CONFERENCE COMMITTEE REPORT NO. 141

                            Honolulu, Hawaii
                                            , 2000

                            RE:   H.B. No. 2277
                                  H.D. 1
                                  S.D. 1
                                  C.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Conference on the disagreeing vote of the
House of Representatives to the amendments proposed by the Senate
in H.B. No. 2277, H.D. 1, S.D. 1, entitled:

    "A BILL FOR AN ACT RELATING TO THE HAWAII TOBACCO SETTLEMENT
    SPECIAL FUND,"

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

     Act 304, Session Laws of Hawaii (SLH) 1999, established the
Hawaii Tobacco Settlement Special Fund (Special Fund) to provide
for the proper allocation and prudent use of moneys received from
the settlement of the class action lawsuit against the tobacco
companies.  The moneys were apportioned as follows:

    (1)  Forty percent to the Emergency and Budget Reserve Fund
         (Reserve Fund);


 
 
 
 
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    (2)  Twenty-five percent to the Hawaii Tobacco Prevention and
         Control Trust Fund (Trust Fund) for tobacco prevention
         and control; and
    (3)  Thirty-five percent to the Department of Health (DOH),
         of which:

         (A)  Up to ten percent will be transferred to the
              Department of Human Services (DHS) for the State's
              Children's Health Insurance Program (S-CHIP); and

         (B)  The remainder of the moneys will be expended for
              health promotion and disease prevention programs.

    The purpose of this bill, as received, is to:

    (1)  Provide that any expenditure of moneys by DOH of tobacco
         settlement moneys for health promotion and disease
         prevention programs not supplant or diminish the funding
         of programs by the State's general fund;

    (2)  Clarify that Special Fund moneys shall be transferred,
         rather than appropriated, from the Special Fund to the
         three funds receiving tobacco settlement moneys;

    (3)  Allow the transfers to be made without an appropriation
         act or budget proviso, to alleviate the necessity of
         annual legislative appropriation measures, which was not
         the intent of Act 304, SLH 1999;

    (4)  Create the DOH Tobacco Special Fund (DOH Special Fund)
         for tobacco settlement moneys received by DOH, to
         provide consistency and convenience;

    (5)  Add youth programs, programs for the prevention of child
         abuse and neglect, early childhood education and care
         programs, substance abuse prevention and treatment
         services, and adult dental services to the list of
         health promotion and disease prevention programs;

    (6)  Require DOH to expend available moneys for each program
         in a proportional amount, if tobacco settlement moneys
         are less than anticipated, because of the difficulty of
         accurately predicting the precise amounts of moneys that
         will be received in any upcoming fiscal year;

    (7)  Allow the selected nonprofit entity to expend moneys
         from the Trust Fund to implement the Tobacco Prevention
         and Control Strategic Plan;


 
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    (8)  Revise the appropriated amounts contained in Act 304,
         SLH 1999, to reflect new anticipated amounts of tobacco
         settlement moneys for the coming fiscal year; and
    (9)  Make various appropriations from the DOH Special Fund
         for substance abuse prevention and treatment programs,
         the prevention of child abuse and neglect, early
         childhood education and care, school-based health
         services, dental services, and the Healthy Hawaii
         Initiative.

    This measure is intended to address the following problems
that arose since Act 304, SLH 1999, went into effect just less
than a year ago:

    (1)  The administration has proposed to use moneys from the
         Special Fund to supplant existing DOH programs; and

    (2)  Concerns have been raised that DOH has not adequately
         incorporated the community's need to address primary
         prevention programs such as substance abuse prevention
         and treatment, child protection, early childhood
         education and care, school-based health services, and
         dental services.

    The intent of Act 304, SLH 1999, is to expand tobacco
prevention and control programs and health promotion and disease
prevention programs, and to serve as a long-term source of stable
funding for prevention-oriented public health efforts.  As such,
your Committee on Conference agrees that additional language, as
found in both the House and Senate versions of the bill, is
necessary to make it absolutely clear that the Legislature is
against the administration using Special Fund moneys to supplant
existing programs.

    The Senate version of this measure attempts to address the
second problem by dipping into the Trust Fund's corpus, for a
period of one year, to fund various prevention programs.  The
intent of establishing the Trust Fund was to allow the corpus to
grow, reaching significant levels where the interest accrued
would be a continual source of program funding once tobacco
settlement moneys are depleted.  The expectation is to have DOH
and the Trust Fund Advisory Board (Board) work together on their
long-range plan.

    After much discussion, your Committee on Conference agrees
that dipping into the corpus would not be sound policy, as it
would deprive Hawaii from a unique opportunity to accrue a
significant amount of interest to ensure a long-term and
meaningful commitment to prevention programs.  Should the Board

 
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decide to fund start-up programs, the Board should consult with
DOH for funding.  
    Your Committee on Conference has amended this measure by:

    (1)  Deleting the various programs that were added on to the
         list of health promotion and disease prevention
         programs;

    (2)  Deleting the requirement that DOH expend available
         moneys for each program in a proportional amount if
         tobacco settlement moneys are less than anticipated;

    (3)  Deleting the authorization for the selected nonprofit
         entity to expend moneys from the Trust Fund to implement
         the Tobacco Prevention and Control Strategic Plan;

    (4)  Deleting the revisions to appropriations contained in
         Act 304, SLH 1999, for the Reserve and Trust Funds to
         reflect new anticipated amounts of tobacco settlement
         moneys for the coming fiscal year;

    (5)  Deleting the various appropriations from the DOH Special
         Fund for substance abuse prevention and treatment
         programs, the prevention of child abuse and neglect,
         early childhood education and care, school-based health
         services, dental services, and the Healthy Hawaii
         Initiative;

    (6)  Clarifying that moneys transferred to the DOH Special
         Fund shall be used only for the Healthy Hawaii
         Initiative and S-CHIP, which includes services for
         immigrant and other children;

    (7)  Requiring DOH to submit a report of the previous fiscal
         year's beginning balance, revenues, expenditures, and
         ending balance of the Special Fund and its three funds
         to the Legislature no later than twenty days prior to
         the convening of each Regular Session;

    (8)  Exempting the DOH Special Fund from assessments for
         central services and administrative expenses;

    (9)  Revising the appropriations contained in Act 304, SLH
         1999, to reflect for fiscal year 2000-2001, $19,506,527
         to DOH, of which $6,100,000 will be transferred to DHS
         for S-CHIP, which includes services for immigrant and
         other children;
   (10)  Increasing the number of members of the DOH advisory
         group to include a member of the House of

 
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         Representatives, to be appointed by the Speaker of the
         House, and a member of the Senate, to be appointed by
         the Senate President;

   (11)  Clarifying that the Special Fund moneys will be
         immediately transferred to the three funds, but the
         departments are not obligated to expend the moneys
         immediately; and

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

    Essentially, this measure now:

    (1)  Prohibits the supplanting or diminishing of moneys
         received from the Special Fund for existing health
         promotion and disease prevention programs;

    (2)  Transfers thirty-five percent of the tobacco settlement
         moneys to the newly established DOH Special Fund and
         clarifies that these moneys can only be used for the
         Healthy Hawaii Initiative and S-CHIP, which includes
         services for immigrant and other children;

    (3)  Requires that each year, DOH submit a report of the
         previous fiscal year's beginning balance, revenues,
         expenditures, and ending balance of the Special Fund and
         its three funds to the Legislature;

    (4)  Adds a member of the House and the Senate to the DOH
         advisory group; and

    (5)  Increases the ceiling of S-CHIP, which includes services
         for immigrant and other children, and the DOH Special
         Fund.

    As a result of conference discussions, your Committee on
Conference strongly encourages DOH and the Board to:

    (1)  Work closely with one another to ensure a long-range,
         seamless system of prevention programs for healthy
         living that embraces the spirit of Act 304, SLH 1999;
         and

    (2)  Reflect in the Healthy Hawaii Initiative the array of
         services as expressed through the Senate version.
    As affirmed by the record of votes of the managers of your
Committee on Conference that is attached to this report, your
Committee on Conference is in accord with the intent and purpose

 
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of H.B. No. 2277, H.D. 1, S.D. 1, as amended herein, and
recommends that it pass Final Reading in the form attached hereto
as H.B. No. 2277, H.D. 1, S.D. 1, C.D. 1.

                                   Respectfully submitted on
                                   behalf of the managers:

  ON THE PART OF THE SENATE        ON THE PART OF THE HOUSE



_______________________________    _______________________________
SUZANNE CHUN OAKLAND, Co-Chair     ALEXANDER C. SANTIAGO, Co-Chair



_______________________________    _______________________________
CAROL FUKUNAGA, Co-Chair           ERIC G. HAMAKAWA, Co-Chair



_______________________________    _______________________________
ANDREW LEVIN, Co-Chair             DWIGHT Y. TAKAMINE, Co-Chair