HOUSE OF REPRESENTATIVES	H.B. NO.	2854
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO THE HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  (a)  The purpose of this Act is to address the need to stabilize the cost of benefits provided by the employer-union health benefits trust fund.

     (b)  More specifically, this Act makes the following major policy amendments:

     (1)  Requires the employer-union health benefits trust fund board of trustees to establish multiple health benefits plans differing in number of insureds covered, types of benefits provided, amounts of deductibles and co-payments, and costs of premiums;

     (2)  Makes the public employer's monthly contribution non-negotiable under collective bargaining;

     (3)  Repeals the group life insurance benefits; and

     (4)  Establishes a single flat dollar amount as the public employer's contribution for the health benefits plan or plans of each public employee.

          The legislature finds that the current system of different public employers' health benefits plan contributions for public employees is not equitable.  Public employees who enroll in more costly plans receive higher public employers' contributions than public employees enrolled in less costly plans or not enrolled at all.  This Act seeks to rectify the inequity.

     (c)  This Act also makes the following amendments to administrative provisions:

     (1)  Requires a majority vote of the board to approve an action;

     (2)  Changes the main duty of the board of trustees to providing health benefits at costs affordable to employees;

     (3)  Requires one of the trustees of the board representing public employers to represent the county employers;

     (4)  Specifies that a trustee may be held over after the end of the trustee's term until the earlier of the following:  the date the trustee's successor is appointed or the one hundred eightieth day following the end of the trustee's term;

     (5)  Reduces some of the administrative authority of the director of finance over the trust fund; and

     (6)  Adds certain duties for the board.

This Act takes effect on July 1, 2011, a date following the expiration of public employees' collective bargaining contracts.

     SECTION 2.  Section 87A-5, Hawaii Revised Statutes, is amended to read as follows:

"§87A-5  Composition of board.  The board of trustees of the employer-union health benefits trust fund shall consist of ten trustees appointed by the governor in accordance with the following procedure:

     (1)  Five trustees, one of whom shall represent retirees, to represent employee-beneficiaries and to be selected as follows:

         (A)  Three trustees shall be appointed from a list of two nominees per trustee selected by each of the three exclusive representative organizations that have the largest number of employee-beneficiaries;

         (B)  One trustee shall be appointed from a list of two nominees selected by mutual agreement of the remaining exclusive employee representative organizations; and

         (C)  One trustee representing retirees shall be appointed from a list of two nominees selected by mutual agreement of all eligible exclusive representatives; and

     (2)  Five trustees to represent public employers[.], one of whom shall represent county employers.

     Section 26-34 shall not apply to board member selection and terms.  Notwithstanding any other provision of this section, no exclusive representative of a bargaining unit that sponsors or participates in a voluntary employee beneficiary association shall be eligible to select nominees or to be represented by a trustee on the board.

     As used in this section, the term "exclusive representative" shall have the same meaning as in section 89-2."

     SECTION 3.  Section 87A-6, Hawaii Revised Statutes, is amended to read as follows:"

     "§87A-6  Term of a trustee; vacancy.  The term of office of each trustee shall be four years; provided that a trustee may be reappointed for one additional consecutive four-year term.

     A vacancy on the board shall be filled in the same manner as the trustee who vacated that position was nominated or appointed; provided that the criteria used for nominating or appointing the successor shall be the same criteria used for nominating or appointing the person's predecessor; provided further that vacancies on the board for each trustee position representing retirees and employee-beneficiaries appointed under section 87A-5(1)(A) and (B) shall be filled by appointment of the governor as follows:

     (1)  If a vacancy occurs in one of the trustee positions described in section 87A-5(1)(A), then the vacancy shall be appointed from a list of two nominees submitted by the exclusive employee representative from among the three largest exclusive employee representatives that does not have a trustee among the three trustee positions;

     (2)  If a vacancy occurs in a trustee position described in section 87A-5(1)(B), then the vacancy shall be appointed from a list of two nominees submitted by mutual agreement of the exclusive employee representatives described in section 87A-5(1)(B); and

     (3)  If a vacancy occurs in the retiree position described in section 87A-5(1)(C), then the vacancy shall be appointed from a list of two nominees submitted by mutual agreement of all eligible exclusive employee representatives.

     If by the end of a trustee's term the trustee is not reappointed or the trustee's successor is not appointed, the trustee shall serve until the earlier of the following:  the date the trustee's successor is appointed[.] or the one hundred eightieth day following the end of the trustee's term."

     SECTION 4.  Section 87A-11, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§87A-11[]]  Quorum; board actions; voting.  (a)  [Six] A majority of the trustees[, three of whom represent the public employer and three of whom represent employee-beneficiaries,] shall constitute a quorum for the transaction of business.

     [(b)  Trustees representing the public employers shall collectively have one vote.  Trustees representing the employee-beneficiaries shall collectively have one vote.

For any vote of the trustees representing the public employers to be valid, three of these trustees must concur to cast such a vote.  In the absence of such concurrence, the trustees representing the public employers shall be deemed to have abstained from voting.

For any vote of the trustees representing the employee-beneficiaries to be valid, three of these trustees must concur to cast such a vote.  In the absence of such concurrence, the trustees representing the employee-beneficiaries shall be deemed to have abstained from voting.

An abstention shall not be counted as either a vote in favor or against a matter before the board.

(c)] (b)  Any action taken by the board shall be by the [concurrence] approval of at least [two votes.] a majority of the trustees.  In the event of a tie vote on any motion, the motion shall fail.  Upon the concurrence of six trustees, the board shall participate in dispute resolution."

     SECTION 5.  Section 87A-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]§87A-15[]]  Administration of the fund. (a)  The board shall administer and carry out the purpose of the fund.  Health [and other] benefit plans shall be provided at a cost affordable to [both the public employers and the] public employees[.] after consideration of the employer contributions set under this chapter.

(b)  Section 26-35 shall apply to the board, except as follows:

(1) Notwithstanding section 26-35(1), the board, not director of finance, shall represent itself in communications with the governor and the legislature;

(2) Notwithstanding section 26-35(2), the financial requirements for the administration of the fund shall be submitted through the director of finance and, if the source of funding is reserves or earnings of the fund, included unaltered by the director in the budget for the department of budget and finance.  This paragraph shall not apply to financial requirements for the State's contributions to the fund, which shall be subject to section 26-35(2);

(3) Notwithstanding section 26-35(4), the employment, appointment, promotion, transfer, demotion, discharge, and job descriptions of all officers and employees of or under the jurisdiction of the board shall not be subject to the approval of the director of finance; and

(4) Notwithstanding section 26-35(5), purchases of supplies, equipment, or furniture by the board or any officer or employee authorized by the board shall not be subject to the approval of the director of finance."

     SECTION 6.  Section 87A-16, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  The board shall establish [the] more than one health benefits [plan or] plans, which shall be exempt from the minimum group requirements of chapter 431.  The board shall establish plans that differ as to number of employee-beneficiaries and dependent-beneficiaries covered, types of health benefits provided, amounts of deductibles and co-payments, and costs of premiums."

     SECTION 7.  Section 87A-22, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The board shall establish conditions and procedures for health benefits plan enrollment[.]; provided that an employee-beneficiary shall not be permitted to enroll in different health benefits plans that provide duplicative health benefits."

     SECTION 8.  Section 87A-31, Hawaii Revised Statutes, is amended to read as follows:

     "§87A-31  Trust fund; purpose.  (a)  The fund shall be used to provide employee-beneficiaries and dependent-beneficiaries with health and other benefit plans, and to pay administrative and other expenses of the fund.  All assets of the fund are and shall be dedicated to providing health and other benefits plans to the employee-beneficiaries and dependent-beneficiaries in accordance with the terms of those plans and to pay administrative and other expenses of the fund, and shall be used for no other purposes except for those set forth in this section.

     (b)  The fund, including any earnings on investments, and rate credits or reimbursements from any carrier or self-insured plan and any earning or interest derived therefrom, may be used to stabilize health and other benefit plan rates; provided that the approval of the governor and the legislature shall be necessary to fund administrative and other expenses necessary to effectuate these purposes.

     [(c)  The fund may be used to provide group life insurance benefits to employees to the extent that contributions are provided for group life insurance benefits in sections 87A-32 and 87A-37.

(d)] (c)  The fund may assist the State and the counties to implement and administer cafeteria plans authorized under Title 26 United States Code section 125, the Internal Revenue Code of 1986, as amended, and part II of chapter 78.

     [(e)] (d)  At the discretion of the board, some or all of the fund may be used as a reserve against or to pay the fund's future costs of providing health and other benefits plans established under sections 87A-23 and 87A-37 and any other benefits plans the board establishes for retired employees and their beneficiaries.  The board may create separate funds within the fund for this purpose.  Each separate fund shall be subject to all of the provisions of this chapter."

     SECTION 9.  Section 87A-32, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§87A-32[]]  State and county contributions[;] for health benefits plan; active employees.  (a)  The State, through the department of budget and finance, and the counties, through their respective departments of finance, shall pay to the fund [a monthly contribution equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreements, whichever is appropriate,] for each of their respective employee-beneficiaries and employee-beneficiaries with dependent-beneficiaries[, which] a monthly contribution equal to the amount determined under subsection (b), regardless of the plan or plans in which the employee-beneficiary is enrolled.  The monthly contribution shall be used toward the payment of the costs of [a] the health benefits plan or plans; provided that:

    [(1)  The monthly contribution shall be a specified dollar amount;

(2)] (1)  The monthly contribution shall not exceed the actual cost of [a] the health benefits plan or plans in which the employee-beneficiary is enrolled;

    [(3]) (2)  If both husband and wife are employee-beneficiaries, and they select a two-party or family plan, the total monthly contribution for them by the State or the county shall not exceed [the monthly contribution for a family plan;] twice the maximum contribution by the State or county for one employee-beneficiary; and

    [(4)] (3)  If the State or any of the counties establish cafeteria plans in accordance with Title 26, United States Code section 125, the Internal Revenue Code of 1986, as amended, and part II of chapter 78, the monthly contribution for those employee-beneficiaries who participate in a cafeteria plan shall be made through the cafeteria plan, and the payments made by the State or counties shall include their respective contributions to the fund and their employee-beneficiary's share of the cost of the employee-beneficiary's health benefits plan.

     (b)  [The State, through the department of budget and finance, and the counties, through their respective departments of finance, shall pay to the fund a monthly contribution equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreement, whichever is applicable, for each of their respective employees, to be used toward the payment of group life insurance benefits for each employee.]  For fiscal year 2011-2012, and fiscal year 2012-2013, the monthly contribution for each employee-beneficiary or employee-beneficiary with dependent-beneficiary shall be $225 for the health benefits plan or plans in which the employee-beneficiary is enrolled.

For each subsequent fiscal year, the monthly contribution for a health benefits plan, dental plan, and vision plan shall be adjusted on each July 1 by the percentage change on the previous January 1 of the least costly medicare part B premium rate, as calculated under section 87A-33(d)."

     SECTION 10.  Section 89-2, Hawaii Revised Statutes, is amended as follows:

     1.   By amending the definition of "collective bargaining" to read:

     ""Collective bargaining" means the performance of the mutual obligations of the public employer and an exclusive representative to meet at reasonable times, to confer and negotiate in good faith, and to execute a written agreement with respect to wages, hours, [amounts of contributions by the State and counties to the Hawaii public employees health fund,] and other terms and conditions of employment, except that by any such obligation neither party shall be compelled to agree to a proposal, or be required to make a concession.  For the purposes of this definition, "wages" includes the number of incremental and longevity steps, the number of pay ranges, and the movement between steps within the pay range and between the pay ranges on a pay schedule under a collective bargaining agreement."

     2.   By amending the definition of "employee organization" to read:

     ""Employee organization" means any organization of any kind in which public employees participate and which exists for the primary purpose of dealing with public employers concerning grievances, labor disputes, wages, hours, [amounts of contributions by the State and counties to the Hawaii public employees health fund,] and other terms and conditions of employment of public employees."

     SECTION 11.  Section 89-9, Hawaii Revised Statutes, is amended to read as follows:

     "§89-9  Scope of negotiations; consultation.  (a)  The employer and the exclusive representative shall meet at reasonable times, including meetings sufficiently in advance of the February 1 impasse date under section 89-11, and shall negotiate in good faith with respect to wages, hours, [the amounts of contributions by the State and respective counties to the Hawaii employer-union health benefits trust fund to the extent allowed in subsection (e),] and other terms and conditions of employment [which] that are subject to collective bargaining and [which] that are to be embodied in a written agreement as specified in section 89-10, but [such] the obligation does not compel either party to agree to a proposal or make a concession[; provided that the parties may not negotiate with respect to cost items as defined by section 89-2 for the biennium 1999 to 2001, and the cost items of employees in bargaining units under section 89-6 in effect on June 30, 1999, shall remain in effect until July 1, 2001].

     (b)  The employer or the exclusive representative desiring to initiate negotiations shall notify the other party in writing, setting forth the time and place of the meeting desired and the nature of the business to be discussed, sufficiently in advance of the meeting.

     (c)  Except as otherwise provided in this chapter, all matters affecting employee relations, including those that are, or may be, the subject of a rule adopted by the employer or any director, shall be subject to consultation with the exclusive representatives of the employees concerned.  The employer shall make every reasonable effort to consult with exclusive representatives and consider their input, along with the input of other affected parties, prior to effecting changes in any major policy affecting employee relations.

     (d)  Excluded from the subjects of negotiations are matters of classification, reclassification, benefits of [but not] and contributions to the Hawaii employer-union health benefits trust fund[,]; recruitment[,]; examination[,]; initial pricing[,]; and retirement benefits except as provided in section 88-8(h).  The employer and the exclusive representative shall not agree to any proposal [which] that would be inconsistent with the merit principle or the principle of equal pay for equal work pursuant to section 76-1 or [which] that would interfere with the rights and obligations of a public employer to:

     (1)  Direct employees;

     (2)  Determine qualifications, standards for work, and the nature and contents of examinations;

     (3)  Hire, promote, transfer, assign, and retain employees in positions;

     (4)  Suspend, demote, discharge, or take other disciplinary action against employees for proper cause;

     (5)  Relieve an employee from duties because of lack of work or other legitimate reason;

     (6)  Maintain efficiency and productivity, including maximizing the use of advanced technology, in government operations;

     (7)  Determine methods, means, and personnel by which the employer's operations are to be conducted; and

     (8)  Take such actions as may be necessary to carry out the missions of the employer in cases of emergencies.

     This subsection shall not be used to invalidate provisions of collective bargaining agreements in effect on and after June 30, 2007, and shall not preclude negotiations over the procedures and criteria on promotions, transfers, assignments, demotions, layoffs, suspensions, terminations, discharges, or other disciplinary actions as a permissive subject of bargaining during collective bargaining negotiations or negotiations over a memorandum of agreement, memorandum of understanding, or other supplemental agreement.

     Violations of the procedures and criteria so negotiated may be subject to the grievance procedure in the collective bargaining agreement.

     [(e)  Negotiations relating to contributions to the Hawaii employer-union health benefits trust fund shall be for the purpose of agreeing upon the amounts which the State and counties shall contribute under section 87A-4, toward the payment of the costs for a health benefits plan, as defined in section 87A-1 and group life insurance benefits, and the parties shall not be bound by the amounts contributed under prior agreements; provided that section 89-11 for the resolution of disputes by way of arbitration shall not be available to resolve impasses or disputes relating to the amounts the State and counties shall contribute to the Hawaii employer-union health benefits trust fund.

(f)]  (e)  The repricing of classes within an appropriate bargaining unit may be negotiated as follows:

     (1)  At the request of the exclusive representative and at times allowed under the collective bargaining agreement, the employer shall negotiate the repricing of classes within the bargaining unit.  The negotiated repricing actions that constitute cost items shall be subject to the requirements in section 89-10; and

     (2)  If repricing has not been negotiated under paragraph (1), the employer of each jurisdiction shall ensure establishment of procedures to periodically review, at least once in five years, unless otherwise agreed to by the parties, the repricing of classes within the bargaining unit.  The repricing of classes based on the results of the periodic review shall be at the discretion of the employer.  Any appropriations required to implement the repricing actions that are made at the employer's discretion shall not be construed as cost items."

     SECTION 12.  Section 89-11, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

     "(g)  The decision of the arbitration panel shall be final and binding upon the parties on all provisions submitted to the arbitration panel.  [If the parties have reached agreement with respect to the amounts of contributions by the State and counties to the Hawaii employer-union health benefits trust fund by the tenth working day after the arbitration panel issues its decision, the final and binding agreement of the parties on all provisions shall consist of the panel's decision and the amounts of contributions agreed to by the parties.  If the parties have not reached agreement with respect to the amounts of contributions by the State and counties to the Hawaii employer-union health benefits trust fund by the close of business on the tenth working day after the arbitration panel issues its decision, the parties shall have five days to submit their respective recommendations for such contributions to the legislature, if it is in session, and if the legislature is not in session, the parties shall submit their respective recommendations for such contributions to the legislature during the next session of the legislature.  In such event, the final and binding agreement of the parties on all provisions shall consist of the panel's decision and the amounts of contributions established by the legislature by enactment, after the legislature has considered the recommendations for such contributions by the parties.  It is strictly understood that no member of a bargaining unit subject to this subsection shall be allowed to participate in a strike on the issue of the amounts of contributions by the State and counties to the Hawaii employer-union health benefits trust fund.]  The parties shall take whatever action is necessary to carry out and effectuate the final and binding agreement.  The parties [may], at any time and by mutual agreement, may amend or modify the panel's decision.

     Agreements reached pursuant to the decision of an arbitration panel [and the amounts of contributions by the State and counties to the Hawaii employer-union health benefits trust fund, as provided herein,] shall not be subject to ratification by the employees concerned.  All items requiring any moneys for implementation shall be subject to appropriations by the appropriate legislative bodies and the employer shall submit all such items within ten days after the date on which the agreement is entered into as provided herein, to the appropriate legislative bodies."

     SECTION 13.  Section 89C-1.5, Hawaii Revised Statutes, is amended by amending the definition of "adjustment" to read as follows:

     ""Adjustment" means a change in wages, hours, benefits, or other term and condition of employment.  It does not include a change of an employer's contributions to the employer-union health benefits trust fund for the health benefits plan of an employee, as set under section 87A-32."

     SECTION 14.  Section 87A-17, Hawaii Revised Statutes, is repealed.

     ["[§87A-17]  Group life insurance benefits or group life insurance program.  The board may provide benefits under a group life insurance benefits program or group life insurance program to employees."]

     SECTION 15.  Section 87A-37, Hawaii Revised Statutes, is repealed.

     ["[§87A-37]  Group life insurance benefits plans for retired employees; contributions.  (a)  The State, through the department of budget and finance, and the counties, through their respective departments of finance, shall pay to the fund a [base] monthly contribution [as set forth in subsection (b)] for each retired employee enrolled in the fund's group life insurance benefits plan under section 87A-34, 87A-35, and 87A-36.

(b)  Effective July 1, 2003, there is established a base monthly contribution of $4.16 for each retired employee enrolled in a group life insurance plan; provided that the monthly contribution shall not exceed the actual cost of the group life insurance benefits plan.  The base composite monthly contribution shall be adjusted annually beginning July 1, 2004.  The adjusted base composite monthly contribution for each new plan year shall be calculated by increasing or decreasing the base composite monthly contribution in effect through the end of the previous plan year by the percentage increase or decrease in the medicare part B premium rate for those years.  The percentage shall be calculated by dividing the medicare part B premium rate in effect at the beginning of the new plan year by the rate in effect through the end of the previous plan year.

As used in this subsection, "medicare part B premium rate" means the rate published in the Federal Register each year on November 1 or on the business day closest to November 1 of each year after the medicare part B premium rate has been established by the Secretary of Health and Human Services and approved by the United States Congress."]

     SECTION 16.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

     SECTION 17.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 18.  This Act shall take effect on July 1, 2011.

INTRODUCED BY:

_____________________________

Report Title:

Hawaii Employer-Union Health Benefits Trust Fund; Administrative Amendments

Description:

Makes public employer contributions to the employer-union health benefits trust fund non-negotiable under collective bargaining.  Establishes a single flat dollar amount as the public employer's contribution the health benefit plan or plans of each public employee.  Repeals group life insurance benefits.  Makes various other amendments, including:  (1) requiring one of the employer trustees to represent the county employers; (2) allowing a trustee to hold over after the end of the trustee's term until the earlier of:  the date the trustee's successor is appointed or the 180^th day following the end of the trustee's term; (3) reducing some of the administrative authority of the director of finance over the trust fund; and (4) adding certain duties for the board.  Takes effect on 7/1/2011.

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