Report Title:

Executive Office on Aging; Hawaii Health Systems Corporation

Description:

Transfers the Executive Office on Aging from the Office of the Governor to the Department of Health. Requires the Auditor to conduct management and financial audit of the Hawaii Health Systems Corporation. (SB1675 HD3)

THE SENATE

S.B. NO.

1675

TWENTY-SECOND LEGISLATURE, 2003

H.D. 3

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HEALTH.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The purpose of part I of this Act is to transfer the executive office on aging from the office of the governor to the department of health for administrative purposes.

SECTION 2. Section 349-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established within the [office of the governor,] department of health, for administrative purposes only, an executive office on aging."

SECTION 3. All rights, powers, functions, and duties of the office of the governor, relating to the executive office on aging, are transferred to the department of health. All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

Any employee who, prior to this Act, was exempt from civil service and may be transferred as a consequence of this Act, shall continue to retain the employee's exempt status and shall not be appointed to a civil service position because of this Act. The employee shall continue in an exempt position upon transfer to the department of health until such time that the exempt position is converted to a civil service position in accordance with applicable state personnel rules, regulations, policies, or procedures.

All officers or employees whose positions are transferred by this Act shall be transferred to the department of health. The functions, duties, classifications, pay, benefits, tenure, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege of any officer or employee shall not be changed in the execution of the transfer. Subsequent changes in status shall be made in accordance with applicable state personnel laws, rules, policies, procedures, and collective bargaining agreements.

If an office or position held by an officer or employee is abolished as a result of this Act, the employment action affecting the officer or employee shall be in accordance with applicable state personnel laws, rules, policies, procedures, and collective bargaining agreements.

SECTION 4. All rules, policies, procedures, guidelines, and other material adopted or developed by the office of the governor to implement provisions of the Hawaii Revised Statutes which are reenacted or made applicable to the department of health by this Act, shall remain in full force and effect until amended or repealed by the department of health pursuant to chapter 91, Hawaii Revised Statutes. In the interim, every reference to the office of the governor in those rules, policies, procedures, guidelines, and other material is amended to refer to the department of health.

SECTION 5. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the office of the governor pursuant to the provisions of the Hawaii Revised Statutes, which are reenacted or made applicable to the department of health by this Act, shall remain in full force and effect. Upon the effective date of this Act, every reference to the office of the governor, relating to the executive office on aging, shall be construed as a reference to the department of health.

SECTION 6. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, computer software and data, authorizations, and other property, both real and personal, heretofore made, used, acquired, or held by the office of the governor in the exercise of the functions and programs transferred by this Act shall be transferred to the department of health when the functions or programs are so transferred.

SECTION 7. If any part of this Act is found to be in conflict with federal requirements that are a prescribed condition for the allocation of federal funds to the State, the conflicting part of this Act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this Act in its application to the agencies concerned. The rules adopted under this Act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the State.

PART II

SECTION 8. The legislature, through Act 262, Session Laws of Hawaii 1996, established the Hawaii health systems corporation to which was transferred the State's community hospitals, previously operating within the jurisdiction of the division of community hospitals of the department of health. The purpose was to provide the administrative structure of governance of the hospitals with the appropriate flexibility and autonomy needed for community hospitals to compete and remain viable.

In 1997, immediately after the corporation's establishment, the legislature, through Act 99, Session Laws of Hawaii 1997, made an emergency appropriation of $12,000,000 in general funds for the corporation's operations because it would have been "unable to meet its fiscal obligation to provide services to members of the general public who need hospital-based services provided by the community hospital system."

Also in 1997, through the General Appropriation Act of 1997, the corporation received funding for its operations (HTH 210), provided that the auditor (in section 52 of Act 328, Session Laws of Hawaii 1997) perform a "fiscal and management audit" of the corporation to include "an analysis of accounting procedures, procurement practices, and personnel and fiscal accountability" and report results to the legislature before the convening of the 1998 regular session.

In 1998, the corporation continued to receive funding in the Supplemental Appropriations Act of 1998 (HTH 210) and the due date of the fiscal and management audit was amended to prior to the convening of the regular session of 1999. However, in that same year, the legislature again made another emergency appropriation of $5,000,000 to the corporation through Act 80, Session Laws of Hawaii 1998, because, although the corporation had "achieved millions of dollars in cost reductions", it had been unable "to completely eliminate the deficit incurred while maintaining the levels of services, including uncompensated care and mandated services."

In 1999, the corporation received funds in the General Appropriations Act of 1999 (HT 210). In 2000, the corporation received funds through the Supplemental Appropriations Act of 2000, but was also subjected to a follow-up study by the auditor (section 4(13), Act 281, Session Laws of Hawaii 2000) to include "an analysis of information systems operation, procurement practices, cash collections, the maximization of accounts receivables, and the effect of Act 229, Session Laws of Hawaii 1998, on personnel management."

In 2001, the corporation received funds through the General Appropriations Act of 2001 provided that the corporation submit "detailed financial statements (balance sheet, statement of revenue and expenses, and sources and uses of cash) by facility and in total, comparing projected revenues to the actual revenues and budgeted expenditures to actual expenditures for fiscal year 2000-2001 and for fiscal year 2001-2002 ... with accompanying explanations for variances to highlight the financial and operational achievements and shortfalls of the Hawaii health systems corporation" (section 28, Act 259, Session Laws of Hawaii 2001).

In 2002, the corporation received funds through the Supplemental Appropriations Act of 2002. Again in 2002, the legislature made an emergency appropriation of $5,000,000 in Act 133, Session Laws of Hawaii 2002, to repay funds advanced by the State and to pay for mandated and rural health care costs.

SECTION 9. (a) The legislature finds that the Hawaii health care system continues to encounter difficulties in controlling its finances and operations. The Hawaii health systems corporation was established with a health systems special fund under the corporation's control to carry out its operations. The corporation was also granted operating and budget autonomy in section 323F-24, Hawaii Revised Statutes, which provides that the "corporation's operating and capital improvement budgets shall not be subject to review or approval by the governor or any state agency, except where state general funds for capital improvement moneys are requested." On the other hand, section 323F-22, Hawaii Revised Statutes, requires the corporation to conduct annual financial audits and submit annual reports, including results of the audits, to the governor, and to report on various items annually to the legislature, including projected revenues for each health care facility, capital improvement projects planned, and regional public health facility management advisory committee reports. In light of the corporation's continuing inability to control its finances and operate efficiently, the legislature finds that the corporation's management and finances must be comprehensively audited.

(b) The auditor shall conduct a comprehensive management audit of the Hawaii health systems corporation with a view toward evaluating the effectiveness of the corporation's management, operational, and financial activities and to recommend ways to reduce or eliminate the corporation's spiraling costs.

(c) The auditor shall report its findings and recommendations to the legislature and to the governor no later than December 31, 2003.

PART III

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.