Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 1335
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Labor and Public Employment, to which was
referred H.B. No. 1335 entitled: 


begs leave to report as follows:

     The purpose of this bill is to implement a cafeteria plan
with flex credits or flex dollars that qualifies under section
125 of the Internal Revenue Code as a pre-tax plan for all public
employees in Hawaii.

     The Department of Human Resources Development (DHRD)
submitted testimony in support of the intent of this measure, but
stated that due to reductions in staff and budget, DHRD will be
unable to administer a full cafeteria plan for all State and
county jurisdictions.  DHRD suggested the alternative of tasking
the Hawaii Public Employees Health Fund with undertaking the lead
role in implementing cafeteria plans.

     The Hawaii State Teachers Association submitted testimony
supporting the intent of this measure and offering a proviso that
the retirement calculations be done on unadjusted gross incomes.

     The Hawaii Government Employees Association submitted
comments on this measure expressing the following concerns:

                                 STAND. COM. REP. NO. 636
                                 Page 2

     (1)  The items in the measure are negotiable according to
          the statute governing collective bargaining for public

     (2)  The measure does not contain language directing the
          DHRD to ensure a credible and fair process is
          implemented to determine how or when to increase flex
          credits or dollars as medical costs rise; and

     (3)  Requesting clear language concerning the ability of an
          employee to continue to choose a union plan over the
          employer plan.

     Your Committee has amended this measure by making technical,
nonsubstantive amendments for purposes of style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Labor and Public Employment that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 1335, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as H.B. No. 1335, H.D.
1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and Public

                                   TERRY NUI YOSHINAGA, Chair