Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 391, H.D. 2, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to exclude administrative and other expenses from the health benefits plan and long-term care plan rates set by the Hawaii Employer-Union Health Benefits Trust Fund.

The bill also delays the transfer of civil service employees from the Public Employees Health Fund to the Hawaii Employer-Union Health Benefits Trust Fund and requires the employer base composite monthly contribution for retirees to be adjusted annually beginning July 1, 2002. The bill also appropriates funds for unanticipated and unbudgeted increases in Public Employees Health Fund payments.

Your Committee has amended the bill by removing its contents and replacing it with a provision to repeal part II of Act 90, Session Laws of Hawaii 2001, relating to privatization.

Your Committee finds that the philosophy behind privatization is contrary to several recent statutory and political developments over the past five years. First, under Act 230, Session Laws of Hawaii 1998, the State adopted the policy of "managed competition" that enabled state and county government to implement public-private competition for government services. Second, two years later under Act 253, Session Laws of Hawaii 2000, the Office of Collective Bargaining was renamed to allow the Office to implement the managed competition process through collective bargaining. Third, under Act 90, Session Laws of Hawaii 2001, the counties were authorized to coordinate and negotiate the terms and conditions of the managed competition process. Finally, the Governor has publicly promised not to lay off public workers and has reaffirmed a commitment to a process of joint decision making to determine wages, hours, and terms and conditions of employment.

Considering these developments, your Committee finds that privatization is inconsistent with the managed competition process and is also an unconstitutional infringement of the right of public employees to engage in collective bargaining. Accordingly, this bill repeals the privatization process under Part II, Act 90, Session Laws of Hawaii 2001.

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 H.B. No. 391, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 391, H.D. 2, S.D. 2.