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FLORIDA CHIEF FINANCIAL OFFICER ALEX SINK'S WEEKLY NEWSLETTER

Volume 4, Number 49, December 7, 2007

Fellow Floridian:

Colorado State University hurricane forecaster William Gray announced today his prediction that seven storms will form into hurricanes during the 2008 hurricane season.  Fortunately, Florida did not experience severe hurricane damage during the 2007 hurricane season.   However, Floridians know all too well how destructive these powerful storms can be.  

By offering free wind inspections, the My Safe Florida Home (MSFH) program helps Floridians learn how to harden their homes against windstorm damage.  But did you also know that the MSFH program might be able to help you get a discount on your windstorm insurance? 

Many insurance companies provide discounts to homeowners who take steps to fortify their homes against the strong winds a hurricane can bring.  In fact, many homeowners are already eligible to save money on their insurance-- without making any improvements-- because their homes have additional protections, such as shutter protection on windows and doors.  

Approximately 75 percent of the homeowners who’ve applied for a free wind inspection have learned they are eligible to immediately save money on their windstorm insurance.   On average, the savings is $200, but we’ve heard from homeowners who are saving as much as $2000 each year!     

And it's easy to apply.  Any Floridian that lives in a single-family, site-built home is eligible.  Just fill out an application at www.MySafeFloridaHome.com or call our toll-free number at 1-866-513-MSFH (6734).  In just two minutes, you can be on your way to learning how to harden your home and determining if you are eligible for a discount on your wind insurance premiums. 

Sincerely,  

Alex


FLORIDA SCHOOL BOARDS ASSOCIATION HEARS FROM CFO SINK

CFO Sink spoke today to more than 200 members of the Florida School Boards Association and representatives of several other education organizations gathered for their 62nd Annual Joint Conference in Tampa.  She asked to speak to the group as she knew many had concerns about recent events with the Local Government Investment Pool operated by the State Board of Administration (SBA).  The CFO serves along with Florida’s Governor and Attorney General on the SBA Board of Directors that oversees the SBA.  After a brief speech in which she said she intends to work with her SBA board colleagues to bring more transparency and communication between SBA fund managers and investors, she took several questions. She got a hearty round of applause when Bill Montford, Chief Executive Officer of the Florida Association of District School Superintendents, thanked her for her “unprecedented access.”


STATEMENT FROM SBA TRUSTEES

After the first morning’s activity in the Local Government Investment Pool, Governor Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink released the following statement:

“We are pleased to see the Local Government Investment Pool opened on time today and we are encouraged by the fact that new deposits were made into the fund. Withdrawal activity in the fund this morning was below expected levels, which continues to demonstrate cooperation among the fund’s investors and an interest in preserving the fund. We hope to see continued deposits from fund investors and remind local governments that all new subscriptions are fully available for withdrawal under the new plan.”

SBA TRUSTEES SEEK TO RESTORE PUBLIC'S TRUST

EDITOR'S NOTE:
• GOV. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum serve as trustees for the State Board of Administration, which handles investment and trust management services for the state. They issued this statement collectively on Thursday:

A decline in the real-estate market and the growing subprime mortgage lending crisis have impacted the U.S. financial market. In Florida, we are keeping a watchful eye over the state's investment funds, particularly our model pension fund.

As part of this oversight, the three of us, sitting together as the State Board of Administration's (SBA) Board of Trustees, took steps this week to address a lack of investor confidence in one of the investment pools.

The Local Government Investment Pool (LGIP) is a short-term investment pool used by a number of counties, school boards and other government entities in Florida. Withdrawals escalated at a significant pace over the past few weeks, decreasing the pool's original balance of $27 billion to $14 billion. Whether or not this "run on the bank was fueled by legitimate concerns, we immediately acted to temporarily suspend withdrawals and hire a world-renowned asset management firm to conduct a thorough review of the LGIP and recommend a proposal with the best chance at preserving investors' principal.

After reviewing the pool's assets, the firm issued a report with several recommendations that we, as the SBA Board of
Trustees, enacted Tuesday. In the simplest terms, we supported a plan to isolate any distressed assets into a secure fund that will be allowed to mature and increase in value over time. The rest of the assets are of a high-grade money-market quality and will be placed in a fund that is open to current and new investors. We also voted to create
relationships with financial institutions to provide loans to investors seeking immediate access to capital.

In passing this reform, we had three guiding principles. Our primary goal was to adopt a plan that would provide the
best opportunity for investors to ultimately retrieve every cent they originally placed in the fund. We also knew that it
was essential for investors to have access to their assets as soon as possible, so that local entities could cover immediate needs such as issuing payroll for teachers and other public servants. Additionally, we understood the
importance of restoring confidence in the new fund, which will be managed by independent financial asset managers
and rated like many other money-market funds.

We believe the actions taken this week will best protect the investments of hundreds of local governments in a manner that is fair and secure to all investors. Above all, we
commend the local-government entities that have worked with us over the past week to help craft an innovative and
sensible solution.

As trustees, we will work to increase transparency in the state's investment funds and require the SBA to increase its
communications with local governments and other investors as well as the Florida League of Cities, Florida Association of Counties, Florida Tax Collectors Association, Florida Sheriffs Association and others. Together, we can overcome the current crisis and provide a model to other states facing similar circumstances.


CFO SINK ANNOUNCES ARREST OF SCHOOL PRINCIPAL FOR ALLEGEDLY STEALING VOUCHER FUNDS

Florida Chief Financial Officer Alex Sink announces the arrest today of a Pinellas County resident for allegedly stealing more than $256,897 from a school voucher program under the Department of Education (DOE).

Marva H. Dennard, 68, owner of the private school Bishop Academy II – GSFA, Inc. in St. Petersburg, is charged with first-degree grand theft and first-degree aggravated white collar crime following an investigation by the Department of Financial Services (DFS), Office of Fiscal Integrity, in connection with the State Attorney’s Office, Sixth Judicial Circuit. Dennard is accused of taking the funds from the John M. McKay Scholarship for Students with Disabilities Program (McKay) and the Corporate Tax Credit (CTC) Scholarship.

“Stealing money intended to provide educational opportunities for Florida’s students cannot and will not be tolerated, and I commend the investigators and prosecutors for holding this individual accountable,” said CFO Sink, who oversees the department.

Investigators said Bishop Academy II targeted the low-income minority population of Pinellas County by pursuing students who qualified for McKay and CTC scholarships by offering “free scholarships.” From July 2002 through June 2005, Bishop Academy II received $782,896.75 in McKay funds and $225,904 in CTC funds.

Dennard is accused of inflating student numbers, submitting scholarship applications that falsely indicated tuition at $3,500 or $7,500 when the actual tuition was $2,600, simultaneously collecting funds for students receiving both McKay and CTC scholarships, submitting inflated fee schedules for individual students to DOE in order for Bishop Academy II to receive the maximum McKay scholarship payments, and failing to provide the professional services prescribed and paid for by DOE.

The Office of Fiscal Integrity is responsible for statewide investigations of allegations of fraud, waste, or abuse involving State of Florida property and money. To report fraud, waste, or abuse of State of Florida resources, call 1-800-GET-LEAN (1-800-438-5326) or the Office of Fiscal Integrity directly at 850-413-5514.


CFO SINK IMPLEMENTS NEW TOOL TO SAVE MONEY, IMPROVE SERVICE

Florida Chief Financial Officer Alex Sink announced that Florida is the first state to implement the use of a new program that will improve services and save money in the administration of insurance company receiverships.

The Department of Financial Services (DFS), Division of Rehabilitation and Liquidation, recently used ClaimNet, a Web-based application that makes it easier for claimants in a receivership to submit a claim, update a claim or check on the status of an existing claim. The National Association of Insurance Commissioners (NAIC) launched ClaimNet in December 2006 to provide a uniform method for collecting and processing a receivership's claims data. Florida recently used the program for a receivership with more than 1,400 policies, and nearly half of the claimants used the program to submit their claims on line, saving money and time.

“As Florida’s fiscal watchdog, I am continually working to improve services and find ways to save taxpayer dollars,” said CFO Sink, who oversees the department. “Processing claims is one of the largest and costliest tasks associated with a receivership or liquidation, which can be a financial and emotional burden for consumers. With this program, we have improved the process and will have more funds to pay claims.”

DFS serves as receiver of any insurance company placed into receivership in Florida. The Division of Rehabilitation and Liquidation is responsible for performing the duties of the Department of Financial Services in the department's capacity as receiver. The basic responsibilities of the receiver include the collection of assets or debts due to the company and the evaluation of all known claims against the company. For more information on the duties and responsibilities of a receiver, log on to http://www.MyFloridaCFO.com/Receiver/ or call 1-877-MyFLCFO.


CFO SINK ISSUES IMMEDIATE FINAL ORDER TO N.J.-BASED NATIONAL TRADE BUSINESS ALLIANCE OF AMERICA, AFFILIATES
Sink urges consumers to avoid doing business with any of the companies

Florida Chief Financial Officer Alex Sink announced the Department of Financial Services has issued an Immediate Final Order against New Jersey-based National Trade Business Alliance of America (NTBAA), National Alliance Association (NAA) and several affiliates, ordering the entities to stop the unauthorized sale of health insurance in Florida.

The department became aware of the unauthorized activities when consumers began to complain about unpaid claims and problems getting premium refunds, and the department’s Division of Agent and Agency Services, Bureau of Investigation, launched an investigation.

“Floridians deserve the most ethical, upfront services from insurance agents and agencies, and that is why Florida requires agents and agencies to be licensed,” said CFO Sink, who oversees the department. “Any consumers who have purchased coverage from these entities are urged to call my office.”

Nearly 800 Florida consumers have signed up for the health plans marketed by these entities, which have been selling their unauthorized products in Florida since at least August 2006. The agencies marketed the insurance via blast facsimile and collected premiums by automatic bank withdrawals. The marketing Web site for the entities is www.naaus.org.

Consumers can file a complaint or verify licensure of an insurance agency or company by calling the department’s Consumer Helpline at 1-877-MyFLCFO or logging on to www.MyFloridaCFO.com.

Neither NTBAA, nor NAA nor their president, Thomas J. Sullivan, has an insurance agent license issued by the department. Similarly, neither Affinity Health Plans nor National Alliance Healthcare, operating as the affiliated insurance companies, has ever been granted a Certificate of Authority from the Office of Insurance Regulation, which also issued an Immediate Final Order. The department’s Order requires the entities to provide a detailed list of the names, contact information and claims information for all Florida policyholders within 10 days.


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