At its October 2018 meeting, the Pennsylvania Public School Employees' Retirement System ("PSERS") Board passed a resolution that created an ad hoc committee to look into fee-related issues. The committee will hold its first meeting prior to the PSERS Board's December 2018 meeting. The committee has been directed to "endeavor to report and make its recommendations to the Board at the January or March 2019 Board Meeting."

The PSERS Board charged the committee to "consider current practices and emerging best industry practices with respect to performance, manager fee structures and public disclosure of compensation arrangements." The PSERS Board also tasked the committee with "collaborat[ing] with other public pension funds and national organizations who serve public pension funds," all in an effort of "making PSERS a national public pension fund leader in fee and performance disclosure and transparency."

This effort runs parallel, in many respects, to the Commission in Pennsylvania that the legislature has charged with looking into, among other things, the value of active management. The Commission has stated that it will present its report to the governor and the General Assembly before the end of November 2018. We have previously covered the Commission's work in Alerts such as "PA Commission Scrutinizes Active Management of Public Pension Assets," "PSERS Takes Action to Reduce Fees Paid to External Investment Managers," "Pennsylvania's Imminent Report on Investment Fees: What's Coming Next?" and "Pennsylvania's Commission Continues to Probe the Value of Active Management."

Pennsylvania Governor Tom Wolf has previously urged PSERS to refrain from "taking any action on any change that involves sizeable management fees" until the Commission releases its report. Governor Wolf's recommendation followed on the heels of PSERS issuing a report recommending that it bring certain active management functions in house.

We will continue to monitor these developments.