STAND. COM. REP. NO.524

Honolulu, Hawaii

, 2003

RE: S.B. No. 779

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 779 entitled:

"A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM,"

begs leave to report as follows:

The purpose of this measure is to convert all new members of bargaining Unit 5, teachers and other personnel of the Department of Education under the same pay schedule, including part-time employees working less than twenty hours a week who are equal to one-half of a full-time equivalent, to class A contributory members of the Employees' Retirement System.

This measure also allows existing members the opportunity to convert from class C to class A membership.

Testimony in support of this measure was submitted by the Hawaii State Teachers Association and six teachers. Testimony in support of the intent of this measure was submitted by the Department of Education.

Testimony in opposition to this measure was submitted by the Department of Budget and Finance.

Comments on the measure were provided by the Employees' Retirement System which proposed an alternative to the measure through the proposal of a defined benefit contribution retirement plan with a hybrid feature to balance the needs of the shorter term employees with those of longer term employees.

Your Committee finds that it has, on numerous occasions, reviewed proposed legislation to convert class C noncontributory members to class A contributory members and believes that this piecemeal approach to legislation is an inefficient manner in which to address the needs of the members of the Employees' Retirement System.

Instead, your Committee believes that the more efficient approach would be to provide all class C noncontributory members with the opportunity to convert to a contributory retirement class in the interest of fairness and clarity.

In light of this belief, your Committee has amended this measure by deleting the existing provisions of the measure and replacing them with language that establishes a new class H membership. The measure, as amended:

(1) Allows class C members, in service on December 31, 2004, the option to convert to class H members;

(2) Requires all employees, hired after January 1, 2005, to be designated as class H members;

(3) Establishes the parameters for unreduced retirement allowances, service retirement allowances, minimum cash balance benefits, ordinary disability retirement allowances, service-connected disability retirement allowances, death benefits, post retirement allowances, retirement allowance options, rollovers, and the determination of members' rights after separation from service.

Your Committee understands that the proposed amendments do not address all issues related to retirement benefits under this new class H membership. However, further clarification from the Employees' Retirement System regarding the establishment, parameters, and benefits of this new class are forthcoming, and your Committee believes this measure should continue in the legislative process as a vehicle for further discussion.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 779, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 779, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor,

____________________________

BRIAN KANNO, Chair