STAND. COM. REP. NO.  298

Honolulu, Hawaii

                , 2011

RE:   H.B. No. 1035

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 1035 entitled:

"A BILL FOR AN ACT RELATING TO EMPLOYEES' RETIREMENT SYSTEM BENEFIT ENHANCEMENT MORATORIUM,"

begs leave to report as follows:

     The purpose of this bill is to place a moratorium on Employees' Retirement System (ERS) benefit enhancements until such time the ERS's fund ratio is at least 80 percent.

     The ERS and the Department of Budget and Finance testified in strong support of this measure.  The University of Hawaii Professional Assembly opposed this bill.  The City and County of Honolulu Department of Budget & Fiscal Services submitted comments.

     Your Committee notes that employers covered by the ERS are facing significant increases in their contribution rates.  Any benefit enhancements granted at this time would require even larger contribution rate increases.  Your Committee believes that this bill is a means of ensuring the financial viability of the ERS and benefits to those covered by the system.

     Upon further consideration, your Committee has amended this bill by:

     (1)  Changing the moratorium on the enhancement of ERS              benefits to 100 percent of the ERS's funded ratio; and

     (2)  Making technical, nonsubstantive amendments for clarity,      consistency, and style.

     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. 1035, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1035, H.D. 1, 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