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 S.B. No. 1309, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to clarify laws pertaining to the Employees' Retirement System (ERS) by:

1. Restoring the method used to calculate a member's average final compensation (AFC) to the formula in effect prior to the enactment of Act 128, Session Laws of Hawaii (SLH) 2002; and
2. Requiring the effective date of retirement to be on the first day of the month or the last day of the year for elective officers and judges who have attained the 75 percent benefit limitation.

The Hawaii State Teachers Association and the ERS Board of Trustees testified in support of this measure.

Act 128, SLH 2002, among other things, created a new formula to calculate an ERS member's AFC. Subsequently, certain membership groups raised concerns that Act 128 negatively impacted the calculation of their retirement benefits. Your Committee finds that this bill is necessary to correct this unintended consequence.

Your Committee notes that the ERS Board of Trustees stated that they preferred H.B. No. 553, H.D. 2, the companion to this measure, because it repeals the provision requiring the salary of the ERS Administrator to be within the range established for deputy directors. The ERS Board of Trustees also suggested several technical amendments.

Accordingly, your Committee has amended this bill by incorporating the recommendations of the ERS Board of Trustees. Specifically, your Committee has amended this bill by:

1. Allowing the ERS Board of Trustees to set the salary range of the ERS Administrator;
2. Clarifying payments relating to the beneficiaries of deceased retirees; and

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. 1309, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1309, S.D. 2, H.D. 1, and be referred to the Committee on Finance.