STAND. COM. REP. NO.  361

Honolulu, Hawaii

                , 2009

RE:   H.B. No. 1738

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 H.B. No. 1738 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 repeal the January 2, 2011, sunset date on the prohibition on approving Employees' Retirement System (ERS) benefit enhancements while an unfunded accrued liability exists.

     The Department of Budget and Finance and ERS Board of Trustees testified in support of this bill.  The United Public Workers, AFSCME, Local 646, AFL-CIO opposed this measure.

     The ERS Board of Trustees reported that the ERS' unfunded actuarial accrued liability on June 30, 2008, was $5,168,000,000, and the actuarial funded ratio was 68.8 percent.  Your Committee notes that a moratorium on retirement benefit enhancement proposals would greatly reduce the ERS' unfunded actuarial accrued liability, and finds that a permanent moratorium is prudent and necessary especially in light of the current economic crisis.

     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 H.B. No. 1738 and recommends that it pass Second Reading 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