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. 704, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to conform the law relating to the use of unemployment insurance trust fund moneys to P.L. 107-147, the Temporary Extended Unemployment Compensation Act of 2002, to allow for the distribution and utilization of Reed Act moneys.

This measure also appropriates the sum of $1 from the unemployment insurance trust fund for the improvement of the administration and infrastructure of Hawaii's employee and employer services provided by the Department of Labor and Industrial Relations (DLIR) and the four counties.

Testimony in support of this measure was submitted by the DLIR, the Mayor of the County of Hawaii, the Hawaii State Teachers Association, the Oahu Workforce Investment Board, the ILWU Local 142, and the Kauai Chamber of Commerce.

Your Committee finds that in 2002, the Department of Labor and Industrial Relations received approximately $31,000,000 in federal Reed Act funds. These funds have been placed within the unemployment trust fund, which can be utilized for the payment of benefits and expenses incurred for the administration of the unemployment compensation laws, as well as for public employment offices. Your Committee further finds that Reed Act distributions made prior to P.L. 107-147 were restricted to unemployment insurance administration purposes only. Additionally, under section 303(a)(8) of the Social Security Act, state laws must include provisions for the expenditure of all moneys. Therefore, your Committee determines that the current law must be amended to allow for the utilization of the 2002 Reed Act funds.

Additionally, your Committee finds that the utilization of these funds is necessary not only to improve the State's automated unemployment insurance and workforce development division services, but also to address the specific needs of the local workforce investment boards of the four counties and to educate and train immigrants from the Freely Associated States so that they may become skilled and qualified members of our workforce.

Accordingly, your Committee has amended this measure by:

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. 704, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 704, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.