Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred S.B. No. 1052 entitled:

begs leave to report as follows:

The purpose of this bill is to change the salary growth assumption rate from a variable rate to an undetermined fixed percentage rate to calculate annual employer contributions to the Employees' Retirement System (ERS).

The Department of Budget and Finance, ERS Board of Trustees, and the Hawaii State Teachers Association supported this measure.

The current statute requires ERS to calculate annual employer contributions using a "variable" salary growth rate. However, because the current three-year rolling average assumption changes with each actuarial valuation, it has resulted in considerable volatility in state and county annual appropriations. Therefore, the ERS Actuary recommended that the salary increase assumption rate be changed to a fixed rate of four percent per year.

Your Committee has amended this bill by:

(2) Adding an assumed salary increase of four percent.

As affirmed by the record of votes of the members of your Committee on Labor and Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1052, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1052, H.D. 1, and be referred to the Committee on Finance.