STAND. COM. REP. NO. 2686

                                   Honolulu, Hawaii
                                                     , 2000

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




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

Sir:

     Your Committees on Labor and Environment and Ways and Means,
to which was referred S.B. No. 2859 entitled: 

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

beg leave to report as follows:

     The purpose of this measure is to reform the public
employment laws that were enacted to implement two constitutional
mandates -- that there be civil service based on merit and that
public employees have the right to bargain collectively.

     Testimony in support of the measure, as received and
initially heard by the Committee on Labor and Environment, was
received from the Governor, the Department of Human Resources
Development (DHRD), DHRD's Management Team, the Hawaii State
Personnel Council, the Office of Collective Bargaining, the
Department of Accounting and General Services, the Department of
Agriculture, the Department of Business, Economic Development,
and Tourism, the Department of Budget and Finance, the Department
of Commerce and Consumer Affairs, the Department of Hawaiian Home
Lands, the Superintendent of Education, the State Librarian, the
Department of Health, the Department of Human Services, the
Department of Land and Natural Resources, the Department of
Public Safety, the Department of Taxation, the University of 

 
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Hawai`i, the Hawaii Health Systems Corporation, the Judiciary,
the Mayors of the Counties of Hawaii, Kauai, and Maui, a Maui
Councilman, the Department of Personnel Services of the County of
Maui, the Chamber of Commerce of Hawaii, the Hawaii Business
Roundtable, the Big Island Business Council, the Kona Kohala
Chamber of Commerce, the Kauai Chamber of Commerce, and the Kauai
Business Council.

     Testimony in opposition was received from the Hawaii State
AFL-CIO, the United Public Workers, AFSCME, Local 646, the Hawaii
Government Employees Association (HGEA), the HGEA Managerial and
Confidential Employees Chapter, the Hawaii State Teachers
Association, the University of Hawaii Professional Assembly, the
Public Employees Management Association of Hawaii, the Hawaii
State Fire Fighters Association, the Hawai`i Nurses' Association,
the Plumbers and Fitters Local 675, the Hotel Employees and
Restaurant Employees, Local 5, the Teachers and Staff of Waimea
Elementary and Intermediate School, the Concerned Teachers of
Wilson Elementary, Information Services, and three individuals.

     The Employees Retirement System and the Office of
Information Practices submitted comments.

     At a subsequent joint hearing by the Committees on Labor and
Environment and Ways and Means, testimony on a proposed
S.B. No. 2859, S.D. 1, was received from the Department of Human
Resources Development, the Department of Health, the Department
of Public Safety, the University of Hawai`i, the Hawaii Health
Systems Corporation, the Judiciary, the Hawaii State Personnel
Council, the Honolulu Board of Water Supply, the County of Maui
Department of Personnel Services, the Public Employees Management
Association of Hawaii, the Chamber of Commerce of Hawaii, the
Hawaii Business Roundtable, and two individuals.

     Your Committees believe that modernization of Hawaii's
system of public employment is one of the most critical issues
facing the legislature in this session of the year 2000.  Public
employment is governed by two often contradictory sets of laws --
those for civil service and those for collective bargaining.
While these laws once clearly delineated the differences between
the two, changes over many years have blurred the lines of
responsibility and authority.

     Your Committees have heard that one of the keys to
successful modernization and a more responsive, adaptive
government, is to restore the "bright line" -- the clear

 
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delineation between civil service and collective bargaining.
After considerable discussion, your Committees have made this
"bright line" concept the basis for deliberations on the many
concepts contained in this measure.

     Your Committees have also considered carefully the format of
this administration measure.  As introduced, Hawaii's current
civil service and collective bargaining laws would be repealed
and a new comprehensive public employment law would be created
with this measure.  While many of the components of current law
are represented in this proposed new law, it is not clear where
changes have been made -- or the extent of these changes.  Your
Committees acknowledge the administration's intent to craft a
comprehensive approach to public employment, but find the
difficulty of identifying how this measure would change the
current structure to be a hindrance in public deliberation of the
many important concepts and changes that must be considered.

     Your Committees have amended this measure accordingly, by
deleting its contents and amending those chapters of current
statutes that are covered by the language in this measure.  In
doing so, your Committees have retained many of the concepts
proposed in the administration measure, believing them to be
worthy of continued scrutiny and discussion by members of the
Legislature, public employers and employees, the unions
representing these employees, and the public beneficiaries of
government services.

     The following outlines the major components of
S.B. No. 2859, S.D. 1, in three categories -- civil service,
collective bargaining, and employment policies -- and notes those
concepts of the administration measure that your Committees have
not retained.  In addition to these three specific categories,
your Committees have retained several other components of the
administration measure, and these are outlined as well.

Civil Service

     (1)  Affirms the merit principle as the core of both civil
          service and collective bargaining, and redefines the
          term to include the concept of retention based on
          performance;

     (2)  Establishes nine separate jurisdictions with the
          authority to establish their own civil service systems:
          the State, each of the four counties, the Judiciary,

 
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          the Department of Education, the University of Hawaii,
          and the Hawaii Health Systems Corporation;

     (3)  Retains the Civil Service Commission for the State
          jurisdiction, and authorizes other jurisdictions to
          establish a similar appellate body, to be responsible
          for matters relating to classification,
          reclassification, recruitment, examination, and initial
          pricing only -- other matters would be subject to
          collective bargaining;

     (4)  Authorizes directors of each jurisdiction to establish
          in-service training and incentive service awards; and

     (5)  Retains current statutory language on positions exempt
          from civil service, for the purpose of further
          discussion.

     Your Committees considered the following items proposed by
the administration measure, and deleted them:

     (1)  Mandated performance appraisal system.  Under
          S.B. No. 2859, S.D. 1, performance appraisal would be
          negotiable under collective bargaining;

     (2)  Establishment of a Merit Appeals Board and a procedure
          for the channeling of performanced based appeals to the
          Merit Appeals Board and disciplinary appeals through
          the grievance procedure established in a collective
          bargaining agreement.  Under S.B. No. 2859, S.D. 1,
          this elaborate procedure is unnecessary with creation
          of the bright line which clearly delineates the scope
          of civil service vis-a-vis collective bargaining; and

     (3)  Exempting personnel rule making from Chapter 91, Hawaii
          Revised Statutes (HRS).  While personnel rules affect
          public employees primarily, they do impact the public
          and rule making should be retained under Chapter 91,
          HRS.

Collective Bargaining

     (1)  Preserves the statewide composition of existing
          bargaining units;


 
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     (2)  Recognizes eight of the nine jurisdictions as separate
          employers for negotiations -- the Department of
          Education would bargain under the umbrella of the State
          jurisdiction;

     (3)  Establishes a "bright line" clearly delineating
          classification, reclassification, recruitment,
          examination, initial pricing, and health fund and
          retirement benefits as matters of civil service and
          subjecting all other matters to negotiation;

     (4)  Requires the jurisdictions' legislative bodies to
          establish a "biennium submission date" for submission
          by the chief executive of cost items to the respective
          legislative body and prohibits retroactivity if the
          submission deadline is missed due to the union's
          failure to bargain in good faith;

     (5)  Mandates a calendar driven impasse process in relation
          to the "biennium submission date";

     (6)  Clarifies the legislative body's role in approving cost
          items by deeming failure to approve or reject as a
          rejection, and requiring the legislative body to submit
          its reasons for a rejection to the parties;

     (7)  Amends criteria for arbitration decisions, to restrict
          from the arbitrator's consideration of the employer's
          ability to pay, potential revenue resources such as the
          imposition of increased or new taxes and fees and
          receipt of judgments and settlements, and any revenue
          estimates exceeding those by the Council of Revenues,
          and to remove from consideration the broad catchall
          provision of other factors that are normally or
          traditionally taken into consideration in voluntary
          agreements between parties in public service or private
          employment;

     (8)  Allows the employer to implement change after good
          faith negotiations or consultation by filing with the
          Hawaii Labor Relations Board the change together with a
          statement of its good faith efforts; and

     (9)  Renames the Office of Collective Bargaining to the
          Office of Collective Bargaining and Managed
          Competition, and designates it as the entity to

 
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          implement and review managed competition for government
          services established pursuant to Act 230, Session Laws
          of Hawaii (SLH) 1998, although this measure does not
          set up the process, and subjects the appointment of the
          chief negotiator to advice and consent of the Senate.

     Your Committees note that with respect to (8) above, on the
ability of the employer to implement change, the members of your
Committees have serious reservations about the clarity of the
proposed language.  Your Committees have heard differing
interpretations of the intent, whether it applies to new items
only or if reopened items are also covered, how it will apply to
negotiable matters as opposed to matters subject to consultation,
and the duration of the change once implemented.  The resulting
confusion has made it difficult for your Committees to weigh the
impacts of this proposed change.  Your Committees find this to be
an extremely important issue, and believe further research is
necessary in order to craft language that clearly reflects the
intent and will not be subject to numerous and conflicting
interpretations.

     Your Committees have deleted the provision that would have
restored the right to strike for all bargaining units except 11
and 12, as well as the proposed repeal of the essential worker
designation.

Employment Policies

     (1)  Provides an interface between the two constitutional
          mandates regarding civil service and collective
          bargaining;

     (2)  Coordinates and simplifies the complaint and grievance
          process as a result of the delineation between civil
          service and collective bargaining -- the "bright line"
          division;

     (3)  Exempts key personnel in charge of program operations
          from civil service;

     (4)  Expedites the salary overpayment recovery process; and

     (5)  Establishes a "two strikes and you are out" substance
          abuse policy.


 
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     Your Committees considered the following items proposed by
the administration measure, and deleted them:

     (1)  Recognition of both disciplinary and non-disciplinary
          adverse actions and employee appeal rights,
          establishment of office hours by the chief executive,
          establishment of a forty-hour work week in statute, and
          limits on vacation and sick leave credits for new
          hires.  Under S.B. No. 2859, S.D. 1, these would all be
          negotiable under collective bargaining; and

     (2)  Exemption from civil service Board of Education and
          Board of Regent positions.  Under S.B. No. 2859,
          S.D. 1, current statutory language on positions exempt
          from civil service were retained for the purpose of
          further discussion.

Additional Initiatives

     (1)  Enables experimental modernization projects;

     (2)  Establishes a voluntary severance benefits and early
          retirement incentives program for certain State and
          county employees which excludes employees terminated
          for disciplinary reasons from eligibility, requires
          each state department to reduce its personnel count by
          the equivalent count of voluntary severance or early
          retirements conferred, and requires any necessary
          payback to the Employees Retirement System from the
          State over five years; and

     (3)  Makes appropriations for management training and the
          statewide employee assistance program that provides
          short term counseling for employees in dealing with
          personal problems that may affect work performance, and
          for separation incentives.

     This measure would also provide for a one-year transition
period for implementation.

     Your Committees believe that the importance of the concepts
contained in this measure warrant extensive further discussion,
and consider S.B. No. 2859, S.D. 1 to be a work in progress.  As
such, the members of your Committees ask for the kokua of all
concerned in working together on this measure during the
remainder of the 2000 legislative session.  Accordingly, your

 
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Committees have deliberately inserted a flawed effective date of
July 1, 2010, to ensure continued dialogue.

     As affirmed by the record of votes of the members of your
Committees on Labor and Environment and Ways and Means that is
attached to this report, your Committees are in accord with the
intent and purpose of S.B. No. 2859, as amended herein, and
recommend that it pass Second Reading in the form attached hereto
as S.B. No. 2859, S.D. 1, and be placed on the calendar for Third
Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Labor and
                                   Environment and Ways and
                                   Means,



____________________________       ______________________________
CAROL FUKUNAGA, Co-Chair           BOB NAKATA, Chair



_____________________________
ANDREW LEVIN, Co-Chair

 
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