NEW FLORIDA LEGISLATION OF INTEREST TO PENSION BOARDS
1. PENSION BOARDS WILL BE REQUIRED TO MAKE MORE “MEANINGFUL” DISCLOSURE REGARDING VALUE OF DEFINED BENEFIT PENSION PLAN ASSETS AND LIABILITIES:
Effective July 1, 2013, Section 112.63(1)(f), Florida Statutes, was amended to repeal the recently-enacted provision requiring disclosure of present value of a plan’s total benefits using the Florida Retirement System’s assumed rate of return. Subsection (14) is added to Section 112.66, Florida Statutes, providing that the state is not liable for any obligations relating to any current or future shortfall in any government retirement systems or plan. (In light of Sections 175.051 and 185.04, Florida Statutes, the new language would appear to be superfluous as to participating firefighter and police officer plans.) Section 112.664, Florida Statutes is created to set forth reporting standards for defined benefit retirement plans:
(1) 60 days after receipt of the certified actuarial report submitted after the close of the plan year ending on or after June 30, 2014, and annually thereafter, each defined benefit retirement plan, excluding the Florida Retirement System [but of course], shall electronically report the following information to the Department of Management Services:
(a) Annual financial statements in compliance with Government Accounting and Standard Board’s Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68, Accounting and Financial Reporting for Pensions, using RP-2000 Combined Healthy Participant Mortality Tables, by gender, with generational projection by Scale AA.
(b) Annual financial statements similar to those required under paragraph (a), but which use an assumed rate of return on investments and an assumed discount rate that are equal to 200 basis points less than the plan’s assumed rate of return.
(c) Information indicating the number of months or years for which the current market value of assets is adequate to sustain the payment of expected retirement benefits as determined in the plan’s latest valuation and under the financial statements prepared pursuant to paragraphs (a) and (b).
(d) Information indicating the recommended contributions to the plan based on the plan’s latest valuation, and contributions necessary to fund the plan based on financial statements prepared pursuant to paragraphs (a) and (b), stated as an annual dollar value and a percentage of valuation payroll.
(2) Each DB plan, excluding the Florida Retirement System [ditto] and its plan sponsor:
(a) Shall provide information required by new law and the funded ratio of the plan as determined in the most recent actuarial valuation as part of the disclosures required for the city’s budget and on any website that contains budget information relating to the plan sponsor or actuarial or performance information related to the plan.
(b) That has a publicly available website shall provide on that website:
1. The plan’s most recent financial statement and actuarial valuation, including a link to the Division of Retirement Actuarial Summary Fact Sheet for that plan.
2. For the previous 5 years, a side-by-side comparison of the plan’s assumed rate of return compared to the actual rate of return, as well as the percentages of cash, equity, bond and alternative investments in the plan portfolio.
3. Any charts and graphs of the data provided in paragraphs (1) and (2) presented in a standardized, user- friendly, and easily interpretable format.
(3) The plan shall be deemed to be noncompliance if it has not submitted the required information to the Department of Management Services within 60 days after receipt of the certified actuarial report for the plan year for which the information is required.
(a) The Department may notify the Department of Revenue and Department of Financial Services of noncompliance, and the Department of Revenue and Department of Financial Services shall withhold any funds not pledged for satisfaction of bond debt service and which are payable to the plan sponsor until the information is provided to the department.
(b) Within 20 days after receipt of the notice of withholding, the plan sponsor may petition the Department of Management Services for a hearing.
The law recognizes there were almost 500 local government employee defined benefit plans in Florida, providing pension benefits to approximately 79,000 retirees. The interest of participants in many of these plans may have property rights implications under state law. CS for CS for CS for SB 534.
2. PENSION BOARDS WILL BE REQUIRED TO GIVE MEMBERS OF THE PUBLIC THE OPPORTUNITY TO BE HEARD: Effective October 1, 2013, Section 286.0114, Florida Statutes, is created to require that members of the public shall be given a reasonable opportunity to be heard on a proposition before a public board or commission (which includes a municipal pension board). The opportunity to be heard need not occur at the same meeting at which the board takes official action on the proposition, if the opportunity occurs at a meeting that is during the decisionmaking process and is within reasonable proximity in time before the meeting at which the board takes the official action. The board is not prohibited from maintaining orderly conduct or proper decorum at a public meeting. The above requirements do not apply to:
- An official act that must be taken to deal with an emergency situation affecting public health, welfare, or safety, if compliance with the requirements would cause an unreasonable delay in the ability of the board to act;
- An official act involving no more than a ministerial act, including, but not limited to, approval of minutes and ceremonial proclamations;
- A meeting that is exempt from Section 286.011, Florida Statutes (such as a “shade meeting”); or
- A meeting during which the board is acting in a quasi-judicial capacity; however, the right of a person to be heard as otherwise provided by law shall not be affected.
The opportunity to be heard is subject to rules and policies adopted by the board, such as those that:
- Provide guidelines regarding the amount of time an individual has to address the board or commission;
- Prescribe procedures for allowing representatives of groups or factions on a proposition to address the board, rather than all members of such groups or factions, at meetings in which a large number of individuals wish to be heard;
- Prescribe procedures or forms for an individual to use in order to inform the board of a desire to be heard, to indicate his support, opposition or neutrality on a proposition, and to indicate his designation of a representative to speak for him or his group on a proposition if he so chooses;
- Designate a specified period of time for public comment.
If a board adopts rules or policies in compliance with the foregoing and follows them, the board is deemed to be acting in compliance with the law. A circuit court has jurisdiction to issue an injunction for the purposes of enforcing this law, upon the filing of an application for such injunction by a citizen of this state. Whenever an action is filed against a board to enforce the law, the court shall assess reasonable attorney fees against such board if the court determines that board acted in violation of the law. The court may assess reasonable attorney fees against the individual filing such an action if the court finds that the action was filed in bad faith or was frivolous. If the board appeals a court order that has found the board to have violated the law, and such order is affirmed, the court shall assess reasonable attorney fees for the appeal against the board. An action taken by a board which is found to be in violation of the law is not void as a result of that violation. We will prepare proposed rules for our clients and thereafter make them available to readers in connection with a subsequent newsletter. CS for CS for SB 50.
3. AMENDMENTS TO FLORIDA’S CODE OF ETHICS FOR PUBLIC OFFICERS AND EMPLOYEES: Chapter 2013-36, effective May 1, 2013, is a comprehensive new law that substantially amends Florida’s Code of Ethics for Public Officers and Employees. Most of the changes affect current and former members of the Legislature and constitutional officers. However, public pension trustees are considered local public officers and should be aware of the following changes that apply to local public officers:
- Regarding gifts to a public officer, the definition of “business entity” has been expanded to include companies, generically, and limited liability companies.
- The definition of “vendor” has also been added. “Vendor” means a business entity doing business directly with an agency, such as renting, leasing, or selling any realty, goods, or services.
- A public officer is prohibited from accepting a gift in excess of $100 from a vendor doing business with a reporting individual’s agency.
- The new law defines and clarifies two terms currently in the Code of Ethics regarding voting conflicts.
- The term “special private gain or loss” is defined as an economic benefit or harm that would inure to the officer, his or her relative, business associate or principal unless the measure [to be voted on] affects a class that includes the officer, his or her relative, business associate or principal, in which case, at least the following factors must be considered when determining whether a special private gain or loss exists:
- The size of the class affected by the vote.
- The nature of the interests involved.
- The degree to which the interests of all members of the class are affected by the vote.
- The degree to which the officer, his relative, business associate or principal receives a greater benefit or harm when compared to other members of the class.
- “Principal by whom retained” means an individual or entity, other than an agency as defined in section 112.312(2), that for compensation, salary, pay, consideration, or similar thing of value, has permitted or directed another to act for the individual or entity, and includes, but is not limited to, one’s client, employer, or the parent, subsidiary, or sibling organization of one’s client or employer.
- It also clarifies that where a public officer, who is also an attorney, is required to disclose the nature of an interest or voting conflict, he or she is not required to disclose specific information which would violate confidentiality or privilege.
- Regarding the filing of the Statement of Financial Interests (COE Form 1), the law now requires a filer to identify on Form 1 whether the filer is using the comparative percentage threshold or the dollar value threshold to report the filer’s financial interests.
- The authority of the Commission on Ethics to collect unpaid financial disclosure fines has been expanded. If a current public officer or employee fails to pay a fine due, the lesser of 10 percent or the maximum amount allowable under federal law may be deducted from public money paid to the person in order to satisfy any outstanding fines. If the person is no longer a public officer or employee, then the Commission may seek a lien on either real or personal property and/or garnish any wages pursuant to Chapter 77, Florida Statutes.
- A new procedure for addressing de minimis errors or omissions made in a financial disclosure has been adopted. Any amendments filed prior to September 1st will be treated as the original filing. Also, if a complaint is filed after August 25th alleging an immaterial, in consequential or de minimis error or omission in a filing, the Commission must notify the filer that he or she has 30 days to file an amended disclosure form. If no amendment is filed within the time frame, the Commission may continue with the complaint. The term “de minimis” is defined as an error or omission that is immaterial, inconsequential, or de minimis if the original filing provided sufficient information for the public to identify potential conflicts of interest.
- All filers are permitted to use a CPA or an attorney in good standing with the Florida Bar to prepare their financial disclosure forms for filing. The attorney or CPA is required to sign any financial disclosure form prepared by the CPA to indicate that the form was completed in compliance with applicable law and that based upon his reasonable knowledge and belief, the disclosure is true and correct. The failure by the attorney or CPA accurately to transcribe information provided by a reporting individual does not constitute a violation of the Ethics Code.
NOTE: ALTHOUGH THE GOVERNOR HAS SIGNED INTO LAW ITEM 3, HE HAS YET TO ACT UPON ITEMS 1 AND 2.