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                                T H E   C A B I N E T

                          S T A T E   O F    F L O R I D A



                              DIVISION OF BOND FINANCE
                            FINANCIAL SERVICES COMMISSION
                                DEPARTMENT OF REVENUE
                                BOARD OF TRUSTEES
                            STATE BOARD OF ADMINISTRATION

                         The above agencies came to be heard before
               THE FLORIDA CABINET, Honorable Governor Bush presiding,
               in the Cabinet Meeting Room, LL-03, The Capitol,
               Tallahassee, Florida, on Tuesday, March 25, 2003
               commencing at approximately 9:40 a.m.

                                    Reported by:

                                  SANDRA L. NARGIZ

                          Registered Professional Reporter
                              Registered Merit Reporter
                             Certified Realtime Reporter

                         ACCURATE STENOTYPE REPORTERS, INC.
                                   100 SALEM COURT
                       TALLAHASSEE, FL  32301   (850)878-2221



                         Representing the Florida Cabinet:

                         JEB BUSH

                         CHARLES H. BRONSON
                         Commissioner of Agriculture

                         CHARLIE CRIST
                         Attorney General

                         TOM GALLAGHER
                         Chief Financial Officer

                                       * * *


                                      I N D E X

               ITEM                 ACTION                     PAGE

               (Presented by J. Ben Watkins, II)

               1                   Approved                      6
               2                   Withdrawn                     6
               3                   Approved                      6
               4                   Approved                      7
               5                   Report                        7

               (Presented by Robert Tornillo)

               ITEM                ACTION

               1                   Appointment                   13

               (Presented by James Zingale)
               ITEM                ACTION

               1                   Approved                      14
               2                   Approved                      14
               3                   Approved                      14
               4                   Approved                      14
               5                   Approved                      15

               BOARD OF TRUSTEES
               (Presented by David Struhs)
               ITEM                ACTION

               1                   Deferred                      17
               2                   Deferred                      18
               3                   Withdrawn                     19
               4                   Withdrawn                     19
               5                   Withdrawn                     19
               6                   Approved                      20
               7                   Approved                      22
               8                   Deferred                      22
               9                   Deferred                      22
               10                  Approved                      44


               (Presented by Coleman Stipanovich)

               ITEM                ACTION                       PAGE

               1                   Approved                      45
               2                   Approved                      45
               3                   Approved                      46
               4                   Report                        46
               5                   Approved                      55

               CERTIFICATE OF REPORTER                           56


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

           2            (The agenda items commenced at 9:40 a.m.)

           3             GOVERNOR BUSH:  The next Cabinet meeting is

           4        Tuesday, April 8, 2003.  I thought I would give

           5        the Cabinet members an update on the Cabinet

           6        voting status in the legislature.

           7             I have some good news.  We asked the

           8        legislature to clarify some of the voting

           9        requirements; it's on the calendar of both

          10        chambers, legislation in Senate Bill 1488 in

          11        the Senate, and it's broken into two parts in

          12        the House, House Bill 739 and House Bill 1627.

          13             And these bills address the voting

          14        requirement necessary when dealing with

          15        state-owned lands, certain actions by the

          16        Administration Commission and actions taken by

          17        the Clemency Board in addition to cleanup

          18        matters.

          19             So all is well.  It looks like, if

          20        possible, these bills will pass by the end of

          21        this week; if not it will pass next week, so

          22        the next Cabinet meeting I think we'll have --

          23        well, you never know.  So we are in the

          24        sausage-making phase of the sessions, but we

          25        are hopeful the next Cabinet meeting we'll have

           1        these issues resolved.  I am sure there is some

           2        people in Broward County that will be happy.

           3             Division of Bond Finance.

           4             CFO GALLAGHER:  Motion on the minutes.

           5             GENERAL CRIST:  Second.

           6             GOVERNOR BUSH:  Moved and seconded.  Without

           7        objection, the motion passes.

           8             MR. WATKINS:  Governor, I would like to

           9        request withdrawal of item number 2.

          10             CFO GALLAGHER:  Motion to withdraw.

          11             GENERAL CRIST:  Second.

          12             GOVERNOR BUSH:  There's a motion to withdraw

          13        and a second, the item is withdrawn.

          14             MR. WATKINS:  Item number 3 is a resolution

          15        authorizing the issuance of up to $24,045,000 in

          16        Housing Revenue Bonds for Florida Atlantic

          17        University.

          18             CFO GALLAGHER:  Motion.

          19             COMMISSIONER BRONSON:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.  Without

          21        objection, the item passes.

          22             MR. WATKINS:  Item number 4 is report of

          23        award on competitive sale of $445,980,000 of

          24        Refunding Bonds for the Turnpike System.

          25             The bonds were awarded to the low bidder

           1        at a true interest cost of 3.85 percent,

           2        generating a gross savings, debt service

           3        savings of 60.4 million or 43.8 million on a

           4        present value basis.

           5             CFO GALLAGHER:  Motion on 4.

           6             GENERAL CRIST:  Second.

           7             GOVERNOR BUSH:  Moved and seconded.  Without

           8        objection, the item passes.

           9             MR. WATKINS:  Item number 5 is a report of

          10        award on the competitive sale of 74,575,000 of

          11        Save Our Coast Refunding Bonds.

          12             The bonds were awarded to the low bidder

          13        at a true interest cost of 2.43 percent,

          14        generating gross debt service savings of

          15        approximately seven and a half million dollars

          16        or 6.6 million on a present value basis.

          17             CFO GALLAGHER:  Ben, how did we get such a

          18        good rate on the bonds for the Save Our Coast as

          19        opposed to DOT?

          20             MR. WATKINS:  They are both great rates.

          21             CFO GALLAGHER:  I understand that.  One is

          22        even greater.

          23             MR. WATKINS:  The turnpike loan was a 20-year

          24        maturity structure; that was the remaining life of

          25        the loan on the bonds we issued.  On the Save Our

           1        Coast loan, it was only a 10-year maturity

           2        structure.  So one was a 10-year loan and one was

           3        a 20-year loan.

           4             CFO GALLAGHER:  I knew there was a good

           5        reason.

           6             MR. WATKINS:  By way of review, our emphasis

           7        and our focus and our priorities have been over

           8        the last quarter to get deals ready to bring to

           9        market to take advantage of interest rates.  In

          10        the last three months, we have executed seven

          11        transactions, totalling $840 million in principal

          12        amount, just on refundings, generating a gross

          13        savings of about $105 million for the state.

          14             GOVERNOR BUSH:  Rates have gone up now?

          15             MR. WATKINS:  Yes, they have, over the last

          16        two weeks.  Everything we could do -- everything

          17        that was economically feasible to refund has been

          18        refunded.

          19             We had one deal that we were -- that was

          20        approved at the last Cabinet meeting and the

          21        market got away from us on that.  Interest

          22        rates have gone up dramatically over the last

          23        couple of weeks.  So we have done everything

          24        that's economically feasible to do at this

          25        point.

           1             GOVERNOR BUSH:  Thank you, Ben.

























           1             GOVERNOR BUSH:  Financial Services

           2        Commission.

           3             MR. TORNILLO:  Thank you, Governor, Cabinet,

           4        it's a different perspective standing in front of

           5        you than it is sitting behind you.

           6             We have one agenda item.

           7             GOVERNOR BUSH:  You want to be more specific

           8        about that?

           9             MR. TORNILLO:  We have one agenda item, is

          10        the appointment of a director for the Office Of

          11        Insurance Regulation.

          12             If you would like, I can go through a

          13        little background history of how we got to

          14        where we are today.

          15             During the first advertising period, we

          16        only had eight applicants who applied; six met

          17        the statutory qualifications, but only one of

          18        those six met what you all were looking for in

          19        preferred qualifications which has some

          20        regulatory experience.  That was Kevin McCarty.

          21             The Commission action they took on the

          22        Special Cabinet meeting was to temporarily

          23        appoint Kevin to a 90-day term limit; asked us

          24        to readvertise the position, with that added

          25        preferred qualifications in the advertisement.

           1        We focussed in the second advertising period on

           2        a lot more web-based advertising.  We did

           3, New York Times On-line, Washington

           4        Post On-line and --

           5             GOVERNOR BUSH:

           6             MR. TORNILLO:  Probably over

           7        50 percent of the applicants we got were based on

           8        the website advertising we did not do the first

           9        time.

          10             We increased the applicant pool by

          11        about -- we had 55 -- 52 applications were

          12        received, 45 met the statutory requirements and

          13        of those 45, six met both the statutory and

          14        preferred qualifications, which had two years

          15        of regulatory experience within the previous

          16        five years.

          17             If would you like, I can read the

          18        applicants into the record if you want me to do

          19        that.  Kevin McCarty, in alphabetical order,

          20        Kevin McCarty, the current director, Office of

          21        Insurance Regulation; David Parsons was the

          22        Current Deputy Insurance Commissioner of the

          23        State of Alabama; John Pouliot, Sr.  was

          24        assistant director for the Ohio Department of

          25        Insurance; George Sinor, Assistant

           1        Commissioner, Tennessee Department of

           2        Insurance, who has since withdrawn his

           3        application; Donnie Spann, Chief Examiner for

           4        the Tennessee Department of Insurance; Kirk

           5        Yeager, assistant insurance commissioner, State

           6        of Colorado.

           7             Several offices also left to interview, an

           8        applicant who fell just shy of the two-year

           9        requirement of regulatory experience, he had

          10        one -- he a little over year, and that

          11        individual was Bruce Heffner, who was former

          12        deputy insurance commissioner for the state of

          13        Ohio.

          14             Each office individually interviewed who

          15        they wished to, and I guess that sets the stage

          16        for you today.  The only requirement in voting

          17        is it takes a majority of the Commission, and

          18        the Governor and Chief Financial Officer must

          19        be on the preveiling side.

          20             GOVERNOR BUSH:  Any discussion?

          21             GENERAL CRIST:  I would like to make a motion

          22        that we, unless there is discussion, that we go

          23        ahead and pick Kevin McCarty as director.

          24             COMMISSIONER BRONSON:  Second.

          25             GOVERNOR BUSH:  I want to put on the record

           1        the people I interviewed.  I interviewed

           2        Mr. Parsons, Pouliot, Heffner, Yeager and Kevin.

           3        Any other discussion?

           4             CFO GALLAGHER:  No, I interviewed Heffner,

           5        McCarty, Parsons, Pouliot and by phone, Kirk

           6        Yeager.  And I agree with my colleagues, that I

           7        think it would be best for the staff if this

           8        Commission were to continue with Kevin.

           9             GOVERNOR BUSH:  I agree.  Any other

          10        discussion?

          11             There is a motion and second to appoint

          12        Kevin McCarty.  All in favor say aye.

          13             THE CABINET:  Aye.

          14             GOVERNOR BUSH:  All opposed?

          15             Unanimous.  Is Kevin here?

          16             MR. TORNILLO:  I don't believe he is.

          17             GOVERNOR BUSH:  Thank you.









           1             GOVERNOR BUSH:  Department of Revenue.

           2             CFO GALLAGHER:  Motion on the minutes.

           3             GENERAL CRIST:  Second.

           4             GOVERNOR BUSH:  Moved and seconded.  Without

           5        objection, the item passes.

           6             MR. ZINGALE:  We have four rule changes here

           7        today.

           8             Item number 2 revises procedures for

           9        scheduling payment plans for tax assessments.

          10        Request approval.

          11             CFO GALLAGHER:  Motion on 2.

          12             COMMISSIONER BRONSON:  Second.

          13             GOVERNOR BUSH:  Moved and seconded.  Without

          14        objection, the item passes.

          15             MR. ZINGALE:  Item number 3 provides for 2002

          16        law changes concerning the verification of sales

          17        tax credits.  Request approval.

          18             CFO GALLAGHER:  Motion on 3.

          19             COMMISSIONER BRONSON:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.  Without

          21        objection, the item passes.

          22             MR. ZINGALE:  Item number 4 provides for 2002

          23        law changes in the technical updates to doc stamp

          24        tax, gross receipts tax, oil and gas production

          25        tax and insurance premium tax. Request approval.

           1             CFO GALLAGHER:  Motion on 4.

           2             COMMISSIONER BRONSON:  I have a question.

           3             GENERAL CRIST:  Question.

           4             GOVERNOR BUSH:  Yes.

           5             COMMISSIONER BRONSON:  Governor, I want to

           6        make sure now, not knowing all of these rules

           7        myself verbatim, that we are -- there are no

           8        issues that we are looking at today that's going

           9        to require legislative -- any updating by the

          10        legislative process to be able to do any of the

          11        rules listed here?

          12             MR. ZINGALE:  No, sir.

          13             CFO GALLAGHER:  These are basically last

          14        legislative year's implementation.

          15             MR. ZINGALE:  And these have been reviewed by

          16        APA to ensure that it doesn't breach any

          17        legislative prerogatives.

          18             CFO GALLAGHER:  There is a motion.

          19             COMMISSIONER BRONSON:  Second.

          20             GOVERNOR BUSH:  Moved and seconded.  Without

          21        objection, the item passes.

          22             MR. ZINGALE:  Item 5 provides for 2002 law

          23        changes and technical amendments to intangible

          24        personal property, estate tax, and corporate

          25        income tax.  Request approval.

           1             CFO GALLAGHER:  Motion on 5.

           2             COMMISSIONER BRONSON:  Second.

           3             GOVERNOR BUSH:  Moved and seconded.  Without

           4        objection, the item passes.

           5             Thank you, Jim.





















           1             GOVERNOR BUSH:  Board of Trustees.

           2             CFO GALLAGHER:  Move to defer to May 13 item

           3        number 1.

           4             GOVERNOR BUSH:  There is a motion to defer.

           5             GENERAL CRIST:  Second.

           6             GOVERNOR BUSH:  And a second.  The item is

           7        deferred until May 13, 2003.

           8             David, before we start, can I make a -- I

           9        would like to recognize Nancy and Tom Struhs

          10        from Pinehurst, North Carolina now.  And today

          11        is David's mom's 75th birthday.  Where are

          12        they?

          13             MR. STRUHS:  They are in the back of the

          14        room, Governor.

          15             (Applause.)

          16             MR. STRUHS:  We are doing our part to sure up

          17        the Florida tourism economy.

          18             GOVERNOR BUSH:  You guys went to Disney?

          19             MR. STRUHS:  Yes, we did.

          20             GOVERNOR BUSH:  How was it?

          21             MS. STUHS:  Wonderful.

          22             GOVERNOR BUSH:  Excellent.  It is surprising

          23        you are not living in Florida instead of

          24        Pinehurst.  That's a little bit of a

          25        disappointment.  Other than that, you have a great

           1        son.

           2             CFO GALLAGHER:  You are heading in the right

           3        direction.

           4             GOVERNOR BUSH:  You should be proud of the

           5        Secretary.  He is, in my opinion, the finest

           6        Secretary of Environmental Protection Agencies in

           7        the country.

           8             MR. STRUHS:  You are very kind.  Thank you,

           9        sir.

          10             I am happy to report also I was able to

          11        bring one of my secret weapons to the

          12        confirmation hearing this morning.  And thanks

          13        to having my parents there in the front row, I

          14        got a 7/0 vote.  It's a good technique.  Maybe

          15        it will work at the Cabinet meeting.  Who

          16        knows?

          17             GOVERNOR BUSH:  Probably not.  You may be the

          18        best Secretary, but we still have to do our jobs.

          19        Good try.

          20             Item 2.

          21             MR. STRUHS:  Recommend deferral of item 2.

          22             GOVERNOR BUSH:  Is there a motion to defer?

          23             COMMISSIONER BRONSON:  Motion to defer.

          24             GENERAL CRIST:  Second.

          25             GOVERNOR BUSH:  Moved and seconded.  The item

           1        is deferred.

           2             MR. STRUHS:  To expedite this, gentlemen, I

           3        would recommend a motion to withdraw items 3, 4

           4        and 5.

           5             These items are being withdrawn because

           6        the legislature still has not acted to clarify

           7        the ambiguity in terms of a super majority

           8        vote.

           9             CFO GALLAGHER:  Motion to withdraw 3 through

          10        5.

          11             COMMISSIONER BRONSON:  Second.

          12             GOVERNOR BUSH:  There's a motion and a second

          13        to withdraw items 3 through 5.  Without objection,

          14        hopefully the next --

          15             MR. STRUHS:  We'll hopefully bring it back to

          16        you in a couple of weeks.

          17             Substitute item number 6 is a Trail

          18        Project in Broward County.

          19             This is approximately 6 acres in the

          20        Parkland Greenway Enhancement Project.  The

          21        county has been a good partner with this

          22        project.  The purchase price for the Board of

          23        Trustees is 44 percent of the approved value.

          24             The Board of Trustees will take a hundred

          25        percent of the title.  The property was

           1        appraised or approved at 1,115,000.

           2             The county purchased it for 975, and for

           3        the state share of $487,500, the Board of

           4        Trustees takes a hundred percent title and will

           5        be then perpetually preserved as a trailhead

           6        for an important greenway in this community.

           7             I would point out that this project was

           8        approved and reviewed by the state's Greenways

           9        and Trails Council.  The property itself was

          10        commercially zoned 15 years ago or more.

          11             CFO GALLAGHER:  Motion on 6 or substitute 6.

          12             GOVERNOR BUSH:  There is a motion.  Is there

          13        a second?

          14             CFO GALLAGHER:  It is a substitute, it's a

          15        motion on substitute 6.

          16             COMMISSIONER BRONSON:  Second.

          17             GOVERNOR BUSH:  There is a motion and second

          18        on item 6, substitute item 6.  Without objection,

          19        the item passes.

          20             CFO GALLAGHER:  Motion on --

          21             MR. STRUHS:  If we could have the camera,

          22        please, for item 7.

          23             This item, substitute item 7, is a

          24        purchase agreement to acquire 710.74 acres

          25        within Estero Bay Florida Forever Project.

           1             We recommend approval of the item.  I am

           2        prepared to answer any questions you may have.

           3             GOVERNOR BUSH:  Where is this compared to the

           4        property that is in general controversy?

           5             MR. STRUHS:  Is it this piece here?  It's

           6        right here.  I believe, is that correct?

           7             I am sorry, it's this one right here.  If

           8        you can see that.

           9             GOVERNOR BUSH:  Do you know the status of

          10        that property?  They had a county commission

          11        meeting yesterday.

          12             MR. STRUHS:  I was told it was dealing -- the

          13        county commission was dealing with a different

          14        piece of property yesterday.

          15             GOVERNOR BUSH:  They were dealing with

          16        property other than the property that we did

          17        not -- we rejected?

          18             MR. STRUHS:  I believe it was a different

          19        parcel.

          20             GOVERNOR BUSH:  Okay.

          21             CFO GALLAGHER:  I would make a motion on

          22        item 7.

          23             GENERAL CRIST:  Second.

          24             GOVERNOR BUSH:  Any other discussion?  There

          25        is a motion and a second.  Without objection, the

           1        item passes.

           2             CFO GALLAGHER:  Moved to defer 8 and 9.

           3             GOVERNOR BUSH:  There is a motion to defer

           4        items 8 and 9 and a second.  The items are

           5        deferred.

           6             MR. STRUHS:  The final item is item

           7        number 10.  I would like to recognize Ms. Carroll

           8        who would like to speak to this issue before you

           9        take any final action.  We are -- excuse me?

          10             GOVERNOR BUSH:  That's not your final item.

          11             MR. STRUHS:  Yes, it is.

          12             Final item 10.  Ms. Carroll would like to

          13        speak to this item before you take any final

          14        action.

          15             We are, as you know, seeking permission to

          16        exercise, if need be, the power of eminent

          17        domain.  In this case we think that's going to

          18        be required.

          19             You may recall, there are three parcels,

          20        805 acres in total, all in holdings necessary

          21        to complete the project in this Golden Gate

          22        Estates area.

          23             We have offered approximately 150 percent

          24        of the appraised value, a total of

          25        $1.2 million.  We believe the state needs to

           1        have a fee simple interest in the land, given

           2        the fact that we will be putting it under

           3        water.

           4             We recommend approval of the item.  I

           5        believe Ms. Carroll is here.

           6             GOVERNOR BUSH:  Sorry you didn't get to speak

           7        last week, about two weeks ago.

           8             MS. CARROLL:  Thank you for hearing me once

           9        again.  I know you heard me quite a few times now.

          10             I came to you at the end of January, and

          11        at that time I encouraged you not to give DEP

          12        the authorization to do eminent domain on this

          13        property.

          14             I explained to you then the cultural

          15        significance of the property.  I explained that

          16        the tribe uses it to conduct its native

          17        cultural activities; they collect palm frons

          18        there to build chickees; they collect tribal

          19        herbal medicines; we had this discussion, I

          20        don't want to bore you again.

          21             Since that time, or at that time Chief

          22        Financial Officer Gallagher made a motion and

          23        sent DEP back for the purpose of looking for

          24        alternatives.

          25             As I had explained at that meeting, that

           1        transferring of tribal lands of cultural

           2        significance was not acceptable to the tribe,

           3        it was against their tribal policy.  The fact

           4        of the cultural significance of this land has

           5        been confirmed since that time.  We have had

           6        archaeologists out there, and there has been

           7        historical sites found on location.  There is

           8        an old hunt camp there, and we are working on

           9        documenting that further.

          10             During the intervening couple of months,

          11        it's my understanding that DEP was to go back

          12        to try and find alternatives for something like

          13        a land swap because, as I suggested to you,

          14        other lands of similar quality and similar

          15        cultural or natural significance would be

          16        reasonable to offer to the tribe as an

          17        alternative.

          18             They, of course, would have to make the

          19        decision about whether that was acceptable or

          20        not.

          21             Interestingly enough, when the State of

          22        Florida and the Federal Government own vast

          23        quantities of land in South Florida, DEP has

          24        indicated an inability to make any kind of

          25        recommendation of a swap.  This is extremely

           1        disappointing to us and a big surprise, as I

           2        had heard over time that, well, it's difficult,

           3        we are looking hard, et cetera, et cetera, but

           4        to come to this point when we had such high

           5        hopes of being able to do something rather than

           6        have the extreme conflict --

           7             GOVERNOR BUSH:  Can I ask you a few

           8        questions?

           9             MS. CARROLL:  Sure, you may.

          10             GOVERNOR BUSH:  What kind of swap would you

          11        accept, out of curiosity?

          12             MS. CARROLL:  I can't answer that question,

          13        and I can't answer --

          14             GOVERNOR BUSH:  It's a two-way street.

          15             MS. CARROLL:  Let me finish, please.

          16             GOVERNOR BUSH:  Yes, ma'am.

          17             MS. CARROLL:   I am sorry, I don't mean to be

          18        short, I just want to answer your question fully

          19        because a half answer is not the right answer.

          20             I can't answer that as a person because

          21        that is a decision of the tribe; that's

          22        something that has to be done through a process

          23        that involves the tribal leadership and tribal

          24        elderly, and the tribal elders would be briefed

          25        on whatever the subject offer was and they

           1        would hopefully build community consensus.

           2             GOVERNOR BUSH:  Has the tribal leadership had

           3        a discussion about whether a swap would be

           4        acceptable?

           5             MS. CARROLL:  We have had that discussion.

           6        They would not give an answer that any specific

           7        thing would be appropriate.  It would have to be

           8        addressed in the case of the offer.  But they have

           9        indicated that they would give due consideration

          10        and real effort to consider an alternative like

          11        that.

          12             GOVERNOR BUSH:  Have they given any

          13        parameters under which they would consider a swap?

          14             MS. CARROLL:  They have given no specific

          15        parameters, but I have given an indication of the

          16        types of lands that I expected to have the most

          17        appeal.  And I have suggested to DEP that the most

          18        appealing areas would be closest to existing

          19        tribal reservations.

          20             For instance, I have a map here, maybe

          21        this would be -- this is a DEP map.  They

          22        provided this to me approximately a week ago,

          23        at the time when they told me there was

          24        absolutely nothing in the State of Florida that

          25        they could offer as a potential swap.

           1             As you can see from the red and green

           2        areas, there is vast areas that are in public

           3        ownership.  I cannot, as I say, I am totally

           4        unable to obligate you on what the tribe could

           5        do because that is just like going to the

           6        legislature; you can't tell me what law the

           7        State of Florida would pass, but I can say and

           8        did say --

           9             GOVERNOR BUSH:  With all due respect, I can

          10        tell you what my parameters are and what my

          11        principles are and what my guidelines would be for

          12        an acceptable bill.  That's what I do everyday,

          13        that's why I am seeking answers from you because

          14        it's kind of hard to negotiate in a vacuum.

          15             MS. CARROLL:  Sure, and I have done that for

          16        them.  I have done what you described, I believe.

          17        And I have suggested to them, as you can see here,

          18        this is reservation land and there is an existing

          19        reserve area down here.  And I suggest that lands

          20        in this area, where I am generally jestering,

          21        which are in state ownership over this way as

          22        well, are likely to be -- have some receptivity

          23        from the tribe.

          24             CFO GALLAGHER:  Would you point out where

          25        this particular piece is, so we are --

           1             MS. CARROLL:  It's this one right here.  It's

           2        kind of small.

           3             GOVERNOR BUSH:  Southern Golden Gates.

           4             MS. CARROLL:  I guess what I want most to

           5        tell you today is I guess I heard from DEP that

           6        they have nothing they can offer.  I think that it

           7        is -- I find that difficult, I find that difficult

           8        to accept.  And I have got to think there are

           9        other alternatives than going to war over this.

          10        And I have been here again and again to try and

          11        encourage alternatives, which I will in good faith

          12        take back to the tribe and have them considered.

          13             So I hope today you will tell DEP please

          14        go back to the drawing board and try again.

          15             Authorizing eminent domain would be a -- I

          16        think it would inhibit discussions.  I will

          17        move expeditiously with anything anyone brings

          18        to me.  I have suggested this as something I

          19        could legitimately put in front of the council.

          20        I will accept their -- if there are other

          21        alternative ways to dealing with this, is

          22        sensitive to the tribe's cultural and sovereign

          23        needs, I will take those to the council as

          24        well, but selling culturally sensitive land is

          25        an indictment to the tribe, I can't recommend

           1        that.

           2             COMMISSIONER BRONSON:  I have a question that

           3        I am trying to determine total need for

           4        acquisition over doing an easement program where

           5        the Miccosukee Tribe has the ability to utilize

           6        that property for herbal collection, and so forth,

           7        without any ability, if they sell the development

           8        rights, so that it stays in its natural state.

           9             Do we truly need to buy it, or can we do

          10        what we have done in other areas and receive

          11        the development rights and yet let them still

          12        use it for the collection of their herbal

          13        medicines, and so forth, without --

          14             GOVERNOR BUSH:  This is the project where

          15        the -- this is the same area, remember we

          16        discussed last two weeks ago with the gentleman

          17        with a homestead.  So an easement that they won't

          18        be able to use the property for what their

          19        intended the purpose is, if it's got a foot of

          20        water on it.

          21             MS. CARROLL:  I am not sure that -- we should

          22        ask DEP because they are the technical people, but

          23        I am not sure there is a foot of water.  I think

          24        that there is less water than that on the

          25        property.  I can't say one way or the other

           1        whether your suggestion would be acceptable to the

           2        tribe, but I am not sure whether or not it's true

           3        they would not be able to use it for their

           4        purposes.  It's not like --

           5             GOVERNOR BUSH:  David, you want to answer

           6        that?

           7             MR. STRUHS:  The amount of water, gentlemen,

           8        is variable; it depends on the season and the

           9        climatic conditions.

          10             I think on average you can expect to see

          11        at least 6 inches of water; could be

          12        substantially more, could be less.  But in

          13        terms of our purposes, when we imagine 6 inches

          14        of water on a land, we believe it's critical

          15        for the state to have the underlying fee simple

          16        ownership if you are going to have it inundated

          17        to that level and that extent.  That's why we

          18        have taken this position.

          19             I have to also, just for the record,

          20        correct a statement I made earlier.  I misread

          21        my own handwriting.  I told you the offer was

          22        1.2 million.  In fact it's 1. 7 million.  And I

          23        think there is, sir, an advantage for all the

          24        parties in offering them the cash and then

          25        allowing them to use that to purchase any other

           1        lands that they would choose.

           2             COMMISSIONER BRONSON:  Governor, I know this

           3        is a sticky situation, trying to deal with one of

           4        our two major tribes in Florida.

           5             I do know the cultural heritage at least

           6        enough that I have studied historical aspects

           7        of both Miccosukee and Seminole, is they treat

           8        that land differently than what you and I would

           9        normally treat a piece of land as tradeable or

          10        usable for what they use it for, which a lot of

          11        it has to do with their heritage and their

          12        medicines and other things they use it for.

          13             So I know their thinking on this is a

          14        whole lot different than the average person

          15        thinks about a piece of land or a piece of

          16        property.  I want to make sure that we do the

          17        right thing and that we find out for sure that

          18        6 inches of water --

          19             I have seen 6-inches of water on my

          20        property before.  And it does ebb and flow, and

          21        there are a lot of things you can still use

          22        that property for naturally, so I am not going

          23        to discount the fact whether there may be or

          24        may not be 6 inches of water on there as to

          25        whether it's usable property or not.  The issue

           1        is, first of all, do we have to buy that piece

           2        of land?  Is it going to be --

           3             GOVERNOR BUSH:  For the record, 6 inches on

           4        average, so --

           5             COMMISSIONER BRONSON:  You are going to have

           6        ebb and flow; that's the point, it's going to be

           7        ebb and flows.  And I have not seen the

           8        hydrological stage of that project yet.  And I

           9        would like to make sure if we are going to do

          10        this, we do it the right way and we do make a

          11        legitimate offer that the Miccosukees feel that

          12        they can live with and that we work out these

          13        issues.

          14             I don't want us to get tied up in federal

          15        issues, should it come down to that, and then

          16        tie up a whole project and maybe have a problem

          17        in Washington when the project comes down to be

          18        finalized.  I want to make sure we are all in

          19        agreement, so that we don't have those problems

          20        in the end.  So I think that we need to go very

          21        slowly here to make sure we are doing the right

          22        thing.  And I believe that Commission Gallagher

          23        I believe has a motion to make.

          24             CFO GALLAGHER:  I do.

          25             GENERAL CRIST:  I want to make another

           1        comment.

           2             GOVERNOR BUSH:  Commissioner Crist.

           3             GENERAL CRIST:  Yes.  I am curious,

           4        Ms. Carroll, have you been sort of negotiating

           5        with DEP on behalf of the tribe?

           6             MS. CARROLL:  Well, I have been speaking with

           7        DEP.  And I have been offering them all the

           8        information that I have.

           9             But to date, they haven't provided any

          10        alternatives to negotiate over.  They have

          11        asked me -- they provided me on several

          12        occasions what is in state ownership, and I

          13        indicated what I expect would be reasonable to

          14        make an offer to the tribe about as, again, I

          15        can't commit what they would accept, but I have

          16        certainly indicated places that are likely to

          17        be of most interest.

          18             GENERAL CRIST:  You are the one that I asked,

          19        but what I am curious about is the notion of a

          20        swap of land.  And I think I was sort of in the

          21        direction that was given in the previous meeting

          22        of ours, if I can form a question.

          23             Was there actual discussion that you or

          24        someone else had on behalf of the tribe with

          25        the DEP as it relates to a swap?

           1             MS. CARROLL:  What was the last part, as to a

           2        swap?

           3             GENERAL CRIST:  As to a swap.

           4             MS. CARROLL:   Yeah.  There was --

           5             GENERAL CRIST:  I am trying to get a sense

           6        for the discussion and the level of give and take,

           7        if you will.

           8             MS. CARROLL:  Sure.  I had suggested that the

           9        water conservation area lands might very well be

          10        appropriate.  They are, as I indicated before,

          11        this is the -- there is the I-75 Reservation

          12        there, the Miccosukee Reserve Area and Everglades

          13        National Park here.  So they are in and around

          14        Water Conservation Area 3A.

          15             We have a perpetual lease to all the state

          16        owned lands.  There are quite a few privately

          17        owned lands in Water Conservation Area 3A, but

          18        all lands which are owned by the state, the

          19        tribe has a perpetual lease to those for the

          20        purpose of hunting and fishing.  And they can

          21        dwell out there as long as they are in native

          22        dwellings, and the normal cultural -- some of

          23        their normal cultural uses.

          24             And I suggested since the reservations

          25        were right there, that they might -- that land

           1        close to that would not be highly intrusive to

           2        the state or to the activities of the

           3        department.

           4             Again, the tribe would have to approve

           5        anything like that.  But I suggested they

           6        should look there.  I also suggested they

           7        should look anyway in the general Everglades

           8        area, that would have similar quality.  We are

           9        not saying we don't want to swap land because

          10        we hate swapping land.  This is significant

          11        land of the kind that meets the cultural needs

          12        of the tribe; so we would like to see lands

          13        which could provide for the cultural needs

          14        again.

          15             They suggested to me once that maybe there

          16        might be some land available in Duval County;

          17        that was never an actual offer, but it didn't

          18        really seem like anything that would be

          19        appropriate.  But as I have consistently

          20        offered, I will take back anything, any kind of

          21        offer.  I am just very disappointed there has

          22        been nothing to take back to the tribe.

          23             GOVERNOR BUSH:  Thank you.  Secretary, unless

          24        there is some other questions, I personally

          25        believe we ought to, given my feeling on eminent

           1        domain is not the first, second or third -- it's

           2        kind of the last, last, last, last choice, but I

           3        do think that the department deserves some credit

           4        at least of making a good faith offer here to

           5        negotiate when the price of the property that --

           6        the purchase price, negotiated price, the last

           7        offer was three times higher than what the tribe

           8        paid.

           9             A swap is, in essence, a swap; you could

          10        buy the property, sell the property and go buy

          11        property and be the equivalent of a swap.  If

          12        you want to do a swap, we can work on that.

          13        And I know it's not the intent of the tribe to

          14        make money -- they make money in other ways --

          15        to increase the value of this over a six-year

          16        period in an area that doesn't have increased

          17        development rights by three fold, shows the

          18        effort that the department has made to try to

          19        purchase this property at a fair price and I

          20        want to be on the record with that.

          21        Commissioner.

          22             CFO GALLAGHER:  I recognize that the

          23        Miccosukee Tribe is our partner in the Everglades

          24        Restoration.  The tribe has a historical

          25        perspective of what the Everglades has been and

           1        is.  And it's my desire that this restoration

           2        project will return to a state very similar to

           3        before we inhabited Florida.

           4             Governor and Fellow Cabinet Members, I

           5        also recognize that fee simple ownership by the

           6        Trustees of the parcel for consideration is a

           7        necessity for the completion of the restoration

           8        project.  I respect and am sensitive to the

           9        access and traditional use by the tribe on this

          10        parcel.  And I must say, Governor, I am

          11        disappointed that the agenda is considering

          12        condemnation rather than exchange.

          13             With that, I want to move this item with

          14        the direction that staff finds a vehicle to

          15        honor the tribe's traditional uses.  So that's

          16        a motion.

          17             GOVERNOR BUSH:  Is there a second?

          18             COMMISSIONER BRONSON:  Governor, I can

          19        probably second that if we defer and let the

          20        tribal council get a chance to see what we have

          21        offered here in our position.  That process is a

          22        little bit slower than most processes, but it

          23        takes Chairman Cypress to go back and work with

          24        his council members of the Miccosukee Tribe so

          25        that they understand everything that's been

           1        offered to them by the state and the options, and

           2        bring it back at the next regular meeting after he

           3        has the opportunity to meet under their normal

           4        schedule with those members.  I don't know what

           5        that date or time is.  I am hoping it's within 30

           6        days.

           7             GENERAL CRIST:  A point, I have been informed

           8        by my staff the council meets again on Friday.

           9             MS. CARROLL:  It's a community meeting on

          10        Friday, but all council members typically attend

          11        the community meeting.  And that meets the needs

          12        of trying to advise the community on any offer.

          13             GOVERNOR BUSH:  I am not sure we will have an

          14        offer by Friday.  But we already heard from the

          15        council of the tribe that in principle the concept

          16        of a swap is acceptable, but they are not going to

          17        pass judgment until they get a specific proposal

          18        in front of them, which is fair.

          19             So I think Commissioner Gallagher's,

          20        Treasurer Gallagher's resolution fulfills your

          21        concern about --

          22             COMMISSIONER BRONSON:  I can second his

          23        motion on it.

          24             GOVERNOR BUSH:  There is a motion and a

          25        second.  Any other discussion?

           1             GENERAL CRIST:  Point.  If I heard

           2        Commissioner Bronson right, I think what he was

           3        saying was that he can second it, if the tribal

           4        council had an opportunity to review it before --

           5        which sounded like a deferral to me.  Maybe I am

           6        wrong.

           7             COMMISSIONER BRONSON:  I was trying to defer

           8        to the next meeting after the council has a chance

           9        to see this offer and understand the offer but --

          10             MS. CARROLL:  We did just receive the money

          11        offer also I believe last Thursday, so they

          12        haven't even had a chance to see that yet.  So I

          13        think the deferral would certainly encourage me to

          14        have them a more positive response.

          15             GOVERNOR BUSH:  There is no offer in this

          16        resolution.

          17             MS. CARROLL:  No, there was an offer made

          18        by --

          19             GOVERNOR BUSH:  You take your time, if you

          20        like it, you can come back to us, we won't have

          21        another meeting on this, it would be great; but

          22        this is just a proposal to not go through -- not

          23        to go through condemnation period; because of the

          24        expression of good faith of the tribe, which we

          25        appreciate greatly, we should pursue the concept

           1        of a swap.

           2             And if, based on our good working

           3        relationship with the tribe and our hope that

           4        this good faith suggestion is sincere, we'll

           5        pursue it and will ask the department to make

           6        proposals.

           7             COMMISSIONER BRONSON:  I will second the

           8        motion by Treasurer Gallagher and also make a

           9        little caveat here; that that good faith needs to

          10        be on both sides of the street, and some property

          11        close to where the traditional Miccosukee tribal

          12        area is as a swap to me is a legitimate request by

          13        the tribe and not somewhere in Duval County where

          14        they can't get to it.

          15             GOVERNOR BUSH:  That's a fair comment.  I am

          16        sure the Secretary is listening intently.

          17             MR. STRUHS:  I am listening intently, but I

          18        am a little bit confused because I have to have

          19        clear instructions as to what you expect the

          20        department to do at this point.  I am not sure I

          21        am clear.

          22             CFO GALLAGHER:  The motion basically

          23        authorizes DEP to proceed with condemnation

          24        provided the staff cannot come to an agreement

          25        with the tribe or a swap, or even use of the

           1        existing property.

           2             There is nothing wrong with us owning it.

           3        We own a lot of property that is pretty much

           4        leased to the tribe forever, and that would

           5        allow us to be part of that negotiation.

           6             MR. STRUHS:  So the authority is to move

           7        forward with eminent domain in the event we are

           8        unable to --

           9             CFO GALLAGHER:  -- come to an agreement with

          10        the tribe.

          11             MR. STRUHS:  Either come up with a land swap

          12        or cash deal?

          13             CFO GALLAGHER:  Right.

          14             GOVERNOR BUSH:  I would give instructions, as

          15        Commissioner Bronson said, that this good faith

          16        stuff goes both ways, and there is a ton of

          17        property.  We are big; we are not Rhode Island

          18        here.  We have acres and acres of property owned

          19        in private hands, it does not have to be

          20        state-owned land; I would assume since we are

          21        prepared to buy the property from the tribe, we

          22        could purchase property to swap with them as well.

          23             So there should be no rational reason why

          24        we couldn't make proposals about properties

          25        that fit the kinds of properties where these

           1        types of thing can be grown.  I can't imagine,

           2        it shouldn't be in Duval County, I don't think.

           3        Doesn't make any sense.

           4             MR. STRUHS:  I will tell you in our effort to

           5        find some accommodation in a land swap, we did

           6        look statewide.

           7             One of the reasons it's problematic to

           8        find a parcel in the Water Conservation Area to

           9        the north and east of the area in discussion is

          10        a variety of issues.

          11             One is, of course, this water conservation

          12        area will be more island than ever before as

          13        holding water as a part of this restoration

          14        project.  So for the same reasons we are

          15        looking to acquire the properties in Southern

          16        Golden Gate Estates, the same reasons hold true

          17        in the water conservation areas.

          18             Above and beyond that, in terms of the

          19        water quality issues, as you know we are as a

          20        state moving forward in state and federal law

          21        to establish water quality goals and criteria

          22        for that part of the state.  And I can assure

          23        you that it keeps it much simpler if you keep

          24        the number of sovereign entities in the

          25        Everglades Protection Area to a minimum so we

           1        can effect the needed regulations that we are

           2        going to have to put in place.

           3             GOVERNOR BUSH:  I don't think the tribe's use

           4        of this property would impact water quality issues

           5        there.

           6             MR. STRUHS:  That's correct, it would give

           7        them legal standing in federal court.

           8             GOVERNOR BUSH:  There is some property that's

           9        outside the CERP area that -- just go across the

          10        highway north of there, literally, you are out of

          11        the area, that is one of the soon-to-be-approved

          12        projects, right?

          13             MR. STRUHS:  To put a finer point on it,

          14        there will be the introduction of new flows of

          15        water, the introduction of new flows of water into

          16        these conservation areas, so it will essentially

          17        be a new discharge.  And we are just sensitive to

          18        that in terms of water quality issues and

          19        regulations.

          20             GOVERNOR BUSH:  If you go just north of where

          21        the tribe currently owns property outside of the

          22        project, you are not in that area, is that

          23        correct?

          24             MR. STRUHS:  That's correct.

          25             GOVERNOR BUSH:  It's a big state.  I am

           1        confident, I am confident that you can find a

           2        piece of property with your very abled team that

           3        will determine whether or not the tribe has good

           4        faith on this, which I believe they will; and then

           5        we can move on without having to condemn the

           6        property, which is something that you heard our

           7        Governor and Cabinet has real concern about.

           8        Does that make sense?  Is that not the direction?

           9             MR. STRUHS:  Yes, sir, we can make that work.

          10             GOVERNOR BUSH:  Very good. There is a motion

          11        and a second.  Any other discussion?  All in favor

          12        say aye.

          13             THE CABINET:  Aye.

          14             GOVERNOR BUSH:  All opposed.  Thank you.

          15             We'll see you back soon.

          16             (Commissioner Bronson departs.)










           1             GOVERNOR BUSH:  State Board of

           2        Administration.

           3             CFO GALLAGHER:  Motion on the minutes.

           4             GENERAL CRIST:  Second.

           5              GOVERNOR BUSH:  Moved and seconded.  Without

           6        objection, the item passes.  Item 2.

           7             MR. STAPANOVICH:  Approval of a fiscal

           8        determination of an amount not exceeding

           9        $8,020,000 Tax Exempt Florida Housing Finance

          10        Corporation Multifamily Mortgage Revenue Refunding

          11        Bonds.  It is recommended the board approve the

          12        fiscal determination.

          13             GENERAL CRIST:  Moved.

          14             CFO GALLAGHER:  Seconded.

          15             GOVERNOR BUSH:  Moved and seconded.  Without

          16        objection, the item passes.

          17             MR. STAPANOVICH:  Item 3, recommend approval

          18        of fiscal determination of amount not exceeding

          19        5,740,000 Tax Exempt Florida Housing Finance

          20        Corporation Multifamily Mortgage Revenue Bonds,

          21        2003 Series.  It is recommend the board approve.

          22             CFO GALLAGHER:  Motion on 3.

          23             GENERAL CRIST:  Second.

          24             GOVERNOR BUSH:  Sounds like you are

          25        auctioning.  Moved and seconded.  Without

           1        objection, the item passes.

           2             MR. STAPANOVICH:  Item 4, Florida Retirement

           3        System Choice Statistics.

           4             Governor and Members, what we are doing

           5        here today is giving you an update on the

           6        Defined Contribution Program.  Attachment

           7        number 4 really summarizes that.

           8             I will cut to the aggregate numbers.  As

           9        you know, we had a group one, state employee,

          10        state university, community colleges; group

          11        two, which is school districts; and a group

          12        three and four which were cities, counties and

          13        special districts.

          14             In the aggregate we had 3.4 percent that

          15        enrolled in the investment plan which amounted

          16        to a total of $244,552,000.

          17             And I will be happy to answer any

          18        questions, Governor.

          19             GOVERNOR BUSH:  Any questions?

          20             CFO GALLAGHER:  Move item 5.

          21             GOVERNOR BUSH:  Is there a motion?

          22             MR. STAPANOVICH:  This is information only.

          23             GOVERNOR BUSH:  Onward.

          24             MR. STAPANOVICH:  Item 5, you asked some

          25        couple of meetings ago, Governor and Members, to

           1        bring forth the defined contribution budget

           2        proposal.

           3             This is what item 5 is for today.  Again,

           4        I think it was in response in terms of concern

           5        about the less than projected numbers that have

           6        been reached in the defined contribution

           7        program.  And I think that the budget,

           8        relatively speaking, reflects that.

           9             The 2003-'04 proposed budget continues to

          10        cover under law the administration of the

          11        Florida Retirement System Investment Plan and

          12        Financial Guidance Program of all 615,000

          13        employees.

          14             The proposed budget represents a

          15        45 percent reduction from the approved 2002-'03

          16        budgets.  That amounts to going from a

          17        31.6 million budget to a 17.3 million budget

          18        with a 14.4 million savings.

          19             The employer contribution rate for funding

          20        the PREORP would be reduced 8 basis points from

          21        15 basis points for contribution rates.

          22             GOVERNOR BUSH:  Coleman, could I ask you a

          23        question?

          24             MR. STAPANOVICH:  Yes.

          25             GOVERNOR BUSH:  How much of this is what we

           1        refer to in Tallahassee as recurring -- the

           2        31 million is a one-time expense, and how much

           3        does the average run rate for expenses mean?

           4             I don't think we spent a lot of money up

           5        front to compare, and there was going to be on

           6        going costs that -- so we are comparing -- my

           7        question is, is a legitimate comparison 31 to

           8        17, or would it be better to take the average

           9        ongoing obligations of that first year and

          10        compare it to reductions?

          11             MR. STAPANOVICH:  The question may be

          12        answered in this reflected number.  .

          13             If we did nothing than revising the

          14        engineering contracts and simply lived with the

          15        current contract moving forward, the budget

          16        would probably be in the neighborhood of

          17        28 million.  I suspect the difference between

          18        the 28 and 32 would be that nonrecurring

          19        capital outlay.

          20             CFO GALLAGHER:  I have a question.  Why are

          21        we charging an administrative fee of 75,000 up to

          22        125?

          23             MR. STAPANOVICH:  Page 7 of the budget,

          24        table 1, is what the Treasurer is referring to.

          25        If you -- Treasurer, if you look at the salaries

           1        on the first line of table 1 you will see salaries

           2        are going from -- we are having one position

           3        reduction, and it's going from $887,146 to

           4        $605,793 or a 31.2 percent reduction; 200 some odd

           5        thousand of that is what you call allocated costs.

           6             For example, you had people in the defined

           7        benefit plan throughout the organization that

           8        had time that they spent on the defined

           9        contribution plan, so part of that was an

          10        allocated cost.

          11             What we have done now is pretty much gone

          12        strictly to fixed costs and pulled back all

          13        those allocated costs.  The program is in such

          14        a posture now that with the eight full-time

          15        employees, we feel very comfortable that they

          16        can do this workload without the assistance of

          17        many other people in the define benefit side,

          18        thus have essentially almost no allocated costs

          19        as part of that budget reduction.

          20             However, there still would be about

          21        75,000 -- about 50,000 of allocated costs, and

          22        we literally made the subjective judgment, the

          23        Chief Financial Officer was to treat that, just

          24        roll it up into a fixed cost in terms of

          25        administrative fees; it's easier than try to

           1        allocate costs to administration --

           2             CFO GALLAGHER:  Let's say I go along with

           3        that one.

           4             How can you have still 250,000 in

           5        additional capital outlay that needs to be done

           6        if we got the first year completed?  Why do we

           7        need that kind of a number for fixed capital

           8        outlay?  What are you buying with that?

           9             MR. STAPANOVICH:  I have Kevin Seacrest with

          10        me, the senior investment of the defined

          11        contribution program.  I believe that has to do

          12        with information technology portals that we are

          13        trying to create for, in terms of our ongoing

          14        education process, where we will be using more

          15        e-mail with employees and employers as well as

          16        giving them their own individual site they go to

          17        and have their own personalized statement posted

          18        along with other information but --

          19             CFO GALLAGHER:  We are paying for the

          20        employers to have their own sites?

          21             MR. STAPANOVICH:  Let me call Kevin Seacrest.

          22             MR. SEACREST:  The idea is that one of the

          23        challenges we've got with a consolidated return

          24        system with 800 brokers and unaffiliated

          25        employers, we don't have a consolidated e-mail

           1        database to communicate in a low-cost manner with

           2        the employees.

           3             So the idea is that we would build portal

           4        mail boxes, something similar to what you might

           5        see, for example, if you go to America on Line

           6        where each person has their own mail box, and

           7        we can post information in that mail box.  The

           8        cost of billing that personalized mail box for

           9        each individual, all end, would be about

          10        $200,000 in hardware costs and another $150,000

          11        costs in programming.

          12             GOVERNOR BUSH:  How is that going to help

          13        increase the number of people that are choosing

          14        the defined contribution plan?

          15        Commissioner/Treasurer Gallagher's point leads to,

          16        I think, the next question; in spite of the good

          17        efforts here to reduce the costs, they are still

          18        out of wack with the base of business that this

          19        expense would be servicing.

          20             It's out of wack.  You've either got to

          21        cut costs more or over time people have to have

          22        confidence that the defined contribution plan

          23        gives them a better deal than defined benefits,

          24        which it should under normal conditions.  It's

          25        in the best interest of certain types of

           1        employees to embrace that retirement option.

           2        They are not doing it now because of the

           3        market.  So --

           4             MR. STAPANOVICH:  That was a good question

           5        and that was a challenge we had with the budget.

           6        And the challenge is we still have 650,000

           7        employees that we are trying to deal with on an

           8        ongoing financial services basis in terms of -- we

           9        are now doing financial planning workshops for the

          10        employees, something that we didn't do in the

          11        past.  So there are a number of things in that

          12        ongoing attempt to educate the 650,000 employees.

          13             The expense of this is not simply for the

          14        25,000 that have moved over and the additional

          15        25,000 we hope to see enroll next year --

          16        actually 50,000 we hope to see enroll next

          17        year.

          18             This has to do with ongoing education for

          19        the entire Florida Retirement System and the

          20        other 615,000 employees.  So there is still, in

          21        terms of the infrastructure, X amount of

          22        workshops which have been reduced drastically.

          23             We increased the amount of employer

          24        workshops because we are really trying to make

          25        it more employer-based as well and get the

           1        employers involved, hoping that will work if we

           2        have a point of contact and get them more

           3        involved.

           4             So there is just -- that may not be the

           5        answer you want to hear, but it's still

           6        addressing the total --

           7             CFO GALLAGHER:  I have a hard time taking

           8        pension money and setting up web sites and e-mails

           9        for everybody.  Just, to me, I don't see where the

          10        plus is in doing that.  That's not a good

          11        expenditure, in my opinion.  But we can discuss

          12        that, I guess.

          13             MR. STAPANOVICH:  Again, the intent is

          14        investment retirement education, and in terms of

          15        trying to find other vehicles, other avenues to

          16        increase awareness about what this program is

          17        about, their future retirement planning and from

          18        everything we can gather --

          19             GOVERNOR BUSH:  Maybe you can cut -- if

          20        that's a viable marketing tool, to give people

          21        information for them to make informed choices,

          22        clearly the education program that we spent a

          23        fortune on -- not a fortune but a lot of money

          24        on -- didn't achieve that result -- maybe cut back

          25        by $250,000 to pay for it.  I just think there

           1        needs to be -- we've got to make some tough

           2        choices here because the timing of our offering

           3        couldn't have been worse, I don't think.

           4             CFO GALLAGHER:  I would say we are

           5        spending -- we have gone from 30 million to

           6        50 million in other contractor services.  Most of

           7        that is services and education.  And to me,

           8        although it didn't show good results, having

           9        e-mail is not going to get people to sign up.

          10        It's a person-to-person contact, it's those

          11        meetings we set up.  And I agree it's the wrong

          12        time, but we had to do it when the legislature and

          13        everybody said to do it.

          14             Continuing notice, I don't have a problem

          15        with that.  I don't see how you are going to

          16        get anybody to sign up because they are on

          17        e-mail.  I really don't.  I just move to knock

          18        out that additional capital outlay at this time

          19        because I just don't think it's a plus.  I will

          20        move to take out the 250 and the 5, actually if

          21        this is a move to 50, I move we don't do any

          22        additional capital outlay.

          23             GOVERNOR BUSH:  There is a motion to leave

          24        the capital outlay out of the budget.  Is there a

          25        second?

           1             GENERAL CRIST:  Second.

           2             GOVERNOR BUSH:  Any other discussion?  All in

           3        favor say aye.

           4             THE CABINET:  Aye.

           5             CFO GALLAGHER:  Second, I will approve the

           6        budget as produced.

           7             GENERAL CRIST:  Second.

           8             GOVERNOR BUSH:  Motion and seconded.  Any

           9        discussion?  The budget as amended is approved.

          10             MR. STAPANOVICH:  Thank you, Governor.

          11             (The proceedings concluded at 10:45 a.m.)
















           2                 CERTIFICATE OF REPORTER




           6   STATE OF FLORIDA         )

           7   COUNTY OF LEON           )


           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 1st

          19   day of April, 2003.



          22                       ______________________________

          23                       SANDRA L. NARGIZ, RMR, CRR
                                   100 SALEM COURT
          24                       TALLAHASSEE, FL  32301