HB2891.DOC

SECTION 1. The purpose of this Act is to require a public employee who leaves state government service between July 1, 2010 and June 30, 2015 to receive additional retirement service credit, instead of cash payment, for unused vacation leave.

SECTION 2. Chapter 88, Hawaii Revised Statutes, is amended by adding a new section to part II, subpart B, to be appropriately designated and to read as follows:

"§88- Credit for unused vacation leave of a state employee. (a) A state employee who has at least five years of credited service, excluding unused sick leave, and retires from or otherwise terminates service with the state government between July 1, 2010 and June 30, 2015 shall receive additional service credit in the retirement system for the unused vacation leave held by the state employee on the date of retirement or termination from service.

For the purpose of this section, "unused vacation leave" means a state employee's unused vacation leave accumulated from previous years of government employment plus unused vacation leave from the current year.

(b) Upon a state employee's retirement or termination of service pursuant to subsection (a), the state department or agency that last employed the state employee shall make a contribution to the system to be calculated by multiplying the following:

(1) The dollar value of the unused vacation leave; by

(2) The sum of the:

(A) Employer's contribution percentage for normal cost and accrued liability as set under section 88-107; and

(B) Employee's contribution percentage applicable to the former state employee on the retirement or termination date.

The state department or agency shall pay the contribution to the system by the end of the second month following the month in which the state employee retired.

(c) Upon receipt of the amount from a state department or agency under subsection (b) for a former state employee, the board shall credit the amount equivalent to the employer's contribution to the pension accumulation fund and, if applicable, the amount equivalent to the state employee's contribution to the annuity savings fund."

SECTION 3. Section 78-17, Hawaii Revised Statutes, is amended to read as follows:

"§78-17 Payment of salaries or wages upon discharge from service. Whenever in any case, and for whatever cause, the employment of any officer, agent, employee, or other person in the public service is discharged, the discharged person shall be paid immediately upon the approval of the head of the department in which the person was engaged whatever salary or wages that are due the person. For the purpose of this section, "salary or wages" does not include amounts for a state employee's unused vacation leave as defined in section 88- ."

SECTION 4. Section 78-23, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:

"(c) Upon discharge, [an] a county employee shall be entitled to all of the county employee's accumulated vacation allowance plus the county employee's current accrued vacation allowance to and including the date of discharge, notwithstanding that the current accrued vacation allowance may not have been recorded at the time.

Upon discharge, a state employee shall receive additional service credit for unused vacation leave in accordance with section 88- .

If any state or county employee dies with accumulated or current accrued vacation earned but not taken, an amount equal to the value of the state or county employee's pay over the period of such earned vacation, and any earned and unpaid wages, shall be paid to the person or persons who may have been designated as the beneficiary or beneficiaries by the state or county employee during the employee's lifetime in a verified written statement filed with the comptroller or other disbursing officer who issues warrants or checks to pay the state or county employee for the employee's services as a public employee, or, failing the designation, to the employee's estate.

(d) Whenever [an] a county employee is to be discharged, voluntarily or involuntarily, the county employee, at the option of the appointing authority, may be discharged and paid forthwith, in lieu of the county employee's vacation allowance, the amount of compensation to which the county employee would be entitled or which the county employee would be allowed during the vacation period if the county employee were permitted to take the county employee's vacation in the normal manner, and in such case the county employee's position may be declared vacant and may be permanently filled by a new appointee before the expiration of any vacation period following the date of the discharge. For [an] county employee hired after June 30, 1997, who is to be discharged, voluntarily or involuntarily, the amount of compensation to be paid in lieu of vacation allowance under this section shall be computed using the rate of pay and amount of accumulated and accrued vacation on the date the county employee is discharged. Prompt notice upon such forms and in such manner as may be required shall be given by the county department head of any action taken under this provision."

SECTION 5. Section 88-21, Hawaii Revised Statutes, is amended by amending the definition of "accumulated contributions" to read as follows:

""Accumulated contributions": the sum of all the amounts paid by, or deducted from the compensation of, a member and credited to the member's individual account in the annuity savings fund together with regular interest thereon. If applicable, the term includes the portion of the contribution by an employer that is credited to the member's individual account in the annuity savings fund pursuant to section 88‑ ."

SECTION 6. Section 88-71, Hawaii Revised Statutes, is amended to read as follows:

"§88-71 Credited service at retirement. Credited service at retirement on which the retirement allowance of a member shall be based shall consist of the member's membership service, the member's credit for unused sick leave as provided in section 88-63, and the member's prior service, if any, as provided in this part.

In addition, for a member who retires from or terminates service with the state government between July 1, 2010 and June 30, 2015, the credited service at retirement on which the member's retirement allowance is based shall include the member's credit for unused vacation leave as provided in section 88- ."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2010; provided that:

(1) Sections 78-17, 78-23, 88-21, and 88-71, Hawaii Revised Statutes, shall be reenacted on June 30, 2015 in the form in which they existed on the day prior to the effective date of this Act; and

(2) Section 88- , Hawaii Revised Statutes, shall be repealed on June 30, 2017.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2891
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII