Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2718, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to extend the payment period to liquidate the Employees' Retirement System's unfunded accrued liability from twenty-one years to twenty-nine years beginning in the plan year 2001.

Your Committee finds that the economic repercussions from the September 11 tragedy have negatively affected Hawaii's economy to such a degree that the Council of Revenues in November, 2001, amended its previous projections for fiscal year 2001-2002 from 4.1 per cent to –0.7 per cent and the fiscal year 2002-2003 projection from 5.2 per cent to 5.1 per cent. This means that over the planning period, a general fund reduction of about $1,186,800 can occur.

Your Committee finds that a reduction of revenues for the State requires re-examination of all expenditure areas, and this measure, by reducing the State and counties' annual payments by amortizing the liability over a longer time period will help the State address the current fiscal situation.

Your Committee has amended this bill by correcting the number of years in the purpose section from fifteen to twenty-one years which is the current number of years required for liquidation. Your Committee has also made technical non-substantive corrections in keeping with proper drafting style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2718, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2718, S.D. 2.