REPORT TITLE:
Voluntary Severance


DESCRIPTION:
Establishes voluntary severance benefits, special retirement
incentive benefits; requires report by DHRD on any restructuring
as a result.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2340
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC SERVICE.
 


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

 1      SECTION 1.  The legislature finds that the reorganization of
 
 2 state government is a multifaceted undertaking.  Change will
 
 3 involve both how government services are provided and the
 
 4 employees who deliver these programs and services to the people
 
 5 of Hawaii.  The legislature also recognizes that any major
 
 6 restructuring will include reducing the size of government, and
 
 7 that these workforce reductions may eliminate positions
 
 8 throughout state government.
 
 9      The purpose of this Act is to provide severance benefits or
 
10 retirement incentives to employees whose positions are eliminated
 
11 as a result of a reduction-in-force or a workforce reduction plan
 
12 by a department, the judiciary, or the University of Hawaii.
 
13      SECTION 2.  Voluntary severance benefits.  (a)  Any state
 
14 employee covered under chapter 88, Hawaii Revised Statutes, who
 
15 receives official notification that the employee's position is
 
16 specifically eliminated or eliminated as a result of a reduction-
 
17 in-force or workforce reduction plan proposed by a department,
 
18 the judiciary, or the University of Hawaii, may elect to receive
 
19 a voluntary severance benefit under this Act in lieu of
 

 
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 1 exercising any reduction-in-force provisions provided under
 
 2 chapters 89 and 89C, Hawaii Revised Statutes, as applicable.
 
 3      (b)  A one-time lump sum cash bonus voluntary severance
 
 4 benefit shall be paid by the terminated employee's department,
 
 5 the judiciary, or the University of Hawaii, as applicable.
 
 6      (c)  The voluntary severance benefit shall be paid from the
 
 7 appropriation for the state employee's annual base salary within
 
 8 the fiscal year the employee elects to voluntarily separate from
 
 9 service after all costs associated with the employee's separation
 
10 have been paid.
 
11      (d)  The amount of voluntary severance benefits paid shall
 
12 be calculated at five per cent of the employee's base salary for
 
13 every year of service worked, up to ten years, and shall not
 
14 exceed fifty per cent of the employee's current annual base
 
15 salary; provided that all costs under subsection (c) have been
 
16 paid.
 
17      For the purposes of this section, "base salary" means an
 
18 employee's annual salary for the position from which the employee
 
19 is to be separated, excluding any bonus, shortage category
 
20 differential, overtime, vacation, or other leave,
 
21      (e)  The terminating department, the judiciary, or the
 
22 University of Hawaii, as applicable, shall report to the
 
23 departments of budget and finance and human resources development
 

 
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 1 a list of all state employees who elected and received voluntary
 
 2 severance benefits pursuant to this Act.
 
 3      (f)  A voluntary severance benefit shall be in addition to
 
 4 any payment owing to the employee for accumulated unused vacation
 
 5 allowances under section 79-7, Hawaii Revised Statutes.
 
 6      (g)  All voluntary severance benefits payable pursuant to
 
 7 this section shall be subject to applicable federal and state
 
 8 income tax laws and rules.
 
 9      (h)  No voluntary severance benefit shall be payable to a
 
10 state employee terminated for disciplinary reasons or reasons
 
11 other than a reduction in state government workforce nor to any
 
12 state employee who elects to receive the special retirement
 
13 benefit provided under section 3 of this Act.
 
14      (i)  A voluntary severance benefit provided under this Act
 
15 shall not be considered as a part of a terminated employee's
 
16 salary, service credit, or a collectively bargainable cost item
 
17 when calculating retirement benefits, or sick or vacation leave.
 
18      (j)  The voluntary severance benefit, payment of accrued
 
19 vacation leave, and the costs associated with providing these
 
20 benefits shall not exceed the participating employee's annual
 
21 salary less any paid salary within the fiscal year in which the
 
22 employee separates from service.
 
23      (k)  No employee who has received a voluntary severance
 

 
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 1 benefit provided by this Act shall be reemployed by the State
 
 2 within five years of receiving the voluntary severance benefit
 
 3 unless the gross amount of the voluntary severance benefit is
 
 4 returned by the employee to the appropriate fund prior to the
 
 5 commencement of reemployment.
 
 6      (l)  All positions held by employees who are provided
 
 7 voluntary severance benefits shall be abolished upon the
 
 8 termination of the employee and all funds allocated for the
 
 9 salary of the position shall be returned to the appropriate fund
 
10 from which the position is funded, as applicable, after the
 
11 deduction of amounts sufficient to cover the voluntary severance
 
12 benefits and the accumulated vacation leave of the employee who
 
13 occupied the position.  The departments of budget and finance and
 
14 human resources development shall abolish the vacated positions
 
15 from the appropriate budget and personnel data files.
 
16      (m)  All employees whose positions are eliminated as a
 
17 result of a reduction-in-force or workforce reduction plan
 
18 proposed by a department, the judiciary, or the University of
 
19 Hawaii, shall voluntarily separate from service within the one-
 
20 year period of July 1, 2000, to June 30, 2001, unless otherwise
 
21 specified in this Act.
 
22      (n)  The terminating department, the judiciary, or the
 
23 University of Hawaii, as applicable, shall reduce its personnel
 

 
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 1 count by the equivalent of each voluntary severance benefit
 
 2 conferred, except as otherwise provided in section 3 of this Act.
 
 3      (o)  The departments of human resources development and
 
 4 budget and finance shall develop guidelines for participating
 
 5 agencies to facilitate the implementation of the voluntary
 
 6 severance benefits provided in this section.
 
 7      SECTION 3.  Special retirement incentive benefits.  (a)  Any
 
 8 state employee covered under chapter 88 or 89C, Hawaii Revised
 
 9 Statutes, who receives official notification that the employee's
 
10 position is specifically eliminated or eliminated as a result of
 
11 a reduction-in-force or workforce reduction plan proposed by a
 
12 department, the judiciary, or the University of Hawaii, may
 
13 elect, if the employee is a vested member of the employees'
 
14 retirement system and meets any of the criteria specified in
 
15 subsection (e), the special retirement benefit provided by this
 
16 section in lieu of receiving the voluntary severance benefits
 
17 provided under section 2 or exercising any reduction-in-force
 
18 provisions to which the employee may be entitled.  To receive the
 
19 special retirement incentive benefits offered under this section,
 
20 the employee shall comply with the application and time frame
 
21 requirements specified in subsections (b) and (c).
 
22      (b)  Any employee whose position is eliminated by a
 
23 reduction-in-force or workforce reduction plan proposed by a
 

 
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 1 department, the judiciary, or the University of Hawaii, who
 
 2 elects to retire and receive the benefits under this section
 
 3 shall notify the employee's employing department, the judiciary,
 
 4 or the University of Hawaii, as applicable, by filing a formal
 
 5 application for retirement not less than thirty days nor more
 
 6 than ninety days prior to the date of retirement.
 
 7      (c)  All employees whose positions are eliminated as a
 
 8 result of a reduction-in-force or workforce reduction plan
 
 9 proposed by a department, the judiciary, or the University of
 
10 Hawaii, and who file a formal application for retirement under
 
11 subsection (b), shall retire within the one-year period of
 
12 July 1, 2000, to June 30, 2001, unless otherwise specified in
 
13 this Act.
 
14      (d)  A one-time early retirement service credit of two
 
15 additional years under chapter 88, Hawaii Revised Statutes, shall
 
16 be provided to affected employees whose positions are
 
17 specifically eliminated or eliminated as a result of a
 
18 department's, the judiciary's, or the University of Hawaii's
 
19 compliance with a reduction-in-force or workforce reduction plan.
 
20      (e)  Notwithstanding the age and length of service
 
21 requirements of sections 88-73 and 88-281, Hawaii Revised
 
22 Statutes, a member shall qualify for the bonus provided under
 
23 subsection (d) if, on the member's retirement date, the member
 

 
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 1 qualifies under one of the following:
 
 2      (1)  The member is at least fifty years of age and has at
 
 3           least ten years of credited service as a contributory
 
 4           class A or B member, exclusive of the bonus provided in
 
 5           subsection (d);
 
 6      (2)  Irrespective of age, the member has at least twenty
 
 7           years of credited service as a contributory class A or
 
 8           B member, exclusive of the bonus provided in subsection
 
 9           (d);
 
10      (3)  The member is at least fifty-seven years of age and has
 
11           at least ten years of credited service as a
 
12           noncontributory class C member, exclusive of the bonus
 
13           provided in subsection (d); or
 
14      (4)  Irrespective of age, the member has at least
 
15           twenty-five years of credited service as a
 
16           noncontributory class C member, exclusive of the bonus
 
17           provided in subsection (d).
 
18      (f)  The additional service credit shall not increase the
 
19 amount of total credited service or retirement allowance of the
 
20 member beyond any maximum limitation on service credit or
 
21 retirement allowance established by chapter 88, Hawaii Revised
 
22 Statutes.
 
23      (g)  The member shall forfeit the additional service credit
 

 
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 1 and any other benefit provided by chapter 88, Hawaii Revised
 
 2 Statutes, that was based on the early retirement bonus upon
 
 3 subsequent reentry into the employees' retirement system.
 
 4      (h)  The heads of the affected department, the judiciary,
 
 5 and the University of Hawaii shall transmit a list of
 
 6 participants whose positions are eliminated to the board of
 
 7 trustees of the employees' retirement system not less than thirty
 
 8 days but not more than ninety days prior to the employee's
 
 9 retirement date.  The heads of the affected department, the
 
10 judiciary, and the University of Hawaii shall certify that the
 
11 employees on the list have in fact selected the special
 
12 retirement incentive benefit in lieu of the voluntary severance
 
13 benefit provided in section 2 of this Act.
 
14      (i)  Any employee who exercises the option of early
 
15 retirement pursuant to this section but who does not qualify with
 
16 respect to the age and length of service requirements under
 
17 section 88-73, Hawaii Revised Statutes, to receive a retirement
 
18 benefit without penalty, shall not have their retirement benefit
 
19 reduced in accordance with the actuarial formula normally used by
 
20 the employees' retirement system for the calculation of early
 
21 retirement benefits.
 
22      (j)  All positions vacated by the retirement of an employee
 
23 pursuant to this section shall be abolished.  All amounts
 

 
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                                     S.B. NO.           2340
                                                        
                                                        

 
 1 allocated for positions vacated and abolished pursuant to this
 
 2 section shall be lapsed to the appropriate fund from which the
 
 3 employee's position is funded, as applicable, upon the retirement
 
 4 of the employee and after the deduction of amounts sufficient to
 
 5 cover the department's, the judiciary's, or the University of
 
 6 Hawaii's costs associated with the retiring employee's special
 
 7 retirement benefit, accumulated vacation leave, and any other
 
 8 directly or indirectly associated costs.  Each department
 
 9 affected by the special retirement program authorized by this
 
10 section, the judiciary, and the University of Hawaii shall reduce
 
11 its personnel count by the equivalent of each special retirement
 
12 benefit conferred.  Each department, the judiciary, and the
 
13 University of Hawaii shall forward a report on the positions
 
14 affected to the directors of finance and human resources
 
15 development who shall then abolish the vacated positions from the
 
16 appropriate budget and personnel files.  The governor shall
 
17 report this information to the legislature no later than twenty
 
18 days prior to the convening of the regular sessions of 2001,
 
19 2002, and 2003.
 
20      (k)  No employee who has received a special retirement
 
21 incentive benefit provided by this Act shall be reemployed by the
 
22 State within five years of receiving the special retirement
 
23 incentive benefit unless the gross amount of the special
 

 
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 1 retirement incentive benefit is returned by the employee to the
 
 2 appropriate fund prior to the commencement of reemployment.
 
 3      (l)  The special retirement incentive benefit, payment of
 
 4 accrued vacation leave, and the costs associated with providing
 
 5 these benefits shall not exceed the participating employee's
 
 6 annual salary allotment.
 
 7      (m)  The departments of human resources development and
 
 8 budget and finance shall develop guidelines for participating
 
 9 agencies to facilitate the implementation of the special
 
10 retirement incentive benefits provided in this section.
 
11      SECTION 4.  The board of trustees of the employees'
 
12 retirement system shall make payments with respect to all
 
13 eligible employees who retire pursuant to section 3 of this Act.
 
14      The board shall determine the amount equal to the actuarial
 
15 present value of the difference between allowances members
 
16 receive after the receipt of service credit under section 3 of
 
17 this Act and the allowances members would have received without
 
18 two years of additional service credit.  The board shall also
 
19 determine the portion of the additional actuarial present value
 
20 of benefits to be charged to the State, based on retirements
 
21 during the early retirement incentive bonus period.  If
 
22 necessary, the State shall make additional payments to the
 
23 employees' retirement system in the amounts required to liquidate
 

 
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 1 the additional actuarial present value of benefits over a period
 
 2 of five years beginning July 1, 2002.
 
 3      SECTION 5.  The department of human resources development,
 
 4 in cooperation with the employees' retirement system and the
 
 5 public employees health fund, shall provide briefings prior to
 
 6 the implementation of any strategic workforce reduction plan to
 
 7 educate the employees whose positions have been eliminated.
 
 8      The department of human resources development shall report
 
 9 to the legislature not later than twenty days prior to the
 
10 convening of the 2002 regular session on any restructuring or
 
11 reengineering activities within the various departments of the
 
12 executive branch initiated as a consequence of this Act.
 
13      SECTION 6.  The governor is authorized to provide funds to
 
14 obtain matching federal moneys to retrain employees separated
 
15 from service by this Act.
 
16      SECTION 7.  There is appropriated out of the employees
 
17 retirement system's investment earnings the sum of $150,000, or
 
18 so much thereof as may be necessary for fiscal year 2000-2001,
 
19 for the employees retirement system to process the retirement
 
20 benefits provided to state employees retiring under section 3 of
 
21 this Act.
 
22      The sum appropriated shall be expended by the employees
 
23 retirement system for the purposes of carrying out its
 

 
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 1 responsibilities under section 3 of this Act.
 
 2      SECTION 8.  If any provision of this Act, or the application
 
 3 thereof to any person or circumstance is held invalid, the
 
 4 invalidity does not affect other provisions or applications of
 
 5 the Act which can be given effect without the invalid provision
 
 6 or application, and to this end the provisions of this Act are
 
 7 severable.
 
 8      SECTION 9.  This Act shall take effect on July 1, 2000, and
 
 9 shall be repealed on June 30, 2002.
 
10 
 
11                           INTRODUCED BY:  _______________________