STAND. COM. REP. NO. 2364

Honolulu, Hawaii

RE:    S.B. No. 2434

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 2434 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Exempt certain procurements of the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) from the procurement code;

     (2)  Specify the fiduciary duties of EUTF trustees;

     (3)  Amend the composition, appointing authorities, vacancy-filling procedure, and quorum requirements of the EUTF board of trustees;

     (4)  Authorize the establishment of a sub-board of the EUTF Board of Trustees to administer contributions and benefits of a particular bargaining unit if the exclusive bargaining representative negotiates a specific contribution to apply to only that bargaining unit;

     (5)  Authorize the EUTF board to appoint attorneys independent of the Attorney General; and

     (6)  Amend the administration of EUTF monies and transfer control of EUTF from the Department of Budget and Finance to the Department of Human Resources Development.

     Your Committee received testimony in support of this measure from the Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO; University of Hawaii Professional Assembly; and Hawaii Fire Fighters Association.  Your Committee received testimony in opposition to this measure from the Department of the Attorney General, Department of Budget and Finance, and State Procurement Office.  Your Committee received comments on this measure from the Department of Human Resources Development and Department of Budget and Fiscal Services of the City and County of Honolulu.

     Your Committee finds that there is concern regarding the operation of the EUTF and reforms are necessary to control costs, encourage preventive care, implement wellness programs, and provide information on provider performance and efficiency.  Implementation of this measure will help reduce some of the concerns associated with the operation of the EUTF.

     Your Committee has amended this measure by:

     (1)  Deleting section 1, relating to the procurement exemption and fiduciary duties; sections 2 and 5, relating to the hiring of independent attorneys by the EUTF; section 4, relating to vacancy-filling procedure; section 7, relating to administration of EUTF monies; and section 8, relating to the transfer of the EUTF from the Department of Budget and Finance to the Department of Human Resources Development;

     (2)  Eliminating the authorization to establish a sub‑board of the EUTF Board of Trustees to administer contributions and benefits negotiated for only a particular bargaining unit;

     (3)  Inserting an effective date of January 7, 2059, to encourage further discussion; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2434, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2434, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,

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GILBERT S.C. KEITH-AGARAN, Chair