STAND. COM. REP. NO. 567-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2519
                                     H.D. 1




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

Sir:

     Your Committee on Finance, to which was referred H.B. No.
2519, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO FLEXIBLE SPENDING ACCOUNTS,"

begs leave to report as follows:

     The purpose of this bill is to enable the State to offer a
new employee benefit plan called Flexible Spending Accounts (FSA)
by:

     (1)  Requiring that all FSA participant contributions,
          interest earned, and forfeited participant balances be
          held in trust for the benefit of the plan and its
          participants; 

     (2)  Allowing the administrator of the FSA plan to hold
          funds in trust outside the state treasury; 

     (3)  Requiring that contributions, interest earned, and
          forfeited participant balances not be subject to the
          State's general creditors; and

     (4)  Requiring that the interest earned on the contributions
          and forfeited participant balances be used to defray
          participant fees and other administrative costs of the
          FSA plan as determined by the administrator of the FSA
          plan.


 
 
 
                                 STAND. COM. REP. NO. 567-00
                                 Page 2

 
     The Department of Human Resources Development, the
University of Hawaii at Manoa, the United Public Workers, the
Government Employees Association, and Comprehensive Financial
Planning, Inc., supported this bill.  The Hawaii State Teachers
Association supported the intent of this bill.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2519, H.D. 1, and recommends that it pass Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair