Regular Session 2017-2018 House Bill 1668 P.N. 2237

PRINTER'S NO. 2237

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1668

Session of

2017

INTRODUCED BY WHITE, STURLA, DRISCOLL, A. HARRIS, PHILLIPS-HILL,

ROTHMAN, McCLINTON, TOOHIL, PICKETT, D. COSTA, TAYLOR AND

KAUFFMAN, JULY 19, 2017

REFERRED TO COMMITTEE ON EDUCATION, JULY 19, 2017

AN ACT

Establishing the Education Endowment Board and the Education

Endowment Fund; and providing additional funding for public

schools in this Commonwealth.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Investing in

Our Kids' Future Act.

Section 2. Purpose.

The purpose of this act is to provide additional funding for

public schools in this Commonwealth.

Section 3. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Board." The Education Endowment Board.

"Fund." The Education Endowment Fund.

"Right-to-Know Law." The act of February 14, 2008 (P.L.6,

No.3), known as the Right-to-Know Law.

Section 4. Education Endowment Board.

(a) Establishment and composition.--The Education Endowment

Board is established as an independent administrative board and

shall consist of the following members:

(1) The State Treasurer or a designee.

(2) The Secretary of Education or a designee.

(3) Three members appointed by the Governor.

(4) Two members of the Senate appointed by the President

pro tempore of the Senate.

(5) Two members of the House of Representatives

appointed by the Speaker of the House of Representatives.

(b) Structure and terms.--

(1) The chairperson of the board shall be designated by

the Governor from among the members of the board.

(2) The members of the board appointed by the Governor

shall be appointed for staggered terms. One shall be

appointed for an initial term of one year, one shall be

appointed for an initial term of two years and one shall be

appointed for an initial term of three years.

(3) The legislative members of the board:

(i) From each House shall consist of a majority and

minority member.

(ii) Shall serve on the board for the duration of

the member's 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 the member's respective legislative terms

or until a successor is appointed for the new term,

whichever occurs first.

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(4) Vacancies among appointed members shall be filled by

the appointing entity and shall serve for the remainder of

the vacant term.

oath of office that the member will, so far as it devolves upon

the member, diligently and honestly administer the affairs of

the board and that the member will not knowingly violate or

willfully permit to be violated any provisions of law applicable

to this act. The oath shall be subscribed by the member taking

the oath and certified by the officer before whom the oath is

taken and shall be immediately filed in the office of the

Secretary of the Commonwealth.

(d) Compensation.--Members of the board shall serve without

compensation but may be reimbursed for itemized expenses

associated with the member's service on the board.

(e) Administrative duties.--The board shall have the

following duties:

(1) Monitoring and oversight of the fund, including

investment of the fund's revenues so as to maximize returns

on the fund while taking appropriate measures to ensure

viability of the fund.

(2) Making annual recommendations to the General

Assembly regarding appropriations to the fund.

(3) Providing an annual report to the General Assembly

on the fund, including interest earnings and corporate and

individual donations to the fund.

(4) Consulting and coordinating with the Pennsylvania

nonprofit corporation that the board enters into a

cooperative agreement with under section 6 to solicit money

for the fund from nongovernment sources.

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(5) Adopting an investment policy.

(6) Any other duties deemed necessary by the board

relating to the fund.

Section 5. Records.

(a) Duty.--The board shall keep a record of all proceedings

which shall be open to inspection by the public, except as

otherwise provided under this act or another law.

(b) Public record.--Except as provided under subsection (c),

a record, material or data received, prepared, used or retained

by the board relating to an investment shall not constitute a

public record subject to public inspection under the Right-to-

Know Law, if, in the reasonable judgment of the board, the

inspection would do any of the following:

(1) For 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 the information's confidentiality.

(2) Cause substantial competitive harm to the person

from whom sensitive investment or financial information

relating to the investment was received.

(3) 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 provided under this act.

(1) The sensitive investment or financial information

excluded from inspection under subsection (b)(1), to the

extent not otherwise excluded from inspection, shall

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constitute a public record subject to public inspection under

the Right-to-Know Law once the board is no longer required by

the board's agreement to maintain confidentiality.

(2) The sensitive investment or financial information

excluded from inspection under subsection (b)(2), to the

extent not otherwise excluded from inspection, shall

constitute a public record subject to public inspection under

the Right-to-Know Law once:

(i) the inspection no longer causes substantial

competitive harm to the person from whom the information

was received; or

(ii) the entity in which the investment was made is

liquidated; whichever is later.

(3) The sensitive investment or financial information

excluded from inspection under subsection (b)(3), to the

extent not otherwise excluded from inspection, shall

constitute a public record subject to public inspection under

the Right-to-Know Law once:

(i) 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 provided under this act; or

(ii) the entity in which the investment was made is

liquidated; whichever is later.

(d) Construction.--Except for subsection (c), nothing under

this section shall be construed to designate a record, material

or data received, prepared, used or retained by the board or the

board's employees, investment professionals or agents relating

to an investment as a public record subject to public inspection

under the Right-to-Know Law.

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Section 6. Cooperative agreement.

(a) Administration.--The board shall enter into a

cooperative agreement with a nonprofit corporation to administer

section 8. A nonprofit corporation entering into a cooperative

agreement with the board must adhere to the following governance

provisions:

(1) The nonprofit must be a nonprofit corporation

organized under 15 Pa.C.S. Pt. II Subpt. C (relating to

nonprofit corporations) and must comply with section 501(c)

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 501(c)(3)).

(2) The nonprofit must comply with the limitations on

lobbying provided in section 501(c)(3) of the Internal

Revenue Code.

(3) A State officer or employee may not serve on the

board of the nonprofit corporation.

(4) The governing board of the nonprofit corporation

shall meet at least quarterly at the call of the governing

board of the nonprofit corporation's chairperson.

(5) The nonprofit corporation must perform the following

duties:

(i) Provide assistance and recommendation to the

board on the board's duties.

(ii) Assist the board in raising money for the fund

for corporate and individual donors.

(iii) Provide a financial report of the nonprofit

corporation to the board.

(b) Benefits.--An officer, employee or member of a governing

board of a nonprofit corporation that enters into a cooperative

agreement with the board under this act shall not be considered

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a State employee and shall not be entitled to State-funded

benefits, including membership in the State Employees'

Retirement System.

Section 7. Education Endowment Fund.

(a) Establishment.--A special fund is established within the

State Treasury to be known as the Education Endowment Fund. The

fund shall not lapse.

(b) Purpose.--Money in the fund shall be used exclusively to

provide distributions to school districts as provided for under

this act.

(1) Appropriations made to the fund by the General

Assembly.

(2) Proceeds of gifts, grants or contributions to the

Commonwealth that are specifically designated for inclusion

in the fund.

(3) Any accrued interest.

(d) Management.--

(1) The members of the board shall be the trustees of

the fund.

(2) Notwithstanding any other provision of law governing

the investments of funds under the control of an

administrative board of the Commonwealth, the trustees shall

have exclusive control and management of the fund and full

power to invest the fund in accordance with this section.

(3) The trustees shall have the power to hold, purchase,

sell, lend, assign, transfer or dispose of:

(i) The securities and investments in which money in

the fund has been invested and the proceeds of the

investments, including directed commissions which have

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accrued to the benefit of the fund as a consequence of

the investments.

(ii) Any money belonging to the fund.

(4) The power of the trustees under this subsection

shall be subject to the exercise of the degree of judgment,

skill and care under the circumstances prevailing at the time

the power is exercised which a person of prudence, discretion

and intelligence, who is familiar with the matters, exercises

in the management of the person's own affairs not in regard

to speculation but in regard to the permanent disposition of

the funds, considering the probable income to be derived from

the disposition and as the probable safety of the person's

capital.

(e) Custodian.--The State Treasurer shall be the custodian

of the fund.

(f) Payments.--All payments from the fund shall be made by

the State Treasurer in accordance with requisitions signed by

the secretary of the board, or the secretary's designee, and

ratified by resolution of the board.

(g) Fiduciary status.--The members of the board, employees

of the board and agents of the board shall stand in a fiduciary

relationship to the fund regarding the investments and

disbursements of any of the money of the fund and may not profit

either directly or indirectly with respect to the investments

and disbursements. The board may, when possible and consistent

with the board's fiduciary duties imposed under this subsection

or other law, including the board's obligation to invest and

manage the fund for the exclusive benefit of the members of the

fund, consider whether an investment in a project or business

enhances and promotes the general welfare of this Commonwealth

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and its citizens, including, but not limited to, investments

that increase and enhance the employment of Commonwealth

residents, encourage the construction and retention of adequate

housing and stimulate further investment and economic activity

in this Commonwealth. The board shall, through the Governor,

submit to the General Assembly annually, at the same time the

board submits the board's budget covering administrative

expenses, a report identifying the nature and amount of each

existing investment made under this subsection.

(h) Name for transacting business.--

(1) Except as provided under paragraph (2), the

following shall be transacted by the name of "Education

Endowment Fund":

(i) Business of the fund.

(ii) Investment of funds.

(iii) Requisitions for money drawn and payments

made.

(iv) Holding of cash, securities and other property.

(2) Notwithstanding any other law, the board may

establish a nominee registration procedure for the purpose of

registering securities in order to facilitate the purchase,

sale or other disposition of securities pursuant to this act.

(i) Venture capital, private placement and alternative

investments.--The board in the board's prudent discretion may

make venture capital investment, private placement investment or

other alternative investment of any kind, structure or manner

which meets the standard of prudence under subsection (d)(4).

(j) Vehicles for authorized investments.--The board in the

board's prudent discretion may make investments which meet the

standard of prudence provided in subsection (d)(4) by acquiring

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any type of interest in a business organization existing under

the laws of any jurisdiction if the liability of the fund is

limited to the amount of the board's investment.

(k) Legislative declaration.--The General Assembly finds and

declares that authorized investments of the fund made by or on

behalf of the board under this section by which the board

becomes a joint owner or stockholder in a company, corporation,

association or other lawful business organization are outside

the scope of the original intent of and therefore do not violate

the prohibition provided in section 8 of Article VIII of the

Constitution of Pennsylvania.

Section 8. Distribution of funds to school districts.

(a) Certification.--By July 15, 2018, and each July 15

thereafter, the State Treasurer shall certify the amount of

interest earned by the fund in the prior fiscal year.

(b) Amount and manner.--The State Treasurer shall distribute

60% of the interest earned by the fund in the prior fiscal year

to each school district in the same manner as a basic education

line item in the General Appropriation Act.

Section 9. Effective date.

This act shall take effect in 60 days.

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