Report Title:

UH Risk Management Program

Description:

Authorizes the establishment of a risk management program at UH; creates a special fund; appropriates $1,000,000 for deposit into the special fund.

THE SENATE

S.B. NO.

72

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to risk management.

 

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

SECTION 1. The purpose of this Act is to:

(1) Authorize the University of Hawaii to establish a risk management program;

(2) Create the University of Hawaii risk management special fund;

(3) Authorize the university to indemnify persons, companies, governmental, and other entities when necessary to secure research and other funds for educational purposes; and

(4) Appropriate funds to the University of Hawaii risk management special fund and authorize the expenditure of money from the fund.

Since the university was granted autonomy over internal affairs, 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. Coupled with the increasing trend to reduce the university's reliance on general funds, this has required the university to more protect itself by augmenting the State's insurance coverage.

The university has opted to establish a risk management program that seeks to ensure protection by purchasing insurance, establishing a self-insurance program, or utilizing a combination of the two. This Act will provide the statutory authority and create the financial framework for the university to implement its risk management program. To cover the initial costs associated with creating a risk-management program, the University is requesting an appropriation of $1,000,000.

The authorization provided in this Act shall not alter the university's status as an agency of the State. Within the parameters provided by the legislature in this Act, the university shall be charged with the responsibility of paying its own legal claims, including settlements and judgments, and shall be responsible for managing its risks and exposures by either purchasing insurance or establishing a self-insurance program.

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; indemnification. (a) There is created the University of Hawaii risk management special fund. The following may be deposited in 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) Moneys received from the settlement of claims for losses of the university that are not contractually or otherwise obligated for other purposes; and

(4) Moneys received by the university pursuant to an insurance policy.

(b) Revenues deposited into the special fund may be expended by the university for costs and expenses associated with the administration of the university's 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.

(c) Notwithstanding any law to the contrary, the university may transfer funds at its disposal, not including general funds, into the special fund to be expended for the purposes of the special fund.

(d) Notwithstanding any law to the contrary, 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 other entity when all of the following conditions have been 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 its designee, approves the proposed indemnifiction; and

(3) The chief financial officer of the university, in consultation with the vice-chancellor for research, 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 limit 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 nor 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. There is appropriated out of the general revenues of the State of Hawaii the sum of $1,000,000 or so much thereof as may be necessary for fiscal year 2003-2004 to be deposited into the University of Hawaii risk management special fund.

The sum appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 4. There is appropriated out of the University of Hawaii risk management special fund the sum of $1,000,000 or so much thereof as may be necessary for fiscal year 2003-2004 for the university's risk management program.

The sum appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 5. If any provision of this Act, or the application thereof to any person or circumstance 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 the provisions of this Act are severable.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

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