Pennsylvania Senate Bill SB1327

Pennsylvania 2025-2026 Regular Session

• Introduced: 5/7/26
• Refer: 5/7/26

Caption

In preliminary provisions relating to retirement for school employees, further providing for definitions; and, in membership, contributions and benefits, further providing for mandatory and optional membership in the system and participation in the plan.

Summary

SB1327 amends the Public School Employees’ Retirement Code to narrow which entities may participate in the Pennsylvania school employees’ retirement system (PSERS) and related defined contribution plan. The bill revises the definition of “governmental entity” and provides that entities that are not governmental entities are generally ineligible for membership in PSERS, and their employees are ineligible to participate as well. Employees already active in the system on the effective date would be allowed to remain participants until their employment with the entity ends, but new hires after that date would be excluded. The bill also creates a new administrative process for removing ineligible entities from the retirement system. Instead of treating such entities as nonparticipating employers subject to withdrawal liability, the PSERS board would impose a one-time administrative removal fee capped at 5% of the withdrawal liability amount that otherwise would have applied. The board must notify the entity in writing, explain the calculation, and collect payment within specified timeframes; the money would be deposited into the State accumulation account to cover the costs of identifying and removing ineligible entities and related administration. The board is authorized to adopt regulations to implement the new process.

Impact

If enacted, SB1327 would change Title 24 of the Pennsylvania Consolidated Statutes by limiting PSERS membership to governmental entities and excluding private associations, nonprofit corporations, and similar non-governmental organizations that do not perform a governmental function. It would also alter the treatment of affected employers by replacing withdrawal liability under the existing nonparticipating employer provisions with a capped administrative removal fee, while preserving participation for current active participants until their employment ends. The bill would require the PSERS board to identify and remove ineligible entities and would direct fee revenue to the State accumulation account.

Sentiment

No committee transcript or recorded votes were provided, so there is no documented floor or committee debate to gauge formal sentiment. Based on the bill text, the measure appears to be a targeted administrative and eligibility correction rather than a broad policy change, suggesting a technical or fiscal-management rationale. The absence of recorded opposition or support in the provided materials means the overall sentiment cannot be determined from legislative discussion history.

Contention

The main point of potential contention is the exclusion of non-governmental entities and their employees from retirement system participation, which could affect organizations that have historically been treated as participating employers or that provide school-related services. Another likely issue is the replacement of withdrawal liability with a capped administrative removal fee, which may be viewed by affected entities as either a reduction in financial exposure or, conversely, as an imposed charge for removal from the system. The bill also gives the PSERS board discretion to determine ineligible entities and adopt implementing regulations, which could raise questions about classification, notice, and appeals.