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
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, in administration and
3 miscellaneous provisions, further providing for
4 administrative duties of the Public School Employees'
5 Retirement Board; and, in administration, funds, accounts and
6 general provisions, further providing for administrative
7 duties of the State Employees' Retirement Board.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Section 8502(e)(1), (2), (3), (4) and (5) of
11 Title 24 of the Pennsylvania Consolidated Statutes are amended
12 and the section is amended by adding a subsection to read:
13 § 8502. Administrative duties of board.
14 * * *
15 (e) Records.--
16 (1) The following shall apply:
17 (i) The board shall [keep a] livestream all public
 1 board and committee meetings and post an unedited video
2 and written record of all [its] such public proceedings
3 which shall be accessible [to the public] on its publicly
4 accessible Internet website, including nonconfidential
5 materials presented to the board, except as otherwise
6 provided in this part or by other law. Video and records
7 shall remain online for a period of at least three years
8 and shall be maintained for a period of at least seven
9 years and thereafter shall be maintained in accordance
10 with applicable records retention schedules.
11 (ii) The Office of Administration shall promptly
12 revise its management directives relating to record
13 management policies to conform with the requirements of
14 this paragraph and shall provide public notice of the
15 requirements of this subsection by publishing the
16 requirements on its publicly accessible Internet website
17 and shall transmit the requirements to the Legislative
18 Reference Bureau for publication in the Pennsylvania
19 Bulletin.
20 (2) Any record[, material or data] received, prepared,
21 used or retained by the board or its employees, investment
22 professionals or agents relating to an investment, to the
23 extent not otherwise excluded from access, shall [not]
24 constitute a [public] record subject to public access under
25 the act of February 14, 2008 (P.L.6, No.3), known as the
26 Right-to-Know Law, [if] unless, in the reasonable judgment of
27 the board, [the] it is found that access would:
28 (i) in the case of an alternative investment or
29 alternative investment vehicle involve the release of
30 sensitive investment or financial information relating to
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 1 the alternative investment or alternative investment
2 vehicle which the fund or trust was able to obtain only
3 upon agreeing to maintain its confidentiality;
4 (ii) cause substantial competitive harm to the
5 person from whom sensitive investment or financial
6 information relating to the investment was received; or
7 (iii) have a substantial detrimental impact on the
8 value of an investment to be acquired, held or disposed
9 of by the fund or trust, or would cause a breach of the
10 standard of care or fiduciary duty set forth in this
11 part.
12 (3) The following apply:
13 (i) The sensitive investment or financial
14 information excluded from access under paragraph (2)(i),
15 to the extent not otherwise excluded from access, shall
16 constitute a [public] record subject to public access
17 under the Right-to-Know Law once the board is no longer
18 required by its agreement to maintain confidentiality.
19 (ii) The sensitive investment or financial
20 information excluded from access under paragraph (2)(ii),
21 to the extent not otherwise excluded from access, shall
22 constitute a [public] record subject to public access
23 under the Right-to-Know Law once:
24 (A) the access no longer causes substantial
25 competitive harm to the person from whom the
26 information was received; or
27 (B) the entity in which the investment was made
28 is liquidated;
29 whichever is later.
30 (iii) The sensitive investment or financial
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 1 information excluded from access under paragraph (2)
2 (iii), to the extent not otherwise excluded from access,
3 shall constitute a [public] record subject to public
4 access under the Right-to-Know Law once:
5 (A) the access no longer has a substantial
6 detrimental impact on the value of an investment of
7 the fund or trust and would not cause a breach of the
8 standard of care or fiduciary duty set forth in this
9 part; or
10 (B) the entity in which the investment was made
11 is liquidated;
12 whichever is later.
13 (4) [Except for the provisions of paragraph (3), nothing
14 in this subsection shall be construed to designate any
15 record, material or data received, prepared, used or retained
16 by the board or its employees, investment professionals or
17 agents relating to an investment as a public record subject
18 to public access under the Right-to-Know Law.] (Reserved).
19 (5) Notwithstanding the provisions of this subsection,
20 the following information regarding an alternative investment
21 vehicle shall be subject to public access under the Right-to-
22 Know Law:
23 (i) The name, address and vintage year of the
24 alternative investment vehicle.
25 (ii) The identity of the manager of the alternative
26 investment vehicle.
27 (iii) The dollar amount of the commitment made by
28 the system or plan to the alternative investment vehicle.
29 (iv) The dollar amount of cash contributions made by
30 the system or plan to the alternative investment vehicle
20230HB1261PN1385 - 4 -
 1 since inception.
2 (v) The dollar amount of cash distributions received
3 by the system or plan from the alternative investment
4 vehicle since inception.
5 (vi) The gross and net internal rate of return of
6 the alternative investment vehicle since inception,
7 provided that the system or plan shall not be required to
8 disclose the gross or net internal rate of return under
9 circumstances in which, because of the limited number of
10 portfolio assets remaining in the alternative investment
11 vehicle, the disclosure could reveal the values of
12 specifically identifiable remaining portfolio assets to
13 the detriment of the alternative investment.
14 (vii) The aggregate value of the remaining portfolio
15 assets attributable to the system's or plan's investment
16 in the alternative investment vehicle, provided that the
17 system or plan shall not be required to disclose the
18 value under circumstances in which, because of the
19 limited number of portfolio assets remaining in the
20 alternative investment vehicle, the disclosure could
21 reveal the values of specifically identifiable remaining
22 portfolio assets to the detriment of the alternative
23 investment.
24 (viii) The dollar [amount] amounts of total
25 management fees [and], costs and expenses paid to [the]
26 or retained by an alternative investment vehicle [by the
27 system or plan] on an annual fiscal year-end basis[.],
28 itemized by gross management, carried interest and other
29 expenses.
30 * * *
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 1 (s) Additional reporting requirements.--
2 (1) In addition to the requirements under this section,
3 the board shall prepare and have published on its publicly
4 accessible Internet website and electronically submit copies
5 to all members of the General Assembly of the following
6 information within six months after the end of the system's
7 fiscal year:
8 (i) The net of fees performance of all investments
9 over the most recent 1-, 3-, 5-, 10-, 15- and 20-year
10 periods.
11 (ii) The performance of all investments by asset
12 class and manager over each time horizon, both gross and
13 net of fees compared to benchmarks being reported for all
14 investments made commencing prospectively from the
15 effective date of this subsection and with the gross
16 returns for all investments made retroactively for the
17 five-year period from the effective date of this
18 subsection using best efforts, unless the records are no
19 longer available.
20 (iii) An itemized listing of the fees and expenses
21 paid to or retained by all investment managers for the
22 applicable reporting years, separated by base management
23 fee, profit share, performance fees, carried interest and
24 incentive fees, and informed by the best practices as
25 recommended by recognized industry standards, including,
26 but not limited to, the Institutional Limited Partners
27 Association Fee Transparency Initiative. The board shall
28 disclose in the report which industry standards were used
29 and whether any changes to industry standards have been
30 made.
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 1 (iv) All travel or other expenses incurred by staff
2 of the system or plan and paid for by an external
3 investment manager, fund or consultant.
4 (2) As used in this subsection, the following words and
5 phrases shall have the meanings given to them in this
6 paragraph unless the context clearly indicates otherwise:
7 "Carried interest." Any share of profits from an
8 alternative investment vehicle that is distributed to a fund
9 manager, general partner or related party, including
10 allocations of alternative investment vehicle profits
11 received by a fund manager in consideration of having waived
12 fees that the fund manager might otherwise have been entitled
13 to receive.
14 "Institutional Limited Partners Association Fee
15 Transparency Initiative." An initiative created by the
16 Institutional Limited Partners Association to establish
17 guidelines for reporting fees, expenses and compliance
18 disclosures regarding investments.
19 Section 2. Section 5902(e)(1), (2), (3) and (4) of Title 71
20 are amended, subsection (e) is amended by adding a paragraph and
21 the section is amended by adding a subsection to read:
22 § 5902. Administrative duties of the board.
23 * * *
24 (e) Records.--
25 (1) [The board shall keep a record of all its
26 proceedings which shall be open to access by the public,
27 except as otherwise provided in this part or by other law.]
28 The following shall apply:
29 (i) The board shall livestream all public board and
30 committee meetings and post an unedited video and written
20230HB1261PN1385 - 7 -
 1 record of all such public proceedings, which shall be
2 accessible on its publicly accessible Internet website,
3 including nonconfidential materials presented to the
4 board, except as otherwise provided in this part or by
5 other law. Video and records shall remain online for a
6 period of at least three years and shall be maintained
7 for a period of at least seven years and thereafter shall
8 be maintained in accordance with applicable records
9 retention schedules.
10 (ii) The Office of Administration shall promptly
11 revise its management directives relating to record
12 management policies to conform with the requirements of
13 this paragraph and shall provide public notice of the
14 requirements of this subsection by publishing the
15 requirements on its publicly accessible Internet website
16 and shall transmit the requirements to the Legislative
17 Reference Bureau for publication in the Pennsylvania
18 Bulletin.
19 (2) Any record[, material or data] received, prepared,
20 used or retained by the board or its employees, investment
21 professionals or agents relating to an investment, to the
22 extent not otherwise excluded from access, shall [not]
23 constitute a [public] record subject to public access under
24 the act of February 14, 2008 (P.L.6, No.3), known as the
25 Right-to-Know Law, [if] unless, in the reasonable judgment of
26 the board, [the] it is found that access would:
27 (i) in the case of an alternative investment or
28 alternative investment vehicle, involve the release of
29 sensitive investment or financial information relating to
30 the alternative investment or alternative investment
20230HB1261PN1385 - 8 -
 1 vehicle which the fund or trust was able to obtain only
2 upon agreeing to maintain its confidentiality;
3 (ii) cause substantial competitive harm to the
4 person from whom sensitive investment or financial
5 information relating to the investment was received; or
6 (iii) have a substantial detrimental impact on the
7 value of an investment to be acquired, held or disposed
8 of by the fund or trust or would cause a breach of the
9 standard of care or fiduciary duty set forth in this
10 part.
11 (3) The following apply:
12 (i) The sensitive investment or financial
13 information excluded from access under paragraph (2)(i),
14 to the extent not otherwise excluded from access, shall
15 constitute a [public] record subject to public access
16 under the Right-to-Know Law once the board is no longer
17 required by its agreement to maintain confidentiality.
18 (ii) The sensitive investment or financial
19 information excluded from access under paragraph (2)(ii),
20 to the extent not otherwise excluded from access, shall
21 constitute a [public] record subject to public access
22 under the Right-to-Know Law once:
23 (A) the access no longer causes substantial
24 competitive harm to the person from whom the
25 information was received; or
26 (B) the entity in which the investment was made
27 is liquidated;
28 whichever is later.
29 (iii) The sensitive investment or financial
30 information excluded from access under paragraph (2)
20230HB1261PN1385 - 9 -
 1 (iii), to the extent not otherwise excluded from access,
2 shall constitute a [public] record subject to public
3 access under the Right-to-Know Law once:
4 (A) the access no longer has a substantial
5 detrimental impact on the value of an investment of
6 the fund or trust and would not cause a breach of the
7 standard of care or fiduciary duty set forth in this
8 part; or
9 (B) the entity in which the investment was made
10 is liquidated;
11 whichever is later.
12 (4) [Except for the provisions of paragraph (3), nothing
13 in this subsection shall be construed to designate any
14 record, material or data received, prepared, used or retained
15 by the board or its employees, investment professionals or
16 agents relating to an investment as a public record subject
17 to public access under the Right-to-Know Law.] (Reserved).
18 (4.1) Notwithstanding the provisions of this subsection,
19 the following information regarding an alternative investment
20 vehicle shall be subject to public access under the Right-to-
21 Know Law:
22 (i) The name, address and vintage year of the
23 alternative investment vehicle.
24 (ii) The identity of the manager of the alternative
25 investment vehicle.
26 (iii) The dollar am