PRINTER'S NO. 1385
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1261
Session of
2023
INTRODUCED BY B. MILLER, BONNER, COOK, SCHLEGEL CULVER, D'ORSIE,
DIAMOND, ECKER, EMRICK, FEE, FREEMAN, FRITZ, GAYDOS, GILLEN,
GLEIM, GREINER, HAMM, IRVIN, JAMES, M. JONES, T. JONES,
JOZWIAK, KAUFFMAN, KEEFER, KLUNK, LEADBETER, R. MACKENZIE,
MENTZER, MOUL, OWLETT, PICKETT, RADER, RAPP, ROAE, ROWE,
SCHEMEL, SCHLEGEL, SCHMITT, SCIALABBA, SMITH, SOLOMON,
STAATS, STAMBAUGH, TWARDZIK, WARNER AND ZIMMERMAN,
MAY 31, 2023
REFERRED TO COMMITTEE ON STATE GOVERNMENT, MAY 31, 2023
AN ACT
Amending Titles 24 (Education) and 71 (State Government) of the
Pennsylvania Consolidated Statutes, in administration and
miscellaneous provisions, further providing for
administrative duties of the Public School Employees'
Retirement Board; and, in administration, funds, accounts and
general provisions, further providing for administrative
duties of the State Employees' Retirement Board.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 8502(e)(1), (2), (3), (4) and (5) of
Title 24 of the Pennsylvania Consolidated Statutes are amended
and the section is amended by adding a subsection to read:
§ 8502. Administrative duties of board.
* * *
(e) Records.--
(1) The following shall apply:
(i) The board shall [keep a] livestream all public
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board and committee meetings and post an unedited video
and written record of all [its] such public proceedings
which shall be accessible [to the public] on its publicly
accessible Internet website, including nonconfidential
materials presented to the board, except as otherwise
provided in this part or by other law. Video and records
shall remain online for a period of at least three years
and shall be maintained for a period of at least seven
years and thereafter shall be maintained in accordance
with applicable records retention schedules.
(ii) The Office of Administration shall promptly
revise its management directives relating to record
management policies to conform with the requirements of
this paragraph and shall provide public notice of the
requirements of this subsection by publishing the
requirements on its publicly accessible Internet website
and shall transmit the requirements to the Legislative
Reference Bureau for publication in the Pennsylvania
Bulletin.
(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, to the
extent not otherwise excluded from access, 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] unless, in the reasonable judgment of
the board, [the] it is found that 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
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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
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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.] (Reserved).
(5) Notwithstanding the provisions of this subsection,
the following information regarding an alternative investment
vehicle shall be subject to public access 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 or plan to the alternative investment vehicle.
(iv) The dollar amount of cash contributions made by
the system or plan to the alternative investment vehicle
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since inception.
(v) The dollar amount of cash distributions received
by the system or plan from the alternative investment
vehicle since inception.
(vi) The gross and net internal rate of return of
the alternative investment vehicle since inception,
provided that the system or plan shall not be required to
disclose the gross or 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 or plan's investment
in the alternative investment vehicle, provided that the
system or plan 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] amounts of total
management fees [and], costs and expenses paid to [the]
or retained by an alternative investment vehicle [by the
system or plan] on an annual fiscal year-end basis[.],
itemized by gross management, carried interest and other
expenses.
* * *
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(s) Additional reporting requirements.--
(1) In addition to the requirements under this section,
the board shall prepare and have published on its publicly
accessible Internet website and electronically submit copies
to all members of the General Assembly of the following
information within six months after the end of the system's
fiscal year :
(i) The net of fees performance of all investments
over the most recent 1-, 3-, 5-, 10-, 15- and 20-year
periods.
(ii) The performance of all investments by asset
class and manager over each time horizon, both gross and
net of fees compared to benchmarks being reported for all
investments made commencing prospectively from the
effective date of this subsection and with the gross
returns for all investments made retroactively for the
five-year period from the effective date of this
subsection using best efforts, unless the records are no
longer available.
(iii) An itemized listing of the fees and expenses
paid to or retained by all investment managers for the
applicable reporting years, separated by base management
fee , profit share, performance fees, carried interest and
incentive fees, and informed by the best practices as
recommended by recognized industry standards, including,
but not limited to, the Institutional Limited Partners
Association Fee Transparency Initiative. The board shall
disclose in the report which industry standards were used
and whether any changes to industry standards have been
made.
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(iv) All travel or other expenses incurred by staff
of the system or plan and paid for by an external
investment manager, fund or consultant.
(2) As used in this subsection, the following words and
phrases shall have the meanings given to them in this
paragraph unless the context clearly indicates otherwise:
"Carried interest." Any share of profits from an
alternative investment vehicle that is distributed to a fund
manager, general partner or related party, including
allocations of alternative investment vehicle profits
received by a fund manager in consideration of having waived
fees that the fund manager might otherwise have been entitled
to receive.
"Institutional Limited Partners Association Fee
Transparency Initiative." An initiative created by the
Institutional Limited Partners Association to establish
guidelines for reporting fees, expenses and compliance
disclosures regarding investments.
Section 2. Section 5902(e)(1), (2), (3) and (4) of Title 71
are amended, subsection (e) is amended by adding a paragraph and
the section is amended by adding a subsection to read:
§ 5902. Administrative duties of the board.
* * *
(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.]
The following shall apply:
(i) The board shall livestream all public board and
committee meetings and post an unedited video and written
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record of all such public proceedings, which shall be
accessible on its publicly accessible Internet website,
including nonconfidential materials presented to the
board, except as otherwise provided in this part or by
other law. Video and records shall remain online for a
period of at least three years and shall be maintained
for a period of at least seven years and thereafter shall
be maintained in accordance with applicable records
retention schedules.
(ii) The Office of Administration shall promptly
revise its management directives relating to record
management policies to conform with the requirements of
this paragraph and shall provide public notice of the
requirements of this subsection by publishing the
requirements on its publicly accessible Internet website
and shall transmit the requirements to the Legislative
Reference Bureau for publication in the Pennsylvania
Bulletin.
(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, to the
extent not otherwise excluded from access, 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] unless, in the reasonable judgment of
the board, [the] it is found that 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
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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)
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(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.] (Reserved).
(4.1) Notwithstanding the provisions of this subsection,
the following information regarding an alternative investment
vehicle shall be subject to public access 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 or plan to the alternative investment vehicle.
(iv) The dollar amount of cash contributions made by
the system or plan to the alternative investment vehicle
since inception.
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(v) The dollar amount of cash distributions received
by the system or plan from the alternative investment
vehicle since inception.
(vi) The gross and net internal rate of return of
the alternative investment vehicle since inception,
provided that the system or plan shall not be required to
disclose the gross or 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 or plan's investment
in the alternative investment vehicle, provided that the
system or plan 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 amounts of total management fees,
costs and expenses paid to or retained by an alternative
investment vehicle on an annual fiscal year-end basis,
itemized by gross management, carried interest and other
expenses.
* * *
(s) Additional reporting requirements.--
(1) In addition to the requirements under this section,
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the board shall prepare and have published on its publicly
accessible Internet website and electronically submit copies
to all members of the General Assembly of the following
information within six months after the end of the system's
calendar year :
(i) The net of fees performance of all investments
over the most recent 1-, 3-, 5-, 10-, 15- and 20-year
periods.
(ii) The performance of all investments by asset
class and manager over each time horizon, both gross and
net of fees compared to benchmarks being reported for all
investments made commencing prospectively from the
effective date of this subsection and with the gross
returns for all investments made retroactively for the
five-year period from the effective date of this
subsection using best efforts, unless the records are no
longer available.
(iii) An itemized listing of the fees, costs and
expenses paid to or retained by all investment managers
for the applicable reporting years, separated by base
management fee , profit share, performance fees, carried
interest and incentive fees, and informed by the best
practices as recommended by recognized industry
standards, including, but not limited to, the
Institutional Limited Partners Association Fee
Transparency Initiative. The board shall disclose in the
report which industry standards were used and whether any
changes to industry standards have been made.
(iv) All travel or other expenses incurred by staff
of the system or plan and paid for by an external
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investment manager, fund or consultant.
(2) As used in this subsection, the following words and
phrases shall have the meanings given to them in this
paragraph unless the context clearly indicates otherwise:
"Carried interest." Any share of profits from an
alternative investment vehicle that is distributed to a fund
manager, general partner or related party, including
allocations of alternative investment vehicle profits
received by a fund manager in consideration of having waived
fees that the fund manager might otherwise have been entitled
to receive.
"Institutional Limited Partners Association Fee
Transparency Initiative." An initiative created by the
Institutional Limited Partners Association to establish
guidelines for reporting fees, expenses and compliance
disclosures regarding investments.
Section 3. This act shall apply as follows:
(1) The amendment of 24 Pa.C.S. § 8502(e)(1) shall apply
to board meetings that occur and video, written records and
materials created more than 30 days after the effective date
of this section.
(2) The amendment or addition of 24 Pa.C.S. § 8502(e)(5)
(vi) and (viii) and (s)(1)(iii) shall apply to contracts and
agreements entered into after the effective date of this
section.
(3) The amendment of 71 Pa.C.S. § 5902(e)(1) shall apply
to board meetings that occur and video, written records and
materials created more than 30 days after the effective date
of this section.
(4) The amendment or addition of 71 Pa.C.S. § 5902(e)
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(4.1)(vi), (vii) and (viii) and (s)(1)(iii) shall apply to
contracts and agreements entered into after the effective
date of this section.
Section 4. This act shall take effect in 60 days.
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