Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

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. 3106, S.D. 1, H.D. 2, entitled:

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 allow a county to enter into an agreement with the State to extend the State's mandatory deferred compensation plan to part-time, temporary, and seasonal or casual county employees.

This measure also:

Your Committee on Conference finds that under the current law, the State and the counties are authorized to establish deferred compensation retirement plans in accordance with sections 457 and 3121 of the Internal Revenue Code of 1986, as amended, for its part-time, temporary, and seasonal or casual employees. However, unlike a deferred compensation retirement plan established by the State, participation in a county deferred compensation retirement plan is not mandatory. Mandatory participation in a deferred compensation retirement plan can be beneficial to both the employer and employees. The employees will experience increased earnings in that the money, which would otherwise be paid as FICA contributions, would be directed to a deferred compensation plan, with the funds and any accrued interest available to them upon termination. Moreover, the counties would be spared the expense of paying their share of the FICA contributions for those employees.

Your Committee on Conference determines that authorizing the State's deferred compensation retirement plan to be extended to the counties would avoid the unnecessary duplication of efforts associated with the administration and implementation of a separate county plan, ultimately resulting in savings to the counties. However, the State may incur additional costs as a result of extending its plan to the counties; therefore, the assessment of any necessary fees should also be permitted.

Upon further consideration, your Committee on Conference has amended this measure to make its provisions effective upon approval of the Act, instead of on February 31, 3004.

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. 3106, S.D. 1, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 3106, S.D. 1, H.D. 2, C.D. 1.