Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.C.R. No. 95 entitled:

begs leave to report as follows:

The purpose of this concurrent resolution is to request the Employees' Retirement System (ERS) to study the feasibility of a deferred retirement option plan (DROP) benefit plan for fire fighters and police officers.

Supportive testimony was submitted by the City and County of Honolulu Police Department; the Hawaii Fire Fighters Association; and State of Hawaii Organization of Police Officers. Comments were received from the ERS, which requested an appropriation of $23,500 out of its investment monies to conduct the proposed study.

Your Committee has learned that DROP benefits are being utilized by an increasing number of states and municipalities. The DROP allows members to defer pension benefits for which they are eligible into an account separate from contributions made by the member based on earlier years of service. Your Committee finds that DROP benefits may assist in the retention of fire fighters and police officers, by providing an incentive to stay beyond the requisite twenty-five years of service. In light of the difficulty recruiting for such positions, and the essential jobs they perform, your Committee finds it prudent to explore options that may improve retention and aid in recruitment.

While testimony submitted by the ERS indicated they would need to draw funds from their investment monies in order to conduct the requested study, your Committee finds that this issue is more appropriately referred to the Committee on Finance.

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 concurs with the intent and purpose of H.C.R. No. 95 and recommends that it be referred to the Committee on Finance.