STAND. COM. REP. NO.  1239

Honolulu, Hawaii

                , 2009

RE:   S.B. No. 876

      S.D. 2

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred S.B. No. 876, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM,"

begs leave to report as follows:

     The purpose of this bill is to clarify various provisions relating to the Employees' Retirement System (ERS) including, among other things, clarifying that:

(1)  Ordinary disability retirement is effective on the first day of the month, except for the month of December when retirement on the first or last day of the month shall be allowed, but no earlier than 30 days from the date the application was filed or the date the member terminated service, whichever is later;

(2)  If a noncontributory member terminates service prior to accumulating ten years of credited service and becomes a member again by December 31^st of the year following the calendar year of the termination, all service credits previously forfeited would be restored;

(3)  The cap on the maximum retirement allowance imposed on certain members also apply to the retirant's benefits when they are reemployed; and

(4)  A challenge to an application for disability retirement or accidental death benefits is considered a petition for a contested case hearing and not an appeal of a medical board's decision.

     This bill also allows:

     (1)  Approved attorney's fees and costs to be paid to the member or survivor instead of being paid only on a reimbursable basis; and

     (2)  ERS to stop collecting retirement contributions from certain re-employed retirants who have reached their maximum average final compensation ceiling.

     The ERS Board of Trustees supported this bill.

     The clarifications contained in this measure will conform existing ERS statutes to current practice and help to streamline the administration of the ERS, allowing the ERS to provide more accurate and efficient service to their members.

     Your Committee has amended this bill by further amending ERS statutes to:

     (1)  Allow ERS to use December 31, 2008, as the valuation date to determine the cost of converting a member's Noncontributory Plan Service to Hybrid Plan Service; and

     (2)  Extend the conversion deadline for a member who is absent from the state due to military service during the Hybrid Conversion period by allowing up to 180 days after the member returns to work to pay for the conversion.

     Technical, nonsubstantive amendments were also 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 S.B. No. 876, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 876, S.D. 2, H.D. 1, and be referred to the Committee on Finance.

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

____________________________

KARL RHOADS, Chair