STAND. COM. REP. NO. 476

Honolulu, Hawaii

, 2025

RE: H.B. No. 202

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

Your Committee on Labor, to which was referred H.B. No. 202 entitled:

"A BILL FOR AN ACT RELATING TO THE ADEQUATE RESERVE FUND,"

begs leave to report as follows:

The purpose of this measure is to amend the definition of "adequate reserve fund" to specify the multipliers used in the calculation of the adequate reserve fund for calendar years 2026 through 2030.

Your Committee received testimony in support of this measure from Department of Labor and Industrial Relations. Your Committee received comments on this measure from the Tax Foundation of Hawaii.

Your Committee finds that it is important to ensure that the Unemployment Trust Fund has enough solvency to dispense unemployment insurance benefits, especially during times of economic crises. Your Committee also finds that in 2007 the multiplier used to calculate the adequate reserve fund was changed from 1.50 percent to 1 percent, which resulted in inadequate reserves during the COVID-19 pandemic when unemployment was high, which further led to the Unemployment Reserve Fund having to borrow $700,000,000 from the United States Department of Labor to pay unemployment insurance benefits. Your Committee believes that incrementally readjusting the multipliers to calculate the adequate reserve fund to 1.50 percent would strengthen the Unemployment Trust Fund against high unemployment rates during economic crises.

Your Committee has amended this measure by:

(1) Using the multiplier of 1.25 percent only for calendar year 2026;

(2) Using the multiplier of 1.50 percent starting in calendar year 2027 and thereafter;

(3) Changing the effective date to January 1, 3000, to encourage further discussion; and

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

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 H.B. No. 202, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 202, H.D. 1, and be referred to your Committee on Finance.

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

____________________________

JACKSON D. SAYAMA, Chair