Report Title:

Hawaii Health Systems Corp; Maui Regional Entity

 

Description:

Allows for creation of regional entities and regional boards for the five regions within the Hawaii Health Systems Corporation.  Establishes the Maui regional entity and regional board.  Appropriation.  (HB1704 HD1)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1704

TWENTY-FOURTH LEGISLATURE, 2007

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO HEALTH.

 

 

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

 


     SECTION 1.  The legislature recognizes that the State's community hospital system, the Hawaii health systems corporation, is the fourth largest public hospital system in the nation.  The Hawaii health systems corporation's public health facilities provide essential safety-net hospital and long-term care services throughout the state and are often the only hospitals in many rural communities.  Due to rapid changes taking place in the health care industry, the legislature acknowledges that the governing structure of the State's public hospital system must provide the appropriate flexibility and autonomy needed to compete, remain viable, and respond to the needs of the specific communities served.

     The current administrative arrangement places the public hospital system within a single state agency, the Hawaii health systems corporation.  This arrangement is the result of the passage of landmark legislation, Act 262, Session Laws of Hawaii 1996, after years of study.  Act 262 was largely the result of the work of a task force established pursuant to Act 266, Session Laws of Hawaii 1994, charged with studying the establishment of an agency for community hospitals.  On December 20, 1994, the task force issued its report entitled "The Preliminary Report of the Governor's Task Force on the Establishment of An Agency for Community Hospitals", to the governor and the legislature.  Many of the recommendations of the task force were adopted by the legislature, resulting in passage of Act 262, and the creation of the Hawaii health systems corporation in 1996.

     One significant recommendation of the task force included the establishment of regional boards of directors, along with the system-wide board.  The task force stated, at page 4 of its report:  "The Hawaii Health Systems Corporation should administer the state facilities in a decentralized fashion, with the facilities to be grouped into five regions.  Three regions should be formed for the facilities of Kauai, Oahu and Maui Counties respectively, and the Big Island should be divided into Eastern and Western regions.  Each region should have an operating Board of Directors consisting of nine members.  Regional Boards should be initially appointed by the Governor with the advice and consent of the Senate, and should subsequently be self perpetuating (i.e., with future Board appointments made by the current Board)."

     During the conference committee hearings on Senate Bill No. 2522, which ultimately became Act 262, the regional board concept was replaced with regional management advisory committees.  The latter represent the communities where the hospitals are located and meet with the management of the facilities and the Hawaii health systems corporation executives to give the communities a voice in the provision of vital safety-net hospital services.

     The legislature finds that the Hawaii health systems corporation has developed strong administrative and clinical leadership in some regions and is now ready for the implementation of more regional control.  Furthermore, regional control would enhance the ability of the local communities to participate in the decision-making and control of their community hospitals.  While the management advisory committees have been effective in representing their communities, their role has only been advisory.  Local communities are in the best position to make the critical decisions relating to operation of their community hospitals.  The hospitals should still engage in statewide activities through the Hawaii health systems corporation where a system-wide approach may provide economies of scale and efficiencies.

     The purpose of this Act is to affirm the State's commitment to provide quality health care for the people of the State, by establishing a regional entity for the Maui region as a first step to more regional control for all regions, to be governed by a community-based regional board and to provide the necessary authority to the regional entities to accomplish the goal of community-based governance.

     SECTION 2.  Chapter 323F, Hawaii Revised Statutes, is amended by adding four new sections to be appropriately designated and to read as follows:

     "§323F-A  Regional entities and transfer of assets.  There may be one regional entity for each of the five regions specified in section 323F-2 as established by law.  Each regional entity shall be a public body corporate and politic and an instrumentality and agency of the State.  All health systems assets and health systems liabilities of a region shall be transferred to the regional entity upon establishment.

     §323F-B  Establishment of a regional entity for Maui county.  There shall be established a regional entity for the county of Maui, except for the county of Kalawao, that shall consist of Kula hospital, Lanai community hospital, and Maui memorial medical center, and all other public health facilities created or acquired hereafter by the regional entity within the region.

     §323F-C  Regional boards.  (a)  Each regional entity shall be governed by a regional board of directors to consist of not less than seven members and not more than fifteen members as determined by the regional board to carry out the duties and responsibilities of the regional entity.  A regional board shall initially consist of eleven members to be appointed as follows:

     (1)  Four members shall be appointed by the governor within thirty days of receipt of a list of candidates as follows:

          (A)  Two members shall be appointed from a list, which shall not include physicians, of four individuals submitted by the speaker of the house of representatives; and

          (B)  Two members shall be appointed from a list, which shall not include physicians, of four individuals submitted by the president of the senate;

     (2)  Four members shall be appointed by the regional public health facility management advisory committee for the region as follows:

          (A)  One member, who shall not be a physician, shall be a member of the corporation board; and

          (B)  Three members, who shall not be physicians, may be medical and health care providers and professionals, consumers, and knowledgeable individuals in appropriate areas such as business and law;

          and

     (3)  Three physicians shall be appointed by majority vote of the medical staff of the public health facilities in the region present at a duly noticed meeting from a list of qualified candidates submitted by the medical executive committees in the region.

Two initial members nominated by the speaker of the house of representatives and the president of the senate, respectively, shall serve for a term of two years.  One initial member appointed by the medical executive committees shall serve for a term of two years.  One initial member appointed by the regional management advisory committee shall serve a term of two years.  The remaining initial members and all members appointed thereafter shall be appointed for a term of three years; provided that new members shall be selected by a two-thirds affirmative vote of the existing board members at a duly noticed public meeting.  Each regional board shall elect its own chairperson.

     (b)  Each regional board shall be responsible for local governance, control, and administration of services in its respective region.  Each regional board shall be as proportionately represented as practicable.

     (c)  Any member of a regional board may be removed for cause by a two-thirds majority vote of the regional board's voting members.  For purposes of this section, cause shall include, without limitation:

     (1)  Malfeasance in office;

     (2)  Failure to attend regularly called meetings;

     (3)  Sentencing for conviction of a felony; or

     (4)  Any other cause that may render a member incapable or unfit to discharge the duties required under this chapter.

Conviction of a felony consistent with section 831-3.1, shall automatically and immediately disqualify a board member.

     §323F-D  Regional chief executive officers; exempt positions.  (a)  Upon the formation of a regional entity and corresponding regional board, a regional board may appoint, exempt from chapter 76 and section 26-35(a)(4), a regional chief executive officer of the regional entity whose salary shall be set by the appropriate regional board.  A regional chief executive officer may also appoint as necessary other personnel, exempt from chapters 76 and 89, to work directly for the regional chief executive officer and the appropriate regional board.

     (b)  Any regional board or its designee may dismiss its exempt personnel with or without cause; provided that removal without cause shall not prejudice any contract rights of personnel.

     (c)  The regional chief executive officer or designee may appoint, exempt from chapters 76 and 89, hospital administrators, assistant administrators, directors of nursing, medical directors, and staff physicians, to facilitate the management of facilities within the regional entity; provided that directors of nursing appointed before July 1, 1998, may maintain their civil service status as provided in chapter 76 by so communicating in writing to the regional chief executive officer by October 31, 2007.  Hospital administrators and assistant administrators appointed before July 1, 1983, may maintain their permanent civil service status as provided in chapter 76."

     SECTION 3.  Section 323F-1, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

     ""Regional board" means a regional board of a regional entity of the corporation.

     "Regional entity" means an entity that is wholly owned by the corporation and responsible for regional governance, control and administration of services in its region."

     SECTION 4.  Section 26-55, Hawaii Revised Statutes, is amended:

     1.   By amending subsection (e) to read:

     "(e)  Nothing in this section shall be construed as in any manner affecting the civil service laws applicable to the several counties, the judiciary, or the Hawaii health systems corporation[,] or any of its regional entities, which shall remain the same as if this chapter had not been enacted.

     2.  By amending subsection (g) to read:

     "(g)  The department of human resources development shall submit, no later than twenty days prior to the convening of each regular session [of the legislature] beginning with the regular session of 2007, a report of the number of exempt positions that were converted to civil service positions during the previous twelve months.  The report shall include but not be limited to:

     (1)  When the position was established;

     (2)  The purpose of the position;

     (3)  Rationale for the conversion; and

     (4)  How many exempt positions remain in each state department after the conversions."

     SECTION 5.  Section 28-8.3, Hawaii Revised Statutes, is amended:

     1.   By amending subsection (a) to read:

     "(a)  No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

     (1)  By the public utilities commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;

     (2)  By any court or judicial or legislative office of the State;

     (3)  By the legislative reference bureau;

     (4)  By any compilation commission that may be constituted from time to time;

     (5)  By the real estate commission for any action involving the real estate recovery fund;

     (6)  By the contractors license board for any action involving the contractors recovery fund;

     (7)  By the trustees for any action involving the travel agency recovery fund;

     (8)  By the office of Hawaiian affairs;

     (9)  By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485;

    (10)  As grand jury counsel;

    (11)  By the Hawaiian home lands trust individual claims review panel;

    (12)  By the Hawaii health systems corporation or any of its regional entities, or any of its facilities;

    (13)  By the auditor;

    (14)  By the office of ombudsman;

    (15)  By the insurance division;

    (16)  By the University of Hawaii;

    (17)  By the Kahoolawe island reserve commission;

    (18)  By the division of consumer advocacy;

    (19)  By the office of elections;

    (20)  By the campaign spending commission;

    (21)  By the Hawaii tourism authority, as provided in section 201B-2.5; or

    (22)  By a department, in the event the attorney general, for reasons deemed by the attorney general good and sufficient, declines, to employ or retain an attorney for a department; provided that the governor thereupon waives the provision of this section."

      2.  By amending subsection (c) to read:

     "(c)  Every attorney employed by any department on a full-time basis, except an attorney employed by the public utilities commission, the labor and industrial relations appeals board, the Hawaii labor relations board, the office of Hawaiian affairs, the Hawaii health systems corporation[,] or any of its regional entities, the department of commerce and consumer affairs in prosecution of consumer complaints, insurance division, the division of consumer advocacy, the University of Hawaii, the Hawaii tourism authority as provided in section 201B-2.5, the Hawaiian home lands trust individual claims review panel, or as grand jury counsel, shall be a deputy attorney general."

     SECTION 6.  Section 29-24, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is established in the state treasury an interagency federal revenue maximization revolving fund, into which shall be deposited all funds and proceeds collected from the federal government and third-party payors for costs not previously claimed by the State, with the exception of proceeds collected for services provided by the Hawaii health systems corporation[,] or any of its regional entities, for reimbursement of federally-funded state programs.  For purposes of this chapter, federally-funded state programs include but shall not be limited to those federally-funded programs within the departments of human services and health, and shall not include the federally-funded program within the department of education as provided in [[]section[]] 302A-1406.  Expenditures and transfers from the fund shall be made by the comptroller in proportional allocations established by the comptroller and the director of finance.  Transfers shall be made to the department claiming the reimbursement for expenses incurred related to federal fund reimbursement claims and to the general fund of the State.  Moneys in the fund may be expended for consultant services rendered under subsection (b)."

     SECTION 7.  Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

     "§36-27  Transfers from special funds for central service expenses.  Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

     (1)  Special out-of-school time instructional program fund under section 302A-1310;

     (2)  School cafeteria special funds of the department of education;

     (3)  Special funds of the University of Hawaii;

     (4)  State educational facilities improvement special fund;

     (5)  Convention center enterprise special fund under section 201B-8;

     (6)  Special funds established by section 206E-6;

     (7)  Housing loan program revenue bond special fund;

     (8)  Housing project bond special fund;

     (9)  Aloha Tower fund created by section 206J-17;

    (10)  Funds of the employees' retirement system created by section 88-109;

    (11)  Unemployment compensation fund established under section 383-121;

    (12)  Hawaii hurricane relief fund established under chapter 431P;

    (13)  Hawaii health systems corporation special funds[;] and the special funds of any of the regional entities of the Hawaii health systems corporation;

    (14)  Tourism special fund established under section 201B‑11;

    (15)  Universal service fund established under chapter 269;

    (16)  Integrated tax information management systems special fund under section 231-3.2;

    (17)  Emergency and budget reserve fund under section 328L‑3;

    (18)  Public schools special fees and charges fund under section 302A-1130(f);

    (19)  Sport fish special fund under section 187A-9.5;

    (20)  Neurotrauma special fund under section 321H-4;

    (21)  Deposit beverage container deposit special fund under section 342G-104;

    (22)  Glass advance disposal fee special fund established by section 342G-82;

    (23)  Center for nursing special fund under section [[]304A-2163[]];

    (24)  Passenger facility charge special fund established by section 261-5.5;

    (25)  Solicitation of funds for charitable purposes special fund established by section 467B-15;

    (26)  Land conservation fund established by section 173A-5;

    (27)  Court interpreting services revolving fund under section 607-1.5;

    (28)  Trauma system special fund under section 321-22.5;

    (29)  Hawaii cancer research special fund;

    (30)  Community health centers special fund; and

    (31)  Emergency medical services special fund[[];

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State.  All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers.  To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund.  No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year.[]]"

     SECTION 8.  Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Each special fund, except the:

     (1)  Transportation use special fund established by section 261D-1;

     (2)  Special out-of-school time instructional program fund under section 302A-1310;

     (3)  School cafeteria special funds of the department of education;

     (4)  Special funds of the University of Hawaii;

     (5)  State educational facilities improvement special fund;

     (6)  Special funds established by section 206E-6;

     (7)  Aloha Tower fund created by section 206J-17;

     (8)  Funds of the employees' retirement system created by section 88-109;

     (9)  Unemployment compensation fund established under section 383-121;

    (10)  Hawaii hurricane relief fund established under chapter 431P;

    (11)  Convention center enterprise special fund established under section 201B-8;

    (12)  Hawaii health systems corporation special funds[;] and the special funds of any of the regional entitiess of the Hawaii health systems corporation;

    (13)  Tourism special fund established under section 201B‑11;

    (14)  Universal service fund established under chapter 269;

    (15)  Integrated tax information management systems special fund under section 231-3.2;

    (16)  Emergency and budget reserve fund under section 328L‑3;

    (17)  Public schools special fees and charges fund under section 302A-1130(f);

    (18)  Sport fish special fund under section 187A-9.5;

    (19)  Neurotrauma special fund under section 321H-4;

    (20)  Center for nursing special fund under section [[]304A-2163[]];

    (21)  Passenger facility charge special fund established by section 261-5.5;

    (22)  Court interpreting services revolving fund under section 607-1.5;

    (23)  Trauma system special fund under section 321-22.5;

    (24)  Hawaii cancer research special fund;

    (25)  Community health centers special fund; and

    (26)  Emergency medical services special fund[[];

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned.[]]"

     SECTION 9.  Section 37-53, Hawaii Revised Statutes, is amended to read as follows:

     "§37-53  Transfer of special funds.  At any time during a fiscal year, notwithstanding any other law to the contrary, any department may, with the approval of the governor or the director of finance if so delegated by the governor, transfer from any special fund relating to such department to the general revenues of the State all or any portion of moneys determined to be in excess of fiscal year requirements for such special fund, except for special funds under the control of the department of transportation relating to highways, airports, transportation use, and harbors activities, special funds under the control of the Hawaii health systems corporation[,] or any of its regional entities, and special funds of the University of Hawaii.  At any time the department of transportation, with the approval of the governor or the director of finance if so delegated by the governor, may transfer from any special fund under the control of the department of transportation, or from any account within any such special fund, to the general revenues of the State or to any other special fund under the control of the department of transportation all or any portion of moneys determined to be in excess of requirements for the ensuing twelve months determined as prescribed by rules adopted pursuant to chapter 91; provided that no such transfer shall be made which would cause a violation of federal law or federal grant agreements."

     SECTION 10.  Section 37-74, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  No appropriation transfers or changes between programs or agencies shall be made without legislative authorization; provided that:

     (1)  Authorized transfers or changes, when made, shall be reported to the legislature;

     (2)  Except with respect to appropriations to fund financing agreements under chapter 37D, the University of Hawaii shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs, among cost elements in a program, and between quarters, as applicable; except with respect to appropriations to fund financing agreements under chapter 37D, the department of education shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs and among cost elements in a program, and between quarters, as applicable; and the Hawaii health systems corporation or any of its regional entities shall have the flexibility to transfer special fund appropriations among community hospitals facilities as applicable; provided that the Hawaii health systems corporation and any of its regional entities shall maintain the integrity and services of each individual facility and shall not transfer appropriations out of any facility that would result in a reduction of services offered by the facility, with due regard for statutory requirements, changing conditions, the needs of the programs, and the effective utilization of resources; and

     (3)  The university and the department of education shall account for each transfer implemented under this subsection in quarterly reports to the governor and annual reports at the end of each fiscal year to the legislature and the governor, which shall be prepared in the form and manner prescribed by the governor and shall include information on the sources and uses of the transfer."

     SECTION 11.  Section 37D-1, Hawaii Revised Statutes, is amended by amending the definition of ""agency" or "participating agency"" to read as follows:

     ""Agency" or "participating agency" means the judiciary, any executive department, any independent commission, any board, any authority, any bureau, any office, any other establishment of the State (except the legislature and its agencies), or any public corporation that is supported in whole or in part by state funds, or any agent thereof, authorized by law to expend available moneys; provided that the Hawaii health systems corporation and any of its regional entities shall not be governed by this chapter for any financing agreement unless it elects to do so."

     SECTION 12.  Section 37D-2, Hawaii Revised Statutes, is amended to read as follows:

     "§37D-2  Financing agreements.  (a)  There is hereby established and authorized the financing agreement program of the State.  Any agency desiring to acquire or improve projects through the financing agreement program established and authorized by this chapter shall submit a written request to the department providing such information as the department shall require.  Notwithstanding any other law to the contrary, and except for the Hawaii health systems corporation[,] and any of its regional entities, only with the approval by the attorney general as to form and legality and upon the written request of one or more participating agencies may the department enter into a financing agreement in accordance with this chapter, except that the board of regents of the University of Hawaii may enter into a financing agreement in accordance with this chapter without the approval of the director and of the attorney general as to form and legality if the principal amount of the financing agreement does not exceed $3,000,000.  A financing agreement may be entered into by the department on behalf of one or more participating agencies at any time (before or after commencement or completion of any improvements or acquisitions to be financed) and shall be upon terms and conditions the department finds to be advantageous.  In each case of a written request by the judiciary to participate in the financing agreement program, the department shall implement the request; provided that the related financing agreement shall be upon terms and conditions the department finds to be advantageous.  Any financing agreement entered into by the department without the approval required by this section shall be void and of no effect.  A single financing agreement may finance a single item or multiple items of property to be used by multiple agencies or may finance a single item or multiple items of property to be used by a single agency.  The department shall bill any participating agency that benefits from property acquired with the proceeds of a financing agreement for such participating agency's pro rata share of:

     (1)  The department's costs of administration of the financing agreement program; and

     (2)  The financing costs, including the principal and interest components of the financing agreement and insurance premiums[;],

on a monthly or other periodic basis, and may deposit payments received in connection with the billings with a trustee as security for a financing agreement.  Any participating agency receiving such a bill shall be authorized and shall pay the amounts billed from the available moneys. 

     (b)  Financing agreements shall be subject to the following limitations:

     (1)  Amounts payable by a participating agency to or upon the direction of the department in respect to a project and by the department under a financing agreement shall be limited to available moneys.  In no circumstance shall the department be obligated to pay amounts due under a financing agreement from any source other than available moneys.  If, by reason of insufficient available moneys or other reason, amounts due under a financing agreement are not paid when due, the lender may exercise any property right that the department has granted to it in the financing agreement, against the property that was purchased with the proceeds of the financing agreement, and apply the amounts so received toward payments scheduled to be made by the department under the financing agreement;

     (2)  No property rights may be granted in property unless the property is being acquired, is to be substantially improved, is to be refinanced with the proceeds of a financing agreement, or is land on which the property is located;

     (3)  Notwithstanding any other law to the contrary, and except for the Hawaii health systems corporation and any of its regional entities, and as otherwise provided in this section with respect to the University of Hawaii, and except as provided in chapter 323F as to the Hawaii health systems corporation[,] and any of its regional entities, an agency shall not have the power to enter into a financing agreement, except through the department as authorized by this chapter, and nothing in this chapter shall be construed to authorize the sale, lease, or other disposition of property owned by an agency;

     (4)  Except as otherwise provided in this section with respect to the University of Hawaii, the sale, assignment, or other disposition of any financing agreements, including certificates of participation relating thereto, shall require the approval of the director; and

     (5)  The department shall not be subject to chapter 103D and any and all other requirements of law for competitive bidding for financing agreements."

     SECTION 13.  Section 76-11, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "chief executive" to read:

     "Chief executive" means the governor, the respective mayors, the chief justice of the supreme court, [and] the chief executive officer of the Hawaii health systems corporation[.], and the regional chief executive officer of any regional entity of the Hawaii health systems corporation.  It may include the superintendent of education and the president of the University of Hawaii with respect to their employees on any matter that applies to employees in general, including employees who are not covered by this chapter."

     2.  By amending the definition of ""employer" or "public employer"" to read:

     ""Employer" or "public employer" means the governor in the case of the State, the respective mayors in the case of the counties, the chief justice of the supreme court in the case of the judiciary, the board of education in the case of the department of education, the board of regents in the case of the University of Hawaii, the Hawaii health systems corporation board in the case of the Hawaii health systems corporation[,] and any regional board in the case of a regional board of a regional entity of the Hawaii health systems corporation, and any individual who represents one of the employers or acts in their interest in dealing with public employees.  In the case of the judiciary, the administrative director of the courts shall be the employer in lieu of the chief justice for purposes which the chief justice determines would be prudent or necessary to avoid conflict."

     3.  By amending the definition of "jurisdiction" to read:

     ""Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, the department of education, the University of Hawaii, and the Hawaii health systems corporation[.], and any regional entity of the Hawaii health systems corporation."

     SECTION 14.  Section 76-47, Hawaii Revised Statutes, is amended by amending subsection (c) to read:

     "(c)  The merit appeals board shall adopt rules of practice and procedure consistent with section 76-14 and in accordance with chapter 91, except that, in the case of the judiciary and the Hawaii health systems corporation[,] and regional entities of the Hawaii health systems corporation, the adoption, amendment, or repeal of rules shall be subject to the approval of their respective chief executives.  The rules shall recognize that the merit appeals board shall sit as an appellate body and that matters of policy, methodology, and administration are left for determination by the director.  The rules may provide for the sharing of specific expenses among the parties that are directly incurred as a result of an appeal as the merit appeals board deems would be equitable and appropriate, including but not limited to expenses for transcription costs or for services, including traveling and per diem costs, provided by persons other than the board members or permanent staff of the board.  Official business of the merit appeals board shall be conducted in meetings open to the public, except as provided in chapter 92."

     SECTION 15.  Section 89-2, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "employer" or "public employer" to read:

     ""Employer" or "public employer" means the governor in the case of the State, the respective mayors in the case of the counties, the chief justice of the supreme court in the case of the judiciary, the board of education in the case of the department of education, the board of regents in the case of the University of Hawaii, the Hawaii health systems corporation board in the case of the Hawaii health systems corporation[,] or any regional board of a regional entity of the Hawaii health systems corporation, and any individual who represents one of these employers or acts in their interest in dealing with public employees.  In the case of the judiciary, the administrative director of the courts shall be the employer in lieu of the chief justice for purposes which the chief justice determines would be prudent or necessary to avoid conflict."

     2.  By amending the definition of "jurisdiction" to read:

     ""Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, and the Hawaii health systems corporation[.] or any of its regional entities."

     3.  By amending the definition of "legislative body" to read:

     ""Legislative body" means the legislature in the case of the State, including the judiciary, the department of education, the University of Hawaii, and the Hawaii health systems corporation[;] or any of its regional entities; the city council, in the case of the city and county of Honolulu; and the respective county councils, in the case of the counties of Hawaii, Maui, and Kauai."

     SECTION 16.  Section 89-6, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  For the purpose of negotiating a collective bargaining agreement, the public employer of an appropriate bargaining unit shall mean the governor together with the following employers:

     (1)  For bargaining units (1), (2), (3), (4), (9), (10), and (13), the governor shall have six votes and the mayors, the chief justice, and the Hawaii health systems corporation board and each of the regional boards of the regional entities of the Hawaii health systems corporation shall each have one vote if they have employees in the particular bargaining unit;

     (2)  For bargaining units (11) and (12), the governor shall have four votes and the mayors shall each have one vote;

     (3)  For bargaining units (5) and (6), the governor shall have three votes, the board of education shall have two votes, and the superintendent of education shall have one vote; and

     (4)  For bargaining units (7) and (8), the governor shall have three votes, the board of regents of the University of Hawaii shall have two votes, and the president of the University of Hawaii shall have one vote.

Any decision to be reached by the applicable employer group shall be on the basis of simple majority, except when a bargaining unit includes county employees from more than one county.  In such case, the simple majority shall include at least one county."

    

     SECTION 17.  Section 323F-3, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Ten members of the corporation board shall be appointed by the governor as follows:

     (1)  One member from region I who resides in the city and county of Honolulu;

     (2)  One member from region II who resides in the county of Kauai;

     (3)  One member from region III who resides in the county of Maui;

     (4)  One member from region IV who resides in the eastern section of the county of Hawaii;

     (5)  One member from region V who resides in the western section of the county of Hawaii;

     (6)  One member from region II who resides in the county of Kauai or from region III who resides in the district of Hana or on the island of Lanai; provided that in no event shall the member be appointed from the same region for two consecutive terms; and

     (7)  Four at-large members who reside in the State.

     [The eleventh member shall be the chairperson of the executive public health facility management advisory committee, who shall serve as an ex officio, voting member.]

     The eleventh and twelfth [member,] members, who shall serve as [a] voting [member,] members, shall be [a physician] physicians with active medical staff privileges at one of the corporation's public health facilities.  The physician [member] members shall serve a term of two years.  [The initial physician member shall be from region II, and subsequent physician members shall come from regions IV, III, and V respectively.  The physician member position shall continue to rotate in this order.]  The physician [member] members shall be appointed to the corporation board by a simple majority vote of the [members of the executive public health facility management advisory committee] corporation board from a list of qualified nominees submitted by the public health facility management advisory committee [for the region from which the physician member is to be chosen.] or by any regional board.  The corporation board shall attempt to choose physicians from different regions and to rotate the appointments from the five regions.  If for any reason a physician member is unable to serve a full term, the remainder of that term shall be filled by a physician from the same region.

     The thirteenth member shall be the director of health or the director's designee, who shall serve as an ex officio, voting member.

     Appointments to the corporation board[, with the exception of the chairperson of the executive public health facility management advisory committee and the regional physician member, shall be made by the governor,] shall be subject to confirmation by the senate pursuant to section 26-34.  Prior to the transfer date, the public health facility management advisory committees appointed pursuant to section 323-66 for each county may recommend names to the governor for each position on the corporation board designated for a region which corresponds to its county.  [After the transfer date, the public health facility management advisory committees appointed pursuant to section 323F-10 for each region may make such recommendations to the governor.]  The appointed board members, except for the physician members, shall serve for a term of four years; provided that upon the initial appointment of the first ten members:

     (1)  Two at-large members shall be appointed for a term of two years;

     (2)  Three at-large members shall be appointed for a term of three years; and

     (3)  Five regional members shall be appointed for a term of four years.

Any vacancy shall be filled in the same manner provided for the original appointments.  The corporation board shall elect its own chair from among its members."

     SECTION 18.  Section 323F-4, Hawaii Revised Statutes, is amended to read as follows:

     "§323F-4  Board meetings.  (a)  The corporation board and any regional board shall meet no fewer than four times a year[.] without regard to chapter 92.  [All meetings of the corporation board shall be subject to chapter 92, except that in addition to matters exempted pursuant to law, the corporation board may elect to hold an executive meeting for the consideration of any matters set forth in section 323F-6.]

     (b)  All business of the corporation board and any regional board shall be conducted at a regular or special meeting at which a quorum is present, consisting of at least a majority of the directors then in office.  Any action of the corporation board or any regional board shall require the affirmative vote of a majority of those present and voting at the meeting; except that a vote of two-thirds of the [members] entire membership of the [corporation] respective board then in office shall be required for any of the following actions:

     (1)  Removal by the corporation board or any regional board of one of its members[, with the exception of the eleventh and twelfth members set forth in section 323F-3, who may only be removed pursuant to sections 323F-10 and 323F-10.5];

     (2)  Amendment by the corporation board or any regional board of its bylaws;

     (3)  Hiring or removing the chief executive officer of the corporation or the chief executive officer of any regional entity; and

     (4)  Any other actions as provided by the corporation bylaws or by any regional entity bylaws."

     SECTION 19.  Section 323F-5, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-5[]]  Disclosure of interests.  All corporation and regional board members and employees of the corporation and any regional entity shall be subject to chapter 84."

     SECTION 20.  Section 323F-6, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-6[]]  Records.  The corporation and any regional entity shall be subject to the requirements of chapter 92F, except that the following categories of government records shall not be required to be disclosed:

     (1)  Applications for credentials or staff privileges at any of the corporation's or regional entity's medical facilities, records from peer review proceedings, and medical records; and

     (2)  Marketing strategies, strategic plans, evaluations, assessments, negotiations, or rates and charges, the disclosure of which would raise the cost of procurement or give a manifestly unfair advantage to any competitor or to any person or entity seeking to do business or proposing to enter into an agreement with the corporation or regional entity or any of [its] their facilities.

     Any person denied access to any such government records shall have available the remedies specified in sections 92F-15 and 92F-15.5.  Government records protected from disclosure by this section shall be subject to the interagency disclosure provisions of section 92F-19.  Section 624-25.5 shall apply to this part notwithstanding anything to the contrary contained in this section."

     SECTION 21.  Section 323F-7, Hawaii Revised Statutes, is amended to read as follows:

     "§323F-7  Duties and powers of the corporation[.] and regional entities.  (a)  Notwithstanding any other law to the contrary, the corporation and any regional entity shall have and exercise the following duties and powers[:]; provided that any regional entity may agree to allow the corporation to maintain any of the following duties and powers:

     (1)  Developing its own policies, procedures, and rules necessary or appropriate to plan, operate, manage, and control the system of public health facilities and services without regard to chapter 91;

     (2)  Evaluating the need for health facilities and services;

     (3)  Entering into and performing any contracts, leases, cooperative agreements, or other transactions whatsoever that may be necessary or appropriate in the performance of its purposes and responsibilities, and on terms it may deem appropriate, with either:

         (A)  Any agency or instrumentality of the United States, or with any state, territory, or possession, or with any subdivision thereof; or

         (B)  Any person, firm, association, or corporation, whether operated on a for-profit or not-for-profit basis;

          provided that the transaction furthers the public interest;

     (4)  Conducting activities and entering into business relationships as the corporation board or any regional board deems necessary or appropriate, including but not limited to:

         (A)  Creating nonprofit corporations, including but not limited to charitable fund-raising foundations, to be controlled wholly by the corporation or any regional entity, or jointly with others;

         (B)  Establishing, subscribing to, and owning stock in business corporations individually or jointly with others; and

         (C)  Entering into partnerships and other joint venture arrangements, or participating in alliances, purchasing consortia, health insurance pools, or other cooperative arrangements, with any public or private entity; provided that any corporation, venture, or relationship entered into under this section furthers the public interest; provided further that this paragraph shall not be construed to authorize the corporation or any regional entity to abrogate any responsibility or obligation under paragraph (15);

     (5)  Participating in and developing prepaid health care service and insurance programs and other alternative health care delivery programs, including programs involving the acceptance of capitated payments or premiums that include the assumption of financial and actuarial risk;

     (6)  Executing, in accordance with all applicable bylaws, rules, and laws, all instruments necessary or appropriate in the exercise of any of the corporation's and any regional entity's powers;

     (7)  Preparing and executing all corporation or regional entity budgets, policies, and procedures;

     (8)  Setting rates and charges for all services provided by the corporation or any regional entity without regard to chapter 91;

     (9)  Developing a corporation-wide or regional entity-wide hospital personnel system that is subject to chapters 76 and 89;

    (10)  Developing the corporation's and any regional entity's capital and strategic plans;

    (11)  Suing and being sued; provided that the corporation and any regional entity shall enjoy the same sovereign immunity available to the State;

    (12)  Making and altering corporation board or regional board bylaws for its organization and management without regard to chapter 91;

    (13)  Adopting rules, without regard to chapter 91, governing the exercise of its powers and the fulfillment of its purpose under this chapter;

    (14)  Entering into any contract or agreement whatsoever, not inconsistent with this chapter or the laws of this State, and authorizing the corporation, regional entities, and chief executive [officer] officers to enter into all contracts, execute all instruments, and do all things necessary or appropriate in the exercise of the powers granted in this chapter, including securing the payment of bonds;

    (15)  Issuing revenue bonds subject to the approval of the legislature; provided that all revenue bonds shall be issued pursuant to part III, chapter 39;

    (16)  Reimbursing the state general fund for debt service on general obligation bonds or reimbursable general obligation bonds issued by the State for the purposes of the corporation[;] or any regional entity;

    (17)  Pledging or assigning all or any part of the receipts and revenues of the corporation or any regional entity for purposes of meeting bond or health systems liabilities;

    (18)  Owning, purchasing, leasing, exchanging, or otherwise acquiring property, whether real, personal or mixed, tangible or intangible, and of any interest therein, in the name of the corporation[,] or any regional entity, which property is not owned or controlled by the State but is owned or controlled by the corporation[;] or any regional entity;

    (19)  Maintaining, improving, pledging, mortgaging, selling, or otherwise holding or disposing of property, whether real, personal or mixed, tangible or intangible, and of any interest therein, at any time and manner, in furtherance of the purposes and mission of the corporation[;] or any regional entity; provided that the corporation or any regional entity legally holds or controls the property in its own name; provided further that the corporation or any regional entity shall not sell, assign, lease, hypothecate, mortgage, pledge, give, or dispose of all or substantially all of its property;

    (20)  Purchasing insurance and creating captive insurers in any arrangement deemed in the best interest of the corporation[,] or any regional entity, including but not limited to funding and payment of deductibles and purchase of reinsurance;

    (21)  Acquiring by condemnation, pursuant to chapter 101, any real property required by the corporation or any regional entity to carry out the powers granted by this chapter;

    (22)  Depositing any moneys of the corporation or any regional entity in any banking institution within or without the State, and appointing, for the purpose of making deposits, one or more persons to act as custodians of the moneys of the corporation[;] or any regional entity;

    (23)  Contracting for and accepting any gifts, grants, and loans of funds, property, or any other aid in any form from the federal government, the State, any state agency, or any other source, or any combination thereof, and complying, subject to this chapter, with the terms and conditions thereof;

    (24)  Providing health and medical services for the public directly or by agreement or lease with any person, firm, or private or public corporation or association through or in the health facilities of the corporation or any regional entity or otherwise;

    (25)  Approving medical staff bylaws, rules, and medical staff appointments and reappointments for all public health facilities[,] of the corporation or any regional entity, including without limitation, determining the conditions under which a health professional may be extended the privilege of practicing within a health facility, and adopting and implementing reasonable rules, without regard to chapter 91, for the credentialing and peer review of all persons and health professionals within the facility;

    (26)  (A)  Investing any funds not required for immediate disbursement in property or in securities that meet the standard for investments established in chapter 88 as provided by the corporation board[;] or any regional board; provided the investment assists the corporation or any regional entity in carrying out its public purposes; selling from time to time securities thus purchased and held, and depositing any securities in any bank or financial institution within or without the State.  Any funds deposited in a banking institution or in any depository authorized in this section shall be secured in a manner and subject to terms and conditions as the corporation board or any regional board may determine, with or without payment of any interest on the deposit, including, without limitation, time deposits evidenced by certificates of deposit.  Any bank or financial institution incorporated under the laws of this State may act as depository of any funds of the corporation or any regional entity and may issue indemnity bonds or may pledge securities as may be required by the corporation board[;] or any regional board; and

         (B)  Notwithstanding subparagraph (A), contracting with the holders of any of its notes or bonds as to the custody, collection, securing, investment, and payment of any moneys of the corporation or any regional entity and of any moneys held in trust or otherwise for the payment of notes or bonds and carrying out the contract.  Moneys held in trust or otherwise for the payment of notes or bonds or in any way to secure notes or bonds, and deposits of such moneys, may be secured in the same manner as moneys of the corporation[,] or any regional entity, and all banks and trust companies are authorized to give security for the deposits;

    (27)  Entering into any agreement with the State including but not limited to contracts for the provision of goods, services, and facilities in support of the corporation's programs[,] or any regional entity's programs, and contracting for the provision of services to or on behalf of the State;

    (28)  Having a seal and altering the same at pleasure;

    (29)  Waiving, by means that the corporation or any regional entity deems appropriate, the exemption from federal income taxation of interest on  the corporation's or any regional entity's bonds, notes, or other obligations provided by the Internal Revenue Code of 1986, as amended, or any other federal statute providing a similar exemption;

    (30)  Developing internal policies and procedures for the procurement of goods and services, consistent with the goals of public accountability and public procurement practices;

    (31)  Authorizing and establishing positions;

    (32)  Calling upon the attorney general for such legal services as the corporation or any regional entity may require; and

    (33)  Having and exercising all rights and powers necessary or incidental to or implied from the specific powers granted in this chapter, which specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this chapter.

     (b)  The corporation or any regional entity shall not be subject to chapters 36 to 38, 40, and 41D, except as otherwise provided in this chapter.

     (c)  The duties and powers granted to the corporation or any regional entity may not be used to enter into contractual or business relationships [which] that have the practical effect of allowing or are intended to allow the private sector counterparts to replace existing employee positions or responsibilities within the corporation or any regional entity or its facilities; provided the corporation or any regional entity shall be allowed to enter into such relationships to the extent and for the purposes that the division of community hospitals could have done under collective bargaining contracts which were in effect for the 1995-1996 fiscal year."

     SECTION 22.  Section 323F-8, Hawaii Revised Statutes, is amended to read as follows:

     "§323F-8  Chief executive officer; exempt positions.  (a)  The corporation board may appoint, exempt from chapter 76 and section 26-35(a)(4), a chief executive officer of the corporation whose salary shall be set by the corporation board.  The chief executive officer may also appoint up to eighteen other personnel, exempt from chapters 76 and 89, to work directly for the chief executive officer and the corporate board.

     (b)  The corporation board or its designee may discharge its exempt personnel with or without cause; provided that removal without cause shall not prejudice any contract rights of personnel.

     (c)  The corporation's chief executive officer or the chief executive officer's designee may appoint, exempt from chapters 76 and 89, hospital administrators, assistant administrators, directors of nursing, medical directors, and staff physicians, to facilitate the management of facilities within the corporation; provided that directors of nursing appointed before July 1, 1998, may maintain their civil service status as provided in chapter 76 by so communicating in writing to the chief executive officer by October 31, 1998.  Hospital administrators and assistant administrators appointed before July 1, 1983, may maintain their permanent civil service status as provided in chapter 76.

     (d)  The authority to appoint hospital administrators, assistant administrators, directors of nursing, medical directors, and staff physicians provided for under subsection (c) shall be superseded by section 323F-D for the region affected upon the establishment of a regional entity and corresponding regional board."

     SECTION 23.  Section 323F-9, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-9[]]  Hiring of attorneys.  The corporation and any regional entity may employ or retain any attorney, by contract or otherwise, for the purpose of representing the corporation or any regional entity in any litigation, rendering legal counsel to the corporation[,] or any regional entity, or drafting legal documents for the corporation."

     SECTION 24.  Section 323F-10, Hawaii Revised Statutes, is amended to read as follows:

     "§323F-10  Regional public health facility management advisory committees.  (a)  On the transfer date, there shall be established within the corporation for each region, a public health facility management advisory committee to consist of nine members initially to be appointed by the chief executive officer of the corporation with the advice of the hospital administrators of the facilities in the affected regions.  The members shall serve for a term of four years; provided that upon the initial appointment of the members, two shall be appointed for a term of one year, two for a term of two years, two for a term of three years, and three for a term of four years.

     Following the initial appointments by the chief executive officer of the corporation board, any vacancies on a regional committee shall be filled by a simple majority vote of the members of the executive committee from a list of qualified nominees submitted by the regional committee in which the vacancy occurred.  If a regional committee vacancy remains unfilled for more than thirty days, that vacancy may be filled by the chief executive officer of the corporation.

     Each regional management advisory committee shall include medical and health care providers, consumers, and knowledgeable individuals in other appropriate areas such as business and law; provided that at least one member shall be a physician with active medical staff privileges at one of the region's public health facilities.  At least three members of the committee shall be consumers.

     The management advisory committee for the East Hawaii region shall have three members who reside in the Ka`u district, three members who reside in the Hamakua/North Hilo districts, and three members who reside in the South Hilo/Puna districts.  The management advisory committee for the West Hawaii region shall have not less than three members who reside in the North Kohala/South Kohala districts.

     Each regional committee shall select its own chairperson and vice chairperson and shall adopt rules governing the terms for removal of its chairperson from the executive management advisory committee.  In the event of a regional committee voting to remove its chairperson who concurrently sits on the corporation board, that vote shall be unanimous.  In the event of a regional committee voting to remove its physician member from the corporation board, that vote shall also be unanimous.  Each regional committee may also adopt other rules as it may consider necessary for the conduct of its business.

     The members of the regional committees shall serve without compensation, but shall be reimbursed for traveling expenses incurred in the performance of their duties.  The corporation shall provide for the necessary expenses of the committees; provided that no expenses may be incurred without prior authorization by the chief executive officer.

     (b)  Each regional committee shall sit in an advisory capacity to the chief executive officer on matters concerning the formulation of regional operational and capital improvement budgets, and the planning, construction, improvement, maintenance, and operation of public health facilities within its respective jurisdiction and shall sit in an advisory capacity to the governor on matters concerning the nominees for positions on the corporation board. Nothing in this section shall be construed as precluding or preventing the committees from coordinating their efforts and activities with the facility administrators within their counties.

     (c)  Each regional committee may prepare a report for inclusion with the corporation's annual report and audit which shall include but not be limited to comments and analyses on the corporation's regional operational and capital improvement budgets for its respective region.

     (d)  Upon the formation of a regional entity's initial board, subsections (a), (b), and (c) shall no longer apply to the region in which the regional entity has been formed."

     SECTION 25.  Section 323F-10.5, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-10.5[]]  Executive public health facility management advisory committee; establishment.  (a)  There is established within the corporation an executive public health facility management advisory committee to consist of the chairpersons of each of the five regional public health facility management advisory committees.  The executive committee shall, through its chairperson, represent the interests of all regional committees on the corporation board.

     (b)  The executive committee shall select its own chairperson to serve on the corporation board and shall adopt rules governing the terms of office and removal from the corporation board.  The executive committee shall also adopt rules governing the terms of office for each of the five regional committee chairpersons. The executive committee may also adopt other rules as it may consider necessary for the conduct of its business.

     (c)  The members of the executive committee shall serve without compensation, but shall be reimbursed for reasonable expenses incurred in the performance of their duties.

     (d)  Upon the formation of a regional entity's initial board, subsections (a), (b), and (c) shall no longer apply to the region in which the regional entity has been formed."

     SECTION 26.  Section 323F-10.6, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-10.6[]]  Peer review and credentialing.  [Corporation board or other committee meetings pertaining to peer review and credentialing matters shall not be subject to part I of chapter 92.] Peer review activities shall be subject to [the provisions of] chapters 663 and 671D and all other provisions and restrictions of medical peer review committees established by state law."

     SECTION 27.  Section 323F-11, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-11[]]  Executive branch; noninterference.  Notwithstanding any other law to the contrary, the governor and executive branch agencies shall limit their responsibilities to that of review and oversight when the corporation or any regional entity receives general funds from the State to subsidize the operating budgets of deficit facilities.  The governor and executive branch agencies shall not interfere with the systemic change, capacity building, advocacy, budget, personnel, system plan development, or plan implementation activities of the corporation[.] or any regional entity.  The governor and executive branch agencies shall not interfere with the ability of the corporation or any regional entity to function as a multiple facility public hospital system delivering health care services to the residents of the State."

     SECTION 28.  Section 323F-21, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-21[]]  Fiscal provisions.  (a)  There is created in the state treasury a special fund to be known as the health systems special fund, into which shall be deposited all fees, proceeds, reimbursements, and the like owed to or received by the corporation, any regional entity, and [its] their facilities, except as herein provided.  The special fund shall be used solely to fulfill the purposes outlined in this chapter.

     The corporation or any regional entity may establish and maintain within [its] the special fund, accounts that may be necessary and appropriate to carry out its purposes and responsibilities.

     The corporation or any regional entity may provide reasonable reserves for any of the following purposes:

     (1)  Insurance deductibles;

     (2)  The improvement, replacement, or expansion of its facilities or services;

     (3)  The securing of the corporation's or any regional entity's bonds, notes, or other instruments of indebtedness; or

     (4)  Any other purpose it deems necessary or appropriate in the performance of its purposes and responsibilities.

     (b)  The corporation board and any regional board shall develop annual operating and capital budgets for each facility.  The corporation and any regional entity shall develop budgetary guidelines, and may allocate to each facility reasonable [corporation] corporate administrative costs, including funds determined by the corporation or any regional entity to be needed from or provided to each facility to:

     (1)  Repay corporation or any regional entity debts;

     (2)  Provide subsidies to any facility determined to be unable to fund from within that facility's programs and services deemed essential to community needs; and

     (3)  Maintain appropriate reserves.

     (c)  The corporation or any regional entity shall develop annual corporation or any regional entity operating and capital budgets, taking into account anticipated surpluses from or subsidies to the facilities pursuant to the annual guidelines described in this section, accumulated corporation or any regional entity reserves and accounts, subsidies, if any, that are determined to be needed from the general fund, and other sources of corporation-wide or any regional entity-wide income as may be identified.

     (d)  The corporation, with the exception of facilities within regions where a regional entity has been formed, may share in any facility's surplus and may offset any facility's deficits.  Any regional entity may share in the surplus of any facility within its region and may offset any facility deficits within its region.  Obligations undertaken by a facility shall be paid only from funds of that facility, unless the corporation board or regional board, or its authorized agent explicitly agrees to guarantee the obligation.

     (e)  In accordance with each annual facility budget, each facility of the corporation or any regional entity shall:

     (1)  Bill and collect for its services;

     (2)  Maintain bank accounts; and

     (3)  Pay for needed personnel, supplies, equipment, and other operational and capital expenditures.

     (f)  The corporation or any regional entity may elect to manage its own capital improvement project and funds, either directly or indirectly by contract; provided that annual reports of the project moneys are provided to the governor and legislature.

     (g)  The corporation board or any regional board may hold public informational meetings on its budget.  Representatives of any county government, state government, or any other person having an interest in the budget, shall have the right to be heard at the meetings."

     SECTION 29.  Section 323F-22, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-22[]]  Annual audit and report; disclosure of revenue projections.  (a)  The corporation or any regional entity shall engage a certified public accountant to conduct an annual audit of its financial affairs, books, and records in accordance with generally accepted accounting principles.  The corporation shall submit to the governor and the legislature within one hundred fifty days after the close of the corporation's fiscal year, a report that shall include the audited financial report for that fiscal year[.] for the corporation and any regional entity.

     (b)  In addition to the submittal of the audit required under subsection (a), the corporation shall submit a report to the legislature at least twenty days prior to the convening of each regular session that shall include but not be limited to:

     (1)  The projected revenues for each health care facility;

     (2)  A list of all proposed capital improvement projects planned for implementation during the following fiscal year; and

     (3)  All reports submitted by regional public health facility management advisory committees pursuant to section 323F-10(c).

     (c)  Each regional board may prepare a report for inclusion with the corporation's annual report and audit which shall include but not be limited to comments and analyses on the services provided by the regional entity to its respective region."

     SECTION 30.  Section 323F-23, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-23[]]  Exemption from taxation.  The corporation or any regional entity shall not be required to pay assessments levied by any county, nor shall the corporation be required to pay state taxes of any kind."

     SECTION 31.  Section 323F-24, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§323F-24[]]  Budget oversight.  The corporation's and any regional entity'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 or capital improvement moneys are requested.  If general funds or capital improvement moneys are requested, then the corporation or any regional entity shall include with its request, the proposed budget for which the funds or moneys are to be included.  The corporation or any regional entity shall submit its budgets annually to the legislature for review and approval at least twenty days prior to the convening of the regular legislative session, beginning with the budgets for the 1997-1998 fiscal years."

     SECTION 32.  Section 323F-31, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  The corporation and any regional entity shall notify the legislature of any planned substantial reduction or elimination of direct patient care services."

     SECTION 33.  It is the intent of this Act that all rights, powers, functions, assets, and operations of the Hawaii health systems corporation, with respect to the health facilities in each region, including the facilities themselves, be conveyed to the corresponding regional entities at such time that the regional entities are established, such that all of the activities and services of the health facilities are continued without interruption by the establishment of the corresponding regional entities.  This Act shall be construed with this intent.

     SECTION 34.  All rights, powers, functions, and duties of the Hawaii health systems corporation shall be transferred to a corresponding regional entity upon establishment of the regional entity.

     The assets, including but not limited to hospital funds relating to health facilities in each region shall be conveyed to a corresponding regional entity at such time that the regional entity is established.

     Upon establishment, a regional entity shall assume the responsibility of the Hawaii health systems corporation with respect to the corresponding region, for all contracts, agreements, and leases for commodities, services, property, and supplies utilized by the Hawaii health systems corporation, all of which shall be transferred to the corresponding regional entity, including real property leases.

     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.

     No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service laws.

     An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act, shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

     If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the executive branch of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State, provided that minimum qualifications are met.

     Any officer or employee transferred to any regional entity pursuant to this section who is a member of or benefits under any existing pension or retirement fund system shall continue to have all rights privileges, obligations, and status with respect to that fund or system as are now prescribed by law, but during the period of employment by a regional entity, all contributions to that fund or system to be paid by the employer on account of the officer or employee shall be paid by the corresponding regional entity.

     SECTION 35.  All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii health systems corporation relating to the functions transferred to a regional entity shall be transferred with the functions to which they relate upon the establishment of the regional entity.

     SECTION 36.  (a)  Any regional entity, in carrying out its duties and responsibilities, may enter into appropriate agreements with the Hawaii health systems corporation, if necessary, to utilize the corresponding regional health facilities and real property under the control of the Hawaii health systems corporation prior to the establishment of the regional entity.  Each agreement shall require compensation of a nominal amount for the use of any facilities or real property.  Until the agreements are finalized, any regional entity shall be entitled to use the facilities and real property of the Hawaii health systems corporation located within the corresponding region.

     (b)  State agencies shall continue to provide to any regional entity, without charge, for six months after the establishment of regional entity, services that the state agencies provided to the Hawaii health systems corporation until the corresponding regional entity enters into a written contract with the state agencies or chooses to terminate the services.

     (c)  Any regional entity shall assume and honor the terms of all collective bargaining agreements applicable to employees of the Hawaii health systems corporation, with respect to the employees of the health facilities within that region.  Upon expiration of those agreements, the regional entity, as appropriate and allowable, may negotiate collective bargaining agreements or sub—agreements under chapter 89, Hawaii Revised Statutes, to address its needs for efficiency and effectiveness.

     (d)  Upon establishment, a regional entity shall assume and honor all responsibilities and obligations transferred to it from the Hawaii health systems corporation regarding the imposition of rates, rents, fees, and charges for the use of health facilities pursuant to section 323—70, Hawaii Revised Statutes.  In no way sha11 this Act be construed as allowing any regional entity or the Hawaii health systems corporation to abrogate these responsibilities and obligations.

     SECTION 37.  There is appropriated out of the general revenues of the State of Hawaii the sum of $       or so much thereof as may be necessary for fiscal year 2007-2008 to support the transition from the Hawaii health systems corporation to the regional entity for the Maui region.

     The sum appropriated shall be expended by the Hawaii health systems corporation for the purposes of this Act.

     SECTION 38.  All Acts passed prior to or during this regular session of 2007, whether enacted before or after passage of this Act, shall be interpreted to conform to this Act, unless the Acts specifically provide that this Act is being amended.  Insofar as this Act is inconsistent with the provisions of any other law, this Act shall control.

     SECTION 39.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

     SECTION 40.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 41.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 42.  This Act shall take effect on January 1, 2500, except that section 37 shall take effect on January 1, 2500.