second substitute item.

20 GOVERNOR BUSH: There is a motion and a

21 second. Without objection, it's approved.

22 MS. ARMSTRONG: Then our final item is the

23 third substitute item for 5. This is an

24 additional vote on -- in our process of acquiring

25 all the land for the Southern Golden Gate Estates

1 Everglades Restoration Project.

2 This is the sixth time we have asked you

3 to vote for condemnation. The item originally

4 contemplated that you would be voting on

5 condemnation for all the unimproved parcels

6 within phase 11-A plus improved parcels with

7 recreational sites only.

8 And then we also have included originally

9 the parcels for homesteads under your policy

10 that we had not been able to get into the

11 Federal Relocation Program. I was hopeful we

12 would be able to use the item as impetus to get

13 those final contracts in here today.

14 We have not gotten all of them. We are

15 down to four we don't have in hand. So we are

16 not asking you to take any action today to

17 condemn the homesteads. We are going to

18 continue to work on those four remaining

19 homeowners.

20 We do, however, have on this agenda two

21 contracts that we are asking you to approve

22 that are in excess of the amount you had

23 delegated us to move forward and make offers on

24 in the past. And I want to explain to you just

25 a minute about why they are here, because they

1 are a lot higher than you normally would expect

2 to see.

3 On these two, they are owned by Mr. Lord

4 and Mr. Winter. We have an appraised, a DSL

5 approved value, your appraised value, which

6 normally is a starting point. The delegation

7 of authority initially, before we went to

8 condemnation, was State Lands move forward and

9 you can offer 125 percent of appraised value or

10 add $5,000 on top in an effort to and in a step

11 see how many additional contracts we could

12 secure.

13 We have eliminated as many of those as we

14 could. We are now back; we've made both first

15 and second bona fide offers, and we have been

16 unable to come to agreement.

17 We also offered them the full benefits

18 under Federal Relocation. And for these two

19 properties, Mr. Winters' federal relocation

20 benefit would be $343,000. Mr. Lord's would be

21 335.

22 We were not able to secure a contract or

23 their agreement to move at that cost. If you

24 added -- if we assumed today that we went in

25 for eminent domain, our best guesstimate based

1 on the Attorney General's figures is that you

2 would add at least 150,000 for the legal costs

3 for the state to go all the through eminent

4 domain on both of those.

5 GOVERNOR BUSH: $150,000; in legal fees?

6 MS. ARMSTRONG: Right. Our costs in legal

7 fees.

8 GOVERNOR BUSH: Which is equal to --


10 GOVERNOR BUSH: It's 40 percent of the value

11 of the property?

12 MS. ARMSTRONG: It is an expensive process.

13 GOVERNOR BUSH: God, we live in the most

14 wonderful country in the world, don't we?

15 TREASURER GALLAGHER: What you have to

16 realize, Governor, is our eminent domain laws say

17 that we pay both sides attorneys' fees.


19 TREASURER GALLAGHER: So they are looking at

20 probably 75 for each side.

21 GOVERNOR BUSH: The lawyers always do better

22 than the rest of us sometimes.

23 COMMISSIONER CRIST: I have a question, if I

24 might. When we have gotten values before, have we

25 included the lawyers' fees as part of the

1 valuation like we are today?

2 MS. ARMSTRONG: No, sir, we have not.

3 COMMISSIONER CRIST: Why are we doing it this

4 time?

5 MS. ARMSTRONG: My theory is this. I know

6 it's very tough for you to vote to condemn

7 somebody's homestead. You have a policy in place

8 right now that says you won't do it.

9 Yet we have a project here that is key for

10 water resources on the west coast, estuaries,

11 groundwater, public water supply. It's a very

12 important project.

13 We cannot build it and have them there.

14 They have no access, not just to get to their

15 house, but in a major storm event we can't get

16 them out quick enough. And with the ground

17 work being restored to what it normally would,

18 septic tanks fail. So it's just not going to

19 work to have homes out in the middle of the

20 project.

21 So here you are up against a policy that

22 says we will not condemn and a project that

23 says, but we need to get those homes. So my

24 theory was, how can I get this -- get as many

25 of these moved as far as I can in order to get

1 the contracts before you instead of eminent

2 domain.

3 So we took the Federal Relocation amount.

4 I said, okay, offer up to and including the

5 legal fees -- because if we end up having to go

6 to court, you can count on it, we'll have to

7 pay if it -- and see if we can get people to

8 agree to that.

9 In these two instances, they both agreed.

10 The reality is the homeowner is much better

11 off. They get their full relocation costs,

12 plus they put the legal fees in their pockets

13 that normally would go to the attorneys. So we

14 have been working really hard to get these guys

15 in. We have two of them here.

16 GOVERNOR BUSH: It's a great incentive, and I

17 think it's a very creative way of dealing with

18 this.

19 The underlying assumption is we have to

20 buy these properties, because of the Everglades

21 Restoration Project, which this is, then this

22 is a, I think, a very creative way of offering

23 to property owners above value. But for us it

24 ends up being a good deal because the lawyers,

25 in the end, we are going to pay it.

1 TREASURER GALLAGHER: And we don't have to

2 use eminent domain.

3 I would like to tell you, Eva, that the

4 progression that you all have carried forward

5 and aggressively to acquire this piece of the

6 Everglades puzzle is something that I am very

7 happy with and pleased. And I appreciate what

8 you are doing and all your staff, because it's

9 certainly a wonderful asset of this state. And

10 we are getting the federal government to be out

11 a couple times, I think maybe Representative

12 Young will get them over the hill, get their

13 part of it done and keep on moving. It's a

14 very important part of what we are doing in the

15 state to provide, as you said, water resource

16 for the west coast.

17 I thank you and I move the item.


19 MS. ARMSTRONG: We do have one speaker but

20 it's on the unimproved parcels. Mr. McDonald, he

21 was here first when you first -- but it was a

22 condemn. Mr. McDonald?

23 MR. MCDONALD: Good morning, ladies and

24 gentlemen, Governor Bush, Secretary Crist,

25 Secretary Gallagher, Commissioner Bronson,

1 Secretary Harris and Commissioner Milligan.

2 Fifteen months ago today I stood here but

3 only for about two minutes when we did not take

4 a negative view or vote against the eminent

5 domain.

6 My firm represents about 700 acres in the

7 area to the south. We have been involved in

8 this land for over 30 years, my family, myself.

9 We personally live in Homestead; this property

10 is in Collier County, as you all know. We had

11 pursued and hoped that we could have gone

12 forward with eminent domain 10, 12, 15 years

13 ago. It didn't happen until this time last

14 year approximately. But it is at least here

15 now and it looks like it's going to go forward.

16 Most of our property owners and our

17 clients have wanted to keep their land. And

18 originally when our first hearing came up back

19 in November of last year, we were opposing the

20 taking.

21 Shortly thereafter, I contacted the

22 Attorney General's office in Fort Lauderdale,

23 Ms. Hassan, and informed her that we had

24 reversed that position. We were not going to

25 contest the taking and that we were desirous of

1 cooperating with the Attorney General's office.

2 And we have pursued that course of action.

3 The matter has not progressed nearly as

4 quickly as many of us thought. I had discussed

5 with DEP the possibility that since we had as

6 many property owners and acreage as we did in

7 just two sections, that we could do this all in

8 maybe one, two, three, four, five, lawsuits if

9 we eventually had to go to trial.

10 That did not materialize because of the

11 Circuit Court in Collier County made the

12 decision that they only wanted five or six

13 defendants per lawsuit.

14 We have had difficulty previously in

15 working with DEP to a certain extent. We have

16 not been very happy with working with their

17 predecessors. And the theme of my

18 presentation, which only, as I say, lasted two

19 minutes last year was that all we are looking

20 for is fairness. And if we get fairness and

21 honest values and prices that are commensurate

22 with what's going on in the surrounding area,

23 this whole thing is going to happen and it's

24 going to go away.

25 However, we just received the latest

1 update of the appraisal. It shows no changes

2 whatsoever. And what has occurred in southwest

3 Florida is that by taking these 55,000 acres,

4 which the state is acquiring, off the tax

5 rolls, eliminating those properties from being

6 able to be built on, used as hunting camps, as

7 little farms, places for families to take their

8 horses, their ATVs, their kids, et cetera,

9 which we all know we are running out of those

10 kind of places, and that's what we envision for

11 this entire area. We used to raise cattle

12 here. Of course, cattle don't swim very well,

13 so it's really high and dry land. You may call

14 it a wetland, this, that, and the other, but

15 whatever.

16 So we have now recognized that what is

17 occurring and what's happening is that there is

18 less land to the south. There is now certain

19 aspects that are going on as to whether the

20 state is going to take land to the north of the

21 Alley. And that is causing prices to elevate.

22 Of course, had this been done 10 years ago, it

23 would have cost everybody a lot less money, but

24 we all have 20/20 hindsight, et cetera.

25 So our focus is again on fairness --

1 fairness, truthfulness, honesty in negotiation

2 and dealing with DEP. As I said, we had

3 difficulties with that in the past.

4 And as I said, I represent now about

5 700 acres, which is about 15 percent of the

6 land that you have left. So that means at

7 least we have a reasonable voice that somebody

8 is going to listen to, and I know you people

9 do. Because when I sent you the letters last

10 year, I wrote each of you two letters, short,

11 one page, a number of you responded. And then

12 when I spoke to you last year, you said, yes,

13 you recalled; you knew what our concern was, et

14 cetera.

15 Our view today is the same as it was,

16 except we have cooperated with the Attorney

17 General's office in the eminent domain filings.

18 We still have difficulty in getting certain

19 things worked out with DEP. I am trying to

20 schedule appointments this afternoon before I

21 return to see if we can work out some of those.

22 GOVERNOR BUSH: I am sure they will meet you.

23 MR. MCDONALD: I think it will work. I would

24 like to comment on one small item.

25 Maybe some of you remember last year, Pop

1 Spencer who rode up in his little electric cart

2 and made a presentation and answered a couple

3 of questions for the Governor. The Governor

4 insisted that he and I come up and say

5 something because we traveled all the way from

6 Homestead and Naples, not that far away but at

7 any rate.

8 Well, Pop Spencer was in two wars. He

9 bought little pieces of property from time to

10 time in this area. The government took away

11 his land in the Big Cypress Swamp. They are

12 taking away his 10 acres that he and his wife

13 bought from my daughter 15 years ago. He has

14 another hunting camp about 10 miles away;

15 that's is in the process of going. And now, I

16 am going to file his death certificate, he died

17 six weeks ago, which was two weeks before I

18 could hand him the first check that the

19 Attorney General's office gave us for the -- or

20 produced for the taking on the land.

21 And now his wife has just been notified

22 that her home. Which is north of Alligator

23 Alley, not south, is now in some other kind of

24 an approach for the taking.

25 And when I spoke with her yesterday, she

1 said: Is there some kind of way that, since I

2 am the only one left, we had three pieces of

3 land taken; would you ask them up there in

4 Tallahassee to please leave my home alone until

5 I die. And these kind of things happen. I

6 know it may sound a little corny.

7 GOVERNOR BUSH: No, it isn't corny at all.

8 Can you, on the northern property, can you explain

9 that to us?

10 MS. ARMSTRONG: Yes, or respond if you don't

11 mind real quickly.

12 We have no project north of 75, and we got

13 word yesterday that there is a developer who

14 sent out a number of letters to landowners

15 saying we were, but we have no plans, no

16 intention. The whole point to Southern Golden

17 Gate Estates is provide flood protection for

18 those lands north of 75. So whatever they are

19 being told is not true.

20 MR. MCDONALD: That's good news.

21 TREASURER GALLAGHER: Is it possible Dade

22 County or Collier or somebody else is doing it for

23 any reason? Water Management District?

24 MRS. ARMSTRONG: Is the Water Management

25 District doing it?

1 VOICE IN AUDIENCE: (Inaudible.)

2 MR. MCDONALD: That's it, okay.

3 TREASURER GALLAGHER: There are other people

4 that unfortunately have eminent domain powers.

5 MR. MCDONALD: I know that. This is

6 called --

7 GOVERNOR BUSH: How do they manage to find

8 either -- either he was a true visionary or he had

9 real bad luck. How did he -- that's a remarkable

10 story.


12 environment and --

13 MR. MCDONALD: Yes, he does. And he likes to

14 be out in the country and left alone,

15 Commissioner, but what I am reading from, it says

16 North Golden Gate ROMA Service Area, and here's a

17 map that was just -- his wife just got four days

18 ago that says you are located here. This is north

19 of the Alley and now they are going to take your

20 home as well.

21 TREASURER GALLAGHER: Unfortunately, that's

22 not something we can do much about.

23 MR. MCDONALD: That may be true, but at least

24 I want you to know, part of the overall picture

25 that we are still looking at and dealing with.

1 Now a lot of people bought land out here

2 years and years ago for investment and they

3 were floating around in airplanes, the Florida

4 Land Deals, the Swamp, and so on and so forth.

5 But for the most part, there are a lot of

6 people that enjoy this land.

7 We are not going to be able to enjoy it

8 anymore as soon as this whole process is over,

9 and we know it's happening. And we are

10 desirous of assisting the state to get this

11 done, again, if we will be treated fairly, if

12 the appraisals that we are provided with are

13 going to be actual appraisals, truthful

14 appraisals, correct information.

15 All you have to do is pick up the Naples

16 Daily News, Sunday only, and read the for sale

17 wanted ads. You won't find more than two,

18 three or four that are selling five or 10-acre

19 pieces of land anymore. They are not there.

20 The brokers don't have the land for sale. When

21 you do see one, it's 8, 10, 12, $14,000 an

22 acre.

23 Now is that a lot higher than they could

24 have bought it two years ago? Yes. You all

25 could have bought it probably two years ago

1 through eminent domain for $6,000 an acre.

2 GOVERNOR BUSH: We have been trying to avoid

3 that.

4 MR. MCDONALD: I know that.

5 GOVERNOR BUSH: And I will, as long as I am

6 Governor, I am going to always try to avoid it

7 because it's a power that I think should be used

8 sparingly, cautiously. These are basic rights in

9 our wonderful country. So what you are saying is

10 by us being cautious about the use of eminent

11 domain, we now have to pay a higher price.

12 MR. MCDONALD: That's the reality of life.

13 GOVERNOR BUSH: You shouldn't be complaining

14 about it, though.

15 MR. MCDONALD: I am one of those attorneys

16 you all were talking about a while ago.

17 GOVERNOR BUSH: I take it back what I said

18 about attorneys. I forgot you were one.


20 While it's important, and I know DEP is moving

21 with Water Management and others because of the

22 Everglades Restoration, which is a huge, huge

23 never-seen-in-the-world-history-before project,

24 part of this still has not been approved by

25 Congress under the WRDA Program; that still has to

1 come yet. And I guess part of it is if we can

2 deal with the landowners and get them to work with

3 us, we can acquire those properties to make it

4 whole so that we can go back to Congress for that

5 program.

6 But we have to be very careful, I think,

7 that we don't go into a full condemnation if we

8 can help it, because that portion, I think

9 where some of these properties are listed have

10 not been approved by Congress under the WRDA

11 Program, to my knowledge, and therefore, we

12 want to make sure that before we ever make the

13 move -- and I don't like to do condemnation

14 either if we can help it -- but we want to be

15 in the right place at the right time. As a

16 matter of fact, if I got this right, if we go

17 too far too fast, we can actually jeopardize

18 that project.

19 MS. ARMSTRONG: If I can clarify a couple

20 things.

21 Number one, on this, it was also a

22 critical project originally. We have federal

23 funds that have been approved for acquisition.

24 That's part of what we are spending our money

25 on. It's clearly a project that we are all

1 moving forward on. The federal law we are

2 waiting on in the fall will have funds for the

3 construction and maintenance and final details.

4 It's important to remember that this is a

5 project that we are all in together. We

6 already spent $78 million buying the land for

7 this project with the federal government. So

8 it's important to recognize that.

9 TREASURER GALLAGHER: I made a motion.

10 GOVERNOR BUSH: There is a motion. Is there

11 a second? And a second. Any other discussion?

12 Without objection, the motion passes.

13 Thank you all very much.

14 (The proceedings concluded at 11:24 a.m.)




















9 I, SANDRA L. NARGIZ, RMR, CRR, certify that I

10 was authorized to and did stenographically report the

11 proceedings herein, and that the transcript is a true

12 and complete record of my stenographic notes.

13 I further certify that I am not a relative,

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

15 nor am I a relative or employee of any of the parties'

16 attorney or counsel connected with the action, nor am I

17 financially interested in the action.

18 WITNESS my hand and official seal this 30th

19 day of April, 2002.



22 ______________________________