Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Labor and Transportation and Government Operations, to which was referred S.B. No. 942 entitled:

beg leave to report as follows:

The purpose of this measure is to amend the law regarding privatization to include restrictions on the privatization of public services and to enhance government accountability.

Testimony in support of this measure was submitted by the Hawaii Government Employees Association. Testimony in opposition to this measure was submitted by the Department of Human Resources Development, the Department of Taxation, and the Office of Collective Bargaining. Comments on this measure were also submitted by the Office of Information Practices.

Your Committees find that government accountability is of paramount importance in order to ensure the continuity of quality public services as well as to improve the delivery of government services. Careful scrutiny should be conducted in determining whether and which privatization contracts should be awarded so as not merely to assume that cost savings will inure to the benefit of the government when this may not be the case. Upon award of a privatization contract, continued monitoring and scrutiny should persist, as often privatization contracts involve less public disclosure than normally involved in the public sector.

Your Committees determine that this measure adequately addresses these issues through the requirement that there be either legislative or county council approval of privatization contracts with a value in excess of $500,000, the detailed criteria for the award of a privatization contract, the heightened review of contractors and contract costs, increased monitoring and enforcing of privatization contracts, and additional disclosure requirements. This measure also provides for managed competition to allow public employees the opportunity to submit proposals improving the operations, efficiency, or organization of the program to be privatized, thereby assuring fairness as well as efficiency in the privatization process.

Accordingly, your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Labor and Transportation and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 942, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 942, S.D. 1, and be referred to the Committee on Ways and Means.