STAND. COM. REP. NO. 2920

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 564
                                        H.D. 2
                                        S.D. 1




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

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 564, H.D. 2, 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 provide for an equitable
solution to providing all qualified public employees with the
opportunity to obtain retirement credit for active duty military
service.

     Specifically, the measure:

     (1)  Establishes a rate of one and one-fourth percent for
          each year of credited membership service for qualifying
          members of the Employees' Retirement System (ERS),
          whether contributory or noncontributory, to receive
          military service credit at no cost;

     (2)  Allows certain ERS members to receive a refund for lump
          sum payments or additional deductions from their
          compensation made to obtain membership service credit
          for active military service; and

     (3)  Allows qualifying ERS members to purchase additional
          service credits at specified rates.


 
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     The United Public Workers, employees of the Real Property
Division of the County of Hawaii, the Hawaii Government Employees
Association, and two individuals testified in support of the
measure.  The ERS submitted comments on this measure.

     Your Committee has amended the measure by:

     (1)  Adding provisions that allow a surviving spouse or
          reciprocal beneficiary of a deceased member of the ERS
          to retain the pension and other retirement benefits
          obtained from the former spouse's or reciprocal
          beneficiary's employment if the surviving spouse or
          reciprocal beneficiary remarries or enters into a new
          reciprocal beneficiary relationship;

     (2)  Rewriting the proposed military service credit language
          to clarify that, beginning July 1, 2000, for
          contributory members, the one and one-fourth percent
          per year service credit is a base allowance credit, and
          that contributory members shall have a one-time option
          of purchasing additional allowance credit to raise the
          military service credit to the level equal to the
          member's contributory allowance status at the time the
          military service is credited; and

     (3)  Amending the appropriation section of the measure to
          state that the moneys used to refund the moneys
          contributory members contributed to purchase their
          military service credit prior to July 1, 2000, shall be
          from the ERS, not the general fund.

     Your Committee believes that the amended measure adequately
addresses the concerns of contributory members who feel that an
inequity exists over the fact that noncontributory members are
able to receive free military service credit while contributory
members must pay for any military service credit they wish to
claim.

     The amended measure also compassionately addresses the issue
of allowing a surviving spouse or reciprocal beneficiary of a
deceased member of the ERS to retain the pension and other
retirement benefits obtained from the former spouse's or
reciprocal beneficiary's employment if the surviving spouse or
reciprocal beneficiary remarries or enters into a new reciprocal
beneficiary relationship.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and

 
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purpose of H.B. No. 564, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 564, H.D. 2, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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