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          2                  T H E   C A B I N E T
          3             S T A T E   O F   F L O R I D A
          6               STATE BOARD OF ADMINISTRATION
                             DIVISION OF BOND FINANCE
          7                  STATE BOARD OF EDUCATION
                            ADMINISTRATION COMMISSION
          8                MARINE FISHERIES COMMISSION
                             TRUSTEES OF THE INTERNAL
          9                   IMPROVEMENT TRUST FUND
                       The above agencies came to be heard before
         11   THE FLORIDA CABINET, Honorable Governor Chiles
              presiding, in the Cabinet Meeting Room, LL-03,
         12   The Capitol, Tallahassee, Florida, on Tuesday,
              April 15, 1997, commencing at approximately 9:44 a.m.
         16                       Reported by:
         17                    LAURIE L. GILBERT
                        Registered Professional Reporter
         18                 Certified Court Reporter
                            Notary Public in and for
         19              the State of Florida at Large
                                100 SALEM COURT
         23                TALLAHASSEE, FLORIDA 32301
          1   APPEARANCES:
          2            Representing the Florida Cabinet:
          3            LAWTON CHILES
                       BOB CRAWFORD
          5            Commissioner of Agriculture
          6            BOB MILLIGAN
                       SANDRA B. MORTHAM
          8            Secretary of State
          9            BILL NELSON
                       FRANK T. BROGAN
         11            Commissioner of Education
         12                           *
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1                        I N D E X
          2   ITEM                  ACTION                PAGE
          3   VOTE ON PAY RAISES
                                  Approved                  5
          6   (Presented by Tom Herndon,
                  Executive Director)
               1                  Approved                  6
          8    2                  Approved                  6
               3                  Approved                  7
          9    4                  Approved                  7
               5                  Approved                  7
         10    6(A)               Approved                 14
               6(B)               Approved                 14
         11    6(C)               Report                   14
              (Presented by J. Ben Watkins, III,
         13       Director)
         14    1                  Approved                 25
               2                  Approved                 25
         15    3                  Approved                 26
               4                  Approved                 26
         17   (Presented by Robert L. Bedford, Ph.D.,
                  Deputy Commissioner)
               1                  Approved                 28
         19    2                  Approved                 30
               3                  Approved                 32
         20    4                  Approved                 60
               5                  Approved                 60
         21    6                  Approved                 60
               7                  Approved                 60
         22    8                  Approved                 61
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1                        I N D E X
              ITEM                  ACTION                PAGE
          4   (Presented by Robert B. Bradley, Ph.D.,
               1                  Approved                 62
          6    2                  Approved                 62
               3                  Approved                 63
          7    4                  Approved                 63
               5A, 5B             Approved                 63
          8    6                  Approved                 64
              (Presented by Charles L. Shelfer,
         10       General Counsel)
         11    A                  Approved                 65
         12   BOARD OF TRUSTEES,
         13   TRUST FUND:
              (Presented by Virginia B. Wetherell,
         14       Secretary)
         15    1                  Approved                 66
               2                  Approved                 66
         16    3                  Approved                 67
               4                  Approved                 67
         17    5                  Approved                 67
               6                  Approved                 67
         18    7                  Approved                 68
              Substitute 8        Approved                 68
         19   Substitute 9        Deferred                 68
              10                  Deferred                 70
         20   Substitute 11       Deferred                 74
         21            CERTIFICATE OF REPORTER             78
         22                           *
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1                  P R O C E E D I N G S
          2            (The agenda items commenced at 10:17 a.m.)
          3            GOVERNOR CHILES:  We -- I need a motion on
          4       a 3 percent pay raise for Executive Directors of
          5       Department of Revenue, Highway --
          6       Department of Highway -- Florida Department of
          7       Law Enforcement, Highway Safety and Motor
          8       Vehicles, and Veterans' Affairs.
          9            COMPTROLLER MILLIGAN:  I -- I'll make that
         10       motion, Governor, and move a 3 percent pay
         11       raise.  And I think it'd be appropriate to make
         12       it retroactive to --
         13            GOVERNOR CHILES:  January 1?
         14            COMPTROLLER MILLIGAN:  -- the 1st of the
         15       year.
         16            COMMISSIONER CRAWFORD:  I second that
         17       motion.
         18            GOVERNOR CHILES:  Been moved and seconded.
         19            Is there discussion?
         20            Without objection, it's adopted.
         21            Our next Cabinet meeting will be
         22       April 29th.
         23            (The Vote on Pay Raises for the Executive
         24       Directors was concluded.)
         25                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1            GOVERNOR CHILES:  State Board of
          2       Administration.
          3            MR. HERNDON:  Good morning, Governor,
          4       members of the State Board.
          5            The first item is approval of the minutes
          6       of the meeting held on March 25th, 1997.
          7            (Commissioner Crawford exited the room.)
          8            TREASURER NELSON:  I move it.
          9            COMPTROLLER MILLIGAN:  And second.
         10            GOVERNOR CHILES:  Moved and seconded.
         11            Without objection, it's approved.
         12            MR. HERNDON:  Item number 2 is approval of
         13       the fiscal sufficiency of not exceeding
         14       nine million seven hundred and eighty thousand
         15       dollars, State of Florida, Board of Regents,
         16       University of Central Florida bonds.
         17            TREASURER NELSON:  Move it.
         18            COMPTROLLER MILLIGAN:  Second.
         19            GOVERNOR CHILES:  Moved and seconded.
         20            Without objection, it's approved.
         21            MR. HERNDON:  Item number 3 is approval of
         22       fiscal sufficiency for seven million seven
         23       hundred and eighty thousand dollar, Board of
         24       Regents Florida A&M -- Mechanical University
         25       student services bonds.
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1            TREASURER NELSON:  Move it.
          2            COMPTROLLER MILLIGAN:  And second.
          3            GOVERNOR CHILES:  Moved and seconded.
          4            Without objection, that's approved.
          5            MR. HERNDON:  Item number 4, approval of
          6       fiscal sufficiency for three million six hundred
          7       and five thousand dollars, Florida A&M

          8       University parking facility bonds.
          9            TREASURER NELSON:  Move it.
         10            COMPTROLLER MILLIGAN:  And second.
         11            GOVERNOR CHILES:  Moved and seconded.
         12            Without objection, that's approved.
         13            MR. HERNDON:  Item number 5 is the
         14       submittal of Florida State Board of
         15       Administration calendar year 1996 performance
         16       summary, FRS Investment Services report.
         17            TREASURER NELSON:  Move it.
         18            COMPTROLLER MILLIGAN:  And second.  And
         19       another good year.
         20            MR. HERNDON:  It was a good --
         21            GOVERNOR CHILES:  Moved and --
         22            MR. HERNDON:  -- year, Governor.  And --
         23            GOVERNOR CHILES:  -- seconded.
         24            That's approved.
         25            MR. HERNDON:  -- acknowledge the fine work
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       that my predecessor, Ash Williams, and
          2       Barbara Jarriel, did to get us through 1996 in
          3       such fine fashion.
          4            Item number 6 --
          5            GOVERNOR CHILES:  Market's kind of gone to
          6       hell now though.
          7            MR. HERNDON:  Well, the market has suffered
          8       through a correction here these last
          9       several months.  But maybe today will be a
         10       better day, Governor.
         11            COMMISSIONER BROGAN:  We don't hold that
         12       against you.
         13            MR. HERNDON:  I understand.  Thank you.
         14            Item number 6, the Florida Hurricane
         15       Catastrophe Fund.
         16            (Commissioner Crawford entered the room.)
         17            MR. HERNDON:  Mr. Nicholson is here.
         18       Item (A) is approving the premium formula for
         19       the rates for reimbursement premiums.
         20            TREASURER NELSON:  Governor, before I move
         21       it -- and I don't have any objection to these --
         22       I've -- I've got a couple of questions I want to
         23       ask, if I may.
         24            GOVERNOR CHILES:  All right.
         25            TREASURER NELSON:  This -- this is the
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       Hurricane Catastrophe Fund.
          2            GOVERNOR CHILES:  Yeah.
          3            TREASURER NELSON:  Did you want to share
          4       something with us before --
          5            DR. NICHOLSON:  No, sir.
          6            TREASURER NELSON:  -- I ask the question,
          7       or did you just want to respond?
          8            DR. NICHOLSON:  I'm just here to respond.
          9            TREASURER NELSON:  Tell me in the -- we've
         10       gone through in looking at all of your
         11       calculations here.  And I'm curious, does the
         12       Catastrophe Fund, does it give any building code
         13       effectiveness grading schedule credits?
         14            You know what I'm talking about.
         15            DR. NICHOLSON:  Yes.
         16            TREASURER NELSON:  The effectiveness of a
         17       local jurisdiction with regard to the
         18       enforcement of their building code is written
         19       into the statutes that insurance companies have
         20       to lower the premium if the -- if the homeowner
         21       lives in a jurisdiction where they're enforcing
         22       the building code.
         23            The idea of the law that we got passed
         24       was -- was to give the incentive to the
         25       homeowner to chew on their city council to get
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       them to enforce the building code.
          2            DR. NICHOLSON:  Right.
          3            TREASURER NELSON:  Does the
          4       Catastrophe Fund do that?
          5            DR. NICHOLSON:  Currently this year we're
          6       not considering credits for the building codes.
          7       That will be something we'll consider in the
          8       future.
          9            That program is relatively new, and it
         10       would be premature at this point to give
         11       credits.  I think that -- my understanding is
         12       that it would only apply to new construction
         13       this year.
         14            And as the program is further developed,
         15       and we get more data, it would be appropriate at
         16       that point to consider it.  Whether that'd --
         17            TREASURER NELSON:  Well, it --
         18            DR. NICHOLSON:  -- be something we'd look
         19       at.
         20            TREASURER NELSON:  It is implemented in all
         21       the jurisdictions in Florida, and it does apply
         22       to new construction.  Or it applies to old
         23       construction that is reinspected.  And it's
         24       going to be a break for the consumer.
         25            And so I would encourage you to look at
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       implementing that as soon as possible.
          2            DR. NICHOLSON:  We certainly will.
          3            TREASURER NELSON:  All right.  Now, let me
          4       ask you:  Does the Catastrophe Fund give any
          5       credits for mobile homes that are constructed
          6       according to the new Federal standards for
          7       mobile homes?
          8            DR. NICHOLSON:  No.  Our credits for
          9       mobile homes happen to do with tie-downs.
         10       That's another thing we will continue to look
         11       at.
         12            But the problem is one of data, having the
         13       data to justify those credits and discounts.
         14       And as that data is developed, and it becomes
         15       credible, those are things that we will be
         16       looking at in the future for -- for discounts
         17       and credits.
         18            This year, we give a mitigation discount,
         19       and it basically applies to shutter type
         20       discounts.  And that is in here for, like,
         21       10 percent -- a 10 percent credit.
         22            TREASURER NELSON:  That's correct.
         23            And the fact that you are a Catastrophe
         24       Fund that deals in hurricane risk, I commend you
         25       for giving a 10 percent credit with regard to
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       shutters and other protective devices.
          2            But by the same reasoning, the same logic,
          3       you would want to give that same kind of credit
          4       for a mobile home that is built according to the
          5       new federal standards which are much more
          6       stringent, and, therefore, the mobile home is
          7       much more wind resistant to a hurricane.
          8            So that's something I'd like you to look
          9       at.
         10            DR. NICHOLSON:  Right.  We'll do that.
         11       That -- all these things regarding discounts and
         12       credits, as the data becomes available, and as
         13       we get more knowledge, we try to update the
         14       rates according to that.
         15            And that's why we moved to shutters or
         16       mitigation discounts this year.  That will be
         17       something we'll look at very strongly next year,
         18       and try to get as much information as we can to
         19       be able to do that.
         20            TREASURER NELSON:  Well, I'd like you to
         21       see if since those standards were implemented,
         22       I think, a year, year-and-a-half ago, if you've
         23       got any applicability to implementing those this
         24       year.
         25            The other one I wanted to ask you about was
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       sprinklers.  Sprinklers, of course, if they are
          2       installed, you get credits, particularly with
          3       regard to fire.  You're not concerned about
          4       fire, but sometimes wind blows, and creates
          5       fires.  And sprinklers would put out those
          6       fires.
          7            DR. NICHOLSON:  Well, we can take a look at
          8       that.  I have discussed that with our Advisory
          9       Council -- Advisory Council actuary.
         10            And I think the opinion there was that
         11       that -- again, we would need the data to be able
         12       to justify that.  That becomes a very nebulous
         13       area in terms of giving the discounts for that
         14       sort of thing with regard to sprinklers.
         15            But, again, these are things that we will
         16       continue to look at.  We want to certainly
         17       upgrade our rating to those factors as they
         18       become appropriate.
         19            TREASURER NELSON:  You might want to talk
         20       to our Fire Marshall's Office there with regard
         21       to the sprinklers.  They've got some pretty good
         22       data there.
         23            All right.  Thank you, Governor.
         24            GOVERNOR CHILES:  Thank you, sir.
         25            TREASURER NELSON:  And I'd move the item.
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1            GOVERNOR CHILES:  It's been moved.
          2            COMPTROLLER MILLIGAN:  This is 6(A) only
          3       we're talking about?
          4            TREASURER NELSON:  6(A).
          5            MR. HERNDON:  That's all I had referenced
          6       initially was 6(A).
          7            COMPTROLLER MILLIGAN:  Yes.  And I second
          8       it.
          9            GOVERNOR CHILES:  Is there a second?
         10            TREASURER NELSON:  All right.  Yeah.  He
         11       seconded, I moved --
         12            GOVERNOR CHILES:  It's moved and seconded.
         13            Without objection, 6(A) is adopted.
         14            MR. HERNDON:  The second item in that
         15       category was Item 6(B), which is approval of the
         16       filing of four rules for notice.
         17            TREASURER NELSON:  And I move it.
         18            COMPTROLLER MILLIGAN:  And second it.
         19            GOVERNOR CHILES:  Moved and seconded.
         20            Without objection, that's approved.
         21            MR. HERNDON:  And the final item, 6(C), was
         22       request by the Cat Fund to give a brief update
         23       on the Florida Hurricane Catastrophe Fund's
         24       bonding activities and so forth.
         25            DR. NICHOLSON:  There's a couple of items I
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       want to report on.  Last time I was here --
          2            GOVERNOR CHILES:  Do we have a motion on
          3       the last one?  Or you're discussing the Fund.
          4            TREASURER NELSON:  Do we need one?
          5            MR. HERNDON:  Probably not.  Strictly --
          6            GOVERNOR CHILES:  Okay.  Go ahead.
          7            DR. NICHOLSON:  Okay.  The last time I was
          8       here, I was discussing with you the process that
          9       we were going through in terms of bonding.  One
         10       of the things that we had done since then was we
         11       took a trip to New York to talk to the rating
         12       agencies, and we have some preliminary
         13       indications from them that our bond rating would
         14       be in the range, for example, with Moody's from
         15       A1 to a AA3, for S&P has given us an A Plus
         16       range; Fitch, A Plus range.
         17            In each situation, all the rating agencies
         18       came to the same conclusions regarding our
         19       credit, that it was a strong credit, they found
         20       no weakness in our program.
         21            Next item is validation.  The Florida
         22       Supreme Court is now considering -- our case has
         23       been appealed to the Supreme Court.  They have
         24       not requested oral argument -- or not asked for
         25       oral argument at this time.  We expect something
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       will be forthcoming from them imminently.
          2            Also, our bond legal counsel is preparing
          3       documentation requests for a private letter
          4       ruling from the Internal Revenue Service to see
          5       if we can issue tax exempt debt.  Even though
          6       we're a tax exempt organization regarding
          7       revenues, that does not imply that we could also
          8       issue tax exempt debt.
          9            The next thing we're looking at and
         10       studying very carefully is the possibility of
         11       pre-event bond issuance.  We feel like it's
         12       our -- it is our responsibility to maximize the
         13       capacity of the fund, as well as to efficiently
         14       control the operating costs.
         15            So what we're doing is looking at the
         16       feasibility of the issuance of up to -- of
         17       five hundred million dollars of bonds.
         18            The problem that we have is a good one in
         19       some respects, in that last year we had six
         20       point four billion dollars of capacity.  This
         21       year we're looking in the range of seven to
         22       seven point five billion dollars of capacity,
         23       roughly two billion of that being cash; the
         24       other five, five point five billion being
         25       bonding capacity.
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1            Insurance companies are relying heavily on
          2       these estimates and these numbers.  We feel like
          3       that we need to be proactive in our involvement
          4       there to do whatever we can to maximize our
          5       capacity.
          6            We don't know for sure what the conditions
          7       of the financial markets are going to be at the
          8       time of loss.  And that may -- depending on the
          9       size of the loss and the timing of the loss, it
         10       could have very adverse psychological impacts
         11       upon investors and how they view us as a credit
         12       risk.
         13            We feel like we are a strong credit risk,
         14       and that we can withstand adverse circumstances
         15       related to a hurricane.
         16            What we plan to do -- we don't have a
         17       recommendation for you today.  What we plan to
         18       do is go to our Advisory Council on May 8th and
         19       discuss with them more details in terms of this
         20       recommendation.
         21            Our timetable would then be to -- following
         22       the Supreme Court's validation, would be then to
         23       do investor education programs, or road shows,
         24       starting in May or June; and then the issuance
         25       would follow that.
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1            A couple of benefits I just want to put in
          2       your mind of why we would want to do this is
          3       I think it's -- at the -- it may be the most --
          4       the worst time to go to the market when we have
          5       an event.  And we certainly do not want to be a
          6       first time issuer at that point.
          7            That would entail a large risk premium from
          8       the investment community, and make it difficult
          9       on our part, and very expensive on our part if
         10       we had to pay a high-risk premium, if somehow
         11       they connected the event to our ability to repay
         12       the debt.
         13            We feel like that it would also help
         14       establish a benchmark for our pricing if we
         15       go ahead with this in this season.  It would
         16       also create a secondary market for trading in
         17       the securities and help with our investor
         18       education program.  They would somewhat be on
         19       the edge of their seats if they're -- if they
         20       know that we're out with a real issue, instead
         21       of a contingent or hypothetical type issue.
         22            These, of course, are similar activities to
         23       what the RPCJUA, and the Florida Windstorm
         24       Underwriting Association are going through.  And
         25       for very similar reasons, we would just like to
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       look at this and evaluate it, and come back to
          2       you with a recommendation probably around the --
          3       I guess the meeting -- mid May meeting, 14th
          4       meeting.
          5            TREASURER NELSON:  Governor --
          6            GOVERNOR CHILES:  All right.  Yes.
          7            TREASURER NELSON:  -- I just want to make
          8       note that this is an extraordinarily successful
          9       program.
         10            The testimony you just heard is that in the
         11       event of another Hurricane Andrew, which had
         12       ten billion dollars in insured losses,
         13       residential losses, what Jack has just told us
         14       is that the industry would be reimbursed
         15       75 percent of their residential losses by virtue
         16       of what they have in the Cat Fund for this
         17       hurricane season and the bonding capacity.
         18       Seven-and-a-half billion dollars.
         19            And in spite of the State of Florida doing
         20       all of that, making the market more attractive,
         21       this morning, the industry killed the Fair Share
         22       Bill in the Senate Insurance Committee on a vote
         23       of 6 in favor, and 7 against, which would have
         24       been Ron Silver's bill to have the industry come
         25       forth with a supply of home owners insurance, of
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       which there is a lack of supply in south
          2       Florida, according to their fair share as
          3       measured by what those insurance companies have
          4       as a share of the property and casualty market.
          5            Oh, they're loving it, writing all of that
          6       lucrative automobile insurance; and they're
          7       loving it, writing all that lucrative
          8       workers' comp insurance.
          9            But they don't want to step up and do their
         10       fair share of homeowners insurance, particularly
         11       in south Florida where we need it, despite the
         12       fact that we have this extraordinarily
         13       successful protection of a catastrophic reserve
         14       fund to cushion any blow of a future
         15       Hurricane Andrew.  So much so that Jack just
         16       told us, the industry would be reimbursed
         17       75 percent of their losses in this hurricane
         18       year.
         19            GOVERNOR CHILES:  Would there be a public
         20       record of that vote in case the insurance policy
         21       seekers wanted to know?
         22            TREASURER NELSON:  Yes, sir.  That is on
         23       the record, who are the seven that voted against
         24       it.
         25            Interestingly, all of the south Florida
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       legislators voted for it, because they know what
          2       their constituents are telling them.
          3            GOVERNOR CHILES:  Well, you know, this
          4       couldn't just be south Florida.  If we had
          5       another blow, as I recall, the companies didn't
          6       want to write anywhere in Florida, they were
          7       pulling out all over.  It wasn't just south
          8       Florida.
          9            TREASURER NELSON:  Can you imagine what a
         10       hurricane would do of a magnitude of Andrew if
         11       it --
         12            GOVERNOR CHILES:  I recall --
         13            TREASURER NELSON:  -- came on to
         14       Tampa Bay?
         15            GOVERNOR CHILES:  -- that we had Opal and
         16       Erin that didn't hit south Florida.
         17            TREASURER NELSON:  That's correct.
         18            GOVERNOR CHILES:  Here in the panhandle.
         19            TREASURER NELSON:  That's exactly correct.
         20            GOVERNOR CHILES:  -- across the -- central
         21       Florida.
         22            TREASURER NELSON:  That's exactly right,
         23       Governor.  It saddens me.
         24            They've just -- despite the fact that the
         25       State of Florida has provided these kind of
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       things to make Florida more attractive to sell
          2       homeowners insurance, they still drag their
          3       feet.
          4            All of the 13 things they asked the
          5       Legislature to do, the Legislature has done, and
          6       they're still refusing to do their fair share.
          7       And they killed the legislation today.
          8            COMPTROLLER MILLIGAN:  Governor, could I --
          9            GOVERNOR CHILES:  Yes, sir.
         10            COMPTROLLER MILLIGAN:  -- get back to the
         11       point at hand here on the --
         12            GOVERNOR CHILES:  Yes, sir.
         13            COMPTROLLER MILLIGAN:  -- pre-event basis.
         14            I didn't hear any downside to your
         15       discussion on the pre-event.
         16            Are there any downside aspects of it?
         17            DR. NICHOLSON:  We're studying that --
         18            COMPTROLLER MILLIGAN:  And I realize you're
         19       just beginning to look at it.
         20            DR. NICHOLSON:  We're studying that.  I'll
         21       give you some preliminary numbers.  I mean, it
         22       is going to have a cost to this.  And the cost
         23       would be about four to five million dollars that
         24       would be paid out of the bond proceeds for
         25       issuance costs.  That's up-front issuance
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       costs.
          2            And then there would be a cost of servicing
          3       the debt.  We would have the money -- investing
          4       the money, but at the same time we have to
          5       service the debt.  That would be -- that's a
          6       situation of what's called negative arbitrage,
          7       the --
          8            COMPTROLLER MILLIGAN:  Right.
          9            DR. NICHOLSON:  -- carrying cost.  That
         10       would be approximately around the three million
         11       dollar range.  So what we're talking about, an
         12       ongoing basis would be three million dollar cost
         13       to the Fund.
         14            And I think it's more of a -- it's kind of
         15       an insurance policy, if you will.  We would
         16       incur those costs at the potential future
         17       benefits of reducing a lot of the risk premium
         18       if we had to issue post-event in the future for
         19       a five billion dollar issue.
         20            COMPTROLLER MILLIGAN:  Any risk in our
         21       standing with the IRS?
         22            DR. NICHOLSON:  No, sir.  We will -- we
         23       will -- we're working closely with our bond
         24       legal counsel in doing this.  And the -- the --
         25       Brown & Wood, our legal counsel that got
                        ACCURATE STENOTYPE REPORTERS, INC.
                          STATE BOARD OF ADMINISTRATION
                                  April 15, 1997
          1       our original tax exempt status, we're working
          2       very closely with them, because they're the same
          3       one seeking the opinion on the tax -- the
          4       ability issue, tax exempt debt.
          5            So there has been no issue to come up
          6       with -- in that regard.
          7            COMPTROLLER MILLIGAN:  Well, I applaud what
          8       you're trying to do is strengthen really the
          9       program.  But I think we have to watch it very
         10       carefully and make sure that we do carefully
         11       look at what downsides there are to this,
         12       because there are downsides beyond those that
         13       you mentioned.
         14            And I look forward to hearing what you all
         15       have to say on it.
         16            Thanks, Governor.
         17            GOVERNOR CHILES:  Thank you, sir.
         18            COMPTROLLER MILLIGAN:  Thank you.
         19            MR. HERNDON:  That completes the agenda,
         20       Governor.
         21            GOVERNOR CHILES:  All right.  Thank you,
         22       sir.
         23            (The State Board of Administration Agenda
         24       was concluded.)
         25                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                             DIVISION OF BOND FINANCE
                                  April 15, 1997
          1            GOVERNOR CHILES:  State Board of Education.
          2            COMPTROLLER MILLIGAN:  Bond Finance,
          3       Governor, you want to --
          4            GOVERNOR CHILES:  All right.  Let's --
          5       yes.  Bond Finance.
          6            MR. WATKINS:  Item number 1 is
          7       authorization of the minutes of the March 25th
          8       meeting.
          9            COMMISSIONER BROGAN:  Move the minutes.
         10            SECRETARY MORTHAM:  Second.
         11            GOVERNOR CHILES:  The minutes are moved.
         12            SECRETARY MORTHAM:  Second.
         13            GOVERNOR CHILES:  Without objection,
         14       they're adopted.
         15            MR. WATKINS:  Item number 2 authorizes a
         16       competitive sale of up to seven million
         17       seven hundred eighty thousand Board of Regents
         18       revenue bonds for the Student Services Center at
         19       Florida A&M University.
         20            COMMISSIONER BROGAN:  Move approval.
         21            SECRETARY MORTHAM:  Second.
         22            GOVERNOR CHILES:  Moved and seconded.
         23            Without objection, it's approved.
         24            MR. WATKINS:  Item number 3 authorizes a
         25       competitive sale of up to three million
                        ACCURATE STENOTYPE REPORTERS, INC.
                             DIVISION OF BOND FINANCE
                                  April 15, 1997
          1       six hundred five thousand Board of Regents
          2       revenue bonds for a parking facility at
          3       Florida A&M University.
          4            COMMISSIONER BROGAN:  Move approval.
          5            GOVERNOR CHILES:  Moved and --
          6            SECRETARY MORTHAM:  Second.
          7            GOVERNOR CHILES:  -- seconded.
          8            Without objection, it's approved.
          9            MR. WATKINS:  Item number 4 authorizes the
         10       competitive sale of up to nine million
         11       seven hundred eighty thousand dollars of
         12       Board of Regents revenue bonds for a parking
         13       facility at the University of Central Florida.
         14            SECRETARY MORTHAM:  Move approval.
         15            COMMISSIONER BROGAN:  Move approval.
         16            Second.
         17            GOVERNOR CHILES:  Moved and seconded.
         18            Without objection, it's approved.
         19            MR. WATKINS:  One other item for your
         20       information that's not on the agenda is that the
         21       State of Florida's general obligation bond
         22       rating has been upgraded by Standard & Poor's
         23       Corporation for the first time in 30 years from
         24       a double A to a double A Plus, which is just one
         25       notch shy of the highest possible rating, which
                        ACCURATE STENOTYPE REPORTERS, INC.
                             DIVISION OF BOND FINANCE
                                  April 15, 1997
          1       is AAA.
          2            GOVERNOR CHILES:  I think that's excellent
          3       news.  I'm disappointed they haven't given us a
          4       AAA.  But we've got to keep working on them.
          5            COMPTROLLER MILLIGAN:  Another 30 years.
          6            GOVERNOR CHILES:  No.  No.  We're not going
          7       to do that.
          8            (The Division of Bond Finance Agenda was
          9       concluded.)
         10                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            GOVERNOR CHILES:  All right.  Board of
          2       Education.
          3            DR. BEDFORD:  Governor Chiles, members of
          4       the State Board of Education, good morning.
          5            Item 1, minutes of the meeting held
          6       February 25th, 1997.
          7            COMMISSIONER BROGAN:  Move approval.
          8            SECRETARY MORTHAM:  Second.
          9            GOVERNOR CHILES:  Moved and seconded.
         10            Without objection, they're approved.
         11            DR. BEDFORD:  Item 2, Manatee County
         12       School Board request to award additional charter
         13       schools.
         14            COMMISSIONER BROGAN:  Governor, this is --
         15       if you'll indulge me, this is a new issue for
         16       the State Board of Education that comes via the
         17       legislation on charter schools.
         18            As you probably are already aware,
         19       districts are capped on the number of charter
         20       schools that they may either convert or begin
         21       from grass roots.  There's a category for each.
         22            Manatee County and their School Board are
         23       coming forward and asking, as is a provision
         24       within the law, to have additional charter
         25       school granting application possibilities, which
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       are only made possible through this process.
          2            Bob, how many are they actually
          3       requesting?
          4            DR. BEDFORD:  They're requesting one
          5       additional.  They have had four requests to
          6       date.  They have evaluated all four requests,
          7       found them all to be exemplary, and they don't
          8       want to be put in a position where they're
          9       denying one they think would be very good.
         10            COMMISSIONER BROGAN:  So these are all
         11       start-ups in that category, and they are only
         12       permitted three by law.
         13            DR. BEDFORD:  That is correct.  These are
         14       not conversions of existing schools.  A couple
         15       of them are existing programs, but not existing
         16       schools.  So they're all start-ups.
         17            GOVERNOR CHILES:  I think that's a
         18       reasonable request for one.  I think, you know,
         19       we should be careful if somebody's asking for as
         20       many as they were supposed to have before
         21       they're starting.
         22            But sounds like a very reasonable request
         23       to me.
         24            COMMISSIONER BROGAN:  I'll move the item,
         25       Governor.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            SECRETARY MORTHAM:  Second.
          2            GOVERNOR CHILES:  Moved and seconded.
          3            Without objection, it's approved.
          4            DR. BEDFORD:  Item 3 is the Annual Feedback
          5       Survey, Revised Format.  The Executive Director
          6       of the Accountability Commission, Mike Biance,
          7       would like to make a few statements, please.
          8            DR. BIANCE:  Governor, members of the
          9       State Board, you have before you three totally
         10       new survey instruments which meet the statutory
         11       requirements, and are submitted for your
         12       approval.
         13            During the first five-year period under
         14       Florida's Education Reform and Accountability
         15       law, it was one that was basically of
         16       development and intensive training.  We are now
         17       in a period of measuring results, and dealing
         18       with major implementation issues.
         19            Just as our emphases have changed, so, too,
         20       the tool we use to collect feedback must change.
         21            The survey of districts and randomly
         22       selected principals and school advisory council
         23       chairs is the only ongoing research on Education
         24       Reform and Accountability in Florida.  And it
         25       enjoys an average return of 70 to 80 percent.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            The surveys were developed with the
          2       tremendous assistance of the Office of Program
          3       Policy Analysis and Government Accountability.
          4       OPPAGA will also be using the collected data in
          5       their reporting.
          6            We also hope that the Colleges of Education
          7       will utilize this information in directing their
          8       graduate students and focusing their research.
          9            As you can see from the questions, the
         10       survey should generate very rich information,
         11       which will be instrumental in annually refining
         12       Florida's system of school improvement and
         13       accountability.
         14            The surveys will be distributed at the end
         15       of the month, with the responses analyzed over
         16       the summer.  And the results will be given to
         17       you by October 1st in the Commission's annual
         18       report.
         19            COMMISSIONER BROGAN:  Move the item,
         20       Governor.
         21            SECRETARY MORTHAM:  Second.
         22            GOVERNOR CHILES:  Thank you, Mike.
         23            It's been moved.
         24            SECRETARY MORTHAM:  Second.
         25            GOVERNOR CHILES:  Seconded.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            Without objection, it's approved.
          2            DR. BEDFORD:  The State Board of Education
          3       will now consider an appeal of a denial of a
          4       charter school application pursuant to
          5       Chapter 228.056, Laws of Florida.  Let me take a
          6       moment to explain the process.
          7            As prescribed by law, Florida's Charter --
          8       excuse me.  As prescribed by law, Florida's
          9       School Boards are given authority to grant
         10       approval to applicants who wish to operate
         11       charter schools within a district.
         12            A further provision of the law allows an
         13       applicant who has been denied a charter, the
         14       right to appeal the School Board's decision to
         15       the State Board of Education.
         16            Based on the written record and oral
         17       argument presented at this meeting, the
         18       State Board must vote to recommend acceptance or
         19       rejection of the appeal to the School Board.
         20            The vote requires a simple majority of the
         21       members, and by law, is not subject to the
         22       provisions of the Administrative Procedures Act.
         23            The rule governing the appeal process was
         24       unanimously adopted by the Cabinet, sitting as
         25       the State Board of Education, on December 10th,
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       1996.
          2            It very clearly states how this hearing
          3       must proceed, and it specifies the following
          4       limitations which must be respected by the
          5       applicant, the district school board, and their
          6       representatives.
          7            The Notice of Appeal must be based on
          8       errors the applicant charges the school board
          9       made in its decision to deny the charter.
         10            The written argument submitted by the
         11       applicant to the State Board is limited to the
         12       discussion of those errors.
         13            The record of this proceeding is limited to
         14       the written arguments, the charter school
         15       application itself, and transcripts of meetings
         16       before the district school board.
         17            At this hearing, representatives of each
         18       party may give oral argument.  Oral argument is
         19       limited to the summary of the written arguments
         20       previously submitted to the State Board.
         21            Each side is alotted 10 minutes to present
         22       its summary.  After the summaries are presented,
         23       a vote will be taken, and a written
         24       recommendation of a vote will be returned to the
         25       district school board.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            Governor Chiles, we will now move to
          2       today's appeal.
          3            TREASURER NELSON:  Governor, a point of
          4       clarification.
          5            At the last meeting in which we had an
          6       appeal of a charter school, the question arose
          7       as to whether or not this was a quasi-judicial
          8       proceeding.  And, therefore, if it was, would we
          9       as the members of the State Board of Education
         10       be banned from having ex parte communications.
         11            There was a great deal of ambiguity and
         12       confusion.  I think most of us took the
         13       conservative position until we could have it
         14       ruled on.
         15            And so I wrote Frank, and Frank then
         16       detailed to his General Counsel, of which all of
         17       you have a memorandum that, in essence, says,
         18       yes, this is a quasi-judicial proceeding, and we
         19       should not have ex parte communications.
         20            Thank you for clarifying that up.
         21            COMMISSIONER BROGAN:  Yes, sir.
         22            DR. BEDFORD:  Thank you.
         23            Item 4, appeal of the Florida Charter
         24       Schools, Don McCammon, which was denied by the
         25       Orange County School Board.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            The applicant, Don McCammon, Florida
          2       Charter Schools, Inc., will now make a
          3       presentation.
          4            MR. McCAMMON:  Governor Chiles,
          5       Commissioner Brogan, members of the State Board
          6       of Education, my name is Don McCammon.  I'm
          7       President of Florida Charter Schools, Inc., a
          8       Florida not-for-profit corporation organized to
          9       improve public education in Florida by creating
         10       and operating public charter schools.
         11            Before I begin though, as a resident of
         12       central Florida, I want to acknowledge a great
         13       diplomat and statesman on his championship
         14       yesterday -- of central Florida,
         15       Eldrick Tiger Woods.
         16            Wanted to get that in the record.
         17            Florida Charter Schools governing Board of
         18       Directors is made up of myself.  I'm a licensed
         19       and Board certified clinical mental health
         20       counselor.  I specialize in working with at-risk
         21       adolescents; Dr. Charles English, a psychologist
         22       and expert in multicultural education;
         23       Jessica Poisson, a parent of four children, and
         24       chief administrator of a national company;
         25       Dr. John Allen, who has a doctorate in
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       educational psychology, and is the owner and CEO
          2       of the Allen Group, a well-known provider of
          3       employee assistance services; Ted Doss, an
          4       attorney who was instrumental in reforming
          5       Florida's home school laws; Al Anderson, a
          6       certified public accountant, and former
          7       vice-president of finance of a publicly held
          8       company; and, finally, Dr. Stan Marshall, the
          9       CEO of the James Madison Institute here in
         10       Tallahassee and a former president of
         11       Florida State University.
         12            As stated in our appeal, Florida Charter
         13       Schools, Inc., submitted a formal application to
         14       operate a charter high school in Orange County,
         15       Florida.  We submitted this on December 10th,
         16       1997.
         17            Prior to that date -- December 10th, 1997.
         18            Prior to that date, we had provided the
         19       staff and School Board members with a
         20       pre-proposal, and let them know in advance our
         21       plans to submit an application.
         22            With the application, we submitted a
         23       complete copy of a proposed contract or
         24       charter.  This document.  And at a School Board
         25       work session, members of the School Board
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       indicated some concerns about our Board of
          2       Directors serving as consultants, so we amended
          3       our application so that no members of our Board
          4       would be paid as Directors, nor would they be
          5       paid as consultants.  The amendments to the
          6       application are listed in our appeal as
          7       Exhibit C.
          8            Included in the amendments were changes to
          9       address other concerns voiced by the staff.
         10            The charter school legislation provides
         11       that school boards have 60 days to accept or
         12       deny an application.  The attorney for the
         13       School Board, Mr. Kruppenbacher, who may speak
         14       today -- and who, by the way, we've had an
         15       excellent working relationship with, and I'm
         16       grateful for his professionalism -- indicated
         17       that they needed additional time to consider the
         18       application.
         19            So in a spirit of cooperation, we extended
         20       the date to the first School Board meeting in
         21       February, beyond the 60 days.
         22            Once again, the School Board attorney
         23       requested more time; so once again in a spirit
         24       of cooperation, we extended the date to the
         25       second School Board meeting in February.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            One of the School Board staff members,
          2       Dr. Whittier, also requested that we change the
          3       format of our charter.  So, in a spirit of
          4       cooperation, we completely changed and rewrote
          5       the charter to meet their requirements.
          6            On February 25th, 1997, the School Board
          7       approved two applications.  That's a date they
          8       held their public hearing, one for an elementary
          9       school, one for a middle school, and they denied
         10       our application to operate a night high school
         11       by a vote of 7 to 0.
         12            As noted in the minutes to the meeting
         13       shown in Exhibit F in our appeal, the
         14       School Board did not state the reasons for their
         15       denial.  The staff of the School Board made some
         16       self-serving comments at the School Board
         17       meeting to discredit me personally and to
         18       discredit our application.
         19            For example, Mr. Williams stated that I
         20       would receive a $45,000 salary from both the
         21       Seminole County school, and from an
         22       Orange County school as President of the
         23       corporation.  He knew full well that was not the
         24       case.
         25            He also stated that we had misrepresented
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       Mrs. Germann as a member of our Advisory Board.
          2       Mrs. Germann is an outstanding teacher, and was
          3       voted the 1996 Compact Teacher of the Year and
          4       1997 Teacher of the Year for University High.
          5            Mrs. Germann and I worked together at
          6       University High for two years where I was a
          7       member of their SAC committee, and where I did
          8       counseling group for their at-risk students
          9       every week at no charge for those two years.
         10            As stated in our reply to the
         11       School Board's response, Mrs. Germann has
         12       admitted being on our Advisory Board, and I find
         13       it hard to believe that Mr. Williams would use
         14       one of his own employees in an attempt to
         15       discredit me and our application.
         16            As noted in Exhibit 8 of our -- H of our
         17       reply, the School Board staff has also created
         18       considerable mistrust with a current applicant
         19       that is attempting to convert Windy Ridge
         20       Elementary School to a charter school.
         21            The entire community has given the
         22       School Board staff a vote of no confidence.  In
         23       a recent poll conducted by the Sentinel, an
         24       overwhelming majority of the local electorate
         25       indicates a lack of trust in the School Board
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       staff.
          2            The last minute arguments that the staff
          3       posted for denying our application are without
          4       merit.  If the School Board was truly concerned
          5       about our budget or about our plan for ESE
          6       students, why weren't these concerns voiced
          7       before the public hearing so they could be
          8       addressed and corrected.
          9            As stated, we gave the School Board staff
         10       plenty of time to respond with two extensions.
         11       Following the denial, the Superintendent of the
         12       School Board and the School Board attorney
         13       suggested we make some changes and resubmit the
         14       application.  I agreed to do that.
         15            I met with Mr. Williams and asked for
         16       specific changes that they would like.  In my
         17       letter to Mr. Williams of February 28th, 1997,
         18       shown in Exhibit E, we offered the staff almost
         19       three weeks to come up with their recommended
         20       changes so we could resubmit our application.
         21            They did not respond, and we are forced to
         22       appeal.
         23            I submit that the School Board and their
         24       staff did not act in good faith, that their
         25       arguments to deny the school are frivolous and
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       without merit and they arbitrarily and
          2       capriciously denied our application.
          3            It should be noted, they indicated some
          4       concern about some of our Board members also
          5       serving as employees of the school.  Yet they
          6       approved the Passport school the same day that
          7       has the same provision.
          8            They indicate concern about our budget.
          9       Yet they approved the Passport school
         10       application that did not even include a budget
         11       in their application as part of the public
         12       record.
         13            Also, the organizers of the Passport school
         14       previously failed in operating a private school,
         15       and now have come to the public trough to start
         16       a charter school.  Despite their prior financial
         17       failure at wanting a school, they were approved
         18       by the School Board.
         19            We would be a performance based school, we
         20       have set performance goals to exceed State
         21       averages on all required high school testing by
         22       10 percent.  This includes the new Florida
         23       Comprehensive Assessment Test, Florida Writes,
         24       and the HSCT.
         25            If we don't perform, the School Board has
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       the right to close us down.  If we create debts,
          2       the governing body of the school, our Board of
          3       Directors, is responsible for those debts if
          4       we're closed.
          5            It is the School Board's job to monitor the
          6       school, and they can close it down without
          7       notice at any time if they believe we have
          8       misused funds, or the school is doing anything
          9       that may threaten the health or welfare of the
         10       students.
         11            Right now, thousands of students each year
         12       drop out of Orange County schools.
         13       Orange County is one of the districts in the
         14       State where over 40 percent in Florida -- over
         15       40 percent of their high school students that
         16       have stayed in school currently have a D average
         17       or less.
         18            Our school gives these kids an alternative
         19       to a traditional high school, gives them hope.
         20       The greatest risk is that nothing is done and we
         21       lose these kids, and they end up in menial jobs,
         22       on welfare, and with dead-end lives.
         23            Our high schools are failing.  We are the
         24       only charter high school that has been proposed
         25       in the district.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            The staff has admitted that we have an
          2       excellent program, there is a proven need; and
          3       by their own survey of high school students,
          4       which is part of our exhibit, there are
          5       thousands of students that would prefer to
          6       attend a night high school like ours.
          7            Our school has a potential to save the
          8       district millions of dollars in much needed
          9       money to build new schools.
         10            Currently seven of their twelve senior high
         11       schools are overcrowded, and the school district
         12       needs a projected seven hundred and
         13       fifty million dollars to construct new schools.
         14            Our school would be attended by high school
         15       students throughout the district, and would
         16       relieve crowding and reduce classroom size all
         17       at the same time.  It would save the district up
         18       to fourteen million dollars in new construction
         19       costs.
         20            Our school serves a community, it saves
         21       taxpayers' monies, and it gives kids a new way
         22       to stay in school and be successful.
         23            As stated by Finn, Bierlein, and Manno, the
         24       authors quoted by the School Board attorneys in
         25       their response, the motives for opposing charter
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       schools are mixed, but often include
          2       self-interested protection by government and the
          3       public education monopoly.
          4            This is politics at its worst.  It hurts
          5       our children and keeps our kids from having a
          6       chance to succeed.
          7            By maintaining a stranglehold on local
          8       public schools, school boards stifle innovation
          9       and competition in a last-ditch attempt to
         10       maintain their power and control.
         11            Local School Board budgets are the last
         12       great political cookie jar in Florida.  School
         13       Boards are willing to give out a few small
         14       crumbs by issuing charters to small token
         15       charter schools.
         16            This is much like Florida school boards did
         17       in the '60s.  I went to elementary, junior high,
         18       and part of high school in public schools in
         19       Dade County in the early '50s and early '60s,
         20       and I remember when Florida schools were first
         21       integrated.
         22            In an attempt to circumvent the law, local
         23       school boards admitted a token number of blacks
         24       to their all-white schools.  The courts saw
         25       through this deception and ruled against local
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       school boards.
          2            I believe the courts will see through this
          3       same deception where school boards approve
          4       small, powerless charter schools in an attempt
          5       to circumvent the law and keep parents from
          6       having some real say in the education of their
          7       children.  This is a 1990s version of tokenism.
          8            You are the State Board of Education.  You
          9       are ultimately responsible for the public
         10       education system of Florida.  I don't think most
         11       voters realize that the parent Board of
         12       Education of Florida is made up of the Governor
         13       and the Cabinet.
         14            By rejecting specious arguments and
         15       frivolous reasons for denying charter schools,
         16       you have the opportunity to give true local
         17       control back to local people, back to the
         18       parents and community groups that have great
         19       hope for this charter law.
         20            The regional accreditation body for Florida
         21       schools is the Southern Association of Colleges
         22       and Schools.  They do not accredit school
         23       boards.  They accredit individual schools, and
         24       they believe the site for educational
         25       improvement lies with the individual local
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       school, not the school board.
          2            This is the same philosophy of the charter
          3       school law.  Local control means control at the
          4       school level where parents and community groups
          5       have the opportunity to create and run their own
          6       public charter schools.
          7            The authors that the School Board attorneys
          8       quote state:  Because much time and energy are
          9       wasted when prospective charter starters are
         10       obliged to go to their local board for approval,
         11       even if an appeals process exists, groups should
         12       have the option of taking their charter proposal
         13       directly to the State or another entity.
         14            For those who argue that State sponsorship
         15       violates a principle of local control, we ask,
         16       what could be more local than the grass roots
         17       initiation of a charter school that is then
         18       completely directed by parents, teachers, and
         19       other community members who serve on its Board
         20       with the State providing only contract
         21       oversight.
         22            This seems to us far closer to the spirit
         23       of local control than a single School Board that
         24       oversees a multitude of schools sprawled over
         25       vast tracks of real estate, and manages them
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       through a large bureaucracy, end quote.
          2            If you accept the right of school boards to
          3       turn down charter school applicants for
          4       arbitrary and capricious reasons, then we
          5       believe you will stifle significant innovation
          6       in Florida.
          7            We still believe we can work with
          8       Orange County.  We're very hopeful we can work
          9       with Orange County.  I was a volunteer in
         10       Orange County schools for five years, and I've
         11       tried very hard to work in their schools.
         12            The Governor's leadership has focused on
         13       the needs of our children this year, and
         14       Commissioner Brogan has had the political
         15       courage to point out the problems in our public
         16       school system, and to begin to hold local boards
         17       accountable.
         18            Our hope now is that the entire State Board
         19       of Education will stand up for the children of
         20       Florida, and stand up for the right of parents
         21       to create their own charter schools.
         22            Our hope is that you will uphold our appeal
         23       and send it back to the School Board, and give
         24       them the opportunity to accept the application,
         25       or at least show good cause why it is denied.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            Thank you.
          2            COMMISSIONER BROGAN:  Governor --
          3            GOVERNOR CHILES:  Yes, sir.
          4            COMMISSIONER BROGAN:  -- suffice it to say,
          5       especially considering the headlines, I suppose
          6       I am second to none in my admiration of the
          7       charter school movement and the potential that
          8       it has for helping to reinvent and reinvigorate
          9       public education.
         10            I think the State Board has demonstrated a
         11       commitment to charter schools by its actions
         12       over the last couple of years.
         13            GOVERNOR CHILES:  Second to none makes me
         14       none.
         15            COMMISSIONER BROGAN:  Equal to, how's
         16       that?
         17            GOVERNOR CHILES:  All right.
         18            COMMISSIONER BROGAN:  And I would -- and at
         19       the -- at the last -- I suppose it was the last
         20       meeting when we had two charter school appeals,
         21       we, I believe, upheld one of those denials, and
         22       recommended the overturn of one of those
         23       denials.
         24            In looking at this particular application,
         25       and I think the -- the well written response
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       from the School Board, my position has not
          2       changed from the last meeting, and I certainly
          3       want to hear from the representative of the
          4       County.
          5            But I -- I just wanted to respond to terms
          6       arbitrary and capricious.  And I think that as
          7       the State Board of Education so frequently does,
          8       is we hear not just on educational issues, but
          9       on land acquisition issues and others, we look
         10       for the guts of -- of the responsive groups and
         11       organizations.
         12            So I just wanted to make that statement
         13       before we even hear from the next -- next
         14       presenter.
         15            And I do stand corrected, Governor.  I am
         16       not second to none.  I'm equal to my admiration.
         17            DR. BEDFORD:  For the School Board, we have
         18       Frank Kruppenbacher, attorney for the Board.
         19            MR. KRUPPENBACHER:  Good morning, Governor
         20       and members of the Cabinet.  I'm here today as
         21       General Counsel on behalf of the Orange County
         22       School Board.  With me is Dr. Bob Williams, the
         23       Deputy Superintendent for Instruction.  And in
         24       the audience is Ms. Susan Arkin, the chairman of
         25       the School Board.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            On February 25th, 1997, the School Board
          2       considered three charter applications.  Contrary
          3       to the rhetoric of the Orange County
          4       School Board being somehow hostile to charter
          5       schools that you just heard, the -- we are very
          6       proud of the fact that the first two
          7       applications were approved by the School Board
          8       that night.
          9            This was the third application.
         10            To the benefit of the Cabinet, I would
         11       point out to you that the Cabinet heard
         12       virtually an identical appeal involving this
         13       applicant, this type charter school, in our
         14       sister county, the Seminole County school
         15       system.  And the Cabinet denied that particular
         16       application.
         17            The appeal involved at least four of the
         18       identical issues in the brief filed by the
         19       applicant that are in front of you today, the
         20       same were heard and dealt with by the Cabinet in
         21       Seminole County.
         22            We are a seven-member School Board.  They
         23       voted unanimously to approve the first two
         24       charters, and unanimously to deny this charter.
         25       They did so for several reasons.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            One, they were concerned regarding the
          2       financial viability regarding this applicant.
          3       The application did not address in any manner --
          4       or even attempt to address in any manner,
          5       funding for exceptional students, those with
          6       exceptional education needs.
          7            In fact, during the application process, it
          8       was initially represented to our staff there was
          9       no plan to serve those type students.
         10            Second, there was a concern regarding
         11       speculative funding for this.  Ten percent of
         12       the budget was based upon what were to be either
         13       grants or charitable funding, that there was no
         14       declaration, no delineation of where that source
         15       was going to come from.
         16            Along with that financial concern, which
         17       I think there was support for the Board when it
         18       looked at its community and said, will our
         19       community step up to the plate and give
         20       charitable contributions to this organization.
         21       That's where the Board looks at the individual
         22       applicants.
         23            There was an editorial in our local paper,
         24       the Orlando Sentinel, as well as an article and
         25       an interview, that was critical of this
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       applicant, given the president's financial
          2       backing, his financial history.
          3            And, granted, people have bankruptcies and
          4       go on with their life.  But there was never any
          5       evidence of a successful ability to manage and
          6       run a business or to be financially prudent in
          7       doing so.
          8            I think the Board correctly concluded in
          9       light of that public dissemination of
         10       information to the community the kind of people
         11       who make charitable contributions within our
         12       area would not support funding that applicant.
         13            The Board was concerned about a conflict of
         14       interest.  This applicant proposed that Board of
         15       Director members would be paid, and they would
         16       set their own salaries.  That didn't change in
         17       subsequent modifications in the application.
         18            There would still be Board of Director
         19       members who would be employees who would set
         20       their own salaries.
         21            The School Board's elected by the public,
         22       their salaries are set by law.  We didn't deem
         23       it appropriate that a Board of Directors for a
         24       charter school would say, here's what we're
         25       going to make.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            There was a question about the stability of
          2       the Board of Directors.  As early as two weeks
          3       prior to this application being heard by
          4       the Board, two very respected members withdraw
          5       without -- resigned and withdrew from the Board
          6       without reason.
          7            Finally, there was a significant issue
          8       regarding credibility.  And I submit to you that
          9       we look forward to our partnership, and I call
         10       it a partnership, with the first two charter
         11       schools that were approved in Orange County.
         12            And I will digress to say, we look forward
         13       hopefully to a partnership with Windy Ridge.  We
         14       meet Friday to work through some tough issues.
         15            Commissioner Brogan, your office, and
         16       Mr. Bailey have been very helpful with us
         17       working through some of those issues.
         18            But a partnership's very foundation is
         19       trust.  I think all of you familiar with
         20       education know how highly valued our educators
         21       are, and our teachers.  You also know the degree
         22       of respect that a teacher of the year commands
         23       within an educational institution, whether they
         24       be a teacher from a local school, from a
         25       program, or a teacher of the year for the entire
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       county.
          2            In this case, the applicant represented to
          3       the School Board that Ms. Germann, a Teacher of
          4       the Year finalist, and one from her own program,
          5       would assist in, and would help write grants for
          6       this school, one of the very critical components
          7       of how they would get funding.
          8            There is an Exhibit E to the appeal filed
          9       by this applicant to you, a letter from that
         10       applicant which is best summed up as follows in
         11       her own words:
         12            In closing, I would just like to add that I
         13       am livid to have been so fraudulently wronged by
         14       you.
         15            That applicant was referring to the
         16       representations that she would serve to assist
         17       or consult or do anything to help on grants.
         18       She had not, and she says in the letter, ever
         19       agreed to do that.
         20            Even more incredible was a representation
         21       at this very hearing to the Board that the
         22       applicant was in the audience that night, and
         23       would answer any questions that my Board may
         24       have.
         25            And a look at the letter in front of you
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1       that this applicant put in his appeal
          2       specifically pointed out she was not in the
          3       audience.
          4            Now, if we look truly to have a
          5       partnership, and we look to innovative changes,
          6       and we look to being role models for our
          7       children, the very essence of it starts with the
          8       leadership of our schools.
          9            And if the very person who comes before a
         10       School Board and says, I want to partner with
         11       you, I can lead an educational component of this
         12       district and help improve children, if that very
         13       person is dishonest, or even to be kind, is lax
         14       in their representations, then I submit to you,
         15       we have created at the very inception exactly
         16       what we're striving not to do with our kids.
         17            And my School Board wouldn't buy it.  We
         18       believe we're committed that much more to our
         19       children.  And I'd ask for support from this
         20       Cabinet for that very principle.
         21            If you come in front of a school district
         22       and you say, please give me a charter, let me
         23       work with these kids, then by God, you ought to
         24       come in front of it, tell them the truth, and
         25       lay it out.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            And so with all due respect, we would ask
          2       that you support the Orange County
          3       School Board's position in this matter.
          4            Thank you.
          5            COMPTROLLER MILLIGAN:  Governor, I have a
          6       quick question.
          7            The inference was made that the
          8       School Board offered the -- Mr. McCammon the
          9       opportunity to resubmit.
         10            Was that, in fact, an offer that was made?
         11            MR. KRUPPENBACHER:  Mr. Milligan, I will
         12       tell you that I have told Mr. McCammon, and I
         13       would tell any applicant who was denied at the
         14       Orange County School Board, that they would have
         15       a right to resubmit and attempt to deal with the
         16       issues that were raised by the school district.
         17       I believe that's the inherent spirit of the
         18       charter school law.
         19            COMPTROLLER MILLIGAN:  And then he did,
         20       in fact, send a letter to you -- to the
         21       School Board asking for the reasons for the --
         22       the denial?
         23            MR. KRUPPENBACHER:  He was there at the
         24       meeting and told the reasons why.
         25            COMPTROLLER MILLIGAN:  But I --
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            MR. KRUPPENBACHER:  We went --
          2            COMPTROLLER MILLIGAN:  -- you didn't answer
          3       my question.
          4            MR. KRUPPENBACHER:  Okay.  He sent
          5       Dr. Williams a letter.
          6            COMPTROLLER MILLIGAN:  And was that letter
          7       responded to?
          8            DR. WILLIAMS:  He did send me a letter
          9       asking for the different areas.  But I had gone
         10       over on -- on several occasions with
         11       Mr. McCammon some of the concerns that we had
         12       right up to the last minute.  We made changes
         13       constantly right up to the last minute.
         14            But he did send me a letter, and did
         15       request in writing the reasons.  But we had gone
         16       over those same reasons at the night -- on the
         17       25th at the Board meeting.
         18            COMPTROLLER MILLIGAN:  But as a matter of
         19       record at the Board meeting?
         20            DR. WILLIAMS:  Yes.
         21            COMPTROLLER MILLIGAN:  And so you did not
         22       answer the letter, but felt that the record of
         23       the Board meeting defined the reasons for the
         24       denial.
         25            DR. WILLIAMS:  Correct.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            COMPTROLLER MILLIGAN:  Okay.  Thank you.
          2            GOVERNOR CHILES:  Is there any questions?
          3            Do you have anything else to present to
          4       us?
          5            MR. KRUPPENBACHER:  No.  Thank you,
          6       Governor.  Thank you, members.
          7            GOVERNOR CHILES:  Thank you.
          8            Is there a motion?
          9            COMMISSIONER BROGAN:  Governor, I would
         10       move, based on my statements of a few moments
         11       ago, and I think some of the discussions that we
         12       had at the previous Board meeting, that, indeed,
         13       the School Board in this particular case is
         14       within its right.
         15            It is my hope that Mr. McCammon will
         16       continue to work with the school system, and see
         17       if at a different and more appropriate time he
         18       may be able to refile and resubmit an
         19       application for future consideration.
         20            And I agree with counsel, I think that
         21       everyone has the right to go back again.  Once
         22       denied doesn't mean that you are blacklisted,
         23       that you've got an opportunity to return again
         24       to that, or any other school district and submit
         25       another application for future consideration.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            But at this point, I would move that we
          2       uphold the denial of the School Board in
          3       Orange County.
          4            COMPTROLLER MILLIGAN:  If I may, Governor,
          5       I do believe that the School Board should have
          6       responded to that correspondence, regardless of
          7       the assumption that the denial and the reason
          8       for the denial was contained in the record of
          9       the School Board meeting.  I believe the
         10       School Board failed to be at least courteous in
         11       responding to that letter.
         12            I would second the motion with the proviso
         13       that the Board, in fact, formally respond to the
         14       request for the reasons that he was denied, to
         15       give this man an opportunity to resubmit in the
         16       spirit of resubmitting.  But also to clarify
         17       exactly the reasons for the denial.
         18            GOVERNOR CHILES:  All right.  It's been
         19       moved and seconded, request that the
         20       School Board submit the letter.
         21            Is there further discussion?
         22            Many as favor, signify by saying aye.
         23            THE CABINET:  Aye.
         24            GOVERNOR CHILES:  Opposed, no.
         25            The ayes have it.  School Board is upheld.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            DR. BEDFORD:  Item 5, Rule 6A-1.0014, an
          2       amendment to the Comprehensive Management
          3       Information System.
          4            SECRETARY MORTHAM:  Move approval.
          5            COMMISSIONER BROGAN:  Second.
          6            GOVERNOR CHILES:  Moved and seconded.
          7            Without objection, it's approved.
          8            DR. BEDFORD:  Item 6,
          9       State University System.  Rule 6C-1.010,
         10       amendment to the Chancellor.
         11            COMMISSIONER BROGAN:  Move approval.
         12            SECRETARY MORTHAM:  Second.
         13            GOVERNOR CHILES:  Moved and seconded.
         14            Without objection, it's approved.
         15            DR. BEDFORD:  Item 7,
         16       State University System, Rule 6C-1.014,
         17       amendment, section called Inspectors General.
         18            COMMISSIONER BROGAN:  Move approval.
         19            COMMISSIONER CRAWFORD:  Second.
         20            GOVERNOR CHILES:  Moved and seconded.
         21            Without objection, that's approved.
         22            DR. BEDFORD:  Item 8, Postsecondary
         23       Education Planning Commission, Limited Access
         24       Competitive Grant Program.
         25            COMMISSIONER BROGAN:  Move approval.
                        ACCURATE STENOTYPE REPORTERS, INC.
                             STATE BOARD OF EDUCATION
                                  April 15, 1997
          1            SECRETARY MORTHAM:  Second.
          2            GOVERNOR CHILES:  Moved and seconded.
          3            Without objection, that's approved.
          4            DR. BEDFORD:  That concludes our agenda.
          5            Thank you.
          6            GOVERNOR CHILES:  Thank you, sir.
          7            (The State Board of Education Agenda was
          8       concluded.)
          9                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                            ADMINISTRATION COMMISSION
                                  April 15, 1997
          1            GOVERNOR CHILES:
          2       Administration Commission.
          3            DR. BRADLEY:  Item number 1, recommend
          4       approval of the minutes of the meetings held
          5       March 11th, 2-- and -- 25th --
          6            COMMISSIONER CRAWFORD:  Motion.
          7            DR. BRADLEY:  -- and 27th, 1997.
          8            COMMISSIONER BROGAN:  Second.
          9            GOVERNOR CHILES:  Moved and seconded.
         10            Without objection, the minutes are
         11       approved.
         12            DR. BRADLEY:  Items 2 through 4 were
         13       deferred from the March 25th meeting.
         14            Item number 2 is recommend approval of the
         15       transfer of general revenue appropriations in
         16       Department of Children and Families.
         17            COMMISSIONER CRAWFORD:  Motion.
         18            SECRETARY MORTHAM:  Second.
         19            GOVERNOR CHILES:  Moved and seconded.
         20            Without objection, Item 2 is approved.
         21            DR. BRADLEY:  Item number 3, recommend
         22       approval of the transfer of general revenue
         23       appropriations in the Department of Corrections.
         24            COMMISSIONER BROGAN:  Move approval.
         25            COMMISSIONER CRAWFORD:  Second.
                        ACCURATE STENOTYPE REPORTERS, INC.
                            ADMINISTRATION COMMISSION
                                  April 15, 1997
          1            GOVERNOR CHILES:  Item number 3 has been
          2       moved and seconded.
          3            Without objection, it's approved.
          4            DR. BRADLEY:  Item number 4 is recommend
          5       approval of the transfer of general revenue
          6       appropriations in the Department of Education.
          7            COMMISSIONER BROGAN:  Move approval.
          8            COMMISSIONER CRAWFORD:  Second.
          9            GOVERNOR CHILES:  Moved and seconded.
         10            Without objection, Item 4 is approved.
         11            DR. BRADLEY:  Item number 5 is recommend
         12       approval of the transfer of general revenue
         13       appropriations under Items 5A and B in the
         14       Department of Children and Families.
         15            SECRETARY MORTHAM:  Move approval.
         16            COMMISSIONER BROGAN:  Second.
         17            GOVERNOR CHILES:  Moved and seconded.
         18            Without objection, that's approved.
         19            DR. BRADLEY:  Item number 6 is request
         20       authorization to enter the draft order.  This
         21       has to do with the purpose of exempting
         22       educational units from the requirements of
         23       publishing notices in the Florida
         24       Administrative Weekly.
         25            SECRETARY MORTHAM:  Move approval.
                        ACCURATE STENOTYPE REPORTERS, INC.
                            ADMINISTRATION COMMISSION
                                  April 15, 1997
          1            COMMISSIONER CRAWFORD:  Second.
          2            COMMISSIONER BROGAN:  Second.
          3            GOVERNOR CHILES:  Moved and seconded.
          4            Without objection, that's approved.
          5            DR. BRADLEY:  That's all, Mr. Chairman.
          6            (The Administration Commission Agenda was
          7       concluded.)
          8                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                           MARINE FISHERIES COMMISSION
                                  April 15, 1997
          1            GOVERNOR CHILES:  Marine Fisheries
          2       Commission.
          3            MR. SHELFER:  Good morning.
          4            Item A involves an emergency rule,
          5       46ER97-1, to reinstate an allowable gear
          6       provision to make legal the gigging of flounder
          7       in Volusia County.
          8            COMMISSIONER BROGAN:  Move the rule,
          9       Governor.
         10            SECRETARY MORTHAM:  Second.
         11            COMMISSIONER CRAWFORD:  Second.
         12            GOVERNOR CHILES:  Moved and seconded.
         13            Is there objection?
         14            Without objection, the rule is adopted.
         15            MR. SHELFER:  Thank you, sir.
         16            GOVERNOR CHILES:  Thank you, sir.
         17            (The Marine Fisheries Commission Agenda was
         18       concluded.)
         19                             *
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            GOVERNOR CHILES:  Trustees.
          2            MS. WETHERELL:  Item 1, minutes.
          3            COMMISSIONER BROGAN:  Move it.
          4            SECRETARY MORTHAM:  Move approval.
          5            GOVERNOR CHILES:  Moved and seconded.
          6            Without objection -- is there a second?
          7            SECRETARY MORTHAM:  Yes.
          8            COMMISSIONER BROGAN:  Yes, sir.
          9            COMMISSIONER CRAWFORD:  Second.
         10            GOVERNOR CHILES:  Seconded.
         11            Without objection, the minutes are
         12       approved.
         13            MS. WETHERELL:  Item 2 is a purchase
         14       agreement for Belle Meade CARL project, and a
         15       waiver of survey.
         16            SECRETARY MORTHAM:  Move approval.
         17            COMMISSIONER BROGAN:  Second.
         18            GOVERNOR CHILES:  Moved and seconded.
         19            Without objection, Item 2 is approved.
         20            MS. WETHERELL:  Item 3 are three option
         21       agreements for Belle Meade CARL project, and a
         22       waiver of survey.
         23            SECRETARY MORTHAM:  Move approval.
         24            COMMISSIONER BROGAN:  Second.
         25            GOVERNOR CHILES:  Moved and seconded.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            Without objection, Item 3 is approved.
          2            MS. WETHERELL:  Item 4 is a purchase
          3       agreement for the Department of Agriculture.
          4            COMMISSIONER BROGAN:  Move approval.
          5            GOVERNOR CHILES:  Moved.
          6            SECRETARY MORTHAM:  Second.
          7            GOVERNOR CHILES:  Seconded.
          8            Without objection, Item 4 is approved.
          9            MS. WETHERELL:  Item 5 is assignment of an
         10       option agreement for Lake Wales Ridge CARL
         11       project.
         12            SECRETARY MORTHAM:  Move approval.
         13            COMMISSIONER BROGAN:  Second.
         14            GOVERNOR CHILES:  Moved and seconded.
         15            Without objection, that's approved.
         16            MS. WETHERELL:  Item 6 are amendments to
         17       Chapter 18-21.
         18            SECRETARY MORTHAM:  Move approval.
         19            COMMISSIONER BROGAN:  Second.
         20            GOVERNOR CHILES:  Moved and seconded.
         21            Without objection, that's approved.
         22            MS. WETHERELL:  Items 7 are amendments to
         23       St. Joe Bay Management Plan, and rule amendment.
         24            SECRETARY MORTHAM:  Move approval.
         25            COMMISSIONER BROGAN:  Second.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            GOVERNOR CHILES:  Moved and seconded.
          2            Without objection, Item 8 is approved.
          3            MS. WETHERELL:  Substitute Item 8 are
          4       amendments to Chapter 18-20 for aquatic
          5       preserves.
          6            COMMISSIONER BROGAN:  Move approval.
          7            SECRETARY MORTHAM:  Second.
          8            GOVERNOR CHILES:  Moved and seconded.
          9            Without objection, that's approved.
         10            MS. WETHERELL:  I wanted to recognize
         11       Representative Jones, if he is here.  I
         12       understood he might come.
         13            He was the one responsible for the
         14       legislation that resulted in this.  But I don't
         15       believe he's here.
         16            Substitute Item 9, Cross State Towing
         17       submerged land lease.
         18            COMMISSIONER BROGAN:  Governor, I'd like to
         19       move to defer this item until June 12th.
         20            COMMISSIONER CRAWFORD:  Second.
         21            GOVERNOR CHILES:  Motion to defer and
         22       seconded.
         23            Without objection, it's deferred.
         24            MS. WETHERELL:  Item 10 is the
         25       Charles River Lab lease revocation.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            And, Governor and Trustees, during the last
          2       30, 45 minutes, some of the Aides have been
          3       meeting with my attorney, David Schwartz, and
          4       they still have a number of concerns which
          5       I think are legitimate.  However, all the
          6       Cabinet Aides were not in this meeting.
          7            And for that reason, I would suggest that
          8       we defer this meeting -- this item until the
          9       next meeting.  They bring up some points that
         10       they're concerned that the position that we're
         11       in in terms of what we would be taking to the
         12       judge might have a negative impact that we're
         13       not currently thinking of.
         14            And without getting into details, I think
         15       they have some good points.  And I think that
         16       all the Aides ought to have an opportunity to
         17       talk about it, and then discuss it with you.
         18            We are -- this does not effect the status
         19       of the lawsuit.  The Department believes this is
         20       the position we ought to be in.  But I think we
         21       probably need to defer it.
         22            SECRETARY MORTHAM:  Move deferral.
         23            COMPTROLLER MILLIGAN:  Second.
         24            COMMISSIONER BROGAN:  I'll second.
         25            GOVERNOR CHILES:  Moved and seconded on a
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1       motion to defer.
          2            And without objection, it's deferred.
          3            MS. WETHERELL:  All right.  And if could I
          4       now turn over Item 11 to the Water Management
          5       District, Henry Dean is here.
          6            And, Governor and Trustees, just to refresh
          7       your memory, a couple of years ago when the
          8       Legislature consolidated the Departments of
          9       Wetland Permitting with the
         10       Water Management District's Surface Water
         11       Permitting, at that point in time, they made it
         12       very clear that the Water Management Districts
         13       are separate staff to you as the Board of
         14       Trustees for items that involve State lands,
         15       sovereign submerged lands.
         16            And so for that reason, this is the very
         17       first item you've had to come to you that was a
         18       Water Management District item.
         19            In the future -- we've recognized it has
         20       caused confusion because it's on our agenda, and
         21       for the future, we will have a separate agenda
         22       for all of the Water Management District items.
         23            It will be their agenda.  It will be a
         24       Board of Trustees, but it'll be their agenda,
         25       because clearly the statute does not give us any
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1       authority to in any way work on these items.
          2       They are the Water Management District's items.
          3            COMMISSIONER BROGAN:  Governor, can I ask
          4       a --
          5            GOVERNOR CHILES:  Yes.
          6            COMMISSIONER BROGAN:  -- just a quick
          7       question.
          8            Are they separate and distinct, Secretary,
          9       in terms of their ability to bring items to the
         10       Cabinet then in your mind?
         11            MS. WETHERELL:  Yes.  What the Legislature
         12       did was to say that certain kinds of activities
         13       would be permitted by DEP, and certain kind of
         14       activities would be permitted by the
         15       Water Management District.
         16            And when those activities that are
         17       permitted by the Water Management Districts
         18       involve sovereign submerged lands, for which you
         19       have responsibility, then they are your staff.
         20       And when it involves -- when activities that we
         21       permit, then we are your staff.
         22            And so they can -- they write the item, we
         23       don't really have any authority to amend the
         24       item.  We can say we like it or don't like it,
         25       but we don't have any authority.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            COMMISSIONER BROGAN:  Will you be bringing
          2       forward a recommendation, or -- as well, or
          3       would they be standing alone then in --
          4            MS. WETHERELL:  Well, since this is the
          5       first one, we've kind of struggled with what's
          6       the appropriate process.  And one thing we could
          7       do -- it would be their agenda item, and they
          8       would prepare it, and they would work with your
          9       Aides on the item.
         10            But we could have a statement at the end of
         11       the item, similarly to what we have at the end
         12       of all of our items in regards to whether the
         13       item is consistent with the comp plan.  We could
         14       have a statement that said we find it consistent
         15       with the Board of Trustees policy, or
         16       something --
         17            COMMISSIONER BROGAN:  You may want to talk
         18       to our folks.  It's not too dissimilar to what
         19       we do with community colleges and state
         20       university.
         21            They all more or less come under the same
         22       umbrella, but they have separate and distinct
         23       requirements and obligations, and we've kind of
         24       worked an arrangement out as to how we bring
         25       things forward to the --
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            MS. WETHERELL:  Uh-hum.
          2            COMMISSIONER BROGAN:  -- State Board of
          3       Education.
          4            MS. WETHERELL:  Right.
          5            Well, we'll work with your staff.  And we
          6       just -- we will separate the item, but we'll
          7       work with your staff to get whatever connections
          8       they want.
          9            GOVERNOR CHILES:  All right.
         10            COMMISSIONER BROGAN:  Thanks, Governor.
         11            MR. DEAN:  Good morning.
         12            GOVERNOR CHILES:  Good morning.
         13            MR. DEAN:  Since this is the first one, as
         14       I understand it, hopefully it'll be pretty
         15       simple.
         16            We're recommending deferral of this item
         17       until -- until May 28th --
         18            COMMISSIONER CRAWFORD:  You fall right in
         19       line with this bunch today.
         20            MR. DEAN:  I -- I became quite capable of
         21       recommending deferral when I served as the
         22       Trustees' attorney a number of years ago.
         23            So -- we do need to defer this -- or we'd
         24       like to ask that you move to defer this until
         25       May 28th, and that's our recommendation.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            COMMISSIONER BROGAN:  Move deferral,
          2       Governor.
          3            SECRETARY MORTHAM:  Second.
          4            COMMISSIONER CRAWFORD:  Second.
          5            GOVERNOR CHILES:  Moved and seconded.
          6            Without objection, it's deferred.
          7            MR. DEAN:  Thank you.  I -- I have to
          8       say --
          9            GOVERNOR CHILES:  A very successful
         10       appearance here.
         11            MR. DEAN:  Well, I have to tell you, if I
         12       may --
         13            GOVERNOR CHILES:  Hope you're as fortunate
         14       in the future.
         15            MR. DEAN:  Governor, I have to tell you --
         16       for 3 seconds, I have to tell you that it is --
         17       it was 18 years ago this week that I made my
         18       first appearance at a Cabinet meeting as a staff
         19       attorney for DNR.
         20            And so I consider this sort of a -- much as
         21       the same as the Hale-Bopp Comet, sort of an
         22       elliptical career path, and I'm now back as
         23       staff to the Trustees.  And it was 18 years ago
         24       this week.  And it's wonderful to be back.
         25            GOVERNOR CHILES:  Thank you, sir.
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            TREASURER NELSON:  Governor, I have a
          2       question.
          3            GOVERNOR CHILES:  Yes, sir.
          4            TREASURER NELSON:  Madam Secretary, let me
          5       ask you:  Governor, I noticed in the clips that,
          6       lo and behold, they're at it again on offshore
          7       oil drilling.
          8            The Federal Government has been petitioned
          9       to -- for a well 17 miles south of
         10       Pensacola Beach.
         11            And with regard to the State, Coastal
         12       Petroleum has filed 12 more applications to
         13       drill off such areas, some nonsensitive areas
         14       such as Sarasota, Sanibel, off of
         15       Tarpon Springs, off of St. George Island.
         16            So what I'd like to find out, if you could
         17       give us a -- Madam Secretary, a status report,
         18       they filed for these 12.
         19            MS. WETHERELL:  Uh-hum.
         20            TREASURER NELSON:  You have certain legal
         21       constraints.  Tell us about those constraints,
         22       and if you have to accept their applications.
         23            And you might also talk about the
         24       legislation -- there's legislation that ups the
         25       bond requirement, which we've had discussions
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1       here in Cabinet meetings about.
          2            MS. WETHERELL:  Uh-hum.
          3            TREASURER NELSON:  Tell us about that.
          4            MS. WETHERELL:  Well, what I would like to
          5       do is to give you a status report of those
          6       applications at the next Cabinet meeting, if I
          7       could.  We'll go back and assess what those
          8       applications look like.
          9            If you recall, the ones that they submitted
         10       the first time were in no way near complete
         11       applications.  And because of the session, I'll
         12       have to be honest with you and tell you that I
         13       haven't had time to focus on what the status of
         14       those are.
         15            But in terms of the legislation, the -- the
         16       Attorney General is the one who has been behind,
         17       and more or less sponsoring the legislation that
         18       would ensure that you have an opportunity as
         19       Trustees to require the kind of surety for any,
         20       you know, drilling that takes place.  And that
         21       seems to be doing okay.
         22            Yes.  So -- and Suwaya Crane is certainly
         23       following that.
         24            TREASURER NELSON:  If we could discuss this
         25       at the next meeting --
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1            MS. WETHERELL:  I will bring you a --
          2            TREASURER NELSON:  -- I would appreciate
          3       it.
          4            MS. WETHERELL:  -- status report at the --
          5            GOVERNOR CHILES:  We'll do that.
          6            MS. WETHERELL:  -- next meeting.
          7            TREASURER NELSON:  Thank you.
          8            MS. WETHERELL:  Thank you.
          9            (The Board of Trustees of the Internal
         10       Improvement Trust Fund Agenda was concluded.)
         11                             *
         12            (The Cabinet meeting was concluded at
         13       11:24 a.m.)
                        ACCURATE STENOTYPE REPORTERS, INC.
                                  April 15, 1997
          1                 CERTIFICATE OF REPORTER
          4   STATE OF FLORIDA:
          5   COUNTY OF LEON:
          6            I, LAURIE L. GILBERT, do hereby certify that
          7   the foregoing proceedings were taken before me at the
          8   time and place therein designated; that my shorthand
          9   notes were thereafter translated; and the foregoing
         10   pages numbered 1 through 77 are a true and correct
         11   record of the aforesaid proceedings.
         12            I FURTHER CERTIFY that I am not a relative,
         13   employee, attorney or counsel of any of the parties,
         14   nor relative or employee of such attorney or counsel,
         15   or financially interested in the foregoing action.
         16            DATED THIS 25TH day of APRIL, 1997.
         19                           LAURIE L. GILBERT, RPR, CCR
                                      100 Salem Court
         20                           Tallahassee, Florida 32301
                                      (904) 878-2221
                        ACCURATE STENOTYPE REPORTERS, INC.