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Cypen & Cypen
NEWSLETTER
for
JULY 30, 2004

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. INDEXERS KICK BUTT:

As plansponsor.com puts it, indexing was the place to be in the first half of 2004. Year-to-date returns as of June 30 show that the S&P 500 beat over 63% of large-cap funds, the S&P MidCap 400 bested more than 57% of mid-cap funds and the S&P SmallCap 600 trounced 90% of small-cap funds. Longer-term results are consistent. For the three-year period ending June 30, 2004, the same indices beat 66%, 78% and 76% of their respective active counterparts. And for the five-year period, the results are not much different (53%, 85% and 76%). Remember that the indices themselves do not bear management fees. For purposes of comparison, however, the weighted average fees for S&P 500 funds are .15%; for S&P MidCap 400 funds, .32%; and for S&P SmallCap 600 funds, .30%.

.2. GAO UNDERGOES NAME AND OTHER CHANGES:

Effective July 7, 2004, after 83 years as the “General Accounting Office,” GAO has changed its name to the “Government Accountability Office.” The change, better reflecting the modern professionals services organization GAO has become, is the most visible provision of the GAO Human Capital Reform Act of 2000, which also

$ decouples GAO from the federal employees pay system

$ gives GAO permanent authority to offer voluntary early retirement opportunities

$ authorizes an exchange program with private sector organizations

.3. GAO COMPARES SERVICEMEMBER SURVIVOR BENEFITS WITH OTHER GOVERNMENT EMPLOYEES:

Speaking of GAO, the agency was recently asked to address two questions: (1) to what extent are the survivor benefits provided to servicemembers different from those provided to federal, state and city government employees in general and (2) to what extent do federal, state and city government supplement their general survivor benefits for employees in high-risk occupations? Although GAO made no recommendations, it found that the military provides survivor benefits that are comparable in type but not in amount to those provided by 61 civilian government entities (federal government, 50 states, the District of Columbia and 9 cities with populations of at least 1 million) when employees die in the line of duty. Social Security payments, a death gratuity, burial expenses and life insurance are four types of lump sum survivor benefits provided by the military and at least some civilian government entities. In addition, the federal government and some states provide a lump sum payment through their retirement plans. In four hypothetical situations posed by GAO, survivors of deceased servicemembers almost always obtain higher lump sums. In three of the four situations, the amount of recurring payments to deceased servicemembers’ survivors exceeds those provided by the federal government, typically exceeds those provided by at least one-half of the states, but are typically less than those provided by over one-half of the cities. The military also provides more types of noncash survivor benefits than do civilian government entities. Survivors of civilian government employees in some high-risk occupations may receive supplemental benefits beyond those the entities provide to civilian government employees. For example, survivors of federal, state and city government law enforcement officers and firefighters who die in line of duty may be entitled to a lump sum payment of more than $267,000 under the Public Safety Officers’ Benefits Act. Further, 34 states and 5 cities provide survivors of employees in high-risk occupations with additional cash benefits not available to survivors of state and city employees in general. View the entire 128-page report at http://www.gao.gov/cgi-bin/getrpt?GAO-04-814.

4. DONATIONS TO COUNTY SHERIFF FOR BENEFIT OF FALLEN DEPUTY’S FAMILY MAY BE USED FOR SUCH PURPOSE:

The Marion County, Florida, Sheriff is soliciting contributions to pay for a statute honoring a Marion County Deputy Sheriff who was killed in line of duty. The statute would be placed at a substation named in the deputy sheriff’s honor. Any excess funds beyond cost of the statute would be used to pay unpaid funeral expenses and for the benefit of the deputy’s minor child. The Clerk of the Marion County Circuit Court expressed concern that once deposited, the funds are county funds that may only be expended for a public purpose. Although agreeing that donations so received and deposited are county funds that must be expended for a public purpose, the Florida Attorney General concluded that such funds may be disbursed to the family of a deputy sheriff killed in line of duty, provided that county commission makes an appropriate legislative determination that such an expenditure serves a public purpose and the funds have been appropriately budgeted for such purpose. (Apparently, there was no issue that the statute served a public purpose.) AGO 2004-37(July 12, 2004).

5. PUBLIC TRAVEL GENERALLY REQUIRED TO BE MOST ECONOMICAL CLASS:

Want to fly first-class? Okay--how about business class? Would you believe steerage? The provision in Section 112.061(7)(c), Florida Statues, requiring a traveler to reimburse the agency for transportation cost in excess of the most economical class of travel does not appear to provide clear statutory authority for agency heads to approve a class of travel other than that which is most economical, except where fully justified. Whether there may be instances where air travel beyond coach class is appropriate or might be determined to be the most economical by the agency head depends on the facts and a full justification by the agency head in approving such travel. However, there are no legislative standards to guide an agency head in making such determination. Therefore, it may be advisable to seek legislative clarification as to propriety of expending public funds for first-class or business class air travel and, if so, under what circumstances such travel is appropriate, according to the Florida Attorney General. AGO 2004-38 (July 13, 2004).

6. RECORDED WITNESS STATEMENT IS PUBLIC RECORD:

In accordance with Chapter 119, Florida Statutes, the Florida Public Records Law, an audio or audiovisual recording of a witness statement by an agency, which is created in the transaction of official business and is intended to perpetuate, communicate or formalize knowledge, constitutes a public record and is subject to the requirements of said chapter, including maintenance and disposal. A transcript or a copy is not necessarily the equivalent of the original or master audio or audiovisual recording. It is the responsibility of the Division of Library and Information Services of the Florida Department of State to adopt rules establishing standards for reproduction or duplication of an audio or audiovisual tape recording with a view to disposing of the original tape recordings. Inasmuch as such rules have apparently not been adopted, an agency should not dispose of the original or master audio or audiovisual recordings without consent of the Division. Florida Attorney General Advisory Legal Opinion (Informal) dated July 12, 2004.

Copyright, 1996-2004, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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