STAND. COM. REP. NO. 675
Honolulu, Hawaii
, 2005
RE: H.B. No. 1608
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Third State Legislature
Regular Session of 2005
State of Hawaii
Sir:
Your Committee on Finance, to which was referred H.B. No. 1608 entitled:
"A BILL FOR AN ACT RELATING TO VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION TRUSTS,"
begs leave to report as follows:
The purpose of this bill is to enable public employee organizations to provide better health benefits for their members by allowing the organizations to launch a three-year pilot program in which Voluntary Employees' Beneficiary Association (VEBA) trusts are established according to certain requirements.
The Hawaii State Teachers Association, Hawaii Government Employees Association, and many public educators testified in support of this bill. The Department of Budget and Finance opposed the measure. The Department of the Attorney General and the Department of Human Resources Development submitted comments.
Your Committee wishes to note that the Attorney General's (AG) testimony included numerous concerns regarding this measure. Specifically, the AG pointed out that:
(1) It is unclear whether prospective VEBA trusts are to be covered by the Employee Retirement Income Security Act of 1974 (ERISA);
(2) The definition of "employees" as used in this bill differs from the definition used in chapter 87A, Hawaii Revised Statutes;
(3) Prospective VEBA trusts are not required to maintain certain types of insurance coverage;
(4) VEBA trustees may not be subject to valid standards and requirements;
(5) VEBA trusts may receive and retain reimbursements from insurance carriers;
(6) Information about VEBA trust operations may be less accessible to state agencies and regulators; and
(7) Certain Hawaii Employer-Union Health Benefits Trust Fund (EUTF) contracts may be subject to re-negotiation if one or more employee organizations withdraws from the EUTF.
Your Committee has amended this measure by:
(1) Inserting language that states the purpose and legislative intent of this bill;
(2) Prohibiting a VEBA trust created under this legislation from exempting itself from any fiduciary responsibilities imposed by ERISA; and
(3) Changing the effective date to July 1, 2020 to promote further discussion.
As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1608, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1608, H.D. 1.
Respectfully submitted on behalf of the members of the Committee on Finance,
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____________________________ DWIGHT TAKAMINE, Chair |
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