STAND. COM. REP. NO. 296-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2398

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.B. No. 2398 entitled:

"A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM,"

begs leave to report as follows:

The purpose of this bill is to standardize employer contributions to the state Employees' Retirement System (ERS) to avoid sizable fluctuations in funding requirements, thereby providing:

(1) Employers with a more predictable budget; and

(2) ERS with a more predictable cash flow.

This bill:

(1) Establishes the employer contributions to ERS, commencing with fiscal year 2005-2006, at:

(a) 15.75 percent of compensation for police officers, firefighters, and corrections officers; and

(b) 13.75 percent of compensation for other employees;

(2) Eliminates the separate computation of contributions for the Early Incentive Retirement Plan authorized under Act 212, Session Laws of Hawaii 1994; and

(3) Allows the State to retain from transient accommodations taxes collected for the year any amounts owed by a county. Currently, the State may retain real property tax money.

The ERS, the Department of Budget and Finance (B & F), and the County of Maui testified in support of this measure. The State of Hawaii Organization of Police Officers offered comments.

Currently, employer contributions to ERS are based on annual actuarial valuations that determine employer contribution amounts for normal cost and amounts required to amortize the projected unfunded liability within 29 years as of June 30, 2000. As a result, employer contribution requirements can vary significantly from year to year.

According to B & F, actuarially, employer contributions are comparable.

Your Committee has amended this bill by making technical, nonsubstantive amendments for the purpose of style.

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 H.B. No. 2398, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2398, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Labor and Public Employment,

 

____________________________

MARCUS R. OSHIRO, Chair