CONFERENCE COMMITTEE REPORT NO.115

                            Honolulu, Hawaii
                                            , 2000

                            RE:   S.B. No. 2859
                                  S.D. 1
                                  H.D. 1
                                  C.D. 1




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

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

Sir:

     Your Committee on Conference on the disagreeing vote of the
Senate to the amendments proposed by the House of Representatives
in S.B. No. 2859, S.D. 1, H.D. 1, entitled:  

     "A BILL FOR AN ACT RELATING TO PUBLIC EMPLOYMENT," 

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.

     The purpose of this measure is to reform the public
employment laws to improve the efficiency and effectiveness of
government consistent with Article XIII, Section 2, and Article
XVI, Section 1, of the Hawaii State Constitution.

     Your Committee has undertaken the work of integrating the
differing approaches to the modernization of Hawaii's public
employment laws.  These differences reflect many of the concerns
raised by stakeholders -- management and workers, the various
jurisdictions and agencies within Hawaii's system of government
and the unions representing public workers, legislators and the
broader general public who benefit from government services --

 
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and your Committee is well aware that the resolution of these
differences will not please all the parties.

     Your Committee believes strongly, however, that the concepts
reflected in S.B. No. 2859, S.D. 1, H.D. 1, C.D. 1, provide a
comprehensive, responsive body of law that will bring about a
more efficient and effective means of providing government
services to the people of Hawaii.

     Your Committee has amended this measure to incorporate
concepts contained in both the Senate and House versions of the
bill, as well as many of those in the measure as introduced.  As
amended, this bill:

     (1)  Replaces the seven-member statewide civil service
          commission with a three-member merit appeals board to
          hear appeals related to recruitment and examination,
          classification and reclassification, initial pricing,
          and other employment actions taken against civil
          service employees who are excluded from collective
          bargaining, authorizes other jurisdictions to establish
          a merit appeals board or continue to use a civil
          service commission or appeals board as the merit
          appeals board, and establishes a procedure for internal
          complaints;

     (2)  Provides incentives for public employees through
          increased in-service training opportunities and
          entrepreneurial activities, and establishes a related
          special fund;

     (3)  Replaces the existing statewide public employment
          system with nine jurisdictions, requires each
          jurisdiction to establish separate civil service
          systems based on the merit principle, clarifies that
          within the classification systems established by each
          director, equal pay for equal work shall apply between
          equal classes in the same bargaining units among
          jurisdictions, and requires continuous improvements to
          streamline the recruitment process;

     (4)  Redefines the merit principle as the selection of
          persons based on their fitness and ability for public
          employment and the retention of employees based on
          their demonstrated appropriate conduct and productive
          performance, and incorporates the merit principle in
          Chapter 89, Hawaii Revised Statutes (HRS);


 
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     (5)  Increases the flexibility of the jurisdictions to
          pursue alternatives in providing human resources
          program services through decentralization, delegation,
          and agreements, including with a private entity if
          authorized by the legislature, and provides additional
          flexibility of exemptions in citizenship and residency
          requirements for highly specialized or hard-to-fill
          positions;

     (6)  Clarifies the parameters for establishing positions
          exempt from civil service, establishes a process for
          conversion of exempt positions to civil service.
          Requires the Department of Human Resources Development
          (DHRD) to review exempt positions established prior to
          this Act, and submit to the legislature an annual
          report on positions that were permanently exempted
          prior to the effective date of this Act, which were
          reviewed during the year, and recommendations for any
          actions regarding the positions;

     (7)  Adds to the list of positions exempt from civil
          service, employees of the office of the lieutenant
          governor, positions that must be filled to comply with
          a court order, such as the Felix-Cayetano consent
          decree, and additional positions within the Department
          of Education;

     (8)  Clarifies performance appraisal and establishes
          conditions for release of an employee from the position
          or discharge from service for failure to meet
          performance requirements, and provides for the right to
          grieve through either collective bargaining or the
          merit appeals board;

     (9)  Clarifies that layoffs, suspensions, discharges, and
          demotions shall be in accordance with procedures
          negotiated under Chapter 89 or determined under Chapter
          89C, HRS;

    (10)  Authorizes drug testing for all prospective employees,
          with no drug convictions for three years prior to
          employment;

    (11)  Authorizes experimental modernization projects to be
          developed in consultation with affected employees;

    (12)  Establishes provisions for office hours, leaves of
          absence, injured employees, credits for workers'
          compensation benefits, leave sharing program, temporary

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          inter-and intra-governmental assignments and exchanges,
          in-service training programs, incentive and service
          awards, and cafeteria plans in Chapter 78, HRS, to
          replace provisions in chapters to be repealed, and
          makes vacation, sick leave, and other leaves of absence
          negotiable under Chapter 89, or adjusted under Chapter
          89C, HRS;

    (13)  Clarifies the procedures for salary withheld for
          indebtedness to the government, and establishes a
          process of repayment to the employee if the
          determination of indebtedness was contested and found
          to be incorrect;

    (14)  Requires the parties to establish a grievance procedure
          for employees covered by collective bargaining, with
          the final and binding decision to be made by a
          performance judge -- a neutral third party selected
          from a list mutually agreed upon by the parties;

    (15)  Adds a definition for "jurisdiction" to Chapter 89,
          HRS, that lists seven of the nine jurisdictions
          established in Chapter 76, HRS, as the University of
          Hawaii and the Department of Education bargain under
          the umbrella of the State;

    (16)  Amends the definition of "collective bargaining" to
          clarify that wages include the number of incremental
          and longevity steps, the number of pay raises, and the
          movement between steps within and between pay ranges;

    (17)  Amends the definition of "cost items" to mean all items
          agreed to in the course of collective bargaining that
          an employer cannot absorb under its customary operating
          budgetary procedures and that requires additional
          appropriations by the respective legislative body;

    (18)  Amends the appropriate bargaining unit language to
          delete optional bargaining unit designation for units 9
          through 13, to adjust the composition of the bargaining
          committees to reflect the multi-jurisdictions, and to
          authorize each employer to negotiate independently of
          one another, supplemental agreements that apply to
          their respective employees;

    (19)  Amends the scope of negotiations to reflect related
          changes under collective bargaining;


 
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    (20)  Clarifies that collective bargaining agreements reached
          under binding arbitration, agreements effective during
          the term of an agreement, such as a supplemental
          agreement, an agreement on reopened items, or a
          memorandum of agreement, are not subject to
          ratification by the employees, and that once approved,
          the general provisions of the agreement shall be in
          effect, regardless of the requirements for the
          submission of cost items;

    (21)  Establishes a calendar-driven impasse procedure,
          beginning on April 16 of an even-numbered year, as a
          means of achieving timely submission of cost items to
          the respective legislative body;

    (22)  Amends the arbitration criteria to define the lawful
          authority of the employer to use special funds within
          statutory limitations, and to clarify that the
          financial ability of the employer does not depend on
          increasing or imposing new taxes, fees, or charges, or
          developing other sources of income;

    (23)  Expands the office of collective bargaining to include
          managed competition, including formulation of a
          philosophy and coordination of the process;

    (24)  Extends to the respective jurisdictions the flexibility
          to adjust wages, hours, benefits, and other terms and
          conditions of employment for excluded employees, and
          clarifies the guidelines for making adjustments for
          excluded employees, whether civil service or exempt;

    (25)  Establishes a program for voluntary severance benefits
          and special retirement incentive benefits for state
          executive branch employees as a means of facilitating
          the restructuring of government; extends to the other
          jurisdictions the option to provide a special
          retirement incentive for workers under a
          reduction-in-force or workforce restructuring plan;

    (26)  Authorizes the board of education to appoint school
          personnel engaged in instructional work, other than
          teachers and educational officers, as part of the
          board's overall efforts to increase autonomy and
          accountability of the public education system;

    (27)  Repeals numerous sections of Chapter 76 and 78, and
          repeals Chapters 77, 79, 80, 81, 82, 83 in their
          entirety;

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    (28)  Appropriates $600,000 for in-service training, and
          $128,000 for the REACH program, out of general funds,
          and $150,000 out of the employees' retirement system's
          investment earnings to process the special retirement
          incentive; and

    (29)  Provides for a transition period of two years for
          implementation of this Act, with the Act to take effect
          July 1, 2002.

     This measure amends public employment laws that have evolved
over decades and procedures constricted by layers of well-
intended rules and ordinances.  Your Committee believes that the
principles, innovations, and additional flexibility contained in
this measure, as amended, will provide a more responsive base for
the continuing evolution of public employment.

     Your Committee commends the many people who have been
involved in crafting a system of public employment for the new
century.  On July 19, 1999, Governor Cayetano issued Executive
Order No. 99-04, tasking the Director of Human Resources
Development with "the responsibility to establish partnerships
with all stakeholders, labor and management included, to
collaboratively design and effectuate a process to modernize the
civil service system."  These stakeholders convened dozens of
meetings; exchanged concepts and complaints; reviewed current
laws, rules, ordinances, and procedures; and debated the pros and
cons of hundreds of recommendations produced as a result.
Without the diligence, persistence, and commitment of so many
people, the work of this Committee would have been far more
difficult.

     Your Committee also wishes to acknowledge the Governor's
leadership in implementing these changes in Hawaii's public
employment system.  Your Committee has fully and with due
deliberation considered the Governor's civil service reform
agenda.  With the following exceptions, the concepts on which
this agenda was based have been incorporated into this measure.

     Two remain for further consideration -- a "two strikes and
you're out" drug policy and changes in vacation benefits for new
employees.  The parties have indicated a desire to negotiate
these issues through the collective bargaining process.  Your
Committee believes the collective bargaining process may be the
appropriate arena to determine these issues, which are critical
both for employees and for management, and strongly urges the
parties to bring these issues to the table for resolution.


 
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     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
of S.B. No. 2859, S.D. 1, H.D. 1, as amended herein, and
recommends that it pass Final Reading in the form attached hereto
as S.B. No. 2859, S.D. 1, H.D. 1, C.D. 1.

                                   Respectfully submitted on
                                   behalf of the managers:

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




_____________________________     _______________________________
Rep. TERRY NUI YOSHINAGA          Sen. BOB NAKATA
Co-Chair                          Co-Chair



_____________________________     _______________________________
Rep. DWIGHT Y. TAKAMINE           Sen. ANDREW LEVIN
Co-Chair                          Co-Chair



                                  _______________________________
                                  Sen. CAROL FUKUNAGA
                                  Co-Chair

 
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