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
VOTE ON CHAIRMAN AND VICE CHAIRMAN, PAROLE COMMISSION
DIVISION OF BOND FINANCE
ADMINISTRATION COMMISSION
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,
April 11, 2000, 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
* * *
3
April 11, 2000
I N D E X
ITEM ACTION PAGE
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
1 Approved 5
2 Approved 5
3 Approved 6
Discussion: Pension Reform 6
VOTE ON CHAIRMAN AND VICE CHAIRMAN,
PAROLE COMMISSION:
Approved 35
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 36
2 Approved 36
3 Approved 36
4 Approved 37
5 Approved 38
ADMINISTRATION COMMISSION:
(Presented by Sandra Sartin,
Policy Coordinator)
1 Approved 39
2 Approved 39
3 Approved 39
4 Approved 40
5 Approved 40
6 Approved 40
7 Approved 40
8 Approved 41
9 Approved 41
10 Approved 42
11 Deferred 42
12 Deferred 42
ACCURATE STENOTYPE REPORTERS, INC.
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April 11, 2000
I N D E X
(Continued)
ITEM ACTION PAGE
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
1 Approved 43
2 Deferred 43
3 Approved 44
4 Approved 44
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented Kirby B. Green, III,
Deputy Secretary)
1 Approved 45
2 Approved 45
3 Approved 45
4 Approved 46
5 Approved 46
6 Approved 47
7 Withdrawn 48
8 Approved 48
9 Approved 50
10 Approved 60
CERTIFICATE OF REPORTER 61
* * *
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April 11, 2000
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:50 a.m.)
3 GOVERNOR BUSH: And now we'll start our --
4 the agenda, with the State Board of
5 Administration.
6 Tom, how are you doing?
7 MR. HERNDON: Governor, good. Thank you.
8 How are you?
9 GOVERNOR BUSH: Great.
10 MR. HERNDON: Item Number 1 is approval of
11 the minutes of the meeting held March 28th.
12 COMPTROLLER MILLIGAN: Move them.
13 TREASURER NELSON: Second.
14 GOVERNOR BUSH: Moved and seconded.
15 Without objection, it's approved.
16 MR. HERNDON: Item Number 2 is approval of
17 a fiscal sufficiency not exceeding 32 million
18 dollars, State of Florida Board of Regents,
19 University of Florida Housing Revenue Bonds,
20 Series 2000.
21 COMPTROLLER MILLIGAN: Move Item 2.
22 TREASURER NELSON: And I'll second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MR. HERNDON: Item Number 3 is approval of
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April 11, 2000
1 a fiscal sufficiency of an aggregate amount not
2 exceeding a hundred and ninety-seven million
3 nine hundred thousand dollars, State of Florida
4 full faith and credit State Board of Education
5 Public Education Capital Outlay Bonds,
6 1998 series.
7 COMPTROLLER MILLIGAN: Move Item 3,
8 PECO Bond.
9 TREASURER NELSON: And I second it.
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 MR. HERNDON: Governor, with your
13 permission, I'd like to spend a few minutes
14 talking about pension reform, and the
15 defined benefit/defined contribution --
16 GOVERNOR BUSH: Please.
17 MR. HERNDON: -- discussion.
18 We do have some overheads that we're going
19 to use. We've put up in front of you the hard
20 copy of this presentation, and we'll try and
21 move through it fairly quickly.
22 But I did want to --
23 I know this is difficult to read, and I
24 apologize. Trying to get a lot of information
25 on -- on some of these pages.
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April 11, 2000
1 This first chart is intended to try and
2 represent for you the best estimate of the
3 costs associated with the House and Senate
4 plans.
5 Now, bear in mind that the only proposal
6 we've seen from the Senate thus far is to
7 improve the current defined benefit plan.
8 We've not seen a defined contribution plan from
9 the Senate.
10 And the House has not officially adopted
11 their proposed defined contribution plan,
12 although we understand that it will come up for
13 consideration this Thursday in a formal vote
14 process.
15 But I would call to your attention the
16 Senate Proposal Column, for example. And you
17 see, as you look at the Senate proposal, the
18 very significant costs associated with some of
19 the proposed improvements.
20 As you look at the total cost column under
21 the heading, Senate Proposal, you will see that
22 the current contributions are forecast to be
23 about 2.1 billion. There's a slight decrease
24 in costs associated with going from ten years
25 to five-year vesting.
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April 11, 2000
1 Then the third line improved the average
2 final compensation from five years to
3 three years, costs a substantial amount of
4 money, 2.2 billion dollars.
5 And then the retroactive special risk
6 accrual, which are improved benefits for police
7 and fire, costs eight hundred and
8 eighty-two million dollars.
9 And I know, by the way, that that does not
10 include the individuals who have already
11 retired. And as a consequence, once that cost
12 is factored in, it's a substantial increment
13 above the eight hundred and eighty-two million
14 that's factored in here.
15 But the net effect of those changes, as you
16 can see, is 5.1 billion dollars.
17 Now, that is paid for, as you look down at
18 the next couple of lines, by employer
19 contributions, by reducing the amount of
20 contributions that employers pay from 10.91, to
21 8.63; and then taking 3.5 billion dollars out
22 of the current surplus, which is currently
23 forecast at about 9 billion dollars, leaving a
24 surplus of about 5.7 billion dollars in the
25 pension fund.
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1 On the House side, although they have not
2 officially adopted their proposal, the costs
3 associated with their proposal really are going
4 from ten years to eight years of vesting.
5 And that's a fairly significant change in
6 total costs, as you can see, when you look at
7 the second line there, improved DB vesting.
8 That actually has a slight positive in terms of
9 total costs. And as a consequence, since they
10 have none of these other changes, the surplus
11 is left virtually untouched.
12 Now, we will see some additional costs as a
13 function of adopting the defined contribution
14 plans when and if we see them in -- in some
15 detail. And I wanted to take this opportunity
16 to just give you a sense of what those
17 defined contribution costs might be.
18 As you look at the next page, it shows you
19 the cost estimates from last year's
20 Senate Bill 356. This is the only real proxy
21 that we have at the moment for what a current
22 Senate Bill might look like.
23 And you can see there, the optional DC
24 plan, first year costs 36 basis points;
25 long-term, one-and-a-half percent, 155 basis
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April 11, 2000
1 points.
2 And then you see two- to six-year grading
3 which was a provision in last year's bill; and
4 indexing the benefits, which is also a
5 provision in last year's bill.
6 This is the worst case scenario. This is
7 when every single employee picks the choice
8 between DB and DC that benefits them the most.
9 So, in other words, they're advantaged in
10 every single instance, and that's the highest
11 cost to the system in its -- in its broadest
12 sense.
13 GOVERNOR BUSH: Worst case scenario, Tom.
14 But it -- it's also -- that would be someone
15 making a -- an estimate of what the best case
16 is for the employee.
17 MR. HERNDON: Correct. So --
18 GOVERNOR BUSH: I mean, it's -- it's not
19 only -- I mean, it may be worst case, but it's
20 closer to more likely -- I mean, if you assume
21 that employees make decisions in their
22 financial interests.
23 MR. HERNDON: Right.
24 Yeah. In fact, Governor, that case is the
25 best case for the employee, because --
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April 11, 2000
1 GOVERNOR BUSH: Right.
2 MR. HERNDON: -- presumably, they're always
3 picking the right choice for them. But in
4 terms of the highest costs, that's the worst
5 case for the system in -- in its entirety.
6 The second category of items there shows
7 imperfect choice. And here we just arbitrarily
8 said 50 percent of the employees pick the worst
9 case for them, and 50 percent picked the best
10 case for them.
11 And you can see the impact in terms of
12 costs. Just to give you some flavor of the
13 disparity between perfect choice and -- and
14 imperfect choice, you see what happens.
15 First year costs for the DC plan go from
16 38 basis points to a negative 1 basis points.
17 So it's a dramatic change as you move down that
18 scale from perfect choice to imperfect choice.
19 What we have recommended, and you endorsed
20 at the Cabinet meeting two meetings back, is to
21 create a rate stabilization mechanism.
22 I know you can't see this. We do have it
23 in your handouts up there.
24 This is a summary of various rate
25 stabilization mechanisms.
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April 11, 2000
1 And for individuals who would like to get
2 some of this information, we'll be happy to
3 make it available to you. I know there's a lot
4 of -- of material on here that can't really be
5 deciphered from any distance.
6 But the intention is to try and lay out a
7 series of stabilization reserve mechanisms, and
8 show you in some detailed way how those
9 stabilization reserves would work in the
10 context of the current plan.
11 Now, I'm going to move on from those,
12 because they're too much detail, and go to the
13 very next chart.
14 And this shows you what happens if you
15 retained all of the current defined benefit
16 plan surplus. This is perfect experience.
17 Now, again, this is best case. This means we
18 hit our actuarially required rate of return at
19 8 percent every year.
20 And you see what happens to the surplus as
21 you go down to this bottom chart, funded ratio.
22 It grows so exponentially over the next
23 30 years that at the end of a 30-year period in
24 2029, we have a surplus of roughly 70 percent
25 more than we need to have the plan fully
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April 11, 2000
1 funded.
2 And obviously that's far more than you
3 would reasonably want to have in a -- in a
4 plan, just sitting there not being put to any
5 productive use.
6 The next chart shows you what happens if
7 you were to forget this notion of a surplus,
8 and immediately, right now today, recognize the
9 surplus amount. In other words, you were to --
10 to spend it.
11 And this first scenario is a moderately
12 adverse experience. And here what we're saying
13 is, our returns are 6 percent per year, as
14 opposed to our targeted 8 percent per year. So
15 we're only talking about a two-year --
16 excuse me -- a 2 percent difference.
17 But you see what happens. In the first
18 couple of years here from 2001 to 2010,
19 contribution rates drop to zero, as you work
20 through the actuarial surplus that exists in
21 the plan. And then contribution rates climb
22 very, very dramatically to 13 percent, and then
23 on up to about 19 percent of payroll.
24 And you see that even more clearly in the
25 next block down below. As you look at the
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April 11, 2000
1 funded ratio of the plan, it continues to rise
2 as you work through the actuarial formula.
3 And then about 2010, the actuarial surplus
4 disappears, and you're back in the unfunded
5 liability category again, and -- and on out for
6 many, many years at that point.
7 TREASURER NELSON: Governor, may I ask a
8 question?
9 GOVERNOR BUSH: Yes, please.
10 TREASURER NELSON: Why are we even
11 considering that, because taking the
12 contributions to zero is not even an option.
13 MR. HERNDON: No. And, in fact, what we
14 wanted to show you was if you were to do that,
15 essentially what could happen in the pension
16 plan when you don't have a reserve built-in --
17 in other words, you have no disciplining
18 mechanism, there's no governor, so to speak, on
19 the system, then you could in theory go in and
20 take all of the surplus every year.
21 And this would be the effect of doing that.
22 You would immediately see that kind of impact
23 spread throughout the system.
24 Now, this next chart shows you that same
25 scenario. You immediately recognize all of the
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April 11, 2000
1 surplus. But now you're in a major adverse
2 environment. This is the 1970s, zero to
3 negative growth throughout the period.
4 And you see what happens, contribution
5 rates drop for a very short period of time to
6 zero, then immediately start to climb way back
7 up to the 19 and 20 percent range.
8 Your surplus disappears in five years, and
9 you're in a negative position, and a
10 dramatically negative position, for many, many
11 years to come.
12 And that's why we've argued, and you all
13 endorsed the notion of, don't use a surplus in
14 any kind of capricious way. Build in a reserve
15 that allows you to plan more appropriately for
16 the out years.
17 We have given you a -- 13 different
18 scenarios. Again, this is one of the ones that
19 you have in your packet.
20 This is Simulation Number 11. This is a --
21 a little bit of a complicated scenario in the
22 sense that it builds in a stairstep style
23 approach to saving the reserves.
24 You take 50 percent over 105 percent
25 reserve, you take 75 percent over 110 percent
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April 11, 2000
1 reserve, and you take 100 percent over
2 115 percent reserve.
3 So you have a stairstep effect to you, and
4 you're always saving a little bit of money.
5 And you just look here at the experiences.
6 And, again, you -- you have this in front
7 of you. And I apologize to the members of the
8 audience who are trying to follow this. But
9 there's just a lot of information on these --
10 on these charts.
11 You see what happens to contribution rates,
12 and -- under perfect experience with this
13 arrangement, you get down to zero in 2005, you
14 stay at zero, then you slowly climb back up.
15 Under favorable experience, which is a
16 better than our actuarially required rate of
17 return, you essentially get to the point where
18 you have zero contribution rates for a long
19 time.
20 But under moderately adverse experience,
21 and a major adverse experience, the
22 contribution rates start to climb very, very
23 quickly again. You deplete the reserve very
24 quickly.
25 And while this mechanism does give you a
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April 11, 2000
1 fairly robust way to protect the reserve, we
2 don't think it's necessarily the best, although
3 there's some good aspects to this.
4 The next one is Simulation 13. And here
5 we essentially do the same style of
6 stairstepping, only this time we've raised the
7 bar just a little bit. Here we've said you
8 take 50 percent of the reserve over
9 110 percent, 75 percent of the reserve over
10 115 percent, and 100 percent of the reserve
11 over 120 percent.
12 And here's that same set of four graphs,
13 now one at a time so you can see it a little
14 bit clearer, and you can see what happens to
15 contribution rates. They drop down to
16 virtually zero at 2009, '10, or '12; and then
17 they slowly climb back up to the point where
18 they're about 6 percent of payroll on an
19 outgoing basis at that point.
20 And you see also what happens to the -- to
21 the surplus. It peaks at about 130; slowly
22 drops down to about 120 percent; and it stays
23 right there, which is what you're trying to
24 stabilize it at.
25 TREASURER NELSON: But that's in a perfect
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April 11, 2000
1 world.
2 MR. HERNDON: Oh, absolutely. That's --
3 that is where we hit our investment experience
4 right on the button.
5 This next one shows you what happens if we
6 have better than a perfect world. In this
7 case, we actually --
8 GOVERNOR BUSH: Better than --
9 MR. HERNDON: -- get --
10 GOVERNOR BUSH: -- a perfect world.
11 MR. HERNDON: -- eight-and-a-half
12 percent return --
13 GOVERNOR BUSH: You won't be worrying about
14 better than a perfect world. You'd only be
15 worried about the pension then.
16 TREASURER NELSON: Yeah. Go to the
17 adverse.
18 MR. HERNDON: Oh, you want to go to the
19 adverse?
20 All right.
21 Moderately adverse experience. This is
22 6 percent return now -- a 6 percent return
23 scenario. You see contribution rates drop down
24 to about six-and-a-half percent, they stay
25 there for a couple of years, they slowly start
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April 11, 2000
1 to climb back up to 14 -- or 13 percent, and --
2 and some change.
3 Now, let me just for the sake of context
4 remember that in fiscal year '99, we eliminated
5 a third of the contribution rates. We went
6 from 16, which had been the case, down to the
7 10 that we're at now.
8 So now you talk about in this case,
9 Commissioner, going back up to 13 percent.
10 And you see what happens to the surplus.
11 It grows for a little while, and then
12 eventually out here in the 2015 and 2020
13 time frame, it -- it disappears.
14 TREASURER NELSON: May I ask --
15 GOVERNOR BUSH: Yeah. Please.
16 TREASURER NELSON: Do you have a chart --
17 maybe it was one of your first charts -- that
18 if we kept the contribution rate at 10 percent,
19 under adverse conditions, what does the surplus
20 look like?
21 GOVERNOR BUSH: You're kind of doing the
22 inverse with these examples.
23 MR. HERNDON: Well --
24 GOVERNOR BUSH: I think the Commissioner's
25 point's a good one, that if you took -- if
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1 you -- if you -- instead of making the
2 contribution rate the variable, if you made the
3 contribution rate fixed, what would the surplus
4 look like is really the question, right?
5 TREASURER NELSON: Under the various
6 economic scenarios, the perfect world and the
7 adverse world.
8 MR. HERNDON: I don't think we have a graph
9 that shows you that. We do have -- as part of
10 that table of information, we have that
11 scenario in there.
12 But we don't have an actual picture of that
13 scenario with us this morning. But we can
14 easily produce it and --
15 TREASURER NELSON: Well, the --
16 MR. HERNDON: -- send it down.
17 TREASURER NELSON: -- the picture basically
18 would be your surplus would stay above the
19 line --
20 MR. HERNDON: Correct.
21 TREASURER NELSON: -- if you -- if you
22 stayed at your present 10 percent contribution
23 rate.
24 MR. HERNDON: Correct.
25 TREASURER NELSON: Even under the worst
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1 economic --
2 MR. HERNDON: Oh.
3 TREASURER NELSON: -- condition of the
4 future, you would still be able to preserve
5 your -- your funded liability out through the
6 out years; would you not?
7 MR. HERNDON: Probably, because you're --
8 you're at a point today where you're at about
9 112 percent of full funding level. And that
10 will grow by default, if you will, as the
11 actuary recognizes some of our prior five years
12 of experience that he has not recognized yet.
13 And those have been very strong years.
14 So as you climb up the stairstep for the
15 next year or two, and then keep contributions
16 level, you're right, it probably would stay
17 above the level, maybe slowly increments --
18 inch down, but not much.
19 COMPTROLLER MILLIGAN: Well, Simulation 1
20 is somewhat akin to --
21 MR. HERNDON: Correct.
22 COMPTROLLER MILLIGAN: -- maintaining --
23 MR. HERNDON: Correct.
24 COMPTROLLER MILLIGAN: -- the 10 percent.
25 MR. HERNDON: That's correct.
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1 COMPTROLLER MILLIGAN: And -- and it -- it
2 does show under the modern adverse and -- and
3 the major adverse that you ultimately have to
4 raise it.
5 TREASURER NELSON: Simulation 1 is.
6 COMPTROLLER MILLIGAN: Yeah. I mean --
7 TREASURER NELSON: It sure is.
8 COMPTROLLER MILLIGAN: -- essentially --
9 MR. HERNDON: Yes.
10 COMPTROLLER MILLIGAN: -- it gets it at a
11 constant rate.
12 MR. HERNDON: That's correct. That's
13 correct.
14 Well, not to -- not to belabor this a great
15 deal further, Governor, and members, but
16 lastly, we wanted to show you what happens
17 under Simulation 13, and you have the major
18 adverse experience.
19 This is the '70s period that we were
20 talking about before. Contribution rates,
21 you know, essentially are flat over the next
22 couple of years. They -- they rise and fall a
23 little bit, then they start to climb. They get
24 up to 14 percent, and stay pretty much there in
25 perpetuity.
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1 The funded ratio drops off in the next six
2 or seven years, and -- and decreases over time
3 as you continue to erode the principal of the
4 fund.
5 The last set of charts that we wanted to --
6 to show you, and again, I know this is a lot of
7 details, and it's difficult to see these
8 things.
9 But this is the -- the Senate proposal as
10 it's currently configured, without any overlay
11 for a defined contribution plan built in,
12 because we don't know what theirs are, or
13 the -- or the House's for certain right now.
14 Here's perfect experience. This is
15 8 percent, hitting it right on the button. You
16 see the contributions drop down to 9 percent,
17 and then slowly inch down to about an 8 percent
18 normalized rate.
19 And the funded ratio climbs to right at
20 130 percent, and stays there on out through the
21 30-year forecast period.
22 GOVERNOR BUSH: But, Tom, that -- just --
23 let's -- in case anybody's actually here that
24 might be interested in this beyond the
25 State Board, that is a -- that does not include
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1 the extra costs that may be necessary to pay
2 out for retirees that are -- that got the
3 lower --
4 MR. HERNDON: Special risk.
5 GOVERNOR BUSH: -- special risk, it does
6 not include any additional costs to have a
7 choice between defined benefits --
8 MR. HERNDON: Correct.
9 GOVERNOR BUSH: -- and defined
10 contribution. And again, it's the perfect
11 experience.
12 In essence, what the Senate's plan has done
13 is to take the -- the surplus itself is their
14 stabilization reserve. Rather than creating a
15 stabilization fund to provide some stability in
16 the contribution rate, they're just taking the
17 surplus down to keep the rate basically flat,
18 as you see it there.
19 And we're all in new -- new territory. I
20 don't know if there's -- no one's had to deal
21 with surpluses before in -- in -- in pension
22 funds of this magnitude.
23 I'm not sure that is the prudent policy.
24 The prudent policy would be to reserve in the
25 fund, and then allow for some mechanism for
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April 11, 2000
1 money to flow out once we are satisfied that
2 the reserves are adequate to meet any kind of
3 adverse condition that might come forward.
4 TREASURER NELSON: Governor, I would just
5 like to echo that. I mean, we've been wringing
6 our hands for so many years about the unfunded
7 liability of the State pension fund.
8 And then all of a sudden, here we are, we
9 finally make it. We get it funded 100 percent,
10 and now it's funded more, because of the
11 surpluses on the beneficence of -- of the
12 marketplace, the beneficence of the wonderful
13 management that we have out at the SBA, and --
14 and all of this has come together. And now
15 everybody wants to start spending it.
16 And it could get us into trouble real quick
17 if you don't have a perfect world, of where
18 we're getting 8 percent returns each year. And
19 you could suddenly find yourself with a big
20 black hole of unfunded liability.
21 GOVERNOR BUSH: Now, the good news that
22 exists, as I understand it, is that we have --
23 because this is an actuarial surplus, not an
24 actual surplus -- there is built up growth in
25 the surplus based on current trends, based on
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1 what's happened in the immediate past.
2 So we have -- I mean, there's good news
3 coming over the horizon in the short run. But
4 the -- the adverse conditions could -- could
5 change -- could that in the long run, and --
6 and we're not prepared for it right now with --
7 with the -- I mean, we've made a policy
8 decision, as I understand it, to consider a
9 stabilization fund, and I would like to maybe
10 push that forward a little bit quicker, given
11 what's going on in the Legislature. They've --
12 they're dealing with two very important issues
13 at once.
14 One is dealing with the surplus, and the
15 second is providing other options than
16 defined benefits for employees that -- that at
17 the State and school district level -- and this
18 is a big deal.
19 I mean, how many times do we have
20 superintendents of schools come to us saying,
21 we were expecting X, we got Y, now we have to
22 make cuts. And the contribution rate is a
23 major element of their -- of their -- of their
24 budget.
25 And for that to have any kind of
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 27
April 11, 2000
1 volatility, I think any of the contributors to
2 the pension fund would argue that stabilization
3 of the contribution rate is more important than
4 anything else.
5 We've got to get that done right before we
6 take advantage of the good times that might
7 exist, that might increase benefits, or provide
8 tax relief, or provide relief for the people
9 that are making contributions.
10 TREASURER NELSON: Well, the Legislature,
11 and with you signing it, cut it from about 16
12 to 10, right?
13 MR. HERNDON: Correct.
14 TREASURER NELSON: That's a pretty sizable
15 cut.
16 So what -- what you're seeking now is some
17 kind of policy discussion here with regard to
18 keeping this thing stable in the future.
19 GOVERNOR BUSH: And -- and sending a signal
20 to -- to my friends in the Legislature that
21 before there is a discussion about increasing
22 benefits, or reducing contribution rates, and
23 spending money and current -- you know, making
24 current obligations, all of which are for good
25 causes, we should have a -- not only a policy,
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 28
April 11, 2000
1 but we should implement a policy that has a
2 budget stabilization reserve that is
3 conservative, that is -- that is thought out,
4 that protects the -- the pensioneers, the
5 people that are in the retirement system to
6 give them the kind of stability that -- that
7 they expect.
8 I mean, we're -- we're dealing with two
9 very complex issues at once that could
10 provide -- could create enormous costs to
11 this -- to the -- enormous obligations at once.
12 And there's a lot of unintended
13 consequences here that need to be -- we need to
14 protect ourselves from.
15 And frankly, it has an impact on the
16 current budget discussions that will begin
17 to -- begin to take place as the Legislature
18 goes to conference.
19 So I think it's an important point now to
20 take a pause and say at least -- I hope at
21 least the State Board of Administration has
22 serious concerns about this, and believes that
23 we should have a stabilization fund before we
24 embark on creative ways to dispose of the
25 surplus.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 29
April 11, 2000
1 MR. HERNDON: Governor, I might add, we --
2 we anticipate seeing the House Bill this
3 Thursday, we're waiting for the actuaries to
4 give us their cost estimates on that. Then
5 we'll be able to overlay some of these
6 scenarios with that cost dimension that you
7 highlighted earlier.
8 The Senate Bill, we're not sure exactly
9 what their status is, but we assume we'll see a
10 Senate defined contribution bill the next
11 10 days or so at the outside.
12 As soon as that's possible, we'll also give
13 you that defined contribution overlay.
14 In the meantime, as we've done, we can use
15 last year's bill as a proxy, and work through
16 some of the factored up numbers, if you will,
17 and see how they play through these scenarios,
18 and get back with you and -- and --
19 GOVERNOR BUSH: Well -- but even -- even
20 without the defined -- the defined --
21 MR. HERNDON: Right.
22 GOVERNOR BUSH: -- contribution --
23 MR. HERNDON: Right.
24 GOVERNOR BUSH: -- costs, to -- to shift to
25 that plan, what the Senate has recommended in
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 30
April 11, 2000
1 terms of taking money out of the surplus, and
2 their strategy to stabilize the rate by taking
3 a percentage of the surplus each year, I think
4 is inappropriate.
5 And I wanted to take this time to express
6 this so that -- you know, I have -- I have two
7 hats here. I guess I'm Governor, and also a
8 Trustee.
9 And in -- in both cases, I think it's
10 inappropriate. And I don't know how we can go
11 in two weeks time, if it's possible to actually
12 make a recommendation on what the stabilization
13 reserve could look like -- you have
14 13 scenarios here.
15 Doctor, you could probably create another
16 100 for us. I mean, I'm sure. How we -- if we
17 can make this a policy statement by the SBA,
18 and -- in two weeks time, if we could, it'd be
19 great. If it's too much work, then I can just
20 express my opinion like I just did, and be done
21 with it.
22 MR. HERNDON: Well, your opinion will go a
23 long way. I think we'll be able to give you
24 some additional insight in the next few days as
25 we nail down some of these actuarial estimates.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 31
April 11, 2000
1 And then we can give you that information.
2 COMPTROLLER MILLIGAN: The -- the sad part
3 is though, Tom, that it's a little bit of the
4 chicken and the egg. If we wait for them to
5 define what it is they're going to do --
6 MR. HERNDON: Right.
7 COMPTROLLER MILLIGAN: -- which can change
8 next year or the following year or the
9 following year.
10 I -- I think we have to decide in a policy
11 sense what our fiduciary responsibilities
12 demand that we do. And that's define some sort
13 of surplus that we will live with, and -- and
14 that's it. And -- and then let them do
15 whatever they want to do beyond that.
16 And -- and I think we ought -- we probably
17 should have done it today, if we could have.
18 But I certainly think we ought to move on it as
19 rapidly as we can. And we ought to be the ones
20 that set what our restrictions are in the
21 reduction of that surplus.
22 GOVERNOR BUSH: Well, can we come back in
23 two weeks -- the session will still be in.
24 It'll -- I mean, my -- in a perfect world, I
25 would like for there to be a consensus about
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 32
April 11, 2000
1 this, not -- not a confrontation.
2 I'm -- if -- if the Legislature would see
3 the reasoning behind this, I believe that they
4 would -- they would be accepting of it. Plus
5 we have -- I mean, we have --
6 COMPTROLLER MILLIGAN: Yeah. Tom has been
7 talking to them.
8 You have been talking --
9 MR. HERNDON: Yes, sir.
10 COMPTROLLER MILLIGAN: -- to them --
11 MR. HERNDON: Oh, yeah.
12 COMPTROLLER MILLIGAN: -- about the
13 surplus. They understand the concept.
14 I think we have to be willing to define
15 what it is that we want that surplus to be.
16 And not be driven by changing concepts on the
17 part of the Legislature.
18 TREASURER NELSON: Governor --
19 GOVERNOR BUSH: Yeah.
20 TREASURER NELSON: -- if two weeks is too
21 late, why don't you consider calling a special
22 meeting of the SBA.
23 GOVERNOR BUSH: We can do that. It's not
24 too late, I don't think. But it -- it --
25 MR. HERNDON: No.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 33
April 11, 2000
1 GOVERNOR BUSH: -- I'm -- I -- I -- the --
2 the sooner the better would be fine. If we can
3 convene a special meeting, that would --
4 MR. HERNDON: We --
5 GOVERNOR BUSH: -- be fine.
6 MR. HERNDON: -- we can do that at your
7 convenience. Let -- let us do this: We should
8 get some insight in the next couple of days.
9 We're hoping to get something from M&R, the
10 actuaries.
11 But the General's right, in a sense, one
12 way to approach this problem is not to worry
13 necessarily about all the pension reform
14 possibilities --
15 GOVERNOR BUSH: It's easier for the General
16 to do that, than me. You know.
17 COMPTROLLER MILLIGAN: Yeah. But -- but
18 I think in terms of our fiduciary
19 responsibilities, that's the --
20 GOVERNOR BUSH: Absolutely.
21 COMPTROLLER MILLIGAN: -- position we have
22 to take.
23 GOVERNOR BUSH: Absolutely.
24 COMPTROLLER MILLIGAN: And -- and that's
25 the one I would like to see us try to resolve
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 34
April 11, 2000
1 and strive for.
2 GOVERNOR BUSH: Well, maybe let's shoot for
3 early next week if we can. If that -- if
4 that --
5 COMPTROLLER MILLIGAN: That --
6 MR. HERNDON: That'd be fine. We certainly
7 can be ready for that.
8 Thank you for the time.
9 GOVERNOR BUSH: Thank you.
10 This is really important. I'm glad that we
11 got an in-depth discussion on it.
12 (The State Board of Administration Agenda
13 was concluded.)
14 * * *
15
16
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
VOTE/CHAIRMAN, VICE CHAIRMAN, PAROLE COMMISSION 35
April 11, 2000
1 GOVERNOR BUSH: I -- I made a mistake of
2 not calling for a vote for the selection of
3 Chairman and Vice Chairman of the
4 Parole Commission.
5 And, Commissioner Crawford, would you like
6 to make a nomination?
7 COMMISSIONER CRAWFORD: Right.
8 With your -- at your recommendation,
9 Governor, I'd -- I'd recommend and move that
10 the Chairman be Jimmy Henry, and Vice Chairman
11 be Fred Dunphy.
12 COMPTROLLER MILLIGAN: I'll second that.
13 COMMISSIONER GALLAGHER: Second.
14 GOVERNOR BUSH: There's a motion and a
15 second.
16 All in favor, signify by saying aye.
17 THE CABINET: Aye.
18 GOVERNOR BUSH: All opposed.
19 Thank you. That's it.
20 I'll say we did it.
21 Very good.
22 (The Vote on the Chairman and Vice Chairman
23 of the Parole Commission was concluded.)
24 * * *
25
ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 36
April 11, 2000
1 GOVERNOR BUSH: Division of Bond Finance.
2 MR. WATKINS: Good morning.
3 COMMISSIONER GALLAGHER: Motion on the
4 minutes.
5 COMMISSIONER CRAWFORD: Second.
6 (Treasurer Nelson exited the room.)
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 Item 2.
10 MR. WATKINS: Item Number 2 is a resolution
11 authorizing the competitive sale of
12 197.9 million dollars in PECO bonds.
13 COMMISSIONER GALLAGHER: Motion.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. WATKINS: Item 3 is a resolution
18 authorizing the competitive sale of up to
19 32 million dollars in University of Florida
20 Housing Revenue Bonds.
21 COMMISSIONER GALLAGHER: Motion.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MR. WATKINS: Item Number 4 is a report of
ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 37
April 11, 2000
1 award on the competitive sale of fourteen
2 million six hundred and ninety-five thousand
3 dollars in facilities management bonds. The
4 bonds were awarded to the low bidder at a true
5 interest cost of 5.63 percent.
6 COMMISSIONER GALLAGHER: Motion.
7 COMMISSIONER CRAWFORD: Second.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, it's approved.
10 MR. WATKINS: And Item 5 is a report of
11 award on the competitive sale of 300 million
12 dollars in P-2000 bonds, which completes the
13 ten-year 3 billion dollar commitment that was
14 initiated back in '91.
15 The bonds were awarded to the low bidder at
16 a true interest cost rate of approximately
17 5.14 percent.
18 GOVERNOR BUSH: Do you have all this
19 memorized?
20 You didn't even read that.
21 COMMISSIONER GALLAGHER: Motion.
22 MR. WATKINS: We do it every day.
23 COMMISSIONER CRAWFORD: Second.
24 GOVERNOR BUSH: Moved -- moved and
25 seconded.
ACCURATE STENOTYPE REPORTERS, INC.
DIVISION OF BOND FINANCE 38
April 11, 2000
1 Without objection, it's approved.
2 Thank you, Ben.
3 MR. WATKINS: Thank you.
4 COMPTROLLER MILLIGAN: Those are great
5 interest rates again. I --
6 COMMISSIONER CRAWFORD: They're really
7 good.
8 COMPTROLLER MILLIGAN: They do a terrific
9 job.
10 (The Division of Bond Finance Agenda was
11 concluded.)
12 * * *
13
14
15
16
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 39
April 11, 2000
1 GOVERNOR BUSH: Administration Commission.
2 COMMISSIONER GALLAGHER: Motion on the
3 minutes.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 Item 2.
8 MS. SARTIN: Information Technology Project
9 for the Agency for Health Care Administration.
10 COMMISSIONER GALLAGHER: Motion for
11 approval.
12 COMMISSIONER CRAWFORD: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 MS. SARTIN: Item 3 is an Information
16 Technology Project for the Department of
17 Children and Families.
18 COMMISSIONER GALLAGHER: Motion to approve.
19 COMMISSIONER CRAWFORD: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Without objection, it's approved.
22 MS. SARTIN: Item 4 is a transfer of
23 general revenue appropriation for Department of
24 Children and Families.
25 COMMISSIONER GALLAGHER: Motion, approval.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 40
April 11, 2000
1 COMMISSIONER CRAWFORD: Second.
2 GOVERNOR BUSH: Moved and seconded.
3 Without objection, it's approved.
4 MS. SARTIN: Item 5 is a transfer of
5 general revenue appropriations for the Fish and
6 Wildlife Conservation Commission.
7 COMMISSIONER GALLAGHER: Motion.
8 COMMISSIONER CRAWFORD: Second.
9 GOVERNOR BUSH: Moved and seconded.
10 Without objection, it's approved.
11 MS. SARTIN: Item 6 is a transfer of
12 general revenue appropriation for Department of
13 Health.
14 COMMISSIONER GALLAGHER: Motion.
15 COMMISSIONER CRAWFORD: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MS. SARTIN: Item 7 is a request to
19 approve -- to establish 47 positions for the
20 State Attorney in the Sixth Judicial Circuit.
21 COMMISSIONER GALLAGHER: Motion to approve.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MS. SARTIN: Item 8 is a transfer of
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 41
April 11, 2000
1 general revenue appropriation for the
2 Department of Law Enforcement -- I'm sorry,
3 Labor and Employment Security.
4 COMMISSIONER GALLAGHER: Motion to approve.
5 COMMISSIONER CRAWFORD: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MS. SARTIN: Item 9 is approval to
9 establish a position for the Department of
10 Law Enforcement.
11 COMMISSIONER GALLAGHER: Motion to approve.
12 COMMISSIONER CRAWFORD: Second.
13 GOVERNOR BUSH: This comes up to this
14 Cabinet, this level of specificity? Hmm.
15 Moved and seconded.
16 Without objection, it's approved.
17 MS. SARTIN: Item 10 is a transfer of
18 general revenue appropriation for Department of
19 Management Services.
20 COMMISSIONER GALLAGHER: Motion to approve.
21 COMMISSIONER CRAWFORD: Second.
22 GOVERNOR BUSH: Moved --
23 COMMISSIONER GALLAGHER: Motion to defer
24 Number 11 and Number 12.
25 GOVERNOR BUSH: Moved and -- Item
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 42
April 11, 2000
1 Number 10, moved and seconded.
2 Without objection, it's approved.
3 COMMISSIONER GALLAGHER: Motion to defer
4 11 --
5 GOVERNOR BUSH: There's a motion --
6 COMMISSIONER GALLAGHER: -- and 12.
7 GOVERNOR BUSH: -- to defer Item 11 and 12.
8 Is there a second?
9 SECRETARY HARRIS: Second.
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 Thank you.
13 MS. SARTIN: Thank you.
14 GOVERNOR BUSH: You going somewhere quick,
15 Tom?
16 COMMISSIONER GALLAGHER: I'm trying to get
17 out.
18 Am I doing pretty good?
19 GOVERNOR BUSH: Doing very well.
20 (The Administration Commission Agenda was
21 concluded.)
22 * * *
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 43
April 11, 2000
1 COMMISSIONER GALLAGHER: Motion on the
2 minutes.
3 MR. PIERSON: We don't have any minutes.
4 COMMISSIONER GALLAGHER: We didn't have any
5 minutes. We're in Education.
6 I'm sorry. I'm in the wrong book.
7 COMPTROLLER MILLIGAN: Wrong --
8 COMMISSIONER GALLAGHER: Wrong book.
9 GOVERNOR BUSH: Item 1.
10 MR. PIERSON: Item 1 is a resolution
11 authorizing the sale of a hundred and
12 ninety-seven million nine hundred thousand
13 dollars in PECO bonds.
14 COMMISSIONER GALLAGHER: Motion to approve.
15 COMMISSIONER CRAWFORD: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MR. PIERSON: Item 2 is deferred at the
19 request of the applicant and the School Board.
20 COMMISSIONER GALLAGHER: Motion to defer.
21 COMMISSIONER CRAWFORD: Second.
22 GOVERNOR BUSH: There's a motion to defer,
23 and a second.
24 Without objection, it's approved.
25 MR. PIERSON: Item 3, appointments to the
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 44
April 11, 2000
1 District Board of Trustees, Edison Community
2 College: Enid S. Gorvine and Darol H. Carr.
3 COMMISSIONER GALLAGHER: Motion to approve.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. PIERSON: Item 4, appointment to the
8 District Board of Trustees, North Florida
9 Community College, Linda F. Gibson.
10 COMMISSIONER GALLAGHER: Motion to approve.
11 COMMISSIONER CRAWFORD: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 Thank you, Wayne.
15 (The State Board of Education Agenda was
16 concluded.)
17 * * *
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 45
April 11, 2000
1 GOVERNOR BUSH: Board of Trustees.
2 COMMISSIONER GALLAGHER: Motion on the
3 minutes.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. GREEN: Substitute Item 2, modification
8 of a 5-year sovereignty submerged land lease
9 for a private residential multislip docking
10 facility.
11 COMMISSIONER GALLAGHER: Motion.
12 COMMISSIONER CRAWFORD: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 MR. GREEN: Item 3, acquire 100 percent
16 interest in 14.31 acres in the East Everglades
17 CARL Project.
18 COMMISSIONER GALLAGHER: Motion, 3.
19 COMMISSIONER CRAWFORD: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Without objection, it's approved.
22 MR. GREEN: Item 4 is acquire an undivided
23 75 percent interest with St. Johns River Water
24 Management District, and 86 acres of
25 Pumpkin Hill.
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 46
April 11, 2000
1 COMMISSIONER GALLAGHER: Motion to approve.
2 ATTORNEY GENERAL BUTTERWORTH: Second.
3 SECRETARY HARRIS: Second.
4 GOVERNOR BUSH: Moved and seconded.
5 Without objection, it's approved.
6 MR. GREEN: Item 5 is an exchange agreement
7 between the Board of Trustees to convey
8 .93 acres of Trustees' lands with the Diocese
9 of -- of Pensacola for .21 acres of land.
10 COMMISSIONER GALLAGHER: Motion to approve.
11 COMMISSIONER CRAWFORD: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 MR. GREEN: Item 6 is a -- is a
15 determination that 3.83 acres, a parcel owned
16 by the Trustees, is no longer needed for
17 preservation and furtherance of the intent of
18 the Florida Preservation 2000 Act; two, that
19 the determination that the 3.83 acres is no
20 longer needed for conservation purposes;
21 approval of a land exchange; and a waiver of
22 appraisal requirements.
23 COMMISSIONER GALLAGHER: Motion to approve.
24 COMMISSIONER CRAWFORD: Second.
25 GOVERNOR BUSH: Moved and seconded.
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 47
April 11, 2000
1 Without objection, it's approved.
2 ATTORNEY GENERAL BUTTERWORTH: Governor,
3 this is the first time in a decade that we had
4 some action with Walton County without any
5 objection. I -- or a lot of testimony.
6 I think that's --
7 (Treasurer Nelson entered the room.)
8 COMMISSIONER GALLAGHER: Things are moving
9 in the right direction for --
10 ATTORNEY GENERAL BUTTERWORTH: Well,
11 they --
12 COMMISSIONER GALLAGHER: -- them now.
13 ATTORNEY GENERAL BUTTERWORTH: -- really
14 are. They really are.
15 COMPTROLLER MILLIGAN: It must be to their
16 advantage.
17 GOVERNOR BUSH: That's right.
18 COMMISSIONER CRAWFORD: They got us again.
19 MR. GREEN: Item 7, recommend withdrawal.
20 COMMISSIONER GALLAGHER: Motion to
21 withdraw.
22 ATTORNEY GENERAL BUTTERWORTH: Just a
23 little Cabinet meeting is all.
24 GOVERNOR BUSH: Motion to withdraw, and
25 a --
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 48
April 11, 2000
1 COMMISSIONER CRAWFORD: Second.
2 GOVERNOR BUSH: -- second.
3 Without objection, it's approved.
4 MR. GREEN: Substitute Item 8, request to
5 issue a perpetual nonexclusive easement.
6 COMMISSIONER CRAWFORD: Motion.
7 ATTORNEY GENERAL BUTTERWORTH: Second.
8 COMMISSIONER GALLAGHER: Second.
9 GOVERNOR BUSH: Moved and seconded.
10 Without objection, it's approved.
11 MR. GREEN: Substitute Item 9.
12 Governor, last night we received some
13 additional information from the appraiser in
14 the form of a letter that had -- he had
15 reevaluated his comparable sales, and found out
16 that one of the comparable sales that he had
17 used in establishing his value was not an
18 arm's length transaction.
19 And so his indication to us is that he
20 would -- in -- in review of that, would most
21 likely remove that from his appraisal process,
22 which would lower his bid -- or excuse me --
23 lower his appraisal to 4.6 million.
24 In light of that, and in verification
25 from -- from our appraisers that that, indeed,
ACCURATE STENOTYPE REPORTERS, INC.
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April 11, 2000
1 appeared to be the case, that it was not an
2 arm's length transaction, we would like to
3 change our recommendation, and recommend that
4 we accept that the -- the bid on the IFAS
5 property at 4.5 million dollars.
6 COMMISSIONER GALLAGHER: I move to accept
7 the bid.
8 COMMISSIONER CRAWFORD: Second.
9 SECRETARY HARRIS: Second.
10 GOVERNOR BUSH: Moved and seconded.
11 Any discussion?
12 SECRETARY HARRIS: Yes --
13 GOVERNOR BUSH: Yes, Katherine.
14 SECRETARY HARRIS: -- Governor.
15 This has been an interesting process, and I
16 completely agree with having the
17 Ritchie Brothers have this -- the opportunity
18 for this purchase.
19 But I think what has been immensely
20 frustrating and exasperating almost, that in
21 the business world, when you want to buy low
22 and sell high to government, we tend to buy
23 high and sell low.
24 And -- and we had long conversations with
25 Eva Armstrong yesterday. And I'm hoping that
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 50
April 11, 2000
1 perhaps at some time, you could -- you could
2 revise your policies, maybe look and see when
3 we need two appraisals, do these kinds of
4 things so there can be some consistency, and we
5 don't run into these issues every time before
6 they come to the Board and, you know, put us in
7 this -- in this position.
8 MR. GREEN: Yes, ma'am. Understand.
9 GOVERNOR BUSH: Any other comments?
10 There's been a motion and a second.
11 Without objection, it's approved.
12 MR. GREEN: Substitute Item 10 is approval
13 of a 50-year lease to Southcom for 15 acres,
14 more or less, of State lands, and deferral of
15 the remaining request until June 13th, this
16 year.
17 We have one speaker.
18 And last night we got a letter from the
19 homeowners association of this group asking
20 about an easement along the south side of this
21 property for a possible road expansion.
22 Southcom is -- is okay with us issuing
23 the -- the lease of the property with the
24 reservation of four road purposes along the
25 south side in case this road never -- ever
ACCURATE STENOTYPE REPORTERS, INC.
TRUSTEES/INTERNAL IMPROVEMENT TRUST FUND 51
April 11, 2000
1 needs to be built.
2 So with that modification, the modification
3 being a lease of the land to Suncom -- to
4 Southcom, subject to an easement for road
5 purposes along the south side. That's our
6 recommendation.
7 And Mr. Stanley Tait would like to speak
8 to --
9 COMMISSIONER GALLAGHER: If I -- I have
10 a -- just one thing.
11 That --
12 GOVERNOR BUSH: Yes.
13 COMMISSIONER GALLAGHER: -- in the original
14 documents that were given to us, it did not say
15 that there -- in this lease, the 50-year lease
16 to the United States Southern Command, should
17 they choose to move out of the facility that
18 they're renting, that that property that we're
19 leasing to them would then -- that lease would
20 be canceled.
21 So they wouldn't -- the -- the next renter
22 wouldn't have benefit of that lease.
23 MR. GREEN: Right.
24 COMMISSIONER GALLAGHER: So that is in the
25 agreement; is that correct?
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April 11, 2000
1 MR. GREEN: I don't know, sir. I'll find
2 out.
3 GOVERNOR BUSH: There's some nodding.
4 No.
5 How could it not be?
6 COMMISSIONER GALLAGHER: It needs to be, if
7 it's not.
8 MR. TAIT: I was informed it's in the
9 lease.
10 COMPTROLLER MILLIGAN: Yeah. I was told
11 that, too.
12 MR. GREEN: It is in the lease.
13 MR. TAIT: It's in the lease.
14 MR. GREEN: It is.
15 COMMISSIONER GALLAGHER: Okay. Well, I'll
16 make a motion to approve it, as long as that's
17 in the lease.
18 COMMISSIONER CRAWFORD: Second.
19 MR. GREEN: Mr. Tait would like to --
20 GOVERNOR BUSH: Stan.
21 I didn't know you were a Marine.
22 COMPTROLLER MILLIGAN: Yes.
23 MR. TAIT: Hardly.
24 Mr. Governor, I'm one of those volunteers
25 that you mentioned earlier that is here before
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1 you because -- several reasons.
2 One, the United States Southern Command is
3 headed by a four star General, Charlie Wilhelm,
4 who many of you may know. And the General is a
5 friend of mine, and he asked me to represent
6 Southcom, which is the short name for the
7 United States Southern Command.
8 Certainly Secretary Harris knows more than
9 most because this is very involved with the
10 secretariate -- the position we're trying to
11 get moved to Miami on a permanent basis. And
12 the United States Southern Command has a -- a
13 great involvement with that.
14 The Southern Command, as most of you are
15 aware, came to Miami because of the 199-- 1977
16 treaty, which required the removal of all of
17 the United States troops representing us in
18 Panama by the end of 1999. And that was
19 accomplished.
20 There were over 100 sites recommended for
21 the Southern Command to be placed. And
22 Florida -- south Florida, Miami-Dade County,
23 won out. There were -- obviously because of
24 the economic impact and a large number of other
25 factors. Many Congress people, both Senators
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1 and Representatives, felt strongly that
2 Southcom should be in their areas. Louisiana
3 tried to get it, Mississippi tried to get it
4 actively, and we were most fortunate in having
5 it move to Miami-Dade County.
6 It's -- it's quite a operation. I've been
7 through it, and anyone who does go through it
8 will be impressed.
9 They really are charged with protecting
10 entire Central, South, and Latin America.
11 And under this four star general's command
12 are all of the branches of the -- of the
13 services: Air Force, Army, Navy, Marines, and
14 the Coast Guard.
15 General Wilhelm is a four star
16 Marine General, as most of you know.
17 The economic impact is -- is in excess of
18 100 million dollars a year to Dade County and
19 to the state of Florida. And that's without
20 the auxiliary impact such as the -- the other
21 items that -- that go along with the movement
22 of over 3,000 people into Dade County.
23 There's over 1200 in the command itself,
24 and probably another 2500 represented by the
25 families of those people who are in the armed
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1 services.
2 We are strongly supportive of this. All of
3 Dade County is supportive of it. The State of
4 Florida should be supportive of it because what
5 it means to the State.
6 We're hoping strongly that the General will
7 be able to entice Congress to understand the
8 need for them to be able to purchase the
9 existing facility that they occupy at the
10 present time, and this land is directly to the
11 west.
12 I have some aerials, and some economic
13 information attached, if I can distribute this
14 to the members of the Cabinet.
15 Colleen.
16 And essentially by looking at that, you'll
17 have an understanding how the land lies. And
18 we certainly have no objection to the
19 reservation for the easement, for the roadway
20 system, because if it's ever developed to the
21 west of the 15 acres, which is also land that
22 is owned by the State of Florida.
23 You should know that this land is located
24 5 -- 5 miles west of the Miami International
25 Airport. It's commonly referred to the FAA
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1 tract. It was acquired by -- from the Federal
2 government in 1903 by the -- what they call the
3 Gainesville patent. Whatever that is, I'm not
4 sure.
5 But as I mentioned, they -- Southern --
6 Southcom relocated to Miami from Panama in
7 September of 1997. And --
8 GOVERNOR BUSH: Stan, you're going to lose
9 it if you keep talking.
10 MR. TAIT: Okay. I'm not going to talk
11 anymore --
12 COMMISSIONER GALLAGHER: Thank you --
13 MR. TAIT: -- Mr. Governor.
14 COMMISSIONER GALLAGHER: -- Governor.
15 MR. TAIT: You have my request. And --
16 GOVERNOR BUSH: Actually we let you keep
17 talking because there was about 20 people
18 behind you figuring out if there was the clause
19 that Commissioner Gallagher wanted in the
20 lease, and we're kind of anxious to find out if
21 it was.
22 COMMISSIONER GALLAGHER: I do have a -- a
23 motion, Governor.
24 GOVERNOR BUSH: Sure.
25 COMMISSIONER GALLAGHER: If we'll take
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1 Section 36 of the lease that reads
2 Special Conditions, and we put a period after
3 the word terminate, and remove the language
4 that says: Upon 60-days written notice to
5 lessee.
6 And the -- the Section 36 will now read:
7 In the event the United States Southern Command
8 headquarters is relocated, this lease shall
9 terminate.
10 GOVERNOR BUSH: So what is in the lease?
11 COMMISSIONER GALLAGHER: Well, it was in
12 there in a -- with a -- in a different way.
13 GOVERNOR BUSH: Is that a problem, Kirby?
14 MR. GREEN: No, sir.
15 GOVERNOR BUSH: Stan, do you have --
16 MR. TAIT: No problem at all.
17 GOVERNOR BUSH: Colonel.
18 COMPTROLLER MILLIGAN: You know, in a -- in
19 a legal sense, suppose they are terminated, as
20 opposed to relocated?
21 I mean, they're more likely to be
22 eliminated as a command than they are to be
23 relocated, frankly.
24 COMMISSIONER GALLAGHER: Well, I -- if we
25 could -- my original way to do it was is, if,
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1 in fact, they're no longer in that facility,
2 the lease terminates.
3 COMPTROLLER MILLIGAN: Yeah. Well, that's
4 what it ought to say --
5 COMMISSIONER GALLAGHER: If this --
6 COMPTROLLER MILLIGAN: -- not --
7 COMMISSIONER GALLAGHER: -- doesn't do
8 that, then let's fix it so it does. Instead of
9 Southern Command is relocated, or --
10 GOVERNOR BUSH: Well --
11 COMMISSIONER GALLAGHER: -- they -- or
12 they --
13 COMPTROLLER MILLIGAN: I might -- I might
14 also add that it's very unlikely that we will
15 ever be -- this land'll ever be purchased. And
16 we need to realize that, too, that this lease
17 is a 50-year lease, and it's more likely that
18 the Command will disappear before it's --
19 purchases the land.
20 GOVERNOR BUSH: Let's hope the Marines stay
21 in existence protecting us so the
22 Southern Command --
23 COMPTROLLER MILLIGAN: Well, it's -- well,
24 I mean, he -- he's just there temporarily.
25 I mean, somebody behind him. But that's not
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1 the point.
2 The point is that they're not going to buy
3 the land if they can get a 50-year lease, and
4 I -- and I wouldn't buy it either.
5 And --
6 COMMISSIONER GALLAGHER: Well --
7 COMPTROLLER MILLIGAN: -- secondly --
8 COMMISSIONER GALLAGHER: -- the issue is --
9 COMPTROLLER MILLIGAN: -- it's more
10 likely --
11 COMMISSIONER GALLAGHER: -- that this isn't
12 the land they'd buy. They'd buy the
13 headquarters they're in that is leased --
14 COMPTROLLER MILLIGAN: Either --
15 COMMISSIONER GALLAGHER: -- to them.
16 COMPTROLLER MILLIGAN: -- either one of
17 them. Either one of them.
18 COMMISSIONER GALLAGHER: Well, that's --
19 that would be Congress making a decision to buy
20 it. I don't know whether they will or not.
21 But I -- I would like to also then, Kirby,
22 say that Southern Command headquarters is
23 relocated, or they vacate the premises.
24 MR. GREEN: I was going to say: Or no
25 longer needed for the purposes of this lease,
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1 it shall be terminated.
2 COMPTROLLER MILLIGAN: Yeah.
3 COMMISSIONER GALLAGHER: Well, here's the
4 thing: They're sitting in another lease
5 property owned by a private entity.
6 MR. GREEN: Right.
7 COMMISSIONER GALLAGHER: We're leasing them
8 this government land, our State land. So
9 what -- when they are no longer renting from
10 that private entity, then this lease should be
11 terminated.
12 So I just -- as long as it says that, we'll
13 be happy.
14 MR. GREEN: Understand. Yes.
15 GOVERNOR BUSH: There's a motion --
16 COMMISSIONER CRAWFORD: And a second.
17 GOVERNOR BUSH: -- and a second as amended.
18 Without any objections, it's approved.
19 Thank you, Stan, for coming up.
20 MR. TAIT: Thank you. Thank you.
21 (The Board of Trustees of the Internal
22 Improvement Trust Fund Agenda was concluded.)
23 * * *
24 (The Cabinet meeting was concluded at
25 10:38 a.m.)
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61
April 11, 2000
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 60 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 21ST day of APRIL, 2000.
18
19
20 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
21 Tallahassee, Florida 32301
850/878-2221
22
23
24
25
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