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T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
STATE BOARD OF ADMINISTRATION
DEPARTMENT OF REVENUE
ADMINISTRATION COMMISSION
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF EDUCATION
VOLUME I
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 Monday,
June 26, 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
* * *
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June 26, 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 18
4 Deferred 56
DEPARTMENT OF REVENUE:
(Presented by James A. Zingale, Ph.D.,
Executive Director)
1 Approved 57
2 Approved 58
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June 26, 2000
I N D E X
(Continued)
ITEM ACTION PAGE
ADMINISTRATION COMMISSION:
(Presented by Sandra Sartin,
Policy Coordinator)
1 Approved 59
2 Approved 59
3 Approved 59
4 Approved 60
5 Approved 60
6 Approved 60
7 Approved 60
8 Approved 61
9 Approved 61
10 Approved 61
11 through 15 Approved 62
16 Approved 62
17 Approved 63
18, 19, and 20 Approved 63
21 Approved 63
22 Approved 64
23 Approved 64
24 Approved 64
25 Approved 65
26 Approved 65
27 Approved 66
28 Approved 70
29 Approved 70
CERTIFICATE OF REPORTER 71
* * *
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 5
June 26, 2000
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:13 a.m.)
3 GOVERNOR BUSH: State Board of
4 Administration.
5 MR. HERNDON: Item Number 1 is approval of
6 the minutes of the meeting held June 13th,
7 19-- or 2000.
8 TREASURER NELSON: I move it.
9 COMPTROLLER MILLIGAN: Second.
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 MR. HERNDON: Item Number 2 is approval of
13 a fiscal determination of an amount not
14 exceeding eight million eight hundred thousand
15 dollars, Florida Housing Finance Corporation
16 multifamily revenue refunding bonds for the
17 Falls of Venice Apartment Project.
18 TREASURER NELSON: And I'll move that one,
19 too.
20 COMPTROLLER MILLIGAN: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, it's approved.
23 MR. HERNDON: Item Number 3 are matters
24 that were deferred from the last agenda, and
25 are back before you for consideration.
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June 26, 2000
1 We have two inf-- essentially informational
2 items this morning. One is the organizational
3 chart, which is contained as part of the budget
4 packet.
5 A second matter, which is attached, is the
6 time line which is dated June 7th, and is our
7 most recent revision.
8 And then finally, Governor, a revised -- I
9 want to underscore that -- revised budget for
10 the operating year 2000-2001, which begins this
11 weekend for the DC portion of the State Board
12 of Administration budget.
13 As you'll recall, you did approve the DB
14 portion last time.
15 We've been very fortunate, I think, in --
16 in having an opportunity to revise this budget
17 downwards, because it reflects a great deal
18 more insight that we have received as a result
19 of some of our bidding processes that we've
20 gone through for a general consultant.
21 It gave us some insight into the expected
22 costs that we were likely to -- to see on some
23 of the other RFIs that we were going to
24 disseminate a little bit later on. And it also
25 gave us an opportunity to defer some of the
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June 26, 2000
1 proposed positions that we had.
2 So the -- the net effect of the revisions,
3 owing largely to the two changes in consulting
4 costs and postponing positions, is about a
5 two million dollar reduction, from 4.5 to
6 2.4 million dollars in this -- in this
7 particular document.
8 And I know, Governor, at -- at your
9 direction and -- and pleasure, both the
10 Division of Retirement are here to speak
11 briefly to their component of the budget, as is
12 the Department of Banking and Finance.
13 If you'd like to go ahead and hear from
14 them now, we can go ahead and call them up, and
15 then come back to the main --
16 GOVERNOR BUSH: Sure.
17 MR. HERNDON: -- main item.
18 So I think Art Simon is here from the
19 Department of Banking and Finance.
20 GOVERNOR BUSH: Art, how are you doing?
21 MR. SIMON: Thank you, Mr. Governor.
22 To be brief and to the point, I believe you
23 all have a little handout we gave you, which
24 sets forth two alternative cost estimates for
25 what the impact of the program will be on the
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June 26, 2000
1 Department.
2 The first one assumes that the Department
3 has to reprogram its systems to make the
4 necessary Federal limit calculations.
5 The principal costs this year that would
6 have to be addressed by way of the budget is
7 the costs of retaining the outside consultants
8 to do the computer programming that'll be
9 necessary to implement this. And that's
10 carried over into the second year.
11 But you see down under Chart 2, that we can
12 eliminate that expense if the third party
13 administrator that is retained to handle the
14 program does the Federal budget -- the Federal
15 limit calculations.
16 Not only would this save our Department a
17 substantial amount of money, but all of the
18 local governments that would have to perform a
19 similar type of function would also be relieved
20 of the burden of -- of replicating those
21 changes in their system.
22 The other point I would make is that we are
23 starting now with the integrated financial
24 management system, and we'd like to be able to
25 incorporate this capacity into that system so
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June 26, 2000
1 we'd have the ability to monitor it in-house.
2 And, certainly, it wouldn't make a lot of
3 sense for us to be spending a
4 million-and-a-half dollars to make changes to a
5 legacy system, only to have the -- the same
6 amount of money -- really the same changes
7 built into the system that's going to replace
8 the legacy system in a very short period of
9 time.
10 So we hope that the third party
11 administrator will be able to handle this
12 function. But if not, by about January of this
13 year, we will have to be seeking an additional
14 appropriation to start retaining the
15 programmers that are necessary to implement
16 these changes.
17 The last time the Department had to do a
18 project of a similar nature, which actually was
19 less complex than this one, it costed (sic)
20 upward of about 1.5 million dollars and took
21 18 months.
22 So we would need to know by around the end
23 of the year, or the early part of next year at
24 the latest, whether this is something that the
25 third party administrator can do.
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June 26, 2000
1 If they do it, the Department's
2 responsibility will largely be to -- to monitor
3 that function, to do post audit of that
4 function. And we do have some programming
5 changes that have to be implemented into our
6 systems. But we can handle that through
7 existing resources, existing revenues, and
8 existing FTEs.
9 GOVERNOR BUSH: Art, the -- is there any
10 reason to believe the third party administrator
11 could not do this?
12 MR. SIMON: We believe -- there's every
13 reason to believe that the third party
14 administrator can do it.
15 GOVERNOR BUSH: Okay.
16 COMPTROLLER MILLIGAN: Not -- not only can
17 do it, I think has to do it --
18 GOVERNOR BUSH: Sure.
19 COMPTROLLER MILLIGAN: -- or else the costs
20 would be extraordinary for the small
21 government, small operations, which constitute
22 a good deal of the activity. It has to be done
23 by a third party administrator.
24 MR. SIMON: Thank you.
25 MR. HERNDON: We fully expect, Governor,
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STATE BOARD OF ADMINISTRATION 11
June 26, 2000
1 to -- to that point, to issue the RFI with that
2 as one of the performance criteria that would
3 be built into the process.
4 The next speaker is Ron Poppell, who is the
5 Acting Director of the Division of Retirement.
6 MR. POPPELL: Good morning.
7 Our budget is -- is real low for this next
8 year. We're asking for 1.4 million dollars. A
9 million of that would be for systems
10 enhancements. And that's assuming that we
11 cannot get the third party record keeper to
12 come to us. That would be about a 90 percent
13 rewrite in my systems that I hope not to make.
14 So I hope I don't have to spend that million,
15 or -- or a whole lot of that million.
16 I'm also asking for $300,000 in consulting
17 services -- actually $400,000 consulting
18 services. A hundred thousand would be for the
19 disability study that we're mandated to do by
20 the legislation.
21 I should have a dollar figure on that by
22 the end of this week. It looks like that
23 study's going to be about $250,000. But I'm
24 going to use 200,000 out of my current year
25 budget so that I can get to -- Mercer started
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June 26, 2000
1 on that.
2 We got a scope of work from them last week
3 that we are refining, and hopefully I will have
4 them working by the end of this week.
5 The plan right now is to have that study,
6 while it's mandated by statute, to have it by
7 January 1st. I'm hoping to have it in hand by
8 November 1, so that if I need something in the
9 Governor's budget recs, we will have it in
10 plenty of time to do that.
11 So I'm hoping to save at least $50,000 out
12 of that 100,000.
13 I also am asking for 300,000 in consulting
14 services so that I can get Mercer to help me
15 look at my organization, the Division of
16 Retirement, and see if I need to be
17 organizationally restructured in order to make
18 this DC plan work better.
19 I also want them to help me in discussions
20 with the third party record keeper. If we're
21 going to be sending payrolls for the DC piece
22 through this third party record keeper, and if
23 this third party record keeper is going to be
24 balancing those payrolls, would it make sense
25 for the DB portion to also go through this
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June 26, 2000
1 third party record keeper, and for them to also
2 balance the payrolls? Can they do it cheaper
3 than I can do it?
4 With our reengineered system, we have cut
5 down from ten days to four days our ability and
6 our -- our speed with balancing payroll. So
7 I'm not sure they can do it quicker or cheaper
8 than me. But if they can, that will free up
9 12 positions that I may not need, or I can do
10 something else with. I can put them someplace
11 else.
12 For the second year, I'm asking for
13 3.3 million dollars. Again, another 300,000
14 for consulting services, and 3 million in case
15 I have to do a complete systems rewrite.
16 The -- the systems rewrite dollars I
17 guesstimated from looking at our current
18 contractor, who is KPMG, that we've had on
19 contract now for three years, doing our
20 reengineering conversion. We're currently
21 paying them $165 an hour. We've been averaging
22 about 1500 hours a month.
23 The million dollars for this next year
24 would carry me for four months. The 3 million
25 would carry me for a full year next year. But,
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June 26, 2000
1 again, I hope not to use a whole lot of that if
2 I can get the third party record keeper to
3 write their system around my system, rather
4 than me having to write mine around them.
5 GOVERNOR BUSH: Any questions?
6 COMPTROLLER MILLIGAN: Just a quick
7 question.
8 The -- your budget dollars will come out of
9 the FRS?
10 MR. POPPELL: The legislation in Section 25
11 allows me to get money out of this 20 million
12 dollar pot.
13 I will either have to have some kind of
14 agreement between us and the SBA for Tom to pay
15 it out of his budget, or I will have to do a
16 budget amendment to get the money into my
17 budget.
18 COMPTROLLER MILLIGAN: Okay. So it's not
19 clear yet exactly where those resources are
20 going to come from.
21 MR. POPPELL: Correct. I've got to get it
22 out of the pot through some mechanism.
23 COMPTROLLER MILLIGAN: So when we talk
24 about approval of the budget today, we are
25 really only talking about approving your
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June 26, 2000
1 budget, Tom, I presume.
2 MR. HERNDON: That's correct.
3 COMPTROLLER MILLIGAN: Okay.
4 GOVERNOR BUSH: General, the -- the same
5 question I was going to ask related to your --
6 the Division of Banking. That -- that would
7 have to be appropriated, or could -- could it
8 be -- just implement --
9 COMPTROLLER MILLIGAN: Yes.
10 GOVERNOR BUSH: -- the DC plan, why
11 couldn't it be taken out of the SBA?
12 COMPTROLLER MILLIGAN: It -- it will have
13 to be appropriated. We have looked at it, and
14 it cannot be paid out of the FRS. It has to be
15 appropriated.
16 But assuming, and I think it's a valid
17 assumption, that the third party administrator
18 will do those things that -- that deal with the
19 limiting problem, there'll be no costs this
20 year. We'll take it out of hide this next
21 fiscal year, and then we'll have it in -- in
22 the budget next year.
23 MR. HERNDON: Governor, those are the only
24 two presentations with respect to the budget
25 document itself.
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STATE BOARD OF ADMINISTRATION 16
June 26, 2000
1 As I mentioned at the outset, the -- the
2 item that we're asking you to approve this
3 morning is the SBA portion of the DC budget,
4 not Retirement and not Banking and Finance.
5 We will come back to you -- in all
6 likelihood, we will need to do a budget
7 amendment -- even to reflect essentially a
8 contract, if you will, between the SBA and the
9 Division of Retirement, we'll need to have a
10 budget amendment to consummate that. And so
11 you'll see that at a subsequent point.
12 GOVERNOR BUSH: And we're going to -- we're
13 going to relook at this in six months?
14 MR. HERNDON: Yes, sir. Yes, sir, we are.
15 In fact, as we start to get into the throws
16 of working with some of the consultants and get
17 a little bit better insight into the cost
18 estimates and so forth for some of the actual
19 production, we may be back, you know, at that
20 point, whenever that occurs.
21 GOVERNOR BUSH: This is a -- this is the
22 largest conversion of a -- partial conversion
23 of a defined benefit plan to the defined
24 contribution plan on the planet.
25 COMMISSIONER GALLAGHER: The next one is
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June 26, 2000
1 social security.
2 GOVERNOR BUSH: They -- yeah. But they may
3 not have it.
4 In any case, I -- I really appreciate what
5 y'all are doing. And -- and I know that this
6 Board recognizes the incredible challenge that
7 y'all face.
8 And I would hope that you'd come regularly
9 to give us updates on what's going on, because
10 it's -- when you're the first person -- when
11 you're a pioneer, you need to have people there
12 to provide support. I -- I know we want this
13 to be successful.
14 So --
15 MR. HERNDON: Yes, sir.
16 I anticipate probably at -- at every
17 agenda, or at least every other agenda, we'll
18 have an update for you, a formal status report
19 for you --
20 GOVERNOR BUSH: Excellent.
21 MR. HERNDON: -- as we move along.
22 GOVERNOR BUSH: Yeah.
23 MR. HERNDON: So, yes, sir.
24 COMPTROLLER MILLIGAN: I move the SBA
25 budget.
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STATE BOARD OF ADMINISTRATION 18
June 26, 2000
1 TREASURER NELSON: Second.
2 GOVERNOR BUSH: Moved and seconded.
3 Any more discussion?
4 Without objection, it's approved.
5 MR. HERNDON: Item Number 4 is a Florida
6 Hurricane Catastrophe Fund reinsurance matter
7 that was also discussed at some length last
8 week.
9 As I indicated at that time, our
10 Advisory Council was going to meet in the
11 interim. They have met.
12 And they have requested, with your
13 forbearance, that this matter be deferred this
14 morning. The Advisory Council spent a very
15 solid 3 hours thrashing through this whole
16 question about reinsurance and the need for it
17 and the type of products that are available,
18 and so on and so forth, and ultimately
19 requested this deferral without intending to
20 convey a message necessarily of favor or
21 disfavor for the -- for the project.
22 They just simply didn't have an opportunity
23 to finally resolve their -- their sentiment
24 about it. And we felt like it was appropriate
25 to get that -- that opinion before you, before
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June 26, 2000
1 it's ultimately addressed.
2 If that's agreeable, then we'll plan on
3 being back before you on the 26th at the next
4 Cabinet meeting.
5 But we did think it would be appropriate to
6 spend a few minutes this morning -- again, with
7 your forbearance -- and give you a brief
8 highlight and a status report, if you will, on
9 where this project is, and -- and how things
10 have progressed since the last meeting.
11 So Dr. Nicholson is here to talk you
12 through that.
13 GOVERNOR BUSH: By the way, this is the
14 best graphics that -- that we've had in this
15 hall in the last year-and-a-half. I don't know
16 what happened.
17 What have you done to make it so I can --
18 we can actually read it for a change?
19 Whatever you found, keep it. Tell
20 everybody else to use the same --
21 DR. NICHOLSON: That's the SBA's projector,
22 by the way.
23 COMPTROLLER MILLIGAN: Well, they --
24 they -- they have a lot of money.
25 GOVERNOR BUSH: That's it.
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June 26, 2000
1 COMMISSIONER CRAWFORD: They get all the
2 money.
3 TREASURER NELSON: They -- they get top of
4 the line out there. They --
5 GOVERNOR BUSH: Out there at the Hermitage?
6 TREASURER NELSON: -- of the agencies.
7 GOVERNOR BUSH: Onward.
8 DR. NICHOLSON: Thank you, Governor.
9 I've prepared a presentation on -- on the
10 subject matter. And it's a little longer than
11 the Cabinet Aides cautioned me about. So if I
12 get long, just say, wrap it up, I can wrap it
13 up in 2 minutes.
14 But I want to -- there are some -- there
15 are some important materials here I would like
16 to present.
17 I think to put some things in context --
18 this is -- of course, is an aerial view of
19 Hurricane Floyd and -- threatening the coast of
20 Florida. Of course, we were lucky to avoid
21 that situation.
22 To put some things in context, I want to
23 talk about the Florida Hurricane Catastrophe
24 Fund in terms of being the largest hurricane
25 catastrophe reinsurer in the world.
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June 26, 2000
1 It's considered the backbone of the
2 insurance -- property casualty insurance --
3 property insurance industry in Florida. And a
4 number of parties are depending upon it for --
5 for their success.
6 The maximum debt issuance of 7.36 billion
7 has never been done before, and it would be the
8 largest municipal issuance ever.
9 Interest rate movements are highly volatile
10 and unpredictable. Faster loss settlement
11 supports public policy goals for faster
12 State recovery.
13 And I want to note that insurers
14 following -- insurers should, and -- and
15 probably have improved significantly in terms
16 of how they're going to handle claims than
17 they -- than they were after Hurricane Andrew.
18 So we can expect pretty -- faster claim
19 payments.
20 This chart illustrates the Florida
21 insurance marketplace. You'll note that there
22 are roughly 5.3 million risks insured in
23 Florida. Now, that one policyholder may have
24 two houses or whatever, and we're counting each
25 house -- or location as a risk.
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June 26, 2000
1 There are 280 insurers that provide the
2 property insurance to these policyholders.
3 On top of that, the Florida Hurricane
4 Catastrophe Fund is a mandatory State
5 reinsurance program that collects about
6 428.2 million dollars of premium, which
7 represents twelve-and-a-half percent of the
8 overall premiums paid to insurers, which are
9 about 3.4 billion total residential premiums.
10 Participating also in the market are
11 private reinsurers, or approximately 140 of
12 those that are made up of U.S. reinsurers,
13 European reinsurers, and Bermuda reinsurers.
14 And they each have about a third of the market
15 share of the catastrophe market.
16 Another entity that's very important to the
17 Florida market is the Florida Insurance
18 Guarantee Association. That is the association
19 that would help protect policyholders from
20 losses should their insurer become insolvent.
21 I want to provide an overview of how the
22 Cat Fund operates, and then get into some
23 operational numbers.
24 It's questions you had asked at the last
25 meeting, Governor Bush.
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STATE BOARD OF ADMINISTRATION 23
June 26, 2000
1 And then talk about two products designed
2 to manage the risks associated at the loss
3 reimbursement product. Specifically one is a
4 liquidity facility, and the other is a bonding
5 shortfall type of reinsurance cover.
6 Let me note that that reinsurance is really
7 a very specialized product. It's not your
8 traditional reinsurance product. It is one
9 based on interest rate volatility and
10 movements, and is also known as a double
11 trigger type product. So, therefore, the
12 pricing is much lower than what you would find
13 with traditional reinsurance.
14 The way the Florida Hurricane Catastrophe
15 Fund operates is, basically insurers are going
16 to report their exposure data to us, wherever
17 they have insured property around the state.
18 You're familiar with the premium formula,
19 how that's developed. Well, the insurers will
20 report their exposure to us, we will determine
21 their premiums for the Cat Fund, and then their
22 coverage is basically a function of their
23 premium. And it's pretty simple.
24 I rounded some numbers here. But their
25 retention or deductible, if you will, is
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June 26, 2000
1 seven times their Cat Fund premium. And their
2 coverage is 25 times their Cat Fund premium.
3 So that simple formula defines what a
4 company -- an insurance company would -- would
5 be entitled to out of the Cat Fund benefits.
6 They also have an option of selecting their
7 coverage, where they select 45, 75, or
8 90 percent coverage.
9 I'll show you an example in the next slide
10 of how that would operate for a company that
11 has a million dollars Cat Fund premium, and
12 chooses a 90 percent coverage selection option.
13 It would have 25 million dollars --
14 25 times the million -- 7 million, roughly,
15 retention. And it would work basically as soon
16 as the insurer absorbs the first 7 million
17 dollars of losses, then the Cat Fund would
18 reimburse 90 percent of those losses, for a
19 total of 25 million dollars.
20 Let me note that the Cat Fund cover, the
21 25 million --
22 GOVERNOR BUSH: Ninety percent over the
23 7 million, or --
24 DR. NICHOLSON: Right.
25 GOVERNOR BUSH: Okay.
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June 26, 2000
1 DR. NICHOLSON: The Cat Fund cover is
2 aggregate cover for the entire hurricane
3 season. So no matter how many hurricanes we
4 have, that is the extent of coverage that you
5 have, 25 million.
6 However, the deductible, or retention, is a
7 per occurrence basis. So if we had three
8 hurricanes during the year, you would have to
9 absorb the deductible each time before you
10 would collect benefits from the Cat Fund. So
11 those are -- those losses would be reported
12 separately to us.
13 COMMISSIONER GALLAGHER: Do you mind if I
14 ask a question?
15 GOVERNOR BUSH: Commissioner Gallagher.
16 Please.
17 COMMISSIONER GALLAGHER: On -- on the thing
18 you just said, you hit 7 million. Once you hit
19 that, then the Cat Fund covers 90 percent of
20 the 7 million up to?
21 No, 7 million's above --
22 DR. NICHOLSON: Seven million.
23 COMMISSIONER GALLAGHER: -- the loss
24 retention --
25 DR. NICHOLSON: Above 7 million.
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June 26, 2000
1 COMMISSIONER GALLAGHER: And then with a
2 max payout of 26 -- or 25.
3 DR. NICHOLSON: Right.
4 TREASURER NELSON: Jack, put it in
5 perspective.
6 What is State Farm's premium to you?
7 DR. NICHOLSON: I believe it's about
8 68 million dollars. And the wind pool
9 I think's anticipated to have 100 million
10 dollar premium.
11 The wind pool is easier to work with
12 because of the math. So their -- their total
13 Cat Fund recovery would be about 20 --
14 2.5 billion dollars.
15 But those two companies, the wind pool and
16 State Farm, are the two largest insurers that
17 participate in the Cat Fund.
18 TREASURER NELSON: Well, the wind pool does
19 not have as much wind risk as State Farm's
20 homeowner policies, does it?
21 DR. NICHOLSON: No, it has more. In terms
22 of our premium and how it's calculated, it
23 has -- it has significantly more.
24 TREASURER NELSON: I see. And yours is --
25 is -- is calculated on the basis of risk --
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June 26, 2000
1 DR. NICHOLSON: Right.
2 So -- so -- and you can understand why.
3 They're located along the coast in the high
4 risk areas.
5 TREASURER NELSON: Okay.
6 DR. NICHOLSON: In terms of operational
7 status, I've mentioned there are
8 280 participating companies. Our year-end cash
9 balance is projected to be 3.64 billion at
10 the -- at the end of 2000.
11 Total capacity is limited by law to
12 11 billion dollars. And basically the bonding
13 capacity is just the difference between
14 11 billion and what we have currently in cash.
15 So our bonding capacity is 3.6 billion.
16 And we estimate the bonding twice a year. But
17 it's -- it's basically to determine how much in
18 terms of assessments that that -- that would be
19 required to reach that 7.3 billion.
20 In this particular instance this year,
21 we're looking at 3.47 percent assessment that
22 would be assessed on all property casualty
23 insurers, excluding workers' comp writers
24 should we need to bond.
25 We would only need to bond in a situation
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1 where a hurricane exhausts the cash balance of
2 the fund. So we will use the cash first, and
3 then we're required by law to issue revenue
4 bonds for the remainder of the capacity.
5 TREASURER NELSON: Let me just interject,
6 Governor, here.
7 The 3.47 percent emergency assessment is if
8 you had the bond all the way up to the total of
9 11 billion dollars.
10 DR. NICHOLSON: That's right.
11 TREASURER NELSON: And just to put it in
12 perspective, this is residential losses only.
13 GOVERNOR BUSH: So it'd be --
14 TREASURER NELSON: Eleven billion dollars
15 is greater than the residential losses of
16 Hurricane Andrew, which was 10 billion dollars.
17 Now, there's an inflation factor in there,
18 so it may be equivalent to.
19 DR. NICHOLSON: We -- last year, the
20 Legislature passed what was known as subsequent
21 season legislation. What this did was
22 basically provide a way to recharge the
23 Cat Fund should it be wiped out totally by a
24 storm in any one season.
25 In order to do that, they passed an
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1 additional emergency assessment requirement of
2 2 percent, which would allow any unused
3 assessment in the first season to be used for a
4 subsequent season. So that's where we get
5 2.53 percent for subsequent season capacity.
6 And right now, we're looking at just short
7 of 5 billion dollars, 4.9 billion, that we
8 would be able to come back with should the
9 Cat Fund be totally wiped out.
10 GOVERNOR BUSH: Will that grow over time,
11 if there's no bad news this year?
12 DR. NICHOLSON: I'm sorry. You think --
13 GOVERNOR BUSH: Will that grow, that
14 capacity for the second -- the --
15 DR. NICHOLSON: Yes. Yes. That -- it'll
16 continue to grow. It is much more sensitive to
17 interest rates -- fluctuations than -- than
18 initial season capacity because, of course,
19 we've got a little bit of cushion in terms of
20 the initial season.
21 3.47, we can go all the way up to 4. And
22 that benefits us right now, because we -- we
23 can absorb a certain amount of interest --
24 interest rate fluctuations before that's cut
25 into.
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1 COMMISSIONER GALLAGHER: Governor?
2 GOVERNOR BUSH: Yeah.
3 COMMISSIONER GALLAGHER: The -- the
4 Cat Fund comes before or after other
5 reinsurance? Does it come in the middle?
6 DR. NICHOLSON: Before. It's -- it's
7 primary coverage.
8 COMMISSIONER GALLAGHER: It's primary --
9 DR. NICHOLSON: Right.
10 COMMISSIONER GALLAGHER: -- reinsurance.?
11 DR. NICHOLSON: Right.
12 TREASURER NELSON: And, Jack, that
13 emergency assessment on the second year event
14 is only if you have the second year event.
15 DR. NICHOLSON: Right. Yes, sir.
16 TREASURER NELSON: Okay.
17 DR. NICHOLSON: Now, this shows the initial
18 season capacity. We aggregated it altogether
19 and looked at everybody's retention, you know,
20 how much is that going to be. Because actually
21 the way the law works, we work backwards.
22 They give us a number in the law, we
23 inflate it for growth and exposure, and then we
24 determine what each company's retention is. So
25 this is not an industry retention that would
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1 have to be breached before we start paying
2 losses, because we could do that if one company
3 exceeded its retention.
4 But if you combine the capacity, the
5 7.36 bonding with the 3.64 cash, that adds up
6 to the 11 billion. Now, in conjunction with
7 the private market, we see that the industry on
8 the aggregate would absorb about 3.2 billion in
9 terms of an underlying retention, and about 1.9
10 in terms of the copay.
11 So there's about 5 billion dollars that the
12 industry would absorb, and the Cat Fund would
13 pay 11. So it's, like, a two-thirds/one-third
14 relationship to the top of the Cat Fund.
15 We say the top of the Cat Fund, or the
16 ground up losses where we would cap out. But
17 it also includes industry participation at
18 16 billion dollars. So this is -- far exceeds
19 Hurricane Andrew in terms of our ability to
20 manage that type of loss.
21 GOVERNOR BUSH: Well, tell me where the
22 private reinsurance on that -- what -- what are
23 they -- what are they reinsuring, what element
24 of this risk?
25 DR. NICHOLSON: Well, they're -- they're
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1 reinsuring the blue areas, all three blue
2 areas, the top, the side, and the bottom. Not
3 for every company. But that is where they
4 participate.
5 GOVERNOR BUSH: They -- they -- so peo--
6 companies will go and get their copayments --
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 DR. NICHOLSON: Right.
2 GOVERNOR BUSH: -- their exposure -- any of
3 the exposure they'll have by-in-large is
4 reinsured?
5 DR. NICHOLSON: Right.
6 For example, we don't cover additional
7 living expenses. They may also buy that from
8 a -- a reinsurer.
9 TREASURER NELSON: And, Governor, that's a
10 very important point. You've hit it on the --
11 on the head, that basically you've got an
12 industry that's been willing to come back in to
13 Florida and write homeowners insurance, because
14 they're protected.
15 And in large part, they're protected
16 because of this Cat Fund, which you can see
17 that even though the Cat Fund's got 11 billion
18 bonding capacity, by the time you'd get to the
19 top of the total bonding capacity of the
20 Cat Fund, the overall industry would have
21 16 billion dollars of residential losses, which
22 is way, way larger than Hurricane Andrew --
23 GOVERNOR BUSH: Uh-hum.
24 TREASURER NELSON: -- in residential
25 losses.
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1 And a lot of those losses that the industry
2 would suffer over there in the copays and the
3 blue line on the bottom, they would have done
4 what you said, which is they would have
5 protected themselves by buying catastrophe
6 reinsurance.
7 GOVERNOR BUSH: It must be pretty pricey.
8 DR. NICHOLSON: What?
9 TREASURER NELSON: It's a lot less -- I'm
10 telling you, it went off --
11 GOVERNOR BUSH: It went down --
12 TREASURER NELSON: -- the charts right
13 after Andrew, and you could hardly get it.
14 GOVERNOR BUSH: Sure.
15 But this is -- I mean, that's the first
16 risk.
17 TREASURER NELSON: The lower on the
18 chart --
19 GOVERNOR BUSH: The copayment --
20 TREASURER NELSON: -- the higher the
21 payment --
22 GOVERNOR BUSH: Yeah.
23 TREASURER NELSON: -- because of the first
24 risk.
25 DR. NICHOLSON: The higher up the chart,
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1 of course, with reinsurance in that top blue
2 area, the more profit load they build in to
3 take that risk, even though the premium is
4 smaller.
5 GOVERNOR BUSH: Interesting.
6 DR. NICHOLSON: I want to talk about
7 managing risks associated with the Cat Fund's
8 loss reimbursement process. Start out by just
9 looking at uncertainty related to bonding, then
10 look at how it impacts us from the -- the -- a
11 loss reimbursement process; state the problem;
12 and then talk about ways to manage it.
13 In terms of uncertainty related to bonding,
14 if you'll note here on the left, I have a blue
15 bar that shows 11 billion dollars of cash.
16 We're not there yet.
17 If we have a -- if we're fortunate enough
18 to have, say, nine or ten years of -- of
19 good -- of no storms or no storms that trigger
20 the Cat Fund, our cash balance will literally
21 grow to 11 billion dollars at the end of
22 ten years -- nine or ten years, in which case,
23 there would be no need to do any assessments to
24 any policyholders after a first storm.
25 So this is -- this represents the growth of
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1 the Cat Fund. That was somewhat what it was
2 all about to begin with, to get tax exempt
3 status as an entity to grow the funds.
4 And -- but with the change in the law last
5 year creating subsequent season capacity, and
6 limiting the capacity of the Cat Fund, we're
7 now at -- where we can actually grow out of
8 assessing people. And we're continuing to do
9 that. You saw that 3.47 percent. That's kind
10 of representative of how we're doing that.
11 But there is a problem with -- till we get
12 there. And that problem is bonding, and the
13 uncertainty associated with bonding. And it
14 has two elements that cause us some concern.
15 One would be the timing of when the bonds
16 could be issued. Even though we think we can
17 issue bonds very quickly, within, say,
18 six weeks or three months of -- of an event, we
19 may not want to do that, because at that
20 particular time, we may have Dan Rather
21 standing on the street corner with rubble
22 behind him reporting all the problems that are
23 going on. And that may not send a -- a strong
24 message to investors in the bond market.
25 So it may be that it would be a good idea
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1 to take time to educate investors and avoid
2 that shock impact of the initial event.
3 The other problem is the amount of bonding
4 capacity. What happens if interest rates
5 fluctuate and cut into that 7.36 billion of
6 bonding that we're -- we're anticipating.
7 That could happen, because of interest rate
8 situations where interest rates are volatile;
9 it could happen because of the -- the bond
10 markets, something there tightens up the
11 availability.
12 And then --
13 (Commissioner Crawford exited the room.)
14 DR. NICHOLSON: -- increases the costs; or
15 the economy. Something could happen to the
16 economy that also creates a problem.
17 In terms of the SBA and the State, the
18 State is not obligated in any way for any
19 shortfall. We're not obligated in terms of the
20 SBA, and you as -- as the Trustees, other than
21 to the extent of the -- the assets, which
22 include the -- the cash and the bonding.
23 That's the extent of our liability.
24 GOVERNOR BUSH: We -- wouldn't we --
25 I mean, that -- the State may not be the -- SBA
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1 may not be obligated, but is the State
2 obligated where either the reinsurance --
3 reinsurers go belly-up, or the insurance
4 companies themselves as structured go belly-up,
5 what happens then?
6 MR. HERNDON: Morally, but not legally.
7 GOVERNOR BUSH: Who's over there?
8 DR. NICHOLSON: Morally, but not legally,
9 Tom said.
10 GOVERNOR BUSH: Oh.
11 DR. NICHOLSON: But I -- I think that this
12 was designed to put certain limitations in the
13 law to be self-funding. It's not to -- to,
14 you know, tax taxpayers as -- as a result,
15 other than what's already built into it.
16 TREASURER NELSON: Let me see if I can
17 answer your question.
18 If we get to the point where the storm is
19 so massive where all the reinsurance companies,
20 and the underlying companies, are going
21 belly-up, then --
22 (Commissioner Crawford entered the room.)
23 TREASURER NELSON: -- what we have is the
24 equivalent of national economic calamity.
25 We can stand another Andrew by virtue of
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1 what you're seeing here. When you get to two
2 and three times Andrew, no one state, and no
3 one company can withstand that kind of hit.
4 And so you -- you have a situation that is
5 going to call on the full efforts of the
6 Federal government.
7 I mean, it would be the equivalent of a
8 50 billion dollar hurricane -- insurance loss
9 hurricane would be like a 50 billion dollar
10 massive earthquake in San Francisco.
11 So there's a -- there's a point at which
12 you just can't continue on an individual
13 private market basis to insure against the
14 greatest calamity that --
15 GOVERNOR BUSH: Well --
16 TREASURER NELSON: -- can happen.
17 GOVERNOR BUSH: -- it doesn't have to be
18 50 billion though for us to begin to feel the
19 pressures as it relates to our budget. I would
20 imagine since the commercial market will be
21 obliterated with this, and there are no
22 protections similar to the -- the Cat Fund.
23 So --
24 TREASURER NELSON: Well, that's -- that's
25 been the whole debate about a national
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1 Cat Fund.
2 GOVERNOR BUSH: Yeah.
3 TREASURER NELSON: Or at least
4 Senator Mack's approach is to reserve and make
5 non-taxable amounts in each company's budgets
6 that could be used to offset catastrophe, but
7 don't make them pay income tax on it so that
8 they have the incentive to reserve for
9 catastrophe.
10 DR. NICHOLSON: I might add that commercial
11 insurance was not a problem after
12 Hurricane Andrew. And I think if you look at
13 the number of exposures, it's probably about
14 one-tenth the amount of residential exposures.
15 And we have not had a crises, particularly in
16 that area, other than commercial residential,
17 and that is covered in the Cat Fund.
18 GOVERNOR BUSH: Okay.
19 DR. NICHOLSON: But there are a number of
20 parties that depend upon the Cat Fund.
21 Insurance regulators, the Florida Insurance
22 Department for one; insurers; reinsurers;
23 consumers; rating agencies; and others who
24 depend on the -- on the CAT fund; banks, and
25 so forth, that insure property in the state.
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1 And if I -- for -- to use an example of the
2 impact of a shortfall in the Cat Fund and show,
3 this -- this chart needs some explanation, so
4 it's not very clear just looking at it. But
5 let me explain what -- what I've got here.
6 I've shown on -- under short-- shortfall
7 and FHCF capacity, I've shown a certain
8 percentage from 5 to 25 percent. But then in
9 the other -- the other numbers, what they
10 represent is a -- it represents the amount of
11 policyholder surplus, or the equity position of
12 an insurance company that would be similar to
13 this shortfall.
14 So if we were to have a shortfall of
15 5 percent, the way you would read the chart is,
16 there would be 16 companies that would suffer
17 25 percent or more reduction -- or possible
18 reduction in their surplus.
19 If we had a 10 percent shortfall, that
20 shortfall would represent the total surplus of
21 two companies. And that's in the second line
22 there.
23 This is kind of an extreme chart, because
24 it's talking about extreme shortfalls.
25 These -- these shortfalls are very unlikely,
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1 but I -- I present them just to show you the
2 magnitude of what perhaps could happen.
3 In terms of the risk to the Cat Fund, I'd
4 like to point out that the Cat Fund, in terms
5 of reimbursing losses and the way it's
6 structured, is basically a pro rata system of
7 distribution. We prorate the total capacity to
8 each company based on the premium they pay to
9 the Cat Fund. And that is their coverage
10 element. So they're entitled to that element.
11 The problem that we have with -- related to
12 bonding is that if we have -- have a shortfall,
13 how much do we pay each company?
14 It's easy to prorate when you know what
15 amount to prorate. But when you don't know
16 that amount, it creates some uncertainty. So
17 more than likely, we would -- we could end up
18 overpaying some insurers early, who would be
19 giving the cash proceeds, and maybe underpaying
20 those later that would be getting the results
21 of the bonding proceeds.
22 There could also be certain time delays
23 between the time that it takes bonding proceeds
24 to come to the door. That would basically be
25 impacted by the nature and size of the loss. A
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1 bigger loss, faster loss payments by the
2 companies, could -- could entail, you know, a
3 bigger shortfall -- or -- or bigger liquidity
4 issue than if it were a smaller storm.
5 So the problem is just the difference
6 between estimated and actual bonding capacity.
7 This shows the significance of the size of
8 debt that we would have to be issuing,
9 7.36 billion dollars is about 56 percent of the
10 State's current tax supported debt of about
11 13.1 billion overall.
12 This chart just illustrates the volatility
13 of interest rates. I won't go into a lengthy
14 explanation here. But interest rates are
15 volatile over -- over time certainly.
16 Now, one of the concerns that we have with
17 regard to bonding is the ability to manage and
18 to continue to pay claims in a timely and
19 sufficient manner. So the question comes up
20 is, how can we get our current structure to
21 work like cash?
22 How can we make it work like cash so that
23 we can be solvent, if you will, up to what's
24 called a 100 -- 1 in 100-year event scenario.
25 And that's -- that's not past events or future
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1 events, it's this year. It's the probability
2 of success of 99 percent, and failure of
3 1 percent.
4 So it's -- it's really ensuring our
5 performance up to a 99 percent level. So the
6 question is how much cash -- additional cash
7 would we need to do that; and, secondly, how
8 much shortfall protection would we need on our
9 bonding to protect in that -- that element?
10 Under the statute, the law gives the Board
11 the ability to purch-- procure reinsurance.
12 It's not a requirement. It just says may
13 procure reinsurance. And also may enter into
14 other financial arrangements.
15 These are -- this is under a section
16 entitled, Additional Powers and Duties. So I
17 think the Legislature put these tools in the
18 statute so that it gave -- gave us the ability
19 to manage this sort of thing.
20 When we see it appropriate, we don't have
21 to buy reinsurance, and we haven't bought
22 reinsurance heretofore with the Cat Fund.
23 So in answering the question -- the chart
24 that I showed you the shortfall and how much
25 liquidity do we need, in terms of additional
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1 liquidity needs, we need about 1.6 billion to
2 get us to that 1 in 100 level of security.
3 And it -- in terms of bonding shortfall
4 needs, we would need 300 million dollars
5 shortfall protection to protect against
6 interest rate volatility.
7 I've showed some other standards of
8 managing where if we looked at -- to get to a 1
9 in 250-year level of confidence, that's
10 basically you would be certain 99.6 percent of
11 the time, or 1 in 500-year, which would be
12 99.8 percent of the time, that would require
13 respectively 4.2 and 5.8 billion of additional
14 liquidity needs; or 500 million, 700 million,
15 respectfully, for shortfall needs.
16 So the product that we're talking about
17 would enhance our ability to pay claims at the
18 1 in a 100-year event scenario, 99 percent
19 probably -- probability performance, or a
20 1 percent probability of nonperformance.
21 We still face risks in this -- with either
22 of these products. There's still a risk
23 element involved.
24 They have a liquidity component, as I
25 mentioned, and a specialized reinsurance
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1 component that has to do with the -- with
2 interest rate volatility.
3 In terms of the costs, what we're talking
4 about here, the bottom line is 7.4 million
5 dollars. That's broken up just about equ-- in
6 equal split between the two products:
7 300 million dollars of -- of reinsurance
8 short-- bonding shortfall coverage would cost
9 3.6 million dollars.
10 And in terms of the liquidity facility,
11 we've priced that out, and there would -- there
12 are -- there is a problem right now getting the
13 additional 600 million amount. But we think we
14 can get 1 billion for a reasonable cost of
15 around 300 -- or excuse me -- 3 million plus
16 expenses.
17 MR. HERNDON: One year.
18 DR. NICHOLSON: For one year.
19 GOVERNOR BUSH: And this would reinsure --
20 this would -- this would protect the -- what is
21 about the 6 billion -- the non-cash portion to
22 get to the 11 billion.
23 DR. NICHOLSON: Okay. What it -- what it
24 basically does is provides us --
25 TREASURER NELSON: No.
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1 COMPTROLLER MILLIGAN: No.
2 GOVERNOR BUSH: No?
3 DR. NICHOLSON: -- more liquidity -- it
4 provides us needed liquidity before the bond
5 proceeds come to the door. There may be some
6 delay there.
7 So what it does is provide us basically
8 1 billion dollars extra liquidity so that if we
9 have a -- a -- we exhaust our cash, and there
10 is a need to delay bonding to maximize our
11 bonding capacity, we have 1 billion dollars of
12 extra liquidity available.
13 GOVERNOR BUSH: Okay.
14 DR. NICHOLSON: We need 1.6 billion to be
15 at a 1 in a 100-year level of manage-- that's
16 kind of a -- a standard of management for
17 insurance companies.
18 The Insurance Department, for example,
19 requires that of all companies when they build
20 their financial structure. A.M. Best that
21 rates insurance companies for policyholder
22 purposes and credit purposes, requires a 1 in
23 250 level of management security.
24 TREASURER NELSON: If I can just interject
25 for my two colleagues.
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1 Basically Jack is talking about a very
2 esoteric part of -- in the case that the big
3 one happens, that you have -- that you can't go
4 into the market and get all your bonds sold,
5 that you have enough cash to reimburse the
6 insurance companies quickly.
7 And what that's going to cost is
8 seven-and-a-half million dollars, which means,
9 you're going to add on to every homeowners'
10 rate an additional one and how much --
11 one-and-a-half -- one-and-a-half percent?
12 DR. NICHOLSON: One -- one point two
13 nine percent, roughly.
14 TREASURER NELSON: -- 1.29 percent.
15 Now, I'll tell you just from a policy
16 standpoint -- and that's what this is a
17 discussion, and we're going to vote on this
18 next time -- the policy discussion.
19 What Jack is trying to get this facility to
20 be is much closer to a guarantee fund. Well,
21 that's not the original purpose of this.
22 What it was was a catastrophic reinsurance
23 fund to offset the losses of massive
24 catastrophic losses, instead of guaranteeing to
25 everybody that they were going to get immediate
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1 dollars for all their losses.
2 That's part of what, Governor, you had
3 mentioned, is you go into the private
4 marketplace and buy private reinsurance.
5 So the more and more we get to a point of
6 which adding another 1.29 percent that
7 consumers are going to pay, the more and more
8 we're moving this thing to the -- an absolute
9 guarantee, which I have some significant
10 reservations about.
11 DR. NICHOLSON: Commissioner, I have a cost
12 example that Patti here has a little handout I
13 didn't include there, because I didn't know the
14 question would come up.
15 But I'd like to give that to you, and --
16 and kind of answer that question, because
17 I think it's important.
18 COMPTROLLER MILLIGAN: While you're passing
19 that out, Jack, the -- this is a one-year
20 policy.
21 DR. NICHOLSON: Right.
22 COMPTROLLER MILLIGAN: And let's suppose we
23 have a year similar to what we've had in the
24 past several years, and we pay out some as a
25 result of Opal-like storms, which was
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1 certainly a significant storm, would we want to
2 buy this policy next year? Would we have to
3 buy this policy next year?
4 Well, I know what the answer is already.
5 The answer is, no.
6 This is a -- this is a one-time to provide
7 an absolute guarantee that we can make timely
8 payments. And I will tell you, I have
9 reservations.
10 But I will also say that folks are still
11 looking at it. And this is an information
12 brief. And I'm anxious to let it continue on
13 in its course, and have folks really discuss
14 this thing in detail, as they will, and see
15 what it comes back with.
16 But I do have reservations as to whether or
17 not this is really my expected value for a
18 7 million dollar cost doesn't quite get up to
19 the value that it's apparently going to be
20 providing. And so that's where I am.
21 DR. NICHOLSON: We just -- a quick comment
22 there. I -- I'm very careful to say: This is
23 certainly not an absolute guarantee, and that
24 we still face significant risks, even with this
25 program.
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1 What it does do is give us some extra
2 cushion, extra financial stability, if you
3 will, to respond to higher levels of claims.
4 Basically what -- what we're doing is
5 saying, if we're able to handle 12.5 billion
6 dollar loss today with our current cash and
7 capabilities, we'd probably be able to handle
8 about 5 billion dollars more with this program,
9 in terms of smooth operation of Cat Fund.
10 And then we're also able to handle a -- a
11 shortfall in -- in capacity.
12 But it's not -- it's certainly not a --
13 a -- a guarantee of any type, because there's
14 still significant risks associated with that.
15 COMMISSIONER GALLAGHER: Is -- is there a
16 potential middle-of-the-road option, which
17 would mean that insurance companies themselves
18 could opt into a program that would allow this,
19 at the same time guaranteeing them cash in the
20 beginning, as opposed to those companies that
21 didn't do it?
22 Have you looked at scenarios like that?
23 DR. NICHOLSON: We -- we've talked about
24 it. We've talked about things like that.
25 That -- that would have to -- that would
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1 require a statutory change, I would think, to
2 do that.
3 COMMISSIONER GALLAGHER: Okay.
4 DR. NICHOLSON: The -- the example -- on
5 the impact on a policyholder -- this is a -- a
6 policy that I'm very familiar with.
7 GOVERNOR BUSH: It's yours?
8 DR. NICHOLSON: It's here in Tallahassee.
9 I looked it up over the weekend to see how it
10 would affect --
11 Now, the -- the impact of someone in
12 south Florida, since the -- the rating, if
13 you'll recall, was basically proportional all
14 over the state, would be greater for someone in
15 south Florida, or another part of the state.
16 I have a rate change here indication of
17 minus 6.45 percent. That was the -- that's in
18 the current premium formula. Rates are going
19 down 6.45 percent for the -- the Cat Fund
20 portion.
21 If my company passed that through to me
22 completely, I would be paying, instead of
23 ten twenty-six forty-eight, I would be paying a
24 thousand seventeen dollars and
25 fifty-three cents.
ACCURATE STENOTYPE REPORTERS, INC.
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June 26, 2000
1 So I'm saving $8.95.
2 Now, if we implement this proposed program,
3 and put in the stabilization charge we talked
4 about, the 1.29 percent, that would -- that
5 would be a -- still a negative 5.25 percent
6 change in the rates. And I would be paying
7 $1,019.19, which is a $7.29 savings.
8 So the difference in these two are a
9 savings of one sixty-six, one way or the other.
10 In each case, I'm saving money from last year,
11 because the rates have gone down.
12 And let -- let me point out that the reason
13 the rates have gone down is because we've taken
14 coverage away from insurers. And we reflect
15 that in the rates.
16 In prior years, not only could insurers
17 collect their payout multiple, they could also
18 collect any excess that was unused by all
19 insurers in the system. That was a type of --
20 of protection that they had in the past that
21 they no longer have today.
22 So what we're proposing here is we're
23 taking out 30 million out of the system and
24 saying, well, let's just add back
25 seven-and-a-half, to give a little more
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 54
June 26, 2000
1 security that -- that we -- we no longer --
2 that we no longer have.
3 GOVERNOR BUSH: All right.
4 DR. NICHOLSON: These are some other cost
5 indications for, you know, higher levels of
6 security.
7 But I want to conclude by just talking
8 about the long-term management goals of the
9 Cat Fund. I think we need to look at the
10 situation every year in terms of the dynamics
11 of how the CAT fund changes.
12 Every year the cash grows, the bonding
13 needs shrink. Or if we have losses, it could
14 be the other way around: Bonding needs could
15 grow, and cash could shrink.
16 But I think in terms of managing to certain
17 accepted levels in the insurance industry and
18 regulatory environment, a 1 in a 100-year level
19 is kind of a target to shoot for and to
20 evaluate where we are today in light of that
21 target. And then address, you know, what --
22 what are our needs.
23 You asked earlier about, you know, the
24 growth and subsequent season capacity. And
25 this kind of illustrates how the Cat Fund will
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 55
June 26, 2000
1 grow over the next five years, both initial
2 capacity -- capacity, which is level at 11.
3 But we're also seeing cash grow and bonding
4 shrink.
5 And then subsequent season capacity, and
6 you're seeing that grow over time.
7 So that -- that concludes my comments.
8 GOVERNOR BUSH: Thank you very much.
9 MR. HERNDON: The emergency meeting of the
10 Advisory Council that I mentioned at the outset
11 is scheduled in the next several days.
12 And at that point, we hope to have their
13 recommendation, along with ours. Because,
14 frankly, at this point, the staff of the SBA is
15 not making a recommendation to you at this
16 stage of the game. It is primarily a product
17 that we think worth examining. But it stands
18 recommendation at this point.
19 So, Governor, with your forbearance, we
20 would encourage you to defer this item until
21 the next meeting.
22 GOVERNOR BUSH: All right. Do we need a
23 motion on that?
24 COMPTROLLER MILLIGAN: Well, I understood
25 this --
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June 26, 2000
1 MR. HERNDON: I think --
2 COMPTROLLER MILLIGAN: -- was an
3 information brief.
4 MR. HERNDON: This briefing was. But the
5 item was originally scheduled for your
6 consideration.
7 COMPTROLLER MILLIGAN: Well, I --
8 MR. HERNDON: I don't know that --
9 COMPTROLLER MILLIGAN: -- I --
10 MR. HERNDON: -- you need --
11 COMPTROLLER MILLIGAN: -- certainly move
12 deferral of the item to the -- I think 11 July,
13 is it?
14 MR. HERNDON: That's correct.
15 GOVERNOR BUSH: Is there a second?
16 TREASURER NELSON: Second.
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19 MR. HERNDON: That completes the agenda.
20 GOVERNOR BUSH: For deferral.
21 MR. HERNDON: Thank you.
22 (The State Board of Administration Agenda
23 was concluded.)
24 * * *
25
ACCURATE STENOTYPE REPORTERS, INC.
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June 26, 2000
1 GOVERNOR BUSH: Department of Revenue.
2 COMMISSIONER GALLAGHER: Motion on the
3 minutes.
4 GOVERNOR BUSH: Moved and seconded.
5 Without objection, it's approved.
6 Item 2.
7 DR. ZINGALE: Only one item on the agenda
8 today.
9 Item 2 deals with the Department's contract
10 auditing program. It's been with us for about
11 six years, about 12 to 15 companies that have
12 cost about 2 million dollars. It's part of our
13 attempt to privatize some of the audit
14 functions, expand our coverage.
15 This item recommends approval, and requests
16 authority to file with the Secretary of State,
17 amendments to Chapter 12-25 of the Florida
18 Administrative Code relating to the contract
19 auditing program. These are basically
20 clarification amendments.
21 COMMISSIONER GALLAGHER: Motion on 2.
22 GOVERNOR BUSH: Is there a second?
23 ATTORNEY GENERAL BUTTERWORTH: Second.
24 COMPTROLLER MILLIGAN: Second.
25 GOVERNOR BUSH: Moved and seconded.
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1 Without objection, it's approved.
2 Do you have a -- any minority -- certified
3 minority --
4 DR. ZINGALE: I think we do.
5 GOVERNOR BUSH: -- auditing firms?
6 DR. ZINGALE: I think we do. But I will
7 check on that for you.
8 GOVERNOR BUSH: I heard a yes?
9 DR. ZINGALE: We definitely have a yes.
10 GOVERNOR BUSH: Okay.
11 DR. ZINGALE: Thank you.
12 GOVERNOR BUSH: Thank you, Larry -- Jim,
13 I mean.
14 (The Department of Revenue Agenda was
15 concluded.)
16 * * *
17
18
19
20
21
22
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 59
June 26, 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: Approval of a transfer of
9 general revenue appropriation for Agency for
10 Health Care Administration.
11 COMMISSIONER GALLAGHER: Motion on 2.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 MS. SARTIN: Item 3 is approval of a
15 transfer of general revenue appropriation for
16 Department of Corrections.
17 COMMISSIONER GALLAGHER: Motion on 3.
18 ATTORNEY GENERAL BUTTERWORTH: Second.
19 GOVERNOR BUSH: Moved and seconded.
20 Without objection, it's approved.
21 MS. SARTIN: Item 4 is approval of a
22 transfer of general revenue appropriation for
23 the Department of Education,
24 Community Colleges.
25 COMMISSIONER GALLAGHER: Motion on 4.
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June 26, 2000
1 ATTORNEY GENERAL BUTTERWORTH: Second.
2 GOVERNOR BUSH: Moved and seconded.
3 Without objection, it's approved.
4 MS. SARTIN: Item 5, approval of a transfer
5 of general revenue appropriation for Department
6 of Legal Affairs.
7 COMMISSIONER GALLAGHER: Motion on 5.
8 ATTORNEY GENERAL BUTTERWORTH: Second.
9 GOVERNOR BUSH: Moved and seconded.
10 Without objection, it's approved.
11 MS. SARTIN: Item 6 is approval of a
12 transfer of fixed capital outlay appropriations
13 for the Department of Military Affairs.
14 COMMISSIONER GALLAGHER: Motion on 6.
15 ATTORNEY GENERAL BUTTERWORTH: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MS. SARTIN: Item 7 is approval of a
19 transfer of general revenue appropriation for
20 the Parole Commission.
21 COMMISSIONER GALLAGHER: Motion on 7.
22 ATTORNEY GENERAL BUTTERWORTH: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MS. SARTIN: Item 8, approval of a transfer
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ADMINISTRATION COMMISSION 61
June 26, 2000
1 of general revenue appropriation for the
2 Department of State.
3 COMMISSIONER GALLAGHER: Motion on 8.
4 ATTORNEY GENERAL BUTTERWORTH: Second.
5 COMMISSIONER CRAWFORD: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MS. SARTIN: Item 9, approval of a gen--
9 transfer of general revenue appropriation for
10 the Agency for Health Care Administration.
11 COMMISSIONER GALLAGHER: Motion.
12 GOVERNOR BUSH: Is there a second?
13 COMMISSIONER CRAWFORD: Second.
14 GOVERNOR BUSH: Moved and seconded.
15 Without objection, it's approved.
16 MS. SARTIN: Item 10 is approval of a
17 transfer of general revenue appropriation for a
18 reorganization for the Executive Office of the
19 Governor and the Agency of Work Force
20 Innovation.
21 COMMISSIONER GALLAGHER: Motion on 10.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MS. SARTIN: Items 11 through 15 are
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June 26, 2000
1 transfers of general revenue appropriations for
2 the Department of Children and Families.
3 COMMISSIONER GALLAGHER: Motion, 11.
4 SECRETARY HARRIS: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MS. SARTIN: Item 16 is approval of a
8 transfer of general revenue appropriation for
9 the Departments of Education and Labor and
10 Employment Security.
11 COMMISSIONER GALLAGHER: Did you -- what
12 happened to 12?
13 MS. SARTIN: I --
14 GOVERNOR BUSH: All those were together.
15 COMMISSIONER GALLAGHER: Oh, 12 -- okay.
16 MS. SARTIN: I was doing 11, 12, 13, and --
17 COMMISSIONER GALLAGHER: Got you.
18 MS. SARTIN: -- 14 as a block.
19 Okay.
20 GOVERNOR BUSH: And 15.
21 COMMISSIONER GALLAGHER: Motion on 16.
22 SECRETARY HARRIS: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MS. SARTIN: Okay. Item 17, approval of
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 63
June 26, 2000
1 transfer of general revenue appropriation for
2 Department of Health.
3 COMMISSIONER GALLAGHER: Motion.
4 SECRETARY HARRIS: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MS. SARTIN: Items 18, 19, and 20 are
8 approval of transfer of general revenue
9 appropriations for the Department of
10 Juvenile Justice.
11 COMMISSIONER GALLAGHER: Motion, 18, 19,
12 20.
13 ATTORNEY GENERAL BUTTERWORTH: Second.
14 GOVERNOR BUSH: Moved and seconded.
15 Without objection, it's approved.
16 MS. SARTIN: Item 21 is approval of a
17 transfer of general revenue appropriation for
18 Departments of Labor and Employment Security
19 and Management Services.
20 COMMISSIONER GALLAGHER: Motion.
21 COMMISSIONER CRAWFORD: Second.
22 SECRETARY HARRIS: Second.
23 ATTORNEY GENERAL BUTTERWORTH: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 64
June 26, 2000
1 MS. SARTIN: Item 22 is approval of a
2 transfer of general revenue appropriation for
3 the Department of Management Services.
4 COMMISSIONER GALLAGHER: Motion.
5 SECRETARY HARRIS: Second.
6 COMMISSIONER CRAWFORD: Second.
7 ATTORNEY GENERAL BUTTERWORTH: Second.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, it's approved.
10 MS. SARTIN: Item 23 is approval to
11 establish seven positions in the Department of
12 Military Affairs.
13 COMMISSIONER GALLAGHER: Motion.
14 SECRETARY HARRIS: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MS. SARTIN: Item 24 is approval of a
18 transfer of general revenue appropriations for
19 the Departments of State and Education, the
20 State University System.
21 COMMISSIONER GALLAGHER: Motion on 24.
22 ATTORNEY GENERAL BUTTERWORTH: Second.
23 SECRETARY HARRIS: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 65
June 26, 2000
1 MS. SARTIN: Item 25 is approval for the
2 Office of the Comptroller to make temporary
3 transfers from trust funds in the
4 State Treasury to the general revenue fund.
5 COMMISSIONER GALLAGHER: Motion on 25.
6 ATTORNEY GENERAL BUTTERWORTH: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 MS. SARTIN: Item 26 is approval for the
10 Office of the Comptroller to make temporary
11 transfers from trust funds in the
12 State Treasury to the Tobacco Settlement
13 Clearing Trust Fund.
14 COMMISSIONER GALLAGHER: Motion on 26.
15 ATTORNEY GENERAL BUTTERWORTH: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18 MS. SARTIN: Item 27 is approval for the
19 Department of Revenue to make temporary
20 transfers from trust funds in the
21 State Treasury to the Revenue Sharing Trust
22 Fund.
23 COMMISSIONER GALLAGHER: Motion on 27.
24 ATTORNEY GENERAL BUTTERWORTH: Second.
25 SECRETARY HARRIS: Second.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 66
June 26, 2000
1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, it's approved.
3 MS. SARTIN: That's the end of the budget
4 actions. And this is the last time we'll be
5 required to bring these type transfers to the
6 Administration Commission.
7 The Legislature created a new Legislative
8 Budget Commission which takes effect July 1.
9 After that time, they will approve budget
10 transfers, and the Governor will approve other
11 actions.
12 Item 28 --
13 COMPTROLLER MILLIGAN: I certainly will
14 miss all of that, Governor.
15 I -- I have to tell you, the one thing I --
16 I really will miss is the -- the hurried
17 transfer of money at the end of the fiscal
18 year. I wish there were something we could do
19 about that.
20 MS. SARTIN: Many of these are transfers
21 for next fiscal year. But --
22 COMPTROLLER MILLIGAN: The first eight --
23 MS. SARTIN: -- some of --
24 COMPTROLLER MILLIGAN: -- were not.
25 MS. SARTIN: That's correct. You're right
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 67
June 26, 2000
1 about that.
2 COMPTROLLER MILLIGAN: Thank you.
3 MS. SARTIN: Item 28 is approval of -- for
4 Department of Management Services proposed rule
5 revisions on recruitment and selection.
6 COMMISSIONER GALLAGHER: Motion, 2--
7 TREASURER NELSON: Governor, I have a
8 question --
9 GOVERNOR BUSH: Okay.
10 TREASURER NELSON: -- on this.
11 GOVERNOR BUSH: Yes.
12 TREASURER NELSON: This is concerning
13 affirmative action, and there is a change in
14 the definition of affirmative action in this
15 rule.
16 And I'd like you to tell me what is the
17 effect of removing the existing affirmative
18 action language in the Rule 60K-3?
19 You're adding some different affirmative
20 action language in Rule 60K-4, but it seems
21 much less proactive and not as strong.
22 Could you address that, please?
23 MS. SARTIN: Yes. I'll have someone from
24 DMS to address this.
25 State your name.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 68
June 26, 2000
1 MS. WILLIAMS: Okay.
2 Patty Williams from the Department of
3 Management Services.
4 There really isn't any impact in the change
5 of the definition. The -- there is a whole
6 rule, 60L-21, that discusses affirmative action
7 in detail. And -- and the definition of
8 affirmative action in that rule is much more in
9 detail.
10 In moving it from Chapter 3 -- we had it in
11 60K-3 -- we had a definition for it, but we
12 never actually used it in the text. So,
13 of course, legal counsel told us we didn't need
14 to have it in there.
15 So when we moved it to 60K-4, it only
16 refers to when we want to make an appointment
17 in a trainee status. And there's certain
18 circumstances under which you can make
19 appointments in trainee status.
20 And one of those is to -- to meet your --
21 your affirmative action plan. Maybe you want
22 to get more diversity in your work force.
23 And so really the effect is not any
24 different. We simplified the definition
25 because it's -- it just doesn't go into detail
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 69
June 26, 2000
1 in this particular rule, like it does in
2 60L-21.
3 But there was no real impact in changing
4 it.
5 TREASURER NELSON: All right. Let me see
6 if I can say what you just said.
7 MS. WILLIAMS: Okay.
8 TREASURER NELSON: And you tell me if I
9 understand you correctly.
10 That the Rule 60L-21, which you referred
11 to, which is not before us today --
12 MS. WILLIAMS: That's correct.
13 TREASURER NELSON: -- that that's the rule
14 that fully implements all of affirmative action
15 provisions in Chapter 110 of the statutes.
16 MS. WILLIAMS: In detail, yes, it does.
17 Yes.
18 TREASURER NELSON: Is there any --
19 MS. WILLIAMS: I think that --
20 TREASURER NELSON: -- then the question is:
21 In what's before us today, is there any
22 weakening with regard to affirmative action in
23 what we will be adopting here today?
24 MS. WILLIAMS: No, sir, not at all.
25 TREASURER NELSON: Okay.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 70
June 26, 2000
1 GOVERNOR BUSH: Is there a --
2 COMMISSIONER GALLAGHER: There's a motion.
3 GOVERNOR BUSH: Is there --
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: -- a second?
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: Any other discussion?
8 Moved and seconded.
9 Without objection, it's approved.
10 MS. SARTIN: Item 29 is approval of a -- a
11 proposed rule revision for Department of
12 Management Services on appointment status
13 transfers and separations.
14 COMMISSIONER GALLAGHER: Motion on 29.
15 COMMISSIONER CRAWFORD: Second.
16 GOVERNOR BUSH: Moved and seconded.
17 Without objection, it's approved.
18
19
20
21
22
23
24
25
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71
June 26, 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 70 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 JULY, 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
ACCURATE STENOTYPE REPORTERS, INC.
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
DEPARTMENT OF REVENUE
ADMINISTRATION COMMISSION
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF EDUCATION
VOLUME II
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 Monday,
June 26, 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
73
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
* * *
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74
June 26, 2000
I N D E X
ITEM ACTION PAGE
ADMINISTRATION COMMISSION:
(Presented by Sandra Sartin,
Policy Coordinator)
30 Approved 159
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented by David B. Struhs,
Secretary)
1 Approved 161
2 Approved 161
3 Approved 162
4 Approved 162
5 Approved 162
6 Approved 163
7 Approved 163
8 Approved 164
9 Approved 164
10 Approved 166
11 Withdrawn 168
12 Approved 169
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
FCAT Results Report 170
1 Approved 177
2 Deferred 177
3 Deferred 177
4 Deferred 178
5 Approved 178
6 through 13 Withdrawn 222
CERTIFICATE OF REPORTER 224
* * *
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 75
June 26, 2000
1 P R O C E E D I N G S
2 MS. SARTIN: Item 30 is a budget appeal by
3 the Lee County Sheriff's Office. I will now
4 turn it over to Brad Thomas, Policy Coordinator
5 for the Public Safety Unit in the Governor's
6 Office of Planning and Budgeting.
7 MR. THOMAS: Thank you, Governor and
8 Cabinet.
9 My name is Brad Thomas. And this item
10 comes to you pursuant to Chapter 30.49
11 regarding the Sheriff of Lee County's appeal of
12 the 1999-2000 fiscal year budget allocation by
13 the Lee County Board of County Commissioners.
14 You have the panel recommendation from the
15 staff to your Aides. That panel was comprised
16 of Ms. Sunny Phillips from the Comptroller's
17 Office, and Mr. Rodney Doss in the Attorney
18 General's Office.
19 The recommendation of that --
20 (Treasurer Nelson exited the room.)
21 MR. THOMAS: -- before you is that the --
22 this body direct an additional amount of
23 funding to the Sheriff that is in your memo of
24 $722,889.
25 And unless there are specific questions
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 76
June 26, 2000
1 directed to that recommendation, the
2 appropriate procedure is for a 10-minute
3 presentation by both parties, with further
4 presentation to be determined by the Governor.
5 And at this time then, I would turn over
6 the podium to a representative of the
7 Lee County Sheriff's Department, unless I might
8 answer some questions.
9 At this time, Mr. Ken Sukhia will make a
10 presentation and share his time, if necessary.
11 And following him, Chairman John Albion of the
12 Lee County Board of County Commissioners will
13 make a presentation.
14 Thank you.
15 MR. SUKHIA: Thank you, Brad.
16 Thanks, Brad.
17 Governor and Cabinet members. I -- I --
18 because we are the moving party here, and have
19 moved to appeal, we would ask that we be given
20 an opportunity to reserve some time for
21 rebuttal following the presentation of the
22 County.
23 We have with us, as you'll understand as I
24 begin -- as I present what the issue is, we
25 have here today also a representative -- a
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 77
June 26, 2000
1 general partner with the auditing firm of MGT,
2 a national auditing firm, which is involved in
3 this appeal, in the sense that we relied upon
4 that firm for a recommendation.
5 And we ask that if the -- if the Cabinet
6 has any questions, or the Administration
7 Commission has any questions of the -- of that
8 auditor, that those be asked of the auditor.
9 I have some handouts, and I'd like to ask
10 that they be handed out at this time.
11 GOVERNOR BUSH: Hence the term, handout.
12 MS. SUKHIA: Yes.
13 I actually coined that phrase some -- some
14 years back. Ever since people have been using
15 it.
16 COMMISSIONER GALLAGHER: Probably invented
17 the Internet, too, right?
18 GOVERNOR BUSH: Now, now.
19 MR. SUKHIA: Governor, may I -- may I begin
20 by saying that I have been involved since I
21 started with the law firm of Fowler, White in
22 representing Sheriff McDougall.
23 And in 1993, I was here before the
24 Administration Commission, at which time we
25 were appealing our budget because our -- our
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 78
June 26, 2000
1 employees were receiving substantially less
2 than comparable law enforcement officials in
3 other areas.
4 When we filed the appeal, we're -- we asked
5 for a certain amount, because there's a certain
6 amount left of the year. The appeals are filed
7 in October.
8 By the time we get to the
9 Administration Commission, often we're closing
10 in on the end of the year. And, therefore, the
11 amount that we requested at the initial part of
12 the appeal becomes less, because, for instance,
13 in that instance, we were adding some members
14 to the force, but they were not yet on.
15 So since we only had three months left of
16 the fiscal year, there was less that we were
17 requesting. And, therefore, the amount which
18 the Administration Commission awarded us at
19 that time, which was $500,000, when, considered
20 over the period of the full year, and that we
21 only had a quarter of the year left, was really
22 an amount equal to 2 million dollars.
23 And then it, of course, adjusted our base
24 at the beginning of the next year.
25 So it was a meaningful addition, which the
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 79
June 26, 2000
1 Commission presented and gave to us at that
2 time.
3 Now, some years later, in 1998, and -- and
4 I think it's important that the Commission
5 understand the circumstance. There -- it's --
6 yes, it's certainly very political. Certainly
7 there are -- there is somewhat of an
8 acrimonious spirit, I think, which had existed
9 between the Commission and the Sheriff. And it
10 is not the Sheriff's desire to repeatedly knock
11 on the door here, if not necessary.
12 The Sheriff, under Chapter 30.49,
13 Subsection (2), is required to submit what he
14 believes is a reasonable and necessary budget.
15 He's the only constitutional officer who must
16 swear under oath that that is reasonable and
17 necessary for the performance of his duties.
18 After we presented the arguments to the
19 Commission last time, we filed an appeal to the
20 Second Circuit -- or Second District Court of
21 Appeal in Lakeland. The appeal was pending,
22 the Court had been -- had set oral argument.
23 We were ready to argue it in about 10 days.
24 And I received a call from the internal
25 General Counsel with the Sheriff's Office
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 80
June 26, 2000
1 saying that the -- we -- we have reached an
2 understanding with the Commission to avoid the
3 frequent and repeated coming back to the -- to
4 the Administration Commission, though it is our
5 right, though we have that statutory right, and
6 I believe, obligation, does the Sheriff in
7 these circumstances.
8 We had an agreement, we had an
9 understanding. And as part of that
10 understanding, we dismissed that appeal. I
11 didn't want to do that. I felt we had a very,
12 very solid basis for arguing it, inasmuch as
13 the -- an entirely wrong standard was utilized
14 by the Commission, and they set an arbitrary
15 cap on the increase for the Sheriff's Office,
16 which I believe could not be reasonable -- a
17 proper assessment of the reasonable and
18 necessary expenses for that office.
19 We dismissed the appeal. As part of
20 that -- that dismissal, both parties agreed --
21 and if you'll look in the package we handed
22 out, the very last item -- both parties agreed
23 and submitted a joint request to the
24 Auditor General's Office for the State of
25 Florida to have an independent audit performed
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 81
June 26, 2000
1 in the Sheriff's Office.
2 And this independent audit was designed,
3 according to the RFP, to assess -- excuse me --
4 that audit was designed -- the purpose of this
5 performance review is to determine whether the
6 Lee County Sheriff's Office is adequately
7 funded by the Board of County Commissioners
8 and is using its resources efficiently and
9 effectively.
10 The Auditor General was involved in
11 directing and -- and preparing this RFP.
12 Members of the MGT management -- or audit
13 group -- and, incidentally, the Sheriff had an
14 independent audit performed four years before
15 by Deloitte & Touche.
16 And he said to the Board, he said, look,
17 I've had an audit done. They were in my
18 office.
19 And they said, no, we're not -- we're not
20 going to accept that audit, because you paid
21 for that office -- audit, and we know how that
22 works.
23 So, okay. So we'll all agree on -- on
24 auditors. Well, actually this was the
25 Sheriff's second choice for the auditor. This
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 82
June 26, 2000
1 was the first choice for the County and for the
2 Auditor General.
3 It had to be -- it had to be, you know,
4 farmed out because the Auditor General didn't
5 have the resources to -- to do it.
6 They said, we can't accept yours, you paid
7 for that. The County paid for this one.
8 $300,000 they paid for this audit, $300,000;
9 15 auditors in the Sheriff's Office for
10 seven months. Seven months going through all
11 types of documents, sending -- sending memos
12 back and forth, people flying in from other
13 states.
14 But basically seven months, 15 auditors,
15 on site, in the Sheriff's Office.
16 And they -- and their purpose was to
17 determine whether the Lee County
18 Sheriff's Office was adequately funded by the
19 Board of County Commissioners.
20 Now, this was -- now, certainly, no one,
21 and they will say, well, we didn't abdicate
22 our -- our responsibility to make an
23 independent assessment and so forth.
24 Well, of course, they didn't do that. And
25 nor would we do that. But there was an
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 83
June 26, 2000
1 understanding. There was a -- that was the
2 whole purpose. That was everything behind this
3 audit. That's why they were sitting in the
4 office for seven months reviewing all of these
5 things.
6 And that was the -- the -- the purpose for
7 it, to make that assessment, so we wouldn't
8 have to keep coming back here. Well, they were
9 there in the office. And the Sheriff's budget,
10 proposed budget, was 62.7 million this year.
11 Now, let me say, I don't know how those
12 figures sound to you. I've been hearing --
13 you know, just sitting here this morning,
14 hearing about, well, I -- I -- we may need
15 another 3.1 million, that's just in case,
16 you know, we run into some problem down the
17 road.
18 And then someone else, you know, there'll
19 be -- and plus another 3 million on top of
20 that, you know, that you never know, we just --
21 we just might need that.
22 Now, I -- I may not be properly reiterating
23 what -- what was said. But something to that
24 effect.
25 And I can tell you that we're talking here
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 84
June 26, 2000
1 about the audit in the office making this very
2 determination.
3 The auditors said, no. They said, we -- we
4 believe that the Sheriff is entitled to, and
5 substantiate an amount of 59.9 million dollars.
6 But I want you to know, sirs, and -- and --
7 and Secretary of State, I want you to know that
8 the County of Lee has two -- has twice the
9 number of -- of residents as does the County of
10 Collier. Collier has a 72 million dollar
11 budget for their Sheriff. Seventy-two million.
12 When the -- when your own staff did an
13 assessment of comparison between our county and
14 eight other counties -- maybe in -- I think it
15 was eight other counties, they determined that
16 Lee County was eight -- the Sheriff's Office
17 was 8.7 percent below comparable counties in
18 the amount. That's roughly 5 million dollars
19 below.
20 Now, I would note that they did that on the
21 basis of 59.9 million. We've run those
22 figures. They did that on the basis of
23 59.9 million, not the amount which is -- which
24 comes before us -- before you today. Not the
25 59.9, but based on a lower number. I believe
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 85
June 26, 2000
1 it was something like 57.-- --.6 or something
2 like that.
3 They did it on the bas-- not -- they did it
4 on the basis -- I'm sorry -- on the basis of
5 59.9. If you take it on the basis of what we
6 have right now, we're 12.5 percent below.
7 That's something like 7 million dollars below.
8 So it is not a situation where, ah, this --
9 this guy's got to have it, he's got to have it
10 pressed down and overflowing. He's -- he's
11 coming to this Commission with a reasonable
12 number.
13 Incidentally, we -- we had the County --
14 the audit -- one of the things the audit did is
15 they assessed the increase in the County's
16 budget over this period of time. And the
17 increase in the County's budget was something
18 like 22.5 percent over this same period, from
19 1993 to 1998. And the increase in the
20 Sheriff's budget was 21 percent.
21 Now, that -- the -- and the increase is --
22 and not only that, this is from the staff.
23 This is what the staff has said: That --
24 (Treasurer Nelson entered the room.)
25 MR. SUKHIA: -- that the budget approved by
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 86
June 26, 2000
1 the Board for the Sheriff for 1999-2000
2 represents a two-year increase of 15.2 percent.
3 Two-year funding for the County constitutional
4 departments, other than the Sheriff, increased
5 by 26.9 percent. Fifteen versus
6 twenty-six point nine.
7 We concur that over the past two fiscal
8 years, the Sheriff has received an average
9 annual funding increase of 7.6 percent, while
10 other County constitutional departments have
11 averaged 13.5 percent increase.
12 The Sheriff's budget per unincorporated
13 population is lower than all but one comparison
14 county, and 8.7 percent below the comparison
15 county average.
16 So I -- I just say that so that -- that
17 this Board can understand that we're not --
18 we're not knocking on the door because --
19 because we're wanting more and beyond that
20 which we believe is necessary and reasonable
21 for the functioning of our office.
22 Well, the Sheriff, when this proposal came
23 out --
24 GOVERNOR BUSH: Ken, are you going to do
25 all this in 10 minutes?
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 87
June 26, 2000
1 MR. SUKHIA: Governor, I -- I -- I'm going
2 to try my very best. But I -- I don't --
3 GOVERNOR BUSH: I just wanted to --
4 MR. SUKHIA: Yes, sir. I -- I know. I --
5 with the Court -- or with the --
6 GOVERNOR BUSH: No, I'm not a -- I'm not a
7 judge, I know that.
8 Go ahead. I just want -- you know, we
9 don't --
10 MR. SUKHIA: I thank you. Yes, sir,
11 Your Honor.
12 I'll --
13 GOVERNOR BUSH: Because I know the Sheriff
14 wants to speak as well it looks like. He's got
15 something in his hands. So --
16 MR. SUKHIA: Sure. And I don't want to --
17 I don't want him to -- to talk. I'll --
18 GOVERNOR BUSH: Oh.
19 MR. SUKHIA: No, I'm just kidding. I'm
20 just kidding.
21 I'm only joking.
22 What I -- let me -- let me say though that
23 on the -- when -- as soon as the recommendation
24 came out from the -- from this auditor, the
25 Sheriff reduced his budget request to
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 88
June 26, 2000
1 59.9 million as soon as it happened. And --
2 and being an honorable, and following their
3 understanding.
4 And I want to ask that one -- there are two
5 things that we're appealing from the staff
6 recommendation. The staff said, listen, it was
7 inappropriate -- right now in the operation
8 budget -- okay, the other stuff is almost --
9 was almost set, because eighty plus percent of
10 our budget is -- is staff and personnel.
11 And they -- and we have the same increase
12 that the County officials have, and that's,
13 like, seven point something percent. So all of
14 that goes -- that major chunk of whatever the
15 normal increase is is the cop's grant which has
16 to be funded. Otherwise, it's a loss of some
17 3 million dollars. So it must be funded.
18 Those type of things.
19 This is operating -- is really where the --
20 this is the meat of the thing. Well, the
21 operating budget this year was reduced -- the
22 operating budget was reduced by the County
23 1.4 million dollars from last year's -- from
24 1988-1999 (sic), reduced.
25 And the -- and the staff said there was no
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 89
June 26, 2000
1 basis for that reduction. In their -- in their
2 recommendation, they said, we find that there's
3 no basis for that reduction, and the Sheriff
4 has -- has given adequate information that
5 there should be no reduction. Therefore, it
6 should be restored to last year's level.
7 There -- our first argument -- or our first
8 point on -- on this appeal to you is that the
9 staff I think did a very fine job and -- but
10 they had a -- a limited amount of time. It's
11 not as though they're -- they're -- they're in
12 the office for seven months, 15 auditors from
13 an independent auditing company.
14 And they said, well -- they came up with a
15 different figure for the difference in order to
16 restore our operating budget.
17 But the County, in a letter, which is the
18 first letter in front of you there -- in a
19 letter requested by Chris Snow -- or submitted
20 to Chris Snow, by -- by the County manager, he
21 said, what is the difference between our
22 operating budget -- their operating budget last
23 year and this year.
24 And they said it's -- the difference is
25 4 -- 1.44 million less. And it's highlighted
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 90
June 26, 2000
1 there in that letter. It's 1.44 million less.
2 Now, during our appeal, because of the
3 emergency situation, and we filed, as we could
4 under the statute, with the County Commission
5 saying we have an emergency, we can't feed
6 our -- our inmates, they gave us 5.5 million
7 more.
8 Okay?
9 That's the difference. It's eight --
10 eight -- if you subtract five hundred -- 5.4 --
11 or not 5.5 million -- they gave us 550,000
12 more. Five hundred and fifty thousand more.
13 In other words, we had a 1.4 less, and they
14 gave us 550,000.
15 So if you subtract that, it's 890,000.
16 That is the difference in -- in order to
17 restore our operating budget.
18 The panel -- or the committee that we
19 appeared before, came up with five hundred and
20 eighty.
21 This is simply to restore us to last year's
22 budget. I mean, how many people come before
23 the Commission asking for a zero increase?
24 This is what we're asking for. It's just
25 simply to restore us.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 91
June 26, 2000
1 This is not even to mention the additional
2 amount that the audit recommended, which would
3 have been another 1.9 million. This is just to
4 restore us.
5 And so we urge this Commission, if we
6 cannot have this amount, to simply restore our
7 budget to levels for 1988-1999 (sic), we will
8 be in a crisis situation. Our money will run
9 out in operating, and we will not be able to do
10 those essential things which are necessary for
11 the -- under our operating budget. It cannot
12 be done.
13 So there is, indeed, an $890,000 shortfall.
14 The panel said it was five hundred and eighty.
15 Now, they added to that the reserves. They
16 came up with seven hundred and eighty-eight.
17 The total amount is nine hundred -- it's --
18 it's -- excuse me, three hundred and fifty-two
19 thousand, which is that difference between the
20 amount they recommended.
21 But, sirs, I'm going to conclude, and I
22 would say this: That there is -- the County,
23 when the Sheriff's budget was proposed of
24 62.7 million, the County is required to -- to
25 set aside a certain amount for that.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 92
June 26, 2000
1 Lo and behold, in this instance, they added
2 four-and-a-half million to that. We don't know
3 why or what for or what's happening to that.
4 But they have 67 million dollars set aside --
5 67 million dollars. There is no issue of an
6 increase in taxes. The taxpayers have already
7 paid it. They have 50 million dollars surplus
8 in this county.
9 Their budget for operating this year
10 increased 26 million dollars. Increased in
11 operating. And that is 26 percent increase.
12 They're talking about a reduction in our
13 operating budget. Their's increased 26 million
14 dollars.
15 Right now we're looking at 58 million,
16 or -- thereabouts, for the Sheriff, right now,
17 for -- with what you have if you do nothing.
18 Fifty-eight million. We're asking for 350,000
19 of that 67 million which they've set aside,
20 which -- which we don't know what they're going
21 to do with, but they've set aside 67 million.
22 We're at the end of our year. We only have
23 three months left. And we're asking for that
24 additional amount.
25 We thank you. And we would like to, if --
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 93
June 26, 2000
1 ATTORNEY GENERAL BUTTERWORTH: If I can
2 just --
3 MR. SUKHIA: Yes, sir.
4 ATTORNEY GENERAL BUTTERWORTH: -- just one
5 question.
6 The -- the panel, as you said, is
7 recommending an additional 723,000.
8 MR. SUKHIA: Yes.
9 ATTORNEY GENERAL BUTTERWORTH: How much do
10 you want?
11 MR. SUKHIA: We -- we have asked in --
12 beyond what the panel has recommended, we've
13 asked for 942,000.
14 That is --
15 ATTORNEY GENERAL BUTTERWORTH: Over and
16 above? So -- so you want nine hundred plus the
17 seven two two?
18 MR. SUKHIA: Yes, sir.
19 And that's -- and what that amounts to is
20 352,000, which was -- which was the difference
21 to bring us up to -- to restore us to the
22 1998-98 --99 level.
23 And also, remember I said that the audit --
24 that the audit substantiated an appropriate
25 amount of 59.9 million for the Sheriff. That
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 94
June 26, 2000
1 would be an additional 1.9 million, something
2 to that effect, or 1.6 million.
3 The Sheriff --
4 ATTORNEY GENERAL BUTTERWORTH: And you mean
5 three five two, because you're so much into
6 the -- but you only have, what, four more
7 months left in this particular --
8 MR. SUKHIA: Yes, sir. That's right.
9 ATTORNEY GENERAL BUTTERWORTH: -- fiscal
10 year?
11 MR. SUKHIA: And -- but on the operating.
12 But -- but we're asking -- this is
13 important, and I appreciate the question,
14 General.
15 I -- we're -- we're -- the audit -- in
16 addition -- obviously, in addition to just
17 restoring, they just used that as a base. In
18 addition to restoring, the audience -- audit
19 substantiated an increase of 1.9 million in our
20 operating budget.
21 Which, of course, we're not even -- we're
22 talking about now being in a deficit. They --
23 they said we -- we -- they're entitled to
24 1.9 million. We spent all this time, and
25 they're entitled to that.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 95
June 26, 2000
1 And so when the -- and -- because -- again,
2 because we're at the end of our fiscal year, of
3 that 1.9 million, the Sheriff needs only
4 600,000.
5 In other words, we are asking that there be
6 some -- there's some -- be some -- imagine
7 this. Imagine if in your budgets, if you had
8 had -- had -- I don't know who you deal with,
9 but if you had been wrangling or -- or having
10 issues with the people who were granting you
11 your budgets, and -- and everybody said, well,
12 look, why don't we do this --
13 And I know this never happens up here.
14 I -- you know, I -- I know this may come as a
15 shock to you -- but sometimes there's wrangling
16 over these budgets.
17 But -- but if you all agreed and said,
18 listen, well, why don't we do this: Why don't
19 we get an independent auditor in here, and
20 we'll pay for it. And -- and we'll all agree
21 to this independent audit. And we'll see what
22 happens after that audit is -- is entered.
23 And -- and, no, no one -- no one
24 necessarily says, okay, we're absolutely,
25 constitutionally going to be bound by it.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 96
June 26, 2000
1 But the Sheriff said at a hearing -- they
2 said to the Sheriff, well, if it's below what
3 you request, you're going to have to ratchet
4 down your request.
5 And --
6 ATTORNEY GENERAL BUTTERWORTH: Okay.
7 Let --
8 MR. SUKHIA: Yes.
9 ATTORNEY GENERAL BUTTERWORTH: -- me ask
10 another question. I -- I just want to keep
11 this thing simple --
12 MR. SUKHIA: Yes, sir.
13 ATTORNEY GENERAL BUTTERWORTH: -- and I
14 appreciate that. I don't have any handouts to
15 give you.
16 The -- the amount that the -- that the
17 panel recommended as seven twenty-three --
18 MR. SUKHIA: Yes.
19 ATTORNEY GENERAL BUTTERWORTH: -- is that
20 really 2 million dollars, or is that really
21 seven twenty-three?
22 MR. SUKHIA: No. The --
23 ATTORNEY GENERAL BUTTERWORTH: The
24 seven twenty-three, if you're talking about
25 your same one quarter -- or one-third would --
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 97
June 26, 2000
1 would, in essence, be almost like a 2.3 million
2 dollar increase.
3 MR. SUKHIA: Well, you know, our -- our
4 budget -- our actual request under the -- under
5 the appeal was I think 7 or 8 -- 8 million,
6 something to that effect, in order to restore
7 because of how -- how much they had reduced us.
8 So I don't know, that may work out that
9 way, I'm not sure.
10 But I -- but -- but keep in mind that our
11 original request, had this been decided -- I
12 think under the statute, it says within 30 days
13 there's to be a decision.
14 And -- and -- and it was, like, four or
15 five months later that -- that the -- the panel
16 met, and that we --
17 ATTORNEY GENERAL BUTTERWORTH: Maybe the
18 Sheriff --
19 MR. SUKHIA: -- had a decision.
20 ATTORNEY GENERAL BUTTERWORTH: -- can
21 answer that question when he gets up then.
22 So --
23 MR. SUKHIA: And -- and I would -- I would
24 want to just make -- note one other thing.
25 And that is it if -- when the audit -- when
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 98
June 26, 2000
1 I was saying that -- that when the Sheriff
2 asked them, when they talked -- agreed, the
3 County Commissioners said, Sheriff, now, you're
4 going to have your -- ratchet yours down.
5 And he said, well, you know, yeah, by the
6 same token, if it's above --
7 Oh, yeah, we'll -- we'll go up on that.
8 So in a -- in an article that appears,
9 Commissioner Albion, who is the Chairman of the
10 Commission, who argued before -- I don't know
11 if he'll be here today -- but he argued before
12 the Cabinet folks -- he said, it's all going to
13 come down to the audit, he said.
14 If the audit says to give him what he asks
15 for, and we don't and he appeals, I'd expect
16 the Governor and the Cabinet to give it to him.
17 The same thing for if it says he doesn't
18 need it all. Albion said that if the audit
19 says McDougall needs each and every one of the
20 66 -- that's what it started out at,
21 incidentally. He went down to 62.7. Then the
22 audit comes out at 59.9, he immediately reduces
23 it.
24 Can you imagine them arguing this to you if
25 the amount they recommended was fifty-four?
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 99
June 26, 2000
1 Oh, you know, what they did? They wrote
2 letters to the Auditor General complaining
3 about the audit. This -- and -- and
4 challenging the credibility of MGT, and saying
5 that this is a -- that -- well, this is one of
6 the lousiest audits we've ever seen. And --
7 and their credit -- and -- and it's a
8 fundamentally flawed, and that --
9 Now, can you just imagine them being up
10 here telling you that if they had to -- if they
11 had gone --
12 GOVERNOR BUSH: Well, maybe they'll --
13 maybe there is someone here, and we'll get a
14 chance to hear it.
15 MR. SUKHIA: Thank you.
16 GOVERNOR BUSH: Sheriff.
17 MR. McDOUGALL: Thank you, Governor.
18 GOVERNOR BUSH: Good morning.
19 MR. McDOUGALL: Good morning.
20 I'll be very brief, because I -- I know
21 we've taken up a lot of your time.
22 But before I make my -- my announcements,
23 I'd like to thank you and -- and
24 General Milligan and -- and Mr. Nelson for the
25 fine work that you did in restoring for our
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 100
June 26, 2000
1 people the 12 percent that they lost 27 years
2 ago in the retirement fund.
3 So on behalf of those men and women of our
4 agency, we thank you. I haven't had a chance
5 to say that to you officially. But we are very
6 pleased with that.
7 This whole thing boils down to a -- it's a
8 fundamental issue of fairness. And when I --
9 when I challenged the decision last year before
10 the Second District Court of Appeals, they --
11 they voted for certiorari, because they saw
12 this as a -- as a compelling interest in the
13 area of -- of -- of the separation of powers
14 issue.
15 Each and every one of us as constitutional
16 officers, we derive our just powers, as the
17 Constitution says, from the consent of the
18 governed. And -- and the authority that I have
19 as the Sheriff, comparable to the authority
20 that you have as Governor or -- or Comptroller,
21 or Secretary of State or Secretary of
22 Agriculture or Commissioner -- whatever
23 statutory authority you have, you derive it
24 from the Constitution. That's where I derive
25 my power from.
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 101
June 26, 2000
1 I am the one that is -- has the -- the
2 decision -- I have to make the decision of what
3 it is that will make my county safe. Because
4 the people elected me. I'm in my third term.
5 My last election, I had 70.2 percent of the
6 vote. So I had an overwhelming support of the
7 people.
8 During this audit, the Gulf Coast
9 University, our new tenth university, did a --
10 did a survey as part of the audit process. And
11 85 percent of the people in my county that were
12 surveyed said, we want the level of service
13 that the Sheriff is providing now.
14 And 35 percent of that 85 people --
15 85 percent said, we would even be willing to
16 pay more money, if necessary, to have these --
17 to have these services provided.
18 I am a service provider. I don't make
19 widgets. I am the person, when you hit 9-1-1,
20 you don't get the County Commissioner's office,
21 you get my office. And we're scrambling.
22 We might have to put up helicopters, we
23 might have to get a SWAT team out there
24 rolling. Whatever it takes.
25 We don't say to the 2.2 million tourists
ACCURATE STENOTYPE REPORTERS, INC.
ADMINISTRATION COMMISSION 102
June 26, 2000
1 that are in Lee County, on top of the 400,000
2 permanent population, which gives us a daily
3 functional population of over 800,000 people,
4 when they hit 9-1-1, we don't say, are you a
5 permanent resident; are you a tourist; are you
6 a Republican; are you a Democrat; are you -- we
7 just say, what's the problem, we'll get
8 somebody to you right away. And that -- that's
9 what I have to do.
10 And in -- and in fairness to the County
11 Commissioners, I don't want you to think that
12 we're here to dump on the County -- because
13 we're not. I'm not trying to -- to take the --
14 the splinter out of -- out of their eye, if I
15 have a beam in my own eye.
16 I'm just saying that sometimes you can't
17 see the forest for the trees, and I'm the first
18 one to admit that.
19 And so when we were ready to go to the
20 Second DCA last year -- I mean, several years
21 ago, when the County came to me, and they said,
22 Sheriff, how can we resolve this? I mean, we
23 have to work together. We work for the same
24 people.
25 And I said, you know, you're absolutely
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1 right. Let's come up with a -- with some kind
2 of a plan, let's come up with some kind of a --
3 a resolution where once and for all, we will
4 know -- because they're always saying, what is
5 your core level of service?
6 You know, why do you have this many people
7 over in Bonita Springs; why do you have many --
8 these many deputies in the outlining islands,
9 because we have a lot of barrier islands in --
10 in Lee County?
11 And -- and I said, because we need them.
12 I've been in this business for 30 years. I --
13 I -- I know law enforcement.
14 So we decided that we would go jointly to
15 the Auditor General of the State of Florida,
16 and once and for all do an audit.
17 Say, what should the Sheriff's base budget
18 be? With a population of this size, and a --
19 and a county that has 2 million tourists coming
20 in every year, what should it be?
21 And MGT, the auditing firm that did the
22 audit says, we believe that we can substantiate
23 59.9 million.
24 And I agreed that, okay, then I -- I will
25 go along with that as my base. But the County,
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1 they attacked the audit. Instead of saying,
2 well, you know, the -- two of the -- two of the
3 County Commissioners, by the way -- in fact,
4 one of the Commissioners wrote a letter and
5 said the Sheriff is right where he should be.
6 I believe what -- the audit is correct.
7 But for some reason, we have this stalemate
8 that has just -- it's almost like, well, if the
9 Sheriff wins, we lose. And it shouldn't be
10 that. It's not if I win, they lose; or if they
11 win, I lose.
12 If we don't give the people the services
13 that they want and that they have paid for, we
14 all lose. They've paid for the services.
15 They've taken 4 million dollars of my budget
16 that the people have paid for, and they put it
17 aside, and they go -- they called it the
18 Taxpayers' Relief Fund.
19 But they told me, Sheriff, but if you need
20 this, if the audit supports this, we'll give
21 you that money. They haven't done it, and
22 that's why we're here.
23 ATTORNEY GENERAL BUTTERWORTH: Can I ask --
24 GOVERNOR BUSH: Yes.
25 ATTORNEY GENERAL BUTTERWORTH: -- a
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1 quick --
2 GOVERNOR BUSH: Question.
3 ATTORNEY GENERAL BUTTERWORTH: -- quick
4 question.
5 Sheriff, let me just -- let me just try and
6 make this simple, because I -- I'm having a
7 hard time.
8 Your -- your original request was, like,
9 62.7 million.
10 MR. McDOUGALL: Yes.
11 ATTORNEY GENERAL BUTTERWORTH: The auditors
12 said you're entitled to --
13 MR. McDOUGALL: Next fiscal --
14 ATTORNEY GENERAL BUTTERWORTH: -- auditors
15 hired by the County say you're entitled to
16 59.9 percent.
17 MR. McDOUGALL: Yes.
18 ATTORNEY GENERAL BUTTERWORTH: Or
19 million dollars.
20 MR. McDOUGALL: Yes.
21 ATTORNEY GENERAL BUTTERWORTH: The County
22 gave you 57.6 million.
23 MR. McDOUGALL: Yes.
24 ATTORNEY GENERAL BUTTERWORTH: Okay.
25 The -- the panel is recommending approximately
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1 723,000.
2 MR. McDOUGALL: Yes.
3 ATTORNEY GENERAL BUTTERWORTH: Your
4 attorney just said you want an additional
5 302,000 over and above that.
6 Seven hundred --
7 MR. McDOUGALL: Three hundred --
8 ATTORNEY GENERAL BUTTERWORTH: -- thousand.
9 MR. McDOUGALL: -- three hundred and
10 fifty-two thousand, yes.
11 ATTORNEY GENERAL BUTTERWORTH: Yes.
12 So that's equivalent to one million and
13 seventy-five thousand.
14 MR. McDOUGALL: Yes.
15 ATTORNEY GENERAL BUTTERWORTH: If you add
16 the one million and seventy-five thousand to
17 the County's 57.6, that's approximately maybe
18 58.7. You're still 1.2 million dollars below
19 what the --
20 MR. McDOUGALL: Yes.
21 ATTORNEY GENERAL BUTTERWORTH: -- auditor
22 has requested.
23 MR. McDOUGALL: Yes.
24 ATTORNEY GENERAL BUTTERWORTH: So you're
25 saying you're willing to accept today
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1 1.2 million dollars less than what the auditor
2 requested you -- requested, or at least
3 substantiated that you needed, at which it was
4 also 1.2 million dollars more than what the
5 County had -- had given you.
6 MR. McDOUGALL: Yes.
7 But there's -- there's -- additionally,
8 there is the -- to -- to kind of like split the
9 difference between what the auditors had agreed
10 back when they -- when they -- the audit was
11 finalized and where we are right now, eight --
12 nine months into our budget, that we could
13 split that difference between the County.
14 So -- so it would be an additional 600,000.
15 And that would get us up -- because we have a
16 base budget going into next year that is a --
17 this is what's critical to me when we're
18 starting off next year's budget, that we have a
19 base that -- that I can work from. And
20 that's -- and what the auditors supported.
21 ATTORNEY GENERAL BUTTERWORTH: Well, the
22 Sheriffs, as you know, can move money around
23 more so than -- than even --
24 MR. McDOUGALL: Uh-hum.
25 ATTORNEY GENERAL BUTTERWORTH: -- we can up
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1 here in our departments can do it --
2 MR. McDOUGALL: Right. Yes, sir.
3 ATTORNEY GENERAL BUTTERWORTH: -- you can
4 be -- your five categories and -- doesn't mean
5 anything.
6 But the thing is, do you -- are you going
7 to be operating at a deficit at the end of the
8 year, if you do not get any -- any relief from
9 this Board?
10 MR. McDOUGALL: Yes, I will be.
11 ATTORNEY GENERAL BUTTERWORTH: And if so,
12 approximately what will that deficit be?
13 MR. McDOUGALL: Yes. And my -- I have
14 my -- my auditor here can -- I mean, my
15 auditor -- my -- my budget manager here, and he
16 can tell you exactly what that dollar figure
17 is.
18 MR. SUKHIA: And if I could -- if I
19 could -- I'm not the auditor fellow, but if I
20 could say that it's 952,000 above -- 952,000
21 above what the panel recommended.
22 And that is comprised of six -- of 352,000
23 to -- in order to restore, plus 600,000 of the
24 1.9 million which the -- which the auditors
25 said we were entitled to.
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1 Because we're so late in the year, we're
2 not asking for all of that 1.9 million, only
3 600,000 of it.
4 And it's not just a number picked out of
5 the hat for compromise purposes. That was an
6 amount, looking at what we had left of the
7 year, and how much of that would be necessary
8 in order to keep the helicopter going, to keep
9 the gas in --
10 ATTORNEY GENERAL BUTTERWORTH: Let me
11 ask --
12 MR. SUKHIA: -- the cars.
13 ATTORNEY GENERAL BUTTERWORTH: -- you're
14 now confusing me again.
15 Because all I want to know is -- is the
16 one million and seventy-five thousand dollars
17 what you're asking for today?
18 MR. SUKHIA: No -- no, sir. It's --
19 ATTORNEY GENERAL BUTTERWORTH: I'm sorry.
20 I --
21 MR. SUKHIA: -- if --
22 ATTORNEY GENERAL BUTTERWORTH: -- I
23 misunderstood you.
24 MR. SUKHIA: -- you have to add 600,000 to
25 that. The total amount is one point six --
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1 one point six seven five seven twenty-four.
2 GOVERNOR BUSH: And what does that
3 annualize out at for the next year?
4 MR. SUKHIA: That -- what that does is
5 it -- it close to restores our base to what the
6 auditors had -- had said it should be. In
7 other words, the fifty -- the fifty-nine point
8 nine.
9 GOVERNOR BUSH: But what -- that doesn't
10 answer the question I don't think.
11 MR. SUKHIA: Let the audit fellow --
12 MR. BERGQUIST: That would annualize out to
13 about 1.4 million, the additional 600,000. If
14 we -- if the average daily population --
15 Bill Bergquist for the record.
16 If the average daily population in the jail
17 were to increase what we originally had
18 budgeted, it would be 1.4 million dollars.
19 GOVERNOR BUSH: So the -- so the million --
20 the million nine is it, that you're requesting,
21 annualizes out at -- the seven fifty--
22 MR. BERGQUIST: The additional -- the
23 additional 600,000 we're requesting would come
24 out to an additional 1.4 million, if our
25 operation --
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1 GOVERNOR BUSH: And the other is not
2 annualized, is it --
3 MR. BERGQUIST: No, sir.
4 GOVERNOR BUSH: -- the three fifty-two --
5 MR. BERGQUIST: That's -- that's just to
6 bring us back to what --
7 GOVERNOR BUSH: Okay.
8 MR. BERGQUIST: -- we were last year.
9 ATTORNEY GENERAL BUTTERWORTH: I'm
10 concerned about the same thing, Governor, that
11 if we do it the wrong way, we end up --
12 GOVERNOR BUSH: Creating -- coming back
13 next year?
14 ATTORNEY GENERAL BUTTERWORTH: Yeah.
15 Either coming back next year, or -- or put
16 him as a base budget with -- which is much more
17 than what he wants. I don't think he wants to
18 do that. So I don't -- I don't think we're --
19 GOVERNOR BUSH: Is there -- is there
20 anybody here from Lee County?
21 MR. ALBION: Good morning, Governor.
22 Good morning to the Cabinet.
23 First, I'm John Albion. I'm Chairman of
24 the Lee County Board of County Commissioners.
25 I feel perhaps I'm at a dis-- bit of a
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1 disadvantage. I'm not an attorney, as they had
2 represented up here, but I'll certainly do my
3 best.
4 And I did bring a watch just in case,
5 because I know that, Governor, you're going to
6 have a busy day getting down to Cape Coral
7 tomorrow, and we're certainly looking forward
8 to your visit.
9 So let me take a few moments and
10 introduce -- I hope that's not funny.
11 No. I'm kidding.
12 Let me introduce the people that we have
13 here today.
14 First we have Don Stilwell, who's our
15 County Manager.
16 We also have Bruce Loucks, who's our
17 Assistant County Manager, our Former -- Former
18 Budget Director.
19 Pete Winton, who's a member of our County
20 administration. He's also formerly a CPA with
21 a Big 8 auditing firm.
22 Tom Wright, who is Assistant County
23 Attorney. He's sitting towards the back.
24 And -- in case there are any legal questions,
25 we'll have him available.
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1 And then Keith Arnold, who's our liaison to
2 Tallahassee. And Keith is over here.
3 I guess we're kind of spread out around the
4 room.
5 So -- first let me start out by expressing
6 my apologies and our embarrassment. This
7 doesn't belong here. This issue belongs in
8 Lee County. And I don't think there's anyone
9 in this room that would refute that.
10 But it's unfortunate that this has gone
11 through the process now for the third time in
12 seven years. And yet here we are again.
13 This part of the process is supposed to be
14 an extraordinary measure, as we understand
15 State statutes. To have this decided here for
16 the third time in seven years by the Governor
17 and Cabinet to -- essentially being forced to
18 set the budget, makes this chambers the place
19 where this budget will have been settled almost
20 as often as our own Commission chambers.
21 I don't understand how that's
22 extraordinary. As a matter of fact, there are
23 no unique circumstances that I've heard about
24 that would indicate that this is extraordinary.
25 So, therefore, we believe this hearing is
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1 really about public policy. It's not about
2 numbers. Should a local agency be regularly
3 allowed to circumvent the local budget
4 authority concerning the budget? I would
5 expect -- expect us, and 66 other counties,
6 would like to know that answer.
7 Also, how should a Governor and Cabinet, in
8 the arena of public policy making, handle a
9 local agency who has knowingly created a crisis
10 by intentionally spending at the amount
11 requested rather than at the amount allocated.
12 This agency has already admitted publicly
13 that they have been spending at the amount that
14 they had requested, not at the amount our Board
15 had allocated.
16 These actions we believe go beyond State
17 law which requires all public agencies in our
18 state, to my knowledge, to operate within the
19 funds allocated, not the funds requested.
20 This agency has publicly acknowledged
21 spending at the amount requested, again, rather
22 than at the amount allocated.
23 Here's the clincher -- and I will confess
24 this bothers me greatly -- if this agency as of
25 this Friday, July 1st, had spent at the
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1 level -- at the level that had been allocated
2 to date, the difference between this agency and
3 the Board of County Commissioners would be
4 zero. Literally zero.
5 The closest this agency and our Commission
6 became -- or got in this disagreement was
7 2.2 million dollars. That was how far the
8 Sheriff had come down from where he was. And
9 we had come up from that 2.2 million, $550,000.
10 Simple math shows that's 1.65 million dollar
11 difference.
12 If you take three-quarters of 2.2 million
13 dollars, that's 1.65 million, the difference as
14 of Friday would be zero.
15 So, therefore, we have a public policy call
16 situation here I believe that truly exists. So
17 what about public safety? Isn't that really
18 what Sheriff's budgets and so on are really
19 supposed to be about?
20 Well, the recommendation from your
21 OMB Committee stated that, and I quote from the
22 report: The data -- the data presented in the
23 appeal, in the staff analysis, and in the
24 presentations by the Sheriff and the Board at
25 the panel hearing, do not indicate that the
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1 level of funding is compromising public safety,
2 end quote.
3 Further, on page 3, under conclusions, the
4 second sentence reads, and again I quote from
5 the report: The external comparison indicated,
6 however, that the Sheriff was adequately funded
7 when compared to other Sheriff's departments,
8 end quote. Your office, OMB, found that.
9 So I don't understand why we're here.
10 I also want to make a quick response to the
11 Collier County comparison. The Collier County
12 Sheriff will tell you he's got twice the area
13 to cover, or better, in actual geographic
14 miles.
15 So, therefore, to compare by population
16 versus comparing to geographic miles -- I don't
17 know what the policy is, but I don't think it's
18 right that we be comparing apples to oranges
19 like that. And that's why the Collier County
20 budget is higher, and why it's always been
21 presented as higher.
22 Also, by the way, if you remove all the
23 municipality populations in Lee County, our
24 unincorporated population is very close to
25 Collier's unincorporated population. So maybe
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1 there's something there, too.
2 Let's talk a moment about solutions.
3 History, I believe, is on yours and our side.
4 In the 1993-94 disagreement, our Board of
5 County Commissioners had offered this Sheriff
6 $700,000 not to pursue an appeal, above what we
7 had offered in the budget process.
8 This Governor and Cabinet gave $500,000.
9 I believe, Mr. Butterworth, you were the one
10 that made that recommendation. And I thought
11 it was very justifiable.
12 Two years ago, there was a unanimous denial
13 of the appeal. Both times this Sheriff's
14 Department claimed that crime would
15 significantly increase, and they couldn't
16 protect our citizens.
17 So what was the result? Crime went down
18 each year. Our true appreciation and
19 congratulations first go to those who were
20 involved in those last two budget processes,
21 those earlier appeals, for backing the local
22 authority.
23 To the Cabinet members and the Governor
24 that were involved, also to your staffs, and
25 especially to the deputies and the staff
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1 members of the Sheriff's Department that got
2 the job done with the dollars that were
3 allocated because he didn't get the 700,000, he
4 got 500,000 the first time, he got zero the
5 second time.
6 And according to the survey and the audit
7 that they've touted, if you believe the survey,
8 it says that the citizens of Lee County are
9 satisfied with the level of service.
10 So, therefore, it seems like we've done our
11 job. That's why this is a local issue.
12 For a good night's sleep, perhaps, if this
13 will help, let me perhaps remind some of you,
14 and make others aware, that to my recollection,
15 the County Commission has routinely made
16 mid-year adjustments in this budget, as needed
17 specifically for this agency.
18 Since the 1988-89 budget, this -- budget
19 year, this budget, the Sheriff's budget, has
20 literally better than tripled. No other
21 general fund in Lee County has as much as
22 doubled.
23 So we've worked with this agency. As a
24 matter of fact, I was the one that recommended
25 the $550,000 because of the timing of this
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1 process to what his needs were.
2 We also had given an additional 3.1 million
3 from the time of what was agreed to in
4 September, to the point where we even offered
5 the 550,000.
6 So we've not been arbitrary or capricious,
7 we've not been negligent, we've not been
8 irresponsible or unfair, to either the
9 Sheriff's Department, or to the taxpayers, our
10 public, who we have to justify as the budget
11 authority these dollars.
12 We are the ones they elected to make this
13 decision. And I'm sorry that it's being pushed
14 on you, because you weren't elected to make
15 this decision. You're just being forced into
16 it by unfortunately a Sheriff's agency that has
17 circumvented the process.
18 Let me take a moment briefly and talk about
19 the audit, because I'm sure that's on some of
20 your minds.
21 GOVERNOR BUSH: Well, but since that quote
22 right behind you is kind of standing out, you
23 may want to explain that part, too.
24 MR. ALBION: So they're good
25 choreographers. They have it directly behind
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1 me.
2 Let me -- the quote had to do with the fact
3 that, as you heard, the Sheriff's request was
4 actually 65.5 million is what was written out
5 on that June 1st request.
6 Frankly, it was -- it was really
7 62.7 million, because there were a number of
8 grants that were included in there that hadn't
9 been included in the past. That was one of the
10 things that actually did help from the audit
11 process, to get a clarification of that.
12 The reason that quote was made was very
13 simple. We could turn around and, frankly,
14 continue to help sell newspapers and have
15 another disagreement splashing all over the
16 pages for a period of time about 62.7 million
17 versus 50.7 million, and -- and that huge
18 increase.
19 Or, frankly, we could pooh-pooh it a little
20 bit and push it over to the audit, which is,
21 frankly, a lot easier approach, and I will
22 confess, it was the easier path.
23 And that's why -- and I made it possibly
24 stronger than I should have. But I did it
25 because I saw the June 1st submittal come out
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1 late in the afternoon, I get a call from the --
2 from reporters, and I've got a choice to make.
3 Why are we doing the audit if I don't go
4 that direction. And on the other direction, do
5 I really want to be reading about this for four
6 or five months instead of getting to the bottom
7 line of the numbers, waiting for the audit to
8 come out, which didn't come out in a timely
9 way, might I add, which made our job even more
10 difficult.
11 So why do we have a problem with the audit
12 would be a logical query. The problem we have
13 is that the audit has resource allocations in
14 there we think well covered, we think there are
15 a lot of good recommendations in the audit.
16 The problem is, there aren't cost
17 allocations to those recommendations. That
18 bothers us greatly. We pushed about that. So
19 they came up with an Executive Summary.
20 And in the Executive Summary is the only
21 place in the entire audit document that
22 indicates a reasonable level being 59.9 million
23 dollars.
24 Yet we were told when pushing about the
25 Executive Summary because it was inconsistent
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1 with the document, we were told that we should
2 just go by the document, because the
3 Executive Summary had to be thrown together
4 quickly to get it done to meet the time lines.
5 And that, therefore, we looked at it and
6 said the 59.9 million, how do you justify that?
7 It should have been in the document, you should
8 be able to see it and understand it, as you
9 would with any other audit.
10 We paid the auditing firm under protest.
11 We finally, after being told on March 28th,
12 that all the documents were in Tallahassee
13 waiting for us, it took us better than
14 two months to get the documents from that point
15 in time.
16 As a matter of fact, we just got them in
17 the last couple of weeks. Yet they're all
18 there waiting for us. So we've had concerns
19 about this.
20 We should also point out, as far as the
21 audit goes, I challenged the auditor directly
22 in our chambers about whether there would be
23 any cost savings to our citizens, or whether
24 there would be any higher level of service.
25 And I think this is an important point.
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1 The auditor told us, there would not be a
2 cost savings, because some of the
3 recommendations would cost less, others would
4 cost more. And there would be no higher level
5 of service.
6 How do I justify that to the taxpayers?
7 So, therefore, we want to get the backup
8 information and get to the bottom line of this
9 audit, because we don't feel it's complete,
10 because the cost allocations aren't there, and
11 that is our job.
12 So if I may move to a close and maybe get
13 to questions, we think this is a question of
14 public policy.
15 Do you want, through this decision, to
16 invite all Florida counties to use this august
17 body as the end of the budget process? All
18 67 counties?
19 Shouldn't an agency be rewarded for
20 spending at the amount requested, instead of
21 the amount allocated, for creating a crisis
22 knowingly?
23 History over the last seven years indicates
24 the local authority was not negligent, was not
25 irresponsible, was not unfair. Shouldn't
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1 extraordinary measure be invoked, unless
2 specifically we can be shown to be so unfair,
3 because we feel this is an extraordinary
4 measure. Local issues should remain local,
5 unless unique circumstances exist. Such
6 circumstances do not exist here.
7 Again, my apologies for our having to be
8 here at all. We shouldn't be.
9 And let me add -- make one other point,
10 and -- and really to the Attorney General. The
11 last time we were here, there was concerns
12 expressed, of course, about County reserves,
13 et cetera. And I thought that that was a very
14 appropriate approach that was taken back then.
15 And we made the commitment that if he
16 needed the additional funding, to prove it,
17 that we would do so. The Sheriff's already
18 said, we have money sitting aside if necessary.
19 Our Board has always come to the plate and
20 done that with this Sheriff, as every year's
21 mid-year adjustments proves.
22 So, therefore, I don't think this is an
23 issue in that regard. I think it should remain
24 with the local authority as a public policy
25 making body, and we've not turned our back on
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1 this Sheriff. Instead, we've turned around,
2 and I think that we've worked with him, and his
3 deputies, for a very positive result for our
4 citizens, and we ask you to stay with the local
5 authority.
6 GOVERNOR BUSH: Can you -- can -- go back
7 to the quote just one --
8 MR. ALBION: Absolutely.
9 GOVERNOR BUSH: -- moment. I --
10 Was there a -- was -- did the Commission
11 make a -- was there a sense that whatever the
12 recommendation was made by the auditing -- MGT,
13 I guess it was, that you would accept that?
14 MR. ALBION: Our feeling was is that we
15 thought it would clarify -- a), it would
16 clarify the issue; b), we did not, as the
17 Sheriff has appropriately stated, neither --
18 neither side abdicated that decision to the
19 auditing firm. We thought it would give us
20 that clear indication.
21 Without the cost allocation in there, we
22 believe the audit is not complete. That's why
23 we paid it under protest. Our people are going
24 to have to try to work with those backup
25 numbers. And if we have to hire somebody else,
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1 we may just have to do that, so that we don't
2 keep coming back here. It gets expensive and
3 time consuming, for you, as well as for us.
4 But we expected to get the cost
5 allocations. What good is an audit for a
6 budget authority without it?
7 GOVERNOR BUSH: But you did get it in a
8 follow-up --
9 MR. ALBION: No. All we got was the one
10 sentence saying the 59.9 million was a
11 reasonable range. We don't have the -- if you
12 implement ninety of the hundred and forty-three
13 recommendations, to pick a number, to the
14 fullest degree, what does that mean? We don't
15 know. First of all.
16 Second of all, again, one question the
17 auditor stated to my questioning publicly, that
18 there will be no cost savings if you were to
19 implement all 143 recommendations properly and
20 fully, and there would be no higher level of
21 service realized by the citizens of Lee County.
22 GOVERNOR BUSH: You -- you don't think
23 you're backing out of an agreement that would
24 have kept this from coming here.
25 MR. ALBION: No. The biggest problem is,
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1 we don't think the audit's complete.
2 But, no, I don't think we're backing out of
3 a deal with it either. And that's why I think
4 your OMB staff I think also --
5 GOVERNOR BUSH: What's the OMB staff?
6 MR. ALBION: I'm sorry. I -- maybe I'm
7 using the wrong term. Brad Thomas and --
8 MR. BOSCAN: OPB.
9 GOVERNOR BUSH: OPB. Okay.
10 MR. ALBION: It may also, if it helps you,
11 as far as some of our consternation -- and I've
12 got to confess, if you all figured out those
13 numbers before, you're far better than me.
14 I -- numbers were flying around here a few
15 minutes ago.
16 But I will tell you that one question at
17 that first round about where the cuts would
18 effect the level of service, the
19 Sheriff's Department said to Brad Thomas,
20 Sunny Phillips, and to Rodney Doss, they didn't
21 get that far yet. They didn't know.
22 Well, what if one person makes 15,000,
23 another person makes 45,000, maybe it's not a
24 hundred and sixty. They don't know.
25 And that is --
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1 GOVERNOR BUSH: Thank you.
2 MR. ALBION: -- very troubling to us.
3 GOVERNOR BUSH: Any questions?
4 MR. ALBION: If we could -- I also have
5 Keith Arnold here. We'd like -- but I'd be
6 happy to answer questions also.
7 SECRETARY HARRIS: I have a -- I have a few
8 questions.
9 How much has Lee County grown? I mean,
10 it's one of the fastest growing counties in --
11 in the country, you know, I read. So do you
12 know how -- in terms of the population, the
13 base, you know, we're listening to some of
14 these services.
15 I -- my question relates to this: If there
16 are no cost savings, but the -- the audit
17 company could actually say there's some that go
18 up, there's some that come down.
19 It seems to me that if they know that they
20 go up or they go down, they should have been
21 able to allocate a cost saving -- then you
22 could look at which ones actually produce
23 savings, or which ones are going to cost more
24 so you could see what you're working with.
25 I don't really understand why they haven't
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1 done that.
2 But it would seem to me that this all has
3 to do with whether it's going up or down or a
4 not greater level of service, and no cost
5 savings. It still seems like you have to
6 accommodate a -- a large population growth that
7 would indicate an increase in costs.
8 And then the second question accompanying
9 that: If -- the Sheriff said that the County
10 has increased 26 percent -- or 26 million,
11 you know, as well.
12 Why would -- in terms of the operating
13 budget, why would you make that part decrease
14 in terms of the budget analysis when the audit
15 said that there was no reason for that
16 decrease?
17 That -- that's really my question.
18 MR. ALBION: Well, maybe it'll be easier if
19 I answer the second question first.
20 One of the -- I think it's a weakness in
21 the process is when we do not give the
22 Sheriff's agency what they request, then we
23 have to say which line items need to be cut or
24 whatever, and yet there's only six line items.
25 And then whatever -- you're at the mercy of
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1 whatever information you get.
2 This Sheriff's agency adamantly refused to
3 give us any indication of where those dollars
4 should be put when we increased first
5 3.1 million from where we originally were, and
6 then the 550,000.
7 They -- the 550,000, they did say put into
8 operating, to their credit. But not the
9 3.1 million. So, therefore, we just wanted to
10 make sure that the men themselves were covered
11 is -- is how we ended up there.
12 I'll be candid with you, if I had to do it
13 over again, I'd just put it in the Sheriff's
14 reserves, and just let him decide that way.
15 But we weren't that smart at the time. So that
16 was the first thing as far as those dollars go.
17 This is an agency that in 12 years has gone
18 up -- the increased portion is over
19 200 percent. So they have actually better than
20 tripled their budget.
21 No one else's general fund -- and we all
22 have the same population increase, we have the
23 same taxpayers -- the County's has gone up
24 130 percent. And the other departments --
25 and -- and by the way, these other
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1 constitutionals, please keep in mind two
2 points: One is that there were certain changes
3 in State law, the computers, et cetera, that
4 required certain upgrades.
5 But that notwithstanding, these budgets are
6 significantly smaller than this budget. So any
7 increase is going to have a much higher
8 percentage attached to it. So that's why
9 I think those increases look that way.
10 As far as the County goes though, we've
11 been increasing at a significantly smaller way.
12 As a matter of fact, our millage for our
13 general fund this year, compared to 10 years
14 ago, is lower, and has been really steady, or
15 on the decline each of those ten years, one.
16 Two, we have 400 less employees than we had
17 ten years ago, because we've been operating
18 efficiently and effectively. But we've had to
19 provide additional resources is why we had the
20 increase.
21 Well, when we looked at the Sheriff's
22 agency, we see that history, I think, is on our
23 side. You stuck with the local authority, the
24 citizens are satisfied with the level of
25 law enforcement they've received.
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1 And why, therefore, would you advocate
2 now -- not advocate, but leave the local
3 authority? I think that that would be a
4 real -- a policy making call that I think would
5 be very odd.
6 I would also say to you that, therefore --
7 so the reason why we have those increases was
8 that. I don't -- I could stand here all day
9 and give you information.
10 SECRETARY HARRIS: I --
11 GOVERNOR BUSH: Katherine.
12 SECRETARY HARRIS: Thanks.
13 I guess I -- one of my concerns is of -- of
14 those other comparable counties, that this
15 county is -- is right at the bottom, you know,
16 if you're looking at it -- the others are
17 8.7 percent higher.
18 And Collier, I do think there's merit that
19 Collier -- that Lee County has twice the
20 population. I think that that does demand more
21 law enforcement. And there must be a
22 percentage concerning land mass as well.
23 But I do think certainly that that's an
24 appropriate increase in law enforcement as
25 well.
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1 It's really awkward, I think, for us to
2 have to deal with this. You know, you say --
3 you apologized, and -- and I think we all feel
4 diffi-- you know, that it's difficult.
5 But this a constitutional officer, and it's
6 the law that they have the right to do that.
7 So I certainly think, you know, that -- that
8 from the standpoint that they're here, it's
9 appropriate.
10 But I guess what I find the most difficult
11 is the circumstances that it has to come, that
12 it's come three times.
13 Would you describe the County's
14 relationship with the Sheriff -- it was
15 described earlier as acrimonious.
16 Would you describe it in that regard as
17 well?
18 MR. ALBION: Well, personally I don't agree
19 with that.
20 First, let me make the statement about
21 Collier. If you're not covering geographic
22 area, isn't the other main concern level of
23 service based on number of calls? Not based on
24 population, number of calls.
25 Because outside of demand, you are
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1 patrolling. That's what I would -- of course,
2 you have the jail, too, of course.
3 SECRETARY HARRIS: And you have --
4 MR. ALBION: But --
5 SECRETARY HARRIS: -- then we've had laws
6 change that have helped --
7 MR. ALBION: Right.
8 SECRETARY HARRIS: -- to drive down the --
9 the criminal arrests, and all those kinds of
10 things so that our crime has dropped
11 dramatically. So --
12 MR. ALBION: Absolutely.
13 SECRETARY HARRIS: -- you know, all those
14 things are at play. I understand that.
15 MR. ALBION: Absolutely.
16 So, therefore, on the Collier situation, I
17 would think it's geographic area, or calls for
18 service. And not simply population. That's my
19 opinion. For whatever that's worth.
20 I apologize. The -- the question --
21 SECRETARY HARRIS: The second -- the -- the
22 question is, I guess, while we're here --
23 MR. ALBION: The acrimony.
24 SECRETARY HARRIS: -- of the -- the
25 acrimony. I mean -- I wondered how you
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1 would --
2 MR. ALBION: Well --
3 SECRETARY HARRIS: -- describe the
4 relationship.
5 MR. ALBION: -- if we have such acrimony
6 with the Sheriff, how come we've been doing
7 mid-year adjustments every year?
8 How come -- I was the one that was a third
9 vote for the Cops Ahead Grant on our Board. I
10 was the one that recommended $550,000 this
11 year.
12 We've done mid-year adjustments every year
13 that if you don't even include the additional
14 grant monies -- check that -- monies required
15 because grants run out.
16 We've done mid-year adjustments of over
17 7 million dollars over the last 10 years.
18 We've been doing it every single year as
19 requested.
20 So if we have an acrimonious relationship,
21 if it's that bad, why are we doing mid-year
22 adjustments?
23 SECRETARY HARRIS: I suppose my -- my final
24 point would be, so that we don't have this
25 happen next year or the following year or the
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1 next, is with regard to the audit, as expensive
2 as it is, it seems there would have been
3 allocations for the -- the points that were
4 given.
5 If they can say that it goes up or down,
6 then obviously, they ought to be able to
7 attribute a value, number one, so that you can
8 move forward, and with a plan in the future.
9 Number two is that in that plan, there
10 should be some sort of methodical way to work
11 together, and -- between your offices and the
12 Sheriff such that we're not having to repeat
13 this every year. Because obviously all we care
14 about is that the services are adequately
15 funded, and that it doesn't -- I mean, I
16 understand politics.
17 But this is -- this is getting a little
18 ridiculous.
19 MR. ALBION: Well, thank you.
20 I would -- I would suggest that we feel
21 it's very ridiculous at this point, three times
22 in seven years without any circumstance
23 creating it I -- I find to be very odd.
24 As far as the agency itself goes -- or the
25 situation goes with the audit, we are
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1 organizing all those papers -- there's eight or
2 nine boxes or something of them right now.
3 We know we need to get the cost
4 allocations, because that is our side of the
5 ledger of the budget authority. And we're
6 doing that now. And the reason why is because
7 it wasn't in there.
8 So we -- we don't disagree that a lot of
9 the recommendations are very good. But we have
10 problems with understanding what does it all
11 mean?
12 How do I say to a taxpayer, you're not
13 going to get a higher level of service, the
14 improvements are internal, you're not going to
15 get a higher level of service, and there isn't
16 going to be a cost savings, but they're doing
17 143 changes.
18 I -- if I were a citizen, I'd be looking
19 and saying, well, okay, what -- what I'd get
20 for it, a little more bureaucracy, is that what
21 an internal change means? I don't know.
22 That's the problem we have with this whole
23 audit situation, as I see it.
24 If --
25 GOVERNOR BUSH: Brad. Can you come --
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1 MR. ALBION: Let's turn --
2 GOVERNOR BUSH: -- back?
3 MR. ALBION: -- this over to Keith Arnold.
4 He had a couple of comments if --
5 GOVERNOR BUSH: Oh, Keith? Do you want to
6 say something?
7 MR. ARNOLD: Sure.
8 MR. ALBION: Thank you.
9 GOVERNOR BUSH: You bet.
10 MR. ARNOLD: Governor, we're clearly at
11 your disposal here. I can make some concluding
12 remarks at the end of the questions if you
13 would prefer. We seem to have moved into the
14 Q and A period.
15 I mean, I'm -- I'm at your disposal,
16 whatever you'd prefer that we do. I can speak
17 for a couple minutes now, or -- or wait to some
18 concluding remarks and --
19 GOVERNOR BUSH: Go ahead and --
20 MR. ARNOLD: Okay.
21 GOVERNOR BUSH: We'd like to get on with --
22 MR. ARNOLD: I will be very brief then,
23 in -- in light of that.
24 For the record, my name is Keith Arnold.
25 I'm here on behalf of the -- the Board of
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1 County Commissioners of Lee County.
2 And I'd like to make just a couple of
3 points, if -- if I may.
4 I've had the opportunity to work with all
5 these gentlemen over the last several years,
6 over the last almost two decades with some of
7 them. And I can tell you that all of these men
8 are very sincere in their efforts to improve
9 the quality of life of Lee County.
10 Our Sheriff is very sincere in his efforts
11 to improve the criminal justice system, and
12 advocate what he sees as a responsible level of
13 funding for reducing criminal justice in
14 Lee County.
15 And I can equally assure you that our Board
16 of County Commissioners is trying to do the
17 best they can in reconciling the various budget
18 issues within our county.
19 I would submit to you that this comes down
20 to more than numbers at this point. It does
21 come down, in fact, to public policy.
22 And I think that that's the issue before us
23 today. If you look at it in the context of the
24 recommendation, the recommendation is for
25 $723,000 almost, from the OPB staff.
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1 Let's keep that in mind. Seven hundred and
2 twenty-three thousand dollars is less than
3 1.2 percent of the entire Sheriff's budget, no
4 matter what decision you make today. No matter
5 what decision you make today.
6 And it seems to me that this
7 constitutionally defined and statutorily
8 defined process is reserved for those unique
9 circumstances where local government is
10 indifferent, or is even arrogant as to the
11 criminal justice needs of our community.
12 If local governing officials do not respond
13 to the needs of our community as it relates to
14 law enforcement, then I think this process has
15 been reserved for you to override local
16 government decisions.
17 But local government, our local government
18 in Lee County, has responded in the last
19 two years, without your intervention, and
20 irrespective of what decision you make today,
21 this budget will have increased at least
22 21 percent in two years. At least 21 percent
23 in two years, if you recommend zero increase.
24 The point is, is our local government has
25 been responsive to our Sheriff's issues, they
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1 have tried to work with our Sheriff, they
2 continue to try to work with our Sheriff, they
3 continue to respond to our community in trying
4 to meet the needs of our citizens as it relates
5 to law enforcement.
6 The final point I'd make to you is I think
7 the real overriding point of this whole forum
8 today, our Constitution is extremely clear.
9 Our Constitution requires every office in
10 this state to operate off a balanced budget.
11 Requires each of you as local -- as statewide
12 elected officials, it requires every state
13 agency to do so; it requires every city, all
14 400 of them in the state of Florida; it
15 requires 67 counties to operate off of a
16 balanced budget. And it requires every single
17 constitutional office in this state to operate
18 off a balanced budget.
19 You've heard the issue before us. And I
20 quote Mr. Sukhia: If you do not approve an
21 increase, we will run out of money before the
22 end of the year.
23 The issue, Governor, and members of the
24 Cabinet, is whether or not a constitutional
25 officer should allow-- be allowed to spend
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1 beyond the budget authority given to him.
2 And I would further suggest to you that
3 irrespective of your decision today, this issue
4 is in all likely to end up in the courts,
5 because we are pushing the constitutional limit
6 of a local governing authority, a local
7 government official, to appropriate and spend
8 unilaterally.
9 That, ladies and gentlemen, is the issue
10 before us.
11 And that's the one that I think we have to
12 struggle with as it relates to the public
13 policy of this state: Should we allow any
14 local body, anybody in the state, to totally
15 and indifferently spend money in contrast to
16 the requirements of our Constitution.
17 And I suggest to you -- I humbly suggest to
18 you, that that is not permissible.
19 Thank you, Governor.
20 GOVERNOR BUSH: Thank you.
21 MR. ARNOLD: I think both sides will be
22 willing to field questions as -- as you see fit
23 at this time.
24 Thank you very much.
25 GOVERNOR BUSH: Brad?
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1 MR. THOMAS: Yes, sir.
2 GOVERNOR BUSH: Based on what you've heard,
3 can you just briefly give us a -- a run-down of
4 what you're -- how you -- your team made the
5 recommendation.
6 MR. THOMAS: Yes, sir.
7 The panel attempted to clarify exactly what
8 Leon -- excuse me -- Lee County Board of County
9 Commissioners funded. And we went through
10 materials and we went through letters, and we
11 went through questions that we actually asked
12 them.
13 And in our document there, you'll see that
14 we -- we looked at COLA merit increase and
15 other items that the Board of County Commission
16 we felt told the Sheriff, you will spend money
17 on these items.
18 We then looked at his base budget from
19 98-99, and determined that the Lee County
20 Sheriff could not fund those line items that
21 the County Commission had told him they were
22 funding without reducing his budget in the
23 category of sal-- of expenses other than
24 salaries, and in the category of reserve for
25 contingencies.
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1 To take a conservative approach, being
2 as -- I'm well aware of the legal tensions
3 involved in this State statute and in the --
4 and the questions -- the public policy
5 questions, we determined the best course was to
6 say, what would it take to at least ensure that
7 the Sheriff's budget was not reduced?
8 Because in looking at internal and external
9 factors, that was our final conclusion. To
10 ensure that his expenses category was not
11 reduced below the base from the previous
12 fiscal year, we determined he needed
13 approximately 550,000. And then in the reserve
14 for contingencies, we determined that he was
15 entitled to a hundred and eighty-four,
16 approximately.
17 That was our -- our calculation.
18 GOVERNOR BUSH: General?
19 ATTORNEY GENERAL BUTTERWORTH: Governor,
20 unless there are any questions, I don't have --
21 GOVERNOR BUSH: Question, Tom?
22 COMMISSIONER GALLAGHER: Yeah. I just want
23 to know: This -- when was the compromise of
24 875,000 offered?
25 MR. THOMAS: I'm -- Commissioner, I'm not
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1 quite sure of the eight hundred and
2 seventy-five figure.
3 COMMISSIONER GALLAGHER: Well, I --
4 SECRETARY HARRIS: Yeah. What --
5 COMMISSIONER GALLAGHER: -- my information
6 says that --
7 MR. THOMAS: Yes.
8 COMMISSIONER GALLAGHER: -- that the
9 County Commission offered a compromise of
10 875,000 to avoid an appeal. And I was just
11 wondering when the timing of that was.
12 MR. THOMAS: I'm not aware of that,
13 Commissioner Gallagher. What I -- I am aware
14 of is the Sheriff filed an emergency appeal for
15 2.2 million dollars approximately four to
16 six weeks ago.
17 The Chairman mentioned that he himself
18 recommended the 550,000 in additional funding,
19 which they did receive. I'm -- I guess that
20 was in the nature of a compromise, but it was
21 not in my understanding a compromise accepted
22 by the Sheriff.
23 COMMISSIONER GALLAGHER: Well, obviously.
24 GOVERNOR BUSH: General.
25 ATTORNEY GENERAL BUTTERWORTH: Yes.
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1 As I understand this, and I have to agree
2 with Representative Arnold, I believe both the
3 Sheriff and the -- and the County Commission
4 has done a wonderful job for Lee County, and --
5 and has taken many, many leadership roles,
6 especially in the area of -- of juvenile
7 delinquency prevention, and a lot of other
8 programs, been very innovative. And -- and the
9 County has been funding them over the years.
10 I'd like to make a recommendation,
11 Governor. I -- I mean, as a former Sheriff,
12 this particular statute was always available to
13 us as -- as the Secretary of State has stated.
14 And only a few times has it been used in the
15 last few years.
16 But I think what it -- the reason why it's
17 there is -- is that law enforcement's the most
18 important aspect of why we're -- we have
19 governance. And -- and, therefore, it's out
20 there.
21 But the -- and as Keith said --
22 Keith Arnold said, maybe it should only be used
23 in the extremest of areas. But that is not
24 what the statute says.
25 I believe out of fairness, Governor,
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1 that -- that our panel -- to increase the
2 expenses by the panel recommendation of five
3 thirty-eight one oh seven, I'd move that, plus
4 the increase to reserve by the panel of one
5 eighty-four seven eighty-two.
6 And also add the additional increase and
7 expenses to achieve the fiscal year
8 1988-99 (sic) base funding, which would be
9 three five two eight three five.
10 And it's not the -- the million dollars
11 that the Sheriff wants, but it's just
12 annualized for one-third.
13 Which means, if my math is right, Governor,
14 I would move the -- the item for one million
15 seventy-five thousand seven hundred and
16 twenty-four dollars.
17 GOVERNOR BUSH: Is there a second?
18 TREASURER NELSON: Second.
19 GOVERNOR BUSH: Any discussion?
20 I have -- since I have -- yeah.
21 COMMISSIONER CRAWFORD: Oh, I was just
22 going to offer a substitute motion.
23 If -- if I -- if I -- if I understand you
24 right, you're going beyond what the panel
25 recommended.
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1 ATTORNEY GENERAL BUTTERWORTH: I -- by
2 352,000.
3 It appears from -- from how I'm hearing
4 this testimony, Bob, is that they're saying
5 that -- that the panel recommended that, but in
6 order to bring them up to their base, where
7 they would not be losing any money from last
8 year, or they need an additional $900,000 over
9 and above that.
10 I think -- so what this ends up being at
11 the end is that the Sheriff for this year will
12 be getting approximately 58.7 million dollars.
13 Not the 59.9 that the auditor may or may not
14 have recommended, and not the 57.6 which the
15 County had -- had recommended.
16 So really it is right -- right between both
17 of those, and it's far less than the
18 62.7 million dollar request that the Sheriff
19 originally wanted.
20 COMMISSIONER CRAWFORD: Well --
21 ATTORNEY GENERAL BUTTERWORTH: -- what's in
22 the order.
23 COMMISSIONER CRAWFORD: Yeah.
24 I -- I would say -- it's hard to figure out
25 what -- what's the best thing to do here. I
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1 want to rely on the panel and -- and their
2 recommendation.
3 And -- and, frankly, I'm reluctant to even
4 do that. As the General mentioned, there's
5 only rare times in the history of this state
6 where this Board has overturned the decision of
7 a -- of a County Commission.
8 And for -- even though I think it probably
9 falls on the County Commission, I would
10 probably vote to increase the -- the Sheriff's
11 budget.
12 But -- but that's not my role here. I do
13 not have the responsibility of raising taxes on
14 the taxpayers of Lee County. That is the
15 responsibility of the County Commission. They
16 are the ones that determine the policy level
17 of -- of expenditures.
18 And for us to step into that role and --
19 and to -- to supersede that responsibility
20 I think does take, in my mind, a very
21 extraordinary set of -- set of circumstances,
22 which it's not a matter that we just disagree
23 with what the level could be.
24 I think it goes to a -- a higher level, and
25 each person has to decide in their own mind
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1 what -- what that standard is.
2 But -- but to me, if you're responsible for
3 raising the taxes, you're responsible for the
4 spending. And there's got to be something very
5 extraordinary to intervene for us, in my
6 opinion, to -- to trample on that fundamental
7 principle of -- of government.
8 Now -- so my -- my motion here would --
9 would, in fact, go a little bit against that,
10 and allow for an increase. But I think it's a
11 well thought-out increase, and -- and the one
12 the County can live with so the Sheriff will
13 get a little bit -- we don't go too far I think
14 in -- in trying to second-guess the County.
15 So I would -- I would make that -- that
16 motion.
17 COMMISSIONER GALLAGHER: I would second
18 that motion, and I'd like to explain why.
19 In order not to come up here, the County
20 did offer the money that they tax the citizens
21 of Lee County, a $875,000 compromise.
22 This amendment to the motion -- or actually
23 this substitute motion goes a little less than
24 what the offer was. So it -- it does still
25 make it so it is affordable to the County.
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1 And it also takes care of what was expected
2 to -- was found by the panel to take care of
3 the increase in reserve, and also the increase
4 to expenses.
5 And so --
6 GOVERNOR BUSH: So this --
7 COMMISSIONER GALLAGHER: -- that's why I
8 second --
9 GOVERNOR BUSH: -- this is a substitute
10 motion that will, in essence, accept the
11 recommendations made by --
12 COMMISSIONER GALLAGHER: -- the panel.
13 GOVERNOR BUSH: -- the panel.
14 ATTORNEY GENERAL BUTTERWORTH: Governor, if
15 I can make some --
16 GOVERNOR BUSH: Please.
17 ATTORNEY GENERAL BUTTERWORTH: -- one more
18 comment.
19 It has not been that -- that we've gone
20 with the County Commission or the Sheriff many
21 times. In my -- this is my fourteenth year
22 here. I believe it's only the seventh appeal
23 or eighth appeal that's actually come this far.
24 There -- there have been a number of
25 appeals that have been out there that ended up
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1 getting worked out before anything is filed,
2 and some that are -- that are worked out before
3 it is filed.
4 But each and every time that it actually
5 has come to this particular Commission, we --
6 we have always given law enforcement an amount,
7 but we tried to do it in such a way where it
8 would not hurt the County.
9 And in one case that we had of a smaller
10 county just to the west of here, we ended up
11 just funding -- they only had, like, eight
12 deputies, but they needed nine. We all agreed
13 with that.
14 So we -- we fund that deputy I think on the
15 last day of that particular fiscal year, and so
16 it didn't cost the County that much money for
17 that particular year.
18 So -- but we might want to find out from
19 Lee County as to how much their reserves are
20 right now. And I think it's -- it's probably
21 kind of high.
22 SECRETARY HARRIS: Governor.
23 GOVERNOR BUSH: Katherine.
24 SECRETARY HARRIS: I -- I completely agree
25 with Commissioner Crawford, that I don't think
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1 we have the role to impose additional taxes
2 from this standpoint in Tallahassee.
3 But it was my understanding that the
4 reserves were there to be able to cover this so
5 that that -- that would not occur, there
6 wouldn't be additional taxes.
7 COMMISSIONER GALLAGHER: Well, I --
8 COMMISSIONER CRAWFORD: And my point is
9 that -- that it's the Lee County Commission's
10 the one that makes the decision on the level of
11 taxes. Therefore, they make the level of -- of
12 services expenditures.
13 It's historically -- I -- back in -- many
14 years ago, I worked for an Attorney General,
15 Bob Shevin. And every time a Sheriff -- he was
16 Attorney General for eight years during 1970 to
17 '78. Great Attorney General, I thought.
18 And --
19 ATTORNEY GENERAL BUTTERWORTH: He was a
20 good Attorney General, too.
21 COMMISSIONER CRAWFORD: And you're another
22 great --
23 ATTORNEY GENERAL BUTTERWORTH: I agree he
24 was a great --
25 COMMISSIONER CRAWFORD: Well --
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1 ATTORNEY GENERAL BUTTERWORTH: --
2 Attorney General.
3 COMMISSIONER CRAWFORD: -- and like most
4 Attorney Generals, he -- he recog-- he sided
5 with the Sheriff on every appeal during that
6 eight years.
7 And do you know how many passed? Zero.
8 Because Governor Askew and the members of
9 that panel recognized the -- the -- the
10 responsibility of the County Commission to levy
11 taxes, and only if extraordinary circumstances
12 exist.
13 It's just not a difference of opinion.
14 It's got to rise much higher than that. I may
15 disagree with the level of services that the
16 County Commission is -- is deciding on. But at
17 the same time, that -- that's their
18 responsibility.
19 And our -- our responsibility here I think
20 is to -- is to only look at things that fall
21 into the extraordinary realm.
22 Yet, at the same time, in trying to be
23 fair, our panel worked real hard; it gives the
24 Sheriff some more money; yet, at the same time,
25 I think doesn't go too far, and -- and that's
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1 why I think it's a good motion.
2 But --
3 GOVERNOR BUSH: Any other discussion on
4 the --
5 SECRETARY HARRIS: Yes.
6 GOVERNOR BUSH: -- substitute --
7 SECRETARY HARRIS: Sorry, Governor. Yes.
8 I -- I just -- to understand this motion a
9 little better, I have two questions, and -- and
10 for the Sheriff.
11 What -- what really concerned me in the
12 testimony by the Commissioner was the fact that
13 nothing in the original discussions on -- from
14 the Sheriff's Office talked about spending at a
15 level that was requested, versus what was
16 allocated.
17 Could you address that concern? Because,
18 obviously, we all work within our budgets in --
19 MR. McDOUGALL: Yes. I've been --
20 SECRETARY HARRIS: -- that concern.
21 MR. McDOUGALL: -- I've been Sheriff now --
22 I'm in my 12th year as Sheriff. And I was
23 Sheriff in Charlotte County prior to being
24 Sheriff in Lee County.
25 And I can tell you, I have never overspent
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1 my budget. It was the assurances that this --
2 that this County Commission gave me -- when I
3 brought up to the County Commissioners, you're
4 not giving me enough money in my operating
5 budget, I'm going to run out of money somewhere
6 around April or May, they said, Sheriff, don't
7 worry about it. We're not going to let you run
8 out of money.
9 As soon as this audit is over -- this whole
10 thing centered around the audit. That is the
11 pivotal point of my argument. I submitted to
12 the audit, because I wanted to end this war
13 once and for all. Okay. I will -- I will -- I
14 will go with the audit recommendation -- is.
15 When they assured me as soon as this --
16 it's all up to the audit. If it -- if we don't
17 give the Sheriff what the audit says, and
18 the -- and he appeals it to the Governor,
19 I think the Governor and Cabinet should give it
20 to him.
21 I -- I took him at his word. I took the
22 Board at their word. I -- we had -- we had an
23 agreement. Lets (sic) the auditors -- let a
24 third party -- the -- the Auditor General of
25 the State of Florida, let him cut -- make the
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1 decision here of what my base should be.
2 And that's why I did what I did. I would
3 never outspend my budget. I just kept going
4 on -- I was spending at the level I was last
5 year.
6 GOVERNOR BUSH: Any discus-- any other --
7 MR. McDOUGALL: And I'm below --
8 GOVERNOR BUSH: -- questions?
9 MR. McDOUGALL: -- I'm 1.4 million dollars
10 below last year's level. That's where I --
11 that's where the problem is.
12 GOVERNOR BUSH: Any other questions?
13 SECRETARY HARRIS: Thank you.
14 GOVERNOR BUSH: Well, there's a substitute
15 motion to accept the recommendations made by
16 the panel. And there's been a second.
17 All in favor, say aye.
18 THE CABINET: Aye.
19 GOVERNOR BUSH: How many is -- how many
20 ayes are those?
21 COMMISSIONER CRAWFORD: Aye.
22 GOVERNOR BUSH: All -- all opposed, no.
23 ATTORNEY GENERAL BUTTERWORTH: No.
24 TREASURER NELSON: No.
25 GOVERNOR BUSH: Okay. So now we're back to
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1 the -- General Butterworth's --
2 COMMISSIONER GALLAGHER: I mean, what was
3 the -- what was the vote?
4 GOVERNOR BUSH: I think it was 5 to 2?
5 Is that correct?
6 SECRETARY HARRIS: Yes.
7 GOVERNOR BUSH: Did you vote, Katherine?
8 SECRETARY HARRIS: Yes, I voted -- no, I
9 voted to support the substitute amendment.
10 COMMISSIONER GALLAGHER: Well, let -- let's
11 know what the vote is --
12 GOVERNOR BUSH: You voted in favor of --
13 Let's start over. Can we have some --
14 Everybody that's in favor of the substitute
15 amendment say aye.
16 COMPTROLLER MILLIGAN: Aye.
17 COMMISSIONER GALLAGHER: Aye.
18 COMMISSIONER CRAWFORD: Aye.
19 GOVERNOR BUSH: All opposed.
20 ATTORNEY GENERAL BUTTERWORTH: No.
21 COMPTROLLER MILLIGAN: No.
22 GOVERNOR BUSH: No.
23 General, did you say no?
24 COMPTROLLER MILLIGAN: I said no, yes.
25 GOVERNOR BUSH: That's 4 --
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1 ATTORNEY GENERAL BUTTERWORTH: No, yes.
2 GOVERNOR BUSH: -- to 3.
3 COMPTROLLER MILLIGAN: I said no twice.
4 GOVERNOR BUSH: The substitute is -- is
5 defeated.
6 We're back on the motion made by
7 General Butterworth.
8 Any discussion?
9 This -- this motion would add $352,000 that
10 would basically fulfill the Sheriff's
11 commitment -- make -- your last statement, this
12 would -- would make you whole for this year.
13 MR. McDOUGALL: Yes.
14 GOVERNOR BUSH: Since you were spending at
15 a rate -- assuming that the --
16 MR. McDOUGALL: That was promised. Right.
17 GOVERNOR BUSH: Any other discussion?
18 All in favor of the motion, say aye.
19 THE CABINET: Aye.
20 GOVERNOR BUSH: All opposed?
21 COMMISSIONER CRAWFORD: No.
22 GOVERNOR BUSH: Thank you very much.
23 MR. McDOUGALL: Thank you, Governor.
24 GOVERNOR BUSH: Who's clapping?
25 ATTORNEY GENERAL BUTTERWORTH: I thought
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1 neither side would -- I thought neither side
2 would clap on that one, Governor.
3 GOVERNOR BUSH: Yeah. I --
4 MR. SUKHIA: Well, I -- I did want to --
5 GOVERNOR BUSH: Chairman, am I going to
6 need police protection down in Lee County
7 tomorrow?
8 ATTORNEY GENERAL BUTTERWORTH: Well, the
9 Sheriff was clapping, so you might be
10 all right.
11 (Discussion off the record.)
12 (Treasurer Nelson exited the room.)
13 (The Administration Commission Agenda was
14 concluded.)
15 * * *
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1 GOVERNOR BUSH: Board of Trustees.
2 MR. STRUHS: Item 1, acceptance of the
3 minutes.
4 ATTORNEY GENERAL BUTTERWORTH: Motion on
5 the minutes.
6 GOVERNOR BUSH: Is there a second?
7 COMPTROLLER MILLIGAN: Second.
8 Second.
9 MR. STRUHS: Item 2, we --
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 Item 2.
13 MR. STRUHS: We're recommending approval to
14 grant authority to the St. Johns River Water
15 Management District to enter into acquisition
16 negotiations for the Emeralda Marsh CARL
17 Project.
18 COMMISSIONER GALLAGHER: Motion.
19 GOVERNOR BUSH: Is there --
20 ATTORNEY GENERAL BUTTERWORTH: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, approved.
23 MR. STRUHS: Item 3, recommending approval
24 of a purchase agreement to acquire 703 acres by
25 the Department of Agriculture as an addition to
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1 the Withlacoochee State Forest.
2 COMMISSIONER GALLAGHER: Motion.
3 ATTORNEY GENERAL BUTTERWORTH: Second.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. STRUHS: Item 4, we're recommending
8 approval of the acceptance of an assignment of
9 option agreement to acquire two hundred and
10 forty-six-and-a-half acres within the
11 Perdido Pitcher Plant Prairie CARL Project from
12 the Nature Conservancy.
13 COMMISSIONER GALLAGHER: Motion.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. STRUHS: Item 5, we're recommending
18 approval of an option agreement to acquire
19 43.4 acres within the Weedon Island Preserve
20 Project under the Greenways and Trails Program.
21 COMMISSIONER GALLAGHER: Motion.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MR. STRUHS: Item 6, recommending approval
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1 of an option agreement to acquire 1.82 acres
2 for the benefit of the Department of Highway
3 Safety and Motor Vehicles.
4 COMMISSIONER GALLAGHER: Motion.
5 COMMISSIONER CRAWFORD: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 MR. STRUHS: Substitute Item Number 7 --
9 GOVERNOR BUSH: Or 8?
10 Did you --
11 MR. STRUHS: Pardon me?
12 GOVERNOR BUSH: I'm sorry. We're on 7?
13 MR. STRUHS: Yeah. I -- it's Substitute
14 Item Number 7.
15 Recommending approval of an option
16 agreement to acquire 11.77 acres within the
17 Dade County Archipelago CARL Project for
18 Miami-Dade County.
19 Archipelago is an unusual term. It's --
20 it's also known as the Atlantic Coastal Ridge
21 Ecosystem.
22 COMMISSIONER GALLAGHER: Motion.
23 COMMISSIONER CRAWFORD: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
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1 MR. STRUHS: Item 8, we're recommending
2 approval of an option agreement to acquire a
3 32.6 acre island in the Florida Keys ecosystem
4 from Jerry J. and Anna L. Israel.
5 COMMISSIONER GALLAGHER: Motion.
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 MR. STRUHS: On Item Number 9, we're
10 recommending approval of an option agreement to
11 acquire 5.8 acres within the South Savannas
12 CARL Project from Walter Ungermann.
13 COMMISSIONER GALLAGHER: Motion.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. STRUHS: Substitute Item 10.
18 This is a -- something we're particularly
19 proud of. We've worked with the
20 Nature Conservancy in acquiring a conservation
21 easement, rather than purchasing property
22 fee simple.
23 And this -- I think you all believe --
24 agree is a better use of the State's resources.
25 It's a nice balance between protecting and
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1 conserving the natural resources, and still
2 allowing private use of certain properties.
3 In this particular agreement, we're
4 recommending an option agreement to acquire
5 these conservation easements of over
6 8,000 acres from Kathryn C. Mills, the Trustee
7 of the Mills Ranch Trust, to then designate the
8 St. Johns River Water Management District as
9 the monitoring agency, to evaluate and amend
10 the management policy statement for the
11 Ranch Reserve CARL Project.
12 GOVERNOR BUSH: This is great.
13 COMMISSIONER GALLAGHER: Well, let me ask a
14 question now.
15 We're -- we're taking I guess the use of
16 the island, except for oil, gas, and mineral
17 interests. Is that right?
18 MR. STRUHS: That's correct.
19 COMMISSIONER GALLAGHER: So although they
20 can't use it for anything, they can -- I mean,
21 they could potentially --
22 MR. STRUHS: The --
23 COMMISSIONER GALLAGHER: -- start mining
24 sand there or something.
25 MR. STRUHS: Well, the -- the -- the terms
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1 of the agreement which -- which I hope you
2 have, are -- are fairly specific in terms of
3 what they are and are not allowed to do on the
4 property as part of this conservation easement.
5 And, in fact, it's -- it's quite
6 controlling going down to the detail of how
7 many more dwellings they can actually build on
8 the property, and numbers of square feet.
9 Ess-- essentially the -- the net effect of
10 all those conditions is that the property will
11 eventually continue to be managed and operated
12 as it has been historically.
13 COMMISSIONER GALLAGHER: Motion.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 This is --
18 MR. STRUHS: Yes.
19 GOVERNOR BUSH: -- we've had the policy
20 discussion about conservation easements and how
21 we can extend the reach. This is probably the
22 largest one that we've done. And we're going
23 to allow for a cattle operation -- you know, a
24 ranch that has been in existence probably for
25 many generations, to continue to do that. And
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1 protect a -- a valuable piece of Florida's
2 heritage.
3 So I think this is an excellent way to
4 keep -- keep the focus on what our
5 responsibilities at the State level are.
6 MR. STRUHS: Yes, sir.
7 Thank you.
8 I think -- I think one thing it does
9 demonstrate is that a well-run cattle grazing
10 operation can be a very good use of -- of -- of
11 land, and you can also conserve the -- the
12 natural resources.
13 By -- by using the conservation easement
14 approach, we're paying 41, almost 42 percent of
15 what the fee simple value of the land would be.
16 GOVERNOR BUSH: And --
17 COMMISSIONER GALLAGHER: And -- and we --
18 GOVERNOR BUSH: -- so the government's --
19 COMMISSIONER GALLAGHER: -- don't have to
20 manage it.
21 GOVERNOR BUSH: -- paying property taxes.
22 COMMISSIONER GALLAGHER: Yeah. And we
23 don't have to manage it.
24 GOVERNOR BUSH: Receiving it.
25 COMMISSIONER CRAWFORD: That's right.
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1 GOVERNOR BUSH: And we don't have to manage
2 it.
3 COMMISSIONER GALLAGHER: Right.
4 MR. STRUHS: Right.
5 GOVERNOR BUSH: That's right.
6 I think we did -- did we do it?
7 MR. STRUHS: Okay.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, it's approved.
10 COMMISSIONER GALLAGHER: We're on 11 now.
11 MR. STRUHS: Substitute Item Number 11,
12 we'd like to withdraw that agenda item, please.
13 COMMISSIONER GALLAGHER: Motion to withdraw
14 Number 11.
15 ATTORNEY GENERAL BUTTERWORTH: Second.
16 COMMISSIONER CRAWFORD: Second.
17 COMMISSIONER GALLAGHER: For the one,
18 two --
19 GOVERNOR BUSH: Motion to withdraw.
20 COMMISSIONER GALLAGHER: -- three,
21 fourth time.
22 GOVERNOR BUSH: There's a motion to
23 withdraw and a second.
24 Without objection, it's approved.
25 MR. STRUHS: Item Number 12, recommending
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1 approval of an agreement which provides for the
2 purchase of 2,471 acres of land as part of a
3 settlement agreement with Ardrenn Suttlemyre in
4 Putnam County.
5 COMMISSIONER GALLAGHER: Motion on --
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 MR. STRUHS: Thank you.
10 GOVERNOR BUSH: Thank you, David.
11 I thought you were going to be in
12 Washington today with the Everglades --
13 No?
14 MR. STRUHS: No. Markup is Wednesday.
15 (The Board of Trustees of the Internal
16 Improvement Trust Fund Agenda was concluded.)
17 * * *
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June 26, 2000
1 COMMISSIONER GALLAGHER: Governor,
2 before --
3 COMMISSIONER CRAWFORD: Is that it?
4 COMMISSIONER GALLAGHER: -- we start, I
5 would like to let the State Board know a few
6 things that happened today.
7 We --
8 GOVERNOR BUSH: Education.
9 COMMISSIONER GALLAGHER: -- we finally got
10 our results back on the FCAT.
11 ATTORNEY GENERAL BUTTERWORTH: You have our
12 attention.
13 COMMISSIONER GALLAGHER: May I?
14 GOVERNOR BUSH: Yeah. Please.
15 COMMISSIONER GALLAGHER: Quickly, we today
16 announced results of the FCAT.
17 In math, this is the 1999 results in
18 stripes. And the green color is the year 2000
19 results.
20 And you can see there was quite an increase
21 in 5th grade mathematics; in 8th grade
22 mathematics, a nice increase; and also in
23 10th grade mathematics.
24 So we have a -- a very nice increase in
25 the math. And as you probably all have read
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June 26, 2000
1 in Florida Writes, there was a nice increase
2 there that -- that really got all of the
3 78 schools that had the potential to be able to
4 qualify for opportunity scholarships, got off
5 the list.
6 In -- in reading, there's a little
7 different results. In the 4th grade, you'll
8 see that there was a substantial increase in
9 4th grade reading, which is where it's most
10 important to have the kids concentrate on it.
11 Reading is a much tougher skill to learn
12 than both mathematics and writing. So it's
13 expected you're going to see the reading
14 results not move up as fast.
15 We have somewhat I'd call them a
16 disappointment in 8th and 10th grade reading,
17 because they -- the scores both de-- decrease
18 in both of those.
19 One of the problems that you have in both
20 8th and 10th grade is that it's harder to learn
21 to read at a proficient level when you're in
22 8th and 10th grade than it is when, in fact,
23 you're in elementary school.
24 And that's why the concentration has been,
25 and good results are coming out of, elementary
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June 26, 2000
1 school reading.
2 I want to just bring you up-to-date. We
3 will take the results of the reading, the
4 writing, and the math scores, and hopefully, as
5 soon as possible, issue the grades on the
6 schools.
7 But we do know at this point, that at the
8 most, there will be 11 F schools in the state.
9 And we don't know whether -- whether they will
10 be F or not, but they have the potential of
11 being F because of their writing results. They
12 could get off the list by having the reading
13 and math results above the -- the minimum
14 requirement.
15 If anybody has any questions.
16 ATTORNEY GENERAL BUTTERWORTH: Tom, I think
17 your chart is not doing justice to what's
18 happening, because your -- if you take your
19 two ninety-five and your two ninety, it should
20 really be very, very close.
21 And also your three oh two and your
22 two ninety-eight. You may want to move that --
23 GOVERNOR BUSH: Yeah.
24 ATTORNEY GENERAL BUTTERWORTH: -- the --
25 the green, because it --
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1 COMPTROLLER MILLIGAN: Yeah. It's a little
2 out of whack. But that's --
3 ATTORNEY GENERAL BUTTERWORTH: It really
4 is --
5 COMMISSIONER GALLAGHER: I mean, if you
6 do --
7 ATTORNEY GENERAL BUTTERWORTH: Yeah.
8 Your -- so really, I mean, if you -- if you can
9 do that, I think that --
10 COMMISSIONER GALLAGHER: Total of 4 points.
11 This -- this graph is certainly off. I agree.
12 ATTORNEY GENERAL BUTTERWORTH: Yeah. So if
13 you -- if you can do that, that -- I think will
14 help to show -- because you --
15 COMMISSIONER GALLAGHER: It's only 4 --
16 4 points.
17 ATTORNEY GENERAL BUTTERWORTH: I understand
18 that the --
19 GOVERNOR BUSH: I mean, the -- the
20 reading -- 4th grade reading going up is
21 higher, and yet it looks like it's smaller.
22 ATTORNEY GENERAL BUTTERWORTH: That's
23 right.
24 GOVERNOR BUSH: Come on, Gallagher.
25 COMMISSIONER GALLAGHER: I agree. I fully
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1 agree.
2 ATTORNEY GENERAL BUTTERWORTH: You must
3 have a green pen with you, because you always
4 have green pens.
5 COMMISSIONER GALLAGHER: As a matter of
6 fact --
7 GOVERNOR BUSH: Just color it in.
8 ATTORNEY GENERAL BUTTERWORTH: Just color
9 in where --
10 Much higher than that. It's up -- all the
11 way up -- what was it, three oh two?
12 COMPTROLLER MILLIGAN: Actually the
13 three oh two needs to come down, Tom. That's
14 the --
15 COMMISSIONER GALLAGHER: Does that look
16 better?
17 ATTORNEY GENERAL BUTTERWORTH: Much better.
18 But also with the -- with the 8th grade
19 also, you -- because you're almost talking
20 about the same numbers really. I mean --
21 COMMISSIONER GALLAGHER: Actually it's 5.--
22 GOVERNOR BUSH: This is how you make --
23 COMMISSIONER GALLAGHER: --5.
24 GOVERNOR BUSH: -- the Tampa Tribune.
25 COMMISSIONER GALLAGHER: It should be about
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1 5 points --
2 ATTORNEY GENERAL BUTTERWORTH: That's
3 15 points.
4 Yeah. Five points or --
5 SECRETARY HARRIS: Five.
6 ATTORNEY GENERAL BUTTERWORTH: --
7 six points.
8 COMMISSIONER GALLAGHER: The bottom line is
9 is that we're doing pretty good.
10 Now, one of the things that -- that you
11 need to know is that these scores do include
12 all of your ESE students, and all your LED
13 students. So it's across-the-board.
14 And so these numbers are not the raw
15 numbers that are used for the grading. The
16 grading is short those, and short also -- this
17 also includes those that have only been in
18 school for a week before the test. We also
19 take those off.
20 So it will be -- it will be --
21 GOVERNOR BUSH: One of the -- one of the
22 important points I think on the reading,
23 which -- for 4th grade, compared to the -- the
24 older grades, is that in elementary school
25 4th grade reading, social promotion, you can --
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1 school districts can use the FCAT reading as a
2 means of determining whether a child will be
3 held back.
4 And it's not a requirement. But I believe
5 most districts are using it as they should.
6 And I think when you put a focus effort on
7 that to say that there's a consequence for a
8 family and for the schools to make sure that
9 these kids learn, that you've got a pretty
10 good -- pretty good increase, whereas the older
11 grades, I don't think the social -- it's used
12 as a criteria, is it?
13 COMMISSIONER GALLAGHER: Well, one of the
14 things that -- no, it is not. And one of the
15 things that we need to look at as a Board, in
16 my opinion, is some major encouragement to
17 eliminate social promotions in our school
18 system. And we're working on some of those
19 encouragements, and will be bringing them to
20 you.
21 Now, Wayne, do you want to go ahead?
22 MR. PIERSON: Item 1 is minutes of meeting
23 of May 9th.
24 COMMISSIONER GALLAGHER: Motion on minutes.
25 ATTORNEY GENERAL BUTTERWORTH: Second.
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1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, it's approved.
3 MR. PIERSON: Item 2 is a charter school
4 appeal, which is deferred to September 12th.
5 COMMISSIONER GALLAGHER: Motion to defer.
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: There's a motion to defer
8 and a second.
9 Without objection, it's approved.
10 MR. PIERSON: Item 3 is a district charter
11 proposal for Hills-- Hillsborough County, which
12 is deferred to July 11.
13 COMMISSIONER GALLAGHER: Motion to defer to
14 July 11th.
15 COMMISSIONER CRAWFORD: Second.
16 MR. PIERSON: Item --
17 GOVERNOR BUSH: Motion to defer and a
18 second.
19 Without objection, it's approved.
20 MR. PIERSON: Item 4 is a district charter
21 proposal for Sarasota County, which is deferred
22 to 7-11.
23 COMMISSIONER CRAWFORD: Motion.
24 SECRETARY HARRIS: Second.
25 GOVERNOR BUSH: There's a motion to defer
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1 and a second.
2 Without objection, it's approved.
3 MR. PIERSON: Item 5 is a presentation on
4 the district charter proposal for
5 Volusia County.
6 For the Department, Deputy --
7 COMMISSIONER GALLAGHER: Let me --
8 MR. PIERSON: -- Commissioner, Betty Coxe.
9 COMMISSIONER GALLAGHER: Yes.
10 Let me just mention for a second, Governor,
11 that we have been working with the three
12 counties in regards to -- as we mentioned in
13 the Sarasota meeting -- in regards to having
14 these charter proposals ready for the end of
15 this month, hopefully at this meeting.
16 And they -- we want to bring them all to
17 you at once, if possible. I think it's very
18 good for us to hear from Volusia from their
19 standpoint.
20 At the same time, we're -- we probably have
21 Hillsborough and Volusia pretty close to a --
22 to an agreement on basically a performance
23 contract. And that's what we expect it to be.
24 We're a little far apart on Sarasota. And
25 maybe they -- I know the Superintendent's here.
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1 He may want to explain how he sees us being far
2 apart. And at the same time, we can explain
3 why we see it being far apart.
4 So we -- can we start now with -- we do
5 have Volusia's presentation, Betty?
6 MS. COXE: Yes, sir.
7 COMMISSIONER GALLAGHER: Okay.
8 MS. COXE: Good morning, Governor --
9 GOVERNOR BUSH: Good morning, Betty.
10 MS. COXE: -- members of the State Board.
11 It's nice to see you this morning.
12 We are excited about coming forward to you
13 with the charter school district proposals now.
14 We do have a presentation.
15 Our first one for you today from Volusia
16 County. I think it's important --
17 (Governor Bush exited the room.)
18 MS. COXE: -- to note that all three of our
19 counties -- and we have Volusia, Sarasota, and
20 Hillsborough -- all three of those have been
21 working in their communities about the concept
22 of charter school districts.
23 Basically that concept is one whereby the
24 school district enters into a new arrangement
25 with the State Board to offer you results,
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1 focused education where they give you
2 performance in exchange for what you give them,
3 which is more latitude and freedom.
4 And as occurs with a lot of new programs,
5 there is considerable effort needed to work out
6 all of the details because we have lots of laws
7 in Florida. And they all exist for good
8 reasons. And we need to be very careful before
9 we tell people that it's okay for them not to
10 comply with something.
11 Conversely, the bottom line for us is
12 student achievement, and having kids get where
13 they need to go. And if we have laws that are
14 serving in any way as barriers to school
15 districts being able to produce good results,
16 we want to give people freedoms to -- to
17 address those issues in various ways.
18 It's exciting for us today to present to
19 you the Superintendent from Volusia County
20 Public Schools, Bill Hall, who's going to
21 introduce his group to tell you a little bit
22 about the Volusia County plan.
23 MR. HALL: Good morning.
24 I am Bill Hall, Superintendent of
25 Volusia County School system. And I have just
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1 completed my 32nd year in education in the
2 school district of Volusia County.
3 And in view of what took place with
4 Lee County, I'm here to change our direction a
5 little bit and ask that all the vetoes towards
6 Volusia County be reinstituted, and that we be
7 given additional -- I'm just kidding you.
8 Let me thank you seriously for allowing us
9 to present our charter district proposal to
10 you; and the agreements that we have reached
11 with your Cabinet Aides; and, of course, with
12 the DOE, and especially Betty Coxe and
13 Commissioner Gallagher.
14 I want to introduce the staff that's behind
15 me. First of all, Deputy Tim Huth;
16 Dr. Chris Colwell, who's Assistant
17 Superintendent for Curriculum; Rich Kizma, our
18 staff attorney, chief negotiator.
19 And in the audience, Dr. Mary Bennett, who
20 is our Government Relations Specialist.
21 And in their job descriptions, they do
22 have -- the last responsibility -- and any
23 other duty assigned by the Superintendent.
24 Volusia County School District is
25 61,000 students. We're the tenth largest
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1 school district in the state of Florida. We're
2 probably the 50th largest at last count --
3 (Governor Bush entered the room.)
4 MR. HALL: -- largest school district in
5 the country.
6 First of all, let me share with you that
7 our agreement was created with countywide
8 community involvement. When we decided that we
9 wanted to become a charter district, we went on
10 the road and had a number of public meetings
11 with our community leaders, and general members
12 of the community and parents.
13 And as a result of those meetings, we
14 developed our first charter district --
15 (Attorney General Butterworth exited the
16 room.)
17 MR. HALL: -- proposal.
18 Our agreement also addresses the
19 Bush/Brogan A+ plan. We have included some
20 extremely high performance goals that address
21 the grading of our schools.
22 In addition, we have addressed what we
23 think are the needs of our special education
24 population, our ESOL students. And we've also
25 addressed character and value. And that came
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1 from our community input sessions with the
2 community.
3 Our belief in the charter district concept
4 is this: We believe that we can significantly
5 increase student achievement faster by becoming
6 a charter district.
7 Commissioner Gallagher released the results
8 this morning of the reading and math FCAT
9 results. And our Assistant Superintendent will
10 address those. We've been doing some quick
11 analyzing in the audience. And I am pleased to
12 announce that we are pleased with our results,
13 even though we want to do much better.
14 With that brief introduction, I want to
15 bring up Tim Huth, our Deputy Superintendent,
16 who will talk about the charter district
17 proposal that we have submitted to you.
18 And also I would like to acknowledge that
19 Dr. David Bennett from Sarasota County is in
20 the audience. I believe he is going to
21 probably analyze how our presentation goes, and
22 be ready to address you on July 11th.
23 Thank you very much.
24 MR. HUTH: Governor, members of the
25 Cabinet, I'd like to thank you also for being
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1 here today.
2 Last year, House Bill 2147 passed
3 authorizing up to six pilot districts to become
4 charter school districts.
5 (Attorney General Butterworth entered the
6 room.)
7 MR. HUTH: And we in Volusia County
8 involved a leadership committee of 70 members
9 that included PTAs, district advisory committee
10 members, our individuals from our bargaining
11 units, teachers, cafeteria workers, custodians,
12 bus drivers, our business community, making
13 sure that we got input from Volusia County
14 stakeholders.
15 On October the 30th, we submitted to the
16 Department of Education a pre-charter agreement
17 outlining what our focus was, working towards a
18 charter agreement proposal that we submitted on
19 January the 26th, after it was approved by our
20 local School Board. And it was submitted to
21 the Department of Education.
22 The Volusia County school's vision did
23 include two important parts: Accelerating the
24 student learning for each of our students, and
25 reaching perfor-- performance goals related to
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1 the A+ plan.
2 Included in, and a very integral part to
3 our charter agreement was a management plan
4 that we have listed as a phase-in period. And
5 we included a list of 18 State statutes that
6 you have in front of you today that we saw in
7 rules and regulations from which our
8 School Board wanted exemptions from.
9 And they are outlined to you in your
10 information packet. Some of them include the
11 waiving of categorical funds so that we can
12 move the dollars that we see best meets the
13 program needs within our school system. And we
14 will give you examples of that in a moment.
15 Also, we have included performance goals.
16 And the performance goals, we feel, are very
17 rigorous. And we had discussions from our
18 community about whether to set them at a low
19 level that we could reach and feel good about,
20 or set them at a very high level, and see
21 whether we can hit that high target.
22 And the -- under the performance goals, I'd
23 like to have Chris Colwell come forward and
24 speak to some of our 29 performance goals.
25 DR. COLWELL: Thank you, Mr. Huth.
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1 My name is Chris Colwell. I'm
2 Assistant Superintendent with Volusia County
3 Schools.
4 As Mr. Huth said, in the Vol-- in the
5 Volusia County charter district proposal, there
6 are currently 29 performance goals. Our
7 performance goals deal in three basic areas:
8 One, high expectations; two, expectations that
9 have yearly benchmarks; and, three, a community
10 consensus for all the goals.
11 We believe these goals are rigorous, but,
12 frankly, we believe that a world class school
13 system must reach towards world class
14 standards. Our 29 goals are targeted for all
15 schools. Our 29 goals are targeted for all
16 students. We are particularly proud that ten
17 of our goals target special population schools
18 specifically.
19 As Mr. Hall said, our goals are tied also
20 to parent involvement and are values based. We
21 believe that yearly benchmarks must be clearly
22 identifiable and measurable.
23 And we believe that these goals should be
24 aimed at specific and fixed performance
25 targets.
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1 We believe that, in short, our action in
2 order to be effective, must be directed towards
3 clearly defined ends, and we believe -- we
4 believe these goals speak for themselves.
5 We have held a series of town meetings
6 throughout Volusia County; we've had a
7 leadership committee consisting of many, many
8 teachers, parents, administrators, and business
9 leaders.
10 Our leadership committee, as well as our
11 community, has endorsed these goals.
12 In short, these 29 performance goals are
13 clearly defined, have the highest academic
14 rigor, are endorsed by our community, and
15 benefit all students.
16 The philosophy of the Volusia County
17 charter district proposal regarding these
18 goals, and the rigor of these goals, is that we
19 would rather reach towards the highest goals,
20 and perhaps not succeed in each and every one,
21 than reach towards average goals and succeed.
22 MR. HUTH: In addition to the performance
23 goals that Dr. Colwell spoke to, we wanted to
24 deregulate our schools, give the individual
25 schools more authority.
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1 And under that, we identified 14 areas by
2 which schools could immediately come out from
3 under the umbrella of central control. And
4 they would be in the area of fiscal management,
5 where we could have the dollars go right to the
6 school, and they make site-based decisions.
7 Or how they may set hours of instruction,
8 or out-servicing of services themselves.
9 Instructional materials selection that they
10 think'll best meet their students' population.
11 How we do procedures and protocol
12 district-wide on the academic improvement plans
13 for individual students would be another area
14 that at -- that local school would like to see
15 changed, they could come forward and submit
16 that request to the leadership, and have a
17 waiver from those procedures and protocols.
18 And we know that over the next couple of
19 years, as our schools become more confident in
20 this -- this environment by which they can
21 waive some of the School Board regulations that
22 they see will be meeting -- that are
23 cumbersome, that we'll have more than the
24 14 that are currently submitted before you
25 today.
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1 Another component to this was also
2 performance contracts. And that was one of the
3 items that we worked with the Department of
4 Education on. And Rich Kizma, our staff
5 attorney, would like to speak to a couple of
6 those points.
7 MR. KIZMA: The performance contract was
8 basically described in the earlier statement as
9 an agreement that exchanges statutory and rule
10 exemption for the agreement to make perform--
11 meet performance goals included in the proc--
12 in the proposal.
13 That, in essence, is what the agreement is
14 here. Usually when we talked about charter
15 schools in the past, we've talked about
16 individual charter school, and you've had a
17 charter or a contract between the school board
18 and that individual organization.
19 Well, this charter district expands that
20 whole concept out much wider, and, therefore,
21 requires an agreement between the State Board
22 of Education and the School Board here.
23 In essence, this performance contract
24 exists as a similarity to a charter that you
25 have on an individual school basis.
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1 The performance contract draft before you
2 have -- and, again, that -- one of the
3 frustrating parts about doing something new,
4 of course, is that there's no draft out there
5 that's a -- there's nothing to copy. So what
6 you have in front of you is just what we have
7 been able to come up with in working
8 cooperatively with the Department of Education.
9 It establishes the relationship of the
10 parties, showing that there's a less
11 restrictive environment for the school district
12 to function in, but also recognizes that each
13 party continues to have separate duties and
14 responsibilities, which each must carry out.
15 It also talks about the waivers. It
16 identifies the limits of the waivers that are
17 available. It lists those that'll be utilized
18 upon the initiation of the contract. And also
19 though establishes a process for expanding that
20 list, as the statute does recognize that the
21 charter school district may be something that's
22 phased in over time within the three-year
23 project.
24 And, again, as Mr. Huth described, the
25 charter -- the performance contract also
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1 includes the goals. So it's -- covers both the
2 waivers and the goals.
3 GOVERNOR BUSH: Can I -- well, go ahead.
4 I'm -- I'm going to show tremendous
5 self-restraint, and not ask a question.
6 MR. HUTH: We know that this has been a
7 year process. We started back last August
8 working with our community. And it generated a
9 tremendous amount of input at town meetings.
10 We had eight town meetings throughout our
11 large geographic county. And we had well over
12 500 individuals provide direct input, both
13 written and verbal, to what they would like to
14 see us, as a charter district, and what it
15 would represent to them.
16 From their input, we gleaned the items that
17 were of highest priority, and that's what we
18 put in to the perf-- the contract, our
19 agreement, and with what we looked at as far as
20 on our first initial attempt of identifying
21 waivers that our community saw, and they would
22 like to see us submit.
23 That's how we arrived at the 18 waivers,
24 and how we arrived at the first 14 deregulation
25 items, was through community input. And that
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1 was very important to us, because we wanted
2 buy-in from our stakeholders, because this is
3 new territory.
4 We looked across the country at any other
5 charter districts, and there are none. And so
6 we were going to be creating the template by
7 which we think other districts will follow.
8 And so to that end, we have worked with
9 members in Hillsborough County and in
10 Sarasota County, and so collaboratively trying
11 to come together with some thinking processes
12 that were outside of the box under this new
13 freedom.
14 And to that end, Mr. Hall would like to
15 summarize a couple of things, and then we'll
16 take questions.
17 MR. HALL: In summarizing, let me just say
18 several things.
19 First of all, we have included in our
20 charter district proposal our vision. Second
21 of all, we have included a management plan;
22 third, high expectation performance goals;
23 three, a performance contract.
24 And in summarizing why we want to be a
25 charter school district: In the 32 years that
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1 I have been in the School District of
2 Volusia County, and as a professional educator,
3 I believe the charter district legislation is
4 perhaps the most important piece of legislation
5 that's been passed by the Florida State
6 Legislature.
7 It provides an opportunity for us to go
8 where no other district has gone. The same is
9 true for Hillsborough County and
10 Sarasota County.
11 It provides us an opportunity to say, here
12 are the expectations that we will achieve by
13 this year and by this time.
14 It also provides us an opportunity to ask
15 for waivers from what we consider to be
16 cumbersome rules and regulations that take up
17 time. And time is money.
18 It also, in my opinion, is the most
19 significant piece of legislation that will
20 allow any school district to accelerate -- and
21 I want to emphasize -- accelerate student
22 achievement faster than what we normally would
23 be able to do.
24 And as we've analyzed our test results
25 today briefly in the audience, we're headed
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1 towards that goal. We believe that as a
2 charter district, we will accelerate that
3 student achievement much more rapidly than what
4 we'll do as a normal school district.
5 And with that, once again, let me thank you
6 for allowing us to make our presentation.
7 And I think we were within our 15-minute
8 allocation time.
9 Let me thank Commissioner Gallagher and his
10 staff, particularly Betty Coxe; and also your
11 Cabinet Aides for listening to us over this
12 past year.
13 Thank you very much.
14 We're open for questions.
15 GOVERNOR BUSH: Any questions?
16 I have a few.
17 Why -- 29 goals. It seems like -- and they
18 were -- and, by the way, I -- they were
19 excellent.
20 I coul-- I couldn't think of one that I
21 wouldn't have added, you know, that -- you
22 covered the entire range of things that I think
23 people want, and what I know educators want.
24 And -- and I applaud particularly the fact
25 that you did not leave behind the ESE kids,
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1 which sometimes are left behind in this
2 process.
3 And so I -- I -- I have no criticism of
4 what you're measuring and what your
5 expectations are. I wonder if it's too many
6 though.
7 I mean, as an insti-- should you talk
8 about -- are you -- you worried with 29
9 different things that you're aspiring to, that
10 you might get three-quarters of the way to all
11 of them, instead of 100 percent of the way to
12 ten of them?
13 MR. HUTH: We sure did. And actually we
14 had more than 29, and we cut down from there.
15 And that was a difficult task because, once
16 again, we valued our community input. And as
17 they did that, we at the district office were
18 more thinking along the lines of pretty much
19 just A+ plan when we started this effort.
20 And then we heard from ESOL students; from
21 ESE; then we heard about, what about parent
22 commitment and involvement? Shouldn't they be
23 held accountable to some sort of a goal for
24 themselves?
25 And so how could we leave those things out?
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1 And actually we combined some of the ones
2 that we received requests on, and got them to
3 the 29. And you're exactly right. I mean,
4 continually -- even as late as driving up last
5 night, we're saying, wow, 29. You know, what
6 if we make 28 of them, and not the 29th, is
7 that a success?
8 Hey, our answer is, yes, I think that's a
9 tremendous success. And it's ambitious, and
10 it's going to be a challenge. But, you know,
11 we're going to work --
12 GOVERNOR BUSH: I think some of them are
13 self-fulfilling.
14 MR. HUTH: Yes, they are.
15 GOVERNOR BUSH: If you achieve some of
16 them, you're going to make it easier to achieve
17 the reading and math and others as well. I --
18 so it's not a -- it's not necessarily a
19 contradiction.
20 But generally I would think that the
21 management gurus would suggest that you're --
22 when you focus, 29 would not be necessarily a
23 definition of focus.
24 MR. HUTH: I appreciate that. We --
25 GOVERNOR BUSH: Anyway.
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1 MR. HUTH: -- recognize that.
2 GOVERNOR BUSH: I could not -- the -- I
3 tried to read the -- most of the proposal over
4 the weekend, and -- and I -- can you
5 describe -- there's -- there's two -- you have
6 a waiver process with the Department of
7 Education on particular rules?
8 And you mentioned it in the presentation,
9 that there's some specific ones that you're
10 seeking through the contract.
11 And then you have a series of Board rules
12 at the local level.
13 Which ones are the more profoundly
14 important ones for this to work?
15 MR. HUTH: Well, I think ones that we like
16 to see from the State Board waivers.
17 For instance, I mentioned the one about waiving
18 categorical funding.
19 To give you --
20 (Secretary Harris exited the room.)
21 MR. HUTH: -- a brief example, we have an
22 instructional materials categorical fund to buy
23 textbooks.
24 GOVERNOR BUSH: Uh-hum.
25 MR. HUTH: And we've spent our money and
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1 had dollars left over. Every student in our
2 county had the textbook required for the
3 course, so they were not without.
4 Then we still had dollars left over.
5 Well, what we wanted to do was move those
6 dollars into art teacher's accounts for things
7 that they need, like, for their instructional
8 materials; if I'm a ceramics teacher, clay.
9 Well, we couldn't move that money into the
10 art account because of the restrictions on how
11 the categorical dollars for instructional
12 materials must be sent -- be spent. It must be
13 a textbook, it must be -- have a list of
14 instructions, it has to have a certain design
15 to it.
16 And we had to work with vendors for them to
17 come up with an instructional text to go along
18 with the clay that we wanted to buy so we could
19 have -- we spent two months trying to get into
20 the mode of providing instructional materials
21 for teachers other than a textbook.
22 That would be an example of --
23 GOVERNOR BUSH: How -- that's a great one.
24 I'm glad -- that's exactly what I was thinking
25 you were going to respond.
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1 And -- and how many waivers are you
2 proposing to begin with?
3 MR. HUTH: There's 18 to begin with right
4 now. And that's a -- an initial start. And we
5 expect over the next couple of years, we'll
6 identify others.
7 GOVERNOR BUSH: I think it would be
8 appropriate, Commissioner, to take this
9 process, and -- and apply it -- or help the
10 other 64 districts as well --
11 COMMISSIONER GALLAGHER: Well --
12 GOVERNOR BUSH: There is a waiver process
13 irrespective of --
14 COMMISSIONER GALLAGHER: Yeah.
15 GOVERNOR BUSH: -- irregardless --
16 COMMISSIONER GALLAGHER: I was just going
17 to --
18 GOVERNOR BUSH: -- of school districts --
19 COMMISSIONER GALLAGHER: I was just going
20 to ask you a question.
21 Did you look at the ability for you to
22 apply for a waiver in regards to the
23 categories? I know there's some things you
24 cannot get waivers on.
25 Is that one of the ones you cannot --
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1 MR. HUTH: That was one of the ones that we
2 could not.
3 COMMISSIONER GALLAGHER: But the new
4 charter district will allow us to --
5 MR. HUTH: That's correct.
6 COMMISSIONER GALLAGHER: -- to do this.
7 And what we need to do is look at the
8 ability to waive other ones with good reason --
9 GOVERNOR BUSH: I mean, there's a great
10 example of -- I don't think anybody would argue
11 that there shouldn't be some flexibility,
12 whether you're a charter school district or
13 not, to be able to manage that money. I mean,
14 that --
15 COMMISSIONER GALLAGHER: Well --
16 GOVERNOR BUSH: -- it might be good to have
17 these best practices or just suggestions that
18 you've -- since you're -- you've gone through a
19 process of venting these ideas with real people
20 and teachers and educators who you've asked
21 their opinion.
22 I think it's of great value to --
23 COMMISSIONER GALLAGHER: Share that.
24 GOVERNOR BUSH: -- Lee County School
25 District or --
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1 MR. HUTH: Share that.
2 COMMISSIONER GALLAGHER: One of our --
3 GOVERNOR BUSH: -- Dade County.
4 COMMISSIONER GALLAGHER: -- one of our past
5 historic problems is that legislators hear the
6 complaints that each child doesn't have a book;
7 and although in the last three years plus, we
8 have funded every single request that the
9 districts have asked for in regards to it, some
10 districts have spent their money and have
11 excess money; others don't have excess money,
12 and --
13 GOVERNOR BUSH: Right.
14 COMMISSIONER GALLAGHER: -- the kids don't
15 have books.
16 So I don't know how you answer the question
17 we've been trying to answer for three years.
18 When you give them all the money they ask for,
19 and yet they still don't have the books, I
20 can't answer that question --
21 GOVERNOR BUSH: You need to be --
22 COMMISSIONER GALLAGHER: -- but I do know
23 that if they have --
24 GOVERNOR BUSH: -- armed with the truth.
25 COMMISSIONER GALLAGHER: -- excess, they
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1 ought to be able to spend it on something else.
2 GOVERNOR BUSH: We need to be armed with
3 the truth, and this is the truth. And this
4 will help us with --
5 COMMISSIONER GALLAGHER: In this district.
6 GOVERNOR BUSH: -- with the Legislature.
7 COMMISSIONER GALLAGHER: For this district.
8 GOVERNOR BUSH: Well, but there are other
9 examples --
10 COMMISSIONER GALLAGHER: I would think so.
11 No, I -- listen, I'm -- I'm all for being able
12 to waive as --
13 GOVERNOR BUSH: I want the --
14 COMMISSIONER GALLAGHER: -- much of the --
15 GOVERNOR BUSH: -- let's tell the
16 Legislature to stop trying to micromanage
17 how -- how schools operate, and focus, as they
18 have, I think, on funding and -- and having
19 high expectations.
20 COMMISSIONER GALLAGHER: Inc--
21 GOVERNOR BUSH: So --
22 COMMISSIONER GALLAGHER: Including,
23 you know, naming all the reading programs and
24 everything else that they micromanage.
25 GOVERNOR BUSH: Yep.
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1 Any -- I have -- I have a couple more
2 questions.
3 The -- the pay, that -- that is not a
4 waiver that you sought or could seek, I'm not
5 sure which.
6 COMMISSIONER GALLAGHER: They could.
7 GOVERNOR BUSH: Performance pay?
8 MR. HUTH: We feel that they -- we could.
9 GOVERNOR BUSH: Why can --
10 MR. HUTH: You know, when we put this
11 package together, it was prior to the
12 legislative session --
13 DR. COLWELL: And we do have in the school
14 deregulation piece, Governor, two issues, which
15 we're very excited about, that go directly to
16 that.
17 One is the opportunity for 11-month and
18 12-month teacher contracts.
19 GOVERNOR BUSH: Right.
20 DR. COLWELL: And also the opportunity for
21 the superintendent to award bonus pay for
22 teachers. And that's under the school --
23 GOVERNOR BUSH: That's part of your plan.
24 DR. COLWELL: -- deregulation piece.
25 Yes, sir. That's in the plan.
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1 COMMISSIONER GALLAGHER: So you're going to
2 put -- it's already in there, or you're going
3 to add it?
4 MR. HUTH: It's in there.
5 DR. COLWELL: It is in the plan right now
6 that you have in front of you.
7 COMMISSIONER GALLAGHER: So there's a bonus
8 program in the plan.
9 DR. COLWELL: There is an -- there is an
10 opportunity for the superintendent to do that.
11 GOVERNOR BUSH: That was the -- that would
12 be my one piece of constructive criticism of
13 the plan is that you -- you've set -- the
14 process you all went through was extraordinary.
15 You covered the areas that I think are
16 important to make -- to see rising student
17 achievement, as the superintendents ultimately
18 say is the one goal that -- that is the main
19 objective here.
20 But the -- there is no alignment of
21 economic interests for all the people that are
22 required to make this happen to be successful.
23 I mean, that can take the form of bonuses.
24 But it also can take a -- the form of, as the
25 law requires, a percentage of the increases
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1 that teachers receive tied to student
2 achievement.
3 Principals again I think clearly, if you're
4 going to give them more freedom, they have a
5 higher responsibility. There may be -- be some
6 possibilities of higher pay for principals
7 based on performances since you're asking them
8 to do more.
9 By the way, I think they might need a
10 little bit more development work if you're
11 going to give them the -- similar to what
12 Sarasota's going to go through -- you --
13 (Secretary Harris entered the room.)
14 GOVERNOR BUSH: -- you're turning -- you
15 may turn principals into entrepreneurs in these
16 plans. And you've got to -- they have to have
17 certain skill sets, I think, of leaders now,
18 not as much being managers waiting for the memo
19 from the home office; they have to actually
20 carry out the mission now. And -- and that may
21 require some alignment of pay as well.
22 And I just throw that out as a suggestion,
23 that all of these -- we should align -- we
24 should establish what the objectives are, and
25 we should align, frankly, everybody's pay, in
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1 State government and -- and in school districts
2 across-the-board towards achieving what we say
3 is our priority.
4 MR. HUTH: We appreciate that, and -- and
5 we recognize it. And -- and we say that we're
6 going to phase in different parts because we
7 don't look at this year to be the end.
8 We're going to identify some legislature
9 (sic) that comes up next year that we feel we
10 may want to waive from. And we would get with
11 the Department of Education and identify what
12 that might be --
13 GOVERNOR BUSH: Prewaivers?
14 MR. HUTH: Yeah. Well --
15 COMMISSIONER GALLAGHER: Well, wait till
16 the law passes, then get the waiver.
17 MR. HUTH: Yes. Exactly.
18 And we see this as evolving and continuing
19 to be a fluid plan. And the issues you brought
20 up is something that we recognize, especially
21 when House Bill 63 passed this year with the
22 whole range of performance goals and -- and
23 contracts that could come about.
24 And as Chris said, the 11-month contract
25 and 12-month for the teacher, that would be
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1 something that would be truly beneficial,
2 increase in pay, recognizing their effort,
3 you know, and commitment that they would have
4 to make.
5 And so I think we will see these things
6 coming forward, and we will be working with DOE
7 to identify those items.
8 GOVERNOR BUSH: I have one more question.
9 And that is, how are you going to -- is there a
10 constant feedback process with your -- what you
11 called stakeholders?
12 MR. HUTH: Yes, there is.
13 In fact, if this was approved today --
14 well, or July the 11th, what we would -- our
15 next step is to get back to our leadership
16 committee, and give them the input that we've
17 received from this State Board of Education,
18 and then we would be getting back through Board
19 meetings and additional town meetings with
20 follow-up questions that they may have on
21 what's next, and then ask them for any
22 additional ideas that they may have.
23 So this is going to be an ongoing process.
24 COMMISSIONER GALLAGHER: How many -- how
25 many schools do you think are going to
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1 participate in your program?
2 MR. HUTH: Under the deregulation?
3 COMMISSIONER GALLAGHER: Right.
4 MR. HUTH: With the 14 items that are out
5 there, we'll have some risk takers that might
6 try to do and request all 14.
7 I see some of them looking at the umbrella
8 waiver of State statutes first, and then
9 picking maybe which ones that they would feel
10 comfortable in instituting this first year.
11 It might be waiving our protocol and
12 requirements for the AIPs, the Academic
13 Improvement Plans, where they think it's maybe
14 too much paperwork, and reduce it down. And
15 what they would come in is let us know what
16 they would do in place of that.
17 We still want the communication to get to
18 the parent, but they might have a better way of
19 doing it, other than the protocols that we
20 currently have set forward for all of our
21 schools.
22 And I think we'll see those immediately.
23 COMMISSIONER GALLAGHER: Well, those are
24 some of the things that make a lot of people
25 the most nervous, too, when, in fact --
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1 MR. HUTH: Uh-hum.
2 COMMISSIONER GALLAGHER: -- you eliminate
3 a -- a written plan for an individual student
4 that -- that needs a plan.
5 MR. HUTH: Well, we're -- we're saying
6 we're still going to have that. But they may
7 give a vehicle that's different than the one we
8 created.
9 COMMISSIONER GALLAGHER: Okay.
10 That's fair.
11 MR. HUTH: Yeah. I see that happening
12 across our 66 schools.
13 COMMISSIONER GALLAGHER: And I want you to
14 know, our goal is not to have legislation pass
15 that -- that adds more restrictions and -- and
16 causes more paperwork. I can tell you from our
17 standpoint.
18 MR. HUTH: I'm sure you've heard about
19 that.
20 Yes.
21 GOVERNOR BUSH: Any other questions or
22 comments?
23 Commissioner, would you like to hear from
24 the Superintendent of Sarasota?
25 COMMISSIONER GALLAGHER: I would.
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1 GOVERNOR BUSH: This is deferred till
2 July 11th, is that --
3 COMMISSIONER GALLAGHER: That's correct.
4 We're going to try and take the three up on
5 July 11th.
6 We're real close to a final agreement
7 signed with Volusia. Of course, pending Board
8 approval.
9 But we're real close to a product that we
10 believe the Board's going to approve for --
11 with Volusia.
12 Hillsborough, we're closer, and we hope to
13 be a lot closer --
14 We have a ways to go on Sarasota, in my
15 opinion, anyway. Maybe the Superintendent may
16 disagree. But we certainly -- I'm glad to hear
17 from him.
18 SECRETARY HARRIS: Governor --
19 GOVERNOR BUSH: Yes.
20 SECRETARY HARRIS: -- with regard to
21 Sarasota, I think that there's not been the
22 communication going back and forth. But
23 I think they're making a lot more progress.
24 And -- and the Superintendent has said that
25 he'll be up here for the next two weeks working
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1 diligently with your staff. And I think
2 hopefully that we'll both be able to come to
3 the table, and we'll be a lot more far --
4 they'll be a lot more farth-- a lot farther
5 ahead by then.
6 COMMISSIONER GALLAGHER: We hope so.
7 We can hear from him right now.
8 DR. BENNETT: Thank you for the invitation.
9 Governor, and members of the State Board of
10 Education, Commissioner Gallagher.
11 The Secretary of State has really offered
12 up my -- my commentary on the situation. That
13 is simply that we are prepared to meet and work
14 diligently with representatives of the
15 Department of Education to come to a conclusion
16 such that you have before you on July 11th.
17 A rep-- a representative recommendation for
18 that is consistent with the Department of
19 Education's view, and also our view.
20 I'm unaware at this point in time of any
21 differences between the Department and us,
22 and because we've not had an opportunity to
23 have any conversation whatsoever in this
24 matter.
25 But we've had conversations with
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1 representatives of the Department here today,
2 and they've -- they've pledged to work with us.
3 And we will look forward to working with them,
4 and working to a resolution, being back before
5 you on July 11th.
6 Thank you very much.
7 COMMISSIONER GALLAGHER: Well, let -- let
8 me just fill you in on what the law says, and
9 what we're expecting to have happen.
10 One of them is that if you request an
11 exemption from a statute or rule, that you give
12 the reason for it so that we can have some kind
13 of a quid pro quo.
14 We don't -- we don't hold you to that
15 statute; you, in trade, give us some kind of
16 student performance.
17 And as you're probably aware, we have
18 almost all of Chapter 228; this is the list of
19 all the exemptions they want from 230; this is
20 the list of all the exemptions -- the
21 individual statute of 231; here's 232's
22 exemptions; here's 233's exemptions; there's
23 two on 234; here's all of 235's, educational --
24 So all of these exemptions with no -- what
25 we get in return. And so that's one of the
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1 beginnings of what we need to do.
2 We're interested in how we're going to --
3 and Volusia's is a good example on what they
4 show they're going to do with school
5 performance and student performance within
6 their district, in trade for, you know, being a
7 charter district.
8 And -- and also in the -- the measurement
9 that is going to be used will be not a school
10 district driven measurement that includes
11 socioeconomic background, but a measurement
12 that every other school and student has used in
13 this state, which is going to be the FCAT,
14 reading, writing, math.
15 I just want to make myself clear on that.
16 This Board has spoken very strongly on that,
17 and I just wanted to reiterate it.
18 And if you're here for two weeks, and you
19 can get it done, I'm going to be thrilled.
20 DR. BENNETT: And, Commissioner Gallagher,
21 in that packet, you'll -- elsewhere in that
22 packet, you'll see our stated reason for
23 seeking those exemptions.
24 And also you'll see a letter addressed to
25 you in February that made it very clear that we
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1 are not seeking any exemption whatsoever from
2 the State measurement techniques.
3 COMMISSIONER GALLAGHER: And we're also not
4 looking forward to you having your own
5 technique also to say, well, ours is really
6 better than the State's is.
7 DR. BENNETT: And, again, all that language
8 was specifically exempted from the proposal, as
9 communicated in that letter in February.
10 COMMISSIONER GALLAGHER: I saw -- I have
11 copies of the letter in February.
12 Each -- each law exemption that you request
13 should have a reason for that particular -- not
14 if you'd exempt us from that one, or all of
15 them, you know, we'll be free, and we'll be
16 able to do a lot of great things.
17 It's got to be specific to the individual
18 statute, and that's what the law requires. And
19 so I hope that y'all will work on that.
20 DR. BENNETT: Okay.
21 GOVERNOR BUSH: Any other questions?
22 Thank you, Superintendent.
23 COMMISSIONER GALLAGHER: I'd like to move
24 that Items 6 through 13 be withdrawn so that we
25 can work out some amendments that need to be
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June 26, 2000
1 done, and also work with JAPC and others on how
2 to bring and keep track of what is a
3 Commissioner and what is a Board rule.
4 ATTORNEY GENERAL BUTTERWORTH: Second.
5 GOVERNOR BUSH: There's a motion and a
6 second to defer -- defer Item 6 --
7 MR. PIERSON: Withdraw.
8 GOVERNOR BUSH: -- through 13 --
9 COMMISSIONER GALLAGHER: Withdraw.
10 MR. PIERSON: Withdraw.
11 COMMISSIONER GALLAGHER: Withdraw. Because
12 we may have to --
13 GOVERNOR BUSH: Withdraw?
14 COMMISSIONER GALLAGHER: -- we have to
15 bring them back completely different.
16 GOVERNOR BUSH: When are you going to bring
17 them back?
18 COMMISSIONER GALLAGHER: How soon?
19 MR. PIERSON: They'll have to go through
20 the complete administrative process. The --
21 the problem is, some of these rules are going
22 to be split into Commissioner's rules, unless
23 we can get a ruling from JAPC that we don't
24 have to.
25 Some of them are going to be Commissioner's
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1 rules, some are going to --
2 COMMISSIONER GALLAGHER: See --
3 MR. PIERSON: -- be Board rules --
4 COMMISSIONER GALLAGHER: -- here -- here's
5 a --
6 MR. PIERSON: There are amendments already
7 to some -- that are voluminous because of some
8 of the outside --
9 COMMISSIONER GALLAGHER: We do have some
10 pretty major amendments.
11 But one of the problems that we have in
12 education probably only, and we ran into this
13 problem when we did the beverage approval.
14 And that is that we have rules that the
15 Commissioner has the authority to move on, and
16 rules that require the State Board to move.
17 My personal opinion, and what makes all the
18 sense in the world, is that if I choose as a
19 Commissioner to bring one to the State Board,
20 and the State Board's approve it, well, my --
21 what's the difference between me doing it
22 myself, and the State Board doing it?
23 I mean, my goodness, if I -- I wouldn't
24 have brought it here if I didn't want it.
25 Which is what I did in the -- in the beverage
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1 approval for the high school kids to buy Cokes.
2 That is a rule that I could have done as a
3 Commissioner rule. I thought it was of high
4 enough significance that the Board should -- I
5 wanted some -- some -- some --
6 ATTORNEY GENERAL BUTTERWORTH: Cover.
7 COMMISSIONER GALLAGHER: -- you can call it
8 cover. I was willing to do it on my own.
9 But --
10 GOVERNOR BUSH: Yeah.
11 COMMISSIONER GALLAGHER: -- it's an
12 issue --
13 GOVERNOR BUSH: I remember that.
14 COMMISSIONER GALLAGHER: I mean, I -- I
15 still get the heat for bringing it, one way or
16 the other.
17 But I --
18 GOVERNOR BUSH: They still --
19 COMMISSIONER GALLAGHER: -- I wanted --
20 GOVERNOR BUSH: -- call me --
21 COMMISSIONER GALLAGHER: -- I thought it
22 was --
23 GOVERNOR BUSH: -- Coca-Cola boy out at --
24 in the --
25 COMMISSIONER GALLAGHER: I thought it was
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1 an issue that -- that should be discussed, and
2 that -- in an open setting, as opposed to a --
3 you know, a rule hearing.
4 And --
5 GOVERNOR BUSH: Were you going to need
6 cover on this one, or not?
7 Because I want -- I want to give you cover
8 on this one.
9 COMMISSIONER GALLAGHER: This --
10 GOVERNOR BUSH: This is --
11 COMMISSIONER GALLAGHER: There are some
12 areas here that are very important that should
13 be discussed among this Board.
14 GOVERNOR BUSH: I agree.
15 COMMISSIONER GALLAGHER: And what we're
16 going to ask JAPC to -- for -- for their --
17 you know, I guess advice and consent, is that a
18 rule brought by the Commissioner is
19 obviously -- it can -- can be a Commissioner's
20 rule or a Board rule, so that we don't have to
21 nitpick down here where there's maybe one
22 little section where this area could be done by
23 the Commissioner, and another one has to be
24 done by the Board.
25 And now, what we're going to go spend a
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June 26, 2000
1 whole bunch of time is to make sure all these
2 are separated so that anybody wants to
3 challenge them, they could use one of these
4 little nit-picking, you know, process things,
5 as --
6 GOVERNOR BUSH: Right.
7 COMMISSIONER GALLAGHER: -- opposed to the
8 other.
9 Now, if -- if -- I mean, so what we're --
10 the real truth is we're withdrawing them so
11 that we can go through all this, and which is
12 going to be very time consuming, nit-picking,
13 and still could leave some opening for somebody
14 that wants to challenge. Which I'd prefer not
15 to have.
16 I think that if the Commissioner brings a
17 rule to the Board, and somebody wants to say,
18 well, that really -- the Commissioner had the
19 authority himself, so what?
20 I mean, if I brought it, I voted for it, I
21 want it, the Board also votes for it, I don't
22 see how that can hurt anything.
23 Maybe the Attorney General can help us on
24 an opinion with this, because it's --
25 GOVERNOR BUSH: He's voluntarily doing
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1 this, puts himself subject to -- subject to
2 a -- to a suit -- to a -- being contested.
3 ATTORNEY GENERAL BUTTERWORTH: But if
4 everybody votes for it, then he's -- and he's
5 voting for it, I mean, he just basically --
6 COMMISSIONER GALLAGHER: How can that not
7 be a Commissioner's rule, right?
8 ATTORNEY GENERAL BUTTERWORTH: Yeah.
9 That's a -- can be a Commiss-- can be a
10 Commissioner's rule, but -- but if we vote no,
11 and you vote yes, it could still be a
12 Commissioner's rule.
13 COMMISSIONER GALLAGHER: That's correct.
14 ATTORNEY GENERAL BUTTERWORTH: Right.
15 COMMISSIONER GALLAGHER: But I'm not trying
16 to -- you know, I -- I can't imagine that I'd
17 want to take a stand that the other six of you
18 disagree with. I mean, I just not -- that's --
19 ATTORNEY GENERAL BUTTERWORTH: You're
20 asking --
21 COMMISSIONER GALLAGHER: -- not my --
22 ATTORNEY GENERAL BUTTERWORTH: -- for
23 advice, but you're asking for it in a -- in --
24 in the sunshine.
25 It may very well be, Governor, that -- that
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1 if he was to ask us -- it could be a
2 Commissioner's rule, but since we sit as -- as
3 the State Board of Education, he wants our --
4 our input, but he can't talk to us
5 individually, so he really has to talk to us up
6 here.
7 COMMISSIONER GALLAGHER: Which is what I
8 did on the Coke rule basically.
9 And -- I should say beverage --
10 GOVERNOR BUSH: Soft drink rule.
11 COMMISSIONER GALLAGHER: Soft drink rule.
12 Pepsi. I'm sorry, Pepsi, Dr. Pepper. I
13 don't want to miss anybody.
14 Anyway, that's -- if -- if we could get --
15 maybe our Department could get some help with
16 your Department on this, and maybe with JAPC,
17 we can get this straightened out.
18 The Secretary of State's office was
19 involved last time because they -- they accept
20 all the filing of the rules. And if we could
21 get that smoothed over, we won't have to do as
22 much work on these -- technical work that --
23 that really takes up a lot of time and get
24 us -- really doesn't --
25 GOVERNOR BUSH: These were good --
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1 COMMISSIONER GALLAGHER: -- get us
2 anywhere.
3 GOVERNOR BUSH: -- these were good rules,
4 and a lot of people -- a lot of families with
5 kids with --
6 COMMISSIONER GALLAGHER: And I want to get
7 them passed as soon as possible.
8 Now, would -- I tell you what we'll do.
9 Let's do this: Let's defer them. And if
10 we find we've got to do brand new ones, between
11 what happens with the Attorney General's Office
12 and JAPC and everything else, we can still
13 bring new ones.
14 I mean, that's not going to stop us from
15 doing that. But if we can bring these as -- as
16 deferred, and if -- if we can't get them fixed
17 the way they need to be, we'll redo them.
18 How's that?
19 That -- that way they're still alive.
20 GOVERNOR BUSH: There's a motion to defer.
21 Is there a second?
22 ATTORNEY GENERAL BUTTERWORTH: Second.
23 GOVERNOR BUSH: Without objection, it is --
24 it is approved.
25 Thank you, Commissioner.
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1 COMMISSIONER GALLAGHER: Thank you.
2 ATTORNEY GENERAL BUTTERWORTH: That's it?
3 GOVERNOR BUSH: That's it.
4 COMMISSIONER CRAWFORD: That's it.
5 All right.
6 (The State Board of Education Agenda was
7 concluded.)
8 * * *
9 (The Cabinet meeting was concluded at
10 12:20 p.m.)
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224
June 26, 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 72 through 223 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 JULY, 2000.
18
19
20 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
21 Tallahassee, Florida 32301
850/878-2221
22
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