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. 2909 entitled:

begs leave to report as follows:

The purpose of this bill is to improve the efficiency of the Employees' Retirement System (ERS) in certain instances by authorizing the ERS to employ or retain attorneys independent of the Attorney General (AG) to provide legal services for the ERS.

The ERS commented on this measure. The Department of the AG opposed this measure.

The ERS serves thousands of retirees statewide and depends on the expertise of attorneys well versed in investment and contract law to carry out its fiduciary responsibility. Your Committee notes that the ERS testified that in past administrations, deputy AGs were not timely in meeting the needs of the ERS costing the State millions of dollars in lost rewards. Although the ERS further testified that current deputy AGs have been much more timely, concerns regarding cases in which quick legal responses are needed still exist.

Although your Committee understands the issues raised by the AG regarding outside legal counsel providing information and advice to the ERS that is contrary to legal advice given to other state agencies and the interests of the Executive Branch, your Committee finds that the ERS has a fiduciary responsibility to its members and should not be beholden to the interests of the State.

Further, your Committee notes that at the time of the public hearing on this measure, the ERS only offered comments because the ERS Board of Trustees (Board) had not had the opportunity to review this measure and discuss its merits. On February 9, 2004, the Board held a meeting to discuss this matter. It was brought to your Committee's attention that the Board voted to support this measure.

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. 2909 and recommends that it pass Second Reading and be referred to the Committee on Judiciary.