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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC EMPLOYMENT



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

 1      SECTION 1. In 1998, the administrator of the employees'
 
 2 retirement system and the Attorney General of the State of Hawaii
 
 3 were found not to have standing to appeal a circuit court
 
 4 decision in Chun vs. Employees' Retirement System (ERS) to the
 
 5 Hawaii Supreme Court.  Because of the Court's decision, the
 
 6 administrator and the attorney general could not present its case
 
 7 on the merits whether the ERS interpretation of the law over the
 
 8 years was correct.  The administrator and the Attorney General
 
 9 could not present its case that prorating the annual pay of an
 
10 employee who works less than twelve over twelve months was not
 
11 intended to provide higher benefits to employees and for the ERS
 
12 to suffer additional costs by this practice.  The resultant cost
 
13 to the State of Hawaii, and not the Counties, were $4.4 million
 
14 in back benefits and an actuarial estimate prepared during the
 
15 court proceedings of an additional $100 million in future
 
16 benefits to be paid over the next 20 years.  The actuarial
 
17 estimate did not include the additional cost of applying this new
 
18 interpretation by the Court to employees at the University of
 
19 Hawaii and the other 9-month and 10-month employees in the
 

 
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 1 Department of Education and the Department of Health for a total
 
 2 of 4,185 employees who have their pay prorated over 12 months.
 
 3      The legislature finds that the practice of prorating annual
 
 4 pay of an employee who works less than twelve over twelve months
 
 5 is partly created by collective bargaining and the cost of
 
 6 implementing the court's decision has never been presented to the
 
 7 legislature as a cost item for legislative approval as required
 
 8 by HRS 89-10(b).  The legislature finds that while terms and
 
 9 conditions of employment are a negotiable matter, it is not the
 
10 intent of the legislature that the parties bargain terms of
 
11 employment that affect retirement benefits.  The practice of
 
12 prorating annual pay over twelve months enhances the years of
 
13 credited service, say for an employee that works nine months, for
 
14 retirement purposes, by thirty-three percent.  The legislature
 
15 finds it is in the public interest to correct the practice of
 
16 prorating annual pay through collective bargaining where it
 
17 affects the calculation of retiree benefits.
 
18      SECTION 2.  Section 77-13, Hawaii Revised Statutes, is
 
19 amended by amending subsection (c) to read as follows:
 
20      "(c) Whenever payment is made on the basis of monthly,
 
21 weekly, hourly, or daily rate, the rate shall be computed in the
 
22 [following] manner provided below; except, in no event shall the
 
23 pay of an employee whose normal annual working months is less
 

 
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 1 than twelve be prorated over twelve months so as to affect the
 
 2 calculation of the employees retirement benefits under chapter
 
 3 88:
 
 4      (1)  By dividing the annual rate by twelve in order to find
 
 5           the monthly rate;
 
 6      (2)  By dividing the annual rate by fifty-two in order to
 
 7           find the weekly rate;
 
 8      (3)  By dividing the weekly rate by forty in order to find
 
 9           the hourly rate;
 
10      (4)  By multiplying the hourly rate by the number of daily
 
11           hours of service required in order to find the daily
 
12           rate."
 
13      SECTION 3.  Section 302A-624, Hawaii Revised Statutes, is
 
14 amended by amending subsection (a) to read as follows:
 
15      "(a) The salary schedule for all teachers of the department
 
16 of education shall be negotiated pursuant to section 89-9[.],
 
17 provided however, in no event shall the annual pay of a teacher
 
18 whose normal annual working months is less than twelve be
 
19 prorated over twelve months so as to affect the calculation of
 
20 the employee's retirement benefits under chapter 88."
 
21      SECTION 4.  Section 302A-625, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 
23      "(a) The salary schedule for educational officers of the
 

 
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 1 department of education shall be negotiated pursuant to section
 
 2 89-9[.], provided however, in no event shall the annual pay of an
 
 3 educational officer whose normal annual working months is less
 
 4 than twelve be prorated over twelve months so as to affect the
 
 5 calculation of the employee's retirement benefits under chapter
 
 6 88."
 
 7      SECTION 5.  Section 304-11, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9           "§304-11 Personnel.  Personnel of the university not
 
10 subject to chapters 76 and 77 shall be under the direction of a
 
11 president who shall be appointed by the board of regents.  The
 
12 board shall appoint such deans, directors, members of the
 
13 faculty, and other employees as may be required to carry out the
 
14 purposes of the institution, prescribe their salaries and terms
 
15 of service, where such salaries and terms of service are not
 
16 specifically fixed by legislative enactment, make and enforce
 
17 rules governing sabbatical and professional improvement leaves
 
18 with or without pay, consistent with the practice of similar
 
19 institutions on the mainland, and notwithstanding the laws of the
 
20 state relating to vacations of the officers and the employees of
 
21 the State[.], provided however, in no event shall the annual pay
 
22 of any employer appointed under this chapter whose normal annual
 
23 working months is less than twelve be prorated over twelve months
 

 
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 1 so as to affect the calculations of the employee's retirement
 
 2 benefits under chapter 88."
 
 3      SECTION 6.  Section 89-9, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (d) to read as follows:
 
 5      "(d) Excluded from the subjects of negotiations are matters
 
 6 of classification and reclassification, benefits of but not
 
 7 contributions to the Hawaii public employees health fund,
 
 8 retirement benefits except as provided in section 88-8(h),
 
 9 prorating the annual salary of employees whose normal annual
 
10 working months is less than twelve over twelve months so as to
 
11 affect the calculation of the employee retirement benefits under
 
12 chapter 88, and the salary ranges now provided by law; provided
 
13 that the number of increments and longevity steps, the amount of
 
14 wages to be paid in each range and step, and movement between
 
15 steps within the salary range shall be negotiable.  The employer
 
16 and the exclusive representative shall not agree to any proposal
 
17 which would be inconsistent with merit principles or the
 
18 principle of equal pay for equal work pursuant to sections 76-1,
 
19 76-2, 77-31, and 77-33, or which would interfere with the rights
 
20 of a public employer to (1) direct employees; (2) determine
 
21 qualification, standards for work, the nature and contents of
 
22 examinations, hire, promote, transfer, assign, and retain
 
23 employees in positions and suspend, demote, discharge, or take
 

 
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 1 other disciplinary action against employees for proper cause; (3)
 
 2 relieve an employee from duties because of lack of work or other
 
 3 legitimate reason; (4) maintain efficiency of government
 
 4 operations; (5) determine methods, means, and personnel by which
 
 5 the employer's operations are to be conducted; and take such
 
 6 actions as may be necessary to carry out the missions of the
 
 7 employer in cases of emergencies; provided that the employer and
 
 8 the exclusive representative may negotiate procedures governing
 
 9 the promotion and transfer of employees to positions within a
 
10 bargaining unit, procedures governing the suspension, demotion,
 
11 discharge or other disciplinary actions taken against employees,
 
12 and procedures governing the layoff of employees; provided
 
13 further that violations of the procedure so negotiated may be the
 
14 subject of a grievance process agreed to by the employer and the
 
15 exclusive representative.
 
16      SECTION 7.  All Acts by the legislature during the Regular
 
17 Session of 2000, whether enacted before or after the effective
 
18 date of this Act, shall be amended to conform to this Act unless
 
19 such acts specifically provide that this Act is being Amended.
 
20      SECTION 8. If any provision of this Act, or the application
 
21 thereof to any person or circumstance is held invalid, the
 
22 invalidity does not affect other provisions or application of the
 
23 Act which can be given effect without the invalid provisions or
 

 
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 1 application, and to this end the provisions of this Act are
 
 2 severable.
 
 3      SECTION 9.  Statutory material to be repealed is bracketed.
 
 4 New statutory material is underscored.
 
 5      SECTION 10.  This Act shall take effect upon approval;
 
 6 provided that members' benefits accrued up to the effective date
 
 7 of this Act shall not be diminished or impaired. 
 
 8 
 
 9                           INTRODUCED BY:  _______________________
 

 
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