SB 498 — Trust Fund Interest for Purposes Approved by the Supreme Court

Florida Senate - 2025 CS for CS for SB 498 By the CommitteesCommittee on BankingJudiciary; and Insurance;

and Judiciary;Senator Grall 590-02314-25 2025498c1 A bill to be entitled An act relating to trust fund interest for purposes approved by the Supreme Court;

and Senator Grall 597-03070-25 2025498c2 A bill to be entitled An act relating to trust fund interest for purposes approved by the Supreme Court;

requiring such financial institutions to payquarterly select a certain interest rate oralternative dividend;for a specified purpose;

prohibitingproviding therequirements for such interest rate fromalternatives; being less than a specified percentage;

requiring a financial institution to submit a rate validation sheet and affidavit to the Chief Financial Officer within a specified timeframe attesting it will pay a certain interest raterate; or dividend;

requiring the Chief Financial Officer to determine, at specified intervals, the interest rate of a specified interest rate alternative;

providing that such rates are effective on specified dates;

requiring the Chief Financial Officer to inform a certain entity of the determined interest rate within a specified timeframe;

WHEREAS, in September 1981, the Florida Supreme Court implemented the nation’s first Interest on Trust Accounts (IOTA) program, establishing a vital funding source for civil legal aid, justice system improvements, and public service programs for law students, and WHEREAS, Funding Florida Legal Aid (FFLA), formerly known as The Florida Bar Foundation, and the Florida Bankers Association have cooperated for decades to sustain the program and encourage participation, and WHEREAS, in March 2023, the Florida Supreme Court adopted new rules requiring lawyers to secure interest rates based on the Wall Street Journal Prime Rate, compelling banks to pay Page 1 of 4 CODING:

Florida Senate - 2025 CS for CSSB 498 590-02314-25 2025498c1 WHEREAS, Funding Florida Legal Aid (FFLA), formerly known as The Florida Bar Foundation, and the Florida Bankers Association have cooperated for SBdecades 498to 597-03070-25sustain 2025498c2the program and encourage participation, and WHEREAS, in March 2023, the Florida Supreme Court adopted new rules requiring lawyers to secure interest rates based on the Wall Street Journal Prime Rate, compelling banks to pay higher rates for IOTA accounts than for other similar accounts, and WHEREAS, 44 states, the District of Columbia, and Puerto Rico have mandatory IOTA programs modeled after Florida’s pre- 2023 system, while 5 states and the U.S.

Virgin Islands operate voluntary or opt-out programs, and WHEREAS, the 2023 rule change made Florida an outlier compared to other jurisdictions where IOTA rates are typically benchmarked against interest-bearing checking account rates, and WHEREAS, the Wall Street Journal Prime Rate serves as a benchmark for lending and is not used to set deposit account rates, and WHEREAS, the 2023 rule change resulted in banks paying higher rates on funds in IOTA accounts, resulting in record revenues, exceeding $279 million, paid to FFLA during the 2023- 2024 fiscal year, nearly four times the prior peak rate and far exceeding average annual interest revenues, and WHEREAS, in October 2024, the Florida Supreme Court authorized FFLA to hold nearly $143 million in reserve, and WHEREAS, it is in the best interests of this state for the Legislature to establish statutory benchmarks for IOTA rates to ensure regulatory safety, fairness, and sustainability, similar toPage the2 quarterly interest rate determinations made by the Chief Financial Officer for interest paid on court judgments, NOW, THEREFORE, Be It Enacted by the Legislature of the4 StateCODING: of Florida:

Section 1.

Section 655.97, Florida Statutes, is created to Page 2 of 4 CODING:

Florida Senate - 2025 CS for CSSB 498 590-02314-25 2025498c1 to the quarterly interest rate determinations made by the Chief Financial Officer for SBinterest 498paid 597-03070-25on 2025498c2court read:judgments, NOW, THEREFORE, Be It Enacted by the Legislature of the State of Florida:

Section 1.

Section 655.97, Florida Statutes, is created to read:

If the institution holds such an account, it must payquarterly select one of the highestfollowing interest rate oralternatives dividend generally available from the institution to itsdetermine comparable business or consumer accounts or nonmaturing deposit accounts, provided that the trustinterest accountit meetswill orpay exceedsto the sameentity minimumestablished balanceby or other account requirements, but the interestSupreme rateCourt: on trust accounts may not be less than 0.25 percent.

(a) The financialfirst institutioninterest must submit a rate validationalternative sheetmust andbe affidavitset toat the Chiefhighest Financial Officer by the tenth day of each quarter attesting that it will pay the same interest rate or dividend ongenerally theavailable lawyerfrom orthe lawinstitution firmto trust accounts that it is paying on its comparable business or consumer accounts or nonmaturing deposit accountsaccounts, provided that the trust account meets or exceeds the same minimum 0.25balance percent.or other account requirements.

(b)1. The affidavit must attest that the rate information submitted on the rate validation sheet is true and factual.

(c)If Thea Chieffinancial Financialinstitution Officerchooses shallto verifypay that the rate alternative provided in this paragraph, it must submit a rate validation sheet and affidavit haveto beenthe receivedChief Financial Officer by the Departmenttenth day of Financialeach Services.quarter attesting that it will pay at Page 3 of 4 CODING:

(2) This section does not apply to interest rates established by written contract or obligations unrelated to the Page 3 of 4 CODING:

Florida Senate - 2025 CS for CS for SB 498 597-03070-25590-02314-25 2025498c22025498c1 least the same interest on the lawyer or law firm trust accounts describedthat byit thisis section.paying on its comparable business or consumer accounts or nonmaturing deposit accounts.

2.

The affidavit must attest that the rate information submitted on the rate validation sheet is true and factual.

3.

The Chief Financial Officer shall verify that the rate validation sheet and affidavit have been received by the Department of Financial Services.

(b) The second interest rate alternative must be set at 25 percent of the federal funds target rate determined by the Federal Open Market Committee of the Federal Reserve System or 0.25 percent, whichever is higher, net of fees.

1.

Each December 1, March 1, June 1, and September 1, the Chief Financial Officer shall determine the interest rate of the second interest rate alternative.

The rate alternative determined by the Chief Financial Officer is effective on the following January 1, April 1, July 1, and October 1, respectively.

2.

Within 3 days after determining the interest rate under this paragraph, the Chief Financial Officer shall inform the entity established by the Supreme Court of the determined interest rate for the upcoming quarter.

(2) This section does not apply to interest rates established by written contract or obligations unrelated to the trust accounts described by this section.