STAND. COM. REP. NO.  170-08

Honolulu, Hawaii

                , 2008

RE:   H.B. No. 3163

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 3163 entitled:

"A BILL FOR AN ACT RELATING TO THE SPECIAL FUND FOR DISABILITY BENEFITS,"

begs leave to report as follows:

     The purpose of this bill is to increase the efficiency of the Department of Labor and Industrial Relation's Disability Compensation Division (DCD) by:

     (1)  Allowing currently available funds in the Special Fund for Disability Benefits (Special Fund) to be used for the automation of the workers' compensation, temporary disability insurance, and prepaid health care programs; and

     (2)  Appropriating $5,000,000 from the Special Fund for this purpose.

     The Department of Labor and Industrial Relations testified in support of this bill.

     The Special Fund was created in 1969 and consisted of funds collected from businesses to pay for disability benefits for employees.  Over the years, the Special Fund has grown to its current estimated balance of $8,600,000 and continues to grow with interest payments of an estimated $156,000 annually.  The current amount in this account far exceeds the Special Fund's annual payout.

     Your Committee finds that DCD is responsible for the workers' compensation program, the prepaid health care program, and the temporary disability insurance program and that the current method of handling these programs, including the antiquated computer system DCD is currently using, decreases DCD's efficiency.  Allowing DCD to modernize its processes and computer systems will allow for increased efficiency, easier access to information, and reduced costs to the State.

     However, your Committee is unsure as to whether $5,000,000 is necessary to accomplish this goal.  Accordingly, your Committee has amended this measure by changing:

     (1)  The appropriation from the Special Fund for the purposes of this Act from $5,000,000 to an unspecified amount; and

     (2)  The effective date to July 1, 2059, to encourage further discussion.

     Other technical, nonsubstantive amendments were made for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 3163, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 3163, H.D. 1, and be referred to the Committee on Economic Development & Business Concerns.

Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,

____________________________

ALEX M. SONSON, Chair