The Lawton Chiles Endowment, created to fund health and education programs in Florida, is being dismantled after HB 5011 was signed by DeSantis in June and went into effect on July 1st.
HB 5011 authorized the termination of the Lawton Chiles Endowment Fund (LCEF) and directed the State Board of Administration to liquidate and transfer the funds into the Budget Stabilization Fund by June 30th, 2022.
The LCEF was established in 1999 under former Florida Governor Jeb Bush in order to, “provide a perpetual source of enhanced funding for state children’s health programs, child welfare programs, children’s community-based health and human services initiatives, elder programs, and biomedical research activities related to tobacco use.” It was named after former Florida Governor Lawton Chiles who won a $11.3 billion settlement against the tobacco industry in 1997.
The Florida Board of Administration (FBA) transferred $1 billion from the LCEF into the Budget Stabilization Fund last week, according to Florida Politics. The report also states that starting September 30th, the FBA will transfer quarterly funds from proceeds that are made from selling the $8 million in assets from the LCEF.
Although the majority of the LCEF will be placed in the Budget Stabilization Fund, the bill does not do away with the Tobacco Settlement Trust Fund and the Biomedical Research Trust Fund, in which the SBA will allocate $8.2 million and $800,000 respectively.
The dismantling of the LCEF is something that lawmakers say is in response to the negative fiscal impact of the Covid-19 pandemic. The legislature backed the decision to get rid of the LCEF to make sure reserves remain at ample levels.
The state has a history of transferring funds from the LCEF when expecting a fiscal downfall. In 2008, during the Great Recession, $700 million was transferred into the general revenue fund from the LCEF, and in 2013, $350 million more was transferred into the general revenue fund.
By dismantling the LCEF and having the extra money distributed to the Budget Stabilization Fund, the need to transfer the funds when needed will no longer be an issue because the funds will already be in place to stabilize a fiscal downfall.
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