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2.
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A RESOLUTION OF THE STATE BOARD OF ADMINISTRATION
APPROVING THE FISCAL SUFFICIENCY OF NOT EXCEEDING $130,000,000 STATE
OF FLORIDA, DEPARTMENT OF TRANSPORTATION TURNPIKE REVENUE BONDS,
SERIES 2000A:
The Division of Bond Finance of the State Board
of Administration (the "Division") has submitted for approval as
to fiscal sufficiency a proposal to issue Not Exceeding $130,000,000
State of Florida, Department of Transportation Turnpike Revenue
Bonds, Series 2000A (the "Bonds") to fund various Turnpike Projects.
It is anticipated that the Governing Board of the Division will
adopt a resolution authorizing the sale of the Bonds on December
14, 1999.
The proposed Bonds shall be secured, along with
certain other previously issued parity bonds, by a first lien upon
Net Revenues of the Turnpike System, which consists of all tolls,
revenues, rates, fees, charges, receipts, rents or other income
derived from, or in connection with, the operation of the Florida
Turnpike, less any necessary contribution to fund the Cost of Maintenance
and Cost of Operation after taking into account other sources of
funds available to fund the Cost of Maintenance and Cost of Operation.
The tolls are required to be fixed, and adjusted if necessary, so
that gross revenues shall be sufficient to pay at least (i) 100%
of Operation and Maintenance costs; (ii) 120% of the Annual Debt
Service Requirement; and (iii) 100% of all other payments required
by the Authorizing Resolution.
RECOMMENDATION: A study of this proposal and the estimates of revenue
expected to accrue indicate that the proposed Bonds are fiscally
sufficient and that the proposal will be executed pursuant to the
applicable provisions of law. It is recommended that the Board approve
the fiscal sufficiency of the proposal outlined above. (Att. #2)
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3.
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Adoption of new Asset Class Target Allocations
and Benchmarks for the Lawton Chiles Endowment Fund:
The SBA anticipates receiving the second and third
installments of the Lawton Chiles Endowment Fund (LCEF) monies on
or about January 1st of 2000. These funds –currently
projected to be approximately $375 million—were originally targeted
for allocation to asset classes other than Domestic Equities and
Fixed Income. Pursuant to that goal, the attached asset allocation
review has been completed and the following changes are recommended
to the Total Fund Investment Plan (TFIP) for the Chiles Endowment.
| 3.1 |
Domestic Equities, Fixed Income and Cash Allocations
would be reduced by 4%, 19% and 4% respectively to fully recognize
the diversification value of new asset classes.
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| 3.2 |
Foreign Equities would be funded at a 12% level
and the Morgan Stanley Capital International (MSCI) All Country
World Free (ACWF) index excluding tobacco would be adopted as
the benchmark.
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| 3.3 |
Fixed Income would be expanded to include a new
sub-asset class component of High Yield Bonds funded at a market
weight—currently approximately 6% of total Fixed Income or approximately
1.3% of the total Endowment. The current Lehman Brothers bond
index would be modified to reflect a corresponding BB and B
component. This recommendation is contingent upon the receipt
of a legal opinion that authorizes the commingling of Lawton
Chiles Endowment Funds with the Florida Retirement System (FRS).
See attached request for opinion letter.
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| 3.4 |
A new asset type would be authorized—Treasury
Inflation Protected Securities (TIPS)—to be managed by the Fixed
Income Asset Class. This asset type would be funded at 11% and
benchmarked against the Lehman Brothers Inflation Note Index.
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| 3.5 |
Real Estate would be funded at 4% with the Wilshire
Real Estate Securities Index as the primary benchmark.
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| 3.6 |
Cash would be reduced to 1%. |
Due to the sequencing of our IAC meeting and the Trustee meetings,
we have not been able to solicit IAC input but plan to review these
recommendations with them at the meeting on December 17. If any
material concerns surface, we will pass those on to you and consider
modifying or postponing our implementation plans. We should also
note that the release of these monies coincides with the Y2K transition
and for that reason, we may decide to tactically postpone implementation
until any problems are cleared up and markets are normalized. The
EK&A review of this set of recommendations is also attached
for your information. (Att. #3).
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Cabinet
Affairs
