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THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1. The legislature finds that traditional government
 2 control mechanisms may impede responsible management in the
 3 provision of government services with maximum efficiency, economy
 4 and effectiveness and that overlapping responsibilities blur
 5 accountability for the efficiency and effectiveness of
 6 operations.
 7      The legislature also recognizes that government has an
 8 obligation to the public to provide high quality services in an
 9 exemplary manner and that government must operate in a manner
10 that is above criticism whether in purchasing, personnel
11 administration or other functions; that prudent use of resources
12 and economy of operations is not assured by the profit motive
13 that brakes unwarranted expenditures in the private sector; and
14 that discrimination, favoritism, waste and inefficiency are
15 unacceptable in a public agency.  Within this framework of
16 concerns and objectives, the legislature intends that less
17 restrictive administrative processes be made available to
18 programs that seek to provide governmental services in an
19 exemplary and responsible manner.  For such programs, the

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 1 legislature waives the current prescriptive administrative
 2 statutes and regulations cited in this chapter.  However, the
 3 legislature mandates that operations and decision making be
 4 guided by the principles expressed in this chapter and by sound
 5 judgment so that expedient but inappropriate actions do not
 6 contaminate operations.
 7      SECTION 2. Hawaii Revised Statutes, is amended by adding a
 8 new chapter to be appropriately designated and to read as
 9 follows:
10      "  -1    Designation as a self-governed program.  (a) A
11 department or agency may propose that a program or other
12 organizational component be designated a self-governing entity.
13 Proposals for such designation shall be submitted to the Governor
14 by the affected department head.
15      (b) Proposals for designation as a self-governing entity
16 shall contain:
17      (1)  Program-related information including a mission
18 statement, specific short- and long-term objectives, and criteria
19 which will be used to assess the extent to which objectives are
20 met;
21      (2)  Administration-related information which indicates how
22 budgeting, procurement, fiscal record keeping and personnel
23 administration will be carried out within the organization.  If

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 1 the organization is responsible for facilities and their
 2 maintenance, the proposal shall also contain such information on
 3 facility maintenance and, if appropriate, CIP budgeting; and
 4      (3)  A plan for implementing the program and administrative
 5 changes described in sections (1) and (2).
 6      (c)  Approval of the self-governing status of an entity
 7 shall be by the Governor and only after consideration of the
 8 recommendations of the Directors of Budget and Finance,
 9 Accounting and General Services, Human Resources Development, and
10 the chief procurement officer appointed in accordance with
11 section 103D-204, HRS.
12      (d)  Upon approval of the self-governing status of the
13 program, the program shall continue to remain a part of the
14 department but shall be attached to that department only for
15 administrative purposes except as provided herein.
16        -2   Organization and operations of self-governed
17 programs.   (a) Self-governed programs shall continue to be
18 headed by the person who normally heads that program.  The
19 program head shall be subject to the terms and conditions
20 outlined in section   -7, except that any adjustment in salary
21 for that person shall be subject to the prior review and approval
22 of the department head.  In the event of a vacancy in the
23 position heading a self-governed program, the department head

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 1 shall select the best qualified individual for appointment to the
 2 position as provided in section   -7.
 3      (b)  Notwithstanding the provisions of sections 26-38 and
 4 26-39, HRS, the program head may assign and reassign work to any
 5 subordinate position, establish and abolish organizational units,
 6 and organize and reorganize the program to improve its
 7 functioning.  In organizing and reorganizing the work the program
 8 head shall consider the following principles:
 9      (1)  Logical division of work that facilitates the
10 accomplishment of objectives, the execution of work activities,
11 improves cooperation, coordination, communication, and the
12 provision of services, and that maximizes skills utilization;
13      (2)  Delegation of authority commensurate with
14 responsibility;
15      (3)  Cost effective use of resources;
16      (4)  Clear lines of command;
17      (c)  Heads of self-governed programs are encouraged to
18 establish advisory groups of individuals knowledgable in the
19 types of services provided by the program, administrative matters
20 such as purchasing and personnel and, as appropriate, clients of
21 the agency and other interested individuals.  If an advisory
22 group is established, members shall serve at the pleasure of the
23 head of the program and shall serve without compensation.

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 1        -3    Evaluation of self-governed programs.  (a) Self
 2 evaluation.  Each self-governed organization shall consciously
 3 install a process of continuous self-evaluation and shall prepare
 4 an annual self-evaluation report.  This self-evaluation process
 5 and annual report shall include but not be limited to an
 6 evaluation of program operations, the administrative processes
 7 and actions of the organization and the impact of the program on
 8 the clients of the program or target group.  The evaluation shall
 9 also include an assessment of the difference, including costs and
10 benefits, in these areas between the prior administrative
11 processes and those under self-governed status.
12      (b)  External evaluation.  The employing department, the
13 departments of budget and finance, accounting and general
14 services and human resources development, and the chief
15 procurement officer shall conduct an evaluation at the close of
16 the second full fiscal year of operations as a self-governed
17 organization.  Such evaluation shall focus on the extent to which
18 the self-governed organization has succeeded in applying the
19 principles enumerated in this chapter, the costs of carrying out
20 the program, its attainment of the objectives established for the
21 program, and the effectiveness of the services provided to the
22 clients of the agency and/or the target group.  The results of
23 this evaluation shall be transmitted to the succeeding

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 1 legislative session through the office of the governor.
 2        -4    Funding and budgeting. (a) Requests for
 3 appropriations for self-governed programs shall be exempt from
 4 the requirements of Chapter 37 and any rules and orders issued
 5 under that authority but shall be contained in the department's
 6 budget request and subject to the following guidelines.
 7      (b)  Upon approval of self-governed status, the unexpended
 8 allocation for that fiscal year for the program will be reserved
 9 for the use of the program. 
10      (c)  During the first full fiscal year in a self-governed
11 capacity, the program shall be funded at the same level as during
12 the preceding year, plus any generally available increases such
13 as for collective bargaining costs.
14      (d) Succeeding requests for appropriations shall be provided
15 by the program to the department and contained, as a separate
16 item, in the department's budget request.  The request shall not
17 be adjusted by the administration, although comments may be
18 attached.  The program shall determine whether to utilize the
19 traditional line item budget request or seek a lump sum
20 appropriation from the legislature.
21      (e)  Funds appropriated by the legislature may be subject to
22 general across the board restrictions applied by the governor,
23 but shall not be restricted for other reasons.

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 1      (f) Should the program chose to use the services of the
 2 department or other agencies for administrative support or other
 3 services beyond those specified in this chapter, a memorandum of
 4 understanding between the program and other agency shall outline
 5 the services and their costs and funds sufficient to cover the
 6 costs of those services shall be transferred between programs and
 7 departments to support the services provided.
 8      (g)  Self-governed programs may utilize Federal funds,
 9 special funds and any non-appropriated funds received in a
10 similar manner.
11      (h) Employee fringe benefits will be provided the department
12 of budget and finance for general fund positions.  Fringe benefit
13 costs for federally funded and special funded positions shall be
14 handled in the usual manner.
15        -5    Administrative support and other services by
16 departments.  (a)  Administrative support.  Self-governed
17 programs will receive assistance in payroll processing from the
18 employing department and the department of accounting and general
19 services.  As provided in this chapter, self-governed programs
20 may request assistance in administrative and support functions
21 from the employing department, the departments of budget and
22 finance, accounting and general services and human resources
23 development, and the chief procurement officer.  Such assistance

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 1 shall be provided free of charge by those agencies, provided it
 2 is within the scope of their usual operations.  However a record
 3 of the assistance provided and its cost shall be maintained by
 4 the department providing the assistance and included in the
 5 external evaluation report.  A mutually agreed to fee may be
 6 charged for assistance which exceeds that usually provided to
 7 state agencies.
 8      (b)  Infra-structure.  Self-governed programs which operate
 9 in facilities owned or leased by the state and are used by other
10 state programs shall continue to receive the usual support for
11 utilities, other than telephone services, and janitorial services
12 and facilities maintenance services.
13        -6    Purchasing functions in a self-governed program. a)
14 Purchasing activities of a self-governing entity shall be exempt
15 from the requirements of Chapter 103D, the Hawaii Public
16 Procurement Code; Chapter 103 F, the Purchases of Health and
17 Human Services; Chapter 104, Wages and Hours of Employees on
18 Public Works; and Chapter 105, Government Vehicles and any rules
19 and procedures established under those chapters.  Nevertheless
20 all purchases shall be limited to those essential to the
21 operations of the agency and attainment of its objectives and all
22 purchasing activities must be carried out in accordance with the
23 following principles:

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 1      (1)  The least expensive alternative that will
 2           satisfactorily meet program needs, taking into account
 3           the length of the anticipated need and the cost,
 4           including initial cost, maintenance cost and
 5           replacement cost, over the life of the product;
 6      (2)  The best price for value offered by a reasonable number
 7           of responsible providers; and
 8      (3)  Adequate documentation of price solicitation and
 9           purchasing activities and an audit trail which meets
10           generally accepted accounting standards.
11        -7    Human resource management functions in a self-
12    governing program. (a) Human resource management activities
13      of a self-governing entity shall be exempt from the
14      requirements of Chapter 76, 77 and 89 and any rules or
15      agreements established in conformance with or under those
16      chapters.  Nevertheless all personnel management activities
17      shall be carried out in conformance with the following
18      principles:
19      (1)  Opportunities for employment shall be made known to all
20           potentially interested and qualified persons;
21      (2)  Selection and appointment shall be of the best suited
22           person, with the knowledge and skills needed to perform
23           the work;

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 1      (3)  All employees and applicants for employment should
 2           receive fair and equitable treatment in all aspects of
 3           human resource management without regard to political
 4           affiliation, race, color, religion, ancestry, national
 5           origin, sex, marital status, sexual orientation, age,
 6           or disability, and with proper regard for their privacy
 7           and constitutional rights;
 8      (4)  Equal pay shall be provided for equal work, with
 9           appropriate consideration of both national and local
10           rates paid by public and private employers in the
11           appropriate labor market;
12      (5)  Appropriate incentives and recognition should be
13           provided for excellence in performance and may include
14           bonuses and other forms of compensation;
15      (6)  High standards of integrity and conduct, and concern
16           for the public interest shall be expected of all
17           employees;
18      (7)  The work force shall be used efficiently and
19           effectively;
20      (8)  Employees will be retained on the basis of the adequacy
21           of their performance.  Inadequate performance will be
22           corrected and employees who cannot or will not improve
23           their performance to meet required standards will be

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 1           separated;
 2      (9)  Employees will be provided effective education and
 3           training in cases in which such education and training
 4           would result in better organization and individual
 5           performance;
 6      (10) Employees will be
 7           (A)  Protected against arbitrary action, personal
 8                favoritism, or coercion for political purposes,
 9                and
10           (B)  Prohibited from using their official authority or
11                influence for the purposes of personal gain or of
12                interfering with or affecting an election;
13      (11) Employees shall be protected against reprisal for the
14           lawful disclosure of information, which the employees
15           reasonably believe, evidences
16           (A)  A violation of any law, rule or regulation or
17           (B)  Mismanagement, a gross waste of funds, an abuse of
18                authority, or a substantial and specific danger to
19                public health or safety;
20      (12) Employees shall be informed of proposed changes in
21           policies or methods of operations, personnel policies
22           and practices, and working conditions that affect them
23           materially.  Opportunities to comment on the proposed
24           change shall also be provided and comments will be

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 1           considered before those changes are implemented.
 2      (13) Employees shall be provided an opportunity to express
 3           and discuss their concerns on matters arising from
 4           their employment.  In the event of suspensions,
 5           demotions or dismissals they shall be provided an
 6           opportunity to request an independent review.
 7      (b)  Employees in a self-governed program who have permanent
 8 civil service status, as of the date the self-governed status is
 9 approved, may request transfer to another available vacant
10 position within the department which is not part of the self-
11 governed program or shall be granted leave without pay from their
12 regular civil service positions and shall occupy exempt positions
13 established within the program.  Those employees who remain in
14 the program in exempt positions shall be eligible for transfer or
15 promotion to other civil service positions in accordance with the
16 rules applicable to regular employees.  These employees shall
17 remain covered by the provisions of Chapter 79, Leaves of
18 Absence, and Chapter 80, Hours of Work and receive any
19 retroactive pay increases for which they would have been eligible
20 in their prior position, and their total compensation shall not
21 be reduced while they are employed by the self-governed
22 organization.  Benefits provided to other employees within the
23 program may be made available to these employees, or alternative

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 1 benefits may be applied, so that a reasonable balance is
 2 attained.  Upon termination of the self-governing status of the
 3 program, they shall be returned to their former positions with no
 4 loss in benefits except that their salary shall be adjusted to
 5 the rate it would have been had they been continuously employed
 6 in the same civil service position that they previously occupied.
 7      (c)  Employees hired by a self-governed organization after
 8 its self-governed status is approved shall be exempt from civil
 9 service and shall be employed on an at will basis.  The program
10 shall determine, in advance of any such hiring, whether these
11 employees shall be covered by Chapter 79, Leaves of Absence, and
12 Chapter 80, Hours of Work, or alternative plans that meet the
13 requirements of federal and state laws governing overtime and
14 sick leave and are consistent with prevailing practices regarding
15 vacation.  When the self-governing status of the organization
16 terminates, they may be offered civil service positions, which
17 are assigned duties similar to those which they performed in
18 their exempt position, without the necessity of competition
19 provided they meet the minimum qualification requirements of the
20 class.
21      (d)  The self-governed organization shall receive its fair
22 share of any allocation made available for collective bargaining
23 and comparable excluded employee increases and may use those

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 1 funds to provide comparable increases to existing workers or to
 2 fund other personnel costs including additional personnel,
 3 alternative pay adjustments, performance bonuses, etc.
 4 Alternatively, a self-governed organization may increase the pay
 5 of all employees within the organization consistent with the
 6 terms and conditions of collective bargaining agreements and
 7 executive orders covering comparable positions.
 8      (e)  Employees in a self-governed program shall be exempt
 9 from the provisions of chapter 89.  However, they may join
10 employee organizations and/or maintain membership in their
11 existing employee organizations.
12      (f)  Employees in a self-governed program shall be covered
13 by the provisions of Chapter 78, Public Service; Chapter 87,
14 Public Employees Health Fund; and Chapter 89, Pension and
15 Retirement System.
16        -8    Applicability of other statutes and regulations.
17 Nothing in this chapter shall be construed as exempting self-
18 governed programs from general state and federal laws and
19 regulations affecting safety, health or employment.
20        -9    Severability.  If any provision of this Act, or the
21 application thereof to any person or circumstance is held
22 invalid, the invalidity does not affect other provisions or
23 applications of the Act which can be given effect without the

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 1 invalid provision or application, and to this end the provisions
 2 of this Act are severable.
 3        -10   Chapter inoperative, when.  If any provision of
 4 this chapter jeopardizes the receipt by the State of any federal
 5 grant-in-aid or other federal allotment of money, the provision
 6 shall, insofar as the fund is jeopardized, be deemed to be
 7 inoperative."
 8      SECTION 3.  New statutory material is underscored. 
 9      SECTION 4.  This Act shall take effect upon its approval and
10 shall be repealed on June 30, 2002. 
12                           INTRODUCED BY:  _______________________

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