STAND. COM. REP. NO. 442

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1341

       S.D. 1

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 1341 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 address the unfunded liabilities of the Employees' Retirement System (ERS) by amending retirement benefits for state and county employees who become members of the ERS after June 30, 2012.

 

     Your Committee received testimony in support of this measure from the Chairman of the Board of Trustees of the Employees' Retirement System and the Administrator of the Employees' Retirement System.  Your Committee received testimony in opposition to this measure from the Hawaii Fire Fighters Association.  Your Committee received comments on this measure from the Department of Budget and Fiscal Services of the City and County of Honolulu.

 

     Your Committee finds that the unfunded liability of the ERS will continue to place a quickly-escalating financial burden on the State and counties as the annual required contribution grows for the required rate of contribution by the public employers and the resulting dollar amounts.  The rising number of retirees and the accelerating pension benefits payable to them, combined with the shrinking ERS assets and consequent decreasing cash returns on these investments, have created an enormous dilemma.  The annual consequences required by the State and counties are growing at a rate that could overwhelm their financial resources and, consequently, the stability of the ERS.  Alternatively, the ERS benefit structure can be retooled for new employees to avoid the insolvency of the ERS.

 

     The ERS Board of Trustees has been working with its Actuary to design a benefit structure for new employees that reduces the long-term costs of the ERS and also provides a reasonable retirement package to state and county employees when combined with other retirement vehicles such as Social Securities.  Your Committee notes that this measure will affect only new ERS members by reducing the pension benefits they would accrue as compared to those of current members.

 

     Your Committee also notes that this measure is a consolidation of two similar measures, H.B. No. 1142 and H.B. No. 1038, that are presently being heard in the House of Representatives.  Your Committee is in agreement with the substance of the proposed amendments in H.B. No. 1038, H.D. 1, which adjusts the age requirements for various benefit levels.

 

     Accordingly, your Committee has amended this measure by:

 

     (1)  Conforming the age requirements for various benefit levels to H.B. No. 1038, H.D. 1;

 

     (2)  Inserting an effective date of July 1, 2050, to allow for further discussion; and

 

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and conformity.

 

     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. 1341, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1341, S.D. 1, and be referred to the Committee on Ways and Means.

 


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

 

 

 

____________________________

CLAYTON HEE, Chair