Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 1309 entitled:

begs leave to report as follows:

The purpose of this measure is to amend various provisions of Chapter 88, Hawaii Revised Statutes, relating to the Employees' Retirement System (ERS), in order to clarify existing language and to restore the method used to calculate a member's average final compensation prior to the enactment of Act 128, Session Laws of Hawaii 2002.

The measure also:

Testimony in support of this measure was received by the Employees' Retirement System, the Hawaii State Teachers Association, and the Hawaii Fire Fighters Association.

Your Committee finds that certain membership groups have expressed concerns that the current method of calculating a member's average final compensation will have a negative impact on their pensions. Act 128, Session Laws of Hawaii 2002, was intended to simplify and facilitate the administration of pension benefits; it was not the intent of the law to negatively impact members.

Your Committee further finds that in order to successfully recruit and retain qualified administrators, the board should have the flexibility in determining its administrator's salary. Finally, your Committee finds that in order to be consistent with other members of the Employees' Retirement System, elective officers and judges who retire and who have attained an allowance of seventy-five per cent of the member's average final compensation shall have an effective retirement date of the first day of the month or the last day of the year.

Your Committee is concerned, however, that the measure, as received, places no cap on what the ERS administrator could potentially earn. Therefore, your Committee has amended this measure to require the ERS board to set the administrator's salary at no less than that of a deputy director of an executive department, but no more than that of a state executive department director, without the approval of the governor. Your Committee also has amended the measure to make numerous technical, nonsubstantive amendments to conform the measure to recommended drafting style and procedures.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1309, as amended herein, and recommends that it pass Second Reading in the

form attached hereto as S.B. No. 1309, S.D. 1, and be referred to the Committee on Ways and Means.