ERS Excess Earnings

Takes the excess earnings of the ERS to fund retroactive pay
raises.  Requires all departments and agencies to identify
goals, objectives, and policies to provide basis for determining
priorities and allocating public funds and human resources.

THE SENATE                              S.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                C.D. 1
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1                              PART I
 2      SECTION 1.  Section 88-107, Hawaii Revised Statutes, is
 3 amended to read as follows:
 4      "88-107  Interest.  (a)  The board of trustees shall
 5 annually allocate the interest and other earnings of the system
 6 to the funds of the system, as follows:
 7      (1)  The annuity savings fund shall be credited with the
 8           amount of regular interest credited to members'
 9           accounts;
10      (2)  The expense fund shall be credited with such sums as
11           provided in section 88-116; and
12      (3)  The remaining investment earnings, if any, shall be
13           credited to the pension accumulation fund.
14      (b)  Beginning with actual investment earnings in fiscal
15 year 1995 in excess of the investment yield rate, to address
16 outstanding unfunded pension obligations, ten per cent of such
17 excess earnings shall be deposited in the pension accumulation
18 fund; remaining excess earnings shall be applied to the amounts

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 1 to be contributed under section 88-123.  In fiscal year 1996,
 2 twenty per cent of the actual investment earnings in excess of
 3 the investment yield rate shall be deposited in the pension
 4 accumulation fund; remaining excess earnings shall be applied to
 5 the amount contributed under section 88-123.  In fiscal years
 6 1997 and 1998, actuarial investment earnings in excess of a ten
 7 per cent actuarial investment yield rate shall be applied to the
 8 amount contributed under section 88-123. Beginning in fiscal year
 9 [1997,] 1999, one hundred per cent of the investment earnings
10 shall be deposited in the pension accumulation fund.
11      (c)  The application of actuarial investment earnings to the
12 amount contributed under section 88-123 for fiscal years 1997 and
13 1998 as provided in subsection (b) is a one-time only provision
14 and no law shall be enacted to again require the employees'
15 retirement system to apply actuarial investment earnings to
16 offset the amount contributed under section 88-123."
17      SECTION 2.  Section 89-9, Hawaii Revised Statutes, is
18 amended by amending subsection (a) to read as follows:
19      "(a)  The employer and the exclusive representative shall
20 meet at reasonable times, including meetings in advance of the
21 employer's budget-making process, and shall negotiate in good
22 faith with respect to wages, hours, the number of incremental and
23 longevity steps and movement between steps within the salary

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 1 range, the amounts of contributions by the State and respective
 2 counties to the Hawaii public employees health fund to the extent
 3 allowed in subsection (e), and other terms and conditions of
 4 employment which are subject to negotiations under this chapter
 5 and which are to be embodied in a written agreement, or any
 6 question arising thereunder, but such obligation does not compel
 7 either party to agree to a proposal or make a concession[.];
 8 provided that the parties may not negotiate with respect to cost
 9 items as defined by section 89-2 for the biennium 1999 to 2001,
10 and the cost items of employees in bargaining units under section
11 89-6 in effect on June 30, 1999, shall remain in effect until
12 July 1, 2001."
13      SECTION 3.  The savings realized by the State and the
14 counties under this Part shall be utilized for the purpose of
15 funding retroactive cost items for HGEA and UPW contracts
16 expiring on or before June 30, 1999, and which have been approved
17 under section 89-10(b), Hawaii Revised Statutes, and other
18 necessary items.
19      SECTION 4.  There is appropriated out of the general
20 revenues of the State of Hawaii the sums of:

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 1                   1998-1999           1999-2000       2000-2001
 2 City & County
 3  of Honolulu         -0-              11,059,400      11,059,400
 4 Hawaii County        -0-               2,065,600       2,065,600
 5 Maui County       2,133,499            2,701,400       2,701,400
 6 Kauai County        154,500              858,900         858,900
 7      SECTION 5.  The sums appropriated shall be expended by the
 8 respective counties for the purposes of this Act.
 9                              PART II
10      SECTION 6.  The legislature finds that our state departments
11 and agencies should constantly be working towards improving the
12 effectiveness and efficiency of our government.  Improving
13 government operations through strategic planning can result in
14 increased and more effective government programs and improved
15 coordination among different agencies and levels of government,
16 and optimal use of state funds and personnel.
17      The legislature believes that the development of goals and
18 objectives is essential for state departments and agencies to
19 determine priorities, guide their decisions, and measure the
20 effectiveness of their programs and services.  Moreover, goals
21 and objectives would assist the legislature in evaluating the
22 budgetary needs of departments and agencies.
23      The legislature further finds that many of our State's
24 departments and agencies have not formally established goals and

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 1 objectives.  Accordingly, the purpose of this Act is to require
 2 all departments and agencies to identify their goals, objectives,
 3 and policies, to provide a basis for determining priorities and
 4 allocating limited public funds and human resources.
 5      SECTION 7.  Every department and agency of the State shall
 6 develop and submit to the legislature twenty days prior to the
 7 start of the regular session of 2000 and each regular session
 8 thereafter, an annual report addressing the following:
 9      (1)  A statement of goals, including what the department or
10           agency hopes to accomplish both short and long term;
11      (2)  Objectives and policies, specifically setting forth how
12           each goal can and will be accomplished;
13      (3)  An action plan with a timetable indicating how the
14           established objectives and policies will be implemented
15           in one, two, and five years; and
16      (4)  The process that the department or agency will use to
17           measure the performance of its programs and services in
18           meeting the stated goals, objectives, and policies.
19                             PART III
20      SECTION 8.  If any provision of this Act, or the application
21 thereof to any person or circumstance is held invalid, the
22 invalidity does not affect other provisions or applications of
23 the Act which can be given effect without the invalid provision
24 or application, and to this end the provisions of this Act are

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 1 severable.
 2      SECTION 9.  This Act shall take effect on June 30, 1999;
 3 provided that sections 4 and 5 shall take effect on July 1, 1999;
 4 and provided further that upon approval of this Act, section 1
 5 shall take effect retroactive to July 1, 1996.