STAND. COM. REP. NO. 2119

Honolulu, Hawaii

RE: S.B. No. 2766

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 2766 entitled:

"A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM,"

begs leave to report as follows:

The purpose and intent of this measure is to clarify the applicability of benefits for accidental death and service-connected disability benefits for members of the Employees' Retirement System (ERS).

Your Committee received testimony in support of this measure from the Board of Trustees of the Employees' Retirement System.

Your Committee finds that as a trust fund, ERS assets are for the exclusive benefits of its members and beneficiaries. The Supreme Court of Hawaii issued a memorandum of opinion on July 10, 2017, on an appeal of a decision by the ERS Medical Board. The Court found that section 88-21, Hawaii Revised Statutes, defines "service" to include any "service as an employee paid by the State or county", and found additional language that indicates that "connected" service includes non-ERS-membership state or county service, as long as the member makes ERS contributions during the non-ERS-membership state or county service. Separately defined is "membership service" as "all service rendered by a member for which the member had made the required contributions to the system". The Court made the distinction between "service" and "membership service" and noted that section 88-79, Hawaii Revised Statutes, provides for "service-connected disability retirement" and not "membership service-connected disability retirement". Based on this opinion, it may be construed that "service" includes persons working in governmental functions paid by the State or county who are not members of the ERS. This measure clarifies that benefits related to service-connected disability and accidental death benefits are limited to members who are beneficiaries of the trust.

Your Committee has amended this measure by 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 Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2766, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2766, S.D. 1, and be referred to your Committee on Ways and Means.

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

________________________________

JILL N. TOKUDA, Chair