Amends public employment laws.

A BILL FOR AN ACT

SECTION 1. The purpose of this Act is to modernize government operations in order to more efficiently and effectively deliver government services.

SECTION 2. Act 253, Session Laws of Hawaii 2000, is amended by amending section 3 to read as follows:

"SECTION 3. Chapter 76, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§76-   Classification. (a) Each director shall establish, implement, and maintain one or more classification systems covering all civil service positions, not otherwise exempted by rules. [The classification systems shall be constructed with the objective of achieving equal pay for equal work as provided in section 76-1.] The director shall adopt rules that allow for the administrative review of classification and initial pricing actions.

(b) Wherever reference is made in statutes that positions are either subject to or exempt from "chapter 77" prior to the effective date of this Act, the positions shall be subject or exempt from the appropriate classification systems established under this section.""

SECTION 3. Act 253, Session Laws of Hawaii 2000, is amended by amending section 5 to read as follows:

"§76-1 Purposes; merit principle. It is the purpose of this chapter to require each jurisdiction to establish and maintain a separately administered civil service system based on the merit principle. The merit principle is 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. It is also the purpose of this chapter to build a career service in government, free from coercive political influences, to render impartial service to the public at all times, according to the dictates of ethics and morality and in compliance with all laws.

In order to achieve these purposes, it is the declared policy of the State that the human resource program within each jurisdiction be administered in accordance with the following:

"SECTION 14. Section 76-16, Hawaii Revised Statutes, is amended to read as follows:

"§76-16 Civil service and exemptions. (a) The State Constitution mandates that the employment of persons in the civil service, as defined by law, be governed by the merit principle. The legislature declares that the public policy of the State is that all positions in the civil service systems of the respective jurisdictions shall be filled through civil service recruitment procedures based on merit and that the civil service system of the respective jurisdictions shall comprise all positions, whether permanent or temporary, in the jurisdiction now existing or hereafter established and embrace all personal services performed for the jurisdiction, except employees or positions exempted under this section, or sections 46-33 and 76-77.

(b) The civil service to which this chapter applies shall comprise all positions in the State now existing or hereafter established and embrace all personal services performed for the State, except the following:

The director shall determine the applicability of this section to specific positions.

Nothing in this section shall be deemed to affect the civil service status of any incumbent as it existed on July 1, 1955.

(c) No position shall be exempted from civil service recruitment procedures unless it is in accordance with this section. In addition to the exemptions under subsection (b), sections 46-33 and 76-77, or other law, the director may exempt additional positions if the reason for exempting the position is for the same reason as a position that is included in the list of exemptions for the respective jurisdiction.

(d) The director may provide for an exemption from civil service recruitment procedures if the appointment to the position has a limitation date and it would be impracticable to recruit under civil service recruitment procedures because the required probation period that is part of the examination process can not be completed by the limitation date. The rules shall not permit additional exemptions from civil service recruitment procedures for the same position when the position will be filled for a duration that would be sufficient to recruit under civil service recruitment procedures and allow for completion of the required probation period.

(e) It is also the public policy of the State that all civil service positions be covered under the classification systems of the jurisdictions, unless the position was exempted from the classification systems by law prior to the effective date of this Act or based on reasons set forth in rules. The rules may include reasons for a temporary exemption of a position, such as the establishment of a new class is pending, or for a permanent exemption when the establishment of a class is impracticable.

(f) The exemption of a position from the classification systems, whether temporary or permanent, or an appointment with a limitation date shall not itself result in an exemption from civil service recruitment procedures. Civil service recruitment procedures based on merit shall be followed for all positions unless exempted under subsection (b), (c), or (d). Applicants referred under civil service recruitment procedures shall be informed if the appointment has a limitation date or if the position is temporarily or permanently exempted from the classification systems.

(g) Each director shall be responsible for ensuring that all exemptions from civil service recruitment procedures or from the classification systems are consistent with this section. With respect to positions exempted under this section prior to the effective date of this Act by any other law, the director shall review these positions to determine whether the positions should continue to be exempt and if so, whether from civil service recruitment procedures or the classification systems, or both. If the director determines that a position should no longer be exempt from either or both based on the intent of this section, the director shall consult with the appropriate appointing authority and its chief executive on removing the exemptions. With the approval of the chief executive, the director shall take whatever action is necessary to remove the exemptions, including submittal of proposed legislation to remove the exemptions.

(h) The director shall establish rules to implement this section that shall be in accordance with the following:

(i) Employees in positions subject to civil service recruitment procedures shall be entitled to become and remain members of the civil service for the duration of their appointments as provided in section 76-27. Employees in positions exempted from civil service recruitment procedures shall not be entitled to membership in the civil service.

(j) Employees in positions that are exempted from the classification plan, whether temporarily or permanently, may be entitled to membership in the civil service as provided in subsection (i).""

SECTION 5. Act 253, Session Laws of Hawaii 2000, is amended by amending section 19 to read as follows:

"SECTION 19. Section 76-27, Hawaii Revised Statutes, is amended to read as follows:

"§76-27 Probationary service and other requirements for membership in the civil service. (a) All employees appointed to civil service positions shall constitute the membership of the civil service, but no employee shall be entitled to membership in civil service until the employee has:

(b) Upon becoming a member in the civil service, the employee shall be entitled to hold the member's position for the duration of the member's appointment, subject to section 76-46. [In addition, civil service employees with permanent appointments, including an employee who has return rights to a position in which the employee has a permanent appointment, shall have layoff rights under section 76-43.] All other civil service employees whose appointments have a limitation date shall not have layoff rights and shall be released at the end of their appointments or earlier if there is lack of work, lack of funds, or other legitimate reasons.

(c) To retain membership in the civil service, all employees must continue to demonstrate their fitness and ability for their current positions by meeting all performance requirements of their positions. If an employee fails to meet performance requirements, section 76-41 shall apply.

(d) A member who is promoted or transferred to another position in the civil service may be required to successfully serve a new probation period as part of the examination process to determine the employee's fitness and ability for the new position but shall be entitled to all the rights and privileges of a member of the civil service, except the right to appeal a discharge from the new position (as distinguished from discharge from the service) for inefficiency during the probationary period, in which case the member shall be returned to the former position or a comparable position.

(e) An employee serving an appointment with a limitation date may subsequently be appointed to the same position or a related position in the same class within the department when a permanent position is established or is vacated; provided that the employee was hired initially through civil service recruitment procedures and the period of service as a temporary appointee immediately preceded the appointment to the permanent position. The period of service performed as a temporary appointee may be credited toward the probation period if the appointing authority certifies that the employee has been performing satisfactorily and that the duties the employee has been performing are essentially similar to those required of the probationary appointment. Upon such certification, the period of service performed as a temporary appointee shall be credited toward fulfilling the required probation period and the employee shall serve only the remainder of the probation period, if any.""

SECTION 6. Act 253, Session Laws of Hawaii 2000, is amended by amending section 22 to read as follows:

"SECTION 22. Section 76-30, Hawaii Revised Statutes, is amended to read as follows:

"§76-30 Tenure; resignations. (a) Every member of the civil service shall be entitled to hold the member's position for the duration of the member's appointment as provided in section 76-27. Resignations shall be in writing in accordance with rules.

(b) If an employee resigns without submitting the employee's resignation in writing, if an employee does not report to work for [fifteen] five days without notifying the appointing authority of the employee's employment intentions, if the resignation is submitted while an investigation was pending against the employee, or if the resignation is not accepted for reasons allowed by rules, the appointing authority shall, within [fifteen] five days following the last day the employee reported to work, file with the director a statement showing either resignation or termination of employment, as appropriate under the circumstances.

(c) If the employee does not report for work without authorization, but, within [fifteen] five days following the last day the employee reported for work, expresses a desire to continue employment, the employee shall not be deemed to have resigned. The appointing authority may take appropriate disciplinary action, including discharge, in consideration of the reasons for the employee's absence.

(d) Actions taken by the appointing authority under this section shall, if grieved, be filed pursuant to the departmental complaint procedure and the merit appeals board for employees excluded from coverage under chapter 89, as applicable.

(e) Whenever there are provisions in a collective bargaining agreement that conflict with this section, the terms of the agreement shall prevail. Actions taken by the appointing authority shall, if grieved, be filed pursuant to the contractual grievance procedure.""

SECTION 7. Act 253, Session Laws of Hawaii 2000, is amended by amending section 25 to read as follows:

"SECTION 25. Section 76-43, Hawaii Revised Statutes, is amended to read as follows:

"§76-43 Layoff. [When it is necessary to release employees due to lack of work, lack of funds, or other legitimate reasons, employees with permanent appointments in civil service positions shall have layoff rights. Layoffs shall be made in accordance with procedures negotiated under chapter 89 or established under chapter 89C, as applicable.] An appointing authority shall be entitled to release employees when necessary due to lack of work, lack of funds, or other legitimate reasons.""

SECTION 8. Act 253, Session Laws of Hawaii 2000, is amended by amending section 78-74 established in section entitled "Prospective employees; suitability for public employment," to read as follows:

"§78-   Prospective employees; suitability for public employment. (a) All prospective employees, regardless of the positions they will assume, shall demonstrate their suitability for public employment by:

[(b)] (c) If an applicant or employee fails to meet the suitability requirements of the employing jurisdiction, the applicant shall be disqualified from further employment consideration or deemed ineligible for further appointment under section 76-29 on the basis of unsuitability for public employment."

SECTION 9. Act 253, Session Laws of Hawaii 2000, is amended by amending section 78-   entitled "Leaves of absence," established in section 74 to read as follows:

"§78-   Leaves of absence. (a) Employees shall be eligible for vacation leave, sick leave, and other leaves of absence, with or without pay, as negotiated under chapter 89 or adjusted under chapter 89C, as applicable.

(b) When an employee is transferred from one department to another within the same jurisdiction [or to another jurisdiction within the State], the employee shall be given credit for the vacation earned or accumulated in the department from which the employee transferred, and the director of finance of the State or the equivalent officers of the several jurisdictions shall make the appropriate transfer of funds to implement the employee transfer. Moneys received from any such transfer of funds by a state agency financed by the general fund of the State shall be deposited with the director of finance of the State to the credit of the general fund of the State; provided that, when an employee is transferred from one department to another within the same jurisdiction, the transfer of funds shall not be made if the employee's salary is paid from the same fund. Compensation for any period of vacation allowance shall be paid at the rate to which the employee is entitled at the time the allowance is granted.

(c) Upon discharge, an employee shall be entitled to all of the employee's accumulated vacation allowance plus the employee's current accrued vacation allowance to and including the date of discharge, notwithstanding that the current accrued vacation allowance may not have been recorded at the time. If any employee dies with accumulated or current accrued vacation earned but not taken, an amount equal to the value of the employee's pay over the period of such earned vacation, and any earned and unpaid wages, shall be paid to the person or persons who may have been designated as the beneficiary or beneficiaries by the employee during the employee's lifetime in a verified written statement filed with the comptroller or other disbursing officer who issues warrants or checks to pay the employee for the employee's services as a public employee, or, failing the designation, to the employee's estate.

(d) Whenever an employee is to be discharged, voluntarily or involuntarily, the employee, at the option of the appointing authority, may be discharged and paid forthwith, in lieu of the employee's vacation allowance, the amount of compensation to which the employee would be entitled or which the employee would be allowed during the vacation period if the employee were permitted to take the employee's vacation in the normal manner, and in such case the employee's position may be declared vacant and may be permanently filled by a new appointee before the expiration of any vacation period following the date of the discharge. For an employee hired after June 30, 1997, who is to be discharged, voluntarily or involuntarily, the amount of compensation to be paid in lieu of vacation allowance under this section shall be computed using the rate of pay and amount of accumulated and accrued vacation on the date the employee is discharged. Prompt notice upon such forms and in such manner as may be required shall be given by the department head of any action taken under this provision."

SECTION 10. Act 253, Session Laws of Hawaii 2000, is amended by amending section 77 to read as follows:

"SECTION 77. Section 78-12, Hawaii Revised Statutes, is amended to read as follows:

"§78-12 Salary withheld for indebtedness to the government. (a) In case any officer, agent, employee or other person in the service of a jurisdiction is indebted to a jurisdiction and the indebtedness has been determined by a hearing pursuant to chapter 91, upon demand of the officer charged with the duty of collecting the indebtedness, the disbursing officer charged with the duty of paying the indebted officer, agent, employee, or other person, after notice to the indebted person, shall withhold one-quarter of the salary, wages, or compensation due the indebted person and pay the same, from time to time as the same shall become due, to the officer charged with the duty of collecting the indebtedness, until the full amount of the indebtedness, together with penalties and interest thereon, is paid.

(b) If the indebtedness has arisen or been incurred by reason of the indebted officer, agent, employee, or other person having embezzled, stolen, or otherwise unlawfully acquired any moneys or other property of the a jurisdiction, the whole amount of the salary, wages, or compensation, or so much thereof as may be required to pay the indebtedness in full, shall be withheld and paid over to the officer charged with the duty of collecting the indebtedness.

(c) The officer, agent, employee or other person in the service of the alleged to be indebted to a jurisdiction may waive the right to a hearing to determine the indebtedness and instead assign by contract to the officer charged with the duty of collecting debts:

For purposes of this section, a person shall be deemed to waive the hearing if the person fails to request a hearing within fifteen days from the date the person was notified of the indebtedness and the opportunity to request a hearing.

(d) The operation of all garnishment process served upon the disbursing officer shall be stayed until the indebtedness has been fully paid.

(e) If the indebtedness has occurred as a result of salary or wage overpayment, the disbursing officer shall determine the amount of indebtedness and notify the employee in writing of the indebtedness. If the employee contests the disbursing officer's determination of indebtedness, the employee may request a hearing pursuant to chapter 91.

(f) Regardless of whether a contested determination of indebtedness is pending, the disbursing officer shall commence immediate recovery of the indebtedness as provided in this subsection. If the indebtedness is equal to or less than $1,000, the disbursing officer shall immediately deduct from any subsequent periodic payment normally due the employee any amount up to the total amount of indebtedness and for indebtedness greater than $1,000, the disbursing officer shall deduct:

In addition to paragraph (1), an employee and the appointing authority may agree to offset any remaining amount of indebtedness by applying the current value of appropriate leave or compensatory time credits posted in the employee's respective accounts as balances that would otherwise be payable in cash upon separation from service; provided that credits shall not be applied to any extent that would require a refund of any moneys already deducted or repaid or that would require the payment of any moneys to the employee equivalent to a cashing out of leave or compensatory time credits.

(g) If the determination of indebtedness was contested and is subsequently found to be incorrect:

(h) If an employee is entitled to contest the determination of indebtedness under a collective bargaining grievance procedure, that [procedures] procedure shall be used in lieu of a hearing under subsection (e). A collective bargaining agreement may include overpayment recovery procedures; provided that the parties do not agree on any provision that would be inconsistent with subsections (f) and (g).""

SECTION 11. Act 253, Session Laws of Hawaii 2000, is amended by amending section 93 to read as follows:

"SECTION 93. Section 89-2, Hawaii Revised Statutes, is amended as follows:

1. By adding two new definitions to be appropriately inserted and to read:

""Day" means a calendar day unless otherwise specified.

"Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, and the Hawaii health systems corporation."

2. By amending the definitions of "arbitration", "collective bargaining", "cost items", "employee" or "public employee", "employer" or "public employer", "exclusive representative", "fact-finding", "impasse", "legislative body", "mediation", and "strike" to read:

""Arbitration" means the procedure whereby parties involved in an impasse submit their differences to a third party, whether a single arbitrator or an arbitration panel, for an arbitration decision. It may include mediation whereby the neutral third party is authorized to assist the parties in a voluntary resolution of the impasse.

"Collective bargaining" means the performance of the mutual obligations of the public employer and an exclusive representative to meet at reasonable times, to confer and negotiate in good faith, and to execute a written agreement with respect to wages, hours, amounts of contributions by the State and counties to the Hawaii public employees health fund, and other terms and conditions of employment, except that by any such obligation neither party shall be compelled to agree to a proposal, or be required to make a concession. For the purposes of this definition, "wages" includes the number of incremental and longevity steps, the number of pay ranges, and the movement between steps within the pay range and between the pay ranges on a pay schedule under a collective bargaining agreement.

"Cost items" means all items agreed to in the course of collective bargaining [that] to which an employer [cannot absorb under its customary operating budgetary procedures and that require] in its sole discretion, designates as requiring additional appropriations by its respective legislative body for implementation.

"Employee" or "public employee" means any person employed by a public employer, except elected and appointed officials and other employees who are excluded from coverage in section 89-6(c).

"Employer" or "public employer" means the governor in the case of the State, the respective mayors in the case of the counties, the chief justice of the supreme court in the case of the judiciary, the board of education in the case of the department of education, the board of regents in the case of the University of Hawaii, the Hawaii health systems corporation board in the case of the Hawaii health systems corporation, and any individual who represents one of these employers or acts in their interest in dealing with public employees. In the case of the judiciary, the administrative director of the courts shall be the employer in lieu of the chief justice for purposes which the chief justice determines would be prudent or necessary to avoid conflict.

"Exclusive representative" means the employee organization certified by the board under section 89-8 as the collective bargaining agent to represent all employees in an appropriate bargaining unit without discrimination and without regard to employee organization membership.

"Fact-finding" means identification of the major issues in a particular impasse, review of the positions of the parties and resolution of factual differences by one or more neutral fact-finders, and the making of recommendations for settlement of the impasse.

"Impasse" means failure of a public employer and an exclusive representative to achieve agreement in the course of collective bargaining. It includes any declaration of an impasse under section 89-11.

"Legislative body" means the legislature in the case of the State, including the judiciary, the department of education, the University of Hawaii, and the Hawaii health systems corporation; the city council, in the case of the city and county of Honolulu; and the respective county councils, in the case of the counties of Hawaii, Maui, and Kauai.

"Mediation" means assistance by a neutral third party to resolve an impasse between the public employer and the exclusive representative through interpretation, suggestion, and advice.

"Strike" means a public employee's refusal, in concerted action with others, to report for duty, or the employee's wilful absence from the employee's position, or the employee's stoppage of work, or the employee's abstinence in whole or in part from the full, faithful, and proper performance of the duties of employment, for the purpose of inducing, influencing, or coercing a change in the conditions, compensation, rights, privileges, or obligations of public employment; and except in the case of absences authorized by public employers, includes such refusal, absence, stoppage, or abstinence by any public employee out of sympathy or support for any other public employee who is on strike or because of the presence of any picket line maintained by any other public employee; provided that, nothing herein shall limit or impair the right of any public employee to express or communicate a complaint or opinion on any matter related to the conditions of employment."

SECTION 12. Act 253, Session Laws of Hawaii 2000, is amended by amending section 96 to read as follows:

"SECTION 96. Section 89-6, Hawaii Revised Statutes, is amended to read as follows:

"§89-6 Appropriate bargaining units. (a) All employees throughout the State within any of the following categories shall constitute an appropriate bargaining unit:

(b) Because of the nature of work involved and the essentiality of certain occupations that require specialized training, supervisory employees who are eligible for inclusion in units (9) through (13) shall be included in units (9) through (13), respectively, instead of unit (2) or (4).

(c) The classification systems of each jurisdiction shall be the bases for differentiating blue collar from white-collar employees, professional from institutional, health and correctional workers, supervisory from nonsupervisory employees, teachers from educational officers, and faculty from nonfaculty. In differentiating supervisory from nonsupervisory employees, class titles alone shall not be the basis for determination. The nature of the work, including whether a major portion of the working time of a supervisory employee is spent as part of a crew or team with nonsupervisory employees, shall be considered also.

(d) For the purpose of negotiating a collective bargaining agreement, the public employer of an appropriate bargaining unit shall mean the governor [together with the following employers:

Any decision to be reached by the applicable employer group shall be on the basis of simple majority, except when a bargaining unit includes county employees from more than one county. In such case, the simple majority shall include at least one county.], respective mayors, chief justice of the supreme court, or chief executive officer of the Hawaii health systems corporation, based on the actual employing jurisdictions.

[(e) In addition to a collective bargaining agreement under subsection (d), each employer may negotiate, independently of one another, supplemental agreements that apply to their respective employees; provided that any supplemental agreement reached between the employer and the exclusive representative shall not extend beyond the term of the applicable collective bargaining agreement and shall not require ratification by employees in the bargaining unit.

(f)] (e) The following individuals shall not be included in any appropriate bargaining unit or be entitled to coverage under this chapter:

(g) Where any controversy arises under this section, the board shall, pursuant to chapter 91, make an investigation and, after a hearing upon due notice, make a final determination on the applicability of this section to specific individuals, employees, or positions.""

SECTION 13. Act 253, Session Laws of Hawaii 2000, is amended by amending section 98 to read as follows:

"SECTION 98. Section 89-9, Hawaii Revised Statutes, is amended to read as follows:

"§89-9 Scope of negotiations; consultation. (a) The employer and the exclusive representative shall meet at reasonable times, including meetings sufficiently in advance of the April 16 impasse date under section 89-11, and shall negotiate in good faith with respect to wages, hours, the amounts of contributions by the State and respective counties to the Hawaii public employees health fund to the extent allowed in subsection (e), and other terms and conditions of employment which are subject to collective bargaining and which are to be embodied in a written agreement as specified in section 89-10, but such obligation does not compel either party to agree to a proposal or make a concession; provided that the parties may not negotiate with respect to cost items as defined by section 89-2 for the biennium 1999 to 2001, and the cost items of employees in bargaining units under section 89-6 in effect on June 30, 1999, shall remain in effect until July 1, 2001.

(b) The employer or the exclusive representative desiring to initiate negotiations shall notify the other party in writing, setting forth the time and place of the meeting desired and the nature of the business to be discussed, sufficiently in advance of the meeting.

(c) Except as otherwise provided in this chapter, all matters affecting employee relations, including those that are, or may be, the subject of a rule adopted by the employer or any director, shall be subject to consultation with the exclusive representatives of the employees concerned. The employer shall make every reasonable effort to consult with exclusive representatives and consider their input, along with the input of other affected parties, prior to effecting changes in any major policy affecting employee relations.

(d) Excluded from the subjects of negotiations are matters of classification, reclassification, benefits of but not contributions to the Hawaii public employees health fund, recruitment, examination, initial pricing, and retirement benefits except as provided in section 88-8(h). The employer and the exclusive representative shall not agree to any proposal which would be inconsistent with the merit principle [or the principle of equal pay for equal work] pursuant section 76-1 or which would interfere with the rights and obligations of a public employer to:

[The employer and the exclusive representative may negotiate procedures governing the promotion and transfer of employees to positions within a bargaining unit; the suspension, demotion, discharge, or other disciplinary actions taken against employees within the bargaining unit; and the layoff of employees within the bargaining unit. Violations of the procedures so negotiated may be subject to the grievance procedure in the collective bargaining agreement.]

(e) Negotiations relating to contributions to the Hawaii public employees health fund shall be for the purpose of agreeing upon the amounts which the State and counties shall contribute under section 87-4, toward the payment of the costs for a health benefits plan, as defined in section 87-1(8), and group life insurance benefits, and the parties shall not be bound by the amounts contributed under prior agreements; provided that section 89-11 for the resolution of disputes by way of fact-finding or arbitration shall not be available to resolve impasses or disputes relating to the amounts the State and counties shall contribute to the Hawaii public employees health fund.

(f) The repricing of classes within an appropriate bargaining unit may be negotiated as follows:

SECTION 14. Act 253, Session Laws of Hawaii 2000, is amended by amending section 100 to read as follows:

"SECTION 100. Section 89-11, Hawaii Revised Statutes, is amended to read as follows:

"§89-11 Resolution of disputes; impasses. (a) A public employer and an exclusive representative may enter, at any time, into a written agreement setting forth an alternate impasse procedure culminating in an arbitration decision pursuant to subsection (f), to be invoked in the event of an impasse over the terms of an initial or renewed agreement. The alternate impasse procedure shall specify whether the parties desire an arbitrator or arbitration panel, how the neutral arbitrator is to be selected or the name of the person whom the parties desire to be appointed as the neutral arbitrator, and other details regarding the issuance of an arbitration decision. When an impasse exists, the parties shall notify the board if they have agreed on an alternate impasse procedure. The board shall permit the parties to proceed with their procedure and assist at times and to the extent requested by the parties in their procedure. In the absence of an alternate impasse procedure, the board shall assist in the resolution of the impasse at times and in the manner prescribed in subsection (d) or (e), as the case may be. If the parties subsequently agree on an alternate impasse procedure, the parties shall notify the board. The board shall immediately discontinue the procedures initiated pursuant to subsection (d) or (e) and permit the parties to proceed with their procedure.

(b) An impasse during the term of a collective bargaining agreement on reopened items or items regarding a supplemental agreement shall not be subject to the impasse procedures in this section. The parties may mutually agree on an impasse procedure, but if the procedure culminates in an arbitration decision, the decision shall be pursuant to subsection (f).

(c) An impasse over the terms of an initial or renewed agreement and the date of impasse shall be as follows:

(d) If an impasse exists between a public employer and the exclusive bargaining representative of bargaining unit (1), nonsupervisory employees in blue collar positions; bargaining unit (2), supervisory employees in blue collar positions; bargaining unit (3), nonsupervisory employees in blue collar positions; bargaining unit (4), supervising employees in white collar positions; bargaining unit (5), teachers and other personnel of the department of education; [or] bargaining unit (6), educational officers and other personnel of the department of education under the same salary schedule; bargaining unit (7), faculty of the University of Hawaii and the community college system[,]; bargaining unit 8, personnel of the University of Hawaii and the community college system; or bargaining unit (13), professional and scientific employees, the board shall assist in the resolution of the impasse as follows:

(2) Fact-finding. If the impasse continues twenty days after the date of impasse, the board shall immediately appoint a fact-finding panel of not more than three members, representative of the public from a list of qualified persons maintained by the board. The fact-finding panel shall, in addition to powers delegated to it by the board, make recommendations for the resolution of the impasse pursuant to subsection (f). The fact-finding panel, acting by a majority of its members, shall transmit a report on its findings of fact and recommendations for the resolution of the impasse to both parties within sixty days after its appointment and notify the board of the date when it transmitted the fact-finding report.

(e) If an impasse exists between a public employer and the exclusive representative of [bargaining unit (2), supervisory employees in blue collar positions; bargaining unit (3), nonsupervisory employees in white collar positions; bargaining unit (4), supervisory employees in white collar positions; bargaining unit (6), educational officers and other personnel of the department of education under the same salary schedule; bargaining unit (8), personnel of the University of Hawaii and the community college system, other than faculty;] bargaining unit (9), registered professional nurses; bargaining unit (10), institutional, health, and correctional workers; bargaining unit (11), firefighters; or bargaining unit (12), police officers[; or bargaining unit (13), professional and scientific employees, the]. The board shall assist in the resolution of the impasse as follows:

(f) A fact-finding panel in making its report and an arbitrator or arbitration panel in reaching its decision shall give weight to the following factors and shall include in its written report or decision an explanation of how the factors were taken into account:

(g) The decision of the arbitration panel shall be final and binding upon the parties on all provisions submitted to the arbitration panel. If the parties have reached agreement with respect to the amounts of contributions by the State and counties to the Hawaii public employees health fund by the tenth working day after the arbitration panel issues its decision, the final and binding agreement of the parties on all provisions shall consist of the panel's decision and the amounts of contributions agreed to by the parties. If the parties have not reached agreement with respect to the amounts of contributions by the State and counties to the Hawaii public employees health fund by the close of business on the tenth working day after the arbitration panel issues its decision, the parties shall have five days to submit their respective recommendations for such contributions to the legislature, if it is in session, and if the legislature is not in session, the parties shall submit their respective recommendations for such contributions to the legislature during the next session of the legislature. In such event, the final and binding agreement of the parties on all provisions shall consist of the panel's decision and the amounts of contributions established by the legislature by enactment, after the legislature has considered the recommendations for such contributions by the parties. It is strictly understood that no member of a bargaining unit subject to this subsection shall be allowed to participate in a strike on the issue of the amounts of contributions by the State and counties to the Hawaii public employees health fund. The parties shall take whatever action is necessary to carry out and effectuate the final and binding agreement. The parties may, at any time and by mutual agreement, amend or modify the panel's decision.

Agreements reached pursuant to the decision of an arbitration panel and the amounts of contributions by the State and counties to the Hawaii public employees health fund, as provided herein, shall not be subject to ratification by the employees concerned. All items requiring any moneys for implementation shall be subject to appropriations by the appropriate legislative bodies and the employer shall submit all such items within ten days after the date on which the agreement is entered into as provided herein, to the appropriate legislative bodies.

(h) Any time frame provided in an impasse procedure, whether an alternate procedure or the procedures in this section, may be modified by mutual agreement of the parties. In the absence of a mutual agreement to modify time frames, any delay, failure, or refusal by either party to participate in the impasse procedure shall not be permitted to halt or otherwise delay the process, unless the board so orders due to an unforeseeable emergency. The process shall commence or continue as though all parties were participating.

(i) Nothing in this section shall be construed to prohibit the parties from reaching a voluntary settlement on the unresolved issues at any time prior to the issuance of an arbitration decision.

(j) The costs and expenses for mediation and fact-finding services provided under subsection (d) or (e) shall be borne by the board. The costs and expenses for any other services performed by neutrals pursuant to mutual agreement of the parties and the costs for a neutral arbitrator shall be borne equally by the parties. All other costs incurred by either party in complying with this section, including the costs of its selected member on the arbitration panel, shall be borne by the party incurring them.""

SECTION 15. Act 253, Session Laws of Hawaii 2000, is amended by amending section 104 to read as follows:

"SECTION 104. Section 89A-1, Hawaii Revised Statutes, is amended to read as follows:

"§89A-1 Office of collective bargaining [and managed competition]. (a) There shall be established an office of collective bargaining [and managed competition] in the office of the governor to assist the governor [in implementation and review of the managed process of public-private competition for particular government services through the managed competition process and negotiations between the State] and the exclusive representatives on matters of wages, hours, and other negotiable terms and conditions of employment.

(b) The position of chief negotiator for the State is hereby established to head the office. The chief negotiator shall be experienced in labor relations. The governor shall appoint the chief negotiator and may also appoint deputy negotiators to assist the chief negotiator. The governor, at pleasure, may remove the chief negotiator and any deputy negotiator. All other employees shall be appointed by the chief negotiator. All employees in the office of collective bargaining shall be included in any benefit programs generally applicable to employees of the State.

[(c) Subject to the approval of the governor, the office of collective bargaining and managed competition shall:

[(d)] (c) No employee of the office of collective bargaining shall be included in the civil service, any civil service classification system, or any appropriate bargaining unit; provided that any civil service position on the effective date of this Act shall not be exempted from civil service until the incumbent in that position on the effective date of this Act vacates that position.""

SECTION 16. Act 254, Session Laws of Hawaii 2000, is amended by amending section 107 to read as follows:

"SECTION 107. Section 89C-2, Hawaii Revised Statutes, is amended to read as follows:

"§89C-2 Adjustments authorized; limitations, restrictions.

Each appropriate authority may make adjustments for their respective excluded employees subject to the following guidelines and limitations:

SECTION 17. Act 253, Session Laws of Hawaii 2000, is amended by amending section 109 to read as follows:

"SECTION 109. Section 89C-4, Hawaii Revised Statutes, is amended to read as follows:

"§89C-4 Adjustments excluded employees exempt from civil service. Each appropriate authority shall determine the adjustments that are relevant for their respective excluded employees who are exempt from civil service [in consideration of the compensation and benefit packages provided for other employees in comparable agencies].""

SECTION 18. Act 253, Session Laws of Hawaii 2000, is amended by amending section 110 to read as follows:

"SECTION 110. Section 89C-5, Hawaii Revised Statutes, is amended to read as follows:

"§89C-5 Implementation; approval and appropriations. (a) Adjustments that do not require appropriations by the respective legislative bodies may be implemented without legislative action.

(b) All other adjustments requiring appropriations shall be submitted to the respective legislative body for appropriations, at such time and in such manner as the legislative body may require. [The legislative body shall appropriate funds of the amount requested or funds of a different amount after discussing the reasons with the appropriate authority.]

(c) No adjustment shall be made and no funds shall be used for purposes of this chapter unless the legislative body has approved the adjustment as submitted or modified and appropriated the funds necessary to implement the adjustment.""

SECTION 19. Act 253, Session Laws of Hawaii 2000, is amended by amending section 148 to read as follows:

"SECTION 148. On or before July 1, [2002,] 2001, any existing rule, ordinance, executive order or directive, or provision in a collective bargaining agreement, that is not consistent with this Act shall be amended to conform with this Act. Any new or amended rule, ordinance, executive order or directive that must be adopted, enacted, or negotiated to carry out this Act shall take effect no later than July 1, [2002] 2001."

SECTION 20. Act 253, Session Laws of Hawaii 2000, is amended by amending section 152 to read as follows:

"SECTION 152. This Act shall take effect on July 1, [2002;] 2001; provided that section 26-5(f), Hawaii Revised Statutes, in Section 2 and Parts V and IX of this Act shall take effect on July 1, 2000."

SECTION 21. Act 253, Session Laws of Hawaii 2000, is amended by repealing section 149.

["SECTION 149. The provisions of sections 131, 132, 133, 134, 135, and 136 of this Act notwithstanding, the rights, benefits, and privileges currently enjoyed by civil servants under chapters 77, 79, 80, 81, 82, and 83 shall not be diminished or impaired, unless comparable rights, benefits, and privileges are either negotiated into collective bargaining agreements or established by executive order for civil servants."]

SECTION. 22. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION. 23. This Act shall take effect on July 1, 2001.