Regular Session 2019-2020 Senate Bill 0724 P.N. 1046

HOUSE AMENDED

PRIOR PRINTER'S NOS. 894, 999

PRINTER'S NO. 1046

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

724

Session of

2019

INTRODUCED BY CORMAN AND BROWNE, JUNE 6, 2019

AS REPORTED FROM COMMITTEE ON STATE GOVERNMENT, HOUSE OF

REPRESENTATIVES, AS AMENDED, JUNE 20, 2019

AN ACT

Amending Titles 24 (Education) and 71 (State Government) of the

Pennsylvania Consolidated Statutes as follows:

In Title 24:

for retirement for school employees, in preliminary

provisions, further providing for definitions; in

membership, contributions and benefits, further providing

for payments by employers and providing for

nonparticipating employer withdrawal liability and

further providing for actuarial cost method; in School

Employees' Defined Contribution Plan, further providing

for vesting; in administration and miscellaneous

provisions, further providing for Public School Employees

Retirement Board; in administration and miscellaneous

provisions, providing for the establishment of the Public

Markets Emerging Investment Manager Program; and, in

preliminary provisions, further providing for

definitions.

In Title 71:

for retirement for State employees and officers, IN

PRELIMINARY PROVISIONS RELATING TO RETIREMENT FOR STATE

EMPLOYEES AND OFFICERS, FURTHER PROVIDING FOR

DEFINITIONS; in membership, credited service, classes of

service and eligibility for benefits regarding

administration of the State Employees' Retirement Fund,

further providing for election to become a Class A-6

member or solely a participant in the plan and for

eligibility for death benefits; and, in benefits, further

providing for maximum single life annuity.

<--

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "eligible annuitants" and

"eligibility points" in section 8102 of Title 24 of the

Pennsylvania Consolidated Statutes are amended to read:

§ 8102. Definitions.

The following words and phrases when used in this part shall

have, unless the context clearly indicates otherwise, the

meanings given to them in this section:

* * *

"Eligible annuitants." All current and prospective

annuitants of the system with 24 1/2 or more eligibility points

and all current and prospective disability annuitants. Beginning

January 1, 1995, "eligible annuitants" shall include members

with 15 or more eligibility points who terminated or who

terminate school service on or after attaining superannuation

retirement age and who are annuitants with an effective date of

retirement after superannuation age. Beginning July 1, 2019,

"eligible annuitants" shall include:

(1) Class DC participants with 24 1/2 or more

eligibility points who have terminated school service, who

are Medicare eligible and who received all or a part of their

distributions; and

(2) Class DC participants with 15 or more eligibility

points who terminate school service on or after attaining age

67 and receive all or a part of their distributions.

"Eligibility points." Points which are accrued by an active

member, a participant, a multiple service member who is an

active member of the State Employees' Retirement System for

credited service or by a member or participant who has been

20190SB0724PN1046 - 2 -

reemployed from USERRA leave or dies while performing USERRA

leave and are used in the determination of eligibility for

benefits as provided in section 8306 (relating to eligibility

points). A participant shall earn one eligibility point for each

fiscal year in which the participant contributes to the trust.

Eligibility points earned as Class T-G or Class T-H participants

shall apply only for purposes of determining vesting of employer

defined contributions under section 8409(b) (relating to

vesting).

* * *

Section 2. Section 8327(b) and (d) of Title 24 are amended

to read:

§ 8327. Payments by employers.

* * *

(b) Deduction from appropriations.--

(1) To facilitate the payment of amounts due from any

employer to the fund and the trust through the State

Treasurer and to permit the exchange of credits between the

State Treasurer and any employer, the Secretary of Education

and the State Treasurer shall cause to be deducted and paid

into the fund and the trust from the amount of any moneys due

to any employer on account of any appropriation for schools

or other purposes amounts equal to the employer

contributions, employer defined contributions [and pickup

contributions which], pickup contributions, mandatory

participant contributions, voluntary contributions, amounts

owed pursuant to section 8327.1 (relating to nonparticipating

employer withdrawal liability) and other amounts related to

plan administration that an employer is required to pay to

the fund and the trust, as certified by the board, and as

20190SB0724PN1046 - 3 -

remains unpaid on the date such appropriations would

otherwise be paid to the employer. Such amount shall be

credited to the appropriate accounts in the fund and the

trust.

(2) To facilitate the payments of amounts due from any

charter school, as defined in Article XVII-A of the act of

March 10, 1949 (P.L.30, No.14), known as the Public School

Code of 1949, to the fund and the trust through the State

Treasurer and to permit the exchange of credits between the

State Treasurer and any employer, the Secretary of Education

and the State Treasurer shall cause to be deducted and paid

into the fund and the trust from any funds appropriated to

the Department of Education for public school employees'

retirement contributions and basic education of the

chartering school district of a charter school [and public

school employees' retirement contributions amounts] equal to

the employer contributions, employer defined contributions

[and pickup contributions which], pickup contributions,

mandatory participant contributions, voluntary contributions,

amounts pursuant to section 8327.1 and other amounts related

to plan administration that a charter school is required to

pay to the fund and the trust, as certified by the board, and

as remains unpaid on the date such appropriations would

otherwise be paid to the chartering school district or

charter school. Such amounts shall be credited to the

appropriate accounts in the fund and the trust. Any reduction

in payments to a chartering school district made pursuant to

this section shall be deducted from the amount due to the

charter school district pursuant to the Public School Code of

1949.

20190SB0724PN1046 - 4 -

* * *

(d) Payments by employers after June 30, 2019.--After June

30, 2019, each employer, including the Commonwealth as employer

of employees of the Department of Education, State-owned

colleges and universities, Thaddeus Stevens College of

Technology, Western Pennsylvania School for the Deaf, Scotland

School for Veterans' Children and The Pennsylvania State

University, shall make payments to the fund and the trust within

30 days after the end of each quarter, or as determined by the

board , in an amount computed in the following manner:

(1) For an employer that is a school entity, the amount

shall be the sum of the percentages as determined under

section 8328 applied to the total compensation during the pay

periods in the preceding quarter of all employees who were

active members of the system during such period, including

members on activated military service leave and USERRA leave.

In the event a member on activated military service leave or

USERRA leave does not return to service for the necessary

time or receives an undesirable, bad conduct or dishonorable

discharge or does not elect to receive credit for activated

military service under section 8302(b.1)(3), the contribution

made by the employer on behalf of such member shall be

returned with valuation interest upon application by the

employer.

(2) For an employer that is not a school entity, the

amount computed under subsection (a).

(3) For any employer, whether or not a school entity, in

computing the amount of payment due each quarter, there shall

be excluded from the total compensation referred to in this

subsection and subsection (a) any amount of compensation of a

20190SB0724PN1046 - 5 -

noneligible member or participant on the basis of which

member or participant contributions have not been made by

reason of the limitation under IRC § 401(a)(17). Any amount

of contribution to the fund paid by the employer on behalf of

a noneligible member or participant on the basis of

compensation that was subject to exclusion from total

compensation in accordance with the provisions of this

paragraph shall, upon the board's determination or upon

application by the employer, be returned to the employer with

valuation interest.

* * *

Section 3. Title 24 is amended by adding a section to read:

§ 8327.1. Nonparticipating employer withdrawal liability.

(a) General rule.--A nonparticipating employer is liable to

the system for withdrawal liability in the amount determined

under subsection (c). A nonparticipating employer is an employer

that is determined by the board to have ceased:

(1) covered operations under the system; or

(2) to have an obligation to contribute under the system

for all or any of the employer's school employees but

continues covered operations.

(b) Determination.--An employer shall, within the time

prescribed by the board in a written request, furnish such

information as the board deems necessary to administer this

section and to determine whether an employer is a

nonparticipating employer. If the board determines that an

employer is a nonparticipating employer, the board shall:

(1) determine the nonparticipation date;

(2) determine the amount of the employer's withdrawal

liability;

20190SB0724PN1046 - 6 -

(3) notify the employer of the amount of the withdrawal

liability; and

(4) collect the amount of the withdrawal liability.

employer's withdrawal liability shall be determined as of the

employer's nonparticipation date and shall be calculated as

follows:

(1) For a nonparticipating employer under subsection (a)

(1), the excess of the actuarial present value of the vested

accrued benefits of the system's members over the market

value of assets, both as of the date of the last actuarial

valuation adopted by the board prior to the employer's

nonparticipation date, shall be multiplied by withdrawal

fraction, calculated as follows:

(i) The numerator of the withdrawal fraction shall

be the total present value of accrued benefits of all

active members of the employer.

(ii) The denominator of the withdrawal fraction

shall be the total present value of accrued benefits of

all active members of the system.

(2) For a nonparticipating employer under subsection (a)

(2), the excess of the actuarial accrued liability of the

system's members over the market value of assets, both as of

the date of the last actuarial valuation adopted by the board

prior to the employer's nonparticipation date, shall be

multiplied by a withdrawal fraction, calculated as follows:

(i) The numerator of the withdrawal fraction shall

be the total present value of accrued benefits of all

active members of the employer.

(ii) The denominator of the withdrawal fraction

20190SB0724PN1046 - 7 -

shall be the total present value of accrued benefits of

all active members of the system.

(d) Value of benefits.--The actuarial present value of the

vested accrued benefits and total present value of accrued

benefits shall be determined based on the unit credit actuarial

cost method, applying the system's provisions and actuarial

assumptions used in the last actuarial valuation adopted by the

board prior to the nonparticipation date. The actuarial accrued

liability shall be determined based on the same actuarial cost

method used to determine the actuarially required contribution

rate in section 8328(i) (relating to actuarial cost method),

applying the system's provisions and actuarial assumptions used

in the last actuarial valuation adopted by the board prior to

the nonparticipating date.

(e) Interest rate assumption.--For purposes of calculating

the withdrawal liability in subsection (c)(1):

(1) For a nonparticipating employer under subsection (a)

(1), the interest rate assumption shall be reduced by an

amount determined by the actuary to reflect the increased

investment, mortality and other actuarial risk associated

with the accrued benefit of the members of the

nonparticipating employer on a basis approved by the board.

(2) For a nonparticipating employer under subsection (a)

(2), the interest rate assumption shall be the same annual

interest rate used to determine the annual normal

contribution rate under section 8328(b) as of the date of the

last actuarial valuation adopted by the board prior to the

employer's nonparticipation date.

(f) Payment.--A nonparticipating employer shall pay the

withdrawal liability as follows:

20190SB0724PN1046 - 8 -

(1) The withdrawal liability for a nonparticipating

employer under subsection (a)(1) shall be paid in a lump sum

no later than the time prescribed by the board in the notice

of the amount of the withdrawal liability.

(2) The withdrawal liability for a nonparticipating

employer under subsection (a)(2) shall be paid based on the

schedule and method of payment determined by the board. In

addition, the obligations of such nonparticipating employer

under this section shall not impair the obligation of the

nonparticipating employer to continue to pay the employer

contribution rate under section 8328 as adjusted for the

withdrawal liability. For purposes of this section, the board

may determine whether a member should be treated as being

employed by a single employer, regardless of whether the

employer is a nonparticipating employer. In making such

determination, the board may rely on the provisions of the

IRC § 414(b), (c) and (m) and corresponding regulations or

may establish other relevant factors the board deems

necessary.

(3) The board is authorized to pursue all causes of

action and collection remedies as permitted under applicable

law to collect the withdrawal liability and to seek relief

under section 8327(b) (relating to payments by employers),

each without regard to whether the nonparticipating employer

has ceased all operations.

Section 4. Sections 8328(a), 8409(b)(3) and 8501(a) of Title

24 are amended to read:

§ 8328. Actuarial cost method.

(a) Employer contribution rate.--The amount of the total

employer contributions shall be computed by the actuary as a

20190SB0724PN1046 - 9 -

percentage of the total compensation of all active members and

active participants, as applicable, during the period for which

the amount is determined and shall be so certified by the board.

The total employer contribution rate shall be the sum of

paragraphs (1), (2) and (3) divided by the total compensation of

all active members and active participants:

(1) the final contribution [rate as] amount computed by

multiplying the final contribution rate calculated in

subsection (h) [plus] by the total compensation of all active

members;

(2) the premium assistance contribution [rate as

computed in subsection (f). The actuarially required

contribution rate shall consist of the normal contribution

rate as defined in subsection (b), the accrued liability

contribution rate as defined in subsection (c) and the

supplemental annuity contribution rate as defined in

subsection (d). Beginning July 1, 2004, the actuarially

required contribution rate shall be modified by the

experience adjustment factors as calculated in subsection

(e).] amount computed by multiplying the premium assistance

contribution rate calculated in subsection (f) by the total

compensation of all active members and active participants;

and

(3) the employer defined contributions as defined under

section 8102 (relating to definitions).

The actuarially required contribution shall be no less than the

normal cost plus the cost to fully amortize the unfunded

actuarial accrued liability calculated using actuarial methods

and assumptions that are consistent with generally accepted

actuarial standards and generally accepted accounting

20190SB0724PN1046 - 10 -

principles, including professional actuarial standards of

practice.

* * *

§ 8409. Vesting.

* * *

(b) Employer defined contributions.--

* * *

(3) Nonvested employer defined contributions, including

interest and investment gains and losses that are forfeited

by a participant, shall be [applied to the participant's most

recent employer's obligations assessed in future years]

retained by the board and used for the payment of expenses of

the plan.

* * *

§ 8501. Public School Employees' Retirement Board.

(a) Status and membership.--The board shall be an

independent administrative board and shall consist of 15

members: the Secretary of Education, ex officio; the State

Treasurer, ex officio; the Secretary of Banking and Securities,

ex officio; two Senators; two members of the House of

Representatives; the executive secretary of the Pennsylvania

School Boards Association, ex officio; one to be appointed by

the Governor; three to be elected by the active professional

members of the system and active professional participants in

the plan from among their number; one to be elected by

annuitants [or participants in the plan who have terminated

school service and are receiving or are eligible to receive

distributions] and Class DC participants receiving

distributions, from among their number; one to be elected by the

active nonprofessional members of the system [or] and active

20190SB0724PN1046 - 11 -

nonprofessional participants in the plan from among their

number; and one to be elected by members of Pennsylvania public

school boards from among their number. The appointments made by

the Governor shall be confirmed by the Senate and each election

shall be conducted in a manner approved by the board. The terms

of the appointed and nonlegislative elected members shall be

three years. The members from the Senate shall be appointed by

the President pro tempore of the Senate and shall consist of one

member from the majority and one member from the minority. The

members from the House of Representatives shall be appointed by

the Speaker of the House of Representatives and shall consist of

one member from the majority and one member from the minority.

The legislative members shall serve on the board for the

duration of their legislative terms and shall continue to serve

until 30 days after the convening of the next regular session of

the General Assembly after the expiration of their respective

legislative terms or until a successor is appointed for the new

term, whichever occurs first. The chairman of the board shall be

elected by the board members. Each ex officio member of the

board and each legislative member of the board may appoint a

duly authorized designee to act in his stead. In the event that

a board member, who is designated as an active participant or as

the participant in the plan who is receiving or is eligible to

receive distributions, receives a total distribution of the

board member's interest in the plan, that board member may

continue to serve on the board for the remainder of his term.

* * *

Section 4.1. Chapter 85 of Title 24 is amended by adding a

subchapter to read:

SUBCHAPTER D

20190SB0724PN1046 - 12 -

PUBLIC MARKETS EMERGING INVESTMENT MANAGER PROGRAM

Sec.

8541. Definitions.

8542. Establishment.

8543. Funding.

8544. Participation criteria.

8545. Preference.

8546. Requirements and limitations of firms.

8547. Administration.

§ 8541. Definitions.

The following words and phrases when used in this subchapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Program." The Public Markets Emerging Investment Manager

Program established under section 8542 (relating to

establishment).

§ 8542. Establishment.

(a) Fiduciary duty of board.--Consistent with the board's

fiduciary responsibilities, the board shall establish a Public

Markets Emerging Investment Manager Program.

(b) Location of managers.--The board shall locate fund

managers with a history of generating positive risk adjusted

returns.

shall provide a source of potential managers for the main fund.

(d) Assistance with marketing.--In order to grow public

market emerging investments firms, the board shall assist in

using the system's name in the manager's marketing efforts.

§ 8543. Funding.

The board shall allocate an amount of at least $250,000,000

20190SB0724PN1046 - 13 -

and not more than $1,000,000,000 to the program. Funding for

each investment manager shall come from assets allocated within

the main fund, similar to or most closely related to the

investment manager's mandate. The maximum number of investment

managers in the program at any one time may not exceed 10,

except that the program may be implemented and run with less

than 10 investment managers.

§ 8544. Participation criteria.

In order to be considered to participate in the program, an

investment manager must meet the following criteria:

(1) Be registered under the Investment Advisors Act of

1940 (54 Stat. 847, 15 U.S.C. § 80b-1 et seq.) or be exempt

from the Investment Advisors Act of 1940.

(2) Have the ability to demonstrate real and contented

transparency of positions and transactions.

(3) Have the ability to provide and show quarterly

liquidity.

(4) A firm, portfolio manager or any combination of firm

and portfolio manager must have a five year historical

performance record verified by at least one consultant or

accounting firm in accordance with the Global Investment

Performance Standard in effect on the effective date of this

section.

§ 8545. Preference.

Preference shall be given to investment managers deemed to

meet the objectives, goals and required criteria contained under

this subsection, plus demonstration of at least one of the

following characteristics:

(1) Be an investment management firm headquartered or

incorporated within this Commonwealth.

20190SB0724PN1046 - 14 -

(2) Be a:

(i) veteran-owned investment management firm, with

proper DD 214 verification and honorable discharge; or

(ii) service-disabled veteran-owned investment

management firm with a letter from the United States

Department of Veteran Affairs.

(3) Be a minority-owned or women-owned investment

management firm approved by the Office of Minority and Women

Business Enterprise in accordance with the criteria

established by Executive Order No. 1987-18 and 4 Pa. Code §

68.204 (relating to eligibility standards).

§ 8546. Requirements and limitations of firms.

(a) Equity, commodity or absolute return exposure firms.--

Firms considered to provide equity, commodity or absolute return

exposure may not have more than $1,500,000,000 of total assets

under management when hired. If the total assets under

management exceed $3,000,000,000, the investment managers shall

be terminated in a reasonable period of time.

(b) Fixed-income exposure firms.--Firms considered to

provide fixed-income exposure shall have no more than

$3,000,000,000 of total assets under management when hired. If

the total assets under management exceeds $6,000,000,000,

existing investment managers shall be terminated within a

reasonable period of time.

fee accounts, a manager must exceed both a hurdle rate and a

high water mark before the manager can earn the performance-

based fee.

(d) Transition to main fund.--Investment managers hired into

the program may continue in the program for a period of at least

20190SB0724PN1046 - 15 -

three years, but not more than five years. If the investment

manager generates strong risk adjusted returns, the Investment

Office shall use best efforts to make a place in the main fund

for the investment manager. The Investment Office shall consider

things such as the investment manager's assets under management

and projected ability to continue generating strong risk

adjusted returns in the future.

§ 8547. Administration.

(a) Authority to hire.--The board and the Investment Office

may hire and fund any investment manager meeting the objectives,

goals and criteria under this section.

(b) Prohibition of investment.--An investment may not be

made into an investment vehicle that primarily includes private

equity, private debt, venture capital or private real estate

instruments. An investment in an absolute return strategy shall

be subject to manager selection requirements within the absolute

return policy.

Office shall appoint an Emerging Manager Portfolio Manager who

shall be responsible for administering the program. The Emerging

Manager Portfolio Manager shall meet with managers that appear

to meet the objectives, goals and criteria of this section. The

Emerging Manager Portfolio Manager shall recommend qualified

investment managers for inclusion into the main fund and shall

further advise the Investment Office if termination of an

investment manager is recommended. An investment manager may be

terminated by the Emerging Manager Portfolio Manager, with

approval from the Investment Office, if the investment manager

is underperforming, not generating strong risk adjusted returns,

not meeting the criteria to move into the main fund, changes

20190SB0724PN1046 - 16 -

investment processes, has personnel turnover or any other reason

which is deemed by the Investment Office to be in the best

interests of the system.

(d) Internal Review Committee.--An investment manager

considered for hiring into the program shall meet with the

Internal Review Committee. The Internal Review Committee shall

review each manager considered for inclusion in the program and

provide feedback to the Emerging Manager Portfolio Manager.

Investment Office approval shall be required to hire a manager

into the program, including the Emerging Manager Portfolio

Manager, the Emerging Manager Portfolio Manager's supervisor and

the Chief Investment Officer.

(e) Approval for exceptional investment manager.--If the

Emerging Manager Portfolio Manager, the Chief Investment Officer

or other qualified staff have located an exceptional investment

manager that does not meet the required criteria established

under this section, the Investment Office shall obtain board

approval for hiring. The Investment Office shall present to the

board the specific reasons for hiring the investment manager.

(f) Contract requirements.--Each investment manager shall

manage its portfolio within the constraints of the contract

entered into between the investment manager and the board, the

Investment Policy Statement, Objectives and Guidelines, any

applicable addendum and any applicable amendments to the

contract and Investment Policy Statement, Objectives and

Guidelines. The Investment Office and board shall have authority

to negotiate the investment contract with the investment

manager, including the investment guidelines.

(g) Insurance.--Each of the standard insurance provisions in

the Investment Policy Statement, Objectives and Guidelines,

20190SB0724PN1046 - 17 -

except for the maximum deductibles, shall apply to the

investment manager until the investment manager is either

managing over $100,000,000 for the program or is moved out of

the program into the main fund. The maximum deductible for both

the error and omissions insurance and the fidelity bond shall be

the greater of 10% of audited retained earnings or the

following:

Asset Size Maximum Deductible

$0 - $50,000,000 $50,000

$50,000,000 - $75,000,000 $100,000

$75,000,000 - $100,000,000 $200,000

(h) Funding.--Board approval shall be required for total

capital allocations exceeding $100,000,000. Investment strategy

limitations shall be consistent with Investment Policy Statement

constraints. The Emerging Manager Portfolio Manager , the

Emerging Manager Portfolio Manager' s supervisor and the Chief

Investment Officer shall determine the amount of the initial

allocation and each subsequent allocation to each investment

manager.

Section 5. The definition of "eligible person" in section

8702(a) of Title 24 is amended to read:

§ 8702. Definitions.

(a) General rule.--Subject to additional definitions

contained in subsequent provisions of this part which are

applicable to specific provisions of this part, the following

words and phrases when used in this part shall have the meanings

given to them in this section unless the context clearly

indicates otherwise:

"Eligible person." An individual who is:

(1) an annuitant or survivor annuitant or the spouse or

20190SB0724PN1046 - 18 -

dependent of an annuitant or survivor annuitant; or

(2) a Class DC participant [receiving distributions] who

has terminated school service, has at least 10 eligibility

points, who is Medicare eligible and who has received all or

part of their distributions, or a successor payee[,] or the

spouse or dependent of [a participant receiving distributions

or a] a Class DC participant described under this paragraph

or successor payee.

* * *

SECTION 5.1. THE DEFINITION OF "ENFORCEMENT OFFICER" IN

SECTION 5102 OF TITLE 71 IS AMENDED BY ADDING A PARAGRAPH TO

READ:

§ 5102. DEFINITIONS.

THE FOLLOWING WORDS AND PHRASES AS USED IN THIS PART, UNLESS

A DIFFERENT MEANING IS PLAINLY REQUIRED BY THE CONTEXT, SHALL

HAVE THE FOLLOWING MEANINGS:

* * *

"ENFORCEMENT OFFICER."

* * *

(5) INDIVIDUALS WHO ARE EMPLOYED BY THE OFFICE OF STATE

INSPECTOR GENERAL ON OR AFTER THE EFFECTIVE DATE OF THIS

PARAGRAPH AS INVESTIGATORS, AGENTS AND THEIR IMMEDIATE

SUPERVISORS, WHO ARE CHARGED WITH THE ENFORCEMENT OF LAWS AND

WHO HAVE, WITHIN THE SCOPE OF THEIR EMPLOYMENT, THE POLICE

POWER TO ENFORCE THE LAWS UNDER THE AUTHORITY OF ARTICLE V-A

OF THE ACT OF APRIL 9, 1929 (P.L.177, NO.175), KNOWN AS THE

ADMINISTRATIVE CODE OF 1929.

* * *

Section 6. Sections 5306.4(c) and (d), 5310 and 5702(a)(1)

of Title 71 are amended to read:

20190SB0724PN1046 - 19 -

<--

§ 5306.4. Election to become a Class A-6 member or solely a

participant in the plan.

* * *

election to become a Class A-6 member shall be irrevocable and

shall become effective on the effective date of membership in

the system and shall remain in effect for all future creditable

State service, other than service performed as a Class A-5

exempt employee. Payment and adjustment of regular member

contributions and mandatory pickup participant contributions for

Class A-5 State service and for Class A-6 State service

performed prior to the election of Class A-6 membership shall be

made in a form, manner and time determined by the board. Upon

termination and subsequent reemployment, a member who elected

Class A-6 membership shall be credited as a Class A-6 member for

creditable State service performed after reemployment, except as

a Class A-5 exempt employee, regardless of termination of

employment, termination of membership by withdrawal of

accumulated deductions or status as an annuitant, vestee or

inactive member after the termination of service.

(d) Effect of election to be solely a participant in the

plan.--An election to become solely a participant in the plan

shall be irrevocable and shall become effective on the date that

membership in the system would have been effective had the

election not been made and shall remain in effect for all future

State service, other than service performed as a Class A-5

exempt employee. [Payment] Adjustment of regular member

contributions for Class A-5 State service and payment of

mandatory participant pickup contributions for service solely as

a participant in the plan performed prior to the election shall

20190SB0724PN1046 - 20 -

be made in a form, manner and time determined by the board. Upon

termination and subsequent reemployment, a State employee who

elected to be solely a participant in the plan shall resume

active participation for State service performed after

reemployment, except as a Class A-5 exempt employee, regardless

of termination of employment, termination of participation by a

partial or total distribution of vested total defined

contributions or status as an annuitant, vestee or inactive

member of the system as a Class A-5 exempt employee after the

termination of service.

* * *

§ 5310. Eligibility for death benefits.

In the event of the death of a member who is eligible for an

annuity in accordance with section 5308(a) or (b) (relating to

eligibility for annuities), his beneficiary shall be entitled to

a death benefit. [For purposes of this section, a member with

ten or more eligibility points shall be considered eligible for

an annuity based on Class A-5 service or Class A-6 service even

if under superannuation age.]

§ 5702. Maximum single life annuity.

(a) General rule.--Any full coverage member who is eligible

to receive an annuity pursuant to the provisions of section

5308(a) or (b) (relating to eligibility for annuities) who

terminates State service, or if a multiple service member who is

a school employee who is an active member of the Public School

Employees' Retirement System who terminates school service,

before attaining age 70 shall be entitled to receive a maximum

single life annuity attributable to his credited service and

equal to the sum of the following single life annuities

beginning at the effective date of retirement:

20190SB0724PN1046 - 21 -

(1) A single life annuity that is the sum of the

standard single life annuities determined separately for each

class of service multiplied by the appropriate class of

service multiplier applicable to each standard single life

annuity. In case the member on the effective date of

retirement is under superannuation age for any service, a

reduction factor calculated to provide benefits actuarially

equivalent to an annuity starting at superannuation age and

subject to the provisions of subsection [(e)] (f) shall be

applied to the product determined for that service: Provided,

however, That any standard single life annuity resulting from

Class A-5 service shall be reduced by a percentage determined

by multiplying the number of months, including a fraction of

a month as a full month, by which the effective date of

retirement precedes superannuation age by 0.25% if the

effective date of retirement is on or after the date the

member has attained age 57 and the member has 25 or more

eligibility points, and that any standard single life annuity

resulting from Class A-6 service shall be reduced by a

percentage determined by multiplying the number of months,

including a fraction of a month as a full month, by which the

effective date of retirement precedes superannuation age by

0.25% if the effective date of retirement is on or after the

date the member has attained age 62 and the member has 25 or

more eligibility points. The class of service multiplier for

any period of concurrent service shall be multiplied by the

proportion of total State and school compensation during such

period attributable to State service as a member of the

system. In the event a member has two multipliers for one

class of service, separate standard single life annuities

20190SB0724PN1046 - 22 -

shall be calculated for the portion of service in the class

applicable to each class of service multiplier.

* * *

SECTION 6.1. NOTWITHSTANDING ANY PROVISION OF 71 PA.C.S. §§

5507 AND 5508 TO THE CONTRARY, FOR PURPOSES OF 71 PA.C.S. §

5508(C)(4), ANY CHANGE IN THE ACCRUED LIABILITY THAT RESULTS

FROM THE ADDITION OF PARAGRAPH (5) OF THE DEFINITION OF

"ENFORCEMENT OFFICER" IN 71 PA.C.S. § 5102 SHALL BE FUNDED IN

EQUAL DOLLAR INSTALLMENTS AS A PERCENTAGE OF COMPENSATION OF ALL

AFFECTED ACTIVE MEMBERS AND AFFECTED ACTIVE PARTICIPANTS

EMPLOYED BY THE OFFICE OF STATE INSPECTOR GENERAL OVER A PERIOD

OF 10 YEARS FROM THE FIRST DAY OF JULY FOLLOWING THE VALUATION

DATE COINCIDENT WITH OR NEXT FOLLOWING THE EFFECTIVE DATE OF

THIS SECTION.

SECTION 6.2. THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF

ANY PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR

CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT

OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN

EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.

SECTION 6.3. THE FOLLOWING SHALL APPLY:

(1) EXCEPT AS PROVIDED UNDER PARAGRAPH (2), THE ADDITION

OF PARAGRAPH (5) OF THE DEFINITION OF "ENFORCEMENT OFFICER"

IN 71 PA.C.S. § 5102 SHALL APPLY RETROACTIVELY TO SEPTEMBER

18, 2017.

(2) THE ADDITION OF PARAGRAPH (5) OF THE DEFINITION OF

"ENFORCEMENT OFFICER" IN 71 PA.C.S. § 5102 SHALL NOT APPLY

RETROACTIVELY TO SEPTEMBER 18, 2017, FOR AN EMPLOYEE HIRED

AFTER DECEMBER 31, 2018.

(3) THE ADDITION OF PARAGRAPH (5) OF THE DEFINITION OF

"ENFORCEMENT OFFICER" IN 71 PA.C.S. § 5102 SHALL NOT APPLY TO

20190SB0724PN1046 - 23 -

<--

A CURRENT OR FORMER EMPLOYEE OF THE OFFICE OF INSPECTOR

GENERAL WHO DIES PRIOR TO 60 DAYS AFTER THE EFFECTIVE DATE OF

THIS SECTION.

(4) EXCEPT AS PROVIDED UNDER PARAGRAPH (5), ONLY SERVICE

PERFORMED BY EMPLOYEES UNDER PARAGRAPH (5) OF THE DEFINITION

OF "ENFORCEMENT OFFICER" IN 71 PA.C.S. § 5102 AFTER SEPTEMBER

17, 2017, MAY BE SERVICE AS AN ENFORCEMENT OFFICER.

(5) ONLY SERVICE PERFORMED ON OR AFTER THE EFFECTIVE

DATE OF THIS SECTION BY EMPLOYEES UNDER PARAGRAPH (5) OF THE

DEFINITION OF "ENFORCEMENT OFFICER" IN 71 PA.C.S. § 5102 WHO

WERE HIRED AFTER DECEMBER 31, 2018, MAY BE SERVICE AS AN

ENFORCEMENT OFFICER.

Section 7. This act shall take effect in 60 days.

20190SB0724PN1046 - 24 -