Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 4
                                     S.D. 2
                                     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 Legislative Management, to which was
referred S.B. No. 4, S.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this bill, as received, is to:

     (1)  Require the Legislative Auditor to contract with an
          independent auditing firm to conduct a comprehensive
          audit of state government;

     (2)  Establish a joint legislative task force to gather
          information to supplement the Legislative Auditor's
          undertaking; and

     (3)  Appropriate moneys for the cost of the comprehensive

     The Judiciary supported the intent of this measure, but
noted that if change is to occur within state government, it must
come from within.  The Department of Budget and Finance submitted
comments.  Both testifiers indicated that this measure is
duplicative of other ongoing efforts to improve state government

                                 STAND. COM. REP. NO. 1239
                                 Page 2

     Your Committee concurs that although the underlying intent
of this measure, as received, is a noble one, the scope of the
proposed audit is too broad and would not justify the cost to
accomplish the audit.  In addition, a review by an outside party
will only create an undesirable reaction from employees.  Even if
the recommendations made are valid, there is no guarantee that
they will be acted upon as the recommendations would have to be
approved by the Legislature and the Executive Branch, subject to
political and other considerations.

     Your Committee finds that for any effective reform to occur,
it must come from those who are intimately familiar with work
operations.  Accordingly, your Committee has amended this bill by
deleting its substance and inserting provisions that would
establish an incentive award program.  As amended, this bill

     (1)  Establish an Incentive Award Program (Program) to
          encourage state employees to make cost-saving
          recommendations to improve government operations;

     (2)  Provide that the head of each department of the
          executive, judicial, or legislative branch of state
          government, upon the approval of the Governor,
          Administrative Director of the Courts, or House Speaker
          or Senate President, respectively, may pay cash awards
          to officers and employees for their cost-saving ideas;

     (3)  Allow a monetary incentive of ten percent of the actual
          savings realized during the first year of
          implementation of the recommendation, but not more than

     (4)  Provide that the Director of Human Resources
          Development develop guidelines to administer the
          Program; and

     (5)  Require the Legislative Auditor to conduct annual
          reviews of the Program.

     As affirmed by the record of votes of the members of your
Committee on Legislative Management that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 4, S.D. 2, as amended herein, and recommends that it
pass Second Reading in the form attached hereto as S.B. No. 4,
S.D. 2, H.D. 1, and be referred to the Committee on Finance.

                                 STAND. COM. REP. NO. 1239
                                 Page 3

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Legislative

                                   EZRA KANOHO, Chair