Rule 19-4.0011 merely sets forth the purpose of Rule Chapter 19-4, and does not meet the definition of a rule. The other rules to be repealed merely repeat the content of statutory provisions pertaining to policies and review procedures pertaining ...

 

STATE BOARD OF ADMINISTRATION

RULE NOS.:RULE TITLES:

19-4.0011Purpose

19-4.0041Policies and Review Procedures for Florida Retirement System Investments in Equities

19-4.0044Policies and Review Procedures for Foreign Obligations and Securities

19-4.0046Policies and Review Procedures for Investments Authorized by Section 215.47(6), Florida Statutes

19-4.0051Policies and Review Procedures for Florida Retirement System Investments in Intermediate to Long-Term Fixed Income Securities

19-4.006Policies and Review Procedures for Florida Retirement System Money Market Investments

19-4.0071Policies and Review Procedures for Florida Retirement System Real Property Investments

PURPOSE AND EFFECT: Rule 19-4.0011, F.A.C., merely sets forth the purpose of Rule Chapter 19-4, F.A.C., and does not meet the definition of a rule. The other rules to be repealed merely repeat the content of statutory provisions pertaining to policies and review procedures pertaining to certain investments made by the SBA. As such, the rule provisions no longer are required.

SUMMARY: To repeal rules that either do not meet the definition of a rule or that merely repeat statutory provisions and that, therefore, are no longer needed. There are no other rules incorporating these repealed rules. The proposed repeals do not have an impact on any other rules. Legislative ratification of the rule repeals is not required.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Upon review of the proposed repeals to the rules, the State Board of Administration has determined that the rule repeals will not meet the statutory threshold for ratification by the legislature. There will be no impact on economic growth, job creation or employment, private-sector investment, or business competitiveness, and no increase in regulatory costs by the repeals of these rules.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 215.52 FS.

LAW IMPLEMENTED: 215.44, 215.45, 215.47 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Thursday, April 17, 2014, 9:00 a.m. – 11:00 a.m.

PLACE: Hermitage Room, the Hermitage Centre, 1801 Hermitage Blvd., Tallahassee, Florida 32308

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Tina Joanos, Agency Clerk, Office of the General Counsel, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, Florida 32308, [phone], [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Ruth A. Smith, Assistant General Counsel, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, Florida 32308, [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

19-4.0011 Purpose.

These rules are promulgated to provide guidance and to establish general operating policies and procedures for the making and reviewing of investments of the Fund by the State Board of Administration.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.44, 215.45, 215.47 FS. History–New 2-10-82, Formerly 19-4.011, Amended 12-18-88,  Repealed__________.

 

19-4.0041 Policies and Review Procedures for Florida Retirement System Investments in Equities.

(1) The objectives of the total equity portfolio is to maximize return subject to the need to maintain a diversified portfolio to achieve a return highly correlated with that of a broad market standard in support of the strategy development process.

(2) The equity holdings shall be diversified relative to a broad market standard and both the market and non-market elements of risk in equity portfolio(s) shall be monitored by the Executive Director regularly and reported to the Board and Investment Advisory Council. Supplementary standards may be included regularly or from time to time at the discretion of the Board or Executive Director to provide desired perspective on the effectiveness of investment management and on the market environment.

(3) No specific approved list of potential holdings shall be required.

(4) Although individual portfolios may not meet the equity objectives, the net result of additions, deletions, and weighting changes in issues and portfolios held shall be made consistent with the objectives of the total equity portfolio.

(5) Equity investment changes resulting in material changes in total equity portfolio diversification and market risk shall be in conformance with prior strategies approved by the Board.

(6) The Executive Director shall approve guidelines for the management of the individual portfolios within the total equity portfolio.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.44, 215.45, 215.47 FS. History–New 2-10-82, Amended 9-27-83, 12-25-85, (4) Transferred to 19-4.045, Formerly 19-4.041, Amended 12-14-86,  Repealed__________.

 

19-4.0044 Policies and Review Procedures for Foreign Obligations and Securities.

In implementing the authority granted to the Board in Section 215.47, F.S., to invest in foreign obligations and securities, the Executive Director is authorized to enter into spot and forward foreign currency exchange contracts in connection with the purchase of these obligations and securities.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.47(5) FS. History–New 12-10-87,  Repealed__________.

 

19-4.0046 Policies and Review Procedures for Investments Authorized by Section 215.47(6), Florida Statutes.

(1) The Board hereby delegates the authority for the Executive Director or his designee to invest in all obligations, securities, and investments (“investments”) authorized by Section 215.47(6), F.S. This delegation constitutes “final approval of investments by the Board” as such term is used in Section 215.44(6), F.S.

(2) If said investments described in the preceding subsection are not publicly traded securities, options, financial futures, or similar instruments, the Executive Director or his designee shall present the proposed plan for investment to the Investment Advisory Council prior to engaging in these investment activities. The proposed plan must satisfy the criteria set forth for such plan in section 215.47(6), F.S.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.47(6) FS. History–New 12-20-87, Amended 12-11-89,  Repealed__________.

 

19-4.0051 Policies and Review Procedures for Florida Retirement System Investments in Intermediate to Long-Term Fixed Income Securities.

(1) The objective of the management of the fixed income portfolio is to maximize the expected long-term return subject to the need to achieve a return highly correlated with that of a broad market standard in support of the strategy development process.

(2) The fixed income holdings shall be diversified relative to a broad market standard and both market and nonmarket risk shall be regularly monitored and reported to the Board and Investment Advisory Council. Supplementary standards may be included at the discretion of the Executive Director or the Board to provide perspective on the effectiveness of investment management.

(3) No specific approved list of potential holdings shall be required.

(4) Although individual portfolios may not meet the fixed, income objectives, the net results of additions, deletions, and weighting changes in issues and portfolios shall be consistent with the objectives of the total fixed income portfolio.

(5) Fixed income investment changes resulting in material changes in total fixed income portfolio diversification and market risk shall be in conformance with the prior strategies approved by the Board.

(6) The Executive Director shall approve guidelines for the management of the individual portfolios within the total fixed income portfolio.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.44, 215.45, 215.47 FS. History–New 2-10-82, Amended 12-25-85, Formerly 19-4.051,  Repealed__________.

 

19-4.006 Policies and Review Procedures for Florida Retirement System Money Market Investments.

(1) The holdings in money market instruments, consistent with the Total Fund Investment Plan, shall be of high quality and ready marketability, with maturities diversified appropriately with respect to the expected cash flow obligations of the funds.

(2) The objective of the money market investments shall be:

(a) To earn interest, with a high degree of safety and liquidity.

(b) To provide ready reserves for meeting irregular payout obligations and for investment in other asset classes.

(c) To serve as a risk-reducing asset class within the context of the total Fund.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.44, 215.45, 215.47 FS. History–New 2-10-82, Amended 12-25-85, Formerly 19-4.06, Amended 12-18-88,  Repealed__________.

 

19-4.0071 Policies and Review Procedures for Florida Retirement System Real Property Investments.

(1) Investments, consistent with the Total Fund Investment Plan, shall be concentrated in income producing real estate. Selected investments are expected to provide returns commensurate with market risk characteristics for the specific investment. Primary consideration shall focus on income producing potential determined by the quality, quantity and durability of the revenues as well as the potential for asset value appreciation. Preservation of the capital investment shall be of paramount importance in all cases.

(2) Operating and financial reporting procedures shall provide a timely and accurate picture of operation results.

Rulemaking Specific Authority 215.52 FS. Law Implemented 215.47(2)(i) FS. History–New 11-9-83, Formerly 19-4.08, Amended 12-25-85, Formerly 19-4.071, Amended 12-18-88, 5-16-90,  Repealed__________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Lamar Taylor

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Trustees of the State Board of Administration

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: March 4, 2014