REPORT TITLE:
Public Employees Health Fund


DESCRIPTION:
Limits total annual State contribution to the Hawaii Public
Employees Health Fund. (SB1137 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1137
THE SENATE                              S.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE PUBLIC EMPLOYEES HEALTH FUND.



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

 1      SECTION 1.  The legislature finds that the State is faced
 
 2 with a severe budget crisis with limited prospects of an
 
 3 immediate infusion of revenue to cover anticipated budget
 
 4 shortfalls.  The legislature believes that there now exists a
 
 5 compelling state interest to deal with the fiscal crisis in an
 
 6 expeditious and innovative manner, ensuring that the public will
 
 7 experience little or no disruption in public services while
 
 8 curtailing or holding to a minimum any harmful impact on public
 
 9 employees.  
 
10      The legislature further finds that contributions to the
 
11 Hawaii public employees health fund made by the State for health
 
12 benefits plans of public employees comprise a substantial
 
13 financial burden to the State that has been rising with the cost
 
14 of health benefits plans.
 
15      One strategy to control the rising cost of health benefits
 
16 plans is to limit the State's contribution toward the plans.  By
 
17 making known the maximum cost of health benefits plans, the plan
 
18 providers must develop a package of benefits that will meet the
 
19 financial parameters set forth by the State.  This will help to
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1 guarantee both the cost-effectiveness and the quality of benefits
 
 2 provided by the plans.
 
 3      The purpose of this Act is to control the rising cost to the
 
 4 State of health benefits plans by capping the amount the State
 
 5 may contribute annually to the Hawaii public employees health
 
 6 fund for health benefits plans.
 
 7      SECTION 2.  Section 87-4, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "§87-4 State and county contributions to the fund.(a)
 
10 The State through the department of budget and finance and the
 
11 several counties through their respective departments of finance
 
12 shall pay to the fund a monthly contribution equal to the amount
 
13 established under chapter 89C or specified in the applicable
 
14 public sector collective bargaining agreement, whichever is
 
15 appropriate, for each of their respective employee-beneficiaries
 
16 and employee-beneficiaries with dependent-beneficiaries, which
 
17 shall be used toward the payment of costs of a health benefits
 
18 plan; provided that the monthly contribution shall not exceed the
 
19 actual cost of a health benefits plan.  If both husband and wife
 
20 are employee-beneficiaries, the total contribution by the State
 
21 or the appropriate county shall not exceed the monthly
 
22 contribution of a family plan for both of them.  If, however, the
 
23 State or any of the several counties establish cafeteria plans in
 

 
Page 3                                                     1137
                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1 accordance with section 125 of the Internal Revenue Code of 1986,
 
 2 as amended, and part II of chapter 78, the monthly contribution
 
 3 to the fund for those employee-beneficiaries who participate in a
 
 4 cafeteria plan shall be made through the cafeteria plan.  In this
 
 5 event, the payments made by the State or the counties shall
 
 6 include the State's and the counties' respective contributions to
 
 7 the fund and the employee-beneficiary's share of the cost of the
 
 8 health benefits plan selected and authorized by the employee-
 
 9 beneficiary through the cafeteria plan.
 
10      (b)  The State through the department of budget and finance
 
11 and the several counties through their respective departments of
 
12 finance shall pay to the fund a monthly contribution equal to the
 
13 amount established under chapter 89C or specified in the
 
14 applicable public sector collective bargaining agreement,
 
15 whichever is appropriate, for each child who has not attained the
 
16 age of nineteen of all employee-beneficiaries who are enrolled
 
17 for dental benefits.  The contributions shall be used towards the
 
18 payment of costs of dental benefits of a health benefits plan.
 
19 Notwithstanding any provisions to the contrary, no part of the
 
20 fund shall be used to finance the contributions except a rate
 
21 credit or reimbursement or earnings or interest therefrom
 
22 received by the fund or general revenues appropriated for that
 
23 purpose.
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (c)  The State through the department of budget and finance
 
 2 and the several counties through their respective departments of
 
 3 finance shall pay to the fund a monthly contribution equal to the
 
 4 amount established under chapter 89C or specified in the
 
 5 applicable public sector collective bargaining agreement,
 
 6 whichever is applicable, for each of their respective employees,
 
 7 to be used towards the payment of group life insurance benefits
 
 8 for each employee.
 
 9      (d)  The several counties through their respective
 
10 departments of finance shall annually reimburse the State no
 
11 later than December 30 of each fiscal year for their respective
 
12 pro rata share of the cost of administering the fund for the
 
13 fiscal year for the benefit of their employee-beneficiaries and
 
14 dependent-beneficiaries.  Each county's pro rata share shall be
 
15 determined by allocating the amount appropriated for
 
16 administering the fund for the fiscal year, after excluding
 
17 therefrom state and county contributions for health and group
 
18 life insurance benefits, in the same proportion as the aggregate
 
19 annual amount of state and county contributions for such benefits
 
20 as of October 31 of the preceding fiscal year.  The amount of any
 
21 excess or deficiency required to administer the fund shall be
 
22 subtracted from or added to, as the case may be, the amount due
 
23 from each county for the succeeding fiscal year.
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (e)  The State through the department of budget and finance
 
 2 and the several counties through their respective departments of
 
 3 finance shall advance the amount of their respective employee-
 
 4 beneficiaries contributions to the fund on or before the first
 
 5 day of each month.
 
 6      (f)  Contributions made by the State or the several counties
 
 7 shall not be considered as wages or salary of an employee-
 
 8 beneficiary, and no employee-beneficiary shall have any vested
 
 9 right in or be entitled to receive any part of any contribution
 
10 made to the fund.
 
11      (g)  The total annual contributions made by the State to the
 
12 fund for health benefits plans shall not exceed $240,000,000."
 
13      SECTION 3.  Section 89-9, Hawaii Revised Statutes, is
 
14 amended by amending subsection (e) to read as follows:
 
15      "(e)  Negotiations relating to contributions to the Hawaii
 
16 public employees health fund shall be for the purpose of agreeing
 
17 upon the amounts which the State and counties shall contribute
 
18 under section 87-4, toward the payment of the costs for a health
 
19 benefits plan, as defined in section 87-1(8), and group life
 
20 insurance benefits, and the parties shall not be bound by the
 
21 amounts contributed under prior agreements; provided that section
 
22 89-11 for the resolution of disputes by way of fact-finding or
 
23 arbitration shall not be available to resolve impasses or
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1 disputes relating to the amounts the State and counties shall
 
 2 contribute to the Hawaii public employees health fund[.]; and
 
 3 provided further that the total annual contributions made by the
 
 4 State to the Hawaii public employees health fund for health
 
 5 benefits plans shall not exceed $240,000,000." 
 
 6      SECTION 4  Section 89C-2, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "§89C-2 Adjustments authorized; limitations, restrictions.
 
 9 Any provision of law to the contrary notwithstanding, the
 
10 compensation, hours, terms, and conditions of employment, amounts
 
11 of contributions by the State and respective counties to the
 
12 Hawaii public employees health fund, and other benefits for
 
13 public officers and employees who are excluded from collective
 
14 bargaining shall be adjusted by the chief executives of the State
 
15 or counties, the board of education, the board of regents, the
 
16 auditor, the director of the legislative reference bureau, the
 
17 ombudsman, or the chief justice, as applicable.  The chief
 
18 executives, the board of education, the board of regents, the
 
19 auditor, the director of the legislative reference bureau, the
 
20 ombudsman, and the chief justice, or their designated
 
21 representatives, shall determine the adjustments to be made and
 
22 which excluded officers or employees are to be granted
 
23 adjustments under this chapter, in accordance with the following
 
24 guidelines and limitations:
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (1)  For excluded officers and employees under the same
 
 2           compensation plans as officers and employees within
 
 3           collective bargaining units, such adjustments shall be
 
 4           not less than those provided under collective
 
 5           bargaining agreements for officers and employees hired
 
 6           on a comparable basis[.];
 
 7      (2)  For excluded officers and employees in the excluded
 
 8           managerial compensation plan, such adjustments shall be
 
 9           not less than those provided under collective
 
10           bargaining to officers and employees in the
 
11           professional and scientific employees bargaining unit.
 
12           Alternate adjustments may be granted to officers and
 
13           employees whose work is related to that of officers and
 
14           employees in the other optional bargaining units in
 
15           order to maintain appropriate pay relationships with
 
16           such officers and employees[.];
 
17      (3)  No adjustment in compensation, hours, terms, and
 
18           conditions of employment, amounts of contributions by
 
19           the State and respective counties to the Hawaii public
 
20           employees health fund, or other benefits shall be
 
21           established which is in conflict with the system of
 
22           personnel administration based on merit principles and
 
23           scientific methods governing the classification of
 

 
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                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1           positions and the employment conduct, movement, and
 
 2           separation of public officers and employees[.];
 
 3      (4)  The compensation of officers or employees whose
 
 4           salaries presently are limited or fixed by legislative
 
 5           enactment shall not be adjusted under this chapter, but
 
 6           shall continue to be adjusted by the appointing
 
 7           authority within limits established by law or by
 
 8           legislative enactment[.];
 
 9      (5)  The compensation of officers or employees, who are not
 
10           covered under the same compensation plans as officers
 
11           and employees within collective bargaining units and
 
12           whose salaries presently are authorized to be fixed by
 
13           the appointing authority, need not be adjusted under
 
14           this chapter.  The appointing authority may continue to
 
15           make specific adjustments in the salaries of individual
 
16           officers or employees from available funds
 
17           appropriated[.];
 
18      (6)  Adjustments to the amounts of contributions by the
 
19           State and respective counties to the Hawaii public
 
20           employees health fund on behalf of officers or
 
21           employees who are not covered by adjustments made under
 
22           this chapter shall be made by legislative enactment[.];
 
23           and
 

 
Page 9                                                     1137
                                     S.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (7)  The total annual contributions made by the State to the
 
 2           Hawaii public employees health fund for health benefits
 
 3           plans shall not exceed $240,000,000." 
 
 4      SECTION 5.  Statutory material to be repealed is bracketed.
 
 5 New statutory material is underscored.
 
 6      SECTION 6.  This Act shall take effect upon its approval and
 
 7 shall be repealed on                       .