§8502. Administrative duties of board.

(a) Employees.--

(1) Effective 30 days after the effective date of this paragraph, the positions of secretary, assistant secretary and investment professional shall be placed under the unclassified service provisions of the act of August 5, 1941 (P.L.752, No.286), known as the Civil Service Act, as those positions are vacated. All other positions of the board shall be placed in either the classified or unclassified service according to the definition of the terms under the Civil Service Act.

(2) Notwithstanding any other provision of law, the compensation of investment professionals shall be established by the board. The compensation of all other officers and employees of the board who are not covered by a collective bargaining agreement shall be established by the board consistent with the standards of compensation established by the Executive Board of the Commonwealth.

(b) Professional personnel.--The board shall contract for the services of a chief medical examiner, an actuary, investment advisors, counselors, an investment coordinator, and such other professional personnel as it deems advisable.

(c) Expenses.--The board shall, through the Governor, submit to the General Assembly annually a budget covering the administrative expenses of this part. Such expenses as approved by the General Assembly in an appropriation bill shall be paid from investment earnings of the fund. Concurrently with its administrative budget, the board shall also submit to the General Assembly annually a list of proposed expenditures which the board intends to pay through the use of directed commissions, together with a list of the actual expenditures from the past year actually paid by the board through the use of directed commissions. All such directed commission expenditures shall be made by the board for the exclusive benefit of the system and its members.

(d) Meetings.--The board shall hold at least six regular meetings annually and such other meetings as it may deem necessary.

(e) Records.--

(1) The board shall keep a record of all its proceedings which shall be open to inspection by the public, except as otherwise provided in this part or by other law.

(2) Any record, material or data received, prepared, used or retained by the board or its employees, investment professionals or agents relating to an investment shall not constitute a public record subject to public inspection under the act of June 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know Law, if, in the reasonable judgment of the board, the inspection would:

(i) in the case of an alternative investment or alternative investment vehicle involve the release of sensitive investment or financial information relating to the alternative investment or alternative investment vehicle which the fund was able to obtain only upon agreeing to maintain its confidentiality;

(ii) cause substantial competitive harm to the person from whom sensitive investment or financial information relating to the investment was received; or

(iii) have a substantial detrimental impact on the value of an investment to be acquired, held or disposed of by the fund, or would cause a breach of the standard of care or fiduciary duty set forth in this part.

(3) (i) The sensitive investment or financial information excluded from inspection under paragraph (2)(i), to the extent not otherwise excluded from inspection, shall constitute a public record subject to public inspection under the Right-to-Know Law once the board is no longer required by its agreement to maintain confidentiality.

(ii) The sensitive investment or financial information excluded from inspection under paragraph (2)(ii), to the extent not otherwise excluded from inspection, shall constitute a public record subject to public inspection under the Right-to-Know Law once:

(A) the inspection no longer causes substantial competitive harm to the person from whom the information was received; or

(B) the entity in which the investment was made is liquidated;

whichever is later.

(iii) The sensitive investment or financial information excluded from inspection under paragraph (2)(iii), to the extent not otherwise excluded from inspection, shall constitute a public record subject to public inspection under the Right-to-Know Law once:

(A) the inspection no longer has a substantial detrimental impact on the value of an investment of the fund and would not cause a breach of the standard of care or fiduciary duty set forth in this part; or

(B) the entity in which the investment was made is liquidated;

whichever is later.

(4) Except for the provisions of paragraph (3), nothing in this subsection shall be construed to designate any record, material or data received, prepared, used or retained by the board or its employees, investment professionals or agents relating to an investment as a public record subject to public inspection under the Right-to-Know Law.

(5) Notwithstanding the provisions of this subsection, the following information regarding an alternative investment vehicle shall be subject to public inspection under the Right-to-Know Law:

(i) The name, address and vintage year of the alternative investment vehicle.

(ii) The identity of the manager of the alternative investment vehicle.

(iii) The dollar amount of the commitment made by the system to the alternative investment vehicle.

(iv) The dollar amount of cash contributions made by the system to the alternative investment vehicle since inception.

(v) The dollar amount of cash distributions received by the system from the alternative investment vehicle since inception.

(vi) The net internal rate of return of the alternative investment vehicle since inception, provided that the system shall not be required to disclose the net internal rate of return under circumstances in which, because of the limited number of portfolio assets remaining in the alternative investment vehicle, the disclosure could reveal the values of specifically identifiable remaining portfolio assets to the detriment of the alternative investment.

(vii) The aggregate value of the remaining portfolio assets attributable to the system's investment in the alternative investment vehicle, provided that the system shall not be required to disclose the value under circumstances in which, because of the limited number of portfolio assets remaining in the alternative investment vehicle, the disclosure could reveal the values of specifically identifiable remaining portfolio assets to the detriment of the alternative investment.

(viii) The dollar amount of total management fees and costs paid to the alternative investment vehicle by the system on an annual fiscal year-end basis.

(f) Functions.--The board shall perform such other functions as are required for the execution of this part and shall have the right to inspect the employment records of employers.

(g) Performance of employer duties.--In the event the employer fails to comply with the procedures as mandated in section 8506 (relating to duties of employers), the board shall perform such duties and bill the employer who shall pay for the cost of same. In the event the employer is delinquent in payment of contributions in accordance with section 8327 (relating to payments by employers), the board shall notify the Secretary of Education and the State Treasurer of such delinquency.

(h) Regulations and procedures.--The board shall, with the advice of the Attorney General and the actuary, adopt and promulgate rules and regulations for the uniform administration of the system. The actuary shall approve in writing all computational procedures used in the calculation of contributions and benefits, and the board shall by resolution adopt such computational procedures, prior to their application by the board. Such rules, regulations and computational procedures as so adopted from time to time and as in force and effect at any time, together with such tables as are adopted and published pursuant to subsection (j) as necessary for the calculation of annuities and other benefits, shall be as effective as if fully set forth in this part. Any actuarial assumption specified in or underlying any such rule, regulation or computational procedure and utilized as a basis for determining any benefit shall be applied in a uniform manner.

(i) Data.--The board shall keep in convenient form such data as are stipulated by the actuary in order that an annual actuarial valuation of the various accounts can be completed within six months of the close of each fiscal year. The board shall have final authority over the means by which data is collected, maintained and stored and in so doing shall protect the rights of its membership as to privacy and confidentiality.

(j) Actuarial investigation and valuation.--The board shall have the actuary make an annual valuation of the various accounts within six months of the close of each fiscal year. In the fiscal year 1975 and in every fifth year thereafter, the board shall have the actuary conduct an actuarial investigation and evaluation of the system based on data including the mortality, service, and compensation experience provided by the board annually during the preceding five years concerning the members and beneficiaries. The board shall by resolution adopt such tables as are necessary for the actuarial valuation of the fund and calculation of contributions, annuities, and other benefits based on the reports and recommendations of the actuary. Within 30 days of their adoption, the secretary of the board shall cause those tables which relate to the calculation of annuities and other benefits to be published in the Pennsylvania Bulletin in accordance with the provisions of 45 Pa.C.S. § 725(a) (relating to additional contents of Pennsylvania Bulletin) and, unless the board specifies therein a later effective date, such tables shall become effective on such publication. The board shall include a report on the significant facts, recommendations and data developed in each five-year actuarial investigation and evaluation of the system in the annual financial statement published pursuant to the requirements of subsection (n) for the fiscal year in which such investigation and evaluation were concluded.

(k) Certification of employer contributions.--The board shall, each year in addition to the itemized budget required under section 8330 (relating to appropriations by the Commonwealth), certify to the employers and the Commonwealth the employer contribution rate expressed as a percentage of members' payroll necessary for the funding of prospective annuities for active members and the annuities of annuitants, and certify the rates and amounts of the normal contributions as determined pursuant to section 8328(b) (relating to actuarial cost method), accrued liability contributions as determined pursuant to section 8328(c), supplemental annuities contribution rate as determined pursuant to section 8328(d), the experience adjustment factor as determined pursuant to section 8328(e), premium assistance contributions as determined pursuant to section 8328(f), the costs added by legislation as determined pursuant to section 8328(i), the actuarial required contribution rate as determined pursuant to section 8328(i), the collared contribution rate as determined pursuant to section 8328(g), the final contribution rate as determined pursuant to section 8328(h) and the shared-risk contribution rate as determined under section 8321(b) (relating to regular member contributions for current service), which shall be paid to the fund and credited to the appropriate accounts. These certifications shall be regarded as final and not subject to modification by the Secretary of the Budget.

(l) Commonwealth payments.--The board shall within 30 days following the end of each quarter determine the amount due to the fund from the Commonwealth during that quarter and submit at that time a requisition for the amount determined to be due from the Commonwealth to the State Treasurer.

(m) Member contributions and interest.--The board shall cause each member's contributions, including payroll deductions, pickup contributions and all other payments, including, but not limited to, amounts collected by the State Employees' Retirement System for the reinstatement of previous school service or creditable nonschool service and amounts paid to return benefits paid after the date of return to school service or entering State service representing lump sum payments made pursuant to section 8345(a)(4)(iii) (relating to member's options) and member's annuity payments, but not including other benefits returned pursuant to section 8346(a.1) and (a.2) (relating to termination of annuities), to be credited to the account of such member and shall pay all such amounts into the fund. Such contributions shall be credited with statutory interest until date of termination of service, except in the case of a vestee, who shall have such interest credited until the effective date of retirement or until the return of his accumulated deductions, if he so elects; and in the case of a multiple service member who shall have such interest credited until termination of service in both the school and the State systems.

(n) Annual financial statement.--The board shall prepare and have published, on or before January 1 of each year, a financial statement as of the fiscal year ending June 30 of the previous year showing the condition of the fund and the various accounts, including, but not limited to, the board's accrual and expenditure of directed commissions, and setting forth such other facts, recommendations and data as may be of use in the advancement of knowledge concerning annuities and other benefits provided by this part. The board shall submit said financial statement to the Governor and shall make copies available to the employers for the use of the school employees and the public.

(o) Independent audit.--The board shall provide for an annual audit of the system by an independent certified public accounting firm, which audit shall include the board's accrual and expenditure of directed commissions.

(p) Transfer of employer contributions.--The board shall, upon receipt of a written request from a public employee retirement system of a county of the third class and upon receipt of written verification that a member of the fund who withdrew contributions upon termination of employment will deposit the employee's contributions with the retirement system of a county of the third class, transfer, within 30 days, to the retirement system of the county of the third class the full amount of employer contributions and the accumulated interest on such contributions credited to the former member's account. This subsection shall apply only where the transfer of employment from the public school district to the county was not voluntary on the part of the employee.

(June 25, 1982, P.L.647, No.183, eff. 60 days; July 22, 1983, P.L.104, No.31, eff. imd.; Feb. 9, 1984, P.L.25, No.10, eff. imd.; Dec. 19, 1984, P.L.1191, No.226, eff. imd.; Aug. 5, 1991, P.L.183, No.23, eff. imd.; Apr. 29, 1994, P.L.159, No.29, eff. imd.; Dec. 20, 1995, P.L.689, No.77, eff. 60 days; Apr. 2, 1998, P.L.229, No.41, eff. imd.; June 18, 1998, P.L.685, No.88, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2001; Nov. 9, 2006, P.L.1371, No.148, eff. imd.; Nov. 23, 2010, P.L.1269, No.120, eff. July 1, 2011; July 1, 2013, P.L.174, No.32, eff. July 1, 2013)

Notation

2013 Amendment.  Act 32 amended subsec. (m).

2010 Amendment.  Act 120 amended subsec. (k).

2006 Amendment.  Act 148 amended subsec. (e). See sections 3, 4, 5 and 6 of Act 148 in the appendix to this title for special provisions relating to authority of Auditor General, construction of law, application of law and fees.

2001 Amendment.  See section 31 of Act 9 in the appendix to this title for special provisions relating to recertification to Budget Secretary and employers.

1998 Amendments.  Act 41 amended subsec. (a) and Act 88 amended subsec. (a).

1995 Amendment.  Act 77 amended subsecs. (h) and (j).

Transfer of Functions.  The powers and duties of the Attorney General and the Department of Justice contained in section 8502(h) were transferred to the Office of General Counsel by section 502 of the act of October 15, 1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act, effective January 20, 1981.

Special Provisions in Appendix.  See section 18 of Act 38 of 2002 in the appendix to this title for special provisions relating to recertification to Budget Secretary and employers.

References in Text.  The act of June 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know Law, referred to in subsec. (e)(2), was repealed by the act of Feb. 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law.

Cross References.  Section 8502 is referred to in section 8321 of this title.