STAND. COM. REP. NO. 764

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 450
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 450, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO STATE GOVERNMENT,"

begs leave to report as follows:

     The purpose of this bill is to continue the ongoing work to
transform the State's accounting system and budgeting system to a
performance-based budgeting system, and to develop a managed
process that enables state and county governments to implement
public-private competition for government services.

     Specifically, this bill:

     (1)  Requires the committee created to transform the State's
          accounting system and budgeting system to a
          performance-based budgeting system, to continually
          submit annual reports of the committee's plans,
          recommendations, and implementing actions to the
          Legislature until further notice;

     (2)  Requires the committee created to develop a managed
          process that enables state and county governments to
          implement public-private competition for government
          services, to:


 
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          (A)  Monitor and review the managed process until
               further notice;

          (B)  Complete a draft of the managed process by
               December 31, 2000, and complete the managed
               process by December 31, 2001; and

          (C)  Continually submit annual reports of the
               committee's findings, plans, implementations, and
               recommendations for changes to such laws as may be
               necessary to implement the managed process, to the
               Legislature until further notice;

     (3)  Requires the managed process to:

          (A)  Develop a costing model that accurately estimates
               and accounts for the total cost of providing a
               government function and develop methods by which
               government in-house costs can be compared to
               private sector costs;

          (B)  Consider the costs of conversion to the private
               sector, including transaction costs, disruption
               costs, contract monitoring costs, and revenue
               increases or decreases;

          (C)  Ensure that all costs, including the costs of
               liability insurance; product and performance
               liability; fringe, employee retirement, and
               disability benefits; and other allocated direct
               and indirect overhead costs are realistic and
               fair; and

          (D)  Develop a handbook and training program that
               educates government agencies in the competitive
               government process;

     (4)  Repeals the law exempting new contracts for goods,
          services, or construction, which are entered into by
          the State or a county after the July 1, 2001, from
          having to include a provision stating that the
          contract, during its term, is subject to a single
          review by the State or the county pursuant to the
          managed process; and


 
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     (5)  Repeals the June 30, 2001, sunset date for those
          provisions related to the managed process, including
          the committee created to develop, monitor, and review
          the managed process, and public-private competition for
          government services in the aftermath of the Konno
          decision.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
450, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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