Employment and training fund
Repeals the employment and training fund and related assessments.

HB HMIA 2000-76
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  Hawaii's poor business climate has been the
 2 subject of many newspaper and magazine articles printed across
 3 the country.  This negative publicity works against the State's
 4 efforts to attract capital and new economic activity to the
 5 islands.  The Legislature must begin to search our laws to
 6 correct past decisions that add unnecessarily to the cost of
 7 doing business in the State.
 8      Payroll taxes and insurance protection for workers add up to
 9 a heavy burden on employers.  Hawaii's workers' compensation,
10 temporary disability, and prepaid health care coverages, taken
11 together, are the most broad based and expensive employee
12 benefits in the nation for employers.  The broad scope of these
13 benefits work against fulltime employment;  many employers are
14 forced by the expense of the system to turn to part-time workers
15 who don't work enough hours to earn benefits.  This adds to the
16 problem of workers forced into taking two or three jobs just to
17 survive.
18      In 1991, the Legislature added an additional .05% assessment
19 on wages subject to unemployment taxes to fund an Employment and

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 1 Training Fund.  This law was to sunset at the end of 1996.  Many 
 2 employers felt it would be allowed to die because the training
 3 programs had affected employment only marginally.  Unfortunately,
 4 instead of repealing the provision, the Legislature expanded the
 5 purposes for which the funds could be used to include grants and
 6 subsidies to agencies who provide services for the School to Work
 7 Program.  As laudable as this program might seem, it should not
 8 be funded by a tax on employers who are already doing a service
 9 by providing jobs and training.  The Legislature intends to
10 reverse this decision and repeal the assessment as a first step
11 toward reducing employers' costs.
12      The purpose of this Act is to repeal the employment and
13 training fund and associated payroll assessments.
14      SECTION 2.  Section HRS 383-128, Hawaii Revised Statutes, is
15 repealed.
16      ["383-128  Employment and training fund established.(a)
17 Effective January 1, 1992, there is established in the state
18 treasury, apart from all other funds in this State, a special
19 fund to be known as the employment and training fund.  All
20 assessments collected pursuant to section 383-129 and all other
21 moneys received by the fund from any other source shall be
22 deposited into the employment and training fund.
23      (b)  The moneys in the employment and training fund may be

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 1 used for funding:
 2      (1)  The operation of the state employment service for which
 3           no federal funds have been allocated;
 4      (2)  Business-specific training programs to create a more
 5           diversified job base and to carry out the purposes of
 6           the new industry training program pursuant to section
 7           394-8;
 8      (3)  Industry or employer-specific training programs where
 9           there are critical skill shortages in high growth
10           occupational or industry areas;
11      (4)  Training and retraining programs to assist workers who
12           have become recently unemployed or likely to be
13           unemployed;
14      (5)  Programs to assist residents who do not otherwise
15           qualify for federal or state job training programs to
16           overcome employment barriers; and
17      (6)  Training programs to provide job-specific skills for
18           individuals in need of assistance to improve career
19           employment prospects.
20      (c)  The director may require employers assisted by any of
21 these programs to contribute up to fifty per cent of the cost of
22 such assistance in cash or in-kind contributions.
23      (d)  The department may contract for employment, education,

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 1 and training services from public and private agencies and
 2 nonprofit corporations.  Contracts, pursuant to subsection (b),
 3 shall be exempt from chapters 103D and 103F so funds for these
 4 services may be expended in a timely manner to effectuate the
 5 purposes of this section.  All other disbursements shall be in
 6 accordance with chapters 103D and 103F.
 7      (e)  For purposes of grants and subsidies awarded under
 8 subsection (d), any organization requesting a grant or subsidy
 9 shall:
10      (1)  Be licensed and accredited, as applicable, under the
11           laws of the State;
12      (2)  Have at least one year's experience with the project or
13           in the program area for which the request or proposal
14           is being made; except that the director may grant an
15           exception where the project or program area deals with
16           new industry training; and
17      (3)  Be, employ, or have under contract persons who are
18           qualified to engage in the program or activity to be
19           funded by the State.
20      (f)  Recipients of grants or subsidies shall be subject to
21 the following conditions:
22      (1)  Any organization requesting a grant or subsidy shall
23           submit its request together with all the information

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 1           required by the director on an application form
 2           provided by the department;
 3      (2)  The recipient of a grant or subsidy shall not use
 4           public funds for purposes of entertainment or
 5           perquisites;
 6      (3)  The recipient of a grant or subsidy shall comply with
 7           applicable federal, state, and county laws;
 8      (4)  The recipient of a grant or subsidy shall comply with
 9           any other requirements the director may prescribe;
10      (5)  The recipient of a grant or subsidy shall allow the
11           director, the legislative bodies, and the legislative
12           auditor full access to records, reports, files, and
13           other related documents so that the program,
14           management, and fiscal practices of the grant recipient
15           may be monitored and evaluated to assure the proper and
16           effective expenditure of public funds;
17      (6)  Every grant or subsidy shall be monitored according to
18           rules established by the director to ensure compliance
19           with this section; and
20      (7)  Any recipient of a grant or subsidy under this section
21           who withholds or omits any material fact or
22           deliberately misrepresents facts to the director or who
23           violates the terms of the recipient's contract shall be

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 1           in violation of this section and, in addition to any
 2           other penalties provided by law, shall be prohibited
 3           from applying for a grant or subsidy under this section
 4           for a period of five years from the date of
 5           termination.
 6      (g)  The director shall submit a report to the legislature
 7 on the status of the employment and training fund, including
 8 expenditures and program results, at least twenty days prior to
 9 the convening of each regular legislative session.
10      (h)  The director of finance shall act as the treasurer and
11 custodian of the employment and training fund, invest those
12 moneys in accordance with applicable laws and rules, and disburse
13 the moneys in the employment and training fund in accordance with
14 directions by the director of labor and industrial relations.
15 All interest earned from investment of moneys in the employment
16 and training fund shall be deposited in the fund.  The director
17 of finance shall be liable on the director's official bond for
18 the faithful performance of all duties in connection with the
19 employment and training fund.  All sums recovered on the surety
20 bond for losses sustained by the employment and training fund
21 shall be deposited in the fund.
22      (i)  Administrative costs for the collection of employment
23 and training fund contributions and for costs related to the

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 1 establishment and maintenance of the employment and training fund
 2 shall be borne by the fund beginning with fiscal year 1992-1993
 3 and thereafter.
 4      (j)  The director may establish positions and hire necessary
 5 personnel to establish and administer the employment and training
 6 fund without regard to chapters 76 and 77."]
 7      SECTION 3.  Section 383-129, Hawaii Revised Statutes, is
 8 repealed.
 9      ["383-129  Employment and training assessment.(a)
10 Effective January 1, 1992, through June 30, 1997, and from
11 January 1, 1999, through December 31, 2000, in addition to
12 contributions determined by section 383-68, every employer,
13 except an employer who has selected an alternative method of
14 financing liability for unemployment compensation benefits
15 pursuant to section 383-62 or an employer who has been assigned a
16 minimum rate of zero per cent or the maximum rate of five and
17 four-tenths per cent in accordance with section 383-68, shall be
18 subject to an employment and training fund assessment at a rate
19 of .05 per cent of taxable wages as specified in section 383-61.
20      (b)  Collections from the employment and training assessment
21 shall be made in the same manner and at the same time as any
22 contributions required under section 383-61, and shall not be
23 deducted, in whole or in part, from the wages of individuals in

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 1 an employer's employ.
 2      (c)  Any assessments collected pursuant to this section
 3 shall remain separate and shall not be included in any manner in
 4 computing unemployment contribution rates assigned to employers
 5 in accordance with sections 383-63 to 383-68.
 6      (d)  The director may impose penalty and interest on
 7 delinquent employment and training assessments in the same manner
 8 as provided for contributions to the unemployment compensation
 9 fund in section 383-73.  For purposes of computation of penalty
10 and interest under this subsection, employment and training
11 assessments shall be considered part of the employer's
12 contributions to the unemployment compensation fund.
13      (e)  Collection of money from an employer delinquent in
14 paying employment and training assessments or contributions to
15 the unemployment compensation fund pursuant to this chapter shall
16 first be applied to interest and penalty, then applied to
17 delinquent unemployment compensation contributions, and finally
18 to delinquent employment and training assessments."]
19      SECTION 4.  Statutory material to be repealed is bracketed.
20      SECTION 5.  This Act shall take effect upon its approval. 
22                         INTRODUCED BY:___________________________

HB HMIA 2000-76