THE CABINET

STATE OF FLORIDA

_____________________________________________________

Representing:

DIVISION OF BOND FINANCE
FLORIDA DEPARTMENT OF LAW ENFORCEMENT
DEPARTMENT OF REVENUE
STATE BOARD OF EDUCATION
ADMINISTRATION COMMISSION
FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
DEPARTMENT OF AGRICULTURE
STATE BOARD OF TRUSTEES
STATE BOARD OF ADMINISTRATION

The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush presiding,
in the Cabinet Meeting Room, LL-03, The Capitol,
Tallahassee, Florida, on Tuesday, September 10, 2002
commencing at approximately 9:20 a.m.

Reported by:

SANDRA L. NARGIZ

Registered Professional Reporter
Registered Merit Reporter
Certified Realtime Reporter

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



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APPEARANCES:

Representing the Florida Cabinet:

JEB BUSH
Governor

JIM SMITH
Secretary of State

ROBERT F. MILLIGAN
Comptroller

CHARLES H. BRONSON
Commissioner of Agriculture

BOB BUTTERWORTH
Attorney General

CHARLIE CRIST
Commissioner of Education

TOM GALLAGHER
Treasurer

* * *

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I N D E X

DIVISION OF BOND FINANCE
(Presented by Ben Watkins)

ITEM ACTION PAGE

1 Approved 5
2 Approved 5
3 Approved 5
4 Approved 6

FLORIDA DEPARTMENT OF LAW ENFORCEMENT
(Presented by Tim Moore)

ITEM ACTION PAGE

1 Approved 9
2 Approved 13
3 Approved 15

DEPARTMENT OF REVENUE
(Presented by James Zingale)

ITEM ACTION PAGE

1 Approved 17
2 Approved 20
3 Approved 21
4 Approved 23

STATE BOARD OF EDUCATION
(Presented by Robin Safley)
1 Approved 24
2 Approved 24
3 Approved 24
4 Approved 25
5 Approved 26
6 Approved 26
7-25 Approved 26
7 Approved 31

ADMINISTRATION COMMISSION
(Presented by Teresa Tinker)

1 Approved 27
2 Approved 27
3 Approved 27



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FLORIDA LAND AND WATER ADJUDICATORY COMMISSION
(Presented by Teresa Tinker)

ITEM ACTION PAGE

1 Approved 30
2 Approved 30
3 Approved 30

DEPARTMENT OF AGRICULTURE
(Presented Sherman Wilhelm)

ITEM ACTION PAGE
1 Approved 32
2 Withdrawn 32

STATE BOARD OF TRUSTEES
(Presented by David Struhs)
ITEM ACTION PAGE

1 Approved 36
2 Approved 36
3 Approved 61

STATE BOARD OF ADMINISTRATION
(Presented by Coleman Stapanovich)

ITEM ACTION PAGE
1 Approved 62
2 Approved 62
3 Approved 63
4 Approved 63
5 Approved 64
6 Approved 64
7 Approved 66
8 Approved 70
9 Approved 82

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1
P R O C E E D I N G S
2 (The agenda items commenced at 9:20 a.m.)

3 GOVERNOR BUSH: The next Cabinet meeting is

4 Capital For A Day to be held in St. Petersburg,

5 Florida, home of Charlie Crist, September 24, two

6 weeks. Looking forward to it.

7 TREASURER GALLAGHER: Motion on the minutes.

8 COMMISSIONER CRIST: Second.

9 GOVERNOR BUSH: Moved and seconded. Without

10 objection, the minutes are approved.

11 MR. WATKINS: Item number 2 is a resolution

12 authorizing the issuance of up $192,600,000 in

13 Public Education Capital Outlay Bonds.

14 TREASURER GALLAGHER: Motion.

15 COMMISSIONER CRIST: Seconded.

16 GOVERNOR BUSH: Moved and seconded. Without

17 objection, the item is approved.

18 MR. WATKINS: Item number 3 is a resolution

19 authorizing the competitive sale of up to

20 $26.9 million of parking facility revenue bonds

21 for Florida International University.

22 COMMISSIONER BRONSON: Motion.

23 TREASURER GALLAGHER: Second.

24 GOVERNOR BUSH: Moved and seconded. Without

25 objection, the item passes.

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1 MR. WATKINS: Item 4 is a report award on the

2 competitive sale of $264.5 million in Public

3 Education Capital Outlay Refunding Bonds.

4 The bonds were awarded to the low bidder

5 at a true interest cost rate of approximately

6 4.4 percent, which generated gross debt service

7 savings for the state of approximately

8 $23.3 million, translated to, on a present

9 value basis, $15.4 million.

10 COMMISSIONER BRONSON: Second.

11 GOVERNOR BUSH: Is there a motion?

12 TREASURER GALLAGHER: Moved.

13 GOVERNOR BUSH: Moved and seconded. Without

14 objection, it's approved.

15 Thank you, Ben.

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1 GOVERNOR BUSH: Commissioner Moore.

2 COMMISSIONER MOORE: Good morning, Governor

3 and Members of the Cabinet.

4 On item 1, the minutes, I owe you some

5 follow up from the last Cabinet meeting. There

6 was considerable amount of discussion about the

7 Capitol Police issue. And as you recall, your

8 instructions collectively were we were supposed

9 to go work and share our plans with all the

10 Cabinet agencies and all the executive agencies

11 and everyone else involved.

12 Director Scotty Sanderson has completed

13 that. We not only have implemented the plan,

14 but we made sure that we briefed all of you,

15 your offices, and everybody in the Executive

16 Branch in terms of how things were going to

17 work. And that has been completed.

18 There are a couple of areas where there is

19 some disagreement generally at the high level

20 on some of the ingredients in the bill, but

21 those things can be worked out later.

22 The most important thing is that we

23 provided for as smooth a transition as can be

24 possible on this piece of legislation. We made

25 sure that we corrected some of the

8
1 jurisdictional issues using some of the

2 authority that we had in our department. With

3 your help and with the agreement of the

4 leadership in the legislature, we'll be

5 continuing to work on that jurisdiction issue

6 and examining the need for tweaking some of

7 these things. And we'll do that, Governor,

8 with obviously you and the Speaker and

9 President as we move into the new leadership.

10 The important thing to remember here,

11 though, is that security plans are in place for

12 all of our facilities, and they are understood

13 by the men and women who run those agencies.

14 GOVERNOR BUSH: Commissioner, could you pause

15 for a second. I know that we had a conversation

16 about this, I believe Commissioner Gallagher and

17 General Butterworth I believe expressed some

18 concerns at the time.

19 I was just curious to know if they had

20 been -- have their concerns been alayed? We

21 are talking about security in the buildings

22 that are one block away from the Capitol that

23 Capitol Police do not have responsibility for,

24 and I just wanted to make sure that you all

25 were comfortable with what the protocol and --

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1 GENERAL BUTTERWORTH: It's working out.

2 TREASURER GALLAGHER: Let me just say that we

3 had a couple incidents last week, and the local

4 police that have now been given charge did an

5 excellent job in getting there on time and

6 following through and helping us and had to clear

7 the building out twice unfortunately.

8 GOVERNOR BUSH: We also have a new law that

9 when that sucker gets caught, he is going to be

10 punished.

11 TREASURER GALLAGHER: It won't be pretty. It

12 won't be pretty, but that will probably teach some

13 lessons on these aren't fun and games to make

14 those kind of calls.

15 But I just wanted to mention that with the

16 leadership from FDLE and Capitol Police and

17 local police, it was a little rocky in the

18 beginning, but it's working out very well now.

19 GOVERNOR BUSH: Okay. Thank you. Is there a

20 motion on the minutes?

21 TREASURER GALLAGHER: Motion.

22 COMMISSIONER BRONSON: Second.

23 GOVERNOR BUSH: Moved and seconded. Without

24 objection, the item passes.

25 Item 2.

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1 COMMISSIONER MOORE: Governor, Item 2 is

2 requesting or submitting the department's annual

3 performance report.

4 You have a copy of that performance report

5 in your file there. As you know, that is tied

6 to the 34 outcome measures that are specified

7 in law which we are expected to deliver on, and

8 our men and women did in our estimation a very

9 good job this past fiscal year.

10 That report is available on line. We

11 didn't produce hard copies other than the

12 summary for this meeting here. It's available

13 for the citizens and policymakers on line.

14 I am proud of their accomplishments in

15 that report. Several of them, they speak for

16 themselves there, as you will see.

17 TREASURER GALLAGHER: I would like to mention

18 also I am going to thank Commissioner Moore and

19 his agency for assisting both the Department of

20 Education and the Department of Insurance and

21 others in the electronic fingerprint processing

22 that we have just recently gotten off the ground.

23 It has enabled us as the insurance

24 regulator to get a couple-hour turn around on

25 fingerprint requests, which is mind boggling,

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1 because it used to be six or eight weeks, and

2 which caused us to give people licenses and

3 then when we got a past criminal record, go get

4 the license back, which keeps people pretty

5 busy; and because we ended up with a pretty

6 large percentage hit, which is amazing, much

7 more than one would want to think.

8 It also helps teachers get certified and

9 have it come back. And it took some

10 cooperation among a bunch of agencies to have

11 this work, and of course, it works through FDLE

12 and the FBI. And that's an amazing thing, to

13 get the records and hits back within a few

14 hours. And it's just a great system.

15 I thank you very much for your efforts in

16 getting it up and running, I am sure you all

17 are using it too somewhere.

18 COMMISSIONER MOORE: We are receiving

19 80 percent, almost a billion arrest fingerprint

20 cards across Florida electronically in digitized

21 formats.

22 TREASURER GALLAGHER: What percent?

23 COMMISSIONER MOORE: Just short of

24 80 percent.

25 TREASURER GALLAGHER: 80?

12
1 COMMISSIONER MOORE: 80 percent. Our goal is

2 85 percent. We have two large counties that

3 aren't quite ready yet. When Hillsborough and

4 Duval Counties come in, we'll be up in the high

5 90s at that point in time.

6 There are some technical difficulties on

7 their end that we are working through with them

8 to make that a reality. And we are trying to

9 leverage that same capability capacity

10 throughout everything we do in government that

11 requires fingerprints, including state

12 employment, incentive positions.

13 GOVERNOR BUSH: Children and Families?

14 COMMISSIONER MOORE: Yes, sir, that will be a

15 possibility.

16 TREASURER GALLAGHER: What we have done, the

17 Department of Insurance and Education got together

18 on a bid, on the electronic fingerprints, and

19 every county, with the exception of Dade right now

20 but it's about to be up and running; if a person

21 wants to get an insurance license or be an officer

22 or director of an insurance company, he can go to

23 any county in the state, to the local school

24 board, and get their fingerprints taken

25 electronically and the answer comes back to us or

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1 to Education within a couple of hours.

2 And Dade is very excited about it. And

3 Dade, they have basically to fingerprint every

4 one of their employees; and they have been

5 having a problem in waiting for the six or

6 eight weeks, too, in order to hire people,

7 which was a problem. And they are real excited

8 about using this system, but it took them a

9 while to get all their HR together and they are

10 going to be opened up by next week on doing the

11 fingerprints in Dade at their -- starting at

12 their main building, and then they are going to

13 the headquarters too.

14 So it's really making a difference in

15 getting background checks done for those

16 agencies that need to do it.

17 COMMISSIONER MOORE: Governor, item 3,

18 Governor if we are --

19 GOVERNOR BUSH: Any other comments? Is there

20 a motion?

21 TREASURER GALLAGHER: Motion on 2.

22 COMMISSIONER BRONSON: Second.

23 GOVERNOR BUSH: Moved and seconded. Without

24 objection, the item passes.

25 COMMISSIONER MOORE: Item 3 is requesting

14
1 permission to transmit the Department's

2 Legislative Budget Request for Fiscal Year

3 2003-2004. A summary of that budget and the

4 priorities of the items are in your package there

5 for to you see.

6 It represents just short of a 4 percent

7 increase on our existing budget, and it goes to

8 the very issues that you've given us

9 instructions and directions to pay attention

10 to.

11 We are trying to add value in areas where

12 economies of scale make sense, realizing that

13 most policing in our state is local as it

14 should be.

15 As you look through those budget items,

16 you will see that some of our priorities are to

17 retain the men and women we have in place, to

18 make sure that we do not lose the capacity to

19 do that.

20 You have recommended, Governor, and the

21 Legislature funded for the last four years our

22 Performance Compensation Plan and that's

23 helping us tremendously deliver our objectives.

24 We are also focussing on making sure that

25 we do not lose any of our sworn men and women

15
1 in the coming years.

2 The federal government is going to hire a

3 hundred thousand sworn police officers over the

4 next 5 to 10 years as a result of 9-11.

5 Director Mueller from the FBI, Director Asa

6 Hutchinson from the DEA have already told me:

7 We are coming to your agency, Tim, because your

8 men and women do a good job.

9 I am proud of that, I appreciate that

10 compliment, but I want to keep our good men and

11 women. We are offering a structured salary

12 plan here to retain and to recruit future men

13 and women t come into out organization.

14 I realize much has to be done to make that

15 a reality, but that's something that is indeed

16 a priority for us, as is continuing to use

17 technology and just in ways as has been

18 discussed here, to help local law enforcement

19 and state law enforcement do our job.

20 GOVERNOR BUSH: Is there a motion?

21 COMMISSIONER BRONSON: Motion.

22 TREASURER GALLAGHER: Second.

23 GOVERNOR BUSH: I am abstaining from voting

24 on this item in order to make my own budget

25 recommendation. The item passes with one

16
1 abstention.

2 GENERAL BUTTERWORTH: I don't think that I

3 can vote it. I might be voting on it in the

4 Senate.

5 GOVERNOR BUSH: Two abstentions. It still

6 passes unanimously with two abstentions.

7 TREASURER GALLAGHER: Yeah, you will probably

8 be promoting it there if you're there; you'll be

9 the sponsor.

10 GOVERNOR BUSH: Sponsor, go-to guy.

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1 GOVERNOR BUSH: Department of Revenue.

2 Motion on the minutes?

3 TREASURER GALLAGHER: Motion.

4 COMMISSIONER BRONSON: Second.

5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item passes.

7 Item 2.

8 MR. ZINGALE: Item 2, like Tim's, is the

9 Department's annual performance contract. It is a

10 closing out of last year. We met 15 of our 16

11 performance goals. It was quite a year in the

12 Department of Revenue. We were excited about it.

13 I am really proud of the staff; a lot of

14 technology initiatives in place: SUNTEX,

15 Telecom. It was a year marked with a lot of

16 reengineering of a number of our major business

17 processes.

18 Third cycle going through on ad valorem,

19 dramatic changes in terms of our way of

20 overseeing what property appraisers do.

21 But the only one I am going to really

22 highlight is child support enforcement where we

23 significantly exceeded our federal performance

24 measures, in both number of cases to order and

25 amounts collected, a major stride forward in

18
1 terms of child support enforcement. Not where

2 I want it to be yet, not where you want it to

3 be yet, but the kind of progress you need to

4 have if we are going to get where we want to be

5 in the next three years.

6 That performance contract does lay out

7 goals for next year. These, as you know, are

8 established by the legislature. They are quite

9 modest; they give you a quite low goal, you

10 accept it and try to exceed the heck out of it,

11 which we are hoping to do.

12 I do want you to know though that this

13 performance year is the one we are in right

14 now, and this is by far the most difficult and

15 dramatic changes that will take place in all

16 three of our programs in the Department of

17 Revenue probably in the last 10 years.

18 Right this minute we are rolling in

19 $17 billion of sales tax into the integrated

20 tax system. It will be finished on schedule in

21 January/February to start the new tax year.

22 That will be the first time this agency has

23 ever had a fully integrated modern tax

24 administration system. It will cause over the

25 next three years major reengineering of all of

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1 our business processes.

2 On Child Support, we will be kicking off,

3 we have a small protest that hopefully will be

4 completed this week on its new computer system,

5 so you are going to see that mirroring the

6 implementation of the laws you all helped to

7 pass in terms of establishing the

8 administrative process.

9 So we have a tremendous year going on in

10 both Child Support and General Tax

11 Administration. To be honest, property tax is

12 really starting into its continuous improvement

13 cycle. We are kind of over the major

14 reengineerings that were initiated by out

15 audit. And the performances that we have been

16 showing you are kind of moving into refinements

17 in this year coming up.

18 So with your permission, I would like to

19 get the contract approved for this year and

20 next year.

21 GOVERNOR BUSH: Is there a motion?

22 TREASURER GALLAGHER: Motion.

23 COMMISSIONER BRONSON: Second.

24 GOVERNOR BUSH: Moved and seconded. Without

25 objection, the item passes.

20
1 MR. ZINGALE: The second item on the agenda

2 is the budget proposal for next year. Fairly

3 modest, less than that a 2 percent increase in

4 general revenue. Our top 10 priorities really

5 have no general revenue associated with them to

6 speak of; a small little 300,000-dollar item for

7 the SDU.

8 These 10 issues are primarily and

9 overwhelmingly technology. The CAMS issue that

10 is federally and incentive funded 22 million

11 for the new child support system, some

12 technology in the SDUs, some technology in the

13 SUNTAX to get the servers out there.

14 Two places we are asking for FTE; they are

15 offset by a cut somewhere else in the

16 organization.

17 Enhancements to the in-depth study

18 process, that's ad valorem; we requested it

19 last year and it was approved. We couldn't get

20 it through the Legislature, and three in our

21 tangible personal property area. Those 13

22 positions will pay for themselves to increase

23 ad valorem.

24 With your permission, we would like the

25 budget approved.

21
1 GOVERNOR BUSH: Is there a motion?

2 COMMISSIONER BRONSON: Motion.

3 TREASURER GALLAGHER: Second.

4 GOVERNOR BUSH: And a second.

5 I am abstaining from my vote on this item

6 in order to make my own budget recommendation.

7 Are you abstaining on this one, too?

8 GENERAL BUTTERWORTH: Yes.

9 GOVERNOR BUSH: The items passes with two

10 abstentions.

11 MR. ZINGALE: The last item is the capital

12 facilities plan.

13 The department has 74 percent of its space

14 utilization under private lease. We are not

15 contemplating any significant increase in

16 capital facility.

17 There is one item that doesn't really

18 appear in this document, but it is a

19 significant change in our capital facility

20 needs.

21 If you drive to the airport and you take

22 the truck route around, that defunct mall off

23 to the right has been Tax World and State of

24 Florida for many years. We converted that

25 defunct mall into the --

22
1 GOVERNOR BUSH: What do you call it, Tax

2 World?

3 MR. ZINGALE: We call it Tax World. We don't

4 call it that, but everybody else does.

5 GOVERNOR BUSH: I break out in a rash when I

6 go by there.

7 MR. ZINGALE: It's Tax World; we got

8 $26 billion flowing through those tin sheds out

9 there, every year. And we sent out for bid a

10 brick and mortar building out there, structured

11 house technology, and to start building buildings

12 out there, maybe Southwood East; we have been

13 unable to get out in Southwood and aren't likely

14 to get out there in my lifetime.

15 So we sent out the bid of brick and mortar

16 building. The current vendor came back with a

17 good solid proposal. We believe it's going to

18 be covered under the current lease agreement.

19 And we are reviewing plans right now, and the

20 intention is to build a new building out there

21 and begin converting that one at a time.

22 With your permission, we would like

23 capital facilities plan approved.

24 TREASURER GALLAGHER: Motion on 4.

25 GOVERNOR BUSH: Is there a second?

23
1 COMMISSIONER BRONSON: Second.

2 GOVERNOR BUSH: I am abstaining from my vote

3 on this item in order to make my own budget

4 recommendation.

5 General, are you abstaining?

6 GENERAL BUTTERWORTH: No.

7 GOVERNOR BUSH: You are going to vote on this

8 one? Okay. One abstention. Thank you, Jim.

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1 GOVERNOR BUSH: State Board of Education.

2 Good morning, Robin.

3 MS. SAFELY: Good morning.

4 Item 1 is the adoption of a resolution

5 authorizing issuance of up to 192,600,000 State

6 Board of Education PECO bonds.

7 COMMISSIONER CRIST: Motion.

8 GENERAL BUTTERWORTH: Second.

9 GOVERNOR BUSH: Moved and seconded. Without

10 objection, the item passes.

11 MS. SAFELY: Item 2 is the rule repeal of

12 6A-20.043, which are access grants for community

13 colleges.

14 COMMISSIONER CRIST: Motion.

15 GENERAL BUTTERWORTH: Second.

16 GOVERNOR BUSH: Moved and seconded. Without

17 objection, the item is approved.

18 MS. SAFELY: Item 3 is the amendment to Rule

19 6A-4.00821, Florida Education Leadership

20 Examinations.

21 TREASURER GALLAGHER: Motion on 3.

22 COMMISSIONER BRONSON: Second.

23 GOVERNOR BUSH: Moved and seconded. Without

24 objection, the item passes.

25 MS. SAFELY: Item 4 is 19 amendments to rule

25
1 6A-20, Student Financial Assistance.

2 COMMISSIONER CRIST: A long motion, if I

3 might. Motion to approve item 4, including

4 amendment to the amendments, for rules 6A-20.019,

5 6A-20.032 and 6A-20.033.

6 TREASURER GALLAGHER: What are the changes?

7 MS. SAFELY: Tom Pritchard, what are the

8 changes to the rule? Or is Teresa --

9 GOVERNOR BUSH: Good morning, Tom.

10 MS. SAFELY: I am sorry, I've got staff.

11 It's not Tom's rules, it's Teresa's. I apologize.

12 I didn't see you there.

13 MS. ANTWORTHY: Governor and Cabinet Members,

14 the amendments to the rule are just corrections to

15 correct full-time/part-time, availability and

16 eligibility for students for those particular

17 programs referred to in each of those three rules.

18 TREASURER GALLAGHER: So a technical change?

19 MS. ANTWORTHY: Technical, correct.

20 GOVERNOR BUSH: All right. Thank for you

21 clarification. There is a motion.

22 TREASURER GALLAGHER: I second Charlie's.

23 GOVERNOR BUSH: It's been moved as amended

24 and seconded. Without objection, the item passes.

25 MS. SAFELY: Item 5 is the appointment of

26
1 Trent Daniel to the Education Practices

2 Commission, replacing Clarissa Coddington, for a

3 term ending September 30, 2003.

4 COMMISSIONER CRIST: Motion.

5 TREASURER GALLAGHER: Second.

6 GOVERNOR BUSH: Moved and seconded. Without

7 objection, the item passes.

8 MS. SAFELY: Item 6 is the appointment of

9 Carlos Seales to the Education Practices

10 Commission, replacing Kimberly Pinsky, for a term

11 ending September 30, 2004.

12 COMMISSIONER CRIST: Motion.

13 TREASURER GALLAGHER: Second.

14 GOVERNOR BUSH: Moved and seconded. Without

15 objection, the item passes.

16 Why don't we take all of these, unless

17 there is any objection, take the rest of them

18 altogether?

19 TREASURER GALLAGHER: Move items 7 through

20 25.

21 GOVERNOR BUSH: You want to say them

22 individually? Moved and seconded. Without

23 objection, the items pass. Thank you.

24

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1 GOVERNOR BUSH: Administration Commission.

2 TREASURER GALLAGHER: Motion on the minutes.

3 COMMISSIONER CRIST: Seconded.

4 GOVERNOR BUSH: Moved and seconded. Without

5 objection, the item passes.

6 Item 2.

7 MS. TINKER: Item 2, recommend approval of

8 the minutes of the May 7th meeting.

9 TREASURER GALLAGHER: Motion on second.

10 COMMISSIONER CRIST: Second.

11 GOVERNOR BUSH: Moved and seconded. Without

12 objection, the item passes.

13 MS. TINKER: Item 3, recommend approval of

14 the final rule adopting amendments to the Monroe

15 County Comprehensive Plan, the City of Marathon

16 Comprehensive Plan, and extending the Florida Keys

17 Area of Critical State Concern designation for an

18 additional year.

19 TREASURER GALLAGHER: Motion on 3.

20 COMMISSIONER CRIST: Second.

21 GOVERNOR BUSH: No discussion? Moved and

22 seconded. Without objection -- there is peace in

23 the valley -- the item passes.

24 TREASURER GALLAGHER: They have come a long

25 way. About 10 or 15 years ago, this would have

28
1 been a full house, a big battle between the

2 Cabinet and the local government, and everybody is

3 on the same wavelength.

4 GOVERNOR BUSH: I want to, if you don't mind,

5 I want to give you one good reason why that's the

6 case; and that's the Department of Community

7 Affairs.

8 They have got a new attitude about their

9 relationship with Monroe County, and Monroe

10 County's attitude has changed because of that.

11 It's amazing how that works when you treat

12 people --

13 TREASURER GALLAGHER: There have been a few

14 elections in Monroe County, also.

15 GOVERNOR BUSH: But we didn't try to impose

16 our will without trying to get buy-in, and there

17 is a new attitude now. And they are making

18 progress, we are helping fund it. And there is a

19 lot of good things going on down there.

20 MS. TINKER: Just to add to that. I am not

21 sure the Cabinet members know there is $12 million

22 in this year's budget for waste water systems in

23 the Florida Keys. That's a great accomplishment.

24 GOVERNOR BUSH: That's why we call you

25 "Sewage Girl."

29
1 TREASURER GALLAGHER: Oh, wonderful. How

2 about "Clean Water Girl." "Clean Water Girl"

3 sounds better to me.

4 GENERAL BUTTERWORTH: We are going to be on

5 Jay Leno again.

6 GOVERNOR BUSH: We try hard to do that. We

7 do have a motion on that? Moved and seconded.

8 Without objection, the item passes.

9 Thank you, Teresa. You are not sewage

10 Water Girl to me.

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1 GOVERNOR BUSH: Florida Land and Water

2 Adjudicatory. Oh, she's back.

3 TREASURER GALLAGHER: Motion on the minutes.

4 COMMISSIONER CRIST: Second.

5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item passes.

7 Item 2.

8 MS. TINKER: Recommend approval of the

9 proposed final rule amending the boundaries of the

10 Circle Square Woods Community Development District

11 in Marion County.

12 TREASURER GALLAGHER: Motion.

13 COMMISSIONER CRIST: Second.

14 GOVERNOR BUSH: Moved and seconded. Without

15 objection, the item passes.

16 MS. TINKER: Item 3, recommend approval of

17 the proposed amendments to the Criteria Manual For

18 the Seminole Water Rights Compact.

19 TREASURER GALLAGHER: Motion.

20 COMMISSIONER CRIST: Second.

21 GOVERNOR BUSH: Is there a motion?

22 Moved and seconded. Without objection,

23 the item passes.

24

25

31
1 TREASURER GALLAGHER: Motion on 7 on

2 Education.

3 COMMISSIONER CRIST: Second.

4 GOVERNOR BUSH: Moved and seconded. This is

5 item 7 on the Department of Education budget.

6 There is a motion and a second. Without

7 objection, the item passes.

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

32
1 GOVERNOR BUSH: Department of Agriculture:

2 MR. WILHELM: Item number 1 is the management

3 agreement with the University of Florida to enter

4 into an 18-month research project for oyster and

5 clams in the Cedar Key area.

6 TREASURER GALLAGHER: Motion on 1.

7 COMMISSIONER BRONSON: Second.

8 GOVERNOR BUSH: Moved and seconded. Without

9 objection, the item passes.

10 MR. WILHELM: Item 2, we are requesting this

11 be withdrawn.

12 TREASURER GALLAGHER: Motion to withdraw.

13 COMMISSIONER BRONSON: Second.

14 GOVERNOR BUSH: There is a motion to withdraw

15 and second. Without objection, the item is

16 withdrawn. Thank you.

17

18

19

20

21

22

23

24

25

33
1 GOVERNOR BUSH: Board of Trustees.

2 MR. STRUHS: Good morning.

3 We have three items. The first one is

4 seeking your approval to move forward with some

5 development of rules, rules that would

6 obviously not become effective until they were

7 brought back here for the Board of Trustees'

8 approval, rules that would not apply on any

9 private property interests unless those private

10 interests were seeking to have access to and

11 develop state-owned spring land.

12 We would look forward to working with

13 obviously all the other resource agencies in

14 developing these rules before they are brought

15 back to you for your consideration.

16 COMMISSIONER BRONSON: I have a question

17 before we make the motion on this, if it's okay

18 with you.

19 I just want to, David, as you know, I am

20 very much interested in the fact that we need

21 to take care of our first and second magnitude

22 springs, without any doubt in my mind. But I

23 want to make sure where we are going, as you

24 develop these rules as to the definition of

25 what is the spring run; how far does that go?

34
1 I mean, if you put dye into Wakulla

2 Springs, where does it come out? Is the full

3 length of that wherever -- where any fish may

4 come up, is that considered a full spring run,

5 or is it that open area where the water runs

6 before it goes back into the ground?

7 Those are issues, Governor, that I think

8 need to be clarified here, because as we all

9 know, those springs pop up miles and miles away

10 sometimes where the water comes out. I want to

11 make sure we are not opening this thing up for

12 a real problem in the future as this rule is

13 being developed.

14 MR. STRUHS: Yes, sir, that's precisely why

15 we would propose what we have here, which is to

16 initiate the rule-making to engage all the other

17 resource agencies, to come back to you with a

18 proposal as to, among other things, defining that

19 zone of influence for a spring.

20 COMMISSIONER BRONSON: The other issue is

21 on -- and I noticed there were some items in there

22 that had to do with plant material, upland plant

23 materials around the spring areas, and so forth.

24 And I want to make sure that we are not

25 also in this rule-making process making it hard

35
1 for us to repair those areas in case of major

2 storms where it says we are not going to fool

3 with putting sand in and other things we may

4 need to do; if we have a major storm that could

5 really damage some of our springs, I want to

6 make sure we can repair those springs; we don't

7 go so far as to keep us from doing what we need

8 to do to repair those springs as well.

9 So I just want to make those points.

10 GOVERNOR BUSH: Good points.

11 GENERAL BUTTERWORTH: David, in this

12 rule-making, of course, we wish to assure public

13 access to the springs, and to make sure that

14 certain commercial activities would not hinder

15 people from actually enjoying the springs.

16 Will the rule in its final form allow the

17 Board of Trustees to make the decision as to

18 whether to allow commercial activity on that

19 spring, or would that be done by your staff?

20 MR. STRUHS: No, that would obviously remain

21 with the Board of Trustees, General, as it should.

22 GOVERNOR BUSH: Any other questions? Is

23 there a motion?

24 TREASURER GALLAGHER: Move.

25 COMMISSIONER BRONSON: Second.

36
1 GOVERNOR BUSH: Moved and seconded, without

2 objection, the item passes.

3 MR. STRUHS: Item 2 is a land acquisition in

4 the North Key Largo Hammocks Florida Forever

5 Project. It's about an acre and a half in north

6 Key Largo, very attractive price on this property.

7 Recommend approval.

8 TREASURER GALLAGHER: Motion.

9 COMMISSIONER BRONSON: Second.

10 GOVERNOR BUSH: Moved and seconded. Without

11 objection, the item passes.

12 MR. STRUHS: The 3rd and final item is a

13 little bit complicated. If I could just take a

14 minute and frame the issues for your

15 consideration.

16 What you face here is really three

17 options. One is to accept the settlement

18 agreement as it appears in your briefing

19 documents.

20 Obviously the other option is to reject it

21 and pursue litigation.

22 The third would be to not oppose the

23 landowner's motion for summary judgment and

24 essentially plead no contest.

25 As you consider those three options, let

37
1 me just do a very quick chronology in terms of

2 how we got to where we are today.

3 Back in the year 2000, the South Florida

4 Land Holdings Company sought to rezone some

5 land near Charlotte Harbor for a marina.

6 In January of 2001, the Charlotte County

7 government said yes to that rezoning for the

8 marina. In 2001, shortly thereafter that, the

9 Department of Environmental Protection said:

10 Hey, wait a minute, this isn't your land; it

11 belongs to the State of Florida.

12 July of 2001, South Florida Land Holdings

13 went to the court seeking to quiet the title

14 and resolve the issues of the land ownership.

15 GOVERNOR BUSH: Are you missing one part,

16 David, which is we never secured our title

17 interest in it?

18 MR. STRUHS: Governor, I was just getting --

19 GOVERNOR BUSH: That happened beforehand,

20 didn't it? Go ahead. I am sorry.

21 MR. STRUHS: I was about to get to that

22 point.

23 In October 2001, the court ordered

24 mediation. We entered into the settlement

25 negotiations in November of 2001, and at that

38
1 point, Governor, in reviewing the record,

2 realized that, in fact, while the property had

3 been offered to the State of Florida, the State

4 of Florida never actually accepted it.

5 GOVERNOR BUSH: The board -- it's a kind of

6 interesting historical end. The board approved

7 the purchase. Someone just didn't go and secure

8 the title, right?

9 MR. STRUHS: Governor, in fact, you just

10 interrupted that point. It wasn't a purchase; it

11 was donation. And the state close not to accept

12 the donation.

13 TREASURER GALLAGHER: Wait a minute, now.

14 Here is the state. Here is the problem: You've

15 got the Trustees on 12-16-87 approved the

16 donation. Okay? This Board approved the donation

17 of 414 acres from General Development Corporation,

18 approved and accepted that donation.

19 In fact, Attorney General Smith seconded

20 the motion.

21 So the state accepted it. And then

22 somebody sitting down in your agency -- you

23 weren't there, but somebody made up their mind

24 they didn't like it, so they didn't record it.

25 Now what's going on? How does that

39
1 happen? Who is supposed to be buying the land?

2 Some bureaucrat sitting in that department or

3 is it this Board?

4 GOVERNOR BUSH: Some bureaucrat that was

5 working in our administration when Governor

6 Martinez was in charge.

7 TREASURER GALLAGHER: It doesn't matter whose

8 administration it is; how does that happen?

9 GOVERNOR BUSH: That's what I was trying to

10 ask. That is kind of a -- before -- you are

11 giving us a historical perspective.

12 Have you figured out how that happened?

13 That part is kind of the part that, looking at

14 past, worrying about prolonged and worrying

15 about what the future looks like, it seems like

16 we ought to have pretty good policies in place

17 to make sure we secure title whenever someone

18 gives us land or we purchase it.

19 MR. STRUHS: That's right. The Division of

20 State Lands, in a previous administration, when

21 reviewing the donation of the land, recognized

22 that there were a bunch of requirements attached

23 to it; there were strings attached, and we can

24 outline those for you if you wish to know what

25 they are. They included things like --

40
1 TREASURER GALLAGHER: Special taxes, special

2 assessments.

3 MR. STRUHS: There you go. The Division of

4 State Lands, exercising their judgment at that

5 time -- and you could subpoena them and bring them

6 back into state government and question them if

7 you want, but I am not going to answer or defend

8 what they chose to do 15 years ago.

9 TREASURER GALLAGHER: But the question --

10 MR. STRUHS: What I will tell you is that

11 they exercised the option to not accept or record

12 the title.

13 TREASURER GALLAGHER: The question here is:

14 Shouldn't they have been required -- or today,

15 don't you feel you are required to bring that back

16 to this Board and let that decision be made here,

17 whether we pay special assessments or taxes or

18 not, whether we accept the deed restrictions?

19 MR. STRUHS: I can tell you how I would

20 operate. If I were operating and the head of the

21 Board of Trustees directing us to accept a

22 donation of land, and then in reviewing the

23 donation recognized that there were strings

24 attached that we found problematic, I would bring

25 it back to the Board of Trustees.

41
1 TREASURER GALLAGHER: That's a good thing,

2 because I think that's what should have happened

3 back then.

4 GOVERNOR BUSH: Exactly. I just want to make

5 sure that's the policy. I am glad you --

6 GENERAL BUTTERWORTH: So where we are

7 essentially on that is the deed is still valid.

8 TREASURER GALLAGHER: That's what I think.

9 GENERAL BUTTERWORTH: The deed is valid. It

10 came to us, came to one of us, and it was

11 approved.

12 TREASURER GALLAGHER: So there is a title

13 problem here. And I think a title company

14 probably owes somebody some money.

15 GENERAL BUTTERWORTH: I think we still own

16 it.

17 TREASURER GALLAGHER: You do have a

18 responsibility to record it. That's going to be a

19 problem. The entire land ownership is done by a

20 responsibility to record deeds.

21 GENERAL BUTTERWORTH: The other issue I

22 think, Governor, further down the line about what

23 role the lawyer played, who was in the law firm,

24 what lawyers were in the law firm with GDC, who

25 ended up getting this land for basically nothing,

42
1 and did they have knowledge -- this may not make a

2 difference they had knowledge or not -- under the

3 bar rules, they have tremendous conflicts here.

4 So I think we are in very dangerous waters

5 here to just walk away from this thing without

6 going into this thing much further or letting

7 the court case proceed. And I would be glad to

8 lend some of my land experts for the case.

9 COMMISSIONER BRONSON: I've got a question on

10 this.

11 If there were deed restrictions and the

12 state refused to accept the deed restrictions

13 under the context of the land going and being

14 donated to the state, is the land truly -- does

15 the land truly belong to the state, since it

16 refused to accept those deed restrictions as

17 given by the person who donated the lane?

18 TREASURER GALLAGHER: Here's the problem. In

19 my personal opinion, the only people that cannot

20 accept those deed restrictions are five members on

21 this Board that agreed to accept the land. And

22 some lawyer sitting in the department can't make

23 that decision.

24 COMMISSIONER BRONSON: I understand that, and

25 I agree with you a hundred percent. But the state

43
1 officially has not accepted those deed

2 restrictions after 15 years. And so what is the

3 legal ramifications after 15 years of not -- does

4 the land revert back to its original owner?

5 I mean, the Attorney General says he

6 thinks the state owns the land, but there

7 again, I don't think we met all of our

8 obligations back then as the Board of Trustees.

9 So those are still some questions up in the air

10 legally, I guess, that need to be answered.

11 MR. STRUHS: That's precisely the reason why

12 we bring to you for your consideration --

13 TREASURER GALLAGHER: I would like to move we

14 deny the purchase.

15 GOVERNOR BUSH: That's why we have a court

16 system basically. The questions you answered

17 aren't completely yes or no. There is some --

18 COMPTROLLER MILLIGAN: If I understood,

19 denying means to send it to go to the court.

20 TREASURER GALLAGHER: It's in court. I think

21 we ought to let it keep working its way through.

22 COMPTROLLER MILLIGAN: I will second that

23 motion.

24 GENERAL BUTTERWORTH: I will lend my lawyers

25 who are the experts.

44
1 SECRETARY SMITH: I would like to ask a

2 question. What's the downside, what do we think

3 our chances are and the down side I guess is we

4 just lose a donation.

5 MR. STRUHS: I think, according to our legal

6 counsel, that if you pursue the route of

7 litigation and don't accept the settlement, that

8 the state will lose and we'll lose pretty quickly.

9 And the one part I did leave out, and it

10 was my error, was the importance of the land

11 itself. Apart from the quagmire that we find

12 ourselves in from a legal and managerial point

13 of view, the actual resources itself are of

14 particular importance. And I think that all of

15 you would, from an environmental point of view,

16 like to see this land preserved.

17 GOVERNOR BUSH: David, does the land have

18 development rights on it right now?

19 MR. STRUHS: Well, yes and no. What we have

20 seen --

21 GOVERNOR BUSH: Like yes and no relates to

22 the title; it depends on who owns it.

23 MR. STRUHS: That's right. The reason I am a

24 little bit tentative on that is one would believe

25 that the answer was no, and yet where we saw that

45
1 occur in January of 2001 was Charlotte County, in

2 fact, rezoning the land for the purposes of

3 development.

4 GOVERNOR BUSH: Tell me, something in my

5 briefing here that confused me a bit was that the

6 zoning board -- I am not sure what they called it

7 in Charlotte County -- actually trumps the county

8 commission and comes after the county commission

9 decision?

10 MR. STRUHS: Yes, sir.

11 GOVERNOR BUSH: Is there a -- I used to be in

12 this business; maybe I have been gone a long

13 while. I thought normally, similar to the Board

14 of Trustees is the ultimate arbiter of the

15 purchase of lands; don't county commissions have

16 the ultimate say on land use decisions?

17 MR. STRUHS: One would think. I think they

18 are facing a similar problem as to what we are

19 facing here in terms of --

20 GOVERNOR BUSH: The commission itself did

21 not --

22 MR. STRUHS: That's correct.

23 GOVERNOR BUSH: -- support what you just

24 said.

25 MR. STRUHS: It was the board did the

46
1 rezoning.

2 GOVERNOR BUSH: Does it go to the Department

3 of Community Affairs after that, or is this

4 something --

5 MR. STRUHS: I don't know.

6 GOVERNOR BUSH: It's a comp plan amendment,

7 isn't it, submittal?

8 COMPTROLLER MILLIGAN: I have a question They

9 rezoned the entire piece?

10 MR. STRUHS: No, just a portion of it.

11 COMPTROLLER MILLIGAN: Just a very small

12 piece of it.

13 GOVERNOR BUSH: For the marina?

14 MR. STRUHS: For the marina, yes.

15 COMPTROLLER MILLIGAN: The piece we are

16 really interested in, as I understand the layout

17 of this property, is a very narrow strip that runs

18 along the body of water that's in question?

19 TREASURER GALLAGHER: Nobody really wants a

20 marina where they are trying to -- besides, you've

21 got to run your boat two hours before you can even

22 get to any water.

23 So this is just setting that up so they

24 can go get the other land and have one up close

25 to the body of water, and that's all well and

47
1 good, they are not going to build a marina

2 there; it doesn't make sense.

3 COMPTROLLER MILLIGAN: They would lose money.

4 COMMISSIONER BRONSON: You mean they are

5 actually using legal maneuvers to get that done?

6 COMPTROLLER MILLIGAN: I thought the Attorney

7 General's comment about the legal maneuvering done

8 earlier by someone ought to tell you how squirrly

9 this thing is. And I think we ought to take the

10 hard line on it.

11 TREASURER GALLAGHER: I agree, I think the

12 first step is done.

13 GOVERNOR BUSH: There is a motion to deny the

14 agenda item. Is there a second?

15 COMMISSIONER BRONSON: Second.

16 GOVERNOR BUSH: Any other discussion?

17 MR. STRUHS: Just a couple from the

18 Department's point of view.

19 We would, given our record with this

20 project, like to turn it over to the Attorney

21 General and let the Attorney General's office

22 pursue this case in terms of the litigation.

23 GENERAL BUTTERWORTH: As long as Commissioner

24 Crist agrees with that, that's fine with me.

25 COMMISSIONER CRIST: Senator Butterworth, I

48
1 agree.

2 SECRETARY SMITH: In other words, you are

3 saying it's going to be his dog, no matter what?

4 GENERAL BUTTERWORTH: What will happen here,

5 if that happens, the Attorney General will be

6 representing the Board of Trustees on this item,

7 not the Attorney General's office but the Board of

8 Trustees and the State of Florida.

9 TREASURER GALLAGHER: Let's also if, we

10 finish that, I would like to move we -- as part of

11 that -- that we pursue the title that was donated

12 and we accepted; so whatever the ramification that

13 includes --

14 GOVERNOR BUSH: Secretary Smith.

15 SECRETARY SMITH: I would like to know, I

16 guess that then would mean whatever the conditions

17 were that were not acceptable to the staff, we

18 would accept. And I would just like to know what

19 those.

20 MR. STRUHS: I can reveal those now if you

21 wish to know.

22 SECRETARY SMITH: If it's coming back, that's

23 fine. I just want to know what --

24 TREASURER GALLAGHER: Do you know how much

25 taxes is involved? They don't exist anymore.

49
1 Somebody obviously paid --

2 GOVERNOR BUSH: Wonder if we'd have to pay

3 back assessments. It's a little more complicated.

4 MR. STRUHS: Commissioner, in addition to --

5 we can pull out the list of them, but in addition

6 to paying back taxes, it also required the state

7 to accept properties that might have been

8 environmentally contaminated. So there were some

9 other concerns.

10 Basically -- again, I am not here to

11 defend what was decided 15 years ago. But I

12 think there are standard practices in place

13 where the State, Division of State Lands does

14 not accept title for property that has certain

15 conditions attached to it, including

16 contaminated property.

17 TREASURER GALLAGHER: This is real

18 interesting. So we didn't accept it for free. So

19 what we are going to do is make a trade for

20 210 acres and we get it anyway and still got the

21 environmental problems on it. Where is the win on

22 that?

23 Did somebody clean up the environmental

24 problems? It's okay to trade and give up

25 something we already own, which is a

50
1 consideration, which is worth money, in trade

2 for something but we wouldn't accept it for

3 free because it had environmental problems.

4 There is something here that doesn't make sense

5 to me. You are catching the grief for it; you

6 weren't here, I apologize for that.

7 COMMISSIONER BRONSON: I would like to make

8 sure we've got a real pig in the poke before we

9 buy it. I want to make sure we don't get caught

10 on something, hung with something that's going to

11 be our responsibility that we had nothing to do

12 with.

13 GOVERNOR BUSH: There is a motion to deny and

14 a second. Commissioner Gallagher, did you want to

15 amend the motion or just let it stay as it is?

16 TREASURER GALLAGHER: I am sorry?

17 GOVERNOR BUSH: Pursue the title.

18 TREASURER GALLAGHER: Yeah, I was going to

19 make another one after that.

20 GOVERNOR BUSH: There is a motion to deny and

21 a second. Any other discussion? All in favor of

22 the motion?

23 MR. STRUHS: If it's useful to you at all,

24 maybe it's not, we do have representatives here

25 from Charlotte County and from the company, if you

51
1 want to speak to them.

2 TREASURER GALLAGHER: If they want to speak.

3 GOVERNOR BUSH: They can come up. Good

4 morning.

5 MR. GUNDERSON: Good morning, my name is Mike

6 Gunderson. I am a real estate lawyer with

7 McKinley,Ittersagen, Gunderson and Berntsson. I

8 am also a 50 percent owner South Florida Land

9 Holdings, LLC.

10 Just so you all aware of this, in the

11 court file there is only two people that own

12 South Florida Land Holdings, LLC, and it's me

13 and my partner, James Duff, who is here today

14 too.

15 Just so you know, when this all transpired

16 in 1987, I just got out of law school and from

17 '87 to '90 I was a lawyer with Kelly Drawer and

18 Warner in Miami. My partner lived in Alaska

19 during that time period and he sold real

20 estate.

21 So in the court file, we have affidavits

22 that have been filed that we did not have any

23 knowledge about this transaction at all. We

24 had no knowledge at all about there was an

25 unrecorded deed or even about the acceptance

52
1 and delivery issues.

2 So those affidavits have been filed. We

3 filed our motion for summary judgment. And

4 then we have been negotiating this settlement

5 since November.

6 I just wanted you to be aware of that.

7 Also, when we purchased this property,

8 General Development -- that's what they were

9 called in the '80s -- was Atlantic Gulf

10 Community Corporation in the '90s -- they are

11 basically on their death rows. As we speak

12 now, they are in Chapter 7, they went into

13 Chapter 11 probably about a year ago and they

14 were liquidating all their properties.

15 When we purchased this particular

16 property, these properties, we had 20 under

17 contract. And when we did our title search, we

18 discovered that one of the properties that we

19 had under contract had been sold to the state

20 in 1978.

21 And we sent a letter, and I still have a

22 copy of that letter, to Atlantic Gulf, telling

23 them that we can't buy this particular piece of

24 property because the state owns it. And they

25 disagreed because I guess at that time they had

53
1 a tax bill for the property, they were paying

2 taxes on.

3 GOVERNOR BUSH: This is separate property?

4 MR. GUNDERSON: Separate property. But we

5 ended up dropping that particular property from

6 the contract.

7 I guess the point I am trying to make here

8 is if we had known that this property was owned

9 by the state, we would have dropped this piece

10 of property, too.

11 So I am really testifying about our

12 knowledge of the deed; that's what we are

13 really talking about here from a legal

14 standpoint.

15 We didn't have knowledge of this

16 particular unrecorded deed. We already filed

17 affidavits in the court file, I just want to

18 make sure you were aware of that.

19 GOVERNOR BUSH: What did you pay for the

20 property?

21 MR. GUNDERSON: For all these properties, we

22 paid $39,600.

23 GOVERNOR BUSH: For the property that's in

24 front us today?

25 MR. GUNDERSON: Yes, there was 17 parcels.

54
1 The same time we bought properties in DeSoto

2 County, Sarasota County and we got a good deal on

3 this transaction; I am not going to deny that.

4 GOVERNOR BUSH: The 39,000 was for all the

5 parcels you bought from General Development?

6 MR. GUNDERSON: 39,600.

7 GOVERNOR BUSH: Just for this property?

8 TREASURER GALLAGHER: For all of them.

9 MR. GUNDERSON: For all 17 parcels.

10 GOVERNOR BUSH: You got a good deal.

11 Congratulations.

12 MR. GUNDERSON: I never denied.

13 GOVERNOR BUSH: You shouldn't.

14 TREASURER GALLAGHER: Did you get title

15 insurance when you purchased it?

16 MR. GUNDERSON: Yes, we did.

17 TREASURER GALLAGHER: Good, because that's

18 who we are going to be talking to.

19 MR. GUNDERSON: Except the title insurance

20 obviously insures me, that's the only problem.

21 You have to go back to -- your question earlier

22 was for title insurance, whether you guys got

23 title insurance when you purchased it in 1986?

24 That's really more the issue that you were talking

25 about.

55
1 Sure, I can make -- I have title

2 insurance, but that's kind of a separate

3 situation. It's whether or not, in my opinion,

4 you got title insurance in '86 when you

5 accepted this donation.

6 TREASURER GALLAGHER: No, the question is if

7 we go end up taking that property back through

8 court, then you have to go with your title

9 insurance to collect money for your title not

10 letting you know there was an unrecorded deed.

11 MR. GUNDERSON: I am not disagreeing with

12 you, Mr. Gallagher; but with all due respect, I

13 know the Attorney General is obviously an

14 excellent lawyer, too, but your lawyers here

15 basically told you what the position on your case

16 is.

17 And we came here in good faith. We

18 started negotiations last November. We threw

19 in a piece of property that's in DeSoto County

20 that the Southwest Florida Water Management

21 District wanted to make this deal work.

22 That property wasn't for sale, they asked

23 us to buy it in the past, and it's 93-acre

24 parcel of property that sits in the middle of

25 all the property they own, it's about

56
1 6,000 acres.

2 We put that piece of property into the

3 deal to make this deal work. And we been here

4 in good faith, negotiating with your attorneys.

5 And their assessment of your legal position in

6 my opinion is a hundred percent accurate.

7 COMMISSIONER BRONSON: I have a question.

8 Did you -- I am trying to follow you. You said

9 that you bought the property, you and your partner

10 bought the property in '78?

11 MR. GUNDERSON: Excuse me, in 1999.

12 COMMISSIONER BRONSON: Okay. I heard '78.

13 GOVERNOR BUSH: '78 is another property that

14 maybe Secretary Struhs can find out about since --

15 MR. GUNDERSON: What I was trying to show you

16 is that in '78, I was just trying to show you that

17 we didn't have knowledge of this because we did

18 our title search, we discovered one of the pieces

19 that we had under contract, you already owned and

20 it was conveyed to you in 1978 and we dropped that

21 from our contract.

22 So my point was, and I have a letter that

23 if I knew about this piece, I obviously would

24 have dropped that, too. We found out about

25 this unrecorded deed one day before our special

57
1 exception hearing which was October 10 of 2000.

2 And the question you had before,

3 Mr. Governor, about how it works in Charlotte

4 County; a special exception for the marina was

5 approved by the board, board of zoning appeals,

6 and in --

7 GOVERNOR BUSH: Only marina does that?

8 MR. GUNDERSON: No, certain special

9 exceptions. So this land is zoned environmentally

10 sensitive, but it allows you -- we own submerged

11 lands where that basin is, so it allows you to put

12 docks and wharfs in there as a matter of right.

13 You can do that right now without even having the

14 property rezoned.

15 We rezoned it to have sports marina there.

16 The other question that came up was, there

17 was a comment it was going to take two hours to

18 get out to the water.

19 That's not true. I have been to this

20 property site myself by boat; there is lock you

21 have to go through to the Myakka River, it

22 takes 30 minutes at most. I used to live in

23 Miami; you know what the boating traffic is

24 like down there. Fort Lauderdale; Cape Coral

25 has lock systems, so does Port Charlotte. I

58
1 have friend of mine that owns a piece of

2 property in Cape Coral, it takes him an hour.

3 So I feel --

4 COMMISSIONER BRONSON: Governor, the one

5 thing I heard you just said that clarified my

6 first question, that you might want to go back and

7 check the deed on that submerged land you own,

8 too, because that seems to be some of the big

9 questions of the day as well, is who owns what

10 lands?

11 And I just hope you hadn't bought another

12 piece of land that originally was owned by the

13 state from someone, because it sounds to me

14 like someone is not checking all their records.

15 MR. GUNDERSON: Commissioner, Mr. Bronson, we

16 checked that very carefully because Charlotte

17 County looked into this, and what happened with

18 this particular piece of property, right above

19 this interceptor lagoon there is a tract called

20 Tract AA. And in 1992, GDC or ADC, as part of

21 bankruptcy, conveyed the deeds about 1-inch thick,

22 they conveyed numerous parcels to the county,

23 including Tract AA. The piece below it, the piece

24 that we own, Charlotte County reached a

25 determination that they don't own it, that we own

59
1 it.

2 So I am a hundred percent confident that

3 we have clear title to that parcel of property.

4 COMMISSIONER BRONSON: There's a lot of other

5 people in that same shape.

6 GOVERNOR BUSH: Any other -- anybody else

7 like to speak?

8 Thank you for being here.

9 MR. MARKS: Good morning, Governor, Cabinet.

10 I am John Marks. I am here on of behalf of

11 Charlotte County with the law firm of Knowles

12 Marks and Randolph here in Tallahassee.

13 We did at one time, Charlotte County did

14 have an interest in this matter simply because

15 we were mentioned in the settlement agreement.

16 However, we were not signatories to the

17 settlement agreement.

18 We have some serious concerns about that.

19 And there was some provisions in the settlement

20 agreement which impacted Charlotte County

21 significantly with regards to land use and with

22 regards to an easement.

23 I have received language, draft language

24 at this point in time which excludes or takes

25 Charlotte County out of this particular

60
1 agreement and that is what we want. We don't

2 want to be a part of this agreement. We want

3 out of this agreement.

4 And as I indicated, we were never

5 signatories to the agreement in the first

6 place.

7 So with that language in there, I guess in

8 the parlance of North Florida: "We don't have

9 a dog in this fight anymore," as long as that

10 language is in there -- as long as that

11 language takes us out.

12 There is one item, however, we would like.

13 There is a provision with regards to Florida

14 Forever Lands. And if certain conditions are

15 met, certain lands will be purchased pursuant

16 to that program.

17 And we would like to have those

18 specifically delineated if, in fact, you go

19 forward with this matter.

20 GOVERNOR BUSH: Any questions?

21 TREASURER GALLAGHER: Just to clarify, we

22 deny this, you don't have a problem there.

23 MR. MARKS: No, sir.

24 MR. STRUHS: Thank you.

25 GOVERNOR BUSH: Anything else?

61
1 MR. STRUHS: That's all.

2 GOVERNOR BUSH: There is a motion to deny and

3 a second. All in favor of the motion say aye.

4 THE CABINET: Aye.

5 GOVERNOR BUSH: All opposed?

6 Motion passes unanimously.

7 MR. STRUHS: Thank you very much.

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

62
1 GOVERNOR BUSH: State Board of

2 Administration.

3 TREASURER GALLAGHER: Motion on the minutes.

4 COMMISSIONER CRIST: Second.

5 GOVERNOR BUSH: Item 1 is moved and seconded.

6 Without objection.

7

8 MR. STAPANOVICH: Thank you, Governor, Good

9 morning, Members. Did you take any action on 1?

10 GOVERNOR BUSH: Yes, we did.

11 MR. STAPANOVICH: Item number 2, approval of

12 fiscal sufficiency of an amount not exceeding

13 $26,905,000, State of Florida, Florida Board of

14 Education, Florida International University

15 parking lot facility revenue bonds.

16 It's recommended the Board approve this

17 fiscal determination.

18 TREASURER GALLAGHER: Moved.

19 COMPTROLLER MILLIGAN: Seconded.

20 GOVERNOR BUSH: Moved and seconded. Without

21 objection, the item is approved.

22 MR. STAPANOVICH: Item 3, approval of fiscal

23 determination of amounts not exceeding $15,900,000

24 tax exempt and $2,650,000 taxable Florida Housing

25 Finance Corporation Housing Revenue Bonds;

63
1 Department's recommendation is to approve the

2 fiscal determination.

3 COMPTROLLER MILLIGAN: Motion.

4 TREASURER GALLAGHER: Second.

5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item passes.

7 MR. STAPANOVICH: Item 4, approval of fiscal

8 determination of amounts not exceeding $14 million

9 tax exempt and $2,700,000 taxable Florida Housing

10 Finance Corporation Housing Revenue Bonds, for

11 Tuscany Lakes Apartments.

12 It is recommended the Board approve this

13 fiscal determination.

14 TREASURER GALLAGHER: Motion.

15 COMPTROLLER MILLIGAN: Second.

16 GOVERNOR BUSH:

17 MR. STAPANOVICH: Item 5, approval of

18 fiscal --

19 GOVERNOR BUSH: Wait. Moved and second.

20 Without objection, the item passes.

21 MR. STAPANOVICH: Item 5, approval of fiscal

22 determination of amounts not exceeding $12,165,000

23 tax exempt and $4,055,000 taxable Florida Housing

24 Finance Corporation Housing Revenue Bonds for

25 Chapel Trace Apartments.

64
1 It is recommended the Board approve the

2 fiscal determination.

3 TREASURER GALLAGHER: Motion.

4 COMPTROLLER MILLIGAN: Second.

5 GOVERNOR BUSH: Moved and seconded. Without

6 objection, the item passes.

7 MR. STAPANOVICH: Item 6, approval of fiscal

8 determination of amounts not exceeding $8,975,000

9 tax exempt and $645,000 taxable Florida Housing

10 Finance Corporation Housing Revenue Bonds,

11 Bridgewater Club Apartments.

12 It is recommended the Board approve the

13 fiscal determination.

14 COMPTROLLER MILLIGAN: Move.

15 TREASURER GALLAGHER: Second.

16 GOVERNOR BUSH: Moved and seconded. Without

17 objection, the item passes.

18 MR. STAPANOVICH: Item 7 is the College

19 Prepay Tuition item and the amendment to the

20 fiscal year. They are requesting an amendment to

21 the fiscal '02-'03 Florida College Savings Program

22 Budget.

23 The executive director of the Florida

24 Prepaid College Program requests authority to

25 amend the '02-'03 Florida College PreSavings

65
1 Budget as approved by the Florida Prepaid

2 College Board at its meeting on June 25, 2002.

3 TREASURER GALLAGHER: Let me ask a question.

4 I should have probably asked before this.

5 The individuals who put their money in

6 there don't make a choice where the investment

7 is made, do they?

8 MR. STAPANOVICH: No, I think Tom Wallace is

9 here with us today, but that is, unlike the DC

10 plan, they make -- the Board makes the

11 determination as to how those assets are

12 allocated. You got large cap growth, You got

13 large capital --

14 TREASURER GALLAGHER: When it said

15 bundled/unbundled is when I started wondering why.

16 What you are saying is basically they made a

17 decision on which companies were going to get the

18 investments as opposed to one and that company

19 figures out where the investments are?

20 MR. STAPANOVICH: Yes, sir, as well as the

21 fact that they kind of unbundled the services like

22 the marketing and the recordkeeper. Normally --

23 TREASURER GALLAGHER: Right. I am

24 understanding you then. Motion.

25 COMPTROLLER MILLIGAN: Second.

66
1 GOVERNOR BUSH: Moved and seconded. Without

2 objection, the item passes.

3 MR. STAPANOVICH: Item number 8, again a

4 college prepaid item approval. It's a

5 recommendation for approval of the revised

6 comprehensive investment plan for the College

7 Savings Plan.

8 The executive director of the Florida

9 Prepaid College Program requests approval of

10 the revised comprehensive investment plan for

11 the College Savings Plan as approved by the

12 Florida Prepaid College Board June 25, '02

13 meeting.

14 TREASURER GALLAGHER: I would like to approve

15 that, and with the caveat that their investments

16 would be a mirror of the -- or could mirror the

17 State Board of Administration's investment

18 approval. And most of it does. But just to give

19 that change, it's a slight change, that whatever

20 we have approved for investments, they will also

21 be able to approve in investments.

22 COMPTROLLER MILLIGAN: Explain that to me,

23 Tom.

24 TREASURER GALLAGHER: Okay. They have

25 exempted tobacco in their investments, and I don't

67
1 believe that they should.

2 I think they should be including that,

3 which is what we voted to do here.

4 COMPTROLLER MILLIGAN: Well, I guess I've got

5 to ask the question: Who has fiduciary

6 responsibility on that board?

7 TREASURER GALLAGHER: I am not directing them

8 to do it. I said they -- recommended they could

9 include whatever we included, so they would be

10 able to, if they choose.

11 COMPTROLLER MILLIGAN: If they choose?

12 TREASURER GALLAGHER: If they choose. And

13 it's sort of a recommendation it would be prudent

14 to do that.

15 COMPTROLLER MILLIGAN: I guess if we are not

16 giving them direction, and just suggesting that

17 they look at what SBA does --

18 GOVERNOR BUSH: Don't they already have that

19 ability, and they decided not to do it?

20 COMPTROLLER MILLIGAN: I agree.

21 MR. STAPANOVICH: My understanding is,

22 Governor, in speaking with Tom Wallace, they would

23 be willing to go back and specifically readdress

24 this question with the board and look for a

25 recommendation for the board and possibly bring it

68
1 back, should there be a change.

2 As it stands now in this recommendation,

3 in this amended investment policy statement, it

4 would exclude tobacco, but he is more than

5 willing to go back and revisit this with the

6 board, because at the SBA, it's excluded in the

7 pension plan for fiduciary reasons. But in the

8 Lawton Chiles Endowments Fund -- excuse me,

9 it's included.

10 In the Lawton Chiles Endowment Fund, it's

11 excluded. So in this particular case, because

12 the fiduciary standard which they must meet is

13 lower than the pension plan, they could either

14 go either way. And it may be an investment

15 decision, but they are more than happy to

16 revisit that.

17 TREASURER GALLAGHER: I feel they have the

18 same fiduciary responsibility we do, and that's

19 why I just wanted to send a message that they

20 ought to take a look at all legal investments. I

21 think that's their fiduciary responsibility.

22 COMPTROLLER MILLIGAN: I certainly think they

23 ought to be looking at everything, and to their

24 credit, I note that last year the FRS had a minus

25 8 percent return and the Prepaid College Fund had

69
1 a 7.9 positive percent return. So I think they

2 are doing a pretty good job.

3 TREASURER GALLAGHER: Well, this is a whole

4 different set of investments.

5 COMPTROLLER MILLIGAN: And the comment as to

6 their performance.

7 TREASURER GALLAGHER: Just for whatever it's

8 worth here, this fund is going to be into

9 equities, and I don't believe that the other fund

10 is. And if you were in fixed income and no

11 equities, you did very well over the last period

12 of time.

13 COMPTROLLER MILLIGAN: Just a comment on it.

14 TREASURER GALLAGHER: I understand. You got

15 to total the whole story.

16 MR. STAPANOVICH: Thank you, Treasurer,

17 because I was about to pipe up. Their equity

18 exposure is like 8 percent versus our 67.

19 GOVERNOR BUSH: You got Coleman all red.

20 There is a motion with an amendment to it that

21 requests the --

22 COMPTROLLER MILLIGAN: I didn't take it as an

23 amendment.

24 TREASURER GALLAGHER: I moved approval --

25 COMPTROLLER MILLIGAN: And I seconded it.

70
1 TREASURER GALLAGHER: -- with mentioning that

2 we are including a recommendation that they look

3 at the same investments that we have looked at in

4 the past, which means they can look at it again if

5 they want to.

6 COMPTROLLER MILLIGAN: I seconded that.

7 GOVERNOR BUSH: Moved and seconded. Without

8 objection, the item passes.

9 I will look at the minutes after this is

10 over, because I am not quite sure how you write

11 that.

12 TREASURER GALLAGHER: That was 8, wasn't it?

13 MR. STAPANOVICH: Yes, it was.

14 9 is for information only. It's a

15 statistical, DC statistical report.

16 I will spend a few moments on that. We

17 did not get the final data in until about

18 8 o'clock last night. Kevin Seacrest, the

19 senior investment officer of the DC programs

20 and his staff, remained until about 10 o'clock

21 last night and crunched out some numbers

22 because we thought it was important to try to

23 get you some type of update today, because that

24 was -- phase one period came to a close.

25 So it gives us some indication with some

71
1 finality and closure on at least one phase.

2 The status report is enclosed in the

3 backup material. We did finally get that down

4 to you this morning as well as a memo from

5 myself to you highlighting the outcome. I can

6 go into that in more detail if you would like

7 in terms of our findings.

8 5 percent of the state employees chose the

9 investment plan, bringing 112 million in assets

10 over. And we are going to go out and look as

11 to how other states have done in this type of

12 environment and see how we stack up.

13 For example, Washington, they have

14 3 percent participation and our participation

15 is 5 percent.

16 But again, we are going to try to look at

17 other states and see how they have done in

18 transitioning and having a choice program with

19 BD and DC and how the participants choose.

20 But that's where we are today, is

21 5 percent of the employees did choose the IP

22 investment plan and 112 million in assets went

23 over. We did that in all cash. We did not

24 have to get into asset transitioning and

25 crossing securities because of the relatively

72
1 small amount.

2 There was a significant spike in

3 enrollment activity towards the waining days of

4 that enrollment period, but still only

5 37 percent of that group actually filed

6 elections.

7 Surprisingly to us, only 7 to 15 percent

8 of the younger employees -- and there is a

9 table in there you can look at; but if you look

10 at the five years or less of service that

11 actually chose the investment plan -- and our

12 research would show that if you really relied

13 on the personal benefit comparison statements

14 and went through your education and understood

15 the education that was provided to you, that

16 the number may have been closer to 50 to

17 75 percent for those five years of service and

18 under.

19 In terms of trying to explain these choice

20 statistics, again, we think that the biggest

21 factor here is this bear market. You have a

22 market that since that period, that education

23 outreach began and ended, the market was down

24 over 20 percent. And you have a second longest

25 bear market since post World War II history,

73
1 that's now into 30 months, the longest being 36

2 months.

3 And you have a market that topped in July

4 of 2000, that the NASDC is down from high to

5 low 75 percent, and the SB 500 from high to low

6 is down 48 percent.

7 So on of this horrific bear market, which

8 may well be the worse bear market since the

9 depression -- it certainly contends with the

10 '74 bear market, the worse -- and it's

11 certainly without doubt the worse bear market

12 we had in the last 20 years. In the last 20

13 years we had three bear markets. You had the

14 '87 bear markets; you had the '90 bear market,

15 and you had the '98 bear market. Not one of

16 those bear markets lasted longer than three and

17 a half months, and one of them was as short as

18 a month and a half.

19 GOVERNOR BUSH: Commissioner Gallagher.

20 TREASURER GALLAGHER: I just want to ask you,

21 on years of service 35 to 40 years, age 75 to 80,

22 at 25 percent, is that like one of four people

23 made up their mind to switch?

24 MR. STAPANOVICH: I am not looking at the

25 table. Is that the hybrid?

74
1 TREASURER GALLAGHER: The last page of

2 yours -- it just sort of jumped out at me. I

3 thought the amount of employees we have between 75

4 and 80 working for the state, probably the lady

5 that just retired.

6 MR. STAPANOVICH: The answer is, yes. The

7 answer is yes, the number crunches.

8 And then as well on top of the market,

9 then you have of course the other things that

10 we are well aware of, but the various things

11 have been going on in Corporate America that's

12 really hurt investor confidence.

13 And you got the Worldcoms and Enrons and

14 September 11. So there are a need of

15 headwinds, but the bear market being the

16 biggest, we think accounts for this lower

17 participation.

18 We did a survey in the summer in which

19 50 percent of employees indicated also that

20 another thing that may be a drag -- and I am

21 not putting that in a positive or negative

22 light -- but the fact that they have a second

23 election.

24 So they may just be waiting. And the

25 thing that concerns us a little bit about that

75
1 is they may be trying to time the market. I

2 mean, investors and the psychology of

3 investors, when things are bad, they don't want

4 to invest. And when things are great, like two

5 years ago, we may have had 40 percent

6 participation.

7 So now, because they know they have that

8 second election, they may be trying to wait

9 until the things are better and that kind of

10 thing. And that concerns us because this may

11 be the most opportunistic time to invest while

12 the market is down.

13 So we are aware of that, and we would

14 again address that.

15 Our main concern --

16 TREASURER GALLAGHER: If I can ask a

17 question. These dates that were set for

18 enrollment, et cetera, were they set by us or

19 legislatively?

20 MR. STAPANOVICH: By statute.

21 TREASURER GALLAGHER: So the legislature can

22 change those next time; we can't?

23 MR. STAPANOVICH: Yes. There has been some

24 discussion in terms of kind of creating new

25 windows and allowing another opportunity to go

76
1 through this once again and open enrollment.

2 I think that would have to be done by

3 statute. But again, inherent in that would be

4 a cost factor.

5 So we did look at and better understand

6 what we did do; could we have done any more to

7 change things and have a better outcome?

8 In the final analysis, if the answer is

9 no, then it may not make sense to spend more

10 money to do the same thing again.

11 TREASURER GALLAGHER: I don't think we need

12 to go through this education process again, I

13 think we just need to open the window and allow

14 somebody that wants -- you can send out a memo

15 with paychecks saying: If you are interested,

16 here's the website, go look it up, something like

17 that.

18 GOVERNOR BUSH: Don't they have that option

19 right now, with a Second Look?

20 MR. STAPANOVICH: That's correct.

21 GOVERNOR BUSH: Is there a time frame in

22 which the Second Look has to take place?

23 MR. STAPANOVICH: I don't believe so.

24 TREASURER GALLAGHER: Then it's already

25 there. That's all.

77
1 COMPTROLLER MILLIGAN: While these are small

2 numbers right now, group two is a little higher

3 percentage.

4 MR. STAPANOVICH: The group two, again

5 another thing that surprised us is that the

6 younger employees, one of the primary drivers of

7 doing this plan was portability. And group two,

8 the teachers, were the primary interest group in

9 having this plan going back several years because

10 of the portability benefit.

11 So with them representing about 50 percent

12 of the plan in numbers, shear numbers, and the

13 fact that portability is important to the

14 teachers, as our understanding is we may see

15 much better enrollment, but certainly, General,

16 as the market gets better, that's going to help

17 as well.

18 COMPTROLLER MILLIGAN: Yeah.

19 MR. STAPANOVICH: This is very much

20 premature. Anybody that doesn't think it is, is

21 jumping to early judgment.

22 However, having said that, we do want to

23 better understand the factors behind the

24 employees' choices in terms of why they made

25 the choices or didn't make the choices they

78
1 did.

2 So we are turning a very critical eye on

3 ourself and seeing if there is something, if we

4 can't ascertain what we could be doing

5 differently or better, that may well have

6 something to do with the outcome.

7 We are going to conduct a thousand phone

8 surveys, make a thousand contacts with

9 participants, and do a phone survey. In

10 addition, we are going to have six focus groups

11 and where we ask tough questions and be very

12 critical of ourselves in terms of: Could we

13 have done things different? Was the education

14 material, which we heard it was too much, too

15 convoluted, and overwhelming; so we are going

16 to try to figure this out and make adjustments

17 along the way. This is a work in progress.

18 GOVERNOR BUSH: Is there a motion?

19 TREASURER GALLAGHER: Move the item.

20 GOVERNOR BUSH: Do we need a motion or is it

21 just information? It's for information only?

22 MR. STAPANOVICH: Yes.

23 GOVERNOR BUSH: Sorry.

24 MR. STAPANOVICH: The last item on the

25 agenda, Governor and Members, is the investment

79
1 protection principles update and recommendation.

2 You all, at your direction, because this

3 is such an important corporate governance

4 issue, we, the board, began to investigate this

5 and research this as far back as late June.

6 Then in early July, the State of New York,

7 State of North Carolina and State of California

8 put together an initiative that really resulted

9 from the state -- New York State Attorney

10 General Spitzer in the Merrill Lynch case.

11 From that, these three states got together

12 and came up with a set of investment protection

13 principles that address broker

14 dealer/investment banking houses as well as

15 money managers.

16 There is about six principles in Part A

17 that you have in your handouts and Part B.

18 At that point in time, they reached out to

19 Florida, as well as other major funds, and

20 asked that we join them in adopting the

21 Investment Protection Principles.

22 We began to do our analysis and our due

23 diligence and research at that point in time.

24 What we did was contacted, through writing

25 and verbal communication, Barbara Jarriel, the

80
1 chief investment officer was on point on this

2 and had direct conversations with 100 percent

3 in terms of responses; we didn't talk to

4 100 percent of them, but we did get responses

5 back from 100 percent of our broker/dealers

6 that do business with us as well as the money

7 managers.

8 And everyone got some written

9 communications, which they were required to

10 respond to.

11 We had conversations with specific money

12 managers and broker dealers as well to get

13 their input.

14 We had lengthy discussions with those

15 three major states, as well as other states to

16 some degree; for example, when we had the

17 meeting in New York.

18 And then beyond that, we have talked to

19 the Investment Advisory Council, I have spoken

20 to them over the past week or so, each and

21 every one of them; visited with the Florida

22 Division of Banking and Finance, the

23 representative over, the comptroller, to get

24 their input, because they work in this area all

25 the time.

81
1 And we also visited with the Attorney

2 General's office to get their input because

3 this did come out of a legal proceeding, and

4 they are very familiar with that proceeding.

5 And these folks provided input and favorable

6 support for adopting these recommendations.

7 The Investment Protection Principles

8 represent significant action that would help

9 protect the Florida Pension Funds Assets and

10 secure the financial future of employees,

11 retirees and tax-paying citizens of our state.

12 While working together with other institutional

13 investors, we are committed to identifying ways

14 and means to strengthen corporate governance

15 standards and prevent the fraud, abuse and

16 conflicts of interest that have greatly

17 diminished the integrity of the financial

18 marketplace.

19 The Investment Protection Principles will

20 encourage pervasive and meaningful corporate

21 changes and reforms in order to make

22 corporations more accountable for their actions

23 relating to accounting and disclosures.

24 It is the recommendation of the executive

25 director and the staff of the SBA to the

82
1 Trustees to adopt these Investment Protection

2 Principles as laid out in attachment 2.

3 TREASURER GALLAGHER: I move.

4 COMPTROLLER MILLIGAN: And I will second it.

5 GOVERNOR BUSH: Moved and seconded. Any

6 discussion?

7 I think this is important and it's good

8 work and appreciate your hard work on this and

9 your staff's work on this. Given the

10 uncertainty that exists right now about

11 corporate governance, I think this is

12 important.

13 MR. STAPANOVICH: Thank you, Governor. We'll

14 be coming back to you as this thing evolves,

15 because there are issues of implementation and

16 compliance and enforcement and how -- as it

17 relates now, this has to do with active equity

18 managers; so what can we do beyond that in the

19 area of fixed income and possibly the DC program

20 which we haven't looked at. So as this thing

21 evolves, we'll keep you updated, Governor.

22 GOVERNOR BUSH: All right. There is a motion

23 and a second. Without objection, the item passes.

24 Thank you.

25 (The proceedings concluded at 10:50 a.m.)

83
1

2 CERTIFICATE OF REPORTER

3

4

5

6 STATE OF FLORIDA )

7 COUNTY OF LEON )

8

9 I, SANDRA L. NARGIZ, RMR, CRR, certify that I

10 was authorized to and did stenographically report the

11 proceedings herein, and that the transcript is a true

12 and complete record of my stenographic notes.

13 I further certify that I am not a relative,

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

15 nor am I a relative or employee of any of the parties'

16 attorney or counsel connected with the action, nor am I

17 financially interested in the action.

18 WITNESS my hand and official seal this 16th

19 day of September, 2002.

20

21

22 ______________________________

23 SANDRA L. NARGIZ, RMR, CRR
100 SALEM COURT
24 TALLAHASSEE, FL 32301
850-878-2221
25