The state of Florida can hardly afford to fumble its finances. The jobless rate hit 10.7 percent in August, up from an annual average of 4.1 percent in 2007 and more than the current national rate of 9.8 percent. The state ranks No. 1 in the country in mortgage defaults, with almost 11 percent of Florida homes in foreclosure in the first quarter of 2009, according to the Mortgage Bankers Association.
Under pressure to close the budget gap of $6.3 billion, the state legislature raided the $2 billion Lawton Chiles Endowment Fund, one of 36 funds managed by the State Board of Administration, taking $700 million this past June in addition to the $354.4 million seized in 2008. To deliver the check the SBA had to sell securities and realize sizable losses.
This is fiscally dumb, and from a public policy standpoint, its egregious, says Bud Chiles, a Tampa attorney and son of the governor for whom the fund was named when he won the assets in a tobacco-related lawsuit in 1997.
Despite the raid on the Chiles fund, the pressure on public funds didnt ease. When SBA executive director Ashbel Williams Jr. went before the three trustees on June 9 to present the $32.34 million 200910 budget which represented an increase of 10.56 percent, or $3.1 million, over last years he was told to go back to the drawing board. On July 28, after chopping the budget in half, he won approval for it; 76 percent of the budget represents audit and compliance costs. Williams fears that the resource-starved legislators are now sharpening their knives to come after the $45 million Administrative Trust Fund, which provides the SBAs operating costs and salaries.
See related story, "Ash Williams Works to Restore Broken Trust At Florida SBA."