HOUSE . . . . . . . . . . . No. 5048
The Commonwealth of Massachusetts
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In the Year Two Thousand and Eight.
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An Act Relative to Pension Governance Reform.
SECTION 1. Section 7 of chapter 4 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by striking out, in line 216, the words “subsection (o).” and inserting in place thereof the following words:- subsection (o);
(q) statements filed pursuant to section 20C of chapter 32.
SECTION 2. Section 50 of chapter 7 of the General Laws, as so appearing, is hereby amended by striking out, in lines 68 to 69, inclusive, the words:- (f) grant to qualified boards an exemption from certain statutory restrictions on investment;
SECTION 3. Said section 50 of said chapter 7 of the General Laws, as so appearing, is hereby further amended by added at the end thereof the following:-
Said public employee retirement commission shall, in consultation with the Massachusetts Association of Contributory Retirement Systems or other local, state, regional or national organizations recognized by the public employee retirement commission as having expertise in retirement issues of importance to retirement board members or other entities, establish rules and regulations for a system of continuing education for all members of retirement boards. Said rules and regulations shall provide for a minimum of 6 hours of continuing education per calendar year and shall include courses or programs of instruction approved by the public employee retirement commission including, but not limited to, courses or programs of instruction on fiduciary responsibility, ethical conduct, and conflict-of-interest; provided, however, that the public employee retirement commission shall certify in advance the curriculum forming the basis of such courses or programs which satisfy the provisions of this section and shall arrange for at least 18 sessions during each calendar year for retirement board members to complete this requirement.
Said public employee retirement commission shall annually, no later than February 1, provide all members of retirement boards with an official summary of said members continuing education hours earned during the previous calendar year.
Said public employee retirement commission shall annually notify all members of retirement boards of the continuing education requirements of this section.
SECTION 4. Section 1 of chapter 30B of the General Laws, as so appearing, is hereby amended by striking out, in line 54, the following words:- (19) a contract for retirement board services;
SECTION 5. Section 1 of chapter 32 of the General Laws, as so appearing, is hereby amended by inserting, after the definition of “Board” the following definition:-
“Board member,” an elected, appointed or ex officio member of a board.
SECTION 6. Said section 1 of said chapter 32 of the General Laws, as so appearing, is hereby amended by inserting, after the definition of “Hospital District” the following definition:-
“Immediate family,” the board member and his spouse, and their parents, children, brothers and sisters.
SECTION 7. Said section 1 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting, after the definition of “Pension reserve fund” the following definition:-
“Person”, a natural person, corporation, association, partnership or other legal entity.
SECTION 8. Section 20 of said chapter 32 of the General Laws, as so appearing, is hereby amended by inserting after the word “member,”, in line 68, the following words:-upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 9. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 230, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 10. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 306, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 11. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 355, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 12. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 411, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 13. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 461, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 14. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 514, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 15. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 567, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 16. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 618, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 17. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after the word “member”, in line 671, the following words:-, upon the removal of any board member pursuant to subdivision (7) or section 20C
SECTION 18. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by inserting after subsection (4 7/8 D) the following new subsection:-
(4 7/8 E) (a) No person receiving compensation or other remuneration from a retirement board or from any person doing business with a retirement board shall be eligible to serve on a retirement board; provided, however, that a person receiving a retirement benefit from a retirement board shall be eligible to serve on the board providing said benefit and may accept the statutory stipend for such service; and provided further, that an employee of a retirement board may serve on a retirement board other than the retirement board by which he or she is employed.
SECTION 19. Said section 20 of said chapter 32 of the General Laws, as so appearing, is hereby further amended by striking out subsection (6) and inserting in place thereof the following subsections:-
(6) The board members of any city, town, county, regional, district, or authority retirement board upon acceptance of the appropriate legislative body shall receive a stipend; provided, however, that said stipend shall not be less than $3,000 per annum and shall not exceed $7,500 per annum and shall be paid from such funds under the control of said board as shall be determined by the commission; and, provided further, that any ex-officio member of any city, town, county, district or authority retirement board upon the acceptance of the appropriate legislative body shall receive a stipend of not more than $7,500 per annum in the aggregate for services rendered in the active administration of the retirement system.
(7) The board members of a city, town, county, district or authority retirement board shall be required to undertake a minimum of 6 hours of continuing education per calendar year as may be determined by the commission pursuant to section 50 of chapter 7.
The board members of a city, town, county, district or authority retirement board shall annually file with the commission and on a form prescribed by the commission a statement identifying the continuing education courses or programs of instruction each board member has successfully completed during the preceding year. Board members shall submit the completed form to the commission by January 15 of the year following and completion of said continuing education courses or programs of instruction and the commission shall provide the member with a summary of his or her status regarding the completion of this requirement by February 15 of each year.
Any board members of a city, town, county, district or authority retirement board failing to complete the requirements of this section shall be prohibited by the commission from serving beyond the conclusion of the term in which said failure took place and shall be precluded from being reelected or reappointed to any retirement board for a period of 7 years thereafter.
SECTION 20. Chapter 32 of the General Laws is hereby amended by inserting after section 20B the following section:-
Section 20C. (a) Every board member of a city, town, county, district or authority retirement board established pursuant to section 20 and every elected and appointed member of a retirement board established pursuant to chapter 34B shall annually file, under the pains and penalties of perjury, a statement of financial interests for the preceding calendar year with the commission on a form and in a manner to be prescribed by the commission.
(b) A statement of financial interest filed pursuant to this section shall, without limitation, include:(1) the name and address of, the nature of association with, the share of equity in, if applicable, each business with which the board member or member of his immediate family is associated; (2) the identity of all securities and other investments with a fair market value of greater than $1,000 which were beneficially owned by said board member or his immediate family; (3) the name and address of each creditor to whom more than $1,000 was owed by said board member or his immediate family; provided, however, that obligations arising out of retail installment transactions, educational loans, medical and dental expenses, debts incurred in the ordinary course of business, and any obligation to make alimony or support payments, shall not be required to be disclosed; provided, further, that such information need not be reported if the creditor is a relative of the board member or his immediate family member within the third degree of consanguinity or affinity; (4) the name and address of the source, and the cash value of any reimbursement for expenses aggregating more than $100 in the previous calendar year if the recipient is a board member or member of his immediate family and the source of such reimbursement is a person having a direct interest in a matter before the retirement board of which the recipient is a member; (5) the name and address of the donor, and the fair market value, if determinable, of any gifts aggregating more than $100 in the calendar year, if the recipient is a board member or member of his immediate family and the source of such gift is a person having a direct interest in a matter before the retirement board of which the recipient is a member; (6) the name and address of the source, and the fair market value of any honoraria aggregating more than $100 if the recipient is a board member or member of his immediate family and the source of such honoraria is a person having a direct interest in a matter before the retirement board of which the recipient is a member; (7) the name and address of any creditor having a direct interest in a matter before a retirement board who has forgiven an indebtedness of over $1,000 by a board member or member of his immediate family and the amount forgiven; provided, however, that no such information need be reported if the creditor is a relative within the third degree of consanguinity or affinity of the board member or member of his immediate family; and (8) the name and address of any business from which the board member or member of his immediate family is taking a leave of absence. Nothing in this section shall be construed to require the disclosure of information which is otherwise privileged by law.
(b) Any board member of a city, town, county, district or authority retirement board who knowingly fails to file a statement of financial interests pursuant to this section shall be removed by the commission from the board of retirement upon which he serves and shall be precluded from receiving compensation pursuant to section 20; provided further, that any board member of a city, town, county, district or authority retirement board who knowingly files an incomplete statement of financial interests may be removed by the commission from the board of retirement upon which he serves; provided, however, that said removal shall be stayed upon the filing of an appeal pursuant to section 16; and provided further, that any board member of a city, town, county, district or authority retirement board removed from his position by the commission pursuant to this section shall be precluded from being elected, appointed or otherwise serving as a member of any retirement board established pursuant to the provisions of section 20 for a period of 7 years after the date of removal.
SECTION 21. Section 21 of said chapter 32 of the General Laws, as so appearing, is hereby amended by inserting after the word “system”, in line 16, the following words:-
, including copies of all collective bargaining agreements which cover the systems members
SECTION 22. Chapter 32 of the General Laws is hereby amended by inserting after section 21 the following new section:-
Section 21A. (a) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:-
“Affiliates”, entities which are affiliates of each other when either directly or indirectly one concern or individual controls or has the power to control another, or when a third party controls or has the power to control both.
“Bid”, a written offer to provide a supply or service at a stated price submitted in response to an invitation for bids.
“Commission”, the public employee retirement administration commission established pursuant to section 49 of chapter 7.
“Contract”, all types of agreement for the procurement or disposal of supplies or services, regardless of what the parties may call the agreement.
“Contractor”, any person that has furnished or seeks to furnish supplies or services under a contract with a city, town, county, district or authority retirement board established pursuant to section 20 or with a person under a contract with a city, town, county, district or authority retirement board.
“Debarment”, an exclusion from contracting or subcontracting with a retirement board for a reasonable, specified period of time commensurate with the seriousness of the offense.
“Person”, any natural person, business, partnership, corporation, union, committee, club or other organization, entity or group of individuals.
“Procurement”, buying, purchasing, renting, leasing, or otherwise acquiring a supply or service, and all functions that pertain to the obtaining of a supply or service, including description of requirements, selection and solicitation of sources, preparation and award of contract, and all phases of contract administration.
“Proposal”, a written offer to provide a supply or service at a stated price submitted in response to a request for proposals.
“Request for proposals”, the documents utilized for soliciting proposals, including documents attached or incorporated by reference.
“Retirement board”, the appropriate retirement board established pursuant to the provisions of section 20 having jurisdiction of any contributory retirement system established pursuant to the provisions of sections 1 to 28, inclusive, and pursuant to the provisions of chapter 34B.
“Services”, the furnishing of labor, time, or effort by a contractor, not involving the furnishing of a specific end product other than reports. This term shall not include employment agreements, collective bargaining agreements, or grant agreements.
“Supplies”, all property, other than real property, including equipment, materials, printing, and insurance and further including services incidental to the delivery, conveyance and installation of such property.
“Suspension”, the temporary disqualification of a vendor who is suspected upon adequate evidence of engaging or having engaged in conduct which constitutes grounds for debarment.
(b) The commission shall establish and maintain a consolidated list of all persons to whom contracts shall not be awarded and from whom offers, bids, or proposals shall not be solicited.
The list shall show at a minimum the following information: (1) the names of those persons debarred or suspended in alphabetical order with appropriate cross reference where more than one name is involved in a single debarment or suspension; (2) the basis of authority for each debarment or suspension; (3) the extent of restrictions imposed; (4) the termination date of each debarment or suspension; and (5) in the case of a suspension, the hearing date, if and when set, for debarment proceedings.
The commission shall cause the list to be kept current by the issuance of notices of additions and deletions. The list shall be published on a periodic basis, together with notices of additions and deletions therefrom, in the goods and services bulletin and the central register published by the state secretary and in such other publications as the commission shall designate. The commission shall also forward said list to the inspector general, the attorney general, and the state auditor.
(c) Debarment may be imposed for the following causes; but, debarment shall be imposed in all causes where debarment is required by law:
(i) conviction or final adjudication by a court or administrative agency of competent jurisdiction of any of the following offenses: (a) a criminal offense incident to obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract; (b) a criminal offense involving embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property or any other offense indicating a lack of business integrity or business honesty which seriously and directly affects the vendor’s present responsibility as a public contractor; (c) a violation of state or federal antitrust laws arising out of the submission of bids or proposals; (d) a violation of state or federal laws regulating campaign contributions; (e) a violation of section 20C; (f) a violation of any state or federal law regulating hours of labor, prevailing wages, minimum wages, overtime pay, equal pay, child labor, or worker’s compensation; (g) a violation of any state or federal law prohibiting discrimination in employment; or (h) repeated or aggravated violation of any state or federal law regulating labor relations or occupational health or safety; or (i) repeated or aggravated violation of any state or federal law protecting the environment; (j) a violation of the provisions of this chapter; or
(ii) substantial evidence, as determined by the commission, of any of the following acts: (a) willfully supplying materially false information incident to obtaining or attempting to obtain or performing any public contract or subcontract; (b) willful failure to comply with record-keeping and accounting requirements prescribed by law or regulation; (c) a record of failure to perform, or of unsatisfactory performance, in accordance with the terms of one or more public contracts; provided, however, that such failure to perform or unsatisfactory performance shall have occurred within a reasonable period of time preceding the determination to debar; and provided further, that such failure to perform or unsatisfactory performance was not caused by factors beyond the vendor's control;
(d) a record of health, safety or environmental violations of a sufficient frequency and severity so as to evidence a pattern of noncompliance with existing state and federal laws, or any rules and regulations applicable thereto; (e) submission to the board or the commission of an inaccurate disclosure statement; (f) the failure to disclose to the board and the commission any compensation provided to any person in regards to attempting to obtain, or in the performance of, a public contract or subcontract, including, but not limited to, compensation provided by third parties retained by the vendor to any other person; (g) any other cause affecting the responsibility of a vendor which the commission determines to be of such a serious and compelling nature as to warrant debarment.
(d) No contractor may be suspended unless the commission has first informed said contractor by written notice of the proposed suspension mailed by registered or certified mail to the vendor’s last known address, except when the commission determines that immediate suspension is necessary to prevent serious harm to the retirement system, in which case the suspension shall take effect immediately upon signing by the executive director of the commission of an order of suspension, and notice shall be mailed to the contractor at the earliest opportunity. The notice shall inform the contractor of the reasons for the proposed suspension and shall state that the contractor may within 14 days respond in writing and may in such response request a hearing. The commission may extend the period for response at the request of the contractor. The commission shall determine whether to impose the suspension or, in the case of an emergency suspension imposed prior to notice to the contractor, whether to continue the suspension after reviewing the contractor’s response, if any, and making such investigation as the commission determines is necessary and appropriate. An indictment, or any information or other filing by a public agency charging a criminal offense, for any of the offenses listed in paragraph (i) of subsection (c) shall constitute adequate evidence to support a suspension.
If the contractor requests a hearing, and the suspension is not based on an indictment, the commission shall conduct a hearing according to the provisions of chapter 30A. Such hearing shall be initiated within 30 days of the imposition of the suspension, unless the contractor requests that the hearing be delayed. Officers and employees of the commission and records of the commission shall not be subject to subpoena for such hearing, if in the opinion of the commission production of records or testimony would prejudice any pending investigation by the commission. A suspension shall not exceed 12 months unless a pending administrative or judicial proceeding in which the contractor is a party may result in a conviction or final adjudication of an offense listed in paragraph (i) of subsection (c).
(e) No contractor may be debarred under this section unless the commission has first informed the contractor by written notice of the proposed debarment mailed by registered or certified mail to the contractor’s last known address. The notice shall inform the contractor of the reasons for the debarment and shall state that the contractor will be accorded an opportunity for a hearing if the contractor so requests within 14 days of receipt of the notice. A hearing requested under this paragraph shall be conducted by the commission within 60 days of receipt of the request, unless the commission grants additional time therefore at the request of the contractor. The hearing shall be conducted according to the rules for the conduct of adjudicatory hearings established by the commissioner of administration pursuant to chapter 30A. A debarment shall not be imposed until (i) 14 days after receipt by the contractor of notice of the proposed debarment if no hearing is requested, or (ii) the issuance of a written decision by the commission which makes specific findings that there is sufficient evidence to support the debarment and that debarment for the period specified in the decision is required to protect the integrity of the public contracting process. A contractor shall be notified forthwith of the decision by registered or certified mail, and of the contractor's right to judicial review in the event that the decision is adverse to the contractor. If a suspension precedes a debarment, the suspension period shall be considered in determining the debarment period.
(f) A debarment or suspension may include all known affiliates of a contractor. The decision to include a known affiliate within the scope of a debarment or suspension shall be made on a case-by-case basis, after giving due regard to all relevant facts and circumstances. The offense or act of an individual justifying suspension, or the evidence justifying a suspension, may be imputed to the entity with which the individual is connected when such offense or act occurred in connection with the individual’s performance of duties for or on behalf of the entity or with the knowledge, approval, or acquiescence of the entity or one or more of its principals. The entity’s acceptance of the benefits derived from the conduct shall be evidence of such knowledge, approval, or acquiescence. The offense or act of an entity justifying debarment, or the evidence justifying a suspension, may be imputed to any officer, director, shareholder, partner, employee or other individual associated with the entity who participated in, knew of, or had reason to know of the entity's act. A contractor may not be suspended or debarred except in accordance with the procedures set forth in this section.
(g) In determining whether to debar a contractor, or the period of a debarment, all mitigating facts and circumstances shall be taken into consideration. Except as precluded by statute, a debarment may be removed or the period thereof may be reduced by the commission upon the submission of an application supported by documentary evidence setting forth appropriate grounds for the granting of relief, such as newly discovered material evidence, reversal of a judgment or conviction, bona fide change of ownership or management, or the elimination of the cause for which the debarment was imposed.
(h) During the period for which a person has been debarred or suspended, that person shall not submit or cause to be submitted offers, bids, or proposals to any retirement board, nor shall any retirement board solicit or consider offers, bids, or proposals from, nor execute, renew, or extend any contract with, a debarred or suspended vendor, and a vendor shall not contract for services from a debarred or suspended subcontractor on any contract with a retirement system.
SECTION 23. Subdivision (2) of section 23 of said chapter 32 of the General Laws, as so appearing, is hereby amended by striking out subparagraph (b) and inserting in place thereof the following:-
(b) The board of each system shall invest or reinvest the funds of such system in the PRIT Fund pursuant to subdivision (8) of section 22, in the PRIT Fund by purchasing shares of said fund, as provided for in the trust agreement adopted by the PRIM Board pursuant to subdivision (2A), or, through an investment manager or an investment consultant, who may invest the funds of the system in securities, other than mortgages or collateral loans, which are legal for the investment of funds of savings banks under the laws of the commonwealth; provided, however, that no investment of funds shall be made in stocks, securities or other obligations of any company deriving more than 15 per cent of its annual revenues from the sale of tobacco products.
Prior to the retention of an investment manager or an investment consultant the board shall submit to the commission: (i) certification that, in retaining said investment manager or an investment consultant, the board has complied with the process established pursuant to section 30B; (ii) a copy of the vendor certification required pursuant to said section 30B; (iii) copies of disclosure forms submitted by the selected investment manager or an investment consultant; and (d) a copy of the board certification required pursuant to said section 30B.
No board shall invest or reinvest funds pursuant to this section until said board receives from the commission an acknowledgement of receipt by the commission of the following: (a) certification that, in making the investment or reinvestment, the board has complied with the process established pursuant to chapter 30B; (b) a copy of the vendor certification required pursuant to chapter 30B; (c) copies of disclosure forms submitted by the selected vendor; (d) certification that the investment is not prohibited pursuant to this chapter or any regulations promulgated by the commission by the commission pursuant hereto; (e) in the event that the board has retained a consultant, a copy of the consultant reports pertaining to the investment and the selected vendor; (f) a copy of the board certification required under chapter 30B.
The commission may withhold acknowledgement if it determines that it is in the best interest of the retirement system; provided, however, that the commission shall notify the board within 10 days of receipt of completed documents as required by this section.
SECTION 24. Subdivision (3) of section 23 of chapter 32 of the General Laws, as so appearing, is hereby amended by inserting at the end thereof the following:-
Each board member of a city, town, county, district or authority retirement board established pursuant to the provisions of this chapter shall, upon the commencement of their term, file with the commission a statement acknowledging that they are aware of and will comply with the provisions of this chapter.
SECTION 25. Subsection (b) of section 19 of chapter 34B of the General Laws, as so appearing, is hereby amended by inserting at the end thereof the following paragraph:-
No person receiving compensation or other remuneration from a retirement board or from any person doing business with a retirement board shall be eligible to serve on a retirement board; provided, however, that a person receiving a retirement benefit from a retirement board shall be eligible to serve on the board providing said benefit and may accept the statutory stipend for such service; and provided further, that an employee of a retirement board may serve on a retirement board other than the retirement board by which he or she is employed.
SECTION 26. Section 7 of chapter 150E of the General Laws, as so appearing, is hereby amended by inserting at the end thereof the following paragraph:-
(e) Every employer entering into a collective bargaining agreement with an employee organization shall provide a copy of said agreement to the appropriate retirement board established pursuant to chapter 32 of which the employees covered by the agreement are members and retirement board shall review collective bargaining agreements for compliance with the provisions of chapter 32.
SECTION 27. Notwithstanding any general or special law to the contrary, subsection 4 (7/8E) of chapter 32 of the General Laws shall apply to retirement board members elected or appointed on or after January 1, 2009.
SECTION 28. Notwithstanding any general or special law to the contrary, the last paragraph of subsection (b) of section 19 of chapter 34 of the General Laws shall apply to retirement board members elected or appointed on or after January 1, 2009.
SECTION 29. Sections 3, 18 and 25 of this act shall take effect of January 1, 2009.