STAND

STAND. COM. REP. NO. 384

Honolulu, Hawaii

, 2005

RE: S.B. No. 579

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 S.B. No. 579 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 allow for the establishment of a three-year volunteer employees' beneficiary association (VEBA) trust pilot program that allows public employee organizations to provide health benefits to its members.

Specifically, this bill:

(1) Exempts employees covered by VEBA trusts from mandatory participation in the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) pursuant to chapter 87A, Hawaii Revised Statutes;

(2) Allows public employee organizations that establish VEBA trusts to provide health benefits to members both during their employment and throughout their retirement years; and

(3) Provides current retirees, who were members of a public employee organization prior to their retirement, with a one-time option of electing to participate in either the Hawaii EUTF or a VEBA trust established by their public employee organization.

Testimony in support of this measure was submitted by the Hawaii State Teachers Association, the Hawaii State Teachers Association – Retired, and eight individuals. Testimony in opposition to this measure was submitted by the Department of Human Resources Development and the Department of Budget and Finance.

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, without any increase in cost to the State or the various counties. Your Committee believes that this measure will help to encourage increased competition and result in lower premium rates for public employee health insurance.

Your Committee has amended this measure to correctly reflect the language in the Hawaii Revised Statutes.

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. 579, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 579, 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,

		____________________________ BRIAN KANNO, Chair