T H E C A B I N E T

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

Representing:

STATE BOARD OF ADMINISTRATION

ADMINISTRATION COMMISSION

DEPARTMENT OF VETERANS' AFFAIRS

FLORIDA DEPARTMENT OF LAW ENFORCEMENT

STATE BOARD OF EDUCATION

BOARD OF TRUSTEES OF THE

INTERNAL IMPROVEMENT TRUST FUND

The above agencies came to be heard before

THE FLORIDA CABINET, Honorable Governor Bush

presiding, in the Cabinet Meeting Room, LL-03,

The Capitol, Tallahassee, Florida, on Tuesday,

March 23, 1999, commencing at approximately 9:11 a.m.

Reported by:

LAURIE L. GILBERT

Registered Professional Reporter

Certified Court Reporter

Certified Realtime Reporter

Registered Merit Reporter

Notary Public in and for

the State of Florida at Large

ACCURATE STENOTYPE REPORTERS, INC.

100 SALEM COURT

TALLAHASSEE, FLORIDA 32301

850/878-2221

2

APPEARANCES:

Representing the Florida Cabinet:

JEB BUSH

Governor

BOB CRAWFORD

Commissioner of Agriculture

BOB MILLIGAN

Comptroller

KATHERINE HARRIS

Secretary of State

BOB BUTTERWORTH

Attorney General

BILL NELSON

Treasurer

TOM GALLAGHER

Commissioner of Education

*

ACCURATE STENOTYPE REPORTERS, INC.

3

March 23, 1999

I N D E X

ITEM ACTION PAGE

STATE BOARD OF ADMINISTRATION:

(Presented by Tom Herndon,

Executive Director)

1 Approved 5

2 Approved 24

3 Approved 24

4 Deferred 34

5 Deferred 36

6 Approved 36

ADMINISTRATION COMMISSION:

(Presented by Donna Arduin,

Secretary)

1 Approved 37

2 Approved 38

3 Approved 38

4 Approved 38

DEPARTMENT OF VETERANS' AFFAIRS:

(Presented by Robin L. Higgins,

Executive Director)

1 Approved 39

2 Approved 44

3 Approved 49

4 Information Only 50

DEPARTMENT OF LAW ENFORCEMENT:

(Presented by James T. Moore,

Executive Director)

1 Approved 53

2 Approved 55

3 Approved 56

ACCURATE STENOTYPE REPORTERS, INC.

4

March 23, 1999

I N D E X

(Continued)

ITEM ACTION PAGE

STATE BOARD OF EDUCATION:

(Presented by Wayne V. Pierson,

Deputy Commissioner)

1 Approved 57

2 Information Only 57

3 Approved 113

4 Approved 114

5 Approved 114

BOARD OF TRUSTEES OF THE

INTERNAL IMPROVEMENT

TRUST FUND:

(Presented Kirby B. Green, III,

Deputy Secretary)

1 Approved 115

2 Approved 115

3 Approved 116

4 Approved 116

5 Approved 116

6 Approved 117

7 Approved 117

8 Approved 117

9 Deferred 118

10 Approved 118

11 Approved 118

12 Approved 118

13 Deferred 119

CERTIFICATE OF REPORTER 121

*

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STATE BOARD OF ADMINISTRATION 5

March 23, 1999

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

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

3 GOVERNOR BUSH: State Board of

4 Administration.

5 MR. HERNDON: Good morning, Governor,

6 members of the Board.

7 The first item for business this morning is

8 approval of the minutes of the meeting held on

9 March 9th, 1999.

10 GOVERNOR BUSH: Is there a motion?

11 TREASURER NELSON: Move it.

12 COMPTROLLER MILLIGAN: Second.

13 GOVERNOR BUSH: Moved and seconded.

14 Without objection, it's approved.

15 MR. HERNDON: Governor, if you would not

16 object, I'd like to suggest that we look at

17 Items 2 and 3 essentially together, even though

18 they are separate agenda items, but we do have

19 individuals in the audience who would like to

20 speak to both items, or to the broader

21 question, I guess.

22 They are both fiscal determinations, one

23 for housing revenue bonds for

24 Eastlake Apartments, and the second for housing

25 revenue bonds for Wentworth II Apartment

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STATE BOARD OF ADMINISTRATION 6

March 23, 1999

1 projects. They're both fiscal determinations.

2 And as you know, we also submitted a -- an

3 amendment to the text a couple of days ago. So

4 these items are recommended to you as amended.

5 And I think Mr. Hauser is here, who wants

6 to speak on this item, and then Ms. Leigh, who

7 is with the Housing Authority itself --

8 GOVERNOR BUSH: Very good.

9 MR. HERNDON: -- would like to speak.

10 MR. HAUSER: Good morning, Governor,

11 members of the Cabinet. My name's Jim Hauser.

12 I'm with the Skelding, Metz law firm in

13 Tallahassee.

14 We represent worthwhile (sic) development 3

15 and 4. Sort of a -- very briefly as

16 background, this matter involves allocation of

17 1998 revenue bond monies in which competing

18 applicants are entitled to these monies.

19 We are representing the challengers -- as

20 challengers to the applicants who claim

21 entitlement to the money.

22 Importantly, Governor, and members of the

23 Cabinet, we submit the real issue today is

24 there's a pending litigation before the

25 Division of Administrative Hearings set for the

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STATE BOARD OF ADMINISTRATION 7

March 23, 1999

1 end of May, which is expressly -- the subject

2 of the litigation is who is entitled to these

3 1998 monies.

4 We understand that the Florida Housing

5 disagrees with our position. We respect their

6 right certainly. We think at this point in the

7 legal posture, however, it is sitting with the

8 Administrative Law Judge, and that it would be

9 premature, and respectfully, irresponsible to

10 go ahead and allocate the monies, and disburse

11 the monies to these competing developers, which

12 is what Florida Housing wishes to do, in

13 advance of the May 24 final hearing.

14 We think going ahead and allocating and

15 disbursing the monies in advance of the

16 resolution of that DOAH proceeding would not

17 only violate the process, it would also perhaps

18 threaten the integrity of the bonds that you're

19 being asked to allocate, because a successful

20 resolution in favor of our clients could very

21 much jeopardize what happens to the allocated

22 funds.

23 We submit that a -- an appropriate and

24 respectfully prudent amendment to the motion

25 would be that the bonds not be closed on to

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STATE BOARD OF ADMINISTRATION 8

March 23, 1999

1 Wentworth II or Eastlake, there not be a

2 closing on the bonds until there is resolution

3 one way or another of the DOAH proceeding.

4 And that way the Board can be assured that

5 bonds have not been issued to the wrong

6 entities in advance of a resolution by the

7 appropriate legal tribunal.

8 And I don't wish to make this too

9 legalistic, but -- but that is really the

10 posture of where we sit, is there's a pending

11 litigation, all parties recognize it. And

12 respectfully the motion as phrased on the

13 agenda item we submit is a bit unclear.

14 Perhaps certainly unintentional, but it is

15 unclear as to what happens from this moment

16 forward, until the litigation proceeds toward

17 the end of May.

18 And we can't see -- in all candor, cannot

19 understand what the urgency is, or where the

20 fire is, to wait another two months --

21 two-and-a-half, three months to get resolution

22 of the administrative proceeding, and then all

23 parties can be assured that there is no

24 impediment, there's no legal encumbrance to

25 what is the appropriate disbursement, and who

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STATE BOARD OF ADMINISTRATION 9

March 23, 1999

1 should get the bond monies.

2 Thank you --

3 GOVERNOR BUSH: Thank you.

4 MR. HAUSER: -- for your consideration.

5 GOVERNOR BUSH: Thank you.

6 MR. HERNDON: And I think Ms. Leigh wants

7 to have -- act as rebuttal, I guess.

8 MS. LEIGH: Governor and Cabinet. I'm

9 Susan Leigh with the Florida Housing Finance

10 Corporation.

11 The Board allocated credits to these two

12 properties that are on the agenda today in

13 December of 1998. They felt it was appropriate

14 to do so, and felt -- and was given legal

15 counsel that these applicants were entitled to

16 these funds at that point in time.

17 There is litigation pending. The Board has

18 remedied -- has provided a remedy. If DOAH

19 rules against the Department -- against the

20 Agency, then there has been allocation set

21 aside so these properties can be funded.

22 To the extent that the DOAH rules in favor

23 of the Agency, then these deals will have moved

24 forward.

25 Our issue, and the Board's issue, has been

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STATE BOARD OF ADMINISTRATION 10

March 23, 1999

1 that we cannot use 1999 allocation until 1998

2 allocation has been used. And that's a Federal

3 distinction.

4 If we hold for two to three months our 1999

5 allocation, 160 million dollars is in jeopardy,

6 because, Governor, you have to sign on a letter

7 that says that these properties have gone

8 through credit underwriting, and have been

9 dealt with appropriately by June 30th of -- of

10 this year.

11 The Board feels very strong about this

12 position. They believe they have remedied.

13 And for either position, they believe they're

14 in the right, of course; as the plaintiff's

15 believe they are, too. But they also believe

16 they have provided the appropriate remedy if

17 that were to play out.

18 GOVERNOR BUSH: Can I ask a question?

19 How --

20 MS. LEIGH: Yes, sir.

21 GOVERNOR BUSH: -- how can you, in advance

22 of granting credits, make a commitment to the

23 litigant that you will take care of their

24 credits in the '99 allocation?

25 MS. LEIGH: These are --

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March 23, 1999

1 GOVERNOR BUSH: Doesn't that --

2 MS. LEIGH: -- tax --

3 GOVERNOR BUSH: -- jeopardize --

4 MS. LEIGH: -- tax exempt bonds, and not

5 credits in this instance. But the -- the

6 corporation and the Board is the sole issuer of

7 the allocation that they have. And they have

8 reserved the appropriate amount -- I think it's

9 approximately 32 million and some change -- to

10 be set aside for the purpose of dealing with

11 this if it were to come forward not in our

12 favor.

13 In addition, this lawsuit may play out

14 beyond June, and we may have to commit to the

15 year 2000, instead of '99, in order to utilize

16 the '99 allocation in the appropriate

17 time frame.

18 GOVERNOR BUSH: Well, why would there be a

19 need for a lawsuit if you're committing to give

20 the -- given what they want? Am I missing

21 something? Can you --

22 MS. LEIGH: No. That's pretty much how

23 the Board feels. But they have a right to

24 go --

25 GOVERNOR BUSH: There's --

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March 23, 1999

1 MS. LEIGH: -- to hearing.

2 GOVERNOR BUSH: There's something missing

3 here.

4 COMPTROLLER MILLIGAN: Yes.

5 GOVERNOR BUSH: There's -- logic has not

6 quite kicked in.

7 MR. HAUSER: May I --

8 GOVERNOR BUSH: Please.

9 MR. HAUSER: May I --

10 GOVERNOR BUSH: Yeah. Please do. Because

11 it doesn't make sense that you would be wanting

12 to spend your -- your client's money to do

13 something that you've already achieved in

14 the --

15 MR. HAUSER: Absolutely.

16 GOVERNOR BUSH: -- next allocation.

17 MR. HAUSER: It's a very fair and cogent

18 question, Governor. Thank you.

19 By -- the very subject matter of the

20 lawsuit is, what is the appropriate allocation

21 of '98 monies. If '98 monies are allocated and

22 closed, it guts -- it could gut the lawsuit,

23 such that the judge sits there saying, we're

24 fighting over who's supposed to get '98 monies,

25 but the '98 monies are gone already.

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STATE BOARD OF ADMINISTRATION 13

March 23, 1999

1 It puts our client in the position of

2 trying to win the lawsuit and claim entitlement

3 to the set aside, but the set aside is not

4 available because we probably cannot win the

5 lawsuit if the very subject matter of the

6 lawsuit, the '98 monies, are gone. They're

7 closed.

8 GOVERNOR BUSH: I'm missing -- still

9 missing -- I'm, you know, new to the job. So

10 help me out here.

11 MR. HAUSER: Then --

12 GOVERNOR BUSH: Ms. Leigh did -- made a

13 commitment that your -- the -- a like kind

14 amount of allocation will be given to you in

15 the next -- the next Board meeting. You'll get

16 the same --

17 MR. HAUSER: No. The set aside is

18 expressly contingent upon successful resolution

19 of the lawsuit into my client's favor. It's

20 not a guarantee right now. It is -- there's an

21 earmarked fund that may be available to us if

22 we win the lawsuit.

23 GOVERNOR BUSH: Sure.

24 MR. HAUSER: But if you allocate the '98

25 monies --

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March 23, 1999

1 COMMISSIONER GALLAGHER: They can't win --

2 MR. HAUSER: -- now and give them away to

3 somebody else, it's a catch-22.

4 How can you win the lawsuit when what the

5 subject matter of the lawsuit is, who's

6 entitled to the '98 monies.

7 So it is -- I apologize for the difficulty

8 of explaining the catch-22. But my -- my

9 client certainly doesn't want to spend

10 unnecessary monies --

11 GOVERNOR BUSH: Sure. I --

12 MR. HAUSER: -- litigation in the out --

13 GOVERNOR BUSH: Clearer now.

14 MR. HAUSER: If we thought we had an

15 entitlement to the set aside monies based on

16 what's being presented this morning and what

17 the Florida Housing Board has done, we wouldn't

18 be here taking up your valuable time, for

19 certain.

20 The problem is, by giving away -- by

21 allocating to the competing developers the '98

22 monies, which is the only subject of the

23 lawsuit, it has certainly the very real

24 potential of mooting -- gutting the lawsuit

25 whereby our client can never claim successful

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STATE BOARD OF ADMINISTRATION 15

March 23, 1999

1 resolution of the DOAH proceeding, and claim

2 entitlement to the set aside.

3 And we would urge that if we could just

4 have, you know, another two months -- not

5 seeking delay any -- any ruling really, but

6 just two months before the closing, before

7 these bonds are closed, to get some kind of

8 resolution from the DOAH proceeding, we don't

9 find ourselves in a catch-22 position; and

10 perhaps more importantly, for this Board

11 certainly, is the integrity of the process is

12 ensured, doing the right thing, and following

13 the processes of the Florida Housing's own

14 rules and policies.

15 And the integrity of the bonds that are

16 being asked to be allocated this morning are

17 preserved so two or three months later, nobody

18 comes back and says there was a lawsuit and it

19 was a negative resolution, but the bonds have

20 already been closed on two months ago.

21 Thank you.

22 GOVERNOR BUSH: Thank you.

23 Anybody have any comments?

24 COMPTROLLER MILLIGAN: I'd like to really

25 get clarification again. If it were delayed --

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March 23, 1999

1 From you, Susan, if it were delayed until

2 the DOAH hearing, DOAH hearing is scheduled for

3 May, I believe?

4 MS. LEIGH: Late May.

5 COMPTROLLER MILLIGAN: Late May.

6 MS. LEIGH: And --

7 COMPTROLLER MILLIGAN: And so it would be

8 well after probably June 30th before we'd hear

9 anything from the hearing officer, I presume.

10 MS. LEIGH: That's correct, sir.

11 COMPTROLLER MILLIGAN: And explain to me

12 again the problem with the end of June.

13 MS. LEIGH: The --

14 COMPTROLLER MILLIGAN: And '99 dollars.

15 MS. LEIGH: Right.

16 The '99 dollars have to be committed to

17 specific projects by June 30th in order to

18 move --

19 COMPTROLLER MILLIGAN: And that is a

20 Federal requirement, or a State requirement?

21 MS. LEIGH: State requirement.

22 COMPTROLLER MILLIGAN: State requirement.

23 MS. LEIGH: Yes.

24 COMPTROLLER MILLIGAN: It's a State --

25 MS. LEIGH: Yes.

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March 23, 1999

1 COMPTROLLER MILLIGAN: -- requirement.

2 MS. LEIGH: Yes, sir.

3 COMPTROLLER MILLIGAN: And that requirement

4 is specified where and how?

5 MS. LEIGH: I'll let my bond counsel, so --

6 COMPTROLLER MILLIGAN: Okay.

7 MS. LEIGH: -- I don't misspeak.

8 COMPTROLLER MILLIGAN: The Federal dollars

9 are three-year dollars. So I mean, there's

10 plenty of time on that. It's really the State

11 problem I think we're -- we're dealing with at

12 the end of June.

13 MS. JUDELLE: Good morning. I'm

14 Elise Judelle with Bryant, Miller and Olive.

15 We're bond counsel to the Florida Housing

16 Finance Corporation.

17 The -- there are two -- two time limits

18 that are of issue here. The State law provides

19 that your '99 allocation is available solely to

20 Florida Housing to allocate till June 30th.

21 They have to commit it to specific projects by

22 June 30, or it lapses --

23 COMPTROLLER MILLIGAN: That's in statute or

24 rule --

25 MS. JUDELLE: That's Florida Statute, yes.

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March 23, 1999

1 The Federal law provides that you have '98

2 allocation, which is presumably in dispute

3 here. But as far as the Federal law is

4 concerned, that's sort of fungible money, and

5 it was carried forward for use in '99.

6 And it has to be -- it has to be attributed

7 to the first bond issue that closes this year,

8 whether it's -- from Florida Housing's

9 perspective, whether it's the '98 cycle or '99

10 cycle is irrelevant to the Federal law. Those

11 '98 dollars literally go toward the first

12 project to close in '99, whichever it is.

13 So in that sense, it's -- it's blind to

14 this issue --

15 GOVERNOR BUSH: Is that the monies referred

16 to in the December '88 allocation?

17 MS. JUDELLE: That's correct. They are

18 referred to --

19 GOVERNOR BUSH: Those are Federal?

20 MS. JUDELLE: -- as a -- as a carry

21 forward. And the General's right, it's -- in

22 three years -- it has to be used within

23 three years. But it also has to be used to the

24 first --

25 GOVERNOR BUSH: First.

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March 23, 1999

1 MS. JUDELLE: -- the first issues that

2 close.

3 And -- and furthermore, I think the fiscal

4 sufficiency determination that's before you

5 today is really utterly separate from that

6 allocation issue.

7 COMPTROLLER MILLIGAN: And we appreciate

8 that. And -- but it is the procedural aspects

9 that I'm rooting around on, not on the fiscal

10 sufficiency.

11 And I -- and I realize what our

12 responsibility is. But our responsibility also

13 goes to serving the citizens of this state in

14 trying to ensure that things are done fairly

15 and -- and properly.

16 MS. JUDELLE: Certainly.

17 COMPTROLLER MILLIGAN: The statute is

18 ironclad. There is no opportunity for waiver

19 on -- from the State in terms of when you

20 commit those '99 funds?

21 MS. JUDELLE: It is a requirement that

22 Florida Housing indicate to the Division of

23 Bond Finance which projects they have committed

24 allocation to by June 30, or it lapses from

25 their control, and goes actually to

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March 23, 1999

1 Florida first, and then to a general State

2 pool.

3 COMPTROLLER MILLIGAN: Could that

4 commitment be done regardless of whether the

5 funds are available?

6 MS. JUDELLE: I'm not --

7 COMPTROLLER MILLIGAN: In other -- in other

8 words, if the '98 funds were to carry over

9 because of this process, and they went through

10 the process of determining the commitment --

11 commitments they were going to make with the

12 '99 funds prior to 30 June, even though the

13 resources would not be available till sometime

14 after 30 June, is that meeting the statute?

15 MS. JUDELLE: It has to be committed to a

16 particular project by that date.

17 COMPTROLLER MILLIGAN: Committed in what

18 sense?

19 MS. JUDELLE: That the Florida Housing

20 Board would have to allocate that allocation to

21 a particular project.

22 COMPTROLLER MILLIGAN: Yes. And which they

23 certainly could do.

24 MS. JUDELLE: Right.

25 COMPTROLLER MILLIGAN: They certainly could

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March 23, 1999

1 do that by 30 June, whether they had the '99

2 dollars on 30 June or not.

3 MS. JUDELLE: Yes. I don't understand your

4 question. But they -- is your question --

5 COMPTROLLER MILLIGAN: Well, it's a -- it's

6 a paper drill that they're going through in

7 terms of the allocation. It is not an actual

8 commitment of the -- or expenditure of the

9 dollar.

10 MS. JUDELLE: Not until the bonds actually

11 close.

12 COMPTROLLER MILLIGAN: That's correct.

13 MS. JUDELLE: That's correct.

14 COMPTROLLER MILLIGAN: So they could go

15 through the commitment process whether or not

16 they had the '99 dollars available on 1 July or

17 not.

18 MS. JUDELLE: That's -- that's correct.

19 But the -- I think from Florida Housing's

20 perspective, I guess that when they allocate to

21 a project, then the developers of those

22 projects go forward, expend dollars, and

23 so forth, and rely on that.

24 COMPTROLLER MILLIGAN: Uh-hum.

25 MS. JUDELLE: Then to -- for that to

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March 23, 1999

1 change, then you'll have some other litigants

2 before you on --

3 GOVERNOR BUSH: This impacts all the other

4 projects that were allocated, and -- and slows

5 down a process where people are at risk money,

6 I assume, and time and --

7 MS. LEIGH: There's -- there's one other

8 point, and that is on the '98, we can only

9 commit '98 funds to those applicants that

10 participated in 1998.

11 So we couldn't take the '98 dollars and

12 move it over to somebody that's applied in

13 1999. The only eligible entities to receive

14 '98 allocation are the specific projects and

15 the ones that the Board allocated to, and the

16 specific litigants potentially -- plaintiffs.

17 COMPTROLLER MILLIGAN: Well, obviously,

18 Governor, in terms of fiscal sufficiency, there

19 is no reason to not approve this. And based on

20 the bond counsel's review of the matter, it

21 does meet the fiscal sufficiency requirement.

22 TREASURER NELSON: Governor --

23 COMPTROLLER MILLIGAN: I would -- I would

24 like to add one thing, though as a -- as a

25 proposal.

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March 23, 1999

1 And that would be that we have the bond --

2 or have the Housing Authority come back to us

3 after the DOAH hearing, with the result of the

4 DOAH hearing.

5 And at the same time, whatever action is

6 required, that they continue to keep us

7 informed as to the results of that action, in

8 an effort to try to provide some assurance to

9 the -- to the petitioners that if they win the

10 DOAH hearing, that they will, in fact, be

11 properly supported by the -- the

12 Housing Authority.

13 GOVERNOR BUSH: Okay. Do you have a

14 question?

15 TREASURER NELSON: Yes. Thank you.

16 I just want to clarify that both of these

17 projects were on the ranked list with completed

18 applications, which made them then eligible for

19 funding. Is that correct?

20 MS. LEIGH: The projects that are on the

21 agenda today?

22 TREASURER NELSON: Right.

23 MS. LEIGH: Yes, sir, they were.

24 COMPTROLLER MILLIGAN: So basically what

25 I'm -- the motion is to approve the fiscal

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March 23, 1999

1 deficiency request, and require that they come

2 back with -- keep us informed basically of the

3 results of the DOAH hearing and any action that

4 may be required as a result of the DOAH

5 hearing.

6 GOVERNOR BUSH: Is there a second?

7 TREASURER NELSON: Second.

8 GOVERNOR BUSH: Okay.

9 MR. HERNDON: Does that motion cover both

10 items, General?

11 COMPTROLLER MILLIGAN: Yes. That's both

12 items, Tom.

13 MR. HERNDON: Okay. Items 2 and 3 then.

14 GOVERNOR BUSH: It's been moved and

15 seconded.

16 Without objection.

17 MR. HERNDON: Item Number 4, the item

18 remaining from prior Cabinet meetings.

19 Discussion is the premium formula for the

20 1999-2000 contract year. As you'll recall,

21 this is both the formula, and then the rule

22 proposed for notice.

23 I know that Commissioner Nelson's staff has

24 looked at this, and I think he may have some

25 questions.

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March 23, 1999

1 TREASURER NELSON: Members of the Board, I

2 want to thank the SBA for all of the time that

3 you've put into this in resolving some of the

4 concerns that have been raised on the issue.

5 You spent quite a bit of time on this, and I

6 appreciate it.

7 This is a complex and a technical subject,

8 and we've now got to proceed to come to closure

9 on this issue.

10 As a result of the technical analysis of

11 the DOI staff that they have conducted with our

12 chief actuary, we would propose that the

13 indicated rate levels for the residential and

14 mobile home coverages be approved as filed.

15 And that on the commercial residential, that

16 there be two adjustments made to the proposed

17 rate level there.

18 The initial commercial indication, as

19 presented by this -- the SBA staff, was 19.48.

20 But using the AIR computer model, it is only

21 12.26. And the difference between those two

22 numbers is based on the overall retention

23 considerations. We believe that it is a better

24 reflection of the pure commercial rate

25 indication that it is 12.26.

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March 23, 1999

1 And second, in response to our questions,

2 the CAT fund stated that the AIR model for the

3 first time in this year refined its

4 damageability factors, and refined that for the

5 commercial residential.

6 And not to belabor all this technical

7 mumbo jumbo, but it was changing it from

8 general commercial damage functions, to damage

9 functions which have been adjusted specifically

10 to commercial residential.

11 The impact of this refinement was an

12 increase in the commercial residential losses

13 of 6.3 percent.

14 That adjustment overlaps another adjustment

15 that they computed of a 5 percent increase for

16 other, quote, post model adjustments.

17 Well, the Cat Fund's response to the

18 Department of Insurance indicates that this

19 adjustment covers phenomena that are not

20 anticipated in the models.

21 And so given their calculations of a

22 6.3 percent increase in commercial residential

23 reflecting a refinement in the damages, we

24 believe that the 5 percent post model

25 adjustment should be deleted in order to

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 27

March 23, 1999

1 overlap.

2 And so, Governor, that's a mouthful. But

3 when we left here two weeks ago, you all wanted

4 us to get into it with our chief actuaries, and

5 come up with a recommendation.

6 So we -- we are making this recommendation.

7 I would again recommend that we defer it so

8 that you have the opportunity to be

9 appropriately briefed on this, and then we can

10 take it up at the next Cabinet meeting.

11 GOVERNOR BUSH: I would appreciate that.

12 That would be helpful to me, unless there is

13 some timing --

14 COMPTROLLER MILLIGAN: Yes.

15 GOVERNOR BUSH: -- requirement to act now.

16 TREASURER NELSON: I think they overshot

17 their mark, in other words, on the commercial

18 residential. We can backstop that with the

19 documentation from the Department of Insurance.

20 But I think you all need to be sufficiently

21 comfortable with all of these figures and have

22 your technical staff go over them as well.

23 So I'd like to defer the matter.

24 COMPTROLLER MILLIGAN: One of -- one of the

25 questions, Governor, that we raised at the last

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 28

March 23, 1999

1 meeting was what is the impact on the consumer?

2 And I -- I haven't heard that answer yet.

3 MR. HERNDON: Well, I think --

4 COMPTROLLER MILLIGAN: Will I hear it the

5 next -- by the next meeting?

6 GOVERNOR BUSH: You could probably hear it

7 now, if you'd like.

8 MR. HERNDON: Well, Jack, come on up.

9 But I think the -- the answer that you're

10 going to hear is also not going to satisfy you

11 this morning, and probably two weeks hence, I'm

12 afraid.

13 As you know, rates have to be submitted --

14 proposed rate increases have to be submitted by

15 the companies, and then the DOI ultimately

16 calculates what the premium impact will be.

17 So although Jack and his folks can --

18 COMPTROLLER MILLIGAN: And I --

19 MR. HERNDON: -- give you a pretty --

20 COMPTROLLER MILLIGAN: -- and I --

21 MR. HERNDON: -- good sense of it --

22 COMPTROLLER MILLIGAN: -- and I appreciate

23 that, Tom. And I understand what Jack's --

24 what Jack's going to say.

25 MR. HERNDON: Right.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 29

March 23, 1999

1 COMPTROLLER MILLIGAN: What I -- what I

2 would like to know is, you know, there must be

3 some correlation that historically has

4 occurred, and that we ought to be able to get a

5 feel for what the impact is. I don't need to

6 know it down to the one hundredth decimal

7 place.

8 MR. HERNDON: We can give you a fair sense

9 of the rate impact for --

10 COMPTROLLER MILLIGAN: Well, that's what --

11 MR. HERNDON: -- certain percentages --

12 COMPTROLLER MILLIGAN: -- that's what I'd

13 like to know. Is it 1 to 1 --

14 MR. HERNDON: Right.

15 COMPTROLLER MILLIGAN: -- is it 2 to 1 --

16 MR. HERNDON: Right.

17 COMPTROLLER MILLIGAN: -- is it 10 to 1, is

18 it -- what -- you know.

19 GOVERNOR BUSH: Better not be 10 to 1.

20 COMPTROLLER MILLIGAN: Yeah.

21 DR. NICHOLSON: The -- the problem is that

22 we have two things going on at one time. We

23 have reinsurance costs dropping, and we have

24 the Cat Fund's part of the catastrophe load

25 increasing slightly.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 30

March 23, 1999

1 So the net effect of that is what is

2 unknown. And the Department would, you know,

3 perhaps have a better feel for that than we

4 would.

5 The only thing I can speak to is the impact

6 of these particular rates to the companies,

7 because that's who's being charged.

8 As far as the consumer is concerned, this

9 is really part of a part. It's a part of the

10 Cat load that the consumer's being charged.

11 GOVERNOR BUSH: Well, what part is it so

12 that we can make a -- do our own -- so you're

13 not committed. Just give us -- give us a

14 little bit of data --

15 DR. NICHOLSON: I'll be glad --

16 GOVERNOR BUSH: -- we can make the

17 calculation in our own mind.

18 DR. NICHOLSON: Be glad to.

19 In terms of -- of a residential exposure,

20 the average exposure in the state's about

21 $150,000. Eighty-six point three percent of

22 those exposures that we charge insurance

23 companies will pay less than $10.

24 Okay. Mobile home. Ninety-six-- or round

25 it off to 97 percent of all mobile homes will

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 31

March 23, 1999

1 get between a zero and a $10 savings in terms

2 of when we charge the companies.

3 Commercial residential -- and these are --

4 these are multifamily dwellings. And if we

5 look at per thousand dollar -- per $100,000 of

6 exposure, we're talking about $30 per unit.

7 So those are the figures that we're

8 concerned about. That will be charged to the

9 insurance companies. They will then --

10 depending on what happens with the reinsurance

11 costs and other factors, may or may not make a

12 filing with the Insurance Department.

13 I really seriously doubt whether they would

14 make an insurance -- a filing with the

15 Insurance Department, because the commercial

16 residential we're talking about here is

17 3.5 percent of the overall premium. It's very

18 insignificant in terms of the overall Cat Fund,

19 a 467 million dollar premium.

20 GOVERNOR BUSH: And this -- this 19 percent

21 recommendation was one of three or four that --

22 as I recall, you had --

23 DR. NICHOLSON: No. There were some

24 questions asked by the Department on, you know,

25 what if type questions. And we went back

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 32

March 23, 1999

1 and --

2 GOVERNOR BUSH: We --

3 DR. NICHOLSON: -- and we demonstrated to

4 the Department what those results would be.

5 GOVERNOR BUSH: Uh-hum.

6 Weren't there other -- other entities

7 making analysis?

8 DR. NICHOLSON: Yeah. The -- with the --

9 the way that we did rates this time, we

10 combined three models for the -- the

11 residential and the mobile home rates.

12 For the commercial, we did not combine

13 three models, because the other two models

14 would have -- would have produced 100 percent

15 rate increase had we combined them.

16 Or if we'd have used either one of those

17 other models, we would have got 150 percent

18 rate increase, or 50 percent rate increase.

19 GOVERNOR BUSH: Tell you what, this is

20 clearly not an exact science.

21 DR. NICHOLSON: So -- so all the evidence

22 indicates that -- that these are very

23 conservative rates.

24 And I think on top of all this, you have to

25 realize, in 1996, we reduced these rates

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 33

March 23, 1999

1 28 percent. And this rate is at --

2 (Commissioner Crawford exited the room.)

3 DR. NICHOLSON: -- 23 percent lower today

4 than it was in 1996.

5 GOVERNOR BUSH: But, I mean, with that kind

6 of range though, you could just throw a dart in

7 the wall and justify it with the post model

8 adjustments, which is a fancy term for adding

9 or subtracting whatever you wanted.

10 I mean, I don't want to be cynical about

11 it. But it -- it doesn't sound -- I think the

12 Commissioner's got a good point in the sense

13 that it doesn't sound as though this is so

14 exacting that reviewing it and making sure that

15 the parameters are -- are done in an

16 intellectually honest way without so much

17 subjectivity is worth us doing.

18 And I --

19 DR. NICHOLSON: And then we would --

20 GOVERNOR BUSH: -- appreciate that we --

21 DR. NICHOLSON: -- do that -- I mean --

22 GOVERNOR BUSH: -- have a chance to do --

23 DR. NICHOLSON: -- we will take that into

24 consideration, and go back to our actuarial

25 consultant, and review some other -- other

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 34

March 23, 1999

1 factors involved here, and see what we can do.

2 COMPTROLLER MILLIGAN: So we have a motion

3 to defer?

4 GOVERNOR BUSH: We have a motion to defer.

5 COMPTROLLER MILLIGAN: And -- and I'll

6 second the motion.

7 GOVERNOR BUSH: All right.

8 TREASURER NELSON: And I second.

9 GOVERNOR BUSH: Well, you moved it.

10 TREASURER NELSON: Okay.

11 GOVERNOR BUSH: Then it's moved and

12 seconded.

13 Without objection.

14 MR. HERNDON: Governor, could I just ask a

15 question of clarification?

16 Was that to defer the whole item, or --

17 TREASURER NELSON: The whole thing.

18 MR. HERNDON: Okay. Fine.

19 COMPTROLLER MILLIGAN: That's -- it doesn't

20 hurt you to defer the whole item, does it?

21 MR. HERNDON: No, it does not. I just -- I

22 wasn't sure. There was a comment made earlier

23 in the discussion about endorsing the

24 residential and mobile home rates. And I

25 wasn't sure just exactly how the motion was --

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 35

March 23, 1999

1 was made. And that's fine.

2 Item Number 5, which is the draft

3 recommendations of the Florida Retirement

4 System/Unfunded Working Group.

5 I'm recommending it be deferred. We got

6 the legal opinion yesterday. I know that the

7 members haven't had a chance to review that.

8 If there's no --

9 COMPTROLLER MILLIGAN: I move deferral, but

10 I --

11 (Commissioner Crawford entered the room.)

12 COMPTROLLER MILLIGAN: -- do note that it

13 didn't answer one of the real questions, Tom.

14 MR. HERNDON: Right.

15 COMPTROLLER MILLIGAN: So it needs to go

16 back.

17 MR. HERNDON: We're going to try and get

18 you some additional clarification --

19 COMPTROLLER MILLIGAN: Okay. Thank you.

20 MR. HERNDON: -- on that point.

21 And Item Number 6 is approval of the

22 appointment --

23 GOVERNOR BUSH: We moved -- let's -- let's

24 get a second --

25 MR. HERNDON: I'm sorry.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF ADMINISTRATION 36

March 23, 1999

1 GOVERNOR BUSH: -- just to follow the rules

2 here.

3 ATTORNEY GENERAL BUTTERWORTH: Say second.

4 TREASURER NELSON: Second.

5 GOVERNOR BUSH: Moved and seconded.

6 Without objection.

7 Thank you.

8 MR. HERNDON: Item Number 6 is approval of

9 the appointments to the Investment Advisory

10 Council of Mr. Hernandez and Mr. Bjorkman.

11 COMPTROLLER MILLIGAN: I move approval.

12 TREASURER NELSON: Second.

13 GOVERNOR BUSH: Moved and seconded.

14 Without objection, it's approved.

15 MR. HERNDON: That completes the agenda.

16 (The State Board of Administration Agenda

17 was concluded.)

18 *

19

20

21

22

23

24

25

ACCURATE STENOTYPE REPORTERS, INC.

ADMINISTRATION COMMISSION 37

March 23, 1999

1 GOVERNOR BUSH: Administration Commission.

2 COMMISSIONER GALLAGHER: Motion on the

3 minutes.

4 ATTORNEY GENERAL BUTTERWORTH: Second.

5 GOVERNOR BUSH: Moved and seconded.

6 Without objection.

7 GOVERNOR BUSH: Item Number 2.

8 MS. ARDUIN: Governor, Cabinet, the first

9 item on our agenda is -- I recommend approval

10 of the minutes for the meeting held --

11 COMMISSIONER GALLAGHER: We're on --

12 GOVERNOR BUSH: We did it.

13 MS. ARDUIN: -- March the 9th --

14 COMMISSIONER GALLAGHER: -- Item 2.

15 MS. ARDUIN: I'm sorry.

16 Would you like to do the rest?

17 GOVERNOR BUSH: No. That's it. That's

18 good enough.

19 MS. ARDUIN: Number 2 --

20 GOVERNOR BUSH: Thank you.

21 MS. ARDUIN: -- I recommend approval of

22 transfer of general revenue appropriations for

23 the Department of Children and Families.

24 COMMISSIONER GALLAGHER: Motion.

25 COMMISSIONER CRAWFORD: Second.

ACCURATE STENOTYPE REPORTERS, INC.

ADMINISTRATION COMMISSION 38

March 23, 1999

1 GOVERNOR BUSH: Moved and seconded.

2 Without objection, it's approved.

3 MS. ARDUIN: Item 3, I recommend approval

4 of an information technology project for the

5 Department of Management Services.

6 COMMISSIONER GALLAGHER: Motion.

7 COMMISSIONER CRAWFORD: Second.

8 GOVERNOR BUSH: Moved and seconded.

9 Without objection, it's approved.

10 MS. ARDUIN: The last item. I recommend

11 approval of an information technology project

12 for the Department of Health.

13 COMMISSIONER GALLAGHER: Motion.

14 COMMISSIONER CRAWFORD: Second.

15 GOVERNOR BUSH: Moved and seconded.

16 Without objection, it's approved.

17 Thank you, Donna.

18 MS. ARDUIN: Thank you.

19 (The Administration Commission Agenda was

20 concluded.)

21 *

22

23

24

25

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 39

March 23, 1999

1 GOVERNOR BUSH: Department of

2 Veterans' Affairs.

3 Good morning, Colonel.

4 MS. HIGGINS: Good morning, Governor Bush,

5 and members of the Cabinet.

6 The Department of Veterans' Affairs has

7 four brief agenda items to present this morning

8 for your acceptance.

9 Item Number 1, we request acceptance of our

10 reports for first and second quarters of fiscal

11 1998 and 1999.

12 GOVERNOR BUSH: Is there a motion?

13 ATTORNEY GENERAL BUTTERWORTH: Motion.

14 COMMISSIONER CRAWFORD: Second.

15 GOVERNOR BUSH: Moved and seconded.

16 Without objection, it's approved.

17 MS. HIGGINS: Item Number 2 is a -- I'd

18 like to go forward with some -- some

19 legislation which I understand is already in

20 the House transportation bill -- I wanted to

21 explain it to you on the -- a slight revision

22 of the statute that allows for these Florida

23 Salutes Veterans license tag.

24 Since the tag was first introduced in 1990,

25 it's really slipped in -- in its popularity

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 40

March 23, 1999

1 from being the eighth most popular in 1995, to

2 the tenth most popular in 1997.

3 As you know, the money for -- the money

4 that we receive from this license tag goes into

5 the support for our veterans nursing homes,

6 which is a very popular program that we -- that

7 we run.

8 What we -- what we think we'd like to do in

9 order to revise that -- revive that tag, and,

10 therefore, get more monies for the -- for the

11 nursing home, is to slightly change the design

12 of the tag.

13 And the -- from -- before I came even,

14 there was a -- a statewide contest, and the

15 Department had been working with the Department

16 of -- with the Highway Motor Vehicle Department

17 in -- in redesigning the tag.

18 They've selected one. And this is the -- I

19 have props -- this is the -- this is the

20 winning tag here. What we'd like to do, we

21 need to request a slight modification in the --

22 in the statute in order to redesign the tag.

23 And that's in your packets.

24 Another problem that we're having is that

25 we have, you know, no money to help market this

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 41

March 23, 1999

1 tag. And so we would like to use a small

2 amount of the proceeds from the tag to,

3 in fact, market it to -- to the citizens of

4 Florida.

5 GOVERNOR BUSH: Any comments?

6 COMMISSIONER GALLAGHER: Does that

7 prohibition exist for all other tags, too?

8 MS. HIGGINS: On marketing?

9 COMMISSIONER GALLAGHER: Or it is just --

10 Yes.

11 MS. HIGGINS: I don't know. But I --

12 COMMISSIONER GALLAGHER: Is that a standard

13 thing we do with tags, or is that just

14 something that you got stuck with? Or we don't

15 know?

16 MS. HIGGINS: I don't know that. But I can

17 find out for you.

18 GOVERNOR BUSH: Is it a prohibition, or are

19 you just asking for approval to --

20 COMMISSIONER GALLAGHER: I think they pro--

21 prohibit it, didn't --

22 MS. HIGGINS: Well, there's -- it's not --

23 it's not mentioned at all in the -- in the

24 statute itself. In paragraph 4 (b), it just

25 says that all monies are to be administered by

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 42

March 23, 1999

1 our Department, and must be used solely for the

2 purpose of constructing, operating, and

3 maintaining domiciliary and nursing homes for

4 veterans.

5 And we would like to add -- just add to

6 that a phrase that says: And for the

7 continuing promotion and marketing of the

8 license plate.

9 However --

10 COMMISSIONER GALLAGHER: That's a statutory

11 change --

12 MS. HIGGINS: -- to the specific question,

13 I don't know whether there is any language that

14 prohibits or allows other states to -- to use

15 the --

16 COMMISSIONER GALLAGHER: What you're asking

17 for is just the -- you're talking about you're

18 going to have to get a statutory change for

19 that.

20 MS. HIGGINS: Correct.

21 COMMISSIONER GALLAGHER: Okay. Well,

22 that's --

23 MS. HIGGINS: Yeah. This is -- yeah. I'm

24 going to have to --

25 GOVERNOR BUSH: How much money are we

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 43

March 23, 1999

1 talking about, Robin?

2 MS. HIGGINS: What's that?

3 GOVERNOR BUSH: How much money are we

4 talking about?

5 MS. HIGGINS: I haven't really determined.

6 I haven't had an opportunity to look at the

7 marketing options that we have. But as you

8 know --

9 GOVERNOR BUSH: What's the total amount

10 of --

11 MS. HIGGINS: Oh, the total amount? Right

12 now I think we're getting about 400,000

13 annually --

14 COMPTROLLER MILLIGAN: Yeah. The past --

15 past five years it has averaged right around

16 400,000.

17 MS. HIGGINS: And I think we can do better.

18 I know we can do better. Because this plate

19 is -- is not just for veterans. Anybody,

20 of course, is -- is allowed to -- and that's

21 going to be, I think, the focus of our -- of

22 our campaign, that anyone can -- can buy these

23 license plates. So we're going to actively do

24 that.

25 But -- but I don't know how much money yet

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 44

March 23, 1999

1 we're going to spend. I expect it shouldn't

2 have to be a very large amount.

3 GOVERNOR BUSH: Is there a motion?

4 COMPTROLLER MILLIGAN: Motion.

5 GOVERNOR BUSH: Seconded?

6 COMMISSIONER GALLAGHER: Second.

7 SECRETARY HARRIS: Second.

8 MS. HIGGINS: Thank you.

9 GOVERNOR BUSH: Any objections?

10 It's approved.

11 MS. HIGGINS: Thank you.

12 The next item is -- I'd like to go forward

13 with a slight change to our enabling statute,

14 which is in Section 20.37. And you've got it

15 there in your packets.

16 At the very end of this paragraph, it says

17 that the headquarters of the Department shall

18 be located where the Florida regional office of

19 the Veterans' Administration was located

20 immediately prior to the effective date of this

21 act.

22 Ten years ago when the Department was

23 formed, we had about 50 people, and most of

24 them were involved with facilitating veterans'

25 claims for benefits. And, of course, the --

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 45

March 23, 1999

1 the regional office of the U.S. Department of

2 Veterans' Affairs is located in St. Petersburg.

3 So that was very workable.

4 However, over the last ten years, the

5 Department has grown to about 400 people

6 involved in -- not only in facilitating claims,

7 but in running nursing homes, assisting in

8 educational benefits, and advocacy for the

9 1.7 million veterans of our state. It's -- we

10 have people located in about 17 locations

11 across the state.

12 We've always maintained a very small office

13 and a small presence here in Tallahassee. But

14 I think in looking at the organization and the

15 way that it's grown and the kinds of things

16 that we do, which overlap with -- with other

17 Cabinet agencies, with other State government

18 agencies, and certainly dealing certainly with

19 the Legislature, I think it's important to kind

20 of beef up our presence here in Tallahassee.

21 And I'm not looking to move a lot of

22 positions. I'm actually not planning on moving

23 the headquarters, per se, because most of our

24 people will probably remain in St. Petersburg.

25 I'm looking at a small number of positions

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 46

March 23, 1999

1 and functions that will be here in Tallahassee

2 to -- to help eliminate duplication of effort,

3 and to enhance programs.

4 However, there seem -- there is some

5 ambiguity in the enabling statute, because

6 certain people have looked at it, and so have

7 I, and said, okay, well, what constitutes a

8 headquarters? Is that the bulk of the people,

9 or is that me?

10 And so I think to avoid that confusion, I

11 simply think that it would be good if we just

12 eliminated that particular sentence in the

13 enabling statute.

14 GOVERNOR BUSH: Any comments?

15 Is there a motion?

16 COMMISSIONER GALLAGHER: So the idea is

17 basically you want to be in Tallahassee, as

18 opposed to St. Petersburg.

19 MS. HIGGINS: Correct.

20 GOVERNOR BUSH: That's the idea.

21 COMMISSIONER GALLAGHER: Figured that out.

22 MS. HIGGINS: Now, I expect to do an awful

23 lot of traveling between here and

24 St. Petersburg. Right now, of course, while

25 the -- while the Legislature is in, it's very

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 47

March 23, 1999

1 difficult for me to get out and meet any of my

2 people that are -- that are all over the state,

3 and get up to Washington and do the things that

4 I need to do up there.

5 However, after the session is over, I

6 expect to do an awful lot of traveling. And

7 because many of my people are located in

8 St. Petersburg, and -- and doing a very

9 important function down there, I expect to be

10 spending an awful lot of time down there as

11 well.

12 COMMISSIONER CRAWFORD: Motion.

13 COMMISSIONER GALLAGHER: Second.

14 GOVERNOR BUSH: Is there a second?

15 SECRETARY HARRIS: Second.

16 ATTORNEY GENERAL BUTTERWORTH: I have a

17 comment, Governor.

18 GOVERNOR BUSH: Yeah. Please.

19 ATTORNEY GENERAL BUTTERWORTH: I think it's

20 a good idea for the -- for various agencies to

21 not only be in Tallahassee, but also be other

22 places. And I'm pleased that you're also going

23 to be staying in St. Petersburg.

24 I know, Governor, you and I have had this

25 conversation a number of times during those

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 48

March 23, 1999

1 flights --

2 GOVERNOR BUSH: Why isn't it in south

3 Florida?

4 ATTORNEY GENERAL BUTTERWORTH: Why is it

5 not in south Florida?

6 MS. HIGGINS: Well, we've got folks down in

7 south Florida as well.

8 ATTORNEY GENERAL BUTTERWORTH: No, no, no.

9 Don't -- but also many of us who are by law

10 required to be in Tallahassee, and also

11 Supreme Court and other personnel, I think

12 sometimes we're -- we're not getting out to the

13 public as much as we --

14 GOVERNOR BUSH: Sure.

15 ATTORNEY GENERAL BUTTERWORTH: -- as we

16 should be. And some of our department heads

17 are literally staying in Tallahassee and not

18 going outside.

19 I'm glad you're -- you're going to be

20 having two offices. And I would encourage us,

21 and -- and the Legislature to allow us to be

22 able to -- to have more than -- more than one

23 office, and also have our department heads

24 spend more time in the field.

25 GOVERNOR BUSH: In this particular case,

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 49

March 23, 1999

1 the -- Robin, it's true that the great majority

2 of the people will still be in St. Petersburg.

3 MS. HIGGINS: Yes, sir.

4 GOVERNOR BUSH: And -- and your commitment

5 in terms of time and energy is -- you're not

6 going to be Tallahassee centric, your mission

7 is to be out making sure veterans know what

8 services they have, and also to fight for those

9 veterans benefits, particularly in Washington

10 when --

11 MS. HIGGINS: Uh-hum.

12 GOVERNOR BUSH: -- because that's our

13 biggest challenge is we're -- we're -- we

14 don't -- kind of like road money. We don't get

15 our fair share of veteran benefits either. And

16 Robin is very effective at that.

17 So --

18 MS. HIGGINS: I expect to keep my sea bag

19 packed.

20 GOVERNOR BUSH: Any other comments?

21 There's a motion.

22 Is there a second?

23 COMMISSIONER GALLAGHER: Seconded.

24 GOVERNOR BUSH: Without objection, it's

25 approved.

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 50

March 23, 1999

1 MS. HIGGINS: Thank you.

2 And the -- the final issue I have is really

3 just a -- an update and to let you know of a --

4 of a couple of changes on the Korean War

5 Memorial which you had gotten certainly quite

6 involved with, and have been very supportive of

7 in the past.

8 I found out that there had been some

9 significant delays in starting to work on the

10 Korean War Memorial, mostly because of -- of

11 price and some cost overruns, and -- and

12 various things like that, most of which could

13 not be helped.

14 However, I think we finally have it on

15 track. And there is some good news and some

16 bad news involved with that.

17 The -- you've all got a -- a copy of the

18 original design. And the -- the slight

19 modification to the design is that the sidewalk

20 is going to be a little bit more narrow, but

21 still will allow for wheelchair access.

22 However, the larger problems have been that

23 we've had to -- in order to go ahead and get

24 started with this, with the money that we've

25 got, we've had to eliminate the flag poles and

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 51

March 23, 1999

1 the lights around the flag poles.

2 And we've also had to eliminate a bronze

3 statuary that was going to be in the center of

4 the -- what's called the Circle of Life. It

5 was a -- a bronze statuary depicting a rifle

6 with a helmet and boots.

7 We're going to design, of course, the --

8 and build the memorial so that those can be

9 built -- those can be added later on. And we

10 are still going to seek the money in any way we

11 can in order to add those two items later.

12 But the -- the memorial itself will still

13 be very dignified, very meaningful, and I think

14 will be -- be something that we can be very

15 proud of, and -- and -- in honoring our

16 Korean War veterans.

17 The good news that's come out of the bad

18 news is that because the -- the building has

19 not actually begun, the original completion

20 date of mid-July is obviously not going to

21 happen.

22 However, the contractor and Department of

23 Management Services has assured me that they

24 can be finished with this, if they start by

25 mid-April, which is what they're planning,

ACCURATE STENOTYPE REPORTERS, INC.

DEPARTMENT OF VETERANS' AFFAIRS 52

March 23, 1999

1 by -- sometime in October.

2 And so what I would like to do is have a

3 dedication of the Korean War Memorial in

4 Tallahassee on Veterans Day in November.

5 And I will keep your offices all informed

6 about that, and would encourage you to go ahead

7 and put that on your calenders now, if you can,

8 to -- to be here in Tallahassee for the

9 dedication on November 11th.

10 GOVERNOR BUSH: Thank you.

11 There's no motion required on that, Robin.

12 MS. HIGGINS: No, I -- I don't believe so.

13 GOVERNOR BUSH: Good seeing you.

14 MS. HIGGINS: Thank you.

15 (The Department of Veterans' Affairs Agenda

16 was concluded.)

17 *

18

19

20

21

22

23

24

25

ACCURATE STENOTYPE REPORTERS, INC.

FLORIDA DEPARTMENT OF LAW ENFORCEMENT 53

March 23, 1999

1 GOVERNOR BUSH: Department of Law

2 Enforcement.

3 COMMISSIONER GALLAGHER: Motion on the

4 minutes.

5 ATTORNEY GENERAL BUTTERWORTH: Second.

6 GOVERNOR BUSH: Moved and second.

7 Without objection, it's approved.

8 Item Number 2.

9 MR. MOORE: Governor, that deals with our

10 second quarterly progress report for the -- for

11 the first two quarters of the current fiscal

12 year.

13 And if I might, let me point out a couple

14 of items there. One that I'm concerned about,

15 but I think we'll have a remedy in place to

16 solve the problem.

17 Just for your information, during these

18 first two quarters of this fiscal year, we've

19 worked over 2100 criminal cases.

20 And I might add that there's over 320 of

21 those that deal with computer crime and major

22 fraud cases, consistent with the effort that

23 we're doing jointly with General Milligan, and

24 many of the other agencies in the state.

25 Additionally, we responded to over

ACCURATE STENOTYPE REPORTERS, INC.

FLORIDA DEPARTMENT OF LAW ENFORCEMENT 54

March 23, 1999

1 718,000 requests for criminal history

2 information from the public, as is allowed by

3 Florida law.

4 Also, we processed just sort of

5 30,000 submissions of evidence in our

6 criminal -- in criminal cases through our eight

7 forensic laboratories. It is there that I have

8 a concern.

9 My performance contract with you and the

10 performance outcome that is in the legislation

11 dealing with -- with processing of evidence in

12 criminal proceedings requires that we turn

13 those evidence -- exhibits around in 30 days.

14 I'm not there now.

15 Notwithstanding the good work of the men

16 and women in -- in our laboratory system, we're

17 currently approaching 45 days.

18 The reason for that is I've lost just short

19 of 20 experienced scientists in the last

20 12 months.

21 And with losing those scientists, there

22 went the capacity to work over 16,000 cases out

23 the door. It'll take us about a year or so to

24 get those expert witnesses replaced and trained

25 back up to that stature.

ACCURATE STENOTYPE REPORTERS, INC.

FLORIDA DEPARTMENT OF LAW ENFORCEMENT 55

March 23, 1999

1 But as you know, Governor, the solution

2 there -- they're leaving because they're

3 getting, on the average, eight to nine thousand

4 dollars more in salary from our competing

5 states, and from the FBI.

6 As you know, you've been very helpful in

7 communicating that need and that problem to the

8 Legislature, and they're responding very

9 favorably at this point.

10 I'm encouraged that we can close that gap,

11 we can slow down that exodus of our experienced

12 scientists, and get back closer to where we

13 need to be in the area of forensics.

14 So notwithstanding that concern, I would

15 recommend approval of that second quarter

16 progress report.

17 COMMISSIONER GALLAGHER: Motion.

18 COMPTROLLER MILLIGAN: Second.

19 GOVERNOR BUSH: Any -- any comments?

20 Moved and seconded.

21 Without objection, it's approved.

22 MR. MOORE: Thank you, Governor.

23 Item 3 deals with requesting authority to

24 initiate rulemaking governing the alcohol

25 breath testing program statewide in our state.

ACCURATE STENOTYPE REPORTERS, INC.

FLORIDA DEPARTMENT OF LAW ENFORCEMENT 56

March 23, 1999

1 COMPTROLLER MILLIGAN: Move it.

2 COMMISSIONER GALLAGHER: Second.

3 SECRETARY HARRIS: Second.

4 GOVERNOR BUSH: Any objections?

5 It's been moved and seconded.

6 It's approved.

7 MR. MOORE: Thank you, Governor.

8 GOVERNOR BUSH: Thank you.

9 (The Florida Department of Law Enforcement

10 Agenda was concluded.)

11 *

12

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16

17

18

19

20

21

22

23

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25

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 57

March 23, 1999

1 GOVERNOR BUSH: State Board of Education.

2 MR. PIERSON: Item 1 is minutes of the

3 meeting held on January 26th and February 2nd,

4 1999.

5 COMMISSIONER GALLAGHER: Motion, minutes.

6 GOVERNOR BUSH: Second?

7 COMMISSIONER CRAWFORD: Second.

8 GOVERNOR BUSH: Moved and seconded.

9 Without objection, it's approved.

10 MR. PIERSON: Item 2 is for information.

11 Policy discussion on State Board of Education

12 Rule 6A-7.042, responsibilities for the school

13 food service program.

14 The first speaker is Dr. Freddy Kaye, who's

15 a local nutritionist.

16 GOVERNOR BUSH: This is part of our ongoing

17 policy discussion --

18 COMMISSIONER GALLAGHER: That's --

19 GOVERNOR BUSH: -- Commissioner?

20 COMMISSIONER GALLAGHER: -- what this is,

21 yes, sir, Governor.

22 GOVERNOR BUSH: All right.

23 COMMISSIONER GALLAGHER: It's nutrition

24 week for nutrition day.

25 DR. KAYE: Thank you. I appreciate that.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 58

March 23, 1999

1 It is National Nutrition Month.

2 COMMISSIONER GALLAGHER: Oh.

3 DR. KAYE: My name is Dr. Freddy Kaye. I'm

4 a clinical nutritionist.

5 And I had the opportunity in 1978 to help

6 Senator Jack Gordon implement the vending

7 machine bill. And at the time, we believed

8 that we should have a balanced lunch, we should

9 not have colas and potato chips conflicting

10 with a well balanced lunch.

11 Today we are here because we are having

12 problems with this. One of the problems is the

13 direction we're going, which is that if you

14 have vending machines, you have items such as

15 Coca-Cola, for example, it leads to the wrong

16 lifestyle, the wrong eating habits that

17 children have.

18 Part of that being that, for example,

19 drinking Coca-Cola instead of milk will lead to

20 osteoporosis, which is a long jump, because

21 girls from twelve to fifteen years old create

22 the greatest bone density at these ages.

23 So by not choosing the milk, and choosing

24 the colas, for example, not just Coca-Cola,

25 then what's happening is that they're leading

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 59

March 23, 1999

1 toward the osteoporosis.

2 At eighteen years old, a young girl starts

3 to lose a little bit of her bone density. At

4 nineteen -- excuse me. At twenty-nine and

5 thirty, it gets worse. At fifty years old,

6 that's when many women have problems with

7 osteoporosis.

8 Where does it start? It starts in the

9 young teenage years.

10 GOVERNOR BUSH: Is it -- can we -- can I

11 ask you a question?

12 Is it the --

13 DR. KAYE: Please, sir.

14 GOVERNOR BUSH: -- absence of -- is it the

15 Coke, or is it the absence of milk that causes

16 that?

17 DR. KAYE: It's the absence of milk by

18 choosing the wrong food.

19 GOVERNOR BUSH: Okay.

20 DR. KAYE: On the other hand, when you're

21 dealing with what Coca-Cola leads to, it's

22 called blood sugar, low blood sugar. Low blood

23 sugar is known as hypoglycemia. A lot of women

24 have this as PMS, certain time of the year.

25 In fact, one nurse friend of mine told me

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 60

March 23, 1999

1 that PMS is what men have all the time, which

2 is a whole another story.

3 But in any case -- that's what she said.

4 COMMISSIONER GALLAGHER: We won't go there.

5 DR. KAYE: All right. But --

6 In any case, the problem with --

7 I had a shock.

8 GOVERNOR BUSH: We're listening at least.

9 I am.

10 DR. KAYE: Thank you. I was checking.

11 In any case, the problem is is that in

12 drinking something like colas, which you have

13 about 9 teaspoons of sugar in a 12 ounce cola.

14 And it leads to diabetes, leads to heart

15 disease. And when I say 9 teaspoons of sugar,

16 I have right here -- this is about 12 ounces.

17 All right. Here we have the equivalent --

18 this is 9 teaspoons of sugar. All right?

19 So all of you can see -- and the question

20 is: How many teaspoons of sugar would you put

21 in your coffee in the morning, your tea in the

22 afternoon, or whatever. You would never put

23 this in. But we allow our children to have

24 this. So it leads to the wrong lifestyle and

25 eating habits down the road.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 61

March 23, 1999

1 And we know that with the cost of insurance

2 and medical costs, a dollar of preventative

3 healthcare saves five dollars of medical costs.

4 So what message and what realities are we

5 sending to children by allowing them,

6 particularly during and before school lunches,

7 to have availability to the vending machines.

8 Even potato chips are only 67 percent fat.

9 So kids who choose --

10 GOVERNOR BUSH: Say that again?

11 Potato chips --

12 DR. KAYE: Potato chips are 67 percent fat.

13 Yes, sir. It's a lot.

14 GOVERNOR BUSH: Losing my appetite.

15 DR. KAYE: Well, that's the idea.

16 TREASURER NELSON: What lunch were you

17 eating?

18 DR. KAYE: Local schools have to well

19 balance meals.

20 But the idea is this: Is that we are -- we

21 are going in the wrong direction by allowing

22 the vending machines to operate as they do.

23 What we're proposing -- what I suggest is

24 having alternatives for raising money for

25 schools. For example, if there was something

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 62

March 23, 1999

1 like a school supply store within each school

2 where they could earn money, teach children --

3 maybe even have the older kids operate these --

4 these stores.

5 And as I understand it -- I think it's

6 Pinellas County, I'm not exactly sure which

7 one -- has this in operation as well. So we

8 need to look for alternatives, instead of just

9 the vending machines to help the schools raise

10 money for whatever reason.

11 So I'm suggesting that we could save money

12 in the long run by not having osteoporosis, by

13 not having diabetes, heart disease, by honoring

14 nutrition for the students.

15 If we teach them the right concepts now,

16 later on -- again, like with obesity,

17 20 percent of all children in the state of

18 Florida are overweight. And if you're

19 overweight as a teenager, you become -- there's

20 an 80 percent chance that you'll be an

21 overweight adult. And then, of course,

22 overweight leads to high blood pressure,

23 diabetes, and so on.

24 So now is the time to do something about

25 it, and you have this power.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 63

March 23, 1999

1 Thank you.

2 Are there any questions?

3 Please, just remember this. This will

4 help.

5 Anyone care for -- no.

6 GOVERNOR BUSH: Thank you very much for

7 being here.

8 DR. KAYE: Excuse me?

9 GOVERNOR BUSH: Thank you for being here.

10 DR. KAYE: Yes, sir.

11 MR. PIERSON: The next speaker is

12 Mr. Frank Mullins, who is the Food Service

13 Director for Indian River County schools.

14 GOVERNOR BUSH: Welcome, sir.

15 MR. MULLINS: Good morning, Governor and

16 Cabinet.

17 Appreciate the opportunity to be here. And

18 as Wayne said, I am the Food Service Director

19 for Indian River County School District.

20 And I'm also the President of the Florida

21 School Food Service Association this year. So

22 I'm here representing them, and their

23 7500 members, with their position on this

24 State Board of Education rule, which controls

25 competitive food sales on public school

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 64

March 23, 1999

1 campuses.

2 Our school and those programs are education

3 and nutrition programs. We look to see how we

4 can best serve the educational process. The

5 biggest impact we have on education is

6 preventing transient hunger.

7 Research done by Dr. Doris Derelian, who is

8 a researcher out in San Diego, California.

9 She's also a past president of the American

10 Dietetic Association. She has done a lot of

11 research on transient hunger, and how it

12 affects learning.

13 Her most recent research measures the

14 effect on learning of four factors: Affected

15 teachers, affected teaching techniques,

16 comfortable facilities, and if the students are

17 experiencing transient hunger.

18 Of the four, transient hunger was the --

19 was the overriding -- had an overriding impact

20 on learning. It didn't matter if your child

21 had the best teacher, that she was using -- he

22 or she were using the best teaching techniques,

23 or if they were sitting in a comfortable

24 building. Transient hunger prevented these

25 other factors from performing at their highest

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 65

March 23, 1999

1 level.

2 Hungry -- hungry children struggle in the

3 classroom. I think we all know that. Like

4 many of my colleagues, I'm a registered

5 dietitian, and I know the importance of

6 consuming a well balanced diet.

7 The U.S. Department of Agriculture food

8 consumption figures over the past two decades

9 showed a radical shift in the America's

10 beverage of choice consumption. Especially

11 among young people.

12 In the 1970s, teens drank almost twice as

13 much milk as soft drinks. By the late 1990s,

14 those figures had reversed. Twelve to nineteen

15 year olds are drinking 40 percent less milk,

16 but twice as many soft drinks.

17 That's the age, as Dr. Kaye indicated, when

18 the body is able to stockpile calcium to last a

19 lifetime.

20 But the youth appear to be squandering that

21 one-time only opportunity by selecting soda

22 over milk.

23 The current State Board of Education rule

24 prohibits the sale in secondary schools of

25 these products until 1 hour after the last

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 66

March 23, 1999

1 lunch period. These include foods of minimum

2 nutritional value, which sodas are included in

3 that category.

4 This -- this rule helps to send the

5 consistent message to students that are in

6 health and nutrition classes -- and the same

7 message that they're sending. Consumption of a

8 variety of nutritious beverages is a good

9 choice. Consumption of sodas should be an

10 occasional treat.

11 Food service professionals, like myself,

12 have strategized on how we can provide

13 nutritious and pleasing meals to students,

14 particularly when many of them come from homes

15 where the importance of nutrition isn't

16 emphasized.

17 And if you -- if you have read the

18 Consumer Report article that came out in

19 September on our program, their recommendations

20 were two things:

21 We need more parent -- parent education

22 in -- in nutrition, and student education in

23 that same area.

24 GOVERNOR BUSH: You got --

25 MR. MULLINS: Do you have a question?

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 67

March 23, 1999

1 GOVERNOR BUSH: Yeah, I do. I mean, I've

2 gone to see a lot of schools. And there's a

3 lot of pizza. And a lot of -- I mean, is

4 that --

5 MR. MULLINS: Right.

6 GOVERNOR BUSH: -- supposed to be

7 nutrition -- nutritious now, because it's --

8 MR. MULLINS: It's --

9 GOVERNOR BUSH: -- I'm happy it is --

10 MR. MULLINS: -- it's interesting,

11 Governor --

12 GOVERNOR BUSH: -- because I eat it, too.

13 MR. MULLINS: -- when we analyzed -- and we

14 do have to analyze our meals to --

15 GOVERNOR BUSH: Spaghetti --

16 MR. MULLINS: -- nutritional concept --

17 GOVERNOR BUSH: -- pizza --

18 MR. MULLINS: -- that we're offering low

19 fat items on there. Our -- this elementary

20 menu, we offered pizza twice in that one week.

21 We also had chicken nuggets.

22 With the other items that we offer -- we

23 offer very low fat milk -- we came out

24 33 percent fat, which is very close to the

25 30 recommendation.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 68

March 23, 1999

1 We found that the -- the most striking

2 thing in that evaluation was the protein was

3 too high. So the fat was real close. So we're

4 trying to save a little money by reducing the

5 protein and give them more fresh fruits and

6 vegetables.

7 Any more questions now, or shall I --

8 GOVERNOR BUSH: You like that.

9 COMMISSIONER CRAWFORD: Yeah.

10 MR. MULLINS: So the current rule is -- is

11 sending a consistent message.

12 So these aren't the students that -- that

13 we're concerned about that -- the students that

14 are on free and reduced, we're -- we're getting

15 their business. But it's the students who can

16 afford to buy their lunch. If given the

17 opportunity, they will buy candy bars,

18 potato chips, and food that don't contribute to

19 a healthy lifestyle.

20 These foods can impact to learning

21 negatively as well.

22 And needed income which is diverted from

23 our Federally funded program -- and this

24 happens when competitive foods are offered.

25 The result of the competitive food sales on

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 69

March 23, 1999

1 campus -- and even though we have a rule

2 against it, it does -- it does happen -- is

3 that secondary schools become big losers in the

4 remaining school -- food service program in the

5 district must cover the losses, if they can.

6 In fiscal year 1984-85, prior to the

7 passage of this current rule, 49 districts food

8 service fairly funded programs were not

9 breaking even. They were in the red, their

10 expenditures were more than their revenue. And

11 I think this is one of the main reasons they

12 passed the -- the current rule.

13 So they were not -- they were not in a

14 position to pay their indirect costs to the

15 school districts, which we pay to local school

16 districts for the services we receive from the

17 district office.

18 The OPPAGA review in its best practices

19 standards for the Florida Legislature feels

20 very strongly, and they have goals addressing

21 competitive food sales in schools. And they

22 see the importance of controlling these sales,

23 and be reporting to the public on how we are

24 doing.

25 We recognize the need and desire to

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 70

March 23, 1999

1 secondary students and are trying to provide

2 food service programs that will satisfy those

3 needs. However, when other organizations are

4 allowed to skim off the top of the available

5 revenue with competitive sales that operate all

6 day long, the nutrition programs, as students,

7 are in a lose-lose situation.

8 Over the years, compromises have been made

9 to allow for the sale of foods in times and

10 places that do not compete with our operations.

11 One example being the waiver -- the waiver

12 program. The Commissioner of Education can

13 waive this rule for any school -- secondary

14 school, and if no negative impact is incurred,

15 the waiver can be extended.

16 Vending machines have been allowed to be

17 placed on school campuses in a limited fashion.

18 We recognize that school districts and

19 corporations look at the expansion of these

20 opportunities as a source of revenue.

21 But as policymakers, we would like for you

22 to keep the impact on students in mind. We're

23 here to ask you not to expand the competitive

24 nature of these operations. The rules serve

25 its purpose well, and you must balance the --

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 71

March 23, 1999

1 the health needs of students against the

2 shifting of the dollars from one pot to

3 another.

4 No new revenues are being created in this

5 situation. This is a nutrition issue, and it's

6 an education issue.

7 I do have a -- the -- the President of the

8 Florida PTA was going to be here to read her

9 letter in support of this bill, and I would

10 like to read it. It's a short letter.

11 Dear Cabinet members. As you discuss

12 possible changes to the State Board of

13 Education Rule 6A-7.02, competitive food rule,

14 the Florida PTA urges you to consider the key

15 points outlined below:

16 As children need a nutritious lunch every

17 school day, children particularly in the

18 elementary and middle schools may bypass a

19 square meal if given access to snack foods

20 before their scheduled lunch period.

21 The exposure of children to commercial

22 advertising and its influence on their lives is

23 another concern for parents in the state.

24 We are also concerned that the change in

25 rule may result in higher prices. We ask that

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STATE BOARD OF EDUCATION 72

March 23, 1999

1 you examine all the health and the nutritional

2 and physical aspects of the proposed change

3 before a final decision is made.

4 We would also like that the -- ask that the

5 ramif-- excuse me -- ramifications of any rule

6 change on children in elementary and those

7 schools be particularly explored.

8 Further, if you do vote to change the rule,

9 we urge you to build in safeguards to

10 protecting children for all of the above

11 concerns that we have outlined.

12 Please do not hesitate to contact me if you

13 have any further questions.

14 Sincerely, Latha Krishnaiyer, President of

15 Florida PTA.

16 GOVERNOR BUSH: Thank you.

17 MR. MULLINS: Yes, sir.

18 So thank you for this opportunity.

19 If there's any questions.

20 GOVERNOR BUSH: Any questions?

21 MR. PIERSON: The third speaker is

22 Michele Springer, who's the Public Affairs

23 Regional Director for Coca-Cola.

24 MS. SPRINGER: Good morning, Governor and

25 Cabinet. Thank you for having us today.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 73

March 23, 1999

1 My name is Michele Springer, I'm the

2 Director of Public Affairs for Coca-Cola

3 Enterprises. And I am here today to ask you to

4 rescind the State regulations, and mirror the

5 Federal regulations dealing with hours of

6 operations for vending machines in secondary

7 schools.

8 This benefits the Florida Coca-Cola

9 Bottling Company, because it allows us to make

10 our product available; it allows us to build

11 brand preference; and it allows us to

12 fulfill -- excuse me -- fulfill our role as a

13 good corporate partner with local schools.

14 It is beneficial to the secondary school

15 system because it generates incremental

16 resources to fund their school initiatives; and

17 it satisfies the students, faculty, and staff's

18 refreshment needs.

19 In 1998, the annual vending revenue support

20 that we paid to secondary schools came to

21 almost 3.8 million dollars. In addition, we

22 provide incremental support which covers things

23 such as school to work software, athletic

24 school boards, scholarship software, and

25 athletic equipment.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 74

March 23, 1999

1 This comes to an average school investment

2 of $6,750. And when you consider that we

3 support 617 schools in the state of Florida,

4 that brings the total to 4.1 million.

5 So looking at the total for commission and

6 incremental support, the total support we gave

7 in 1998 came to 7.9 million dollars. And this

8 figure does not take into account the support

9 given by our major competitor, which I would

10 imagine --

11 GOVERNOR BUSH: Who's that? I forgot.

12 What's --

13 MS. SPRINGER: I don't want to say that

14 name.

15 GOVERNOR BUSH: It's corporate policy.

16 MS. SPRINGER: They operate the same way.

17 So this -- these are our figures alone. With

18 their's included, I would imagine that dollar

19 amount would get close to 14 million dollars.

20 Because audits have been done, and the

21 rules have -- have started being enforced in

22 the schools, the State of Florida beverage

23 regulations limit our ability to maintain the

24 current and new investments that generated

25 that -- that much money in 1998.

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 75

March 23, 1999

1 The -- the differences between the Federal

2 and the State do -- do deal with hours of

3 regulations. Under the Federal regulations,

4 the non-carbonated beverages, such as the

5 POWERaDE and Minute Maid, Naya, can be served

6 at all times during the day.

7 The carbonated can be served at all times,

8 except in the food service area while breakfast

9 or lunch is being served.

10 The more restrictive State regulations

11 state that the carbonated and non-carbonated

12 cannot be served until 1 hour after the last

13 lunch period.

14 Some reasons why it is a good idea to not

15 restrict the time of sale to students, except

16 as indicated in the Federal regulations, are

17 that students bring beverages to school anyway.

18 Research has shown that close to 50 percent of

19 students say drinks they consumed at school

20 were purchased on the way to school, were

21 brought from home, or where they left during

22 the day to run out to the convenience store

23 down the road to get one.

24 This will also keep -- help to keep

25 students on campus if they're wanting to run

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 76

March 23, 1999

1 out during the day to get a beverage. The

2 Federal school lunch program already restricts

3 the sale of carbonated beverages in the

4 cafeteria during breakfast and lunch periods in

5 order to not compete with food service.

6 And schools in other states that don't

7 limit the beverage availability generate

8 basically twice as much money as those that do.

9 What it boils down to is we want to make

10 our product available, while generating needed

11 resources for schools. We believe that for

12 schools to be successful, everyone in the

13 community, including local Coca-Cola bottlers,

14 need to be involved.

15 Students are bringing schools to anyway --

16 to school anyway, so we feel that the school

17 should be the ones to benefit from that.

18 Thirty-three other states in the nation are

19 already operating under the Federal

20 regulations. We ask that you do the same.

21 And in response to the -- to the

22 nutritionist who testified, we -- we do not

23 care to compete with -- with food service. We

24 believe that every consumer should eat a well

25 balanced diet, which all of our products can be

ACCURATE STENOTYPE REPORTERS, INC.

STATE BOARD OF EDUCATION 77

March 23, 1999

1 a refreshing part of that.

2 And -- and in regards to the sugar content,

3 in our Coca-Cola Classic, our carbonated

4 beverages, there are 27 grams of sugar in

5 there. That is the same as orange juice, and

6 it is less than grape juice or apple juice.

7 So I thank you for your time, and I'll be

8 happy to take any questions.

9 TREASURER NELSON: I have a question.

10 GOVERNOR BUSH: Yeah. Please.

11 TREASURER NELSON: You said that you were

12 asking that this ban be lifted for secondary

13 schools.

14 MS. SPRINGER: Yes, sir.

15 TREASURER NELSON: Were you talking about

16 high schools, or were you talking about

17 high schools and middle schools?

18 MS. SPRINGER: I -- I believe we would like

19 middle schools and high schools. But if --

20 you know, we would take just high schools if --

21 if that was the way you chose to go.

22 But I am referring strictly to secondary

23 schools, not elementary. We have no desire

24 to -- to do that.

25 Anything else?

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1 SECRETARY HARRIS: I have a question.

2 MS. SPRINGER: Okay.

3 SECRETARY HARRIS: You mentioned in terms

4 of fund raising ability for the individual

5 schools, that -- in your opening comments,

6 staff -- are staff restricted from buying

7 Coca-Colas during -- in your opening comments

8 you said to take --

9 MS. SPRINGER: Uh-hum.

10 SECRETARY HARRIS: -- care of staff and

11 administration. Are they restricted as well

12 from buying Coca-Colas during the lunch hour

13 period?

14 MS. SPRINGER: Well, under the Federal

15 regulations, the vending machines cannot be

16 turned on until 1 hour after the last lunch

17 period.

18 SECRETARY HARRIS: Within the cafeteria,

19 but not throughout the school system.

20 COMMISSIONER GALLAGHER: Throughout the

21 school.

22 MS. SPRINGER: That's correct. That's

23 correct.

24 Well, under the -- excuse me. In the State

25 regulations, it's all over the campus.

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1 SECRETARY HARRIS: Right.

2 MS. SPRINGER: So not --

3 SECRETARY HARRIS: But Federal regulations

4 only restrict it in the cafeteria area.

5 MS. SPRINGER: Yes.

6 SECRETARY HARRIS: I wanted to ask the

7 Commissioner, how many schools -- and I don't

8 know the answer to this -- have permission

9 to -- the students would have permission to

10 leave campus to go home, and you're open that

11 way, that they could -- a percentage can

12 leave --

13 COMMISSIONER GALLAGHER: I wouldn't have a

14 clue. There are closed campuses, and there are

15 open campuses --

16 SECRETARY HARRIS: Oh.

17 COMMISSIONER GALLAGHER: -- throughout the

18 state. And that's an individual school rule.

19 And I don't have any idea how many would be one

20 way or the other.

21 I will tell you that there are some schools

22 that are not following the rule. And -- for

23 better or worse, or whatever.

24 And it's something that we should at least

25 look at the policy and -- and see whether the

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1 rule should be changed or -- or stay the way it

2 is.

3 SECRETARY HARRIS: Ms. -- Ms. Springer, I

4 have one other --

5 COMMISSIONER GALLAGHER: The rule change

6 that we're talking about here is for

7 high school.

8 SECRETARY HARRIS: For high school, not for

9 middle school.

10 COMMISSIONER GALLAGHER: Not for

11 middle school.

12 SECRETARY HARRIS: Not for middle school.

13 Okay. And -- one other question. What was

14 my question? I forgot. I'll come back to it.

15 COMMISSIONER CRAWFORD: Let me ask -- let

16 me ask -- with the Commissioner there.

17 I -- so we've got schools that are

18 complying with the rule, we've got schools that

19 have got a waiver on the rules, and then we've

20 got schools that aren't complying.

21 I'm trying to figure out exactly what is

22 going on out there.

23 COMMISSIONER GALLAGHER: Hopefully there's

24 not a lot that are not complying without a

25 waiver. But I have to admit, I do think there

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1 are some.

2 COMMISSIONER CRAWFORD: And how many have

3 the waiver?

4 MR. BALLARD: Six.

5 COMMISSIONER GALLAGHER: Six.

6 GOVERNOR BUSH: Out of 3200? Or twenty --

7 COMMISSIONER GALLAGHER: About 2200.

8 GOVERNOR BUSH: Twenty-two hundred?

9 COMMISSIONER GALLAGHER: But now -- you're

10 doing it out of high school. So --

11 GOVERNOR BUSH: Okay.

12 COMMISSIONER GALLAGHER: -- that would only

13 be the high schools.

14 SECRETARY HARRIS: So six schools you're

15 allowed to leave campus?

16 COMMISSIONER GALLAGHER: No, no, no, no.

17 SECRETARY HARRIS: Kids have the waiver

18 to --

19 COMMISSIONER GALLAGHER: To sell it.

20 Right.

21 SECRETARY HARRIS: And how much more do

22 they make -- you said that schools that have

23 the waiver make considerable more than those

24 who don't.

25 COMMISSIONER GALLAGHER: We're going to

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1 hear, I think --

2 SECRETARY HARRIS: -- have an analysis.

3 COMMISSIONER GALLAGHER: -- from somebody

4 that's going to speak to that.

5 SECRETARY HARRIS: And -- and have you done

6 any analysis nationally when they can sell the

7 nutritional foods?

8 Like one of the studies I read said that

9 Snapple was one of the favorites. I mean, what

10 if you were selling only the nutritional

11 aspects during lunch? I mean --

12 MS. SPRINGER: Just the --

13 SECRETARY HARRIS: -- that would enhance --

14 MS. SPRINGER: -- non-carbonated --

15 SECRETARY HARRIS: -- profit --

16 MS. SPRINGER: -- beverages?

17 SECRETARY HARRIS: Pardon me?

18 MS. SPRINGER: Just the non-carbonated

19 beverages?

20 SECRETARY HARRIS: Well, the -- in the

21 staff analysis, the -- yeah, the Minute Maid,

22 Fruitopia, POWERaDE, and Nestea --

23 MS. SPRINGER: Uh-hum.

24 SECRETARY HARRIS: -- and those things.

25 MS. SPRINGER: Well, we'd like to make

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1 our -- our prod-- all of our products

2 available. And -- and students in high school,

3 if they want a soft drink, I believe that

4 they're going to drink a soft drink, whether

5 they leave campus to get it or bring one from

6 home.

7 So I think the schools should be the one

8 benefiting from that.

9 SECRETARY HARRIS: I guess it would still

10 be a matter of access though, whether it was

11 there, we're setting the example to say that

12 was okay or not. But -- but again --

13 MS. SPRINGER: Yeah.

14 SECRETARY HARRIS: -- we're looking at

15 high school. So --

16 COMMISSIONER GALLAGHER: There may be some

17 other speakers that'll answer your questions

18 better than --

19 MS. SPRINGER: Thank you.

20 GOVERNOR BUSH: -- for being here.

21 MS. SPRINGER: Thank you.

22 GOVERNOR BUSH: For the record,

23 Commissioner Crawford is drinking a Diet Coke

24 right now --

25 COMMISSIONER CRAWFORD: No sugar. The --

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1 COMMISSIONER GALLAGHER: I was sure he

2 was -- I was sure he was going to drink milk.

3 COMMISSIONER CRAWFORD: I asked them for

4 orange juice, and they brought me a diet drink.

5 GOVERNOR BUSH: I guess our original

6 speaker is still here, he was concerned that

7 he --

8 COMMISSIONER GALLAGHER: Usually he has

9 milk though during these meetings. I know he

10 has milk.

11 GOVERNOR BUSH: Florida -- Florida diary

12 products.

13 COMMISSIONER GALLAGHER: I want to thank

14 him for the --

15 GOVERNOR BUSH: Wash it down with a little

16 citrus from Florida.

17 MR. PIERSON: The -- the next speaker is

18 Wayne Blanton, Director of Florida School Board

19 Association.

20 GOVERNOR BUSH: Welcome, Wayne.

21 MR. BLANTON: Thank you, Governor, members

22 of the State Board of Education. Appreciate

23 the opportunity to be here.

24 I think I'll start by telling you that I

25 will not tell you more than you really want to

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1 know. I'm going to try to stick to the rule

2 itself.

3 We are in favor of amending the rule.

4 We're one of only 17 states in the country who

5 have a stricter State rule than the Federal

6 regulation.

7 We are in favor of amending it,

8 Commissioner Nelson, only to high schools. And

9 we're talking about beverages only. We're not

10 talking about the other things. We think that

11 would be an amended rule that everybody could

12 live with, and we think that's the right thing

13 to do.

14 We have worked closely with a lot of the

15 people throughout the state in trying to get to

16 where we are today. We feel that this is a

17 good deregulation measure. And best of all,

18 we -- we feel that it's a good public-private

19 partnership that we can work with a number of

20 entities as -- as we deal with this.

21 The waiver issue that has come up, one of

22 the reasons we're asking for the amendment of

23 the rule, yes, you can get a waiver. And a lot

24 of people have not asked for a waiver.

25 And you say, well, why? Well, one thing is

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1 it's a one-year issue. When you get a waiver,

2 it's only one year at a time.

3 When you go to negotiate these contracts

4 with various individuals at the various

5 schools, they're very hesitant to make that

6 kind of commitment for one year at a time. And

7 so what you're really trying to do is get a

8 long-term commitment from a private vendor to

9 help you with this.

10 These dollars can produce ten to fifteen

11 million dollars statewide. These dollars go

12 for scholarships, they go for computers, and

13 they're made in -- in joint decision making

14 with the principal and the staff and the school

15 advisory committee.

16 What we're asking basically is this: We

17 have adult students in our high schools. There

18 are good programs out there for those adults.

19 We're asking to let our adult students,

20 after they've been through their programs at

21 the -- the people that teach those programs

22 about nutrition, give them the opportunity to

23 make adult decisions at the local school.

24 I think that's the right thing to do.

25 We believe it's a good measure. We support

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1 amending this rule to allow our local school

2 boards to make decisions that are best in the

3 local constituents and for their local

4 students.

5 Thank you very much.

6 SECRETARY HARRIS: Governor --

7 GOVERNOR BUSH: Yes.

8 SECRETARY HARRIS: -- I have a question,

9 Mr. Blanton.

10 We'll go from 7 million presently to

11 14 million if we're allowed to sell during

12 lunch?

13 MR. BLANTON: I believe -- considering the

14 number of schools that have not done it, based

15 on the restrictive State rule, if we take that

16 State rule off and make it more liberal,

17 you know, yes. I think we can double or maybe

18 triple our dollars in that, and -- at the local

19 school level.

20 And remember, these dollars stay at the

21 school level. And they are shared with food

22 service. And then some of those dollars then

23 go out to -- you know, to distribution for

24 whatever that school thinks is best.

25 So I believe that if this rule is amended,

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1 then more and more schools will do this. And

2 more and more schools, very frankly, are going

3 to enter into contract with -- contracts with

4 vendors, and have a public-private partnership.

5 SECRETARY HARRIS: On drinks only in the

6 high school.

7 MR. BLANTON: Yes. And we're staying --

8 high school beverage only.

9 SECRETARY HARRIS: Be --

10 MR. BLANTON: Thank you, Governor.

11 MR. PIERSON: The -- the final speaker is

12 John Bowen, who's a School Board attorney for

13 Pinellas County Schools.

14 GOVERNOR BUSH: Welcome.

15 MR. BOWEN: Thank you, Governor, members of

16 the Cabinet.

17 Greetings from Pinellas County. I'd like

18 to share with you what we have done in

19 Pinellas County, and -- and how successful it

20 was.

21 GOVERNOR BUSH: Pinellas, is that near

22 Pinellas?

23 COMMISSIONER GALLAGHER: Pinellas, man.

24 That's Pinellas.

25 MR. BOWEN: Well --

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1 COMMISSIONER CRAWFORD: It's been there a

2 lot longer.

3 MR. BOWEN: -- it's Pinellas.

4 I was born in Tennessee. That's where I

5 got this --

6 GOVERNOR BUSH: When I moved to Florida, I

7 moved to Perrine, Florida, which is similar to

8 Pinellas.

9 MR. BOWEN: In 1995, the Pinellas County

10 School District developed our Exclusive Access

11 Vending Program. And you've all received this

12 from our District to review where we set forth

13 the program and the problems we face.

14 And our program was simple, effective,

15 and -- and really had no downside. We entered

16 into partnerships with our vendors where they

17 would bid on the right to have the exclusive

18 access at a particular high school and sell

19 their product.

20 They agreed to pay a set commission on the

21 drinks at -- in the amount of 75 cents per

22 case. And then they would pay the school an

23 annual fee -- repeat -- annual fee, to be the

24 exclusive vendor at that school.

25 The commission on the sales of the product

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1 was split between the school and food service.

2 But the -- the exclusive access fee was paid to

3 the school for the school to spend.

4 Now, the results were phenomenal.

5 The first full year of the Exclusive Access

6 Vending Program, Coke and Pepsi paid our

7 16 high schools over $500,000. And contrary to

8 what may be circulating -- misinformation, food

9 service increased their sales a million

10 four hundred thousand dollars. So it did not

11 have the adverse impact on the food service

12 plan.

13 Now, the schools were able to buy computers

14 and technology they could not otherwise afford

15 without this money. They were able to buy --

16 hire teacher aides and clerks to help with the

17 paperwork that are -- that is falling upon the

18 teachers in the classrooms.

19 And they were able to -- to buy materials

20 to enhance their curriculum, and improve

21 student performance that they couldn't afford

22 before.

23 Now, one school was being paid as much as

24 $57,000 a year for -- for the exclusive right

25 to sell their product on that -- at that

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1 campus. And -- and they used that to buy the

2 things that they could not otherwise afford.

3 Now, the simple fact is that we cannot live

4 on taxpayers' money alone. We need these

5 partnerships with the business community.

6 And as pointed out in the materials that I

7 provided you, if every school district in the

8 state did a similar program to -- to what we

9 have in Pinellas County, it would mean over

10 13 million dollars in revenue to high schools

11 that would not come out of the taxpayers'

12 pockets.

13 Now, who knows, when we implement this, if

14 we're able to do that, statewide it might be

15 even more successful as -- as other districts

16 find better ways to do things, and we can share

17 the successes.

18 Now, our program was halted because of an

19 audit that said it was contrary to the State

20 and Federal regs. Now, we disagreed with that,

21 that it was not contrary to the -- to the regs

22 the way they were written. But that's

23 difficult when you're disagreeing with both the

24 State and Federal government.

25 COMMISSIONER GALLAGHER: Which supplies all

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1 the money.

2 MR. BOWEN: But I've been out there before

3 on many issues. And what we did is we went to

4 the Federal government.

5 And do you know what? They agreed with us,

6 that their rules do not restrict this, and

7 their rules did not prohibit the sale of soft

8 drinks in the schools during the school day,

9 only with respect to in the cafeteria area

10 where schools -- meals are served and eaten.

11 GOVERNOR BUSH: What's your case against

12 the State rule?

13 MR. BOWEN: Well, it -- they said, and I

14 agree, that it was the most -- more restrictive

15 State rule that -- that was the problem. And

16 that's why they told us to come to you to try

17 to get --

18 GOVERNOR BUSH: But you're not disagreeing

19 that the State rule prohibits you doing this.

20 MR. BOWEN: Well, no. I -- I had a -- what

21 I thought a valid argument, and still think a

22 valid argument, if it was interpreted

23 correctly, in accordance with the Federal

24 definition that it would be allowed. Otherwise

25 I would not have allowed my client to --

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1 GOVERNOR BUSH: Well, I know. That's what

2 I'm saying, that --

3 MR. BOWEN: -- it would be contrary to the

4 State rules. So -- but the auditor -- the

5 auditor disagreed with me. And we're coming to

6 correct that.

7 GOVERNOR BUSH: I got you.

8 So -- this is -- did you do this last year

9 or --

10 MR. BOWEN: We did it -- we started it in

11 1995, and we did it 95-96 and 96-97 --

12 GOVERNOR BUSH: No one, like, stopped you

13 until --

14 MR. BOWEN: -- till the -- till the audit

15 came. And --

16 GOVERNOR BUSH: Wow.

17 MR. BOWEN: -- said that it was -- it

18 was --

19 GOVERNOR BUSH: So you've been doing this

20 for three years.

21 (Treasurer Nelson exited the room.)

22 MR. BOWEN: Well --

23 GOVERNOR BUSH: Two years, and you stopped

24 this year.

25 MR. BOWEN: Two years. Right.

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1 And -- and --

2 GOVERNOR BUSH: Interesting.

3 MR. BOWEN: But I felt -- I felt

4 comfortable with the interpretation, but I

5 disagreed with the audit.

6 Now, the USDA has changed their position

7 and -- and said okay, and that's why we're here

8 now, is to ask you to correct this situation,

9 and -- and make it clear that soft drinks can

10 be sold in high schools during the day so long

11 as they are not sold in the areas where food

12 service meals are served or eaten. That's all

13 we're asking.

14 And it doesn't apply, as Mr. Blanton --

15 Dr. Blanton said, to other vending products.

16 It only applies to soft drinks, and only in

17 high schools is what we're asking.

18 GOVERNOR BUSH: The vending machines, are

19 they right outside the door of the cafeterias,

20 or --

21 MR. BOWEN: No. We -- they're at another

22 part of the campus. And -- and what we

23 would -- what we would do is if -- if we're

24 going to go along with the Federal

25 interpretation, we would make sure that there

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1 was some distance between the food service

2 areas, and the vending machines.

3 And that's all we're asking you to do is --

4 is make your rule consistent with the

5 United States Department of Agriculture rule,

6 and allow us to resume our partnerships with

7 the business community at no cost to the

8 taxpayers.

9 Our experience showed that food service was

10 not hurt. During the first full year of this,

11 the participation in food service meals

12 increased four times the rate of the increase

13 in the student population.

14 Our food service has continued to make a

15 profit, as it always has, and still does.

16 Student nutrition has not suffered. This is

17 not a nutritional issue.

18 And we're asking you to please help us

19 recover what we have lost in opportunities, and

20 allow the other districts the opportunities to

21 go into similar partnerships in their districts

22 so that they can buy things for the students

23 and help enhance education.

24 If you have any questions, I'll be glad to

25 respond.

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1 COMMISSIONER CRAWFORD: Governor, are

2 they -- are they buying anything other than

3 soft drinks in these machines, or is -- are

4 they just all --

5 MR. BOWEN: Just soft drinks --

6 COMMISSIONER CRAWFORD: -- just soft

7 drinks. I mean, they don't have any

8 alternatives, like orange juice --

9 MR. BOWEN: Oh. No, there's orange juice

10 available. And -- and the vending -- the

11 vending company can sell any -- those -- those

12 nutritional drinks also. And -- but the -- the

13 exclusive access program is tailored to the

14 soft drinks.

15 And that's why -- they're -- that's where

16 they're willing to pay the -- the large amounts

17 of money every year for this access. And --

18 and they're willing to do it when we can say

19 that you will have exclusive access on this

20 campus for four years, and then they -- they

21 will pay these amounts.

22 And we go to the highest bidder.

23 COMMISSIONER CRAWFORD: You may not be the

24 right one to ask this question, because it's

25 more of an operational --

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1 But if you -- if you -- if the rule was

2 that they couldn't sell during the lunch hours,

3 I wonder how much that would impact on the

4 sales of the soft drinks.

5 MR. BOWEN: It would probably have a

6 significant impact. But the -- the Federal

7 rule doesn't address during lunch, it's in the

8 lunchroom areas while meals are being served.

9 So any other time, the Federal regulation

10 would allow sales, even in the cafeteria, so

11 long as it wasn't during the time that lunch

12 was being served or eaten.

13 GOVERNOR BUSH: Maybe Mr. Blanton could

14 answer this, or perhaps you could.

15 How many of your schools are open campuses,

16 and how many are closed high schools for lunch?

17 MR. BOWEN: I don't know. It's an

18 individual --

19 (Treasurer Nelson entered the room.)

20 GOVERNOR BUSH: Do you have a guess,

21 just -- around the state?

22 MR. BOWEN: Wayne?

23 MR. BLANTON: Most -- most of our high

24 school campuses, Governor, are closed now. The

25 great majority -- I'd say about two-thirds of

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1 them are closed.

2 GOVERNOR BUSH: Okay.

3 MR. BOWEN: But that doesn't stop the

4 students from leaving. And the anecdotal

5 remarks I get from our principals was that

6 they -- they attributed to, in part, the

7 increase in participation in the lunchroom

8 meals to the students not having to leave

9 campus to buy their soft drinks.

10 GOVERNOR BUSH: Even though they had to

11 walk a long distance from the cafeteria to get

12 that soft drink during lunch.

13 MR. BOWEN: Across the street.

14 GOVERNOR BUSH: Oh.

15 MR. BOWEN: Across a busy street, with

16 traffic. It's a safe --

17 TREASURER NELSON: And big trucks.

18 COMMISSIONER GALLAGHER: And big trucks.

19 MR. BOWEN: It's not a nutritional issue,

20 it's a safety issue.

21 GOVERNOR BUSH: Commissioner, any --

22 COMMISSIONER GALLAGHER: I don't -- I don't

23 have any questions. I think --

24 MR. BOWEN: No.

25 GOVERNOR BUSH: We appreciate you coming.

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1 COMMISSIONER GALLAGHER: -- the issue --

2 MR. BOWEN: Thank you very much.

3 GOVERNOR BUSH: Where do we stand with

4 the -- in the -- this rulemaking --

5 COMMISSIONER GALLAGHER: Governor, where we

6 are is this is an issue brought for discussion

7 today.

8 And if you all think that there should be a

9 change or direction of that change, the

10 Cabinet Aides can deliver that message to us.

11 We'll take everybody's advice, and move forward

12 according to either direction here, or

13 direction in the interim.

14 MR. PIERSON: We've had one more request

15 for someone to speak.

16 Tim Huth, who's the Deputy Superintendent

17 of Volusia County.

18 MR. HUTH: Thank you.

19 GOVERNOR BUSH: Good morning.

20 SECRETARY HARRIS: Good morning.

21 MR. HUTH: Good morning, Governor, members

22 of the Cabinet.

23 From '90 to '95, I was principal of

24 Maitland High School in Daytona Beach, a school

25 a little over 2200 students, and grades 9

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1 through 12.

2 We have students -- 67 percent were on free

3 and reduced lunch. We have 40 percent minority

4 population. We've won three National Blue

5 Ribbon Schools of Excellence, twice recognized

6 by Red Book Magazine as one of the 50 best

7 schools in the country.

8 We received the Business Week Award for

9 schools in the age of technology for the

10 infusion of technology across our curriculum.

11 And we were designated as a Florida Model

12 Technology School.

13 Our graduates received each year a little

14 over two to three million dollars in

15 scholarships to go on to postsecondary

16 education. And during this time, we had

17 vending machines open on our campus.

18 We had --

19 COMMISSIONER GALLAGHER: This is the answer

20 to good education in Florida. I figured it

21 out. I would have never known.

22 MR. HUTH: That's right.

23 But we also were recognized by the

24 Governor's Council for an Outstanding Personal

25 Fitness Physical Education Program. And what

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1 we've done is we created a life center on our

2 campus.

3 We had, through our personal fitness and

4 physical fitness classes, developed a life

5 center that teaches the students to make wise

6 decision making. We have in there Schwinn

7 Aerodynes, we have StairMasters, we have

8 treadmills, we have rowing machines, we have

9 fat measurements that are being taken on

10 students.

11 Through that education, we had students

12 that came to me and said, in addition to what's

13 offered in school food services and what we had

14 on our campus in the vending machines, we

15 wanted to go ahead and open up a business

16 opportunity and provide what they called, the

17 Health Nut Hut is the term that they gave it.

18 But anyway, it was healthy foods: Bagels,

19 they had granola bars, raisins, bottled water,

20 those type of things that were being sold, so

21 that the students could have choice, and make

22 the informed decisions about what they chose to

23 have in those different opportunities before

24 school, or at a change of class, or at the end

25 of the day.

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1 And when that was instituted, and along

2 with the sale of sodas on our campus, we even

3 saw an increase in our school food services

4 participation. Why? We do have an open

5 campus. It was limited to the 11th and

6 12th graders.

7 Across the street from our school was the

8 fast food row. But because we had some

9 opportunities for healthy foods, for some

10 different choice, the students stayed on

11 campus.

12 And we had less of them moving across,

13 which increased not only our sale of the

14 healthy foods and the sodas, but it increased

15 our school food service sales during that time

16 also. So we were very pleased with the

17 program.

18 It has since stopped because of the rules

19 change or enforcement or the audits that have

20 taken place. But I can tell you that we had a

21 very successful operation with very successful

22 students. And we believe that we can survive

23 and give the students a -- a wise decision

24 making process through education.

25 COMMISSIONER GALLAGHER: How much was

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1 being --

2 By the way.

3 GOVERNOR BUSH: Yeah.

4 COMMISSIONER GALLAGHER: How much was being

5 generated in your school?

6 MR. HUTH: We would generate a little over

7 35,000.

8 COMMISSIONER GALLAGHER: Annual.

9 MR. HUTH: Each year.

10 COMMISSIONER GALLAGHER: And with that

11 money you did what?

12 MR. HUTH: Well, we -- once again, this is

13 a local decision. And because of the

14 uniqueness of our school, we had a number of

15 students who were on free and reduced lunch.

16 We have on an average 40 to 50 homeless

17 students a year.

18 I took those funds and made sure we bought

19 clothes for them, medical supplies for them,

20 their school supplies, made sure that they had

21 the opportunities to go on field trips,

22 participate in the flag core, band, whatever

23 type of opportunities.

24 In addition to other things like supporting

25 the math teachers who want to go to the state

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1 math conference, we would fund them out of

2 those supplies.

3 So we had a wide array of needs that were

4 funded out of the program. And it's not just

5 one that some people think about, well, it's

6 only going into buy football equipment or

7 something like that. No, it's not. It's going

8 into support of the needs of those particular

9 students at that particular school.

10 GOVERNOR BUSH: Thank you.

11 MR. HUTH: Okay.

12 GOVERNOR BUSH: In terms of looking for

13 some guidance, I'm prepared to tell you that

14 I think we ought to consider the rule change.

15 We -- we have too many rules on schools.

16 That's the whole point of the debate in the

17 Legislature. We ought to be focusing on

18 results, and let them do what's right so that

19 we don't have auditors chasing down people that

20 are doing things that might actually enhance

21 education.

22 So I'm on -- I'll be on record saying that

23 I'm supportive of your considering the -- the

24 rule change, Mr. Commissioner.

25 SECRETARY HARRIS: I have a question.

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1 COMMISSIONER GALLAGHER: Sure.

2 SECRETARY HARRIS: Within the soft drink

3 machines, do they also offer the alternatives

4 and nutritional things?

5 I am -- I am a major Coca-Cola supporter, I

6 love Coca-Cola. I am concerned here -- I don't

7 want to leverage nutrition against additional

8 funding. I mean, I don't think that's a

9 decision we should be making either.

10 And, of course, choices -- by the time

11 these students are in high school, they can

12 make their own choices. I don't -- I hated an

13 expression in the Legislature where they talk

14 about the camel's nose under the tent, and the

15 proverbial slippery slope.

16 But I don't want to be back here talking

17 about this in -- in middle and primary

18 education scenarios.

19 COMMISSIONER GALLAGHER: Well, the -- your

20 question is they serve what sell. They put it

21 in the vending machine what sells. And if the

22 schools could sell orange juice in the vending

23 machines, they'll put it in there.

24 But bottom line is, it's soft drinks. And

25 if you go visit the schools, you're going to

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1 see --

2 COMMISSIONER CRAWFORD: Well --

3 COMMISSIONER GALLAGHER: -- soft drinks in

4 the --

5 COMMISSIONER CRAWFORD: -- but if they

6 don't offer the alternative at all because of

7 the lucrative contract with the soft drink

8 people, then -- then the child doesn't have the

9 choice.

10 I would -- I would hope that -- I don't

11 know if we need it in the rule or not, but I

12 would hope that -- that -- I'd like -- these

13 kids can make a choice.

14 And -- and as the -- the Superintendent

15 from Hillsborough County -- they seem to have a

16 lot of choices, and they built that into their

17 curriculum talking about health. Which I --

18 I think kids are a lot more attuned now to

19 making healthy choices.

20 And I'd like to see the alternative there.

21 And, you know, if they don't -- if they go with

22 the soft drink versus the orange juice, I'd

23 like for them to at least feel a little guilty

24 about it. And maybe -- and maybe -- maybe --

25 maybe later on, they'll try to make up for it,

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1 you know.

2 COMMISSIONER GALLAGHER: So you want me to

3 bring back a little guilt in the rule?

4 COMMISSIONER CRAWFORD: Little guilt.

5 Yeah. Please. Thank you.

6 COMMISSIONER GALLAGHER: This'll be known

7 as the -- as the soft drink guilt rule. Good.

8 GOVERNOR BUSH: Commissioner Nelson.

9 TREASURER NELSON: Would -- Tom, would you

10 get somebody to comment -- we've had testimony

11 here from some school districts about how

12 giving the competitive opportunities, that it

13 increased the actual sale of the lunches.

14 And yet I know there's statistics,

15 for example, I'm looking at Hendry County here

16 that exactly the opposite occurred, that the

17 sales of lunches went up in the noncompetitive

18 sales on campus.

19 So could somebody address that? What is

20 the -- what -- what is the case in Florida?

21 COMMISSIONER GALLAGHER: Well, I think we

22 have the food service -- President of Food

23 Service Association speak to that better than

24 anyone else.

25 I think a lot of the food service

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1 operations don't make money. Some do, but a

2 lot don't.

3 MR. MULLINS: Yes, sir.

4 Well, basically I feel, like I had stated

5 in my testimony, that it's just moving one --

6 the money from one pot to another.

7 I mean, if the -- if the Cabinet would like

8 for carbonated beverages to be sold on the

9 campus, you know, we can do that. We can -- we

10 can look at other alternatives. You know,

11 whatever wants -- needs can be offered,

12 you know, we can do that.

13 You know, it seems like to me that you're

14 splitting up, you know, the food service

15 responsibility. You know, our program has

16 never asked to -- to get instructional dollars

17 and be part of that.

18 And I think it's efficient to -- for one --

19 for one organization to -- to be as productive

20 as they can, and then we would like to give

21 back. Because if we're making a net, all we're

22 going to do is give it back to the district.

23 COMMISSIONER GALLAGHER: To --

24 MR. MULLINS: So to --

25 TREASURER NELSON: Here's my question.

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1 MR. MULLINS: I'm sorry?

2 TREASURER NELSON: Here's my question.

3 The question is: We've had testimony here

4 about where competitive sales on campus

5 actually increased the sales of lunches.

6 I'm looking at statistics from

7 Hendry County where the opposite occurs.

8 MR. MULLINS: Yes, sir.

9 TREASURER NELSON: That the lunches

10 increase where there's noncompetitive sales on

11 campus.

12 What is, in effect, the fact in Florida?

13 MR. MULLINS: Well, we -- we feel that when

14 competitive sales are offered on campus, our

15 participation goes down.

16 The gentleman from Pinellas County did

17 indicate that there -- their numbers may be

18 going up, but it looked from last year's

19 financial records for '98, the actual Food

20 Service Department actually lost $908,000. So

21 something else is going on there.

22 GOVERNOR BUSH: The Pinellas --

23 Pinellas County legal counsel is going like

24 this.

25 MR. MULLINS: Okay.

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1 MR. HUTE: Lost.

2 MR. BOWEN: We didn't have the program last

3 year, so if we lost money, maybe that's the

4 reason. So the reason --

5 MR. MULLINS: Well --

6 MR. BOWEN: -- our sales increased a

7 million four hundred thousand dollars. And if

8 it -- if it's gone down, it's without the

9 vending program.

10 MR. MULLINS: They did operate through

11 January is my understanding. There was an

12 article from -- March '98; is that not correct?

13 MR. BOWEN: I don't think so.

14 GOVERNOR BUSH: Yes, sir. What --

15 Mr. Blanton.

16 MR. BLANTON: Governor, school food service

17 sales for years have been losing money in

18 Florida. It has nothing to do with this

19 program.

20 I will tell you, it depends on what's

21 happening in that particular district, what's

22 going on. And that is a School Board budgetary

23 decision. That's a -- those local elected

24 officials look at their programs every year,

25 and they try to make them more efficient. Or

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1 they look at other things.

2 You know, we've got school systems in this

3 state right now privatiz-- privatizing food

4 service. And they're making money.

5 So, you know, that's something I think we

6 need to take a closer look at, too, quite

7 frankly. And -- and when you look at all these

8 kind of things, that's a local budgetary

9 decision.

10 As to whether -- whether you believe it or

11 not, school food service is part of the entire

12 school system.

13 I will tell you, I can stand here and tell

14 you, I can show you where transportation loses

15 money in a lot of districts, too, because of

16 what's going on. The State doesn't reimburse

17 us dollar for dollar. Neither do the Feds.

18 I think this is a budgetary decision

19 locally. And if you will let us, we'll work it

20 out.

21 Thank you.

22 GOVERNOR BUSH: Any other comments?

23 MS. SPRINGER: I just want to make clear

24 that we do provide the non-carbonated beverage

25 vendors on all the school campuses as well.

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1 GOVERNOR BUSH: Including orange juice.

2 MS. SPRINGER: Pardon me?

3 Yes. Orange juice, the POWERaDE, water.

4 COMMISSIONER CRAWFORD: All right.

5 Let's -- let's -- let's go for it then.

6 GOVERNOR BUSH: Any other comments?

7 Have we given you enough direction? Others

8 can do it any way they like. I felt compelled

9 to -- I was moved by the testimony and wanted

10 to say it publicly. So --

11 COMMISSIONER GALLAGHER: No problem. We'll

12 be back.

13 GOVERNOR BUSH: I'll tell you what

14 though -- and Secretary Harris and -- I think

15 agrees with this as well. For the little guys,

16 we've got to improve the nutrition.

17 Maybe then by the time that they're in

18 high school, students will be making proper

19 nutritional choices.

20 But in my wandering around, we're feeding

21 kids things that -- that shouldn't -- it's not

22 cost effective. I don't think it's any cheaper

23 or any -- I don't think it's that. I think

24 it's maybe they like the taste of it.

25 But sometimes a little Florida fruit and

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1 vegetable wouldn't hurt either.

2 COMMISSIONER CRAWFORD: There you go.

3 COMMISSIONER GALLAGHER: You've got

4 Crawford's attention on that one.

5 COMMISSIONER CRAWFORD: That's right. I --

6 I'm liking it more and more.

7 GOVERNOR BUSH: It's almost an active

8 problem in a -- just by the school system.

9 ATTORNEY GENERAL BUTTERWORTH: Broccoli is

10 one of our better products --

11 GOVERNOR BUSH: We don't make broccoli, do

12 we, in Florida, I hope?

13 COMMISSIONER GALLAGHER: Well, I guess

14 they'll -- eat it.

15 COMMISSIONER GALLAGHER: Okay. I think

16 we're ready to move to the next item, Wayne.

17 MR. PIERSON: Item 3 is an amendment to

18 Rule 6A-1.09412, Course Requirements, Grades 6

19 to 12, Basic and Adult Secondary Programs.

20 GOVERNOR BUSH: Is there a motion?

21 COMMISSIONER GALLAGHER: Motion.

22 ATTORNEY GENERAL BUTTERWORTH: Second.

23 GOVERNOR BUSH: Is a there second?

24 Without objection, it's approved.

25 MR. PIERSON: Item 4 is an amendment to

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1 Rule 6A-1.09441, requirements for programs and

2 courses which are funded through the Florida

3 education finance program, and for which the

4 student may earn credit toward high school

5 graduation.

6 COMMISSIONER GALLAGHER: Motion.

7 COMMISSIONER CRAWFORD: Second.

8 GOVERNOR BUSH: Moved and seconded.

9 Without objection, it's approved.

10 MR. PIERSON: Item 5 is a repeal of

11 Rule 6A-1.04512, Membership in the Exceptional

12 Student Programs.

13 COMMISSIONER GALLAGHER: Motion.

14 ATTORNEY GENERAL BUTTERWORTH: Second.

15 SECRETARY HARRIS: Second.

16 COMMISSIONER CRAWFORD: Second.

17 GOVERNOR BUSH: Moved and seconded.

18 Without objection, it's approved.

19 Thank you.

20 (The State Board of Education Agenda was

21 concluded.)

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BOARD OF TRUSTEES/INTERNAL IMPROVEMENT TRUST FUN115

March 23, 1999

1 GOVERNOR BUSH: Trustees, the Internal

2 Improvement Trust Fund.

3 Hello, Kirby.

4 MR. GREEN: Secretary Struhs is moving his

5 family down this week, so that's why he's not

6 here today.

7 COMMISSIONER GALLAGHER: Motion on the

8 minutes.

9 ATTORNEY GENERAL BUTTERWORTH: Second.

10 COMMISSIONER CRAWFORD: Second.

11 MR. GREEN: Item 1, minutes of --

12 GOVERNOR BUSH: Moved and --

13 MR. GREEN: -- the January --

14 GOVERNOR BUSH: -- seconded.

15 Without objection, it's approved.

16 MR. GREEN: Item 2, option agreement to

17 acquire 171.5 acres in the Belle Meade Project.

18 ATTORNEY GENERAL BUTTERWORTH: Moved.

19 COMMISSIONER CRAWFORD: Second.

20 GOVERNOR BUSH: Moved and seconded.

21 Without objection, it's approved.

22 MR. GREEN: Item 3, three option agreements

23 to acquire 4.69 acres in the Florida Keys

24 Ecosystems CARL Project.

25 GOVERNOR BUSH: Is there a motion?

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1 COMMISSIONER CRAWFORD: Motion.

2 GOVERNOR BUSH: A second?

3 COMMISSIONER GALLAGHER: Second.

4 GOVERNOR BUSH: Moved and seconded.

5 Without objection, it's approved.

6 MR. GREEN: Item 4, option agreement to

7 acquire 31.2 acres; designation of the

8 Department of Environmental Protection, the

9 United States Fish and Wildlife Service, and

10 Wakulla County as managers; and an amendment to

11 the management plan.

12 COMMISSIONER GALLAGHER: Motion.

13 ATTORNEY GENERAL BUTTERWORTH: Second.

14 GOVERNOR BUSH: Moved and seconded.

15 Without objection, it's approved.

16 MR. GREEN: Item 5, two option agreements

17 to acquire 11.31 acres in the South Savannas

18 project, and waiver of survey.

19 COMMISSIONER GALLAGHER: Motion.

20 COMMISSIONER CRAWFORD: Second.

21 GOVERNOR BUSH: Moved and seconded.

22 Without objection, it's approved.

23 MR. GREEN: Item 6, authorization to

24 acquire 100 percent interest in 80 acres within

25 the Corkscrew Regional Ecosystem Watershed CARL

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1 Project.

2 COMMISSIONER CRAWFORD: Motion.

3 COMMISSIONER GALLAGHER: Motion.

4 COMMISSIONER CRAWFORD: Second.

5 GOVERNOR BUSH: Moved and seconded.

6 Without objection, it's approved.

7 MR. GREEN: Item 7, an option agreement to

8 acquire 12.2 acres in the Fort George Island

9 inholdings and addition project.

10 SECRETARY HARRIS: Motion.

11 COMMISSIONER CRAWFORD: Second.

12 GOVERNOR BUSH: Moved and seconded.

13 Without objection, it's approved.

14 MR. GREEN: Item 8, two option agreements

15 to purchase leasehold interest of tenants and

16 property located at Topsail Hill.

17 GOVERNOR BUSH: Is there a motion?

18 ATTORNEY GENERAL BUTTERWORTH: Motion.

19 COMMISSIONER GALLAGHER: Second.

20 GOVERNOR BUSH: Moved and seconded.

21 Without objection, it's approved.

22 MR. GREEN: Item 9, recommend deferral.

23 COMMISSIONER GALLAGHER: Motion to defer.

24 COMMISSIONER CRAWFORD: Second.

25 GOVERNOR BUSH: Moved and seconded.

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March 23, 1999

1 Without objection, it's approved.

2 MR. GREEN: Substitute Item 10, a 50-year

3 nonexclusive access easement, and a 50-year

4 nonexclusive utility easement.

5 COMMISSIONER GALLAGHER: Motion.

6 COMMISSIONER CRAWFORD: Second.

7 GOVERNOR BUSH: Moved and seconded.

8 Without objection, it's approved.

9 MR. GREEN: Item 11, waiver of competitive

10 bid requirements, extension of term of a lease,

11 and increase in royalty payments.

12 COMMISSIONER GALLAGHER: Motion.

13 SECRETARY HARRIS: Second.

14 GOVERNOR BUSH: Moved and seconded.

15 Without objection, it's approved.

16 MR. GREEN: Item 12, modification of a

17 sovereign submerged land lease, authorization

18 to sever material, and authorization for

19 placement of 450 cubic yards of riprap.

20 COMMISSIONER GALLAGHER: Motion.

21 COMMISSIONER CRAWFORD: Second.

22 GOVERNOR BUSH: Moved and seconded.

23 Without objection, it's approved.

24 MR. GREEN: Additional Item 13, deferral

25 until May 11th.

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March 23, 1999

1 COMMISSIONER GALLAGHER: Motion to defer.

2 COMMISSIONER CRAWFORD: Second.

3 GOVERNOR BUSH: Without objection, the

4 deferral is approved.

5 ATTORNEY GENERAL BUTTERWORTH: Governor, I

6 just have one quick question.

7 GOVERNOR BUSH: Yes.

8 ATTORNEY GENERAL BUTTERWORTH: I can --

9 Kirby, I understand that's -- there's some

10 legislation out there that might have the

11 effect of -- of actually adversely affecting

12 our powers and duties as the Board of Trustees,

13 and the stewardship of the land that the State

14 buys, and, in essence, giving certain private

15 parties entitlements to the public use of land.

16 Are you on top of that, and can you advise

17 our Aides of -- I don't -- I don't want you to

18 do it now.

19 But at a point in time, if our Aides could

20 just be advised, we may wish to transmit a

21 letter to the Legislature on that.

22 MR. GREEN: Yes, sir, we can.

23 GOVERNOR BUSH: Thank you all very much.

24 (The Board of Trustees of the Internal

25 Improvement Trust Fund Agenda was concluded.)

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1 *

2 (The Cabinet meeting was concluded at

3 11:20 a.m.)

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121

March 23, 1999

1 CERTIFICATE OF REPORTER

2

3

4

5 STATE OF FLORIDA:

6 COUNTY OF LEON:

7 I, LAURIE L. GILBERT, do hereby certify that

8 the foregoing proceedings were taken before me at the

9 time and place therein designated; that my shorthand

10 notes were thereafter translated; and the foregoing

11 pages numbered 1 through 120 are a true and correct

12 record of the aforesaid proceedings.

13 I FURTHER CERTIFY that I am not a relative,

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

15 nor relative or employee of such attorney or counsel,

16 or financially interested in the foregoing action.

17 DATED THIS 7TH day of APRIL, 1999.

18

19

20 LAURIE L. GILBERT, RPR, CCR, CRR, RMR

100 Salem Court

21 Tallahassee, Florida 32301

850/878-2221

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