- The Florida State Board of Administration (SBA) may undergo changes to its investment capabilities with the unanimous approval of SB 110 by the Senate Committee on Appropriations.
- The bill includes provisions such as allowing the SBA to hold real estate investments in subsidiaries and group them into a real estate financing pool, raising the cap on alternative investments from 20 to 30 percent, and amending due diligence information required for investment in vehicles not explicitly approved by statute.
- The bill also includes provisions related to paying benefits to SBA members who have been charged with or convicted of offenses indicating a breach of public trust, and an amendment prohibiting the SBA from acquiring securities of companies that boycott the nation of Israel.
The Florida State Board of Administration (SBA) may see alterations to its investment capabilities with the unanimous approval of SB 110 by the Senate Committee on Appropriations on Thursday. The bill aims to amend various aspects of the administration of the Investment Plan, with several key provisions.
The primary provision included is allowing the SBA to hold its real estate investments in subsidiaries and group them into a real estate financing pool, potentially generating additional income. The bill also seeks to raise the cap on alternative investments from 20 to 30 percent, expanding the SBA’s authority in this area.
Additionally, the bill proposes amending the due diligence information required to be given to the Investment Advisory Council before investment in vehicles not explicitly approved by statute.
Further, Hooper’s legislation clarifies that the SBA cannot pay benefits to a member of the Investment Plan who has been charged with or convicted of offenses that indicate a breach of public trust. This provision aligns with the constitutional requirement for the forfeiture of retirement benefits for public officers or employees convicted of felonies involving a breach of public trust.
The Appropriations Committee also adopted an amendment that prohibits the fund from acquiring securities of companies that maintain a boycott against the nation of Israel. In 2016, the SBA was directed to compile a list of scrutinized companies boycotting the country including actions that limit commercial activity in a discriminatory manner.
“Currently, when a company or corporation is identified as being anti-Israel, the SBA can only stop investing in that company,” said Hooper. “This bill, if passed, would allow them to divest after going through a process over several months to divest that investment in that company or corporations that do a boycott or attempt to damage any Israeli-controlled entity.”
Senator Tina Polsky raised concerns about the potential impact of Hooper’s bill on existing anti-ESG legislation being deliberated in the House and Senate. She sought clarification on whether the bill under consideration would necessitate the state to make a political statement, which runs counter to the objective of the anti-ESG measures aimed at preventing such statements.
“Just to be clear, this amendment is requiring the government to choose its investment based on a political ideology, is this true?” Asked Polsky.
In response, Hooper clarified that his bill would subject companies that participate in a boycott against Israel to similar treatment as corporations in countries currently under sanction, such as Cuba, Venezuela, and Sudan.
Though ultimately voting in favor of both the bill and amendment, Polsky seized the chance to juxtapose the support of Hooper’s bill to that of the anti-ESG legislation.
“I’m in favor of this particular amendment because as a state when we invest our money, we should be doing it the right way – and this is the right way,” said Polsky. “But I want you all to remember this when we see the ESG bill maybe next week or the week after that that bill says you cannot use these factors for a government to invest in a company or fund that uses environmental concerns, societal concerns, so just realize how hypocritical this will be when that bill comes up.”
The SBA, which is responsible for investing the assets of the FRS Pension Plan and administering the FRS Investment Plan, follows fiduciary standards of care and operates within statutory restrictions and limitations. The SBA manages various investment portfolios, including the Florida Hurricane Catastrophe Fund, the Florida Lottery Fund, the Florida Prepaid College Plan, and state bond issues.