HB2892.DOC

SECTION 1. The purpose of this Act is to set the employers' contribution under the employees' retirement system for fiscal year 2010-2011 at the following:

(1) Ten and seven tenths per cent of the members' compensation for police officers, firefighters, and corrections officers plus regular interest on the unfunded accrued liability for this group of employees; and

(2) Six per cent of the members' compensation for other employees plus regular interest on the unfunded accrued liability for this group.

The legislature intends that, for the fiscal year 2010-2011 only, the employers' contribution shall include full payment for normal cost, but only interest on the unfunded accrued liability as of June 30, 2010.

SECTION 2. Section 88-122, Hawaii Revised Statutes, is amended to read as follows:

"§88-122 Determination of employer normal cost and accrued liability contributions. (a) Based on regular interest and such mortality and other tables as are adopted by the board of trustees, the actuary engaged by the board, on the basis of successive annual actuarial valuations, shall determine the employer's normal cost and accrued liability contributions for each fiscal year beginning July 1 separately for the following two groups of employees:

(1) Police officers, firefighters, and corrections officers; and

(2) All other employees.

(b) The actuarial valuations made for years after June 30, 1999, shall be based on an eight per cent investment yield rate, salary increase assumptions adopted by the board on the recommendation of the actuary described under section 88-30, and tables, contribution rates, and factors adopted by the board or legislature for actuarial valuations of the system, subject to recommendations made by the actuary appointed under section 88-29.

(c) With respect to each of the two groups of employees in subsection (a), the normal cost for each year after June 30, 1994, shall be the percentage of the aggregate annual compensation of employees as of March 31 of the valuation year as determined by the actuary using the entry age normal cost funding method. On each June 30 the board shall determine the allocation of the assets of the pension accumulation fund between the two groups of employees in subsection (a); provided that the assets of the pension accumulation fund as of June 30, 1976, shall be allocated between the two groups in the same proportion as the aggregate annual compensation of each group as of March 31, 1976.

(d) Commencing with fiscal year 1994-1995 and each subsequent fiscal year, the actuary shall determine the total unfunded accrued liability using the entry age normal cost funding method separately for each of the two groups of employees in subsection (a). The accrued liability contribution for each of the two groups of employees shall be the annual payment required to liquidate the unfunded accrued liability over a period of twenty-nine years beginning July 1, 2000. Any increase or decrease in the total unfunded accrued liability resulting from legislative changes in the benefit provisions of the employees' retirement system shall be liquidated over a period of time to be determined by the actuary.

(e) Commencing with fiscal year 2005-2006 and each subsequent fiscal year, the employer contributions for normal cost and accrued liability for each of the two groups of employees in subsection (a) shall be based on fifteen and three-fourths per cent of the member's compensation for police officers, firefighters, and corrections officers and thirteen and three-fourths per cent of the member's compensation for all other employees.

[~~Commencing with~~] For fiscal year 2008-2009 [~~and each subsequent~~], fiscal year[,] 2009-2010, and then for fiscal year 2011-2012 and each subsequent fiscal year, the employer contributions for normal cost and accrued liability for each of the two groups of employees in subsection (a) shall be based on nineteen and seven-tenths per cent of the member's compensation for police officers, firefighters, and corrections officers and fifteen per cent of the member's compensation for all other employees. The contribution rates shall amortize the total unfunded accrued liability of the entire plan over a period not to exceed thirty years.

For fiscal year 2010-2011 only, the employer contributions for normal cost and accrued liability for each of the two groups of employees in subsection (a) shall be as follows:

(1) Ten and seven-tenths per cent of the member's compensation for police officers, firefighters, and corrections officers plus regular interest on the unfunded accrued liability as of June 30, 2010, for this group; and

(2) Six per cent of the member's compensation for all other employees plus regular interest as of June 30, 2010, on the unfunded accrued liability for this group.

(f) Effective January 2, 2008 [~~until January 2, 2011~~], there shall be no benefit enhancements under this chapter for any group of members, including any reduction of retirement age, when there is an unfunded accrued liability.

(g) The contribution rates for fiscal year 2011-2012 or any subsequent fiscal year shall be subject to adjustment:

(1) If the actual period required to amortize the unfunded accrued liability exceeds thirty years;

(2) If there is no unfunded accrued liability; or

(3) Based on the actuarial investigation conducted in accordance with section 88-105."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2010.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2892
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII