STAND. COM. REP. NO. 1119

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1416
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and
Judiciary, to which was referred H.B. No. 1416, H.D. 2, entitled: 

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

beg leave to report as follows:

     The purpose of this measure is to change the retirement
benefit status of deputy sheriffs of the Department of Public
Safety.

     Specifically, the measure:

     (1)  Changes the retirement membership status of deputy
          sheriffs from Class C, noncontributory members of the
          Employees Retirement System (ERS) to Class A
          contributory members;

     (2)  Allows deputy sheriffs with at least twenty-five years
          of service to retire, regardless of age, without
          actuarily reducing their pension;

     (3)  Provides existing deputy sheriffs who are currently
          Class C, noncontributory members of the ERS with an
          option to convert to Class A, contributory membership;
          provided that their credited service prior to becoming
          a Class A member shall remain as Class C credited
          service; and

 
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     (4)  Stating that any deputy sheriff hired after July 1,
          1999, shall be a Class A, contributory member of the
          ERS.

     The deputy sheriffs who convert their retirement status to
Class A membership shall be required to contribute twelve and
two-tenths percent of their compensation to the ERS.

     The Hawaii Government Employees Association testified in
support of the measure.  The Department of Budget and Finance
opposed the measure.

     Your Committees have amended the measure by:

     (1)  Deleting the majority of the proposed amendments and
          retaining only the amendment that allows deputy
          sheriffs to retire without penalty after twenty-five
          years of service in that capacity;

     (2)  Adding provisions that allow qualified contributory
          class members of the ERS to convert their membership
          status to noncontributory and obtain a refund of their
          contributions in cases of financial hardship;

     (3)  Adding provisions that establish the chairpersons and
          members of the Public Utilities Commission, the Labor
          and Industrial Relations Appeals Board, and the Hawaii
          Labor Relations Board as Class A, contributory members
          of ERS;

     (4)  Amending section 88-47(a), Hawaii Revised Statutes, to
          delete an erroneous reference to the executive
          directors of the Labor and Industrial Relations Appeals
          Board, and the Hawaii Labor Relations Board as Class A,
          contributory members of the ERS; and

     (4)  Making technical, nonsubstantive amendments for the
          purposes of style and clarity.

     Your Committees believe that the provision of retirement
benefits in the measure as amended is consistent with those of
other public sector employees in similar capacities.

     With regard to the inclusion of a conversion of membership
status for reasons of financial hardship, your Committees find
that many public sector employees, like their private sector
counterparts, are suffering through these tough economic times.
By providing this membership conversion option, your Committees
believe that qualified, financially-depleted public sector

 
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employees will have a better chance at maintaining fiscal
stability.

     As affirmed by the records of votes of the members of your
Committees on Commerce and Consumer Protection and Judiciary that
are attached to this report, your Committees are in accord with
the intent and purpose of H.B. No. 1416, H.D. 2, as amended
herein, and recommend that it pass Second Reading in the form
attached hereto as H.B. No. 1416, H.D. 2, S.D. 1, and be referred
to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Commerce and
                                   Consumer Protection and
                                   Judiciary,



____________________________       ______________________________
AVERY B. CHUMBLEY, Co-Chair        BRIAN KANNO, Co-Chair



____________________________       ______________________________
MATTHEW M. MATSUNAGA, Co-Chair     BRIAN T. TANIGUCHI, Co-Chair

 
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