This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
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DATE: 5/22/2023
HOUSE OF REPRESENTATIVES STAFF FINAL BILL ANALYSIS
BILL #: CS/HB 925 Direct-support Organizations
SPONSOR(S): Education & Employment Committee, McClain and others
TIED BILLS: None. IDEN./SIM. BILLS: CS/SB 1278
FINAL HOUSE FLOOR ACTION: 116 Y’s
0 N’s GOVERNOR’S ACTION: Pending
SUMMARY ANALYSIS
CS/HB 925 passed the House on April 26, 2023, as CS/SB 1278.
Direct-support organizations (DSOs) are statutorily created private entities that are generally required to be
non-profit corporations, and are authorized to carry out specific tasks in support of public entities or public
causes. A district school board DSO is an organization that is organized and operated exclusively to receive,
hold, invest, and administer property and to make expenditures to or for the benefit of public K-12 education
and adult career and community education programs for the school district that they support.
The bill authorizes the DCF to establish a DSO with the sole purpose to support the DCF in carrying out its
purposes and responsibilities. The DSO board of directors is appointed by the Secretary of the DCF and must
operate pursuant to a contract with the department.
The bill authorizes district school boards to contract with a DSO for personal services or operations. Retirees of
the Florida Retirement System (FRS) must first satisfy the requirements for termination from employment prior
to providing services for a FRS employer, and are subject to the reemployment limitations in law.
The bill also raises the threshold of expenditures and expenses that requires a district school board DSO to
undergo a financial audit from $100,000 to $250,000. Additionally, the bill authorizes district school boards to
contract with a vendor for an annual financial audit of a DSO.
The bill does not appear to have a fiscal impact on state or local governments.
Subject to the Governor’s veto powers, the bill is effective upon becoming a law.
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I. SUBSTANTIVE INFORMATION
A. EFFECT OF CHANGES:
Background on Citizen Support Organizations and Direct-Support Organizations
Citizen support organizations (CSOs) and direct-support organizations (DSOs) are statutorily created
private entities that are generally required to be non-profit corporations, and are authorized to carry out
specific tasks in support of public entities or public causes. The functions and purpose of a CSO or
DSO are prescribed by its enacting statute and, for most, by a written contract with the agency the CSO
or DSO was created to support.
CSO and DSO Transparency and Reporting Requirements
In 2014, the Legislature created s. 20.058, F.S., establishing a comprehensive set of transparency and
reporting requirements for CSOs and DSOs that are created or authorized pursuant to law or executive
order and created, approved, or administered by a state agency.
1
Specifically, the law requires each
CSO and DSO to annually submit, by August 1, the following information related to its organization,
mission, and finances to the agency it supports:
2
the name, mailing address, telephone number, and website address of the organization;
the statutory authority or executive order that created the organization;
a brief description of the mission of, and results obtained by, the organization;
a brief description of the organization’s plans for the next three fiscal years;
a copy of the organization’s code of ethics;
and
a copy of the organization’s most recent federal Internal Revenue Service (IRS) Return of
Organization Exempt from Income Tax form (Form 990).
3
Each agency receiving the above information must make the information available to the public through
the agency’s website. If the CSO or DSO maintains a website, the agency’s website must provide a link
to the website of the CSO or DSO.
4
Additionally, any contract between an agency and a CSO or DSO
must be contingent upon the CSO or DSO submitting and posting the information.
5
If a CSO or DSO
fails to submit the required information for two consecutive years, the agency must terminate the
contract with the CSO or DSO.
6
The contract must also include a provision for ending operations and
returning state-issued funds to the state if the authorizing statute is repealed, the contract is terminated,
or the organization is dissolved.
7
By August 15 of each year, the agency must report to the Governor, the President of the Senate, the
Speaker of the House of Representatives, and the Office of Program Policy Analysis and Government
Accountability (OPPAGA) the information provided by the CSO or DSO. The report must also include a
recommendation by the agency, with supporting rationale, to continue, terminate, or modify the
agency’s association with each CSO or DSO.
8
Finally, a law creating or authorizing the creation of a CSO or DSO must state that the creation or
authorization for the CSO or DSO is repealed on October 1 of the fifth year after enactment, unless
reviewed and saved from repeal by the Legislature.
9
1
Section 3, ch. 2014-96, L.O.F, codified as s. 20.058, F.S.
2
Section 20.058(1), F.S.
3
The IRS Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from federal
income tax under 26 U.S.C. 501.
4
Section 20.058(2), F.S.
5
Section 20.058(4), F.S.
6
Id.
7
Id.
8
Section 20.058(3), F.S.
9
Section 20.058(5), F.S
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CSO and DSO Audit Requirements
Current law requires each CSO and DSO created or authorized with annual expenditures in excess of
$100,000 to provide for an annual financial audit of its accounts and records.
10
The audit must be
conducted by an independent certified public accountant in accordance with rules adopted by the
Auditor General and the state agency that created, approved, or administers the CSO or DSO.
11
The
audit report must be submitted within nine months after the end of the fiscal year to the Auditor General
and to the state agency the CSO or DSO supports.
12
This audit requirement does not apply to a CSO or DSO for a university, district board of trustees of a
community college, or district school board
13
because there are separate requirements in law for those
specific entities. Additionally, the threshold for an audit of a CSO or DSO for the Department of
Environmental Protection and the Department of Agriculture and Consumer Services is $300,000.
14
The Auditor General may conduct audits or other engagements of the accounts and records of a CSO
or DSO, pursuant to his or her own authority, or at the direction of the Legislative Auditing Committee.
15
The Auditor General is authorized to require and receive any records from the CSO or DSO, or its
independent auditor.
16
The Department of Children and Families
Present Situation
The Department of Children and Families (DCF) works with local communities to protect the vulnerable,
promote strong and economically self-sufficient families, and advance personal and family recovery and
resiliency.
17
The DCF must provide services relating to: adult protection; child care regulation; child
welfare; domestic violence; economic self-sufficiency; homelessness; mental health; refugees; and
substance abuse.
18
The DCF vision is to empower people with complex and diverse needs to achieve the best outcomes
for themselves and their families, as well as to provide world-class and constantly improving service
focused on providing the people it serves with the level and quality that the DCF would demand and
expect for its own families.
19
Direct Support Organization for the Children and Youth Cabinet
In 2007, the Legislature created the Children and Youth Cabinet (Cabinet).
20
The Cabinet is charged
with promoting and implementing collaboration, creativity, increased efficiency, information sharing and
improved service delivery between and within state agencies and organizations. As directed by statute,
in 2007 the Cabinet developed a shared vision and a Strategic Plan to guide the Cabinet in designing
and implementing measurable outcomes and actions that promote collaboration and information
10
Section 215.981(1), F.S.
11
Id.
12
Id.
13
Id.
14
Section 215.981(2), F.S.
15
Section 11.45(3)(d), F.S.
16
Id.
17
Section 20.19(1)(a), F.S.
18
Section 20.19(4)(a)1.-9., F.S.
19
Florida Department of Children and Families, Mission, Vision and Values, https://www.myflfamilies.com/about/additional-services-
offices/office-secretary/mission-vision-and-values (last visited Apr. 27, 2023).
20
Chapter 2007-151, s. 1, L.O.F., codified as s. 402.56, F.S.
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sharing.
21
The mission of the Cabinet is to ensure that Florida’s public policy relating to children and
youth promotes interdepartmental collaboration and program implementation in order for services
designed for children and youth to be planned, managed and delivered in a holistic and integrated
manner to improve the self-sufficiency, safety, economic stability, health, and quality of life of all
children and youth in Florida.
22
DCF is required by law to establish a DSO to assist the Cabinet in carrying out its purpose and
responsibilities.
23
The sole purpose of the DSO is to support the Cabinet, and must be:
a Florida not-for-profit corporation;
organized to make expenditures to or for the Cabinet; and
approved by the DCF to operate for the benefit of and in a manner consistent with the goals of
the Cabinet and in the best interest of the state.
24
Effect of the Bill
The bill authorizes the DCF to create a DSO with the sole purpose to support the DCF in carrying out
its purposes and responsibilities. The DSO must be:
A Florida not-for-profit corporation.
Organized and operated to:
o conduct programs and activities;
o raise funds;
o request and receive grants, gifts, and bequests of moneys;
o acquire, receive, hold, invest, and administer securities, funds, objects of value, or other
real or personal property; and
o make expenditures to or for the direct or indirect benefit of the DCF and the individuals it
serves.
Determined by the DCF to be operating in a manner consistent with the goals and purposes of
the DCF, the best interest of the state, and the needs of children and adults served by the DCF.
The DSO must operate under a written contract with the DCF that provides for all of the following:
Approval of articles of incorporation and bylaws by the DCF.
Submission of an annual budget for approval by the DCF.
Annual certification by the DCF that the DSO is in compliance with the contract and operating in
a manner consistent with the goals and purposes of the DCF and in the best interest of the
state. This certification must be made annually and reported in the official minutes of a meeting
of the DSO.
Reversion of moneys and property held in trust by the DSO to the state if the DCF ceases to
exist, or to the DCF if the DSO is no longer approved to operate for the DCF, a county
commission, or a circuit board, or ceases to exist.
The fiscal year for the DSO is from July 1 of each year through June 30 of the following year.
Disclosure of material provisions of the contract and the distinction between the DCF and the
DSO to donors, including on all promotional and fundraising publications.
The Secretary of the DCF (Secretary) must appoint the board of directors of the DSO. The board
members must be appointed according to the organization’s bylaws.
The DCF may allow the DSO to use fixed property or facilities of the DCF at no cost. The DCF may
impose conditions on the DSO's use of fixed property or facilities, and the DCF may refuse to allow the
21
Governor Ron DeSantis – 46
th
Governor of Florida, Florida Children and Youth Cabinet, https://www.flgov.com/childrens-cabinet/
(last visited Apr. 27, 2023).
22
Id.
23
Section 402.57(1), F.S.
24
Section 402.57(1)(a)-(c), F.S.
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DSO to use any fixed property or facilities if the DSO does not provide equal membership and
employment opportunities to all people, regardless of race, color, religion, sex, age, or national origin.
The DCF may, without charge, allow appropriate use of “personnel services” of the DCF by the DSO.
The bill provides that “personnel services” include full-time or part-time personnel, as well as payroll
processing services.
The DCF must adopt rules prescribing the procedures by which the DSO is governed and any
conditions with which it must comply to use property, facilities, or personnel services of the DCF.
The DSO may collect, expend, and provide funds to address gaps in services for the children and
adults served by the DCF; develop, implement, and operate targeted prevention efforts; provide
services and activities that support the goals of the DCF; and cover functions of the DSO’s board of
directors, as necessary and approved by the DCF. The DSO may not use funds for the purpose of
lobbying. The DSO may hold any moneys in a separate depository account in the name of the DSO,
subject to the provisions of the contract with the DCF. The DSO must provide an annual financial audit
in accordance with statutory requirements.
25
The bill provides for the repeal of the enacting subsection on October 1, 2028, unless reviewed and
saved from repeal by the Legislature.
District School Board Direct-Support Organizations
Present Situation
A district school board DSO is an organization that:
26
is approved by the district school board;
is a Florida not-for-profit corporation; and
is organized and operated exclusively to receive, hold, invest, and administer property and to
make expenditures to or for the benefit of public K-12 education and adult career and
community education programs in this state.
The board of directors of the DSO must be approved by the district school board.
27
Use of Property by the District School Board DSO
Section 1001.453, F.S., sets forth limitations on the use of district property by the DSO. DSOs are
authorized to use the property, facilities, and personal services
28
of the district. The district school board
must adopt rules in coordination with the Florida Department of Education (DOE) that govern the DSO’s
use of the district property, facilities, or personal services, and provide for budget and audit review and
oversight by the district school board and the DOE.
However, the DSO is not permitted to use the property, facilities, or personal services if the DSO does
not provide equal employment opportunities to all persons, regardless of race, color, religion, sex, age,
or national origin.
Employment after Retirement
25
Section 215.981, F.S. Provides audits of DSO’s and CSO’s created, approved, or administered by a State agency are subject to rules
adopted by the State agency that created, approved, or administers the DSO or CSO. Financial audits must be conducted in accordance
with rules adopted by the Auditor General. See also State of Florida Auditor General, Rules of the Auditor General (2022), at 1,
available at https://flauditor.gov/pages/pdf_files/10_700.pdf.
26
Section 1001.453, F.S.
27
Section 1001.453(3), F.S.
28
Section 1001.453(1)(b), F.S. Personal services includes full-time or part-time personnel, as well as payroll processing. Id.
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The Deferred Retirement Option Program (DROP) is a voluntary retirement program available only to
Florida Retirement System (FRS) Pension Plan members who qualify for normal retirement.
29
A
member of FRS is required to terminate employment to begin receiving benefits or begin participation in
DROP.
30
Termination occurs when a member ceases all employment relationships with his or her FRS
employer.
31
Termination is void if any FRS-participating employer reemploys a member during a
specified period of time.
32
However, an FRS retiree can work for any private employer, for any public
employer not participating in the FRS, or for any employer in another state without affecting his or her
FRS benefits.
33
Before July 1, 2010, an FRS retiree was allowed to be reemployed by an FRS employer one calendar
month after retiring or after the member’s DROP termination date. If the retiree was reemployed during
months two through 12, the retiree was not authorized to receive his or her pension benefit until month
13. However, a retiree was authorized to be reemployed as instructional personnel on an annual
contractual basis after one calendar month without having his or her retirement benefits disrupted.
34
A member who retires on or after July 1, 2010, may not be reemployed by an FRS employer until
month seven after retiring or after the member’s DROP termination date. If the retiree is reemployed
during months seven through 12, the retiree may not receive his or her pension benefit until month 13.
35
The reemployment exception for retirees reemployed as instructional personnel no longer applies to
members who retire and are reemployed on or after July 1, 2010; however, a retired law enforcement
officer may be reemployed as a school resource officer by an FRS-covered employer during months 7
through 12 after retirement or DROP termination and receive both a salary and pension benefits.
36
A retiree employed in violation of the reemployment limitation and the FRS employer are jointly and
severally liable for reimbursement to the retirement trust fund from which the benefits were paid.
Pension benefits remain suspended until repayment has been made. Benefits suspended beyond the
reemployment limitation are applied towards repaying the benefits received in violation of the
reemployment limitation.
37
District School Board DSO Audit Requirements
Similar to other DSOs, each district school board DSO with more than $100,000 in expenditures or
expenses is required to provide for an annual financial audit of its accounts and records.
38
The audit
must be conducted by an independent certified public accountant in accordance with the rules adopted
by the Auditor General
39
and the Commissioner of Education.
40
The annual audit report must be
submitted within nine months after the fiscal year’s end to the district school board and the Auditor
General. The Commissioner of Education, the Auditor General, and the OPPAGA have the authority to
require and receive from the organization or the district auditor any records relative to the operation of
the organization.
41
29
Florida Retirement System, Pension Plan Deferred Retirement Option Program (2022), at 3, available at
https://employer.frs.fl.gov/forms/drop-guide.pdf.
30
Id. at 5.
31
Section 121.021(39)(a), F.S.
32
Id.
33
See s. 121.091(9)(a), F.S.
34
Section 121.091(9)(b), F.S.
35
Section 121.091(9)(c), F.S.
36
Section 121.091(9)(f), F.S.
37
Section 121.091(9)(b)1. and (9)(c)3., F.S.
38
Section 1001.453(4), F.S.
39
Section 11.45(8), F.S.
40
Section 1001.453(4), F.S.
41
Section 1001.453(4), F.S.
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Effect of the Bill
The bill authorizes district school boards to contract with a DSO for personal services or operations.
Retirees of the FRS must first satisfy the requirements for termination from employment prior to
providing services or operations for a FRS employer, and are subject to the reemployment limitations in
law.
42
To reduce the burden of costs associated with annual audits for smaller DSOs,
43
the bill increases from
$100,000 to $250,000 the threshold of expenditures and expenses to require a DSO provide for a
financial audit. Additionally, the bill authorizes district school boards to contract with a vendor for an
annual financial audit of a DSO.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
42
Section 121.091(9), F.S.
43
National Council of Nonprofits, What is an independent audit? https://www.councilofnonprofits.org/running-nonprofit/nonprofit-
audit-guidec/what-independent-audit (last visited Apr. 27, 2023); 501(c) Services, Does your nonprofit really need an annual audit?
Here are the alternatives, https://www.501c.com/does-your-nonprofit-really-need-an-annual-audit-here-are-the-
alternatives/#:~:text=Audits%20are%20time%20consuming%20and,the%20National%20Council%20of%20Nonprofits (last visited
Apr. 27, 2023).