Report Title:

Hawaii Health Systems Corporation; Transfer Prior Liabilities

 

Description:

Requires (1) department of health to assume all community hospital liabilities accrued up to 6/30/1996; and (2) Hawaii health systems corporation (HHSC) to assume all subsequent liabilities.  Clarifies HHSC responsibility for payments into the employees' retirement system funds for its employees.  (SD2)

 

THE SENATE

S.B. NO.

44

TWENTY-FIFTH LEGISLATURE, 2009

S.D. 2

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO THE HAWAII HEALTH SYSTEMS CORPORATION.

 

 

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

 

     SECTION 1.  The legislature finds that the Hawaii health systems corporation faces fiscal challenges amounting to a projected deficit of $62,000,000 for fiscal year 2009-2010 in addition to an estimated shortfall of over $40,000,000 in fiscal year 2008-2009.  This situation presents a potential crisis that may seriously affect the delivery of health care to Hawaii's residents by community hospitals statewide, especially health facilities on the neighbor islands.

     The legislature also finds that, prior to the creation of the Hawaii health systems corporation by Act 262, Session Laws of Hawaii 1996, which took effect on July 1, 1996, the community hospitals then located within the division of community hospitals of the department of health had on its books a certain amount of accrued liabilities that were subsequently transferred to the Hawaii health systems corporation.  The legislature further finds it necessary to take action to safeguard the delivery of health care through the statewide community hospitals to all Hawaii residents.

     Accordingly the purpose of this Act is to support the healthy financial operations of the Hawaii health systems corporation by reducing the corporation's debt obligations by transferring back to the department of health the amount of the liabilities that the community hospitals had accrued while operating within the division of community hospitals of the department of health prior to the establishment of the Hawaii health systems corporation on July 1, 1996.  Correspondingly, it is a further purpose of this Act to require the Hawaii health systems corporation to assume all liabilities or debts or other obligations accrued by the community hospitals beginning on July 1, 1996, and thereafter.  Finally, it is the purpose of this Act to clarify the Hawaii health systems corporation's responsibility for making payments into the employees' retirement system funds for its employees.

     SECTION 2.  Community hospitals; liabilities prior to July 1, 1996; assumption by department of health; report.  (a)  On July 1, 2009, the department of health shall assume the total amount of all liabilities and debts or other obligations of the Hawaii health systems corporation that had been accrued up to June 30, 1996, by the community hospitals while the community hospitals were operating within the division of community hospitals of the department of health.  The department of health, with the assistance and cooperation of the Hawaii health systems corporation, shall determine the final amount of the liabilities and debts or other obligations to be transferred to and assumed by the department of health pursuant this subsection.

     (b)  The department of health shall report to the legislature the details of the total amount of liabilities and debts or other obligations transferred from the Hawaii health systems corporation and assumed by the department pursuant to subsection (a) no later than December 1, 2009.

     SECTION 3.  Community hospitals; assumption of liabilities by Hawaii health systems corporation; after June 30, 1996.  The Hawaii health systems corporation shall bear the sole responsibility for assuming all liabilities and debts or other obligations accrued beginning on July 1, 1996, and thereafter, by the community hospitals operating within the Hawaii health systems corporation.

     SECTION 4.  Hawaii health systems corporation; employees' retirement system liabilities; after June 30, 1996.  The Hawaii health systems corporation shall bear sole responsibility for making all appropriate employer payments into funds of the employees' retirement system under chapter 88, Hawaii Revised Statutes beginning on July 1, 1996, and thereafter.

     SECTION 5.  Section 88-125, Hawaii Revised Statutes, is amended to read as follows:

     "§88-125  Contributions by certain state agencies.  (a)  Each of the departments and agencies hereinafter described [and], the office of Hawaiian affairs, and the Hawaii health systems corporation shall reimburse the State for the respective amounts payable by the State to cover the liability of the State to the various funds of the system on account of the employees in [such] the departments and agencies [and], the trustees of the office of Hawaiian affairs[.], and the employees of the Hawaii health systems corporation.  This provision shall apply to any department or agency of the State [which] that is authorized by law to fix, regulate, and collect rents, rates, fees, or charges of any nature.  [The provisions herein] This subsection shall not apply as to rental units receiving federal subsidies until approval has been obtained from the appropriate federal agency.

     (b)  Whenever any department or agency of the State or the Hawaii health systems corporation receives federal-aid funds [which] that may be expended for the purpose of covering the liability of the State to the various funds of the system, the department or agency or the Hawaii health systems corporation shall set aside a portion of these funds sufficient to cover the amount of the State's liability to the various funds of the system on account of the employees in the department or agency or the Hawaii health systems corporation whose compensation is paid in whole or part from federal funds.

     (c)  The amount payable by each department or agency of the State, [or] the office of Hawaiian affairs, or the Hawaii health systems corporation, covered by this section shall be determined at least quarterly by the department of budget and finance on the basis of the payroll of the employees of the department or agency, [or] trustees of the office of Hawaiian affairs, or the Hawaii health systems corporation who are members of the system in the same manner the allocation of employer contributions is determined in section 88-123.  The comptroller of the State, the office of Hawaiian affairs, the Hawaii health systems corporation, or any department or agency having control of its own funds [shall], upon information furnished by the department of budget and finance, shall issue a check for the proper amount to the director of finance, charging the same to the appropriate fund.  The director of finance shall place all such sums to the credit of the State as part payment of the State's contributions to the various funds of the system.

     (d)  With respect to the Hawaii health systems corporation only, this section shall be operative with respect to costs accrued beginning July 1, 1996."

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2050.