Florida State Board of Administration
Encyclopedia
The Florida State Board of Administration (SBA) manages pension funds for nearly 1 million current and retired Florida
teachers, public employees, and their families. The SBA also invests money for more than 800 school districts and state and local government entities.
While the Florida Retirement System Pension Trust Fund (FRS) represents about 80% of the assets under management
, the SBA manages 37 different funds, including the Florida Hurricane Catastrophe Fund, the Lawton Chiles Endowment Fund and the local government investment pool known as Florida PRIME.
Each trustee appoints two people knowledgeable about financial markets to the Investment Advisory Council, which provides oversight of the SBA’s funds and major investment responsibilities. Each trustee also appoints two members to the Participant Local Government Advisory Council, which reviews the administration of the local government investment pool known as Florida Prime.
In addition, trustees appoint a three-member Audit Committee to serve as an independent and objective party to monitor SBA’s processes for financial reporting, internal controls, risk assessment, compliance and review of the agency’s independent auditors and Office of Internal Audit. The SBA also is audited by two legislative entities: the Auditor General and the Office of Program Policy Analysis and Government Accountability.
All broker-dealers used by the SBA are subject to a stringent set of standards governing research analyst independence, communications and compensation. Equity investment management firms engaged by the SBA must certify their adherence to guidelines designed to promote unbiased investment decision-making and eliminate conflicts of interest, including assurance that SBA assets are managed in the best interests of the SBA and that affiliated entities do not detrimentally influence investment decision-making. Finally, SBA staff members also are subject to a stringent personal investment activities policy.
The SBA is a constitutional entity, and it takes a constitutional amendment to change the way the agency is governed.
In 2010, there was a total of 655,367 active (non-retired) participants in the Florida Retirement System. This included 316,785 employees of school boards; 149,398 county employees; 116,204 state employees; 29,568 city employees; 23,994 state university employees; and 19,418 state college employees.
In February 2010, the Pew Center
on the States identified four states that demonstrate different approaches to designing and managing retirement systems: Florida, Nebraska, Iowa and Georgia. Florida's method for calculating annual contribution rates incorporates a portion of any unfunded liability into upcoming actuarially required contributions so that the bill is paid off over time. Furthermore, Florida has legally mandated that pension surpluses of less than 5 percet of total liabilities will be reserved to pay for unexpected losses in the system -- and even if the surplus is greater than 5 percent of total liabilities, only a fraction can be used to reduce participating employer contributions.
In response to the economic turmoil in the markets, the SBA moved aggressively to change guidelines to ensure that Florida PRIME offers daily liquidity, making it possible for investors to convert 100% of any balance into cash. Such a policy is possible because the legislative and policy changes require Florida PRIME to make conservative investments, purchasing only top-tier, short-term assets of the highest quality.
In a recent report, Standard and Poor’s gave its highest rating, AAAm, to Florida PRIME, advising that the fund has “extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit.”
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
teachers, public employees, and their families. The SBA also invests money for more than 800 school districts and state and local government entities.
While the Florida Retirement System Pension Trust Fund (FRS) represents about 80% of the assets under management
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
, the SBA manages 37 different funds, including the Florida Hurricane Catastrophe Fund, the Lawton Chiles Endowment Fund and the local government investment pool known as Florida PRIME.
Management and Oversight
While financial specialists at the SBA handle day-to-day operations, the agency is governed by a three-member Board of Trustees, which includes Florida’s elected governor, chief financial officer and attorney general. The current trustees are Governor Rick Scott, Chief Financial Officer Jeff Atwater, and Attorney General Pam Bondi. They function as chairman, treasurer, and secretary, respectively.Each trustee appoints two people knowledgeable about financial markets to the Investment Advisory Council, which provides oversight of the SBA’s funds and major investment responsibilities. Each trustee also appoints two members to the Participant Local Government Advisory Council, which reviews the administration of the local government investment pool known as Florida Prime.
In addition, trustees appoint a three-member Audit Committee to serve as an independent and objective party to monitor SBA’s processes for financial reporting, internal controls, risk assessment, compliance and review of the agency’s independent auditors and Office of Internal Audit. The SBA also is audited by two legislative entities: the Auditor General and the Office of Program Policy Analysis and Government Accountability.
All broker-dealers used by the SBA are subject to a stringent set of standards governing research analyst independence, communications and compensation. Equity investment management firms engaged by the SBA must certify their adherence to guidelines designed to promote unbiased investment decision-making and eliminate conflicts of interest, including assurance that SBA assets are managed in the best interests of the SBA and that affiliated entities do not detrimentally influence investment decision-making. Finally, SBA staff members also are subject to a stringent personal investment activities policy.
The SBA is a constitutional entity, and it takes a constitutional amendment to change the way the agency is governed.
Florida Retirement System Pension Fund
SBA’s current asset classes for the Florida Retirement System are Global Equities (both developed and emerging markets), Fixed Income, Private Equity, Strategic Investments, Real Estate and Cash.In 2010, there was a total of 655,367 active (non-retired) participants in the Florida Retirement System. This included 316,785 employees of school boards; 149,398 county employees; 116,204 state employees; 29,568 city employees; 23,994 state university employees; and 19,418 state college employees.
In February 2010, the Pew Center
Pew Research Center
The Pew Research Center is an American think tank organization based in Washington, D.C. that provides information on issues, attitudes and trends shaping the United States and the world. The Center and its projects receive funding from The Pew Charitable Trusts. In 1990, Donald S...
on the States identified four states that demonstrate different approaches to designing and managing retirement systems: Florida, Nebraska, Iowa and Georgia. Florida's method for calculating annual contribution rates incorporates a portion of any unfunded liability into upcoming actuarially required contributions so that the bill is paid off over time. Furthermore, Florida has legally mandated that pension surpluses of less than 5 percet of total liabilities will be reserved to pay for unexpected losses in the system -- and even if the surplus is greater than 5 percent of total liabilities, only a fraction can be used to reduce participating employer contributions.
Florida PRIME
Florida PRIME operates to provide local government entities in the state with a low-risk, low-cost opportunity to invest tax revenues and other short-term funds.In response to the economic turmoil in the markets, the SBA moved aggressively to change guidelines to ensure that Florida PRIME offers daily liquidity, making it possible for investors to convert 100% of any balance into cash. Such a policy is possible because the legislative and policy changes require Florida PRIME to make conservative investments, purchasing only top-tier, short-term assets of the highest quality.
In a recent report, Standard and Poor’s gave its highest rating, AAAm, to Florida PRIME, advising that the fund has “extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit.”