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Clear Dot Image Cabinet Affairs









The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush presiding,
in the Cabinet Meeting Room, LL-03, The Capitol,
Tallahassee, Florida, on Wednesday,June 12, 2002
commencing at approximately 10:30 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


Attorney General

Commissioner of Education

* * *




(Presented by J. Ben Watkins)

1 Approved 5
2 Approved 5
3 Approved 5
4 Approved 6

(Presented by Daryl McLaughlin )

1 Approved 7
2 Approved 13
3 Approved 25

(Presented by Jennifer Carroll, Executive Director)

1 Approved 29
2 Approved 29

(Presented by Teresa Tinker )

1 Approved 37
2 Approved 37

(Presented by Wayne Pierson )

1 Approved 38
2 Approved 41
3 Approved 47
4 Approved 48
5-18 Approved 48
19 Approved 60


(Presented by David Struhs)


1 Approved 61
2 Approved 61
3 Approved 62
4 Approved 62
5 Approved 64
6 Approved 72
7 Approved 84
8 Approved 84
9 Deferred 85

(Presented by Tom Herndon, Executive Director)

1 Approved 86
2 Approved 86
3 Report 86
4 Approved 110
5 Accepted 110
6 Approved 111
7 Approved 111
8 Approved 117
9 Report 117


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

2 GOVERNOR BUSH: Division of Bond Finance.

3 TREASURER GALLAGHER: Motion on the minutes.


5 GOVERNOR BUSH: Moved and seconded. Without

6 objection.

7 MR. WATKINS: Item number 2 is a resolution

8 authorizing the issuance of up to $10 million in

9 parking facility revenue bonds for Florida

10 Atlantic University.



13 GOVERNOR BUSH: Moved and seconded. Without

14 objection, it's approved.

15 MR. WATKINS: Item number 3 is a resolution

16 authorizing issuance of up to $26,905,000 in

17 parking facility revenue bonds for Florida

18 International University.



21 GOVERNOR BUSH: Moved and seconded. Without

22 objection, it's approved.

23 MR. WATKINS: Item 4 is a resolution

24 authorizing the issuance of up to $13,700,000 in

25 parking facility revenue bonds for the University

1 of South Florida.



4 GOVERNOR BUSH: Moved and seconded. Without

5 objection, it's approved.

6 Thank you, Ben.




















1 GOVERNOR BUSH: Florida Department of Law

2 Enforcement.

3 MR. McLAUGHLIN: Good morning, I am Darly

4 McLaughlin, FDLE. Commissioner Moore is in

5 Washington today.

6 GOVERNOR BUSH: Why is he there today?

7 MR. McLAUGHLIN: He is -- Governor, I have a

8 feeling you know.

9 He has been appointed by the President to

10 serve on the Homeland Security Advisory Council

11 for the nation. He is the only law enforcement

12 representative on that group, the last time I

13 looked at the list. We are highly honored at

14 FDLE that he was recognized and we feel that's

15 good for Florida.

16 GOVERNOR BUSH: It's great for Florida.

17 MR. McLAUGHLIN: So he asked me to fill in

18 for him today.

19 TREASURER GALLAGHER: Move the minutes.


21 GOVERNOR BUSH: Moved and seconded. Without

22 objection, it's approved.

23 Item 2.

24 MR. McLAUGHLIN: Item 2 is the quarterly

25 report, the third quarter. With your indulgence,

1 I want to comment just on a few things with

2 respect to that report to bring you up to date on

3 some things I have been talking to the Cabinet

4 aides about for sometime now.

5 The good news, Governor and Members of the

6 Cabinet, is that we are making great progress

7 in our crime laboratories. We have had a

8 concerted effort for some time now to bring our

9 laboratories up to a level of funding, a level

10 of staffing that would allow us to provide the

11 kind of service to the criminal justice

12 community that you all would expect and our

13 citizens of the state would expect. We are

14 making progress.

15 The good news is the third quarter, seven

16 of the nine disciplines have met their

17 turnaround times. That's a significant issue

18 for us.

19 But the better news is that this last

20 month, the eighth discipline, computer evidence

21 recovery, was able to meet their turnaround

22 time and also to eliminate their backlog.

23 We have one discipline remaining, that's

24 our DNA serology discipline. I just want to

25 comment a second or two on that with your

1 permission.

2 We have in Florida a pretty extensive DNA

3 operation. Our DNA database is the largest in

4 the country. We have more hits against that

5 database than any other state. We are

6 providing consultation to other states and the

7 federal government on the DNA database on some

8 of the DNA issues even as we speak.

9 We have had a problem turning that around,

10 but with your recommendation and the

11 legislature's approval, the calvary is on the

12 way.

13 We've got 26 new personnel that will show

14 up July 1. They will actually begin work that

15 day. Within 90 days after their report, we

16 believe they will become productive in the

17 crime laboratory system.

18 And the good news is when we lose

19 experienced scientists, these forensic

20 technologists, who are not yet testifying

21 analysts, will have the opportunity then to be

22 trained to move right into their positions.

23 That has been a real problem in our

24 laboratory and been a real problem with DNA

25 some time now.

1 So we are very encouraged by that. We

2 project that with an additional million dollar

3 federal grant that we just received notice of,

4 we'll be purchasing some robotic equipment;

5 we'll be outsourcing some of our nonsuspect DNA

6 cases. We expect that turnaround time to be

7 achieved certainly by the end of the first

8 quarter of the next fiscal year and no later

9 than the second quarter, but I have been

10 assured the first quarter, we should see

11 dramatic, dramatic improvement.

12 We have actually eliminated some part of

13 our backlog; that's been an on-going issue. We

14 had 2700 cases last month pending and in a

15 month's time we were able to cut into the

16 backlog by nearly 400 cases, and that's

17 significant.

18 We are encouraged, our laboratory people

19 are hard at it. They are doing what I think

20 the people of Florida expect them to do. They

21 are working extra hard. They are working

22 smart, and we are trying to use resources at

23 our disposal to bring this issue to some

24 fruition very shortly.

25 With respect to other issues in our report

1 there, Governor and Members of the Cabinet,

2 there is some excellent news that we don't talk

3 much about, but I just want to bring to your

4 attention very briefly.

5 In the information area, this is an area

6 that our chiefs and sheriffs across the state

7 are very concerned about. We now have 39,000

8 workstations tied into our FCIC system, the hot

9 files.

10 For those who have been out there and seen

11 this, you know that our requirement is 24 hours

12 a day, seven days a week that we give two to

13 five-second response to police officers on the

14 street. 99.9 percent of the time we are able

15 to do that. We ought to be doing it a hundred

16 percent of the time, but the significance of

17 that is that's 80 million transactions a month

18 coming across that system; 39,000 terminals

19 hooked up.

20 So we are very pleased with that. We are

21 meeting our standard and making progress there.

22 And finally, with respect to that report,

23 nearly 80 percent of our fingerprint

24 submissions from across the state now are

25 coming to us electronically. We never touch a

1 paper fingerprint card in 80 percent of the

2 cases. That's been a goal of ours for the last

3 five years.

4 Actually when Commissioner Crist was

5 Senator Crist, he was chairman of our

6 appropriations committee, he helped fund that

7 issue so that we could actually get that in

8 place.

9 So that is coming to fruition. We are

10 very pleased with that, and I will be happy to

11 try to answer any questions with respect to the

12 report.



15 SECRETARY HARRIS: I just wanted to say how

16 much we appreciate the partnership with FDLE for

17 the Live Scan opportunities, the instantaneous

18 fingerprinting that will be in the 67 sheriff

19 offices around the state so that whenever we have

20 private security officers or concealed weapons

21 permit licensing issues, that's an instantaneous

22 criminal background check. And we are really

23 grateful to the legislature for funding it as

24 well; appreciate the partnership.

25 MR. McLAUGHLIN: That was an excellent -- I

1 am glad you brought that up because that's two

2 million dollars added to the FDLE budget for the

3 purposes of purchasing cross match equipment and

4 putting it out in the field.

5 That's going to be such a convenience for

6 Florida citizens, without having to wander

7 around and try to get a fingerprint card; they

8 can actually live scan their print, we can do

9 an instantaneous check and that's a great

10 opportunity for all of us, certainly a great

11 benefit to the citizens of our state.

12 GOVERNOR BUSH: Any other discussion on

13 item 2? Is there a motion?



16 GOVERNOR BUSH: Moved and seconded. Without

17 objection, it's approved.

18 Item 3.

19 MR. McLAUGHLIN: Item 3 is the performance

20 contract between Commissioner Moore and you.

21 We request your approval of that. I would

22 like to comment on just one issue with respect

23 to the Capitol Police, with your permission.


25 MR. McLAUGHLIN: On April 11, Governor, you

1 signed the bill that transferred Capitol Police to

2 FDLE. With that, there was a change in the

3 jurisdiction of Capitol Police.

4 In the past, every state building that was

5 in Leon County and in each of the regional

6 service centers across the state, the Capitol

7 Police were responsible for providing security

8 in those buildings.

9 The legislature studied this thing through

10 three sessions, two special sessions and a

11 regular session, and finally concluded that

12 what they really wanted was a high-level police

13 service that was specializing in providing

14 security for the people who work and visit the

15 Capitol Complex.

16 They defined that as the area between

17 Jefferson and Duval, Gaines and Monroe Street,

18 the Capitol buildings here, the Old Capitol,

19 the New Capitol, Holland Building, Pepper

20 Building, and the areas that immediately

21 surround that area.

22 In addition to that, they also define that

23 jurisdiction as being out of the Satellite

24 Office Complex. What that means to us here in

25 Tallahassee is that those other state buildings

1 in Leon County that aren't particularly in that

2 jurisdiction as defined by law will be the

3 responsibility now of DMS to provide a security

4 plan working with local -- our agency heads, a

5 security plan to make sure that those buildings

6 receive the same level of security as they have

7 in the past.

8 We are working with DMS, we are consulting

9 with them. We are trying to assist them in any

10 way we can to move that along.

11 We have had several meetings, I believe

12 each of the Cabinet aides have been met with at

13 least once, the chief Cabinet aides. We also

14 had meetings with individuals, you at your

15 request, to discuss some of these issues in

16 greater detail.

17 We are optimistic that the level of

18 security that you enjoyed over the past will

19 not only continue but we believe we will be

20 able to improve that with the cooperation and

21 assistance of DMS, Department of Management

22 Services.

23 That actually, while the law went into

24 effect April 11, the bill actually goes into

25 effect July 1 and the money transfers then. We

1 expect by the first of July we'll have a plan

2 in place for every agency to understand exactly

3 how that is dealt with in terms of security in

4 their respective areas.


6 Governor. Right now, are -- the Capitol Police,

7 are they certified law enforcement?

8 MR. McLAUGHLIN: Yes, 87 Capitol Police

9 officers are certified.


11 certified in law enforcement?

12 MR. McLAUGHLIN: Right.

13 GOVERNOR BUSH: Not all Capitol Police --

14 MR. McLAUGHLIN: Yes, I am sorry, there are

15 certified police officers; those that are part of

16 the Capitol Police force, 60 of the 87 are

17 certified.


19 number that are certified?

20 MR. McLAUGHLIN: Right.



23 have jurisdiction only within a few block range?

24 They would not have jurisdiction, let's say in my

25 situation of the Collins Building, which is two

1 blocks away; they would not have jurisdiction in

2 the Pepper Building which is just literally a

3 matter of feet from where we are standing right

4 now.

5 GOVERNOR BUSH: They do have the Pepper

6 Building.

7 MR. McLAUGHLIN: Actually the Pepper Building

8 is included.


10 If, in fact, they are certified, could

11 they enter into some interlocal agreement with

12 the City of Tallahassee in order to be able to

13 receive some authority there in order to be

14 able to respond?

15 MR. McLAUGHLIN: General, they are certified.

16 They have the authority of a peace officer for the

17 State of Florida. They are limited by their

18 jurisdiction as to where they can actually provide

19 police service.

20 Yes, in fact, we would enter into a mutual

21 aide agreement. However, what we elected to do

22 is work with the City of Tallahassee police

23 department and Leon County sheriff's office to

24 arrange for, in the instance of an event in one

25 of those buildings, one of those outlying

1 areas, the 911 call would be routed directly to

2 them.

3 Chief McNeill and Sheriff Campbell have

4 agreed that they would be able to handle those

5 calls and we would be, Capitol Police, would be

6 apprised of that at a later date so we could

7 follow up, if any follow up is needed.


9 would be that we have a number of Capitol Police

10 that are here 24 hours, seven days a week that are

11 a matter of feet away from where there could be a

12 problem.

13 We are going to get somebody -- the last

14 time I checked, the sheriff did not do too many

15 patrols within the City of Tallahassee. And

16 also, I am sure there is not a local city

17 police car always within the range whereas

18 there is always a Capitol Police car, always

19 sitting right out front here a matter of

20 literally seconds away from what could be a

21 problem any day of the week, besides to come in

22 later and investigate. But prevention

23 obviously is going to be a real problem here.

24 Are any -- if you were to cross designate

25 some of the 60 that are certified law

1 enforcement also as FDLE agents, could you give

2 them the authority then to have jurisdiction to

3 be able to go into these buildings, if even

4 only one on duty at any given time?

5 MR. McLAUGHLIN: Actually, FDLE, the

6 Commissioner does have the authority to authorize

7 additional police officer certifications for other

8 than special agent positions within FDLE; he could

9 do that.

10 That's an issue that is under discussion

11 in our agency right now, as to how to deal with

12 some of the issues that have been raised in

13 some of these meetings. We have not concluded

14 yet how to proceed with that.

15 But certainly mutual aide with the local

16 police chief or local sheriff is an option. We

17 have some unique authority -- the legislature

18 was quite clear when passing -- in passing this

19 bill to indicate to us the Capitol Police

20 service was uniquely set up to provide the

21 security for the Capitol Complex. And they did

22 not want FDLE to be able to use the Capitol

23 Police for anything other than just that. So

24 we would have to obviously do that in concert

25 with them.

1 GOVERNOR BUSH: This is why we went through

2 about five special sessions and a regular session

3 and didn't get this done until the very end. To

4 reach a consensus between the House and the Senate

5 was quite difficult about this for whatever

6 reason, it was not an easy thing to do.


8 don't disagree with that. I know you tried hard

9 and both you and General Milligan have done a lot

10 I think to enhance security in the Capitol

11 Complex. And I am personally very pleased as to

12 how the Capitol Police have changed from something

13 when I first started here 16 years ago with

14 polyester jackets and cigars to now uniform and

15 guns.

16 It's really an entirely different agency

17 than it was before. And I would say years ago

18 I would probably say I would rather not have

19 them show up at the Collins Building, but I

20 have full confidence in them now. I hope it

21 can be worked out; really, we are concerned

22 about the safety of not only this tall

23 building, but we have a lot of buildings here

24 that deal with people who are in an emotional

25 state, that you might want somebody there at

1 the Department of Corrections; you have

2 Children and Family, you have other targets

3 that really may be really more of a target than

4 right here.

5 GOVERNOR BUSH: Is it possible for

6 Commissioner Moore to come back with, or Scotty

7 Sanderson to come back with a plan of action to

8 deal with how we are going to implement the

9 legislation in dealing with these issues,

10 particularly -- it's that way, I guess. There is

11 four or five people at any given time out there,

12 and if they can't cross the street to deal with

13 potential crime issues, that makes no sense.

14 MR. McLAUGHLIN: We would be happy to do

15 this.

16 TREASURER GALLAGHER: On this issue, if I

17 may. When does this bill become effective?


19 MR. McLAUGHLIN: July 1 is when the actual

20 transfer of the money --

21 TREASURER GALLAGHER: That's the transfer of

22 the money, but you know, the Capitol Police quit

23 doing the other buildings already.

24 MR. McLAUGHLIN: Actually the law became

25 effective when the Governor signed it I believe on

1 April 11.

2 TREASURER GALLAGHER: Well, since April 11th,

3 we had a fire alarm go off in the Larson Building

4 and nobody answers it because it's nobody's

5 responsibility any more. Everybody just sort of

6 has their own thing to do.

7 That's pretty daggone irresponsible of

8 somebody. Now I don't know who I blame it on,

9 but I sure don't have a budget for security but

10 I have got to go spend money that I don't have

11 to secure a building because it needs securing.

12 Here we are all worried about security in

13 this state and somebody needs to realize you

14 left a void. And if you have a fire alarm or

15 intrusion, there is nobody around.

16 MR. McLAUGHLIN: Those are the very --

17 TREASURER GALLAGHER: The local guys aren't

18 doing it, the state is not doing it, Capitol

19 Police aren't doing it. What are we supposed to

20 be doing?

21 MR. McLAUGHLIN: Those are the very issues I

22 think we are trying to work out in concert with

23 DMS now.

24 TREASURER GALLAGHER: We need something done,

25 I mean, we need it done now, not when we get a

1 meeting and get it done. Somebody has got to

2 carry the responsibility and I don't know whether

3 it's FDLE. I can tell you that I am not going to

4 call the local city and expect them to go do it.

5 GENERAL MILLIGAN: I want to really thank

6 FDLE for jumping on this thing, because there was

7 a void and they have jumped on it and DMS has

8 jumped on it.

9 I became aware of it because of the actual

10 fire alarm and nobody came. That's how we

11 found out about it.

12 But they have been working hard to fix it,

13 and I think they are trying to fix it. And I

14 am supportive of what the Governor says. We

15 need to have DMS come back here and tell us,

16 not FDLE.

17 TREASURER GALLAGHER: I am not picking on you

18 specifically. Who needs to do it?

19 GENERAL MILLIGAN: Department of Management

20 Services, they have picked up the responsibility

21 for this and they need to come back to us and tell

22 us how it's been fixed.

23 GOVERNOR BUSH: We'll get it done.

24 TREASURER GALLAGHER: While we are here, this

25 is probably as good a place as any.

1 GOVERNOR BUSH: Is this -- are we finished

2 with the --

3 SECRETARY HARRIS: I have a question on

4 item 3.

5 My question on item 3 is, this is just my

6 concern. When you see the number of missing

7 children cases that FDLE, from 640, now looking

8 at 760, is there a breakdown of these

9 noncustodial parent issues; are these run

10 aways?

11 MR. McLAUGHLIN: We can provide a breakdown

12 to you.

13 SECRETARY HARRIS: Would you do that? I

14 would appreciate that.

15 Is that a high number, low number,

16 national average?

17 MR. McLAUGHLIN: I don't know the answer to

18 that question.

19 GOVERNOR BUSH: On runaways?

20 SECRETARY HARRIS: No, on the number of

21 missing children; I don't know how it breaks down

22 in terms of runaways, noncustodial --

23 GOVERNOR BUSH: I am becoming a semi-expert

24 on runaways that are in the custody of the state.

25 And we actually have about 1 percent of our

1 children that are in custody of the state that are

2 running away, which is about half the national

3 average. But as it relates to the larger missing

4 persons, I don't know.

5 SECRETARY HARRIS: With regard to FDLE, that

6 doesn't include those that are in the custody of

7 the state, does it? Are these separate?

8 MR. McLAUGHLIN: It does include that. If

9 they are entered in our system, they will be

10 there, yes.

11 GOVERNOR BUSH: Which they are now

12 automatically. FDLE gets an immediate call. At

13 least that's the theory.


15 GOVERNOR BUSH: Is there a motion?



18 GOVERNOR BUSH: Moved and seconded. Without

19 objection, it's approved. Commissioner Gallagher.

20 TREASURER GALLAGHER: This is probably a good

21 thing maybe Tim isn't here.

22 Last September, we had a discussion about

23 some raises for Cabinet officers and especially

24 for Tim, and bonus. And we basically agreed to

25 do that; and then we got into our budget

1 problems and everything got held and anybody

2 that was making more than 80,000 got frozen,

3 and so nothing happened for any of our Cabinet

4 agency heads, some of which haven't had a raise

5 since they were hired; because of the events

6 that came down, not because of anything they

7 did.

8 I would like us to bring up at the next

9 Cabinet, let our aides work on it, to look at

10 increases for them in regards to similar to

11 what the state employees have had and maybe a

12 bonus program for them in regards to the way

13 state employees can get under the new personnel

14 actions. So if we could get our aides to work

15 on that for the next meeting, I would like to

16 propose that we do that.

17 GOVERNOR BUSH: Any objections to that? I

18 think that's a great idea and this is the proper

19 time since we are about ready to start the fiscal

20 year.


22 GOVERNOR BUSH: I am sure Commissioner Moore

23 will fully endorse that.

24 TREASURER GALLAGHER: He is the one that got

25 the shortest end of it. He actually sort of got a

1 vote on it and didn't get it.

2 MR. McLAUGHLIN: I will make a report on that

3 immediately.

4 TREASURER GALLAGHER: Also, when you look at

5 what they done in the lab in regards to what you

6 guys have done has been great to speed up the

7 process.

8 GOVERNOR BUSH: I am proud of all the

9 departments that report to the Cabinet. I think

10 we have a great group of leaders.


12 GOVERNOR BUSH: And Tim Moore, the fact he is

13 in Washington, that's a bigger deal than what's

14 been -- than what's been covered.

15 He is on -- September 11, it was a test of

16 leadership for all our people. And

17 Commissioner Moore passed with flying colors.

18 And now it's being recognized nationally.

19 Literally, I have been told by soon-to-be

20 Secretary Ridge, if he gets appointed or

21 whoever it is, that he sends people down to

22 Florida, other states, that are looking about

23 how to structure their homeland security

24 operations.

25 And so not only is it traditional crime

1 fighting elements; the fact we have the largest

2 DNA database and dealt with the backlog and

3 hiring scientists and cooperating with local

4 law enforcement and all that, we now have this

5 new responsibility and Tim has just done an

6 extraordinary job.


8 him, Governor.

9 GOVERNOR BUSH: If I brag too much? Then I

10 will keep my mouth shut. Thank you.

11 MR. McLAUGHLIN: Thank you.

12 GOVERNOR BUSH: So we'll do -- you want to do

13 that in Miami?

14 TREASURER GALLAGHER: We can do it in Miami.

15 That's the last real meeting before the new fiscal

16 year starts, and I would like to get these started

17 the new fiscal year. Among our Cabinet aides they

18 can come up with a recommendation that everybody

19 might find comfortable.

20 GOVERNOR BUSH: You bet.






1 GOVERNOR BUSH: Department of Veterans

2 Affairs.

3 TREASURER GALLAGHER: Motion on the minutes.


5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, it's approved.

7 Item 2.

8 MS. CARROLL: Item 2, I would like to

9 recommend acceptance our of our third quarterly

10 report for fiscal year 2001-2002.



13 GOVERNOR BUSH: Motion approved.

14 SECRETARY HARRIS: I have a question.

15 On the fiscal report, when I am looking at

16 the breakdowns, do you have a better breakdown

17 in terms of the -- in terms of the spending in

18 the trust funds, which are actually state

19 employees and which aren't, in terms of

20 salaries, those kinds of things?

21 MS. CARROLL: With our trust fund, the

22 dollars are paying our state nursing home

23 employees, and many of them are under the contract

24 for CNAs and some of them are state employees. I

25 don't have that on this report, but I can get

1 that.

2 GOVERNOR BUSH: Can you get a breakdown which

3 are actually state employees and which are

4 privatized?

5 I think that's relevant. And also, just

6 the activities in personnel that are being paid

7 out of that trust fund that could possibly be

8 paid from other sources?

9 MS. CARROLL: Our trust funds are

10 self-generating with the money that we receive by

11 the residents that are residing in the home. Plus

12 the dollars that comes in from our license tags,

13 our veterans license tags. So it's no money

14 that's coming in from the state that goes into our

15 trust fund.

16 And the employees only that are working at

17 our state veterans' nursing homes are paid out

18 of that trust fund. So the trust fund dollars

19 that are going in paid for the staff and their

20 salaries and maintenance of the homes.

21 SECRETARY HARRIS: If we can get a little

22 more thorough breakdown. I am concerned just

23 about the accountability on how those trust funds

24 are being used; that would be great.

25 MS. CARROLL: Sure.

1 GENERAL MILLIGAN: A quick question or update

2 on the World War II Memorial?

3 MS. CARROLL: The World War II Memorial, we

4 raised $175,000 and received $150,000 of in-kind

5 donations.

6 We are continuing to raise money. We need

7 to raise an additional $200,000 just to make

8 sure we pay all of our debts and have our

9 monument in the state.

10 And I am constantly contacting

11 corporations as well as other organizations to

12 assist us with our fund raising efforts.

13 The VFWs in the state have committed to

14 raising $100,000, of which since January they

15 raised $30,000. And they are continuing to

16 send checks in weekly.

17 So continuously we are beating the

18 pavement, raising the dollars and making sure

19 that we get information out. We have a public

20 service announcement radio ad that is

21 throughout the state as well as the American

22 Legion will be printing a poster so we can

23 disseminate the information more so to

24 additional people to get interest to get the

25 dollars in.

1 GENERAL MILLIGAN: Where are we in

2 relationship to the goal then or the requirement

3 really for the --

4 MS. CARROLL: The requirement is 2005 for us

5 to have the dollars and get a plan in place.

6 We have opened up the museum. December 7

7 was our opening ceremony for the museum. The

8 State Department is in control of our

9 travelling exhibit that will go on the road,

10 proposed plan, next month; with three museum

11 sites that will have some of the travelling

12 exhibit items.

13 And then our Heritage Trail magazine --

14 well, the Department of State again, Heritage

15 Trail, most of the research and information has

16 been done by -- I forgot the doctor's name, but

17 we need about 20,000, 20 or $30,000 to print

18 and publish that as well as $75,000 for our

19 monument with shipment and placement here.

20 GENERAL MILLIGAN: Weren't there some funds

21 to be raised to sustain the Memorial?

22 MS. CARROLL: It wouldn't take much to do so.

23 What we have projected initially was a higher

24 cost, because it wasn't fully planned as to what

25 would be. But we have had an endowment of over

1 $600,000, and we would not need $600,000 for the

2 endowment.

3 GENERAL MILLIGAN: I think maybe I would like

4 to know a little bit better where we are, what the

5 long-term implications are and where we are in

6 terms of -- so rather than wait, why don't we wait

7 until the next meeting or perhaps even the one in

8 August, if it's not appropriate or necessary to go

9 down to Miami with it. Miami might not be a bad

10 place to start with it if we need money.

11 GOVERNOR BUSH: Exactly. Jennifer, you may

12 want to comment on this, but the plan has been

13 scaled back from the time 600,000-dollar

14 endowment.

15 GENERAL MILLIGAN: I know that.

16 GOVERNOR BUSH: But perhaps you could bring

17 the story boards and talk about the design of the

18 monument. And the Department of State has done an

19 extraordinary job with the museum. I don't know

20 if you all have seen it. The exhibit is really

21 nice.

22 SECRETARY HARRIS: Thank you. Thank you very

23 much. We are also working with you on the website

24 development and things.

25 I am sorry, I always ask you this, I

1 apologize, but we are just trying to -- we are

2 so happy to partner with Veterans' Affairs on

3 anything we can do. And the Division of

4 Historical Resources is really passionate about

5 this area of history.

6 And so it was unprecedented, I know, for

7 us to front the money, but we were really happy

8 to do it. And we always find out the check is

9 in the mail every time. But I just want to go

10 back, how much have we raised?

11 MS. CARROLL: We raised $175,000.

12 SECRETARY HARRIS: The exhibit was 116.

13 MS. CARROLL: Was 130.

14 SECRETARY HARRIS: Well, we scaled back on

15 $6,800 anyway. The balance due is still 39,000.

16 MS. CARROLL: 39-6.

17 SECRETARY HARRIS: Yes. Thank you. We had

18 additional expenses, too.

19 MS. CARROLL: As a matter of fact, we are

20 going to cut you another check for $10,000 here

21 this week. We sent a check two weeks ago for

22 $20,000. As the dollars come in, we'll pay our

23 debt.

24 GENERAL MILLIGAN: I would just like to know

25 in the long-term implications here to make sure we

1 got the program in place to sustain whatever it is

2 we are going to have, including a monument of some

3 sort. And I think Miami might be a good place to

4 talk about it.

5 GOVERNOR BUSH: Okay. Road trip.

6 MS. CARROLL: Governor, I have two other

7 things I wanted to mention. That we were funded

8 for the initial staffing of our two new nursing

9 homes and we'll have a groundbreaking for our

10 Charlotte County nursing home on the 17th of June

11 at 10 o'clock. And hopefully many of you will be

12 able to attend.

13 GOVERNOR BUSH: I will. I hope you all can

14 make it.

15 MS. CARROLL: Thank you, Governor.

16 SECRETARY HARRIS: And Governor, I won't be

17 here at the next meeting; I planned the fourth

18 Tuesday to be away, and so it's the fifth Tuesday,

19 I got confused on the calendar. But if I have any

20 other questions on the breakout on some of these

21 expenditures or specifically the funds, I will

22 forward them to you. Thank you.

23 GENERAL MILLIGAN: We can certainly wait

24 until August if it's more appropriate, wait until

25 the Secretary is here.

1 GOVERNOR BUSH: Okay. We'll wait until

2 August.

3 MS. CARROLL: Thank you, Governor.

4 GOVERNOR BUSH: Thank you.






















1 GOVERNOR BUSH: Florida Land and Water

2 Adjudicatory Commission.

3 There she is. It's a big podium; I didn't see you the

4 you there, T.

5 TREASURER GALLAGHER: Motion on the minutes.


7 GOVERNOR BUSH: Moved and seconded. Without

8 objection, it's approved.

9 MS. TINKER: Item 2, recommend approval of

10 the proposed final rule establishing the Double

11 Branch Community Development District in Clay

12 County.



15 GOVERNOR BUSH: Moved and seconded. Without

16 objection, it's approved.

17 MS. TINKER: Thank you.

18 GOVERNOR BUSH: Thank you, Teresa.








1 GOVERNOR BUSH: Department of Education.

2 MR. PIERSON: Item 1, minutes from April 23

3 and May 7 Cabinet meetings.



6 GOVERNOR BUSH: Moved and seconded. Without

7 objection, it's approved.

8 MR. PIERSON: Item 2 is the presentation to

9 the Manatee County school board for the seal of

10 Best Financial Management. And I think

11 Commissioner Crist has some remarks.

12 COMMISSIONER CRIST: Thank you very much.

13 Governor and Members of the Cabinet, in

14 1997 the legislature directed the Office of

15 Program Policy Analysis and Government

16 Accountability as well as the Auditor General

17 to develop a system for reviewing the financial

18 management practices of Florida school

19 districts. This resulted in the development of

20 the Best Financial Management Practices which

21 were adopted in 1997 and expanded in 2000.

22 In 2001, with the leadership of then

23 Senator Horne, the legislature passed the

24 Sharpening the Pencil Act which made

25 substantial revisions to review process for

1 these practices.

2 Best Financial Management Practice reviews

3 are designed to encourage school districts to

4 use performance and cost efficiency measures to

5 evaluate programs, use appropriate benchmarks

6 based on comparable school districts,

7 governmental agencies and industry standards to

8 assess their operations and performance,

9 identify potential cost savings through

10 privatization and alternative service delivery

11 and link financial planning and budgeting to

12 district priorities, including student

13 performance.

14 Since '97, Best Financial Management

15 Practice reviews have been completed in

16 Brevard, Lake, Manatee, Martin, Miami-Dade, and

17 Polk counties. Of these, only Manatee has

18 elected to pursue the Seal of Best Financial

19 Management designation.

20 As of March 2002, Manatee County school

21 district had implemented 68 of the 69 action

22 plans and was in substantial compliance with

23 the Best Practices.

24 They have also made significant

25 improvements, Governor, in management,

1 increased efficiency and effectiveness, and

2 reduced operating costs.

3 The district estimates that they have

4 saved $14.7 million by implementing these

5 action plans.

6 The OPAGA Progress Report dated May 2002

7 recommends that the State Board of Education,

8 us, award the Seal of Best Financial Management

9 to the Manatee County school district.

10 Governor, Members of the Cabinet, it's my

11 pleasure to recognize the Manatee County School

12 District for receiving the seal of Best

13 Financial Management.

14 And with us in the audience today are --

15 and please come forward when I call your name,

16 Dr. Dan Noland, superintendent of Manatee

17 County Schools; Bill Horton, assistant

18 superintendent of school support; Harry Kinan,

19 chairman of the Manatee County school board.

20 Mr. Chairman, Barbara Harvey, vice

21 chairman of the Manatee County School Board;

22 school board members: Frank Bruner, Walter

23 Miller and Larry Simmons; Jim Buckley, Manatee

24 County School district comptroller, Dr. Brenda

25 Bailey, director of planning, accountability

1 and evaluation; and Maryanne Lorensen, director

2 of community relations, as well as David

3 Summers from OPAGA. I am very please to

4 present this seal to Dr. Dan Nolan,

5 superintendent of Manatee County, and commend

6 the district on their diligence in implementing

7 these practices. Their pursuit of excellence

8 and their achievement of receiving this

9 designation, Governor, is one that we should be

10 most proud of. I move the resolution.


12 GOVERNOR BUSH: Moved and seconded. Without

13 objection, it's approved congratulations.

14 DR. NOLAN: Thank you, Governor, Members of

15 the Cabinet. And I accept this with pleasure on

16 behalf of all those employees who decided three

17 and a half years ago, if there was a seal, we

18 would get it. We worked very hard for this.

19 GOVERNOR BUSH: Can we use this as a moment

20 to just kind of learn about what is the

21 distinguishing feature now in Manatee County

22 school system that may not have existed before

23 this process started?

24 DR. NOLAN: I think we have benchmarks within

25 each division to measure our success, and we also

1 have financially, we've done strategic planning

2 and tied all of that in our budgeting process.

3 And that's a much higher degree of sophistication

4 than there has ever been before.

5 GOVERNOR BUSH: Can you measure the cost per

6 square foot to operate a school building?

7 DR. NOLAN: Yes, sir, we can.

8 GOVERNOR BUSH: What is it?

9 DR. NOLAN: I will ask Bill Horton to do

10 that. His division does that.

11 GOVERNOR BUSH: It's not a trick question.

12 MR. HORTON: Thank you, Dr. Nolan. I can

13 actually tell you how much it might cost to build

14 the school, but the actual operation I am not

15 familiar with. Christine Station maintains --

16 GOVERNOR BUSH: I will give you an example.

17 The reason I know this is that the legislature

18 created a commission, a group in Dade County to

19 supervise the operations of the schools, not

20 getting involved in classroom instruction and all

21 that, but focussing on what it costs to maintain a

22 school.

23 And this group came up with an estimate of

24 about $8 per foot. And my guess is, I have a

25 little bit of experience in this, that it's

1 probably -- it could be half that in Manatee

2 County.

3 I am curious, if you have that number, I

4 would love to have it because in the case of

5 Miami-Dade, the number of square feet you can

6 imagine is in the 30-plus million square foot

7 range. So if you save two bucks, that's

8 $60 million of operating expense that could go

9 to teacher pay or reading instructors, all

10 sorts of other things.

11 I bring this up because you have gone

12 through a rigorous process. If there are

13 specific Best Practices that you have

14 identified -- believe it or not, not every

15 OPAGA report is read by the citizens of the

16 state.

17 Somehow we need to get Best Practices out

18 amongst a lot of people. That's why we do

19 this.

20 Commissioner Crist deserves high praise

21 for making this a high priority, and now we

22 need to get -- see the benefits -- so the good

23 things that you done can be stolen by other

24 places.

25 MR. KINAN: With your pleasure, Mr. Governor,

1 as chairman of the board, I would just like to say

2 that when this first came out, Manatee County

3 welcomed the opportunity for an OPAGA report. I

4 think that's a significant thing.

5 But we wanted to be able to go to our

6 community and give them the confidence that we

7 indeed were using the best practices and most

8 efficient. So we think that's very important

9 for our community to understand that; as well

10 as working that we have embraced an A-Plus plan

11 and all educational reforms that have been

12 enacted, so we think that Manatee County, both

13 financially and educationally, are doing the

14 things in terms of education reform that have

15 been prescribed and wished by the Governor, the

16 Secretary and other people. Thank you.

17 SECRETARY HARRIS: I just had a question.

18 Notwithstanding the fact that you are the first

19 and only, and the apparently you can commend

20 yourselves back to the community, what kind of

21 advisory -- what sort of benefits have you enjoyed

22 or do you think you will enjoy from this that

23 would encourage other school districts to do the

24 same to follow your footsteps? What could we use

25 from your experience to encourage others to do

1 this?

2 MS. LORENSEN: I think probably the most

3 important thing and that we have achieved is that

4 all of our division heads and our department heads

5 have had to come together and work cooperatively.

6 There is a tendency within school

7 districts for the various divisions to drift

8 off like different ships in the night in

9 different directions, and our instructional

10 division has been just as deeply involved in

11 this process as every other one. So we have

12 all had to work together. And it's been a very

13 important common goal for all of us.

14 SECRETARY HARRIS: From your experience, that

15 should be enough in itself, but is there any

16 type -- any other type of encouragement you think

17 we could offer other districts that would

18 encourage them to do the same process that you

19 done?

20 MR. BUCKLEY: Yes, ma'am, I can answer that

21 question very easily for you.

22 When you can demonstrate credibility in

23 front of your district, you are able to very

24 shortly thereafter, as we are pleased to

25 present or announce, is that it helped us get

1 62/38 passage of a half penny sales tax for 15

2 years.

3 SECRETARY HARRIS: That's what I wanted to

4 hear. Thank you.

5 GOVERNOR BUSH: That was a leading question.

6 MR. BUCKLEY: When the people know that it's

7 going to be spent right and accountable, people

8 are willing to do what education asks for.

9 GOVERNOR BUSH: If you all can give us -- my

10 email address is; and if you have that

11 dollar per foot operating cost, I would love to

12 see it.

13 DR. NOLAN: We'll make sure you have that.

14 GOVERNOR BUSH: Do we have a picture? We

15 have a resolution.

16 (Picture taking.)

17 MR. PIERSON: Item 3 is an amended rule

18 6A-4.0021, Florida Teacher Certification

19 Examination. Deputy Commissioner Betty Cox is

20 here, if you have questions.

21 GOVERNOR BUSH: Any questions on item 3?

22 TREASURER GALLAGHER: I got a question.

23 GOVERNOR BUSH: Betty, get on up here.

24 TREASURER GALLAGHER: Can I ask a question on

25 Item 2, not 3.

1 Do you guys think you can come up with

2 something a little more exciting for this, for

3 these people to put on the letterhead? It's

4 says what it is but --

5 MR. PIERSON: It looks better in gold.

6 GOVERNOR BUSH: They always do.

7 TREASURER GALLAGHER: At least if it comes in

8 gold, that's a major improvement compared to what

9 I see here.

10 GOVERNOR BUSH: Thank you. Any discussion on

11 item 3?



14 GOVERNOR BUSH: Moved and seconded. Without

15 objection, it's approved.

16 Item 4.

17 MR. PIERSON: Item 4, a rule repeal, Chapter

18 6A-15, all rules. These rules are related to HRS

19 programs for the handicapped.

20 The programs have transferred from the

21 department to the Department of Health and we

22 no longer have authority for these rules. They

23 did not need the rules.



1 GOVERNOR BUSH: Moved and seconded. Without

2 objection, it's approved.

3 MR. PIERSON: Items 5 through 18 are

4 Governor's appointments to Community College

5 Boards of Trustees. We would like to move them as

6 a block.



9 GOVERNOR BUSH: Moved and seconded. Without

10 objection, it's approved.

11 MR. PIERSON: Item 19 is an administrative

12 item, as amended, discussion and adoption of the

13 process for the State Board of Education to Act it

14 Relates to School Grades. And Secretary Horne is

15 here.

16 GOVERNOR BUSH: Secretary Horne.

17 SECRETARY HORNE: Governor, Cabinet, it's

18 indeed a pleasure to be here in front of you.

19 Today is an exciting today. Today we released

20 school grades, and I think it's an extremely

21 positive message today, because we have seen a lot

22 of schools improve. And we knew going in as we

23 raised the bar that we would have some schools

24 that would not meet it or cross that bar.

25 One thing is clear to me and to, I think

1 there is really no debate, is that the state

2 adopted high standards as a regular testing

3 mechanism and strong accountability are the

4 only states that are showing academic

5 achievement. And we all support rising student

6 achievement. We all support soaring school

7 improvement. And part of that requires to have

8 a very strong accountability system. And we

9 have that in Florida.

10 Quite honestly, I think Florida standards

11 are the highest in the nation. I believe we

12 have the best, most vibrant testing structure

13 in the country.

14 And yes, we have strong accountability and

15 with that comes some consequences.

16 One of the things that I learned, Governor

17 and Cabinet, is that we do a lot of things

18 right. But the real question: Are we doing

19 the right things?

20 And that question is a question I posed to

21 the Department of Education on many occasions.

22 And the response is that we must make some

23 changes.

24 And as part of making changes requires a

25 new and improved way of reaching the schools

1 who miss the mark, whose students do not

2 perform at the level we set as our

3 expectations.

4 And today I want to present to you a time

5 line, a plan, that we call Assistance Plus that

6 will be a much improved version of our school

7 improvement efforts.

8 We can even argue the school improvement

9 efforts of the last few years have been very

10 successful. We have seen schools, 78 failing

11 schools move from four to zero; and now we have

12 done like we have done historically throughout

13 our rich history in the state: We raised the

14 bar again, and with that comes more schools

15 that missed the mark.

16 And once again, we've got to put forth

17 that really hard effort, that immediate

18 attention, the sense of urgency to go in and

19 help rescue the schools that don't perform at

20 the level that we know they are capable of.

21 So we are now today unveiling what we call

22 Assistance Plus, a new and improved version,

23 that doesn't just take the resources of the

24 Department of Education and deploy them to help

25 schools, but assesses the entire talent in this

1 state, inventories that pull and connects that

2 talent with the schools that need the help.

3 And so today we are presenting that plan.

4 That plan has got many phases on it. It

5 includes today we begin that process of

6 connecting with the principals of these

7 schools, these schools that are low performing.

8 It begins tomorrow, beginning to provide a deep

9 analysis of the numbers, getting inside the

10 numbers, beginning to recognize the strengths

11 and the weaknesses of these schools, the

12 deficiencies that they have.

13 Beginning next week we will begin to make

14 personal site visits. The department will send

15 our leaders. Commissioner Crist and I have

16 both personally pledged we are going to visit

17 the schools that have twice made a failing

18 grade in the last four years.

19 We are going to make a personal visit. We

20 are going to meet with those principals and

21 those superintendents. We are personally going

22 to invest our time and attention to their needs

23 at that school.

24 And next month, beginning on July 11 and

25 12, it's going to be mandatory, by they way.

1 We are going to have a summit. We are going to

2 bring the best talent we have -- experts in

3 reading, experts in math, experts in writing,

4 those that are involved in intervention

5 programs and school improvement, the best this

6 country has, and particularly the best talent

7 in this state. We are going to provide that

8 for all of the failing and low-performing

9 schools. We are going to assure that they have

10 a buffet line of opportunities, where they can

11 pick and choose those pieces.

12 And then the succeeding month, we are

13 going to begin to customize assistance teams

14 for those schools so that we can send in teams

15 of four or five experts in their fields that

16 can work with those schools.

17 We are also going to provide some of the

18 Reading First money to acquire reading coaches

19 for all failing schools to make sure they have

20 the kinds of talents that they need.

21 So we have a much vibrant, more improved,

22 much more urgent, much more special operations

23 like general kind of approach to it. We are

24 going to move in and we are going to help. We

25 are going to provide -- I am going to unleash

1 everything I have in the K-20 system. We are

2 going to bring universities, the colleges; we

3 are going to bring the National Board of

4 Teachers who are reading specialists in one

5 district, and we are going to mentor and

6 partner them with the schools that need that

7 help.

8 We are going to connect everything that we

9 have. We are going to make it work. We will

10 succeed at this mission. We will not fail,

11 because this is all about our students learning

12 and our schools improving.

13 We can't fail at that. That is the most

14 fundamental priority that the department has.

15 Everything else is secondary. And so that is

16 going to be our single focus for the next

17 month.

18 Here is the time line, which is what

19 really is of most interest to you at the

20 moment. And since you are not having a July

21 Cabinet meeting, the ultimate decision would

22 fall in August, so this is the time line that I

23 think is very important for you to focus on.

24 I believe you have the time line up there.

25 If not, I will kind of walk through it very

1 quickly.

2 Today, as you know, we released the

3 grades. Today we begin the process. We have

4 statutorily 30 days for the districts to go

5 through the process of creating school

6 improvement plans, those that have gotten a

7 grade of F, and includes a district plan for

8 improvement as well.

9 They have to have that back to the

10 Commissioner within 30 days. So by July 12th

11 they must submit those plans to the

12 Commissioner.

13 On, as I mentioned July -- but we are not

14 waiting until then. Like I say, we started the

15 process today by contacting principals and

16 superintendents, and we start the process of

17 doing -- going inside the numbers beginning

18 tomorrow, and I am going to complete that

19 process within one week.

20 The following two weeks, we will begin the

21 process of site visits led by the Office of

22 School Improvement. With my partner here, the

23 Commissioner, we'll make those visits, we'll

24 conclude those visits before July 11.

25 July 11 and 12 we'll hold the summit, as I

1 mentioned. I think these going to be the most

2 incredible opportunity we've ever seen in our

3 state. We are going to bring the best that we

4 can.

5 After July 11 and 12, we are going to

6 begin to customize assistance teams. We are

7 not going to take a chance. And if your

8 problems are in reading, you are not going to

9 simply be availed to pick just math experts.

10 We are going to make sure that you get the

11 right kind of medicine for the right kind of

12 problem. And so we are going to make sure

13 that's done and that those assistance teams are

14 in place.

15 And from the period of time of July 11 and

16 12 to your next Cabinet meeting, which is

17 August 13th, at that Cabinet meeting you will

18 actually see the school improvement plans.

19 Now that's not the end of the road either.

20 This is going to be an on-going, continuous

21 effort. And you will get, beginning after that

22 point in time of August 13 and going forward,

23 you will get monthly progress reports on those

24 double F schools, monthly progress reports on

25 double F schools.

1 GOVERNOR BUSH: Can we -- on August 13, will

2 the schools themselves be here or will this be a

3 report by the department?

4 SECRETARY HORNE: We going either way,

5 Governor, but since there are 68 of them, I would

6 suggest that we have -- unless you want to have a

7 Marathon Cabinet meeting -- that we would present

8 the plans.

9 What we may have do is have the double F

10 schools represented here because of the

11 consequences of the double F. Not that I am

12 trying to put any more priority on double F

13 than F, but our first priority is going to be

14 double F. We are going to make sure we get the

15 effort in there.

16 With 68 failing schools, I think that, I

17 would suggest that we not have representatives

18 of all 68 schools here, but have the double

19 F's, maybe have the superintendents on call and

20 ready, depending upon the circumstances.

21 But the succeeding months you will get

22 progress reports on all double F schools. We

23 are also going to have quarterly reports on all

24 F schools, so you will get up-to-date

25 information.

1 We are going to have biweekly phone calls

2 with all of these schools from the Office of

3 School Improvement. We will be there on site.

4 Like I said, we are going to be placing reading

5 specialists in all the schools and this will be

6 an on-going, continuous effort, and we will

7 make sure that there is strong monitoring and

8 compliance mechanisms in place.

9 GOVERNOR BUSH: I know we had conversations

10 about this. I am -- I don't know if there was a

11 specific course of action established yet.

12 But reading is clearly the number 1 factor

13 in the schools that are underperforming, since

14 most schools have shown dramatic improvements

15 in writing and significant improvements in

16 math.

17 Are we going to do any -- require or

18 encourage politely or somewhere inbetween

19 assessments of where kids start the school

20 year; and then as part of the monthly report

21 have some monitoring of progress so that we can

22 see if learning is being accelerated?

23 SECRETARY HORNE: As part of the summit, we

24 are going to showcase some diagnostic assessment

25 tools that will give the principals, the leaders

1 of their schools, the superintendents the tools;

2 we'll make tools available where they can access

3 where students are.

4 GOVERNOR BUSH: You will pay for that?


6 SECRETARY HORNE: We are going to pay for

7 that. We are going to provide that. We are going

8 to make sure -- there will be no more excuses.

9 There is no more excuses. We do a lot of very

10 good things. The question is are we doing the

11 right things? And now we know what the right

12 things are.

13 You know, there has been a lot of debate

14 about reading and probably about 30 years of

15 research, but there is no more debate about the

16 ways to teach reading. We know the right way

17 to teach reading, and now it's a matter of

18 execution, it's a matter of implementing the

19 right scientifically-based programs.

20 We have the opportunity to do that; they

21 exist; they have been validated, and now we

22 need to move forward, bring all the talent and

23 bring all the help and push forward and make

24 these students rise to the occasion.

25 I know they are capable of it. We seen

1 schools with similar demographic backgrounds

2 succeeding at very high levels. Schools in

3 some cases are barely across town or in the

4 next neighborhood that sort of get a grade of

5 A, and yet we often say that sometimes these

6 conditions are systemic and we can't change

7 them.

8 We can, and we will, and we got the tools,

9 we got the talent, and it's a matter of now

10 logistically connecting the pieces and making

11 it happen. And I think we have got the right

12 kind of plan, Governor, and we are ready to go,

13 and we are starting today.

14 GOVERNOR BUSH: Is the State Board of

15 Education comfortable with this course of

16 objection to comply with the law in terms of the

17 information?


19 GOVERNOR BUSH: Okay. Any questions or


21 COMMISSIONER CRIST: I have a comment.

22 I want to thank Secretary Horne for his

23 presentation, and for a very well, thought-out

24 plan. The Assistance Plus is a wonderful

25 concept; it's a great idea; it's the right

1 thing to do. And as a result, I would move it

2 for the Cabinet's approval.

3 GOVERNOR BUSH: Does it require -- I guess

4 you could, just to put us on record. There is a

5 motion.


7 GOVERNOR BUSH: Moved and seconded. Anymore

8 discussion?

9 Without objection the item is approved.

10 Thank you.

11 COMMISSIONER CRIST: We have just a little

12 logistic item. I think E.T. is here. We would

13 like to do a photograph of the Manatee --

14 GOVERNOR BUSH: Let's bring the manatee

15 people back.

16 (picture taking)










1 GOVERNOR BUSH: Board of Trustees. Is there

2 a motion on the floor?

3 MR. STRUHS: We are recommending approval

4 item 1. It's an easement in the Blackwater River

5 State Forest. It's a nonexclusive easement.



8 GOVERNOR BUSH: Moved and seconded. Without

9 objection, it's approved.

10 MR. STRUHS: Item 2, recommending approval.

11 This is a project in the Brevard Coastal Scrub

12 Ecosystem project.

13 TREASURER GALLAGHER: Motion on item 2.


15 GOVERNOR BUSH: Moved and seconded. Without

16 objection, it's approved.

17 MR. STRUHS: The next two items are in the

18 category of greenways and trails.

19 Item 3, recommending approval with the

20 consideration of $150,000. This will be a good

21 example of where we are leveraging the state's

22 dollars with the 50/50 cost share with the

23 local government. The title will be held by

24 the state through the Board of Trustees.

25 This project does provide not just a

1 greenway, but it also provides a canoe access

2 point on Turkey Creek which makes a real nice

3 3-mile run on that waterway.

4 TREASURER GALLAGHER: Motion on item 3.


6 GOVERNOR BUSH: Moved and seconded. Without

7 objection, it's approved.

8 MR. STRUHS: Item 4, recommending approval of

9 this item.

10 This is a very, very popular trail,

11 Governor, Members of the Cabinet. We are

12 actually measuring use on this trail at 20,000

13 per month and growing. So this is going to be

14 a nice addition to that greenway project in

15 Tampa.

16 And it's consistent, Governor, with your

17 directions to us a few years ago, which was to

18 make sure we are spending these resources in

19 neighborhoods where people actually live and

20 can take advantage of them.



23 GOVERNOR BUSH: Moved and seconded. Without

24 objection, it's approved.

25 MR. STRUHS: Five is a proposal to expand a

1 commercial marina.

2 It's a public marina, provides

3 first-come/first-serve access. It will include

4 108 dry storage facilities and 16 wet slips.

5 We are pretty enthusiastic about this and

6 are recommending approval because among other

7 things, it will repair a poorly designed,

8 poorly functioning seawall with a more

9 environmentally sensitive riprap.

10 For the first time it will provide pump

11 off facilities for the boats. We will require

12 them to build again for the first time a

13 contingency fuel containment plan, and perhaps

14 most important, installing stormwater

15 collection and maintenance, which is not

16 currently on site.

17 Both the Florida Fish and Wildlife

18 Conservation Commission and the U.S. Fish and

19 Wildlife Service agree that this poses no

20 significant risk to manatees.

21 And as you probably remember, Pasco County

22 is not one of the counties that is required to

23 have a Manatee Protection Plan. Nonetheless,

24 as a part of this agreement, the slip lessees

25 will agree upfront to abide by slow speeds as

1 they enter and exit this marina facility.

2 Recommending approval.



5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item passes.

7 MR. STRUHS: Item 6, frankly, was just too

8 complicated, so we brought in the experts.

9 Delighted Deborah Getzoff is here, who is our

10 district director out of Tampa. If you could bear

11 with her for a few minutes, she will give you the

12 chronology as to how we got to where we are on

13 this item.

14 GOVERNOR BUSH: Deborah.

15 MS. GETZOFF: Good morning, Governor, Members

16 of the Cabinet, I like to ask for your indulgence

17 for a few minutes to go through a chronology on

18 this so that you understand why there might be

19 special circumstances attached to this request.

20 This is a request on behalf of Mr. Kendall

21 R. Jones for consideration to reinstate a camp

22 site lease for a term of 20 years, and to

23 rebuild a stilt house which was partially

24 destroyed by the no-name storm of 1993.

25 There were 13 camp site stilt houses at

1 this location when the storm hit in 1993.

2 These camp sites were built in the early part

3 of the 20th century and, along with the other

4 stilt house owners, Mr. Jones was granted a

5 camp site lease by the Board of Trustees in

6 1971.

7 This was renewed in 1976. And based on

8 that renewal in '76, was scheduled to terminate

9 in 1999 with no right of renewal.

10 When the storm came in in 1993, six of the

11 13 camp site lessees had only piling remaining,

12 super structures were destroyed. And at that

13 time there was a policy in place, which is

14 reflected in those leases, that states that if

15 more than 50 percent of the value of the

16 structure was destroyed, the lessee would not

17 be allowed to rebuild.

18 Since it appeared to the staff at the time

19 in 1994 that greater than 50 percent of the

20 value of those six camp sites had been

21 destroyed, those six stilt house owners were

22 ordered to remove their piling and were

23 instructed that their leases were being

24 cancelled.

25 Of the six who were notified in 1994 to

1 remove their piling at their own expense, only

2 Mr. Jones came forward voluntarily and removed

3 his piling in compliance with the order at that

4 time.

5 In 1997, the legislature amended section

6 253.03 of the Florida Statutes providing that

7 owners of stilt houses had the right to apply

8 for a lease extension if the structure was

9 listed with the state or federal Historic Site

10 Registry and if the owner had a lease or

11 grandfather status.

12 Based upon that 1997 change in the

13 statute, the Division of State Lands notified

14 each of the six camp site lessees who had had

15 their structures partially destroyed that they

16 had an opportunity to come forward and apply

17 for renewal and reinstatement of their leases.

18 All six were listed with the state's Inventory

19 for Historic Sites.

20 Based upon that notification, four of the

21 six came forward and requested reinstatement.

22 A second notice was sent out in 1998 to

23 again all six of the camp site lessees

24 informing them of the fact that this matter

25 would go before the Governor and Cabinet and

1 that they had an opportunity for point of entry

2 to request a hearing if they disagreed with the

3 action.

4 The recommended action at that time was

5 that two of the four making the request be

6 allowed to rebuild based upon the fact that

7 those two camp site lessees had submitted

8 certified appraisals which were accepted by the

9 state showing that greater than 50 percent of

10 the value of their structure remained after the

11 no-name storm in 1993.

12 The value of the structures appear to be

13 greatly in the piling as opposed to the super

14 structure. The appraisals have demonstrated

15 and the state has accepted that up to

16 73 percent of the value of the structure is

17 actually in the piling placement itself and not

18 in the house that sits on top of the piling.

19 GOVERNOR BUSH: Wouldn't by definition all

20 the stilt houses comply?

21 MS. GETZOFF: It would depend -- no,

22 Governor, actually not, because at that time four

23 made the request and two had submitted appraisals

24 based upon the piling that remained, but they

25 didn't have a sufficient amount of piling to meet

1 the 50 percent test. So it did require a

2 certified appraisal.

3 GOVERNOR BUSH: The storm actually destroyed

4 the pilings as well?

5 MS. GETZOFF: Yes, it did it.

6 So it did require that a certified

7 appraiser actually examine the amount of piling

8 left in each individual circumstance.

9 At the September 9, 1998, Board of

10 Trustees meeting the Board approved the two

11 leases for renewal and rebuilding that were

12 recommended by the staff and required that

13 these leases terminate in a period of 20 years,

14 and that no right of renewal would attach after

15 that 20-year time frame.

16 Subsequently, in 1999, in response to the

17 Cabinet's action in 1998, the legislature again

18 amended section 253.03 (7)(c) to give stilt

19 house owners the right to continue a camp site

20 lease if the house is kept in good repair

21 consistent with its conditions for listing and

22 if no greater than 50 percent of the

23 structure's value is impacted or damaged in the

24 future, and if the camp site lessee does not

25 increase the square footage of the structure

1 upon any rebuilding.

2 Subsequent to that 1999 law change, the

3 two lessees who were approved in '98 were given

4 leases from the state consistent with the

5 Board's action in '98 and with the statutory

6 changes in '99.

7 Subsequent to that time, in 2001,

8 Mr. Kendall Jones, who is the applicant today,

9 came forward and asserted that he had never

10 received the two notices sent by the staff to

11 the six camp site lessees in 1998 advising of

12 the opportunity to come forward for

13 reinstatement and further advising of the

14 Cabinet meeting date and a point of entry.

15 We researched the file which was found in

16 Tallahassee and discovered that of the six

17 notices sent out, Mr. Jones was the only lessee

18 whose notices were returned as undeliverable

19 because the wrong address had been placed on

20 the envelopes. It was not the same address

21 that was contained in his lease.

22 So indeed we verified that Mr. Jones did

23 not receive those notices in 1998.

24 Mr. Jones has provided our staff with an

25 appraisal which was performed by the same

1 appraiser who did the two appraisals accepted

2 by the board in 1998, certifying that

3 subsequent to the no-name storm in 1993,

4 greater than 50 percent of the value of his

5 structure remained at that time based upon the

6 piling that were there, which he later removed.

7 The staff believes that but for Mr. Jones'

8 voluntary compliance with the order of 1994

9 requiring removal of his piling, and but for

10 the misaddressing of the two envelopes for the

11 notices in 1998, Mr. Jones would have been

12 successful had he requested reinstatement of

13 his lease in 1998 from the Board based upon his

14 appraisal.

15 And based upon the specific facts and

16 circumstances of this particular request, the

17 staff believes that there are equities present

18 which would entitle Mr. Jones to consideration

19 for reinstatement of his lease; and

20 specifically the staff is aware that we don't

21 believe it would be a good precedent to punish

22 him essentially for having removed his piling

23 in 1994 in compliance with the state's request

24 when those owners that did not remove their

25 piling were essentially rewarded with the

1 opportunity based upon the law change in '97 to

2 come forward and have their leases reinstated.

3 We have not discovered any other lessee

4 who is similarly situated to Mr. Jones who

5 could take advantage of these types of

6 equities.

7 GOVERNOR BUSH: Is Mr. Jones here?

8 MS. GETZOFF: No, he is not. An associate of

9 his, Mr. Lake, is here. Mr. Jones is elderly; he

10 did not come up today. Mr. David Lake is here if

11 there are any questions of the applicant.

12 GOVERNOR BUSH: Does anybody have any

13 questions?

14 That was a very thorough explanation.


16 comment.

17 This obviously is a unique situation.

18 David couldn't understand it enough to explain

19 it, and it took you eight minutes to explain

20 it. And I don't think any of us here would --

21 we would agree with David.

22 So, therefore, is it safe to assume that

23 this item reflects a very unique set of

24 circumstances and facts that would not be

25 replicated anywhere else since this would not

1 be a precedent set for anyone else?

2 On the record not, just a nod; it has to

3 be a verbal.

4 MS. GETZOFF: That's correct, General.


6 I go ahead and move the item then.


8 GOVERNOR BUSH: Moved and seconded. Any

9 other discussion? Without objection, the item

10 passes.

11 Congratulations. When do you start

12 construction? I want to come out. I have a

13 picture of the pilings, it looks like it's a

14 good location. Where is this? How far out?

15 MR. LAKE: We are about two and a half miles

16 out in the Gulf of Mexico. Good fishing.

17 GOVERNOR BUSH: I bet. I am jealous.

18 MR. STRUHS: Thank you, Deborah. Item

19 number -- has the vote been cast on 6? Item

20 number 7.

21 GOVERNOR BUSH: Would you like to explain it

22 a little more?

23 MR. STRUHS: No, other than I know my own

24 limitations, and I am grateful that Deborah could

25 join us today.

1 Item number 7, I would like, if I could,

2 take just a minute and remind you that this is

3 a continuation of a discussion that occurred at

4 the last Cabinet meeting, and suggested there

5 are three basic alternatives that face you and

6 also alert you to the importance of the vote

7 count.

8 Three options are either to sell the state

9 lands to Mr. Blackburn. Option two would be to

10 require Mr. Blackburn to remove the fill and

11 restore the land and have it remain in state

12 ownership in a restored fashion. Option three

13 would be to direct that the fill remain, but

14 this newly-filled area is determined to be

15 state owned.

16 Under option one, should you choose to

17 sell the land to Mr. Blackburn, it becomes an

18 issue of price and there are three options

19 there.

20 Either to sell it to him for the court

21 recommended amount of $15,000; to sell it to

22 him for $52,800, which would be the figure that

23 would result from the application of the Board

24 of Trustees' rules; or option C, of course, is

25 any other amount the Board of Trustees would

1 deem appropriate.

2 And in terms of the vote, Governor and

3 Members of the Cabinet, the proposal before you

4 is to approve this item.

5 Should you choose to deny this staff

6 recommendation, you simply need a simple

7 majority to deny our recommendation. However,

8 should you chose to sell the land to

9 Mr. Blackburn, you need to have five votes.

10 GOVERNOR BUSH: Should we not, as I

11 understand it, should nothing happen, should no

12 action be taken as was the case last time because

13 we couldn't get the five votes, he has to remove

14 the seawall, doesn't he?

15 MR. STRUHS: Yes.


17 A judge will determine that, Your Honor.

18 GOVERNOR BUSH: (Laughter) Excuse me. I

19 shouldn't laugh when you call me Your Honor like

20 that.

21 Is that accurate?


23 court now.

24 GOVERNOR BUSH: The question is if we take no

25 action, what is the consequence of that?

1 MS. VIELHAUER: Then if the board does not

2 approve the 15,000-dollar sale, the judgment --

3 there is a motion pending in court right now that

4 he is trying not to remove the seawall. We would

5 take the position that, yes, he has have to remove

6 it.

7 GOVERNOR BUSH: It's going to be determined.

8 Our position would be he would have to remove the

9 seawall, which is somewhat self-defeating, if

10 that's the end result.

11 TREASURER GALLAGHER: This issue wouldn't be

12 in front of the court it's in? If we say remove

13 it, then we have a whole new issue and a whole new

14 court?

15 MS. VIELHAUER: It's still part of our court

16 case. He has filed a motion for relief from this

17 judgment that we are talking about. And that's

18 still an issue before the court.

19 TREASURER GALLAGHER: He's filing a relief

20 for the $15,000?

21 MS. VIELHAUER: He is filing a relief saying

22 if the board makes him remove it, that it's

23 inequitable and he should no longer be bound by

24 the judgment.

25 GOVERNOR BUSH: Let's see if we can find

1 common sense, the depth of common sense is not --

2 hopefully not in this particular case. This is,

3 for a small deal in the life of the department and

4 the Board of Trustees, this is taking up a lot of

5 energy and time and lawyers and other things; so

6 maybe we can come to a solution we can get five

7 votes on.

8 Unfortunately Commissioner Bronson, whose

9 lack of presence here makes that a little

10 difficult, since we had the same problem last

11 time. Does anybody have anything they want to

12 add?


14 question. Maybe you can answer or maybe somebody

15 in the audience can.

16 David, am I correct that this gentleman

17 sued the former department lawyer handling this

18 case and also director of the southeast

19 district office personally, personally in a

20 SLAPP suit; is that correct?

21 MR. STRUHS: Yes, sir, it is.


23 SLAPP suits have been filed against your lawyers

24 and your administrators in your turn term of

25 office?

1 MR. STRUHS: Since I have been here in

2 Florida, I don't believe there have been any.

3 There were some prior to my arrival, but I don't

4 think there have been any in the last three years.


6 as Attorney General, I have only had one SLAPP

7 suit filed against me in the thousands upon

8 thousands of cases. It's very rare, very rare for

9 a person to do this type of -- to file a SLAPP

10 suit against a governmental entity, especially

11 when that person did wrong.


13 GOVERNOR BUSH: Isn't that an acronym?


15 acronym.

16 GOVERNOR BUSH: S-L-A-P-P or something.


18 Basically this usually happens with many residents

19 of communities when somebody might want to put in

20 a cement plant or something, whether it be a

21 community group or whether it be an entity, they

22 will then find themselves sued for libel and

23 slander, personally for libel and slander. And

24 then, of course, they end up getting intimidated

25 and many times they drop the suits.

1 Of course, anybody that files -- it means

2 Strategic Lawsuit Against Public Participation.

3 That's what that means. I did not know this

4 myself, which I should have.

5 MR. STRUHS: We were working on that as well.


7 anybody should be rewarded, Governor, for having

8 taken this type of action. I personally think the

9 court gave him two options, as I understand it:

10 Take it down or buy it, make application to buy

11 it.

12 The department agreed: Well, we'll

13 recommend to the board $15,000. That does not

14 obligate this board to accept 15,000, it only

15 obligates David to say 15,000.

16 So this gentleman has two alternatives, as

17 I see it, and that is apply to us to buy it.

18 David said he's done that. David's

19 recommending 15. And I don't think that's

20 going to happen up here, at least this week.

21 And then --

22 GOVERNOR BUSH: Who knows? Let's see.


24 last week believe: Well, we have a rule in place

25 here and rules should be followed. Therefore, it

1 should be three times the appraised value.

2 And I personally believe, because of the

3 action and way this guy has handled this case,

4 I think he deserves to be treated equally like

5 everybody else, and that is we should follow

6 the rule.

7 GOVERNOR BUSH: We'll take that tree down for

8 free for him.

9 SECRETARY HARRIS: Governor, I just want to

10 go on the record and concur with General

11 Butterworth concerning the rule the board has,

12 three times the appraised value.

13 TREASURER GALLAGHER: Let me sort of break

14 this thing a little lose.

15 I happen to agree with the General myself,

16 but in order to get this to move on, I am

17 willing to split the difference between the 15

18 and 52.

19 GOVERNOR BUSH: We tried that one the last

20 time, too.

21 TREASURER GALLAGHER: I am trying again.

22 33-9. And I will -- my motion is 33-9 and see if

23 we can get five votes.

24 GOVERNOR BUSH: Is there a second?


1 GOVERNOR BUSH: Oh, please, don't. Thank

2 you. Appreciate that, Commissioner Crist.

3 GENERAL MILLIGAN: What's the significance of

4 the S-L-A-P, other than somebody had a bad

5 attitude; somebody exercising his right?

6 TREASURER GALLAGHER: Made the General mad.

7 GENERAL MILLIGAN: I know it did.


9 respond; is that when you have employees working

10 for the Department of Environmental Protection --

11 or even let's just use citrus canker, as an

12 example now, which is a real big problem.

13 You could have somebody out there file an

14 action against any one of the inspectors, any

15 person who wants to chop down a tree or

16 anything else and just say you are violating my

17 rights.

18 Not that they can -- they can always sue

19 us as an entity as the state; we accept that.

20 People do it everyday, they get their $75 and

21 they file an action against us.

22 But here they are filing an action

23 personally against some of our employees. And

24 in many cases, Risk Management will not pick up

25 if, in fact, they lose. So in many cases they

1 have to hire a private lawyer if Risk

2 Management does not approve of one; if, in

3 fact, there is a judgment against them, the

4 state doesn't pay it, unless Risk Management

5 approves it and they don't have to.

6 So you are really putting other -- you are

7 basically having your employees now saying:

8 Wait a minute. Should I take action or not, if

9 I am going to have a suit filed personally

10 against me? And I don't think we want to --

11 GENERAL MILLIGAN: So it's the intimation

12 that goes along with this. And you, in your

13 judgment of this individual, is that he is trying

14 to intimidate those people?


16 TREASURER GALLAGHER: That's the only reason

17 for SLAPP suits.

18 GOVERNOR BUSH: He's just got a bad attitude

19 and he is not -- clearly this has gone on how

20 long; how many years has this been going on?

21 MR. STRUHS: Oh, I think 10 years anyway.

22 GOVERNOR BUSH: This is just one of the

23 people we serve with a bad attitude. That's not

24 strange; it happens all the time. You ought to

25 see my e-mails.

1 GENERAL MILLIGAN: Per the discussion a

2 couple weeks ago, the fact that he built it the

3 way he built it, frankly made good sense and it

4 probably should have been built that way or

5 designed that way right from the get-go. Of

6 course, that was the issue that didn't make a

7 whole lot of sense to me, why we were making such

8 a big deal out of this.

9 I will said this, I think we are being

10 frivolous if we just cut it in half. Either we

11 have a rule or don't have a rule, and either we

12 apply the rule or we don't apply the rule. And

13 the decision should be either to apply the rule

14 or not apply it. And so cutting it into half,

15 I don't think is --

16 TREASURER GALLAGHER: If you go for a

17 substitute for mine, I will sure back you, as

18 always is the rule.

19 GOVERNOR BUSH: Any other discussion on

20 Commission Gallagher's amendment? All in favor

21 say aye.




25 GOVERNOR BUSH: All opposed?




3 GOVERNOR BUSH: It's dead.


5 follow the rule.

6 GOVERNOR BUSH: Which is?


8 GOVERNOR BUSH: Three times the appraised

9 value.


11 really to apply the rule; they can do the math.

12 MR. STRUHS: Yes.


14 GOVERNOR BUSH: That's above my pay grade,

15 but I am sure there is a reason for that.


17 the General says, we are here to follow the rule.

18 SECRETARY HARRIS: Follow the law.


20 GOVERNOR BUSH: There is a motion and a

21 second to -- say it again.


23 law, follow the rule.

24 GENERAL MILLIGAN: Which would mean approve

25 it with 52-8. $52,800.

1 MR. STRUHS: $52,800 would be three times the

2 appraised value.


4 the math.

5 GOVERNOR BUSH: Okay. There is a motion and

6 a second. All in favor say aye.







13 GOVERNOR BUSH: All opposed?

14 MR. STRUHS: Thank you.

15 GOVERNOR BUSH: Did you vote, General?


17 GOVERNOR BUSH: Okay. I wanted to make sure.

18 It's a unanimous vote; six/nothing.

19 MR. STRUHS: Item number 8, we are

20 recommending approval of a settlement agreement.

21 GOVERNOR BUSH: I voted yes. I am tired of

22 it.


24 GOVERNOR BUSH: My staff is happy, too.

25 Item 8?

1 MR. STRUHS: We are recommending approval of

2 a settlement approval.



5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item is approved.

7 MR. STRUHS: We would like to defer item 9 to

8 the meeting of August 27.



11 GOVERNOR BUSH: Motion to defer and a second.

12 The item is deferred.














1 GOVERNOR BUSH: State Board of

2 Administration.

3 MR. HERNDON: Item number 1 is approval of

4 the minutes of the meeting --

5 GENERAL MILLIGAN: I will move the minutes.

6 Is this going to be a fairly long meeting? I

7 think it could be.

8 MR. HERNDON: Not necessarily. Can I make

9 one comment?

10 I should say the minutes as corrected from

11 meeting of May 21, and I will move the minutes.


13 GOVERNOR BUSH: Item 1 is approved as

14 amended.

15 MR. HERNDON: Item 2, approval of fiscal

16 determination for an increase of an amount not

17 exceeding $25 million in the Florida Housing

18 Finance Corporation's federal home loan bank

19 liquidity advance line.



22 GOVERNOR BUSH: Moved and seconded. Without

23 objection, it's approved.

24 MR. HERNDON: Item number 3 is a submission

25 of the statistical report for the defined

1 contribution program as of May 31.

2 And if I might take advantage of this

3 opportunity to also just bring the Trustees up

4 to speed on a couple of other items related to

5 the implementation of PEORP.

6 Number one, you may have seen in the

7 newspaper this morning that Alliance Capital

8 filed their reply brief on Monday. It's not

9 directly a PEORP matter, but their position

10 basically was as outlined in the newspaper.

11 We are providing your offices with a copy

12 of the reply brief and we'll respond to their

13 reply brief and hopefully set a date for a

14 hearing.

15 Secondly, as it relates to the bundled

16 provider contracts that we discussed at the

17 last couple of meetings, I am pleased to say we

18 have signed all five of the bundled provider

19 contracts, including the last one which was the

20 most difficult to negotiate. And so those five

21 providers are all signed and 12 of the 17

22 unbundled provider contracts have been signed;

23 so other than a few minor items there, we are

24 in good shape.

25 As it relates to the statistical report

1 itself, what you have in front of you today is

2 the report as of May 31, which shows that we

3 have mailed out 441,000 kits. Altogether now

4 we have almost 18,000 people who have made

5 selections, but that's still less than

6 4 percent of the total.

7 And of those 18,000 or 17,582, the vast

8 majority are still selecting the pension plan.

9 As we indicated, our expectation is that those

10 are by in large people for whom that's a

11 clear-cut decision, and they know just exactly

12 where they need to be.

13 Again, enrollment started for the first

14 group on June 1. So we will see enrollment

15 numbers begin to climb over the course of the

16 next two and a half months.

17 Remember, that first group, which is state

18 employees, has open enrollment June, July and

19 August and our expectation is that we will see,

20 as you might expect, the enrollment figures

21 will spike up in August.

22 That's been the expectation and experience

23 of all of the vendors that we have contracts

24 with that serves these kinds of programs in

25 other states and jurisdictions.

1 We also provided to your staff -- and I

2 didn't intend to go into it here today -- but

3 some of the results of the surveys that we

4 conduct at the workshops, we do pre and post

5 workshop surveys to try and get a sense of how

6 the employees are learning in those workshops,

7 what resources are they making, taking

8 advantage of, and so on, and so forth.

9 We provided that information to your

10 staff. It's going well from that standpoint.

11 The employees are finding the employee

12 workshops to be very beneficial and are

13 recommending them to their colleagues.

14 The unfortunate part is that they are not

15 taking advantage of the workshops in the first

16 place. We are still having a concern in that

17 respect. We only have 30,000 or so out of the

18 440,000 that have actually scheduled themselves

19 for workshops.

20 In response to that, we are planning two

21 more mailings to the employees in the first

22 group, that's the state employees, one in July

23 and one in August to try to push them into the

24 workshops, encourage them to recognize the

25 significance of this decision and provide them

1 with additional information on risks, on the

2 market volatility, and the importance of making

3 an affirmative choice, an informed, affirmative

4 choice.

5 So we should have another mailing in July

6 and another one in August. And hopefully that

7 will result in higher numbers, taking advantage

8 of these workshops.

9 Once they are there, they like them and

10 they find them to be quite informative, and

11 it's clear when you look at the survey data

12 that their knowledge level is going up

13 significantly, but we have just got to get them

14 to the trough so that they can drink.

15 GOVERNOR BUSH: General?

16 GENERAL MILLIGAN: Are you still meeting

17 resistance in the group two?

18 MR. HERNDON: The primary resistor has been

19 one school board. And I don't want to

20 mischaracterize it. I don't think it's militant

21 by any means, but it is just trying to have the

22 school board free up their employees to attend

23 some of the workshop sessions and those kinds of

24 things.

25 Now that school is out, we are hoping that

1 that problem won't be quite as severe as it

2 once was. But it is a significant school board

3 employer with a lot of employees, and we hope

4 that's not a problem, but that is really the

5 only place we really had a problem.


7 MR. HERNDON: Dade County.

8 GOVERNOR BUSH: It's always my hometown.


10 participating?

11 MR. HERNDON: It's not so much that they are

12 not participating; it is that they are not being

13 gracious about allowing their employees to attend.

14 They are not encouraging them to attend their --

15 it's not so much that they are discouraging them

16 as they are just not encouraging them, they are

17 not giving them the time to go to the workshops on

18 the school day and those kinds of things.

19 We appreciate that this is a problem. We

20 talked with the legislative staff for two years

21 about the possibility of changing the dates for

22 the school teachers, because we knew that

23 summer was going to be a problem, end of the

24 school was going to be a problem, but the

25 legislature wasn't prepared to do that and so

1 we have to live with this awkward time.

2 GOVERNOR BUSH: The irony of this is that the

3 teachers' groups and the unions and the people

4 that represent the teachers were the strongest

5 advocates for this; seems like they would be a

6 means to make sure that the message gets out.

7 And the critical part is as these big

8 school districts start hiring new teachers,

9 that the information is in place, because in

10 Miami-Dade County, they have a tremendous

11 number of veteran teachers that probably will

12 not opt out. They may, but chances are the

13 computer run will say stay in.

14 But there are thousands of new teachers

15 that will be coming on line next month, and I

16 hope at least for, as part of the employee

17 assistance efforts, that new hires are done,

18 that the school districts will make sure that

19 this is part what they do. I assume they are

20 doing that.

21 MR. HERNDON: Yes, sir. And one of the

22 pluses, so to speak, is that the enrollment window

23 for teachers doesn't actually open until

24 September, so we are hopeful that we still got

25 time.

1 We had this 90-day preenrollment period,

2 it's the education cycle. I think the

3 legislature -- and we kind of saw these as two

4 distinct periods of time. And now it's clear

5 we need to combine them more aggressively. But

6 if we still have a problem come the fall, we'll

7 be back with you to try and resort that.

8 GENERAL MILLIGAN: This is kind of a

9 technical question on DC. I have been asked a

10 couple of times, and I am not sure I have given

11 exactly the right answer.

12 When are those that opt for the DC plan,

13 when in each of the phases is the money

14 actually transferred out of the defined benefit

15 program and into the defined contribution

16 program?

17 MR. HERNDON: What we are trying to do is to

18 stage this in three steps, so that initially we

19 thought we would transfer money -- let me back up.

20 Are you talking about into the DB plan to

21 the DC plan and then into all the employees

22 accounts?

23 GENERAL MILLIGAN: I guess I am really

24 talking about both.

25 MR. HERNDON: Our initial thought was that we

1 would do it monthly. We thought there would be

2 such a large volume that it would necessitate a

3 monthly transfer, and we didn't want to try and

4 transfer three months for all the state employees

5 early, and then lose whatever investment

6 benefit -- these days it seems like it's an

7 investment loss -- but investment benefit that

8 might accrue in the two months that we predicted

9 might occur.

10 It appears now that a three-stage process

11 makes more sense. So we are anticipating a

12 transfer this month for the first employee

13 group, and then it would be disbursed into

14 their accounts in July for the first -- the

15 group, the employees who make the decision in

16 this month would actually get the money in

17 July, will transfer all three months, June,

18 July and August, this month is the last

19 discussion that I had -- I really hadn't

20 confirmed that.

21 GENERAL MILLIGAN: So those that had made a

22 selection now or make a selection prior to the end

23 of June would have it effected 1 July?

24 MR. HERNDON: Is it the first of July or end

25 of July? July 31.


2 MR. HERNDON: Then the ones who make --

3 GENERAL MILLIGAN: If that works all right --

4 I see Doug Darling back there, I hope that works

5 all right.


7 MR. HERNDON: For those who are making

8 election in July, it would be August 31, and so

9 on. But all of the money we will set up in a

10 transition account will start to liquidate the

11 assets this month for the three months, set it up

12 in the transition account and start moving it

13 over.

14 GENERAL MILLIGAN: So it would be basically

15 on a monthly basis and at the end of the full

16 month basis?

17 MR. HERNDON: That's right.

18 That statistical report is for your

19 information only.

20 Item number 4 is approval of the State

21 Board of Administration's budget for the fiscal

22 year 2002-2003.

23 And Governor, you will recall at the last

24 meeting when we brought this before you, you

25 had requested some information regarding the

1 outyear forecast for the various programs.

2 We can go through this at your

3 convenience. Just for the sake of information,

4 let me just simply say that the budget for the

5 Board for the current year contemplates

6 something less than a 1 percent increase. And

7 that's largely a function of the pay increase.

8 Were it not for the cola, there would be a

9 slight decrease.

10 We have transferred, begun to transfer

11 some positions from the DB ledger over to the

12 DC ledger to go with the original ones that we

13 established.

14 But other than that, there is not a great

15 deal in the operating budget of any

16 significance.

17 Now if you want to talk about the outyear

18 forecasts for the DC program, which I think was

19 your particular interest, we can do that.

20 GOVERNOR BUSH: Here's what -- this is a new

21 venture, a big new venture in terms of costs. We

22 have these contracts with vendors that are, given

23 the volume, particularly at the beginning, are

24 significant. And we don't know what the end

25 result will be in terms of who is going to opt out

1 of the defined benefit into defined contribution.

2 It seems to me, and it's -- I appreciate

3 the fact that it's hard for you to project how

4 that's going to work and what the run rate

5 should be on expenditures at this point.

6 But there is some -- there's got to be

7 some point where we can pause and evaluate the

8 cost structure for the defined contribution and

9 defined benefit plans based on who is in each.

10 That's kind of what I am asking, is a time

11 certain when that review would begin and be

12 done, so that we don't just kind of spend and

13 spend and grow or do things without having any

14 kind of a static environment, because it's

15 already different right now than what we

16 anticipated and it may change.

17 MR. HERNDON: Yes, sir. It would be

18 worthwhile. I would just call to your attention

19 what we provided you is essentially three

20 different scenarios: A low, middle and high

21 scenario.

22 That they are intended to reflect likely

23 transfer amounts and numbers of participants.

24 The ones we now think are the most likely case

25 are the base cases, the middle scenario which

1 is a four and half billion dollar transfer and

2 roughly 150,000, 144,000 participant accounts.

3 And you will see there, the beginning of

4 changes in the way the budget is structured as

5 you look out over the next couple of years.

6 Obviously, as you say, the reality will be

7 the ultimate test of this. And I think the

8 budget that you see next June, which will show

9 all of the state employees and all of the

10 education category and many of the county

11 employees having made their choices, we will

12 then know with a great deal more precision.

13 But here, for example, we are not

14 projecting a dramatic change in the DC costs

15 for two reasons.

16 Number 1, because we have a number of

17 front-end costs for education programs and

18 development of software and everything else

19 that are falling away, but the execution costs

20 are now going up because, for example, if we

21 set up 144,000 accounts, there is a cost

22 associated with each one of those accounts that

23 we are paying to the vendor.

24 So we are replacing implementation or

25 preimplementation costs with some execution

1 costs.

2 Now the significant savings in this whole

3 equation is frankly not staff at the Board,

4 although that's certainly possible. But in

5 time, you should see the costs of managing the

6 DB assets, the money we pay the money managers,

7 start to fall; and the costs associated with

8 the DC program stay relatively stable because

9 some of those costs are being shifted out to

10 the employees who are picking up the manager

11 costs.

12 And we have forecasted for you here --

13 looking at this middle scenario, for example,

14 in the first year, that our management fees on

15 the DB side -- and this is footnote number 2 on

16 that middle scenario -- should drop about six

17 and a half million dollars.

18 Now that's based on this estimate of --

19 what we did is we went to our three asset

20 classes that are footing the lion's share --

21 U.S. equities, international and fixed income

22 and said: Using this scenario, how would you

23 adjust your manager lineup? Which ones would

24 you eliminate, which ones would you defund, and

25 so forth? And what does that produce in the

1 way of savings? And this is the estimate that

2 we got back.

3 And it will obviously rise and fall a

4 little bit as experience dictates. But over

5 time, that's the pattern that you will see; is

6 our manager costs will drop on the DB side and

7 the staff will as well because we'll be

8 reducing the need for some of those, but

9 ultimately that's not the major driver. The

10 staff on the Board is not the major cost

11 driver; it's the managers' fees that we pay.

12 And you don't see those in the budget

13 because they are netted against the returns.

14 GOVERNOR BUSH: All right.

15 MR. HERNDON: The other point I would like to

16 make with respect to the budget, and it's not here

17 so much because it's a significant budget issue,

18 but just to call it to your attention, is we are

19 contemplating strengthening of our compliance

20 office, our internal audit, compliance function.

21 One of the side elements of that is that

22 we had proposed to your offices that we have

23 the internal auditor or our chief compliance

24 officer report directly to you. They would

25 also serve us obviously in an administrative

1 capacity, but they report directly to you.

2 We recognize your time is too valuable to

3 sit down and start doing work plans and all the

4 rest of the things.

5 So what we suggested as an alternative is

6 that your individual inspector generals

7 function as kind of the working arm for you,

8 and our inspector general would work with them

9 to develop a work plan, a charter for the

10 office and some of those kinds of functions;

11 and then periodically during the course of the

12 year, probably quarterly once it's up and

13 running, meet with your inspector generals to

14 make sure they are on track, give you the

15 reports.

16 And then if you wanted to meet with them

17 individually, of course, that would be

18 appropriate. But that was the mechanism we

19 were suggesting. It seems to fit, given the

20 unique structure, and make sense. So that's

21 part and parcel of this budget that is before

22 you.


24 I am very interested in having that work

25 out that way, and I think having our inspector

1 generals work with the chosen inspector

2 general. And I would guess that the inspector

3 general that's going to be out there -- and we

4 had different names, but I sort of liked the --

5 what did we call our -- inspector generals in

6 our agencies--


8 TREASURER GALLAGHER: We would obviously

9 choose the person that's going to be doing that

10 function.

11 MR. HERNDON: Yes, what we would anticipate

12 is we would advertise it, screen down the

13 applicants, probably give your inspector generals

14 and you three or five or some smaller number, and

15 you would choose that person. And they would

16 report to you and you would have the hire and fire

17 decision.

18 We would hope that the executive director

19 would be involved in that discussion, but that

20 would be your decision.

21 TREASURER GALLAGHER: I think it might be

22 good if you are going to do the advertising, that

23 you would have our inspector generals involved in

24 it, in the breakdown and final recommendation to

25 us.

1 MR. HERNDON: Right.

2 TREASURER GALLAGHER: I really think that

3 makes me feel a lot better about my and my

4 colleagues' fiduciary responsibility in this

5 agency because inspector generals report to the

6 agency head.

7 GENERAL MILLIGAN: I have thought about this

8 quite a bit already, and we are not making a

9 decision on this, I hope, today because I think we

10 need to think through clearly what we are asking

11 our IGs to do and what the role of the IG is in

12 terms of his relationship with you as the head of

13 the agency.

14 And so before we go too far down that

15 track, I think we need to really think through

16 the IG function and the responsibilities they

17 already have, and exactly what this means in

18 terms of their very carefully defined, I think,

19 responsibilities as an IG within an agency.

20 So I just think we need to think through

21 if that's the right --

22 COMMISSIONER GALLAGHER: It could be another

23 person within our agency.

24 GENERAL MILLIGAN: I don't know. We need to

25 think about it. There is a pretty good little

1 report here, and I think it's -- this happens to

2 be from Coleman, and it's a pretty good summary

3 and it's a pretty good report from the people that

4 looked into this whole setup. And I think they

5 need to be looked at carefully and then make a

6 decision.

7 MR. HERNDON: If it's beneficial, perhaps to

8 just keep moving forward, one thing we could do is

9 work with your IGs for the time being.

10 GENERAL MILLIGAN: I have no problem with

11 that in the interim while we really consider this

12 thing.

13 MR. HERNDON: Just to come up with the

14 charter, something that's written and laid out

15 clearly; and then that would be the document that

16 would be before you to in effect vote on.

17 GENERAL MILLIGAN: I, for one, come from a

18 long background of dealing with inspector generals

19 and you have to be careful that you don't dilute

20 the responsibility of the inspector general.

21 And so I am always concerned when anything

22 is put on to an inspector general that takes

23 away from the very important function they

24 perform for you.

25 TREASURER GALLAGHER: I fully understand what

1 you are saying and agree with you.

2 I look at this responsibility that we are

3 putting on as really an oversight

4 responsibility; first of all, importance of who

5 we hire, that's the number 1 thing. And

6 number 2 it's an oversight and our inspector

7 generals can be sort of a guidance to whoever

8 that person is and that type of thing as

9 opposed to our people, as they can be spending

10 a lot of personal time over in that agency,

11 which I don't think any of us really want to

12 see happen.

13 GENERAL MILLIGAN: I just, before we jump to

14 this thing one way or the other, I think we need

15 to look at all work that's gone into it already.

16 And I have no problem on an interim basis to allow

17 you time, Tom, to move forward, allowing IGs to

18 serve as kind of the focal point within certainly

19 my agency.

20 MR. HERNDON: I would like to start the

21 advertising process with your IGs.

22 TREASURER GALLAGHER: We can do that.

23 GENERAL MILLIGAN: I have no problem with

24 that. I think we need to think carefully about

25 diluting IG functions.



3 TREASURER GALLAGHER: If not them, who?

4 GENERAL MILLIGAN: I don't know. There is

5 some suggestions. There is some good

6 recommendations.

7 TREASURER GALLAGHER: I am willing to listen.

8 Then the next thing is it's going to be us

9 ourselves.

10 GENERAL MILLIGAN: There is some good

11 thoughts in here and some good thoughts in the

12 report that was put together, and I think it needs

13 to be reviewed and then we can talk about it.

14 GOVERNOR BUSH: Very good.

15 MR. HERNDON: I need a motion on the budget.

16 GOVERNOR BUSH: Is there a motion?

17 TREASURER GALLAGHER: Governor, I have got a

18 quick question.

19 GENERAL MILLIGAN: The education component of

20 this thing, of course, is very large.

21 TREASURER GALLAGHER: I guess, judging from

22 the projections that I see in the next several

23 years, that you don't see a great decline in the

24 education --

25 MR. HERNDON: No, we don't. The statute is

1 fairly clear that education about retirement in

2 the broad sense is now part of the Florida

3 Retirement System and not that the division hasn't

4 always tried to do that, but they didn't have the

5 resources to do it.

6 GENERAL MILLIGAN: The education is about the

7 defined benefit and PEORP, and it's not all about

8 the defined contribution.

9 MR. HERNDON: That's exactly right.

10 GENERAL MILLIGAN: So this really education

11 piece reflects a growth in education on the

12 defined benefits side, too.

13 MR. HERNDON: That's correct.

14 GENERAL MILLIGAN: So you don't see it

15 falling off particularly?

16 MR. HERNDON: We don't. We are doing some

17 projections in here for a lower number of

18 workshops, based on the pull that the workshops

19 have, we can scale them back, but we looked at

20 other topics, and there is some information in the

21 packet that we are giving to your staff that look

22 at some of the topics that employees have an

23 interest in.

24 Retirement plan in the broad sense is one

25 of the things they have a strong interest in.

1 And that's the kind of thing that the

2 legislature really was interested in over and

3 above PEORP per se.

4 GOVERNOR BUSH: I was just going to say that

5 again, I am going to vote for the budget, of

6 course, but I do think we need a thorough review

7 of all the things, going forward, and because the

8 legislature passed a law to allow us to do this.

9 This is a great innovation, kind of one of a kind

10 opportunity.

11 The legislature comes every year back into

12 session, and should there need to be some

13 changes based on our experience, we can go back

14 and ask them to make modifications as well.

15 We don't need to be spending,

16 overspending, that's all I am saying. If it

17 makes sense to do it, it helps employees make

18 the decisions, we provide them the right

19 services for them to do what is best for their

20 retirement needs, that's great.

21 But we'll have a lot more experience and

22 information a year from now for next year's

23 budget. Some of us, I am not sure I'll be

24 here.

25 TREASURER GALLAGHER: Me either. I mean me.

1 GENERAL MILLIGAN: I will not be here, but I

2 will be worried about it, and I will be watching

3 it.

4 TREASURER GALLAGHER: Right now, it's a

5 pretty hard decision to make to move out of a

6 defined benefit plan, if you look at what's

7 happening in the stock market in the last year.

8 This is not the greatest time for anybody wanting

9 to --

10 GOVERNOR BUSH: Thank God we didn't do this

11 five years ago, for the same reason. In other

12 words, if people were making decisions because the

13 stock market was going like gang busters and they

14 started thinking short-term, we would have had --

15 TREASURER GALLAGHER: Then we would have had

16 other problems.

17 GENERAL MILLIGAN: That underscores the

18 importance of the education, so that money is well

19 spent.

20 I still have a little problem, and I just

21 only mention in passing; it's still the State

22 Board of Administration, whether you are in the

23 defined contribution or defined benefit. And

24 so I think we need to -- while we separate the

25 two for clarity, I just have a problem

1 referring to SBA, DB and PEORP, DC. It is the

2 State Board of Administration.

3 MR. HERNDON: Yes, sir.

4 GOVERNOR BUSH: Is there a motion?

5 TREASURER GALLAGHER: I will move the budget.

6 GENERAL MILLIGAN: And I will second.

7 GOVERNOR BUSH: It's moved and seconded.

8 Without objection, the budge is approved. Item 5.

9 MR. HERNDON: Item 5 is report of the

10 Executive Director of the fund activity analysis

11 for the month of March, 2002.

12 GENERAL MILLIGAN: We accept the report.

13 GOVERNOR BUSH: Good. It's accepted.

14 MR. HERNDON: Item number 6 is requesting

15 approval of the following rules for adoption.

16 We have several here. The first is the

17 investment policy statement which was approved

18 at your meeting on January 29, 2002 and rule

19 19-9.001.

20 There was no changes proposed. The Joint

21 Administrative Procedures Committee had no

22 comments or suggestions, so we would recommend

23 that this be adopted and filed in July.

24 6.2 is also a rule that implements the

25 initial asset transfers, General, that we were

1 talking about earlier, that would occur between

2 July of '02 and March of '03 for the defined

3 contribution program. We didn't hold a

4 workshop; there was no request to do so. There

5 were no changes made to this rule as a

6 consequence.

7 GOVERNOR BUSH: Is there a motion?



10 GOVERNOR BUSH: Moved and seconded. Without

11 objection, it's approved.

12 MR. HERNDON: Item number 7 for the Florida

13 Commission on Hurricane Loss Projection

14 Methodology, we are requesting reappointment of

15 the statistics expert, Scott Gulati, to chair the

16 council or the commission, excuse me.



19 GOVERNOR BUSH: Moved and seconded. Without

20 objection, it's approved.

21 MR. HERNDON: Item number 8 has two parts.

22 8.1, which is the premium formula proposed for the

23 Florida Hurricane Catastrophe Fund and the

24 emergency rule-making authority to allow the forms

25 and rules, and so forth, to be amended as part of

1 that procedure.

2 And as you know, what we had provided you

3 before was some different scenarios based on

4 what was likely to be passed by the legislature

5 and addressed by the Governor.

6 In the veto process, the Governor did veto

7 a small amount of the mitigation dollars that

8 were appropriated by the legislature. That had

9 the effect of causing the proposed decrease to

10 decrease slightly less. So if that sentence

11 makes sense, it went down --

12 GOVERNOR BUSH: Was that a good point?

13 MR. HERNDON: -- some minute --

14 TREASURER GALLAGHER: The less, the better

15 would be -- the more you detail, the better, the

16 less mitigation the better.

17 MR. HERNDON: The premium decrease is now

18 10.75 percent as opposed to 10.93 percent, it's

19 very negligible. It is a significant decrease in

20 the premiums.

21 GOVERNOR BUSH: These are special projects.


23 pot they reached into.

24 COMMISSIONER GALLAGHER: Tom, the legislature

25 included a proposal that would encourage us to

1 enhance collections for the CAT Fund in order to

2 reach our maximum first storm and allow us to

3 build for the second one.

4 And I see that this is an opportune time

5 to do that when you are facing a decrease

6 instead of an increase, and we can end up next

7 year with an increase and it be a very tough

8 time to do that.

9 You want to give us sort of a layout why

10 we didn't recommend doing it this year when it

11 would be an opportune time?

12 MS. ALLEN: My name is Tracy Allen, I work

13 for the Catastrophe Fund.

14 GOVERNOR BUSH: Hi, Tracy, how are you doing?

15 MS. ALLEN: Doing great.

16 This was brought up with our advisory

17 council, and they chose this year to not act on

18 it. And they gave four specific reasons.

19 These reasons were under the economic

20 environment, there are already cost pressures

21 on the insurers due to private reinsurance

22 market situations. And they felt it would not

23 be productive to exacerbate these problems by

24 increasing rates at this time.

25 Number 2, that the fund is well into its

1 rate-making cycle for this season and thus

2 changes calling for a rapid cash flow factor

3 would be disruptive; to be participating

4 insurers, they got their reinsurance in place.

5 And number 3, the staff and the advisory

6 council have not had the opportunity to

7 adequately study the effect of utilizing a

8 rapid cash buildup factor and its impact on the

9 fund and the insurers.

10 And number 4, that any realistic factor

11 would not contribute significantly to the fund

12 capacity in the short-term.

13 And they gave an example that even at a

14 25 percent surcharge, raising a hundred million

15 would only increase the second season capacity

16 by 1 percent. And they felt it was wiser to

17 defer it to the next contract year so that they

18 could study it and act on it.

19 Obviously the Trustees can order that they

20 have total control over the rates and can

21 change the advisory council.

22 TREASURER GALLAGHER: If you put a 25 percent

23 surcharge on it, how much -- how would that be

24 relative to the 10 percent decrease we just are

25 about to do?

1 MS. ALLEN: I don't know. I can find that

2 out from our actuaries. It's never a percentage

3 to percentage. There is always all these factors

4 that go in.

5 TREASURER GALLAGHER: That's why I asked the

6 question, because I don't have a clue as to the

7 math.

8 GOVERNOR BUSH: All the issues the advisory

9 group gave, but for maybe the timing one, are all

10 going to be applying next year as well.

11 TREASURER GALLAGHER: Yes. The worst one is

12 that this year when you have a decrease -- by the

13 way, as the Governor said, all the formulas and

14 everything have to be redone anyway. But if you

15 got a hundred million dollars more this year,

16 that's a hundred more million plus interest you

17 would have in the pot next year. We wait until

18 next year, we are a hundred million plus interest

19 behind.

20 GOVERNOR BUSH: It's a trade off. Because by

21 doing what Commissioner Gallagher is suggesting, I

22 am assuming there would be stabilizing, a greater

23 chance of stabilizing rates long-term. Do you

24 think?

25 MS. ALLEN: I don't know.

1 TREASURER GALLAGHER: You are getting into

2 actuarial questions there.

3 GENERAL MILLIGAN: You don't really know?

4 MS. ALLEN: I don't know.

5 GENERAL MILLIGAN: They have looked at it,

6 the board has looked at it fairly closely, and I

7 respect their consideration on this thing. And it

8 would take considerable effort to go back and we

9 don't -- we are guessing at this stage.

10 TREASURER GALLAGHER: One of the problems we

11 have is that we are supposed to be -- what we are

12 doing right now should -- there's notice out and

13 everything else on June 1st to all the insurance

14 companies so that they can get their rates in and

15 paid.

16 And so we are really behind the eight ball

17 anyway; so trying to muck it up with something

18 else is probably not --

19 GENERAL MILLIGAN: We are at that point. We

20 are already behind the eight ball.

21 GOVERNOR BUSH: All right.



24 GOVERNOR BUSH: Moved and seconded. Without

25 objection, it's approved.

1 MR. HERNDON: I misspoke, just for the

2 record, Governor and Members.

3 On item 6.2, there was a notice of change

4 that was published to address a few comments

5 from the Department of Community --

6 GENERAL MILLIGAN: That's been taken care of

7 and I have no problem with that.

8 MR. HERNDON: I misspoke and I wanted to just

9 correct that.

10 Item number 9, which is the bundled

11 provider report, I already mentioned, we signed

12 virtually all the contracts, so we don't need

13 to go into that. That completes the agenda.

14 GOVERNOR BUSH: Thank you.

15 (The proceedings concluded at 12:37 p.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 18th

19 day of June, 2002.



22 ______________________________