PRINTER'S NO. 2799
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1996
Session of
2019
INTRODUCED BY RYAN, BARRAR, BERNSTINE, EVERETT, GROVE, HELM,
KEEFER, B. MILLER AND MOUL, OCTOBER 25, 2019
REFERRED TO COMMITTEE ON STATE GOVERNMENT, OCTOBER 25, 2019
AN ACT
Amending Titles 24 (Education) and 71 (State Government) of the
Pennsylvania Consolidated Statutes, in administration
relating to retirement for school employees, further
providing for Public School Employees' Retirement Board and
for administrative duties of board; and, in administration
relating to retirement for State employees and officers,
further providing for the State Employees' Retirement Board
and for administrative duties of the board.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 8501(a) and (f) of Title 24 of the
Pennsylvania Consolidated Statutes, amended July 2, 2019
(P.L.434, No.72), are amended and the section is amended by
adding a subsection to read:
§ 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
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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 and Class DC participants receiving distributions,
from among their number; one to be elected by the active
nonprofessional members of the system and active 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[.] ,
each appointed member may serve not more than four three-year
terms as an appointed member and each nonlegislative elected
member may serve no more than four three-year terms as a
nonlegislative elected member. 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. Each member of the Senate appointed to
the board may serve no more than three four-year terms as a
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Senate appointee and each member of the House of Representatives
appointed to the board may serve no more than six two-year terms
as a House of Representatives appointee. 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.
* * *
(f) Board training.--Each member of the board will be
required to obtain [eight] 10 hours of mandatory training in
investment strategies, actuarial cost analysis, asset
allocation, risk assessment and retirement portfolio management
on an annual basis.
(g) Committees.--
(1) The board shall establish an independent audit
committee. In order to be appointed to the Audit/Compliance
Committee as a voting member, a board member must first
complete at least 16 hours of training in risk assessments,
internal controls and auditing standards. In order to
continue serving as a voting member of the Audit/Compliance
Committee following initial appointment, a board member must
complete at least eight hours of continuing education in risk
assessments, internal controls and auditing standards each
calendar year thereafter.
(2) The board shall establish an executive committee,
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which shall consist of the board chair, the board vice chair,
if one has been appointed, the chair of the Audit/Compliance
Committee, the chair of the Bylaws/Policy Committee and the
chair of the Budget/Finance Committee.
(3) The board shall establish an Asset Liability
Contingency Operating Committee, which shall be charged with
evaluating the risk associated with the system's assets and
liabilities.
(4) The board may establish additional committees and
delegate duties to committees consistent with the provisions
of this part.
Section 2. Section 8502(o) of Title 24 is amended to read:
§ 8502. Administrative duties of board.
* * *
(o) Independent audits.--
(1) The board shall provide for annual audits of the
system and the plan by an independent certified public
accounting firm. The audits shall include the board's accrual
and expenditure of directed commissions. The board may use
the same independent certified public accounting firm 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
subsection (n) 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
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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.
* * *
Section 3. Section 5901(b) and (f) of Title 71 are amended
and the section is amended by adding a subsection to read:
§ 5901. The State Employees' Retirement Board.
* * *
(b) Appointments and terms.--The two members elected by the
board and serving on the effective date of this title shall
continue to serve until the expiration of their respective
terms. The members of the Senate shall be appointed by the
President pro tempore of the Senate and shall consist of a
majority and a minority member. The members of the House of
Representatives shall be appointed by the Speaker of the House
of Representatives and shall consist of a majority and a
minority member. 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. Each member
of the Senate appointed to the board may serve no more than
three four-year terms as a Senate appointee and each member of
the House of Representatives appointed to the board may serve no
more than six two-year terms as a House of Representatives
appointee. Of the remaining four appointees, one shall be
appointed for an initial term of two years, one for an initial
term of three years, and two for an initial term of four years.
Each appointed member may serve no more than three four-year
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terms as an appointed member. A vacancy occurring during the
term of an appointed member shall be filled for the unexpired
term by the appointment and confirmation of a successor in the
same manner as his predecessor.
* * *
(f) Board training.--Each member of the board will be
required to obtain [eight] 10 hours of mandatory training in
investment strategies, actuarial cost analysis, asset
allocation, risk assessment and retirement portfolio management
on an annual basis.
(g) Committees.--
(1) The board shall establish an independent audit
committee. In order to be appointed to the Audit Risk and
Compliance Committee as a voting member, a board member must
first complete at least 16 hours of training in risk
assessments, internal controls and auditing standards. In
order to continue serving as a voting member of the Audit
Risk and Compliance Committee following initial appointment,
the board member must complete at least eight hours of
continuing education in risk assessments, internal controls
and auditing standards each calendar year thereafter.
(2) The board shall establish an executive committee,
which shall consist of the board chair, the board vice chair,
if one has been appointed, the chair of the Audit Risk and
Compliance Committee and the chair of the Finance and Member
Services Committee.
(3) The board shall establish an Asset Liability
Contingency Operating Committee, which shall be charged with
evaluating the risk associated with the system's assets and
liabilities.
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(4) The board may establish additional committees and
delegate duties to committees consistent with the provisions
of this part.
Section 4. Section 5902(n) of Title 71 is amended to read:
§ 5902. Administrative duties of the board.
* * *
(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.
* * *
Section 5. The following shall apply:
(1) The term limits established in 24 Pa.C.S. § 8501
shall apply to board members appointed after the effective
date of this section or, for nonlegislative elected board
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members, to members elected after the effective date of this
section.
(2) The term limits established in 71 Pa.C.S. § 5901
shall apply to board members appointed after the effective
date of this section.
(3) The amendment of 24 Pa.C.S. § 8501(f) and 71 Pa.C.S.
§ 5901(f) shall apply beginning January 1, 2020.
Section 6. This act shall take effect in 90 days.
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