CFO Alex Sink's Consumer eViews Newsletter

FLORIDA CHIEF FINANCIAL OFFICER ALEX SINK'S NEWSLETTER

Volume 5 Number 48 November 28, 2008

HOME


Whether you are celebrating at home or away with family and friends, this week marks the safe delivery of Spanish settlers in 1565 in what we now call St. Augustine, and it also marks a time to reflect on the joys, hurdles, and triumphs of 2008. As our nation celebrates Thanksgiving this weekend, let us all remember that we have much to be thankful for here in Florida and much to look forward to next year.

It is also important to remember that many Floridians are experiencing difficult times during the holiday season. Many Floridians have fallen behind on their mortgage payments, seniors have seen their retirement savings depleted by the global financial meltdown and families are struggling this year just to keep up with their monthly bills.

Giving back is a great way to give thanks this Thanksgiving. As you enjoy time with friends and family, please also remember your fellow Floridians in need. Whether you are able to donate time or money to a local food bank, toy drive, or charity; every donation is meaningful and contributes to a stronger state and nation.


Rhodes Scholar Myron Rolle's mom is a Department of Financial Services employee

For weeks, fascinated Florida State University fans have watched in amazement as Myron Rolle racked up records on and off the field. Last Saturday, Myron, considered an NFL prospect, became the first major-college football player of his generation to win the prestigious Rhodes Scholarship.

His mother, Beverly, an administrative assistant in the Department of Financial Services’ Division of Workers’ Compensation, expected nothing less from her youngest of five sons.

“He is a good manager of his time,” she said, noting he learned these habits during high school. “He learned there is a time to study, a time to work and a time to play.”

Myron is in his third season playing safety with FSU. It took him just two and a half years at FSU to earn his bachelors degree in exercise science with a 3.75 grade point average. He is now working on a master's degree in public administration and plans to become a neurosurgeon.

His mother said her precocious young son laid out his goals a long time ago, and that she and his father, Whitney, worked hard to focus and guide the energy of all five of their children. “He always loved challenges, and we encouraged him in that.”

That love of new challenges is apparent in Myron’s activities. In 2007, he studied in London as part of FSU's international program, was awarded a $4,000 grant to study human mesenchymal stem cells in 2008 and helped start a program to educate Seminole Indian children about health and physical fitness. He also was inducted into the Omicron Delta Kappa National Leadership Honor Society in 2007, was named a 2007 Arthur Ashe First Team Sports Scholar and won the Watkins Award in 2006, which honors high school students for their achievement academically and athletically as well as for their community involvement.

Beverly moved to Tallahassee from Galloway, N.J., to stay near her son during college and said the importance of family influenced Myron’s choice to play at FSU. She said FSU Defensive Coach Mickey Andrews and Tight End Coach/Recruiting Coordinator John Lilly bonded with them like family. And FSU supported all of his goals, including his hopes of going to the NFL.

“His older brothers were FSU fans - and they told him if you want to go to the NFL, go to FSU.”


CFO SINK PRAISES MINORITY BUSINESS ENTERPRISE OFFICE

New processes have been established in the Purchasing Services Office within the Department of Financial Services as a result of the CFO’s initiative to improve internal contract procurement. The improvement initiative was launched last year to develop a uniform model that will implement better controls, accountability and cost savings, while promoting competition and increased opportunities for minority business participation. DFS’ involvement and partnering with the Florida Department of Management Services Office of Supplier Diversity (OSD) has achieved positive outreach results with minority vendors.

CFO Alex Sink praised the accomplishments of the DFS Purchasing office and noted that results have gone above and beyond Florida statute requirements. Statutes require a request for quote from at least three vendors for purchases in the amount of $25,000 or above. Statutes also require that all notifications for proposed procurement in the amount of $150,000 or above be sent to the OSD. In contrast, DFS sends requests for quotes to all vendors listed in the procurement-related category and sends notifications to the OSD in the amount of $25,000 or above.

The OSD’s function is to improve business and economic opportunities for Florida’s minority, women and service-disabled veteran business enterprises by providing additional information or notifications to all Certified Minority Business Enterprise (CMBE) entities. Click on the link for more information regarding the OSD: http://dms.myflorida.com/other_programs/office_of_supplier_diversity_osd.

The DFS Purchasing Office, shown above, continues to provide vendors with outstanding customer service by supporting and participating in the outreach to minority businesses by attending MatchMaker events and providing “one-on-one” sessions with vendors. As a result of these efforts, DFS’ Certified Minority Business Enterprise spending has continued to increase over the past two years while other agencies have shown decreases:


CFO Alex Sink on Florida Face to Face

Florida public television stations will air Beth Switzer's Florida Face to Face interview with guest CFO Alex Sink about a variety of issues of interest to Floridians. Please check the following schedule for the station and time in your area.

Florida Face to Face schedule  


South Florida roofing contractor charged in $400,000 Workers’ Compensation Fraud Scheme

As part of an ongoing investigation into financial fraud involving check-cashing stores to avoid payment of workers’ compensation premiums, Florida Chief Financial Officer Alex Sink today announced the arrest of the owner of a large roofing company in Delray Beach who, using such a scheme, allegedly underpaid premiums by more than $400,000 during a four-year period.

Robert J. McDonald, 54, owner and operator of Gulfstream Roofing, Inc., located at 140 NW 18th Ave., was arrested Saturday at the Palm Beach International Airport by detectives with the Florida Department of Financial Services’ Division of Insurance Fraud (DFS), on charges of Workers’ Compensation Fraud and Grand Theft. He allegedly used “shell” construction companies and check-cashing stores throughout Broward and Palm Beach counties to perpetrate fraud.

“There is a growing underground economy aimed at avoiding workers’ compensation premiums,” said CFO Sink, who oversees the DFS. “When employers try to scam the system, it means their workers are unprotected; and we will not tolerate the actions of any dishonest employers who put their workers at risk.”

If convicted, McDonald faces up to 30 years in prison on both First Degree Felony charges. The prosecution is being handled by the Palm Beach County State Attorney’s Office. DFS’ lead investigator was Deborah de la Paz-Boxer.

McDonald’s arrest stems from an investigation that found McDonald used the services of individuals who incorporated “shell” construction companies to disguise Gulfstream’s payroll as legitimate payments to insured subcontractors. Detectives said that McDonald would issue Gulfstream checks made payable to several shell companies, and that the operators of the shell companies would, for a fee, cash the Gulfstream checks at various check-cashing stores and then return the cash to Gulfstream where the cash would be used to pay employees.

At four consecutive workers’ compensation premium audits, McDonald, through Gulfstream employees and accountants, indicated that all payments made to the “shell” companies were for legitimate subcontractor work and provided certificates of insurance for the “shell” companies. As a result of the cash being returned to Gulfstream to pay its employees, none of the payments made to the “shell” companies were assessed any workers’ compensation insurance premiums.

These activities allegedly occurred between 2002 through 2006. Investigation continues into the various check cashing stores which helped to facilitate the fraud and into other contractors who engaged in the same behavior. Additional arrests are expected.


My Family CFO

Are you the chief financial officer of your family? Are you always looking out for the best deals, wise investments and smart moves for your family's financial security?

As your family's fiscal watch dog, keep an eye on this column for money-smart ideas from the Chief Financial Officer of Florida, Alex Sink.

Idea: Consider year-end financial moves

Make a charitable gift by year-end. By making to a gift to a charitable organization, you'll help a group whose work you support. Remember that you can deduct whatever it is you give to charity: stock, cash, goods. If you itemize your deductions, you may get an income tax break for your contribution. Before making any moves, though, check with your tax professional.

Before the year is over, consider applying some tax reducing strategies such as contributing further to your IRA or other retirement accounts. If you have a 401(k), 403(b) or 457(b), your employer may allow you to make extra contributions before the end of the year. Since you typically make these contributions with "pre-tax" dollars, the more you contribute, the lower your taxable income may be. And of course, your money grows on a tax-deferred basis.

If you’ve set up a flexible spending account (FSA), you’ll need to spend the balance before the end of the year or if your plan allows it, before the 2 1/2 month grace period you’re given, since an FSA is a “use it or lose it” benefit offered by employers.


Saving Energy, Saving Money

Energy tips for Florida families - these actions represent ways to behave kindly toward Mother Earth, AND save money as well as energy.

These tips are presented by CFO Alex Sink's science advisor Meg Lowman, Ph.D., on the faculty at New College of Florida. Dr. Lowman has written numerous award-winning books and is an expert on world rainforests.

Red, green and green for the holidays

Would you like to be the first in your neighborhood to try something new and different? Ask your lighting supplier or holiday retailer for LED holiday bulbs. Available in green, orange, gold, red, white and blue, they're shatterproof, shock resistant, safe to touch and won't burn hands. They also present no fire hazard, save up to 80-90 percent of your energy costs, and are long lasting.

Those large, traditional colored bulbs you unpack year after year could be costing you more in energy costs. While most C7 or C9 lights use 5 to 7 watts per bulb, some of the older strings use up to 10 watts per bulb. Miniature lights use about 70 percent less energy and last much longer than the larger bulbs. If you prefer the brilliance of the larger lights, switch to 5-watt bulbs, which use about 30 percent less energy than 7- to 10-watt bulbs. Although the new bulbs will cost money initially, you will see energy savings immediately.

To avoid accidentally leaving your lights on and running up your electric bill, use an automatic timer indoors and out. Be sure the timer is rated to handle the total wattage of your lights.


CREDIT INSURANCE: Safety Net You Need or a Waste of Money?

For many Americans, the holiday shopping season officially begins on “Black Friday,” the day after Thanksgiving. At a time when many consumers are worried about paying for even their most basic needs, it’s tempting to use credit to buy holiday presents. Many credit card companies know that, and are using the season to offer credit insurance for your account. These details may help you make a decision about your needs before purchasing credit insurance. For more help, call the Florida Department of Financial Services Consumer Helpline at 877-MY-FL-CFO (877-693-5236).

What is Credit Insurance?

Credit insurance is insurance that is sold in conjunction with a credit obligation or loan. If you lose your job or become unable to work due to some type of disability -- and these events prevent you from making the necessary loan payments -- credit insurance protects the lender from your inability to repay the loan by making payments to the lender on your behalf.

There are four main types of credit insurance:

How Much Does It Cost?

The are a number of factors — including the amount of the loan or debt, the type of credit and the type of policy — that might impact the cost of a credit insurance policy. Companies will generally charge premiums by either using a single premium method or a monthly outstanding balance method.

Single Premium Method

The insurance premium is calculated at the time of the loan, and often added to the amount of the loan. This means that the borrower is responsible for the entire premium at the time the policy is purchased. In turn, the monthly loan payment would increase because the original loan amount now includes both the original loan amount and the insurance premium.

Monthly Outstanding Balance (MOB)

This method is generally used for credit cards, revolving home equity loans or similar debts. There are two subcategories to consider for this type of charge:

How Does It Pay Out?

The payment of the insurance claim will vary, depending on the situation:

Full Disclosure

It is against the law for a lender to deceptively include credit insurance in your loan without your knowledge or permission. Before you sign any loan papers, ask the lender whether the loan includes any charges for voluntary credit insurance.

Is Credit Insurance Required for a Loan?

With the exception of private mortgage insurance (PMI), lenders cannot deny you credit if you do not buy optional credit insurance. PMI is extra insurance that lenders require from most homebuyers with less than a 20 percent down payment on the purchase of a home.

If a lender tells you that you will only get the loan if you buy the optional credit insurance, report the lender to your state insurance department and find another lender. Go to www.naic.org/state_web_map.htm for a link to your state insurance department’s Web site.

Things to Consider

Before deciding to buy credit insurance from a lender, think about your needs, your options and the rates you are able to pay.

Consider these questions before signing the application:

Watch for aggressive sales tactics and make sure you understand all of the documents you sign. If you have any questions about the coverage or the company selling the coverage, contact your state insurance department.

Before purchasing credit insurance, check to see what a traditional term life insurance or disability insurance policy would cost. You might decide it is less expensive to purchase traditional life insurance or disability insurance rather than purchasing credit insurance.