Florida Government and Politics Weekly Update

Economy: Unemployment Rose to 10.2 Percent in May 2009, Reaching Its Highest Level Since 1975
For the first time since the beginning of the current recession, the Florida unemployment rate reached double digits in May 2009. On June 19, 2009, the Florida Agency for Workforce Innovation announced that Florida’s seasonally adjusted unemployment rate for May 2009 was 10.2 percent. Out of a total workforce of 9.2 million, 943,000 Floridians were without jobs in May. The May figure represented a 0.5-percentage point increase over the revised April 2009 unemployment rate of 9.7 percent and a 4.4-percentage point increase over the Florida unemployment rate for May 2008.

Florida’s May 2009 unemployment rate was the highest since October 1975, when unemployment in the state reached 11.0 percent.

After many years in which unemployment in Florida was lower than the national average, the Florida unemployment rate has consistently exceeded the national unemployment rate since the beginning of 2008. In May, Florida’s rate was 0.8 percentage points higher than the national unemployment rate of 9.4 percent.

The counties with the lowest unemployment levels were counties with a large proportion of government employees in the workforce and several small counties that did not participate in the housing bubble, including Liberty County (5.0 percent), Monroe County (6.2 percent), Franklin County (6.4 percent), and Alachua, Leon, and Walton counties (6.6 percent each). According to the Agency for Workforce Innovation, manufacturing layoffs and continuing weakness in the housing market explain unemployment rates in the high-unemployment counties, including Flagler County (14.4 percent), St. Lucie County (13.3 percent), Indian River County (13.0 percent), Hernando County (12.7 percent), and Lee County (12.4 percent).

Thirty-three counties had unemployment rates of 10 percent or more in May 2009.

Education: Tuition to Increase by 15 Percent at 11 State Universities; Florida State University President T. K. Wetherell Announces His Retirement
On June 18, 2009, the Florida Board of Governors, which oversees the state university system, unanimously approved a proposal to increase tuition at all 11 state universities. When the seven-percent increase approved by the Board of Governors is combined with an eight-percent tuition increase enacted by the Florida Legislature earlier this year, state university students will see their tuition rise by a total of 15 percent.

Tuition may continue to increase in future years. Under the new legislation, the Board of Governors has the discretion to increase tuition by up to 15 percent a year until Florida state university tuition matches the national average of tuition for public universities. Newspaper reports have calculated that a typical University of Florida student will pay tuition and fees of $4,372 for the 2009 – 2010 academic year. Even though this amount includes a tuition increase of more than $600, it is still 33-percent lower than the national public tuition average of $6,585.

Florida State University President T. K. Wetherell announced on June 17, 2009 that he would retire as soon as the FSU Board of Trustees selects a successor. Following a 12-year legislative career that culminated in his service as Speaker of the House of Representatives in 1990 –1992, Mr. Wetherell served in various academic posts, including seven years as president of Tallahassee Community College. He began serving as FSU’s president in January 2003.

Health Care: Governor Charlie Crist Signs “Pill Mill” Legislation
On June 18, 2009, Gov. Charlie Crist signed legislation intended to crack down on prescription drug abuse. The legislation, SB 462, establishes a prescription drug-monitoring program. It requires the Florida Department of Health to implement an electronic system to monitor the prescribing and dispensing of specified controlled substances and requires prescribers and dispensers of controlled substances to report information for inclusion in the monitoring system. The system must be in place by December 1, 2010. Florida is one of 12 states that does not currently have a prescription drug monitoring system.

The legislation also requires certain physicians to register with the Department of Health. The new registration requirement covers any physician who practices in a privately owned pain-management facility that primarily engages in the treatment of pain by prescribing narcotic medications, more commonly known as “pain clinics.”

The legislation was enacted in response to reports that South Florida, and especially Broward County, is the home to hundreds of pain clinics in which controlled substances are prescribed with little or no oversight or control over a patient’s ability to receive several prescriptions for the same controlled substance. Proponents of the legislation cited a U.S. Drug Enforcement Administration report that all of the nation’s top 25 pain management clinics, measured by the volume of prescriptions for controlled substances, were located in Florida. Law enforcement officials had testified that Broward County pain clinics were becoming the main source of illegal prescription drugs in the southeastern United States, dispensing more than one million narcotic pills each month.

Property Insurance: Gov. Crist Flooded With E-Mails on “Consumer Choice” Property Insurance Bill; A. M. Best Issues Downgrades for Florida Insurers
As of June 19, 2009, Gov. Crist had received 12,923 e-mails regarding HB 1171, the “consumer choice” property insurance bill. The governor typically receives between 13,000 and 20,000 e-mails each week. The governor’s press office stated that most of the e-mails appear to be part of organized campaigns, and that most were urging the governor to sign the bill.

The bill would allow insurers that have a net worth (technically, “surplus as to policyholders”) of $150 million or more and that meet certain other criteria to offer the deregulated policies after making specified disclosures to the consumer. The bill is viewed by proponents as a way of keeping large national property insurers in the state and by opponents as a way to allow insurers to raise rates while escaping regulatory review.

Insurance Commissioner Kevin M. McCarty has vigorously opposed the bill, stating that the Florida insurance market is adequate to meet the needs of the state’s property owners even if large insurers such as State Farm leave the state. Earlier this year, State Farm Florida Insurance Co. announced that it would cease covering property in Florida. The Consumer Federation of America, the Florida Public Interest Research Group, and some small insurance companies also oppose the bill. Supporters include business groups such as the Florida Chamber of Commerce and Associated Industries of Florida as well as several large property insurance companies.

The bill reached the governor’s desk on June 12, 2009. He has until June 27 to sign the bill, veto it, or allow it to become law without his signature.

On June 17 and 18, 2009, A. M. Best Co. downgraded the financial strength ratings of two Florida property insurers. Argus Fire & Casualty Insurance Co. was downgraded from C- (Weak) to D (Poor) because of exposure growth and catastrophe exposure. The downgrade is also based on A. M. Best’s concern about the ability of the Florida Hurricane Catastrophe Fund to provide backup funding to insurers after a major hurricane. Argus is a subsidiary of the United Automobile Insurance Group.

State Farm Florida Insurance Co., a Florida-only subsidiary of State Farm Mutual Automobile Insurance Co., was downgraded to B (Fair) from B+ (Good). According to A. M. Best, the downgrades were based on a deterioration in earnings and risk-adjusted capital driven by nonrenewals, wind mitigation discounts, increased reinsurance costs, rate decreases, and the suspension of the writing of most new homeowners and commercial property policies. State Farm Florida, which has announced its plan to leave the state, is currently the second largest writer of residential property insurance in Florida.

Public Policy News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this alert or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals: