19-7.010: Pooled Investment Accounts
19-7.011: Rate of Return Calculation
19-7.012: Pool Participation
19-7.013: Reporting Procedures
19-7.015: Allocation of Earnings
19-7.016: Close of Business
19-7.017: Pooled Investment Account Reserve Fund
PURPOSE AND EFFECT: To amend the rate of return calculation rule to reflect that the calculation will be in accordance with the yield methodology of SEC Rule 2a-7 for money market funds; to amend the reporting procedures rule to eliminate investment service charges; to amend the allocation of earnings rule to allow the closing of an account if the balance is less than $1,000; to amend the close of business rule to indicate 1:00 p.m. EST as the close of business; to delete Rules 19-7.012 and 19-7.017, F.A.C.; to update references.
SUMMARY: Revised Local Government Surplus Trust Funds account procedures; revised rate of return calculation; updated references.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The agency has determined that these rules will not have an impact on small business. A SERC has been prepared in an abundance of caution.
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.
SPECIFIC AUTHORITY: 218.405, 218.412 FS.
LAW IMPLEMENTED: 218.405, 218.409, 215.515 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: Monday, July 12, 2010, 9:00 a.m. – 11:00 a.m.
PLACE: Room 116 (Hermitage Conference Room), 1801 Hermitage Blvd., Tallahassee, FL 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, FL 32308; (850)413-1197; tina.joanos@sbafl.com. 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, Office of the General Counsel, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, FL 32308; (850)413-1182; ruth.smith@sbafla.com
THE FULL TEXT OF THE PROPOSED RULE IS:
19-7.010 Pooled Investment Accounts.
Rules 19-7.001 19-7.010 through 19-7.016, F.A.C., are developed for the Local Government Surplus Funds Trust Fund Pooled Investment Account pursuant to Section 218.409, Florida Statutes.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented Ch. 218, Part IV FS. History–New 8-24-82, Formerly 19-7.10, Amended 3-26-02,________.
19-7.011 Rate of Return Calculation.
The Rate of Return for the Local Government Surplus Funds Trust Fund shall be calculated in accordance with the yield methodology set forth by the Securities and Exchange Commission (SEC) Rule 2a-7 (17 CFR §270.2a-7) under the Investment Company Act of 1940 for money market funds. Rule 2a-7 can be obtained by accessing the SEC website at sec.gov and clicking on the Laws & Regulations section. For the purposes of comparing the yield of the Local Government Surplus Funds Trust Fund to that of a performance benchmark for participant reporting, a net-of-fees methodology will be utilized for all reporting periods for both the Local Government Surplus Funds Trust Fund and the performance benchmark.
The Rate of Return Calculation for the Pooled Investment Account shall be as follows:
(1) Daily Rate of Return:
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(2) Moving 30 Day Average Rate of Return:
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(3) Definitions:
(a) Daily Accrued Earnings:
1. Accrued coupon income;
2. Accretion/Amortization on securities; and
3. Realized gains/losses on security sales.
All computations for the components of Daily Accrued Earnings are in conformance with the “Standard Securities Calculation Methods” published by the Securities Industry Association.
(b) Investment Balance at Cost (end of day) is the total of all investments held in inventory for the Pooled Investment Account totaled on a cost basis.
(c) Average Daily Investments Balance at Cost is the average of the daily investment balance at cost for each day of the time period cited.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 218.409(4) FS. History–New 8-24-82, Formerly 19-7.11, Amended 4-8-92, 3-26-02,________.
19-7.012 Pool Participation.
All units of Local Government that qualify to be participants in the Local Government Surplus Funds Trust Fund after January 1, 1982, will normally have surplus funds deposited into the Pooled Investment Account. During the pendency of a major market disruption which causes a suspension of trading or liquidity is impaired, the Executive Director shall limit contributions to the fund or withdrawals from the fund to ensure that the Board can invest the monies entrusted to it exercising its fiduciary responsibility as trustee. Funds designated by a unit of Local Government for the purpose of investment management by a private investment asset manager shall not be deposited into the Pooled Investment Account nor into any separate account established within the Local Government Surplus Funds Trust Fund.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 218.407(2), 218.409(1), (3) FS. History–New 8-24-82, Formerly 19-7.12, Amended 12-20-87, 2-16-92, 3-26-02, Repealed________.
19-7.013 Reporting Procedures.
The State Board of Administration shall generate for forward to each Pool participant a monthly statement containing each account’s activity including deposits, withdrawals, balances, and earnings and investment services charges. If no errors are reported to the Board within 14 days, the statement will be considered correct. A semi-annual portfolio activity statement will be forwarded to each participant.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 218.409(6) FS. History–New 8-24-82, Formerly 19-7.13, Amended 12-18-88, 11-7-99, 3-26-02,________.
19-7.015 Allocation of Earnings.
The Local Government Surplus Funds Trust Fund System is used to keep current account balance information for individual accounts participating in the Ppooled Iinvestment Aaccount and to apportion the pooled investment earnings back to each account. At the end of each month, pool month-to-date accrued earnings minus accrued expenses are apportioned to the participants directly proportionate to the respective net amounts deposited in the Fund and the length of time such amounts remain therein. The resulting proportionate amount is credited to each account at that time. An investment service charge is then deducted from the account. If the investment service charge is less than one dollar, a minimum charge of one dollar or the account ending balance, whichever is less, will be deducted as satisfaction of the investment service charge for that month. If the end of the month account balance falls below $1,000.00 is less than $1.00, the State Board of Administration may choose to close the account may be closed upon satisfaction of the investment service charge and return the residual balance to the participant.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 215.515, 218.409(4), (5) FS. History–New 8-24-82, Formerly 19-7.15, Amended 6-26-95, 3-26-02,________.
19-7.016 Close of Business.
Any requests for funds to be returned or notification of funds to be wired for investment after 1:00 p.m. EST 11:00 a.m. may be included in the following day’s business. In the event that the Board is informed by 1:00 p.m. EST 11:00 a.m. of a deposit for investment that day, and the funds are not transmitted to the Board’s bank account by the close of business that day, which results in a shortfall, a fee shall be charged to the participant for each day until the shortfall is corrected. The fee will be based on the current overdraft fee charged by the bank on the amount of the shortfall.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 215.515 218.409(2) FS. History–New 8-24-82, Formerly 19-7.16, Amended 6-26-95, 3-26-02,________.
19-7.017 Pooled Investment Account Reserve Fund.
A Pooled Investment Account Reserve Fund shall be established in order to protect the Pooled Investment Account in accordance with Section 218.409(3), F.S. The funds required to establish said Reserve Fund shall be deducted from “pooled investment earnings” as the term is used in Rule 19-7.015, F.A.C. If the size of the Reserve Fund is reduced, then the excess moneys in the Reserve Fund shall be distributed in accordance with the formula set forth in Rule 19-7.015, F.A.C., at the end of the month during which the Reserve Fund was reduced.
Rulemaking Specific Authority 218.405, 218.412 FS. Law Implemented 218.409(3) FS. History–New 8-17-92, Amended 3-26-02, Repealed________.