Allows a voluntary retirement benefit of two years plus one-time cash bonus, or (b) a special retirement incentive benefit to state employees meeting certain prerequisite provided the department of human resources development determines that it is more cost efficient to have a new hire or replacement worker.

A BILL FOR AN ACT

SECTION 1. Voluntary retirement benefit. (a) Any state employee who is a member of the employees' retirement system who has never been a retiree of the system may elect to receive a one-time voluntary retirement benefit as provided by this section in lieu of the special retirement incentive in section 2, provided that the department of human resources development determines that it is more cost efficient to have a new hire or replacement worker.

(b) A one-time lump sum cash bonus voluntary retirement benefit shall be calculated at five per cent of the employee's base salary for every year of service worked, up to ten years, and shall not exceed fifty per cent of the employee's annual base salary.

For the purposes of this section, "base salary" means an employee's annual salary for the position from which the employee is to be separated, excluding all other forms of compensation paid or accrued, whether a bonus, allowance, differential, or value of leave or compensatory time off credits. Compensation excluded from base salary includes but is not limited to: shortage category differential, night shift differential, overtime, compensatory time off credits, vacation or sick leave credits, and workers' compensation benefits.

(c) A voluntary retirement benefit shall be in addition to any payment owing to the employee upon separation from service, including accumulated unused vacation allowances or compensatory time credits.

(d) All voluntary retirement benefits paid under this section shall be subject to applicable state income tax laws and rules.

(e) A voluntary retirement benefit provided under this section shall not be considered as a part of a discharged employee's salary, service credit, or a cost item under section 89-2, Hawaii Revised Statutes, when calculating retirement benefits or sick and vacation leave.

SECTION 2. Special retirement incentive benefit. (a) Any employee may elect, if the employee is a vested member of the employees' retirement system and meets any of the criteria specified in subsection (c), the special retirement incentive benefit provided by this section, which shall be a one-time voluntary retirement benefit under chapter 88, Hawaii Revised Statutes, of one additional year of service credit as provided by this Act. The special retirement incentive benefit shall be in lieu of receiving any voluntary retirement benefits under section 1 of this Act. To receive the special retirement incentive benefit offered under this section, the employee shall comply with the application and time frame requirements specified in subsection (b).

(b) Any employee who elects to retire and receive the special retirement incentive benefit under this section shall notify the employee's employing department and file a formal application for retirement with the employees' retirement system not less than thirty days nor more than ninety days prior to the date of retirement.

(c) Notwithstanding the age and length of service requirements of sections 88-73 and 88-281, Hawaii Revised Statutes, an employee member shall qualify for the special retirement incentive benefit if, on the employee's retirement date, the employee meets any one of the following criteria:

(d) Any employee who exercises the option of the special retirement incentive benefit under this section because the employee does not qualify with respect to the age and length of service requirements under sections 88-73 and 88-281, Hawaii Revised Statutes, to receive a retirement benefit without penalty, shall not have the retirement benefit reduced in accordance with the actuarial formula normally used by the employees' retirement system for the calculation of early retirement benefits.

(e) The head of each affected department shall transmit a list of employees who elected and received the special retirement incentive benefit to the board of trustees of the employees' retirement system not less than thirty days but not more than ninety days prior to the employee's retirement date. The head of each affected department shall certify that the employees on the list have in fact selected the special retirement incentive benefit in lieu of receiving the voluntary retirement benefit and exercising any reduction-in-force rights under chapter 89 or 89C, Hawaii Revised Statutes, as applicable.

(f) The board of trustees of the employees' retirement system shall make payments with respect to all eligible employees who retire pursuant to this section. The board shall determine the portion of the additional actuarial present value of benefits to be charged to the State based on retirements authorized under this section. If necessary, the State shall make additional payments to the employee's retirement system in the amounts required to amortize the additional actuarial present value of benefits over a period of five years. The unfunded actuarial present values of benefits payable under this section are part of the unfunded accrued liability of the employees' retirement system under sections 88-122 and 88-123, Hawaii Revised Statutes.

SECTION 3. No voluntary retirement or special retirement incentive benefit shall be payable to an employee discharged for disciplinary reasons or without a determination by the department of human resources development of the cost effectiveness of a new hire.

SECTION 4. No employee who has received any benefit under this Act shall be reemployed by the State in any capacity as follows:

SECTION 5. After payments of all costs associated with the voluntary retirement and special retirement incentive benefits, the remaining payroll balances shall not be expended for any purpose and shall be lapsed into the appropriate fund.

SECTION 6. The departments of human resources development and budget and finance shall develop and administer guidelines and timeframes for participating agencies to implement the voluntary retirement and special retirement incentive benefits under this Act.

The department of human resources development, the employees' retirement system, and the public employees health fund shall work cooperatively to ensure briefings are provided prior to the implementation of the voluntary retirement and special retirement incentive benefits under this Act.

The department of human resources development shall report to the legislature on the number of employees electing to participate in the benefits provided in this Act no later than twenty days prior to the convening of the 2002 regular session.

The report shall include but not be limited to a description of the savings to the State as the result of implementing this Act.

SECTION 7. Optional participation by the judiciary, the Hawaii health systems corporation, the office of Hawaiian affairs, or the legislative branch of the State. The Hawaii health systems corporation, the office of Hawaiian affairs, or the legislative branch of the State may opt to provide the special retirement incentive benefit under section 2 of this Act to their respective employees; provided that the special retirement incentive is in lieu of any voluntary retirement benefit that may be offered under its plan and is consistent with all of the provisions in section 2. All references to the State in section 2 shall include the jurisdiction opting to provide the special retirement incentive benefit.

SECTION 8. The auditor shall conduct a study on the effects on state government caused by this Act and shall submit a report to the legislature and the governor not later than twenty days prior to the convening of the 2003 regular session.

SECTION 9. This Act shall take effect upon approval an shall be repealed on June 30, 2004.