Honolulu, Hawaii



RE:    S.B. No. 1078

       S.D. 1




Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii




     Your Committee on Judiciary and Labor, to which was referred S.B. No. 1078 entitled:




begs leave to report as follows:


     The purpose and intent of this measure is to specify that the benefits of the Hawaii Employer-Union Health Benefits Trust Fund are subject to negotiation, clarify that a decision of an arbitration panel shall be final, update statutory references, and make conforming amendments.


     Your Committee received testimony in support of this measure from the Hawaii Government Employees Association and the University of Hawaii Professional Assembly.  Your Committee received testimony in opposition to this measure from the Department of the Attorney General; the Department of Budget and Finance; and the Department of Human Resources, City and County of Honolulu.


     Your Committee finds that health care costs to public employees are increasingly unaffordable and that by allowing negotiation of both premiums and benefits between unions and employers, benefit features that can be reduced or restructured without compromising key coverage areas can be identified.  Your Committee recognizes, however, that allowing each bargaining unit to independently negotiate benefits may further complicate negotiations that have already proven to be difficult, lead to higher administrative burdens to unions and employers, and undermine the design of the Hawaii Employer-Union Health Benefits Trust Fund as a large group purchasing pool.


     Your Committee further finds that this measure is one of a number of measures aimed at reforming the Hawaii Employer-Union Health Benefits Trust Fund, which your Committee understands has a current unfunded liability of $10,000,000,000, and that certain reforms are likely necessary to maintain the financial viability of the Trust Fund.  Your Committee anticipates more discussions between the Hawaii Government Employees Association, other stakeholders, and subsequent committees hearing this measure in order to define workable solutions to the issues facing the Trust Fund.


     Your Committee has amended this measure by:


     (1)  Inserting an effective date of July 1, 2050, to allow for further discussion; and


     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1078, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1078, S.D. 1, and be referred to the Committee on Ways and Means.


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