STAND. COM. REP. NO. 237

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 147
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Labor and Public Employment, to which was
referred H.B. No. 147 entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to require the investment of
Employees' Retirement System (ERS) funds in investments that
create direct economic benefits in Hawaii, subject to unspecified
minimum and maximum limits.

     The Hawaii State Teachers Association supported the intent
of this measure, but had reservations in "requiring" the ERS to
invest in economically-targeted investments.  The Employees'
Retirement System commented on this measure.

     Upon further consideration, your Committee has amended this
measure by: 

     (1)  Deleting the requirement that the ERS invest in
          economically-targeted investments;  

     (2)  Allowing ERS the option to invest in investments that
          provide Hawaii with direct economic benefits; and 

     (3)  Making other technical, nonsubstantive amendments for
          clarification purposes.   


 
 
                                 STAND. COM. REP. NO. 237
                                 Page 2

 
     Your Committee finds that the ERS has a fiduciary
responsibility to invest beneficiaries' funds in financially
sound investments.  While bolstering Hawaii's economy is a noble
and needed concept, the primary concern for the ERS should be to
provide its beneficiaries with the highest return on investments.
Your Committee encourages the ERS to invest in instruments, which
provide Hawaii with direct economic benefit, but finds that it is
not financially responsible or sound to mandate the ERS to invest
in such instruments.

     As affirmed by the record of votes of the members of your
Committee on Labor and Public Employment that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 147, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as H.B. No. 147, H.D.
1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and Public
                                   Employment,



                                   ______________________________
                                   TERRY NUI YOSHINAGA, Chair