Report Title:

University of Hawaii Risk Management Special Fund


To establish the University of Hawaii Risk Management Special Fund.


S.B. NO.












SECTION 1. The purpose of this Act is to authorize the University of Hawaii to establish a risk management program, to create and capitalize a risk management special fund, to authorize the deposit of certain revenues into the risk management special fund, to authorize the expenditure of funds from the risk management special fund for purposes provided herein, and to authorize the board of regents to approve the indemnification of persons, companies, and government entities, as necessary in order to receive research and other funds for educational purposes. With the passage of the Act 115 in 1998, otherwise known as the Autonomy Act, the legislature has increasingly looked to the university to become more autonomous in the management of its affairs. Since 2001, the legislature has required the university to identify funds from its revenue sources to pay for settlements and judgments. This, coupled with the trend to look to the university to become less dependent on general funds in the future, has required the university to creatively manage its risks and exposures by augmenting the State's excess insurance coverage. The university has opted to establish a risk management program to manage its risks and exposures by either purchasing insurance, establishing a self-insurance program, or a combination of the two. This Act will provide the statutory authority for the university to implement its risk management program in cooperation with the State's risk management program. The authorization provided hereunder shall not alter the university's status as an agency of the State. Within the parameters provided by the legislature, as provided herein, the university is charged with the responsibility of paying its own legal claims, including settlements and judgments, and to be responsible for managing its risks and exposures by either purchasing insurance or establishing a self insurance program, or both.

SECTION 2. Chapter 304, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"304- University of Hawaii risk management special fund. (a) There is established within the treasury of the State a special fund to be known as the University of Hawaii risk management special fund.

(b) The following may be deposited into the special fund:

(1) Appropriations by the legislature;

(2) All revenues derived from assessments for risk management costs against the funds of the university;

(3) Money received from the settlement of claims or losses of the university which are not contractually or otherwise obligated for other purposes;

(4) Money received pursuant to an insurance policy; and

(5) Any law to the contrary notwithstanding, the university may transfer funds at its disposal, not including general funds, into this special fund to be expended for the purposes provided herein.

(c) Revenues deposited into this special fund may be expended by the university for costs and expenses associated with the administration of the risk management program, including, but not limited to, insurance premiums, retention payments, claims administration, settlements, payment of judgments, other obligations, and legal fees and costs.

(d) Any law to the contrary notwithstanding, the board of regents may agree in writing to an indemnity provision by which the University of Hawaii agrees to indemnify, defend, and hold harmless any person, corporation, or entity when all of the following conditions are satisfied:

(1) When such person, corporation, or entity requires an indemnity in writing as a condition for receiving a grant, benefit, service, or interest in or right to use property;

(2) The president, or the president's designee, following a favorable review by the university general counsel, or the counsel's designee, approves the proposed indemnification; and

(3) The chief financial officer, pursuant to section 304-6, has obtained an insurance policy or policies in an amount sufficient to cover the liability of the university that reasonably may be anticipated to arise under the indemnity provision or has determined that it is not in the best interest of the university to obtain insurance.

(e) Nothing in this section shall be construed to expand the scope of liability of the university beyond that set forth in chapters 661 and 662. Nothing in this section shall be construed to waive the immunity of the university from suit in federal courts guaranteed by the Eleventh Amendment to the Constitution of the United States. An indemnity provision not in strict compliance with this section shall not give rise to a claim against the university under chapter 304 or 661 or otherwise waive the university's sovereign immunity.

(f) The board shall develop internal policies and procedures for the management of risk at the university that are consistent with the goals of public accountability."

SECTION 3. If any provision of this Act, or the application thereof to any person or entity or circumstances is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end of the provisions of this Act are severable.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2003.