Report Title:

Community Hospitals

Description:

Abolishes the Hawaii Health Systems Corporation and returns all community hospitals to the Department of Health under a newly established Division of Community Hospitals. (HB512 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

512

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to health.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 323, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part   . DIVISION OF COMMUNITY HOSPITALS ADMINISTRATION

§323-A Findings and purposes. The legislature finds that certain health facilities of the Hawaii health systems corporation have not benefited from the flexibility and autonomy granted to the corporation in 1996. Thus, the legislature finds that it is necessary to return the health facilities and community hospitals in the State to the department of health under the division of community hospitals.

§323-B Definitions. The following terms, whenever used or referred to in this part, shall have the following meanings, unless the context clearly requires a different meaning:

"Administrator" means the administrator of a public health facility.

"Advisory committee" means the public health facility management advisory committee established for each county in section 323-G.

"Department" means the department of health.

"Director" means the director of health, unless otherwise stated.

"Division" means the division of community hospitals of the department of health.

"Health systems assets" means all property or rights in property, real, personal and mixed, tangible or intangible, existing on June 30, 2003, used by or accruing to the Hawaii health systems corporation in the normal course of its operations.

"Health systems liabilities" means, without limitation, all debts or other obligations, contingent or certain, owing on June 30, 2003, by the Hawaii health systems corporation in the normal course of its operations.

"Public health facility" means any of the following health care facilities and all other health care facilities that may hereafter be placed within the jurisdiction of the division:

(1) Hilo Medical Center, Hilo, Hawaii;

(2) Honokaa Hospital, Honokaa, Hawaii;

(3) Kau Hospital, Pahala, Hawaii;

(4) Kauai Veterans Memorial Hospital, Waimea, Kauai;

(5) Kohala Hospital, Kohala, Hawaii;

(6) Kona Community Hospital, Kealakekua, Hawaii;

(7) Kula Hospital, Keokea, Maui;

(8) Lanai Community Hospital, Lanai City, Lanai;

(9) Leahi Hospital, Honolulu, Oahu;

(10) Maluhia, Honolulu, Oahu;

(11) Maui Memorial Medical Center, Wailuku, Maui; and

(12) Samuel Mahelona Memorial Hospital, Kapaa, Kauai.

§323-C Division of community hospitals; establishment. The department shall establish a division of community hospitals under this part to plan, construct, improve, manage, control, and operate public health facilities and perform all acts necessary or convenient to carry out the purposes of this part.

§323-D Powers. The department may:

(1) Operate, manage, and control all public health facilities and establish one or more public health facilities as a system of public health facilities for the purpose of issuing revenue bonds pursuant to part III of chapter 39;

(2) Establish new public health facilities;

(3) Adopt, amend, and repeal bylaws and rules governing the conduct of its affairs and the performance of the powers and duties granted to or imposed upon it by law;

(4) With the governor's approval, enter into and perform contracts, leases, cooperative agreements, or other transactions that may be necessary in the performance of its duties and responsibilities, including entering into contracts for the management or lease, or both, of any component of a public health facility, and on terms that it may deem appropriate, with any agency or instrumentality of the United States, or with any state, territory, or possession, or with any subdivision thereof, or with any person, firm, association, or corporation; provided that the transaction shall further the public interest;

(5) With the governor's approval, enter into business relationships, including but not limited to:

(A) Creating nonprofit corporations;

(B) Establishing, subscribing to, and owning stock in for-profit corporations individually or jointly with others; and

(C) Entering into partnerships and other joint venture arrangements; provided that the relationship shall further the public interest;

(6) Participate in prepaid health care service and insurance programs and other alternative health care delivery programs, including programs that may involve discounts and contractual adjustments from its rates, rents, fees, and charges;

(7) Execute, in accordance with all applicable bylaws, rules, and laws, all instruments necessary or appropriate in the exercise of any of its powers;

(8) Hire and dismiss the administrator or assistant administrator, or both, for each public health facility;

(9) Prepare and recommend all division-wide and facility-specific budgets, policies, and procedures;

(10) Set rates and charges for all services provided in each public health facility;

(11) Recommend capital improvement projects, and repair and maintenance projects for each public health facility;

(12) Conduct annual audits through an independent certified public accountant covering all financial operations of the public health facilities and the division;

(13) Approve medical staff bylaws, rules, and medical staff appointments and reappointments for all public health facilities;

(14) Develop division-wide capital and strategic plans;

(15) Issue revenue bonds pursuant to part III of chapter 39; and

(16) Perform all other acts necessary or appropriate to carry out the purposes of this part.

§323-E Division of community hospitals; personnel; administration; recruitment and retention. The director shall have the following powers relating to personnel recruitment and retention for the division, including the filling of existing vacancies and the retention of incumbent personnel:

(1) To determine the need for and to provide health shortage and retention differentials for shortage categories;

(2) To establish exempt positions without regard to chapters 76 and 89 to pay competitive salaries comparable to similar positions in the private sector or to accommodate changes in health care services;

(3) To provide perquisites, including quarters and utilities for shortage categories;

(4) To provide monetary incentives; provided that:

(A) The monetary incentive may be paid in monthly installments over an agreed period of time;

(B) In the event the employment is terminated prior to an agreed upon period, the unpaid balance of the amount in subparagraph (A) shall be forfeited; and

(C) The monetary incentive shall not be used in the computation of payment for overtime work; and

(5) To pay one-way travel and moving expenses to fill shortage categories.

§323-F Administration of public health facilities. The appointment of hospital administrators, assistant administrators, and directors of nursing shall be made on an exempt basis by the director of health. Hospital administrators and assistant administrators appointed before July 1, 1983, shall maintain their permanent civil service status as provided in chapter 76. A hospital administrator or assistant administrator with civil service status may be granted leave without pay by the director for employment in an exempt hospital administrator or assistant administrator position in a public health facility of the department; provided that the leave is for a period not to exceed four years from the date of the exempt appointment but may be extended, by the director, for an additional four years. Upon reinstatement in the former position, the employee shall be compensated as though the employee had remained continuously in the position in which the employee last held a permanent appointment.

§323-G County public health facility management advisory committees. (a) There is established within the department for each county, a public health facility management advisory committee to consist of nine members to be appointed by the governor. The members shall serve for a term of four years; provided that upon the initial appointment of the members, two shall be appointed for a term of one year, two for a term of two years, two for a term of three years, and three for a term of four years.

(b) Appointments to an advisory committee shall be subject to the advice and consent of the senate. No member shall serve more than two consecutive four-year terms. Each advisory committee shall include medical and health care providers, consumers, and knowledgeable individuals in other appropriate areas; provided that at least one member shall be a physician with active medical staff privileges at one of the county's public health facilities. The advisory committee for the east Hawaii region shall have three members who reside in the Ka'u district, three members who reside in the Hamakua/North Hilo districts, and three members who reside in the South Hilo/Puna districts. The advisory committee for the west Hawaii region shall have no fewer than three members who reside in the north Kohala/south Kohala districts.

(c) Each advisory committee shall select its own chairperson and vice-chairperson and may adopt rules necessary for the conduct of its business. Members shall serve without compensation but shall be reimbursed for traveling expenses incurred in the performance of their duties. The department shall provide for the necessary expenses of the advisory committee; provided that no expenses may be incurred without prior authorization by the director.

(d) Each advisory committee shall sit in an advisory capacity to the director on matters concerning the planning, construction, improvement, maintenance, and operation of public health facilities within their respective jurisdictions; but nothing in this section shall be construed as precluding or preventing the advisory committees from coordinating their efforts and activities with the facility administrators within their counties.

(e) Any member may be removed for cause by the governor. For purposes of this section, cause shall include, without limitation:

(1) Malfeasance;

(2) Failure to attend regularly called meetings;

(3) Sentencing for conviction of a felony, to the extent allowed by section 831-2; or

(4) Any other cause that may render a member incapable or unfit to discharge the duties required under this part.

(f) Each county advisory committee shall meet no fewer than four times a year. All meetings shall be subject to chapter 92, except that in addition to matters exempted pursuant to law, an advisory committee may elect to meet in executive session to consider any of the following matters:

(1) Removal of one of its members; or

(2) Amendment of its bylaws, rules, or policies.

§323-H Disclosure of interests. All advisory committee members and employees of the division of community hospitals shall be subject to chapter 84.

§323-I Records. The division shall be subject to the requirements of chapter 92F, except that the following categories of government records shall not be required to be disclosed:

(1) Applications for credentials or staff privileges at any of the division's public health facilities, records from peer review and quality assurance/improvement proceedings, and medical records; and

(2) Marketing strategies, strategic plans, evaluations, assessments, negotiations, or rates and charges, the disclosure of which would raise the cost of procurement or give a manifestly unfair advantage to any competitor or to any person or entity seeking to do business or proposing to enter into an agreement with the department or any of its facilities.

Any person denied access to these government records shall have available the remedies specified in sections 92F-15 and 92F-15.5. Government records protected from disclosure by this section shall be subject to the interagency disclosure provisions of section 92F-19. Section 624-25.5 shall apply to this part notwithstanding anything to the contrary contained in this section.

§323-J Contracts with territories and possessions of the United States. The governor is authorized to enter into and execute contracts in the name of the State with territories, possessions, and other areas in the Pacific Ocean region, regarding the use of public health facilities of the State on a space available basis; provided that any such contract shall provide for the payment of costs to the State.

§323-K Admittance to Leahi Hospital. Leahi Hospital may admit indigent persons who are suffering from chronic disease as patients, and such other patients as the director determines can be accommodated by the facility; provided that sufficient beds are at all times available to admit persons with tuberculosis. The department may adopt rules under chapter 91 concerning the admission policies for persons suffering from chronic disease and other diseases and the reimbursement for their care and treatment.

Money appropriated to Leahi Hospital for the care and treatment of tuberculosis patients may be used to care for patients suffering from chronic and other diseases who are admitted to the hospital.

§323-L Gifts. (a) The department or the public health facilities, or both, may receive, manage, and invest moneys or other property, real, personal, or mixed which may be given, bequeathed, devised, or in any manner received from sources other than the legislature or any federal appropriation for the benefit of the division, individual public health facility, facilities improvement or equipment, or the aid or advantage of patients or employees, and in general act as trustee on behalf of the division for any of these purposes or objectives.

(b) The department or public health facility, or both, shall keep suitable books of accounts to record each gift, the management of each gift, and the expenditure of the income. A statement of all trust funds shall be included in regular reports required to be made by the department or public health facility.

§323-M Revenues. (a) Pursuant to chapter 91, the division shall impose and collect rates, rents, fees, and charges for the use of its public health facilities and their derived services, and shall revise these rates, rents, fees, and charges from time to time whenever necessary so that all public health facilities, services, and projects of the division may provide appropriate care to the community.

(b) Notwithstanding subsection (a) and without regard to chapter 91, the division may:

(1) Increase rates, rents, fees, and charges by up to five per cent per fiscal year;

(2) Reduce rates, rents, fees, and charges without notice; and

(3) Establish rates for new medical services that are comparable to rates charged by private hospitals in Hawaii;

provided that the division shall give public notice of the revisions by publishing a summary statement of the substance of the proposed revisions in a newspaper of general circulation in the State not less than thirty days before the revisions take effect. Following this notice, the division shall review the proposed rates with an appropriate body that includes representation from health benefit plan providers.

(c) Nothing in this chapter shall preclude the making of appropriations to the division, or the use of funds derived from the sale of stocks, bonds, or other assets in the possession of the division, to pay all or part of the costs of construction or maintenance, or both, of any or all facilities, services, and projects of the division; provided that the rates, rents, fees, and charges imposed by public health facilities that are part of a system of public health facilities for which revenue bonds have been issued shall not be less than the rates, rents, fees, and charges required to enable the department to comply with section 39-61 and any resolution or certificate authorizing and securing the revenue bonds.

§323-N Use of credit cards for public health facilities charges. Except as provided in this section and notwithstanding any other law to the contrary, all charges due and owing to any public health facility operated by the State may be paid by means of credit cards as may be deemed acceptable by the comptroller. The use of credit cards shall be exempt from section 40-35. A service fee may be required by the department for this use.

§323-O Patient trust fund. Patient funds received by the public health facilities may be deposited outside the state treasury in an individual trust account to the credit of the patient. The facility shall maintain individual ledger accounts for, and issue quarterly statements showing credits and debits to, each patient having such funds.

§323-P Establishment of special funds. (a) Notwithstanding any other law to the contrary, each public health facility shall place its revenues and all other moneys collected, acquired, or made available for the use of that facility, into a special fund to be used for the payment of its lawful operating expenditures, except that:

(1) Any moneys received from the federal government or private contributions shall be deposited and accounted for in accordance with conditions established by the agencies or persons from whom the moneys are received;

(2) With the concurrence of the director of finance, moneys in trust or revolving funds administered by the community hospitals may be deposited in depositories other than the state treasury; and

(3) Amounts of less than $1,000 collected from patients and health insurance providers shall be deposited into the appropriate collections revolving fund established under section 323-Q.

At the beginning of each quarterly allotment period, the director shall assess from each hospital special fund an amount equal to two per cent of the moneys in the hospital special fund and deposit those amounts into the facility administration fund established in subsection (b). At the end of each quarterly allotment period, the director shall transfer all moneys remaining in a hospital special fund not required for the lawful operating expenditures of the hospital for that quarterly allotment period into the facility administration fund. Public health facilities that do not receive general fund augmentation may retain not more than twenty-five per cent of their unrequired special fund revenues in their respective hospital special funds for payment of their lawful operating expenditures. The director shall determine, with the concurrence of the respective public facility administrator, the percentage that a public health facility not supported by general funds may retain in its hospital special fund. The amounts the director may transfer shall include all unrequired special fund balances from prior years.

(b) There is established within the department a special fund to be known as the facility administration fund. The facility administration fund shall be used to defray the general administrative costs of the division and provide supplemental funds to public health facilities that do not have sufficient moneys in their special funds to cover their required lawful operating expenditures, including contingencies for correcting hospital deficiencies cited by agencies that monitor and evaluate the division. If the balance in the facility administration fund exceeds ten per cent of the expenditures of all public health facilities for that fiscal year, the funds in excess of ten per cent of the expenditures shall be transferred by the director to the general fund. The director may also transfer funds from the facility administration fund to the general fund at any time pursuant to section 37-53.

(c) Any other law to the contrary notwithstanding, a separate special fund shall be established for each system of public health facilities for which revenue bonds have been issued. All income, revenues, and receipts derived from the ownership or operation of the particular system shall be deposited in the special fund and applied in accordance with section 39-62 and the resolution or certificate authorizing and securing the revenue bonds. For the purposes of determining the amount to be assessed against a special fund established pursuant to this subsection, the director may separately allocate a portion of the special fund to each separate public health facility that constitutes a component of the system or assess from the special fund as a whole.

(d) The director shall submit an annual report to the legislature, twenty days prior to the convening of each regular session, that identifies all fund balances and ceiling increases in the various public health facilities and facility funds, the transfers and expenditures made from the funds, and the purposes of the expenditures.

§323-Q Collections revolving funds. (a) There are established three collections revolving funds, one fund for Maui Memorial Hospital, one fund for Hilo Medical Center, and one fund for Kona Community Hospital, to expedite the collection of patient bills and the refunding of credit balances. Payments of bills of less than $1,000, from patients and health insurance providers, shall be deposited into the revolving fund. Expenditures from the revolving fund shall be used for the purpose of making refunds of credit balances of less than $1,000.

(b) The department shall provide an annual report to the governor and the legislature describing all transactions and activities involved in the administration of each of the three collections revolving funds. If, at the end of a fiscal year, the balance of any one of the collections revolving funds exceeds $100,000, the amount in excess of $100,000 shall be transferred by the director to the appropriate special fund established under section 323-P for the associated public health facility.

§323-R Hospital operations funds. (a) There are established at commercial banks selected by each public health facility, twelve hospital operations funds, one each for each of the public health facilities, to expedite the payment of any vendor's bill for goods and services received of less than $10,000.

(b) The director is authorized to transfer funds from each public health facility's special fund established by section 323-P to the respective hospital operations funds established in subsection (a).

(c) At the end of each fiscal quarter, each public health facility shall report its expenditure activities to the department of budget and finance and the department of accounting and general services.

(d) The director shall establish policies and procedures necessary to ensure each public health facility operates its hospital operations fund in compliance with existing statutes.

(e) The department shall provide an annual report to the governor and legislature describing the activities involved in each of the twelve hospital operations funds, including a detailed listing of encumbrances and expenditures using general acceptable accounting principles, by December 15 of each year for the preceding fiscal year.

(f) Notwithstanding any law to the contrary, expenditures from these funds shall be subject to section 103D-305.

§323-S Exemption from taxation. No public health facility shall be required to pay assessments levied by any county, nor shall any public health facility be required to pay state taxes of any kind."

SECTION 2. Section 26-5, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Nothing in this section shall be construed as in any manner affecting the civil service laws applicable to the several counties[,] or the judiciary, [or the Hawaii health systems corporation,] which shall remain the same as if this chapter had not been enacted."

SECTION 3. Section 29-24, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established in the state treasury an interagency federal revenue maximization revolving fund into which shall be deposited all funds and proceeds collected from the federal government and third-party payers for costs not previously claimed by the State[, with the exception of proceeds collected for services provided by the Hawaii health systems corporation,] for reimbursement by federally-funded state programs. For purposes of this chapter, federally-funded state programs include but shall not be limited to those federally-funded programs within the departments of human services, education, and health. Expenditures and transfers from the fund shall be made by the comptroller in proportional allocations established by the comptroller and the director of finance. Transfers shall be made to the department claiming the reimbursement for expenses incurred related to federal fund reimbursement claims and to the general fund of the State. Moneys in the fund may be expended for consultant services rendered under subsection (b)."

SECTION 4. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"§36-27 Transfers from special funds for central service expenses. Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

(1) Special out-of-school time instructional program fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center enterprise special fund under section 201B-8;

(6) Special funds established by section 206E-6;

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

(9) Aloha Tower fund created by section 206J-17;

(10) Domestic violence prevention special fund under section 321-1.3;

(11) Spouse and child abuse special account under section 346-7.5;

(12) Spouse and child abuse special account under section 601-3.6;

(13) Funds of the employees' retirement system created by section 88-109;

(14) Unemployment compensation fund established under section 383-121;

(15) Hawaii hurricane relief fund established under chapter 431P;

(16) [Hawaii health systems corporation] Division of community hospitals' special funds;

(17) Boiler and elevator safety revolving fund established under section 397-5.5;

(18) Tourism special fund established under section 201B-11;

(19) Department of commerce and consumer affairs' special funds;

(20) Compliance resolution fund established under section 26-9;

(21) Universal service fund established under chapter 269;

(22) Integrated tax information management systems special fund under section 231-3.2;

(23) Hawaii tobacco settlement special fund under section 328L-2;

(24) Emergency and budget reserve fund under section 328L-3;

(25) Probation services special fund under section 706-649;

(26) High technology special fund under section 206M-15.5;

(27) Public schools special fees and charges fund under section 302A-1130(f);

(28) Cigarette tax stamp enforcement special fund established by section 28-14;

(29) Cigarette tax stamp administrative special fund established by section 245-41.5;

(30) Tobacco enforcement special fund established by section 28-15;

(31) Sport fish special fund under section 187A-9.5;

(32) Neurotrauma special fund under section 321H–4;

(33) Deposit beverage container deposit special fund under section 342G-104; and

(34) Glass advance disposal fee special fund established by section 342G-82

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 5. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund, except the:

(1) Transportation use special fund established by section 261D-1;

(2) Special out-of-school time instructional program fund under section 302A-1310;

(3) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center enterprise special fund established under section 201B-8;

(15) [Hawaii health systems corporation] Division of community hospitals' special funds;

(16) Tourism special fund established under section 201B-11;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund under section 231-3.2;

(20) Hawaii tobacco settlement special fund under section 328L-2;

(21) Emergency and budget reserve fund under section 328L-3;

(22) Probation services special fund under section 706-649;

(23) High technology special fund under section 206M-15.5;

(24) Public schools special fees and charges fund under section 302A-1130(f);

(25) Cigarette tax stamp enforcement special fund established by section 28-14;

(26) Cigarette tax stamp administrative special fund established by section 245-41.5;

(27) Tobacco enforcement special fund established by section 28-15;

(28) Sport fish special fund under section 187A-9.5; and

(29) Neurotrauma special fund under section 321H-4;

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 6. Section 37-53, Hawaii Revised Statutes, is amended to read as follows:

"§37-53 Transfer of special funds. At any time during a fiscal year, notwithstanding any other law to the contrary, any department may, with the approval of the governor or the director of finance if so delegated by the governor, transfer from any special fund relating to such department to the general revenues of the State all or any portion of moneys determined to be in excess of fiscal year requirements for such special fund, except for special funds under the control of the department of transportation relating to highways, airports, transportation use, and harbors activities, special funds under the control of the [Hawaii health systems corporation,] division of community hospitals of the department of health, and special funds of the University of Hawaii. At any time the department of transportation, with the approval of the governor or the director of finance if so delegated by the governor, may transfer from any special fund under the control of the department of transportation, or from any account within any such special fund, to the general revenues of the State or to any other special fund under the control of the department of transportation all or any portion of moneys determined to be in excess of requirements for the ensuing twelve months determined as prescribed by rules adopted pursuant to chapter 91; provided that no such transfer shall be made which would cause a violation of federal law or federal grant agreements."

SECTION 7. Section 37-74, Hawaii Revised Statutes, is amended to read as follows:

"§37-74 Program execution. (a) Except as limited by policy decisions of the governor, appropriations by the legislature, and other provisions of law, the several agencies responsible for administering state programs shall administer their program assignments and shall be responsible for their proper management.

(b) The appropriations by the legislature for a biennium shall be allocated between the two fiscal years of the biennium in the manner provided in the budget or appropriations act and as further prescribed by the director of finance. The amounts allocated for each fiscal year shall be subject to the allotment system prescribed in chapter 37, part II. Each agency (except the courts), in estimating its quarterly requirements under chapter 37, part II, shall prepare a plan for the fiscal year for the operation of each of the programs it is responsible for administering. The operations plan shall be in such form and content as the department of budget and finance may prescribe. It shall be submitted, together with the estimated quarterly requirements, to the department of budget and finance on such date as the department may prescribe.

(c) The department of budget and finance shall:

(1) Review each operations plan to determine:

(A) That it is consistent with the policy decisions of the governor and appropriations by the legislature;

(B) That it reflects proper planning and efficient management methods; and

(C) That appropriations have been made for the planned purpose and will not be exhausted before the end of the fiscal year;

provided that the department of budget and finance shall review the operations plan submitted by the University of Hawaii solely for consistency with the allotment ceilings established by the governor under section 37-34, appropriations by the legislature, the requirements of chapter 37D, and the status of revenues to support operations plans for all state programs;

(2) Approve the operations plan if satisfied that it meets the requirements under paragraph (1). Otherwise, the department of budget and finance shall require revision of the operations plan in whole or in part; and

(3) Modify or withhold the planned expenditures at any time during the appropriation period if the department of budget and finance finds that the expenditures are greater than those necessary to execute the programs at the level authorized by the governor and the legislature, or that state receipts and surpluses will be insufficient to meet the authorized expenditure levels; provided that the planned expenditures for the University of Hawaii may be modified or withheld only in accordance with sections 37-36 and 37-37.

(d) No appropriation transfers or changes between programs or agencies shall be made without legislative authorization; provided that:

(1) Authorized transfers or changes, when made, shall be reported to the legislature;

(2) Except with respect to appropriations to fund financing agreements under chapter 37D, the University of Hawaii shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs, among cost elements in a program, and between quarters, as applicable; and the [Hawaii health systems corporation] division of community hospitals shall have the flexibility to transfer special fund appropriations among division of community hospitals public health facilities as applicable; provided that the [Hawaii health systems corporation] division of community hospitals shall maintain the integrity and services of each individual facility and shall not transfer appropriations out of any facility that would result in a reduction of services offered by the facility, with due regard for statutory requirements, changing conditions, the needs of the programs, and the effective utilization of resources; and

(3) The university and the division of community hospitals shall account for each transfer implemented under this subsection in quarterly reports to the governor and annual reports at the end of each fiscal year to the legislature and the governor, which shall be prepared in the form and manner prescribed by the governor and shall include information on the sources and uses of the transfer.

(e) The division of community hospitals shall not use current appropriations in any manner that would result in the expansion of programs or the initiation of new programs that may require any future increase in the commitment of state resources, without the specific prior concurrence of the legislature and advice of the governor."

SECTION 8. Section 37D-1, Hawaii Revised Statutes, is amended by amending the definition of "agency" to read as follows:

""Agency" or "participating agency" means the judiciary, any executive department, any independent commission, any board, any authority, any bureau, any office, any other establishment of the State (except the legislature and its agencies), or any public corporation that is supported in whole or in part by state funds, or any agent thereof, authorized by law to expend available moneys[; provided that the Hawaii health systems corporation shall not be governed by this chapter for any financing agreement unless it elects to do so]."

SECTION 9. Section 37D-2, Hawaii Revised Statutes, is amended to read as follows:

"§37D-2 Financing agreements. (a) There is hereby established and authorized the financing agreement program of the State. Any agency desiring to acquire or improve projects through the financing agreement program established and authorized by this chapter shall submit a written request to the department providing such information as the department shall require. Notwithstanding any other law to the contrary, [and except for the Hawaii health systems corporation,] only with the approval by the attorney general as to form and legality and upon the written request of one or more participating agencies, may the department enter into a financing agreement in accordance with this chapter, except that the board of regents of the University of Hawaii may enter into a financing agreement in accordance with this chapter without the approval of the director and of the attorney general as to form and legality if the principal amount of the financing agreement does not exceed $3,000,000. A financing agreement may be entered into by the department on behalf of one or more participating agencies at any time (before or after commencement or completion of any improvements or acquisitions to be financed) and shall be upon terms and conditions the department finds to be advantageous. In each case of a written request by the judiciary to participate in the financing agreement program, the department shall implement the request; provided that the related financing agreement shall be upon terms and conditions the department finds to be advantageous. Any financing agreement entered into by the department without the approval required by this section shall be void and of no effect. A single financing agreement may finance a single item or multiple items of property to be used by multiple agencies or may finance a single item or multiple items of property to be used by a single agency. The department shall bill any participating agency that benefits from property acquired with the proceeds of a financing agreement for such participating agency's pro rata share of:

(1) The department's costs of administration of the financing agreement program; and

(2) The financing costs, including the principal and interest components of the financing agreement and insurance premiums;

on a monthly or other periodic basis, and may deposit payments received in connection with the billings with a trustee as security for a financing agreement. Any participating agency receiving such a bill shall be authorized and shall pay the amounts billed from the available moneys.

(b) Financing agreements shall be subject to the following limitations:

(1) Amounts payable by a participating agency to or upon the direction of the department in respect to a project and by the department under a financing agreement shall be limited to available moneys. In no circumstance shall the department be obligated to pay amounts due under a financing agreement from any source other than available moneys. If, by reason of insufficient available moneys or other reason, amounts due under a financing agreement are not paid when due, the lender may exercise any property right that the department has granted to it in the financing agreement, against the property that was purchased with the proceeds of the financing agreement, and apply the amounts so received toward payments scheduled to be made by the department under the financing agreement;

(2) No property rights may be granted in property unless the property is being acquired, is to be substantially improved, is to be refinanced with the proceeds of a financing agreement, or is land on which the property is located;

(3) Notwithstanding any other law to the contrary, [and except for the Hawaii health systems corporation] and as otherwise provided in this section with respect to the University of Hawaii, [and except as provided in chapter 323F as to the Hawaii health systems corporation,] an agency shall not have the power to enter into a financing agreement, except through the department as authorized by this chapter, and nothing in this chapter shall be construed to authorize the sale, lease, or other disposition of property owned by an agency;

(4) Except as otherwise provided in this section with respect to the University of Hawaii, the sale, assignment, or other disposition of any financing agreements, including certificates of participation relating thereto, shall require the approval of the director; and

(5) The department shall not be subject to chapter 103D and any and all other requirements of law for competitive bidding for financing agreements."

SECTION 10. Section 76-11, Hawaii Revised Statutes, is amended:

1. By amending the definition of "chief executive" to read:

""Chief executive" means the governor, the respective mayors, and the chief justice of the supreme court[, and the chief executive officer of the Hawaii health systems corporation]. It may include the superintendent of education and the president of the University of Hawaii with respect to their employees on any matter that applies to employees in general, including employees who are not covered by this chapter."

2. By amending the definition of "employer" to read: ""Employer" or "public employer" means the governor in the case of the State, the respective mayors in the case of the counties, the chief justice of the supreme court in the case of the judiciary, the board of education in the case of the department of education, the board of regents in the case of the University of Hawaii, [the Hawaii health systems corporation board in the case of the Hawaii health systems corporation,] and any individual who represents one of the employers or acts in their interest in dealing with public employees. In the case of the judiciary, the administrative director of the courts shall be the employer in lieu of the chief justice for purposes which the chief justice determines would be prudent or necessary to avoid conflict."

3. By amending the definitions of "jurisdiction" and "legislative body" to read:

""Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, the department of education, and the University of Hawaii[, and the Hawaii health systems corporation].

"Legislative body" means the legislature in the case of the State, including the judiciary, the department of education, and the University of Hawaii[, and the Hawaii health systems corporation]; the city council in the case of the city and county of Honolulu; and the respective county councils in the case of the counties of Hawaii, Maui, and Kauai."

SECTION 11. Section 76-47, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The merit appeals board shall adopt rules of practice and procedure consistent with section 76-14 and in accordance with chapter 91, except that, in the case of the judiciary [and the Hawaii health systems corporation], the adoption, amendment, or repeal of rules shall be subject to the approval of [their respective chief executives.] the chief justice or the chief justice's designee. The rules shall recognize that the merit appeals board shall sit as an appellate body and that matters of policy, methodology, and administration are left for determination by the director. The rules may provide for the sharing of specific expenses among the parties that are directly incurred as a result of an appeal as the merit appeals board deems would be equitable and appropriate, including but not limited to expenses for transcription costs or for services, including traveling and per diem costs, provided by persons other than the board members or permanent staff of the board. Official business of the merit appeals board shall be conducted in meetings open to the public, except as provided in chapter 92."

SECTION 12. Section 89-2, Hawaii Revised Statutes, is amended by:

1. Amending the definition of "employer" to read:

""Employer" or "public employer" means the governor in the case of the State, the respective mayors in the case of the counties, the chief justice of the supreme court in the case of the judiciary, the board of education in the case of the department of education, the board of regents in the case of the University of Hawaii, [the Hawaii health systems corporation board in the case of the Hawaii health systems corporation,] and any individual who represents one of these employers or acts in their interest in dealing with public employees. In the case of the judiciary, the administrative director of the courts shall be the employer in lieu of the chief justice for purposes which the chief justice determines would be prudent or necessary to avoid conflict."

2. Amending the definitions of "jurisdiction" and "legislative body" to read:

""Jurisdiction" means the State, the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, and the judiciary[, and the Hawaii health systems corporation].

"Legislative body" means the legislature in the case of the State, including the judiciary, the department of education, and the University of Hawaii[, and the Hawaii health systems corporation]; the city council, in the case of the city and county of Honolulu; and the respective county councils, in the case of the counties of Hawaii, Maui, and Kauai."

SECTION 13. Section 89-6, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) For the purpose of negotiating a collective bargaining agreement, the public employer of an appropriate bargaining unit shall mean the governor together with the following employers:

(1) For bargaining units (1), (2), (3), (4), (9), (10), and (13), the governor shall have six votes and the mayors[,] and the chief justice[, and the Hawaii health systems corporation board] shall each have one vote if they have employees in the particular bargaining unit;

(2) For bargaining units (11) and (12), the governor shall have four votes and the mayors shall each have one vote;

(3) For bargaining units (5) and (6), the governor shall have three votes, the board of education shall have two votes, and the superintendent of education shall have one vote;

(4) For bargaining units (7) and (8), the governor shall have three votes, the board of regents of the University of Hawaii shall have two votes, and the president of the University of Hawaii shall have one vote.

Any decision to be reached by the applicable employer group shall be on the basis of simple majority, except when a bargaining unit includes county employees from more than one county. In such case, the simple majority shall include at least one county."

SECTION 14. Section 89C-1.5, Hawaii Revised Statutes, is amended by amending the definition of "appropriate authority" to read as follows:

""Appropriate authority" means the governor, the respective mayors, the chief justice of the supreme court, the board of education, the board of regents, [the Hawaii health system corporation board,] the auditor, the ombudsman, and the director of the legislative reference bureau. These individuals or boards may make adjustments for their respective excluded employees."

SECTION 15. Section 323D-71, Hawaii Revised Statutes, is amended by amending the definition of "hospital" to read as follows:

""Hospital" means an institution with an organized medical staff, regulated under section 321-11(10) which admits patients for inpatient care, diagnosis, observation, and treatment[, but does not include a public health facility under chapter 323F]."

SECTION 16. Section 113 of Act 253, Session Laws of Hawaii 2000, is amended by:

1. Amending the definition of "jurisdiction" to read:

""Jurisdiction" means the city and county of Honolulu, the county of Hawaii, the county of Maui, the county of Kauai, the judiciary, [the Hawaii health systems corporation,] the office of Hawaiian affairs, and the legislative branches of the State and county governments."

2. Amending the definition of "state executive branch" to read:

""State executive branch" includes the department of education and the University of Hawaii[, but excludes the Hawaii health systems corporation which is considered a separate jurisdiction under this part]."

SECTION 17. Act 253, Session Laws of Hawaii 2000, is amended by amending section 122 to read as follows:

"SECTION 122. Optional participation by a county, the judiciary, [the Hawaii health systems corporation,] the office of Hawaiian affairs, or the legislative branch of the State or a county. The city and county of Honolulu, the county of Hawaii, the county of Kauai, the county of Maui, the judiciary, [the Hawaii health systems corporation,] the office of Hawaiian affairs, or the legislative branch of the State or a county may opt to provide the special retirement incentive benefit under section 115 to their respective employees under a workforce restructuring plan; provided that the special retirement incentive is in lieu of any voluntary severance benefit that may be offered under its plan and is consistent with all of the provisions in section 115. All references to the State in section 115 shall include the jurisdiction opting to provide the special retirement incentive benefit. The chief executive or other appropriate authority of the respective jurisdictions shall ensure that approval of its respective legislative body is obtained, if required, before offering the special retirement incentive under section 115."

SECTION 18. Chapter 323F, Hawaii Revised Statutes, is repealed.

SECTION 19. All rights, powers, functions, and duties of the Hawaii health systems corporation are transferred to the division of community hospitals of the department of health.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 20. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii health systems corporation relating to the functions transferred to the division of community hospitals of the department of health shall be transferred with the functions to which they relate.

SECTION 21. It is the intent of this Act that all rights, powers, functions, assets, and operations of the Hawaii health systems corporation be conveyed to the division of community hospitals of the department of health, such that all of the activities and services of the public health facilities being transferred be continued without interruption. This Act shall be construed with this intent.

The assets, including but not limited to hospital funds of the health facilities being transferred, and the facilities themselves, shall be conveyed to the State of Hawaii by the Hawaii health systems corporation on July 1, 2010.

Effective on July 1, 2010, the department of health shall assume the responsibility of the Hawaii health systems corporation, with respect to the public health facilities being transferred, for all contracts, agreements, and leases for commodities, services, property, and supplies utilized by the Hawaii health systems corporation, all of which shall be transferred to the department of health. Real property leases shall be transferred to the State of Hawaii. The auditor shall conduct a due diligence audit and review of the assets and liabilities of the Hawaii health systems corporation.

SECTION 22. The department of health shall assume and honor all collective bargaining agreements applicable to employees of the Hawaii health systems corporation, with respect to the health facilities being transferred, as of July 1, 2010. Upon expiration of those agreements, the department of health shall negotiate collective bargaining agreements or sub-agreements under chapter 89, Hawaii Revised Statutes, to address the needs of the division of community hospitals.

SECTION 23. All acts passed prior to or during this Regular Session of 2003, whether enacted before or after the passage of this Act shall be interpreted to conform to this Act, unless the acts specifically provide that this Act is being amended. In so far as this Act is inconsistent with the provisions of any other law, this Act shall be controlling.

SECTION 24. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 25. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 26. This Act shall take effect on July 1, 2010; provided that the amendments made to section 36-27, Hawaii Revised Statutes, by this Act shall not be repealed when that section is reenacted on July 1, 2010, pursuant to section 9 of Act 142, Session Laws of Hawaii 1998; and provided further that sections 16 and 17 shall take effect on July 1, 2010.