STAND. COM. REP. NO. 1208
Honolulu, Hawaii
, 2005
RE: H.B. No. 1608
H.D. 1
S.D. 1
Honorable Robert Bunda
President of the Senate
Twenty-Third State Legislature
Regular Session of 2005
State of Hawaii
Sir:
Your Committee on Labor, to which was referred H.B. No. 1608, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION TRUSTS,"
begs leave to report as follows:
The purpose of this measure is to authorize public employee organizations to establish voluntary employees' beneficiary association (VEBA) trusts, as a pilot program for a period of three years, to provide health benefits to their members, in lieu of coverage under the Hawaii employer-union health benefits trust fund (EUTF).
Testimony in support of this measure was submitted by the Hawaii State Teachers Association and twenty-three individuals. Testimony in opposition to this measure was submitted by the Department of Budget and Finance, the Department of Human Resources Development, and the Hawaii Government Employees Association.
Your Committee finds that with the escalating cost of medical coverage, alternate methods for the provision of health benefits to public employees must be explored and analyzed. Your Committee further finds that a pilot program for the establishment of VEBA trusts will provide valuable insight to the viability of VEBA trusts as a cost-savings mechanism for the State. Your Committee determines that information provided indicates that VEBA trusts will provide public employees with an option for health care coverage, apart from participation in the EUTF.
Additionally, the Attorney General previously raised other concerns regarding the measure, including that a VEBA trust may be exempt from fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) and is not required to maintain certain types of insurance coverage. This measure has been amended to address the concerns raised by the Attorney General. Furthermore, your Committee believes that this measure will help to encourage increased competition and result in lower premium rates for public employee health insurance.
Accordingly, your Committee has amended this measure by:
(1) Requiring that in the establishment of a VEBA trust, an employee organization must have an applicable collective bargaining agreement that shall specify that the employee organization agrees to comply with all the requirements of the chapter regardless of whether the trust is deemed a governmental plan;
(2) Clarifying language regarding the prohibition on a VEBA trust from exempting itself from any fiduciary responsibility imposed by ERISA;
(3) Clarifying that the retired employees will be covered under a VEBA trust if the retirees were members of a bargaining unit that establishes a VEBA trust immediately prior to retirement;
(4) Authorizing the attorney general to take appropriate legal action to enforce the provisions of the chapter;
(5) Adding a new section to require an employee organization or a trust's governing board to procure insurance and the appropriate bonding and to provide for immunity of the State and the counties;
(6) Amending the definition of "employee" or "public employee" to accurately reflect the proper subsection regarding individuals who are excluded from collective bargaining;
(7) Clarifying within the new subsection 89-6(f) that all individuals who retire after July 1, 2005 shall be considered members of the bargaining unit to which they belonged immediately prior to retirement;
(8) Changing the effective date of the act from July 1, 2010 to effective upon approval; and
(9) Making technical, nonsubstantive amendments for purposes of clarity and style.
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 H.B. No. 1608, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1608, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.
Respectfully submitted on behalf of the members of the Committee on Labor,
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____________________________ BRIAN KANNO, Chair |
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