MEETING OF THE

STATE BOARD OF ADMINISTRATION

(Contact Person: Dorothy Westwood - 488-4406)

THE CAPITOL

JULY 28, 1998

1. Approval of minutes of meeting held on July 14, 1998. (Att. #1)

2. APPROVAL OF FISCAL SUFFICIENCY OF AN AMOUNT NOT TO EXCEED $260,000,000 STATE OF FLORIDA, FULL FAITH AND CREDIT, STATE BOARD OF EDUCATION, PUBLIC EDUCATION CAPITAL OUTLAY REFUNDING BONDS, 1998 SERIES (LETTER DESIGNATIONS TO BE DETERMINED):

The Division of Bond Finance of the State Board of Administration (the "Division"), on behalf of the State Board of Education, has submitted for approval as to fiscal sufficiency a proposal to issue an amount Not to Exceed $260,000,000 State of Florida, Full Faith and Credit, State Board of Education, Public Education Capital Outlay Refunding Bonds, 1998 Series (Letter Designations to be determined) (the "Bonds") for the purpose of refunding previously issued bonds; provided, however, that none of the said Bonds shall be issued in excess of the amount which can be issued in full compliance with the State Bond Act and other applicable provisions of law, and pursuant to Section 9(a)(2), Article XII of the Constitution of Florida, as amended. It is anticipated the Governor and Cabinet will adopt on July 28, 1998 the Fourteenth Supplemental Authorizing Resolution authorizing the issuance of the Bonds.

The State Board of Education has heretofore issued Public Education Bonds, Series A and B of which $136,315,000 in principal amount was outstanding and unpaid on June 30, 1998; and which bonds constitute a prior lien on the Gross Receipts Taxes which are required to be deposited in the Public Education Capital Outlay and Debt Service Trust Fund (the "Gross Receipts Taxes.")

The State Board has heretofore issued Public Education Capital Outlay Bonds, Series 1985, 1985-A, 1986-B, 1986-C, 1987-A, 1989-A, 1989-B, 1990, 1991-A, 1991-B, 1991-C and 1992-A, 1992 Series B, 1992 Series C, 1993 Series A, 1993 Series B, and 1993 Series C, 1993 Series D, 1993 Series E, 1993 Series F, 1994 Series A, 1994 Series B, 1994 Series C, 1995 Series A, 1995 Series B, 1995 Series C, 1995 Series D, 1995 Series E, 1995 Series F, 1996 Series A, 1996 Series B and 1997 Series A of which $6,269,605,000 in principal amount was outstanding and unpaid on June 30, 1998, and has authorized and intends to issue Not to Exceed $500,000,000 Public Education Capital Outlay Bonds, 1997 and 1998 Series (letter designations to be determined). The proposed Bonds shall be junior, inferior, and subordinate to the outstanding and unpaid Public Education Bonds, Series A and B and to the outstanding and unpaid

AGENDA

July 28, 1998

Page 2

portion of Series 1985, 1985-A, 1986-B, 1986-C, 1987-A, 1989-A, 1989-B, 1990, 1991-A, 1991-B, 1991-C and 1992-A Bonds as to lien on and source and security for payment from the Gross Receipts Taxes. The proposed Bonds shall be issued on a parity as to lien on and source and security for payment from the Gross Receipts Taxes with the outstanding and unpaid Public Education Capital Outlay Bonds, 1992 Series B, 1992 Series C, 1993 Series A, 1993 Series B, 1993 Series C, 1993 Series D, 1993 Series E, 1993 Series F, 1994 Series A, 1994 Series B, 1994 Series C, 1995 Series A, 1995 Series B, 1995 Series C, 1995 Series D, 1995 Series E, 1995 Series F, 1996 Series A, 1996 Series B, 1997 Series A and, if and when issued, the proposed $500,000,000 Public Education Capital Outlay Bonds described above.

A study of this proposal and the estimates of revenue expected to accrue from the Gross Receipts Tax, indicate that the proposed Bonds and all other outstanding bonds having a lien on the Gross Receipts Tax are fiscally sufficient and that the proposal will be executed pursuant to the applicable provisions of law. The State Board of Administration has relied upon information from others but has not independently verified the accuracy or completeness of such information.

RECOMMENDATION: It is recommended that the Board approve the fiscal sufficiency of the proposal outlined above. (Att. #2)

3. A RESOLUTION OF THE STATE BOARD OF ADMINISTRATION RESCINDING THE FISCAL SUFFICIENCY AUTHORIZATION FOR THE UNISSUSED PORTION OF THE STATE OF FLORIDA, STATE BOARD OF EDUCATION LOTTERY REVENUE BONDS, SERIES 1998A AND A RESOLUTION OF THE STATE BOARD OF ADMINISTRATION APPROVING THE FISCAL SUFFICIENCY OF NOT EXCEEDING $200,000,000 STATE OF FLORIDA, STATE BOARD OF EDUCATION LOTTERY REVENUE BONDS, SERIES 1998B:

The Division of Bond Finance of the State Board of Administration of Florida (the "Division") has submitted for approval a proposal to rescind $9,610,000 of the Not Exceeding $125,000,000 State of Florida, State Board of Education Lottery Revenue Bonds, Series 1998A (the "1998A Bonds") as to fiscal sufficiency as this amount was not delivered as part of the 1998A Bonds and is needed to permit sufficient fiscal sufficiency authorization for future issues of bonds in the Lottery Revenue Bond Program.

In addition, the Division has submitted for approval a proposal to issue Not Exceeding $200,000,000 State of Florida, State Board of Education Lottery Revenue Bonds, Series 1998B (the "Bonds"), for the purpose of providing funds for the financing of the costs of classrooms and educational facilities.

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July 28, 1998

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The Authorizing Resolution for the Bonds was adopted by the Governor and Cabinet on May 12, 1998. It is anticipated that the Sale Resolution for the Bonds will be adopted by the Governor and Cabinet on July 28, 1998.

The proposed Bonds shall be secured by a first lien upon the Pledged Revenues which are defined by the Authorizing Resolution as all revenues pledged pursuant to Section 24.121(2), Florida Statutes for bonds issued pursuant to Sections 235.187 or 235.2195, Florida Statutes. The Division has heretofore issued Lottery Revenue Bonds, Series 1998A of which $115,390,000 in principal amount was outstanding and unpaid on June 30, 1998. The proposed Bonds shall be issued on a parity as to lien on and source and security for payment from the Pledged Revenues with the outstanding and unpaid Series 1998A Bonds.

A study of this proposal and the estimates of revenue expected to accrue from the Pledged Revenues, indicate that the proposed Bonds are fiscally sufficient and that the proposal will be executed pursuant to the applicable provisions of law. The Board has relied upon information from others but has not independently verified the accuracy or completeness of such information.

RECOMMENDATION: It is recommended that the Board approve the proposal outlined above. (Att. #3)

4. APPROVAL OF FISCAL SUFFICIENCY OF AN ISSUE NOT EXCEEDING $55,675,000 STATE OF FLORIDA, BOARD OF REGENTS, UNIVERSITY SYSTEM IMPROVEMENT REVENUE BONDS, SERIES 1998:

The Division of Bond Finance of the State Board of Administration (the "Division"), on behalf of and in the name of the Board of Regents, has submitted for approval as to fiscal sufficiency a proposal to issue an amount Not Exceeding $55,675,000 State of Florida, Board of Regents, University System Improvement Revenue Bonds, Series 1998, (the "Bonds") for the purpose of financing a portion of the cost of the acquisition and construction of capital projects of the State University System of Florida and paying certain costs associated with the issuance of the Bonds. It is anticipated the Governing Board of the Division will adopt the sale resolution for the Bonds on July 28, 1998. The Governing Board of the Division adopted the Authorizing Resolution for the Bonds on June 24, 1998.

A study of this proposal and the estimates of revenue expected to accrue from the Pledged Revenues indicate that the proposed Bonds are fiscally sufficient and that the proposal will be executed pursuant to the applicable provisions of law. The State Board of Administration has relied upon information from others but has not independently verified the accuracy or completeness of such information.

AGENDA

July 28, 1998

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RECOMMENDATION: It is recommended that the Board approve the fiscal sufficiency of the proposal outlined above. (Att. #4)

5. A RESOLUTION OF THE STATE BOARD OF ADMINISTRATION OF FLORIDA APPROVING THE FISCAL DETERMINATION OF AN AMOUNT NOT EXCEEDING $14,690,000 FLORIDA HOUSING FINANCE CORPORATION HOUSING REVENUE REFUNDING BONDS, 1998 SERIES (ONE OR MORE SERIES TO BE DESIGNATED) (HUNTER'S RIDGE AT DEERWOOD APARTMENTS PROJECT):

The Florida Housing Finance Corporation has submitted for approval as to fiscal determination a proposal to issue an amount Not Exceeding $14,690,000 Florida Housing Finance Corporation Housing Revenue Refunding Bonds, 1998 Series (one or more series to be designated) (Hunter's Ridge at Deerwood Apartments Project) (the "Bonds") for the purpose of refunding all or a portion of the outstanding $14,690,000 Florida Housing Finance Agency Multi-Family Housing Revenue Bonds, 1985 Series X (Oaks at Bay Meadows II Project) (Duval County, Florida).

The Bonds shall not constitute an obligation, either general or special, of the State or of any local government thereof; neither the State nor any local government thereof shall be liable thereon. Neither the full faith, revenue, credit nor taxing power of the State of Florida, or any local governments thereof shall be pledged to the payment of the principal of, premium (if any), or interest on the Bonds. The Bonds shall be payable as to principal, premium (if any), and interest solely out of revenues and other amounts pledged therefor.

RECOMMENDATION: A study of this proposal and of estimates of revenue and other available moneys expected to accrue indicate that the issue meets the requirements for the fiscal determination required by Section 420.505, Florida Statutes, as stated in Article VII, Subsection 16(c) of the revised Constitution of 1968, and the Executive Director recommends that the State Board of Administration of Florida (the "Board") approve the fiscal determination thereof. It is further recommended that, pursuant to the fiscal determination requirements of Subsection 16(c) of Article VII of the revised Constitution of 1968, the Board find and determine that in no State fiscal year will the debt service requirements of the Bonds proposed to be issued and all other bonds secured by the same pledged revenues exceed the pledged revenues available for payment of such debt service requirements. The Board has relied upon information from others but has not independently verified the accuracy or completeness of such information.

The Board does not assume any responsibility for, and makes no warranty (express or implied) with respect to any other aspect of this bond issue except for fiscal determination.

(Att. #5)

AGENDA

July 28, 1998

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6. APPROVAL OF LAW SUIT FOR REFUND OF ILLINOIS REAL ESTATE TRANSFER TAX AGAINST COOK COUNTY, ILLINOIS AND ILLINOIS DEPARTMENT OF REVENUE:

The State Board has determined in connection with real estate investment in Illinois that an exemption from the imposition of transfer taxes may exist under Illinois law for the State Board's real estate acquisitions. In Illinois, real estate transfer tax is imposed at the state, county and, if applicable, municipal levels. Illinois Codified Statutes provide an exemption from all transfer taxes for "governmental bodies." The State Board has acquired two real estate assets in the City of Chicago and took title to the assets in separately created corporations wholly owned and controlled by the State Board.

Applications for exemption from the real estate transfer tax were granted by the City of Chicago. Applications for exemptions from the Illinois Department of Revenue and from Cook County were denied. Real estate transfer taxes for the state and county were paid in the sum of $309,636 for the two assets. Substantive administrative level discussions with all appropriate levels within the Illinois Department of Revenue seeking a favorable ruling were unsuccessful. The discussions did produce agreement to pursue a "friendly" law suit to obtain a judicial review of existing Illinois statutes as to whether the State Board's title holding corporations constitute exempt "government bodies." The law suit will consist of a complaint, an answer, a response, legal briefs and oral argument. The State Board and the Illinois Department of Revenue have agreed not to seek interrogatories or depositions and not to call witnesses.

Negotiations with the seller in both acquisitions have produced agreements to allocate any tax refunds 2/3 to the State Board and 1/3 to the sellers. The State Board will bear the costs of the attorney fees and costs in the litigation.

A copy of a memorandum from the State Board's Illinois counsel dated November 13, 1997 is attached for additional detail and reference.

This approval is sought to comply with Rule 19-3.016(11), Florida Administrative Code.

RECOMMENDATION: It is recommended that the Board authorize bringing the law suit outlined above. (Att. #6)

AGENDA

July 28, 1998

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7. REPORTS BY THE EXECUTIVE DIRECTOR:

Submitted for information and review are the investment performance and fund balance analysis for the month of June 1998. (Att. #7)

8. FLORIDA HURRICANE CATASTROPHE FUND FINANCE CORPORATION:

The Florida Hurricane Catastrophe Fund Finance Corporation requests that the Trustees, in their capacities as directors, hold a Board of Directors meeting of the Florida Hurricane Catastrophe Fund Finance Corporation. The purpose of the Board meeting is to consider the list of prequalified underwriters recommended for use by the Corporation in the event of a hurricane which causes sufficient damage to require the issuance of bonds to pay the obligations of the State Board of Administration with regard to the Florida Hurricane Catastrophe Fund.

Motion to approve the list of prequalified underwriters as recommended. (Att. #8)