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. 1155 entitled:

begs leave to report as follows:

The purpose of this measure is to permit trustees of the Office of Hawaiian Affairs, in service on July 1, 2002, who elected to become members of the Employees' Retirement System by October 1, 2002, to claim service credit under either utilizing payroll deductions or a lump sum payment as provided in section 88-59, Hawaii Revised Statutes.

Testimony in support of this measure was submitted by the Office of Hawaiian Affairs.

Testimony in opposition to this measure was submitted by the Employees' Retirement System.

Your Committee finds that Act 183, Session Laws of Hawaii 2002 (Act 183), authorized trustees of the Office of Hawaiian Affairs to become members of the Employees' Retirement System. However, Act 183 did not allow trustees who elected to become members pursuant to section 88-54.5(1), Hawaii Revised Statutes, and were eligible for retirement, but without five years of credited service, to acquire the service credit for their past service through a lump sum purchase.

Your Committee also finds that section 88-59(2), Hawaii Revised Statutes, which enables the acquisition of service credit through a lump sum purchase, excluded any member who established membership with the Employees' Retirement System after July 1, 1982, and who has fewer than five years of creditable service, from utilizing this method of purchasing prior service credit.

Your Committee recognizes that providing an exception from this restriction for certain trustees of the Office of Hawaiian Affairs is contrary to the existing prior service credit acquisition statute and policy of the Employees' Retirement System. However, your Committee believes that the circumstances that created the impetus for this measure warrant the measure's passage.

Your Committee is concerned, however, with the amendments as contained in the measure as received by your Committee, in that the proposed language could be interpreted to contradict the existing time period for which service credit may be acquired.

Accordingly, your Committee has amended this measure in order to effectuate the intention of the Act by correcting the oversight as follows:

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. 1155, as amended herein, and recommends that it pass Second Reading in the

form attached hereto as S.B. No. 1155, S.D. 1, and be referred to the Committee on Ways and Means.