(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 provisions of law, the compensation of investment professionals and legal counsel 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.
(a.1) Secretary.--The secretary shall act as chief administrative officer for the board with respect to both the system and the plan. In addition to other powers and duties conferred upon and delegated to the secretary by the board, the secretary shall:
(1) Serve as the administrative agent of the board.
(2) Serve as liaison between the board and applicable legislative committees, the Treasury Department, the Department of the Auditor General, and between the board and the investment counsel and the mortgage supervisor in arranging for investments to secure maximum returns to the fund.
(3) Review and analyze proposed legislation and legislative developments affecting the system or the plan and present findings to the board, legislative committees, and other interested groups or individuals.
(4) Direct the maintenance of files and records and preparation of periodic reports required for actuarial evaluation studies.
(5) Receive inquiries and requests for information concerning the system or the plan from the press, Commonwealth officials, State employees, the general public, research organizations, and officials and organizations from other states, and provide information as authorized by the board.
(6) (i) Supervise a staff of administrative, technical, and clerical employees engaged in record-keeping and clerical processing activities for both the system and the plan in maintaining files of members and participants, accounting for contributions, processing payments to annuitants and terminated participants, preparing required reports, and retirement counseling.
(ii) The board may utilize the staff of employees provided for under this paragraph for both the system and the plan but shall allocate the fees, costs and expenses incurred under this paragraph between the system and the plan as appropriate.
(b) Professional personnel.--
(1) The board shall contract for the services of a chief medical examiner, an actuary, investment advisors and counselors, and such other professional personnel as it deems advisable. The board may contract for legal services.
(2) The board may utilize the same individuals and firms contracted under this subsection for both the system and the plan but shall allocate the fees, costs and expenses incurred under this subsection between the system and the plan as appropriate.
(c) Expenses.--
(1) The board shall, through the Governor, submit to the General Assembly annually a budget covering the administrative expenses of the system and a separate budget covering the administrative expenses of the plan. Budgets under this paragraph shall include those expenses necessary to establish the plan and trust.
(2) Such expenses of the system as approved by the General Assembly in an appropriation bill shall be paid from investment earnings of the fund.
(3) For fiscal years ending on or before June 30, 2020, and for any additional fiscal years as the General Assembly may provide, such expenses of the plan as approved by the General Assembly in an appropriation bill shall be paid from the General Fund. For fiscal years beginning on or after July 1, 2020, such expenses of the plan as approved by the General Assembly that are not paid under sections 5809 (relating to vesting), 5812(2) (relating to powers and duties of board), 5814(b) (relating to investments based on participant's investment allocation choices) and 5953(a)(2)(ii) (relating to taxation, attachment and assignment of funds) shall be paid as otherwise provided in this part except as the General Assembly otherwise provides by appropriations from the General Fund.
(4) 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 access 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 access under the act of February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law, if, in the reasonable judgment of the board, the access 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 or trust 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 trust or would cause a breach of the standard of care or fiduciary duty set forth in this part.
(3) The following apply:
(i) The sensitive investment or financial information excluded from access under paragraph (2)(i), to the extent not otherwise excluded from access, shall constitute a public record subject to public access 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 access under paragraph (2)(ii), to the extent not otherwise excluded from access, shall constitute a public record subject to public access under the Right-to-Know Law once:
(A) the access 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 access under paragraph (2)(iii), to the extent not otherwise excluded from access, shall constitute a public record subject to public access under the Right-to-Know Law once:
(A) the access no longer has a substantial detrimental impact on the value of an investment of the fund or trust 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 access under the Right-to-Know Law.
(5) Any record, material or data received, prepared, used or retained by the board or its employees, or agents relating to the contributions, account value or benefits payable to or on account of a participant shall not constitute a public record subject to public access under the Right-to-Know Law if, in the reasonable judgment of the board, the access would disclose any of the following:
(i) The existence, date, amount and any other information pertaining to the voluntary contributions, including rollover contributions or trustee-to-trustee transfers, of any participant.
(ii) The investment option selections of any participant.
(iii) The balance of a participant's individual investment account, including the amount distributed to the participant, investment gains or losses or rates of return.
(iv) The identity of a participant's designated beneficiary, successor payee or alternate payee.
(v) The form of distribution of a participant's account.
(6) 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, or agents relating to the contributions, account value or benefits payable to or on account of a participant as a public record subject to public access under the Right-to-Know Law.
(7) The following apply:
(i) Nothing in this part shall be construed to mean that the release or publicizing of a record, material or data which would not constitute a public record under this subsection shall be a violation of the board's fiduciary duties.
(ii) This subsection shall apply to a record, material or data under this subsection, notwithstanding any of the following:
(A) Whether the record, material or data was created, generated or stored before the effective date of this paragraph.
(B) Whether the record, material or data was previously released or made public.
(C) Whether a request for the record, material or data was made or is pending final response under the Right-to-Know Law.
(f) Functions.--The board shall perform such other functions as are required for the execution of the provisions of this part.
(g) Performance of departmental duties.--In the event the head of the department fails to comply with the procedures as mandated in section 5906 (relating to duties of heads of departments), the board shall perform such duties and bill the department for the cost of same.
(h) Regulations and procedures.--The board shall, with the advice of the Attorney General, legal counsel 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 pertaining to the system, 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 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 of the fund can be completed within six months of the close of each calendar year.
(j) Actuarial investigation and valuation.--The board shall have the actuary make an annual valuation of the various accounts of the fund within six months of the close of each calendar year. In the 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 of the system. 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 (m) for the fiscal year in which such investigation and evaluation were concluded.
(k) Certification of employer contributions to fund.--The board shall, each year in addition to the itemized budget required under section 5509 (relating to appropriations and assessments by the Commonwealth), certify, as a percentage of the members' payroll, the shared-risk contribution rate, the shared-gain adjustment to the regular member contribution rate, the employers' contributions as determined pursuant to section 5508 (relating to actuarial cost method) necessary for the funding of prospective annuities for active members and the annuities of annuitants and certify the rates and amounts of the employers' normal contributions as determined pursuant to section 5508(b), accrued liability contributions as determined pursuant to section 5508(c), supplemental annuities contribution rate as determined pursuant to section 5508(e), the experience adjustment factor as determined pursuant to section 5508(f), the collared contribution rate pursuant to section 5508(h) and the final contribution rate pursuant to section 5508(i), which shall be paid to the fund and credited to the appropriate accounts. The board shall certify the dollar amount of the annual contribution setoff for each eligible employer that has made advance payment of accrued liability contributions under section 5507(h) (relating to contributions to the system by the Commonwealth and other employers). The board may allocate the final contribution rate and certify various employer contribution rates and amounts based upon advance payment of accrued liability contributions and the different benefit eligibility, class of service multiplier, superannuation age, final average salary calculation, compensation limits and other benefit differences resulting from State service credited for individual members even though such allocated employer contribution rate on behalf of any given member may be more or less than 5% of the member's compensation for the period from July 1, 2010, to June 30, 2011, or may differ from the prior year's contribution for that member by more or less than the percentages used to calculate the collared contribution rate for that year and may be below any minimum contribution rate established for the collared contribution rate or final contribution rate. These certifications shall be regarded as final and not subject to modification by the Secretary of the Budget.
(l) Member contributions.--The board shall cause all pickup contributions made on behalf of a member to be credited to the account of the member and credit to his account any other payment made by such member, including, but not limited to, amounts collected by the Public School Employees' Retirement System for the reinstatement of previous State service or creditable nonstate service and amounts paid to return benefits paid after the date of return to State service or entering school service representing lump sum payments made pursuant to section 5705(a)(4)(iii) or (a.1) (relating to member's options) and member's annuity payments, but not including other benefits returned pursuant to section 5706(a.2) or (a.3) (relating to termination of annuities), and shall pay all such amounts into the fund.
(m) Annual financial statement.--The board shall prepare and have published, on or before July 1 of each year, financial statements as of the calendar year ending December 31 of the previous year showing the condition of the fund, the trust 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 statements to the Governor and shall file copies with the head of each department for the use of the State employees and the public.
(n) Independent audits.--
(1) The board shall provide for annual audits of the system and the plan by independent certified public accountants. The audits shall include the board's accrual and expenditure of directed commissions. The board may use the same independent certified public accountant for the audits of both the system and the plan.
(2) The following shall apply:
(i) Except as provided under subparagraph (ii), the board shall provide for an internal control audit of the system and the plan at least every five years.
(ii) If an annual financial report prepared under this section identifies a material weakness or significant deficiency or an internal control audit identifies a material weakness or significant deficiency, the board shall provide for an additional internal control audit of the system and the plan for the year subsequent to the report or audit in which the weakness or deficiency was identified.
(o) USERRA leave.--The board shall have the authority to take whatever action is necessary for the implementation of the requirements of this part pertaining to State employees on USERRA leave or who have been granted a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves of absence for certain government employees) or a military leave of absence under 51 Pa.C.S. § 7302 (relating to granting military leaves of absence) and to establish administrative, reporting and payment requirements and processes pertaining to the leaves applicable to heads of departments and members.
(p) Participant and employer contributions to trust.--The board shall, each year in addition to any fees and itemized budget required under section 5509, certify, as a percentage of each participant's compensation, the employer defined contributions, which shall be paid to the trust and credited to each participant's individual investment account. Certifications under this subsection shall be regarded as final and not subject to modification by the Secretary of the Budget. The board shall cause all mandatory pickup participant contributions made on behalf of a participant and all voluntary contributions made by a participant to be credited to the participant's individual investment account.
(q) Limitation on fees charged to the board.--In order to strive towards actuarial savings of $1,500,000,000 over 30 years from the effective date of this subsection while achieving the assumed annual rate of return at the least cost and maximum return on the system assets, the board shall:
(1) Consider the findings and recommendations of the Public Pension Management and Asset Investment Review Commission. The board shall, at its discretion, adopt guidelines and procedures to implement any recommendations of the Public Pension Management and Asset Investment Review Commission that the board believes will ensure the highest return on investment at the lowest responsible cost.
(2) Review, identify and implement any investment fee reduction and cost avoidance strategies identified to be prudent by the board, to reduce expenditures for investment.
(r) Additional report on investment performance.--In addition to any other report required to be made by the board under this part, the board shall prepare a separate report of the investment performance of the State Employees' Retirement System for the period of July 1 through June 30 of each year.