STAND. COM. REP. NO. 212

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1039
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Labor and Environment, to which was
referred S.B. No. 1039 entitled: 

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

begs leave to report as follows:
     
     The purpose of this measure is to authorize flexible
spending accounts for public employees.

     Your Committee received testimony in support of this measure
from the Department of Human Resources Development.

     Your Committee finds that flexible savings accounts are a
benefit that allows employees to deduct moneys from their
paycheck on a pre-tax basis to pay for unreimbursed medical and
dependent care expenses.  In addition, the measure authorizes the
use of any interest earned on the plan contributions and any
unused and forfeited participant balances to defray
administrative costs.

     Your Committee is in support of this measure and believes it
will provide an additional benefit to participants, without undue
administrative costs to the State.

     As affirmed by the record of votes of the members of your
Committee on Labor and Environment that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 1039 and recommends that it pass Second Reading and
be referred to the Committee on Ways and Means.

 
a                                                     SB1039
                                   STAND. COM. REP. NO. 212
                                   Page 2



                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and
                                   Environment,



                                   ______________________________
                                   BOB NAKATA, Chair

 
a                                                     SB1039