Board reviews proposed ordinance for in‑service distributions and new state divestment requirement

Trust counsel provided two legal updates at the Sept. 25 meeting: a draft ordinance to permit in‑service distributions and a memo on a new state law requiring divestment from companies that boycott Israel.

Attorney Kaufman told trustees the proposed ordinance would allow members who become eligible for an unreduced normal retirement — including those leaving DROP — to begin receiving an in‑service distribution. He said the board is awaiting a written determination from the Florida Retirement System (FRS) on whether a retiree who begins receiving an in‑service distribution would be eligible to join FRS as a new member; counsel expected a written answer before the board’s next meeting.

Kaufman also advised trustees about a change in Florida law, effective July 1, that requires public entities to divest from companies that boycott Israel. He explained the obligation differs depending on whether the plan holds a stock directly or holds it inside a mutual fund or ETF. For a direct holding the plan must divest; for holdings within mutual funds or ETFs the plan must contact the fund provider and request divestiture but is not required to force the provider to change the fund. Kaufman cited Ben & Jerry’s (owned by Unilever) as an example of a company whose business decisions have prompted scrutiny under the new statute.

Kaufman said staff will prepare necessary investment policy language and will follow up with the FRS on the in‑service distribution question. He noted the in‑service ordinance language as drafted contained a placeholder effective date of Jan. 1, 2025, which will be corrected as the board finalizes timing.