CONFERENCE COMMITTEE REP

CONFERENCE COMMITTEE REP. 145

Honolulu, Hawaii

, 2003

RE: S.B. No. 687

S.D. 1

H.D. 1

C.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 687, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LEAVES OF ABSENCE,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to authorize the State to establish a special pay plan, pursuant to section 401(a) of the Internal Revenue Code, for state and county employees separating from service.

This measure also allows employees under the age of fifty-five years, who elect early withdrawal from the special pay plan within sixty days from the date of separation from service, to be reimbursed by the employer the difference between the Federal Insurance Contribution Act (FICA) amount and any Medicare tax savings to the employee, and any early withdrawal penalty imposed by the Internal Revenue Service. Additionally, this measure provides for leaves of absence with pay for state and county employees who are members of the National Guard and Military Reserves.

Your Committee on Conference recognizes that the repeal of Chapter 79, Hawaii Revised Statutes, acted to remove leave provisions, including those relating to military leave. As a result of the current war in Iraq, the restoration of military leave provisions are necessary to protect and support those public employees who are also involved in active military service.

Your Committee on Conference finds that the implementation of a special pay plan for eligible public employees separating from service can provide the State as well as terminating employees with the benefit of substantial savings. However, so as not to adversely affect individuals who do not wish to enjoy the long-term benefits of a special pay plan or those who require cash upon separation, the State will reimburse the employee the difference between FICA and Medicare savings, and any federal early withdrawal penalty.

However, in an effort to allow more employers the option of utilizing a special pay plan for public employees separating from service, your Committee on Conference has amended the measure by creating a new chapter within Title 7, Hawaii Revised Statutes, which additionally:

(1) Includes definitions for the terms "employee", "jurisdiction" and "special pay plan";

(2) Creates the authority of a jurisdiction to establish a special pay plan;

(3) Requires that participation in a special pay plan shall be:

(i) Mandatory for all employees whose employer has elected to offer a special pay plan; and

(ii) In accordance with chapters 89 for employees subject to a collective bargaining agreement.

(4) Requires the employer to pick-up any mandatory employee contribution of accumulated vacation allowance to the special pay plan within the meaning of section 414(h)(2) of the Internal Revenue Code;

(5) Requires each jurisdiction to be responsible for the administration of an established special pay plan;

(6) Allows each jurisdiction, either individually or jointly with other jurisdictions, to contract the services of a special pay plan provider;

(7) Allows each jurisdiction to adopt rules in accordance with Chapter 91, Hawaii Revised Statutes, and federal and state law;

(8) Requires the selected plan provider to be responsible for any costs associated with the implementation and administration of the special pay plan;

(9) Amends section 78-23, Hawaii Revised Statutes, to require payments of vacation allowance paid pursuant to subsections (c) or (d) to be subject to the provisions of the new chapter; and

(10) Changes the effective date of the Act as follows:

(i) Part I shall not take effect until December 31, 2004; and

(ii) Part II shall take effect retroactively to June 30, 2000.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 687, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 687, S.D. 1, H.D. 1, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ MARCUS R. OSHIRO, Chair		____________________________ BRIAN KANNO, Chair