2010 Pennsylvania Code
Title 24 - EDUCATION
Chapter 85 - Administration and Miscellaneous Provisions
8502 - Administrative duties of board.

     § 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) and the experience
     adjustment factor as determined pursuant to section 8328(e) and
     premium assistance contributions as determined pursuant to
     section 8328(f), 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 Budget
     Secretary.
        (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) (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.)

        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.  Act 9 amended subsec. (m). 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), was repealed by the act of Feb. 14, 2008 (P.L.6,
     No.3), known as the Right-to-Know Law.