Pension Calculation

Makes the inclusion of a public sector union member's overtime
pay for pension benefit calculation purposes negotiable.
Prohibits the use of overtime pay in an exempt employee's pension
benefit calculation.  (SD1)

THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Section 88-21, Hawaii Revised Statutes, is
 2 amended by amending the definition of "average final
 3 compensation" to read as follows:
 4      ""Average final compensation":  the average annual
 5 compensation as described in section 88-81, which becomes part of
 6 the formula for the computation of a retirement allowance[.],
 7 except for overtime compensation which is contrary to negotiated
 8 provisions under sections 89-9(f) or as provided in
 9 section 89C-2(7)."
10      SECTION 2.  Section 89-9, Hawaii Revised Statutes, is
11 amended to read as follows:
12      "89-9 Scope of negotiations.(a)  The employer and the
13 exclusive representative shall meet at reasonable times,
14 including meetings in advance of the employer's budget-making
15 process, and shall negotiate in good faith with respect to wages,
16 hours, the number of incremental and longevity steps and movement
17 between steps within the salary range, the amounts of
18 contributions by the State and respective counties to the Hawaii
19 public employees health fund to the extent allowed in
20 subsection (e), and other terms and conditions of employment

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 1 which are subject to negotiations under this chapter and which
 2 are to be embodied in a written agreement, or any question
 3 arising thereunder, but such obligation does not compel either
 4 party to agree to a proposal or make a concession; provided that
 5 the parties may not negotiate with respect to cost items as
 6 defined by section 89-2 for the biennium 1999 to 2001, and the
 7 cost items of employees in bargaining units under section 89-6 in
 8 effect on June 30, 1999, shall remain in effect until July 1,
 9 2001.
10      (b)  The employer or the exclusive representative desiring
11 to initiate negotiations shall notify the other in writing,
12 setting forth the time and place of the meeting desired and
13 generally the nature of the business to be discussed, and shall
14 mail the notice by certified mail to the last known address of
15 the other party sufficiently in advance of the meeting.
16      (c)  Except as otherwise provided herein, all matters
17 affecting employee relations, including those that are, or may
18 be, the subject of a regulation promulgated by the employer or
19 any personnel director, are subject to consultation with the
20 exclusive representatives of the employees concerned.  The
21 employer shall make every reasonable effort to consult with the
22 exclusive representatives prior to effecting changes in any major
23 policy affecting employee relations.

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                                     S.B. NO.           S.D. 1

 1      (d)  Excluded from the subjects of negotiations are matters
 2 of classification and reclassification, benefits of but not
 3 contributions to the Hawaii public employees health fund,
 4 retirement benefits except as provided in section 88-8(h)[,] and
 5 subsection (f), and the salary ranges now provided by law;
 6 provided that the number of incremental and longevity steps, the
 7 amount of wages to be paid in each range and step, and movement
 8 between steps within the salary range shall be negotiable.  The
 9 employer and the exclusive representative shall not agree to any
10 proposal which would be inconsistent with merit principles or the
11 principle of equal pay for equal work pursuant to sections 76-1,
12 76-2, 77-31, and 77-33, or which would interfere with the rights
13 of a public employer to (1) direct employees; (2) determine
14 qualification, standards for work, the nature and contents of
15 examinations, hire, promote, transfer, assign, and retain
16 employees in positions and suspend, demote, discharge, or take
17 other disciplinary action against employees for proper cause; (3)
18 relieve an employee from duties because of lack of work or other
19 legitimate reason; (4) maintain efficiency of government
20 operations; (5) determine methods, means, and personnel by which
21 the employer's operations are to be conducted; and take such
22 actions as may be necessary to carry out the missions of the
23 employer in cases of emergencies; provided that the employer and

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                                     S.B. NO.           S.D. 1

 1 the exclusive representative may negotiate procedures governing
 2 the promotion and transfer of employees to positions within a
 3 bargaining unit, procedures governing the suspension, demotion,
 4 discharge or other disciplinary actions taken against employees,
 5 and procedures governing the layoff of employees; provided
 6 further that violations of the procedures so negotiated may be
 7 the subject of a grievance process agreed to by the employer and
 8 the exclusive representative.
 9      (e)  Negotiations relating to contributions to the Hawaii
10 public employees health fund shall be for the purpose of agreeing
11 upon the amounts which the State and counties shall contribute
12 under section 87-4, toward the payment of the costs for a health
13 benefits plan, as defined in section 87-1(8), and group life
14 insurance benefits, and the parties shall not be bound by the
15 amounts contributed under prior agreements; provided that section
16 89-11 for the resolution of disputes by way of fact-finding or
17 arbitration shall not be available to resolve impasses or
18 disputes relating to the amounts the State and counties shall
19 contribute to the Hawaii public employees health fund.
20      (f)  In order to reduce or eliminate the excessive use of
21 overtime that is intended to improperly increase an employee's
22 pension benefit, an employer and the exclusive bargaining
23 representative may negotiate over the inclusion, partial

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                                     S.B. NO.           S.D. 1

 1 inclusion, or exclusion of overtime in the calculation of an
 2 employee's average final compensation as defined under section
 3 88-21."
 4      SECTION 3.  Section 89C-2, Hawaii Revised Statutes, is
 5 amended to read as follows:
 6      "89C-2 Adjustments authorized; limitations, restrictions.
 7 Any provision of law to the contrary notwithstanding, the
 8 compensation, hours, terms, and conditions of employment, amounts
 9 of contributions by the State and respective counties to the
10 Hawaii public employees health fund, and other benefits for
11 public officers and employees who are excluded from collective
12 bargaining shall be adjusted by the chief executives of the State
13 or counties, the board of education, the board of regents, the
14 auditor, the director of the legislative reference bureau, the
15 ombudsman, or the chief justice, as applicable.  The chief
16 executives, the board of education, the board of regents, the
17 auditor, the director of the legislative reference bureau, the
18 ombudsman, and the chief justice, or their designated
19 representatives, shall determine the adjustments to be made and
20 which excluded officers or employees are to be granted
21 adjustments under this chapter, in accordance with the following
22 guidelines and limitations:
23      (1)  For excluded officers and employees under the same

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 1           compensation plans as officers and employees within
 2           collective bargaining units, such adjustments shall be
 3           not less than those provided under collective
 4           bargaining agreements for officers and employees hired
 5           on a comparable basis.
 6      (2)  For excluded officers and employees in the excluded
 7           managerial compensation plan, such adjustments shall be
 8           not less than those provided under collective
 9           bargaining to officers and employees in the
10           professional and scientific employees bargaining unit.
11           Alternate adjustments may be granted to officers and
12           employees whose work is related to that of officers and
13           employees in the other optional bargaining units in
14           order to maintain appropriate pay relationships with
15           such officers and employees.
16      (3)  No adjustment in compensation, hours, terms, and
17           conditions of employment, amounts of contributions by
18           the State and respective counties to the Hawaii public
19           employees health fund, or other benefits shall be
20           established which is in conflict with the system of
21           personnel administration based on merit principles and
22           scientific methods governing the classification of
23           positions and the employment conduct, movement, and

Page 7                                                     2793
                                     S.B. NO.           S.D. 1

 1           separation of public officers and employees.
 2      (4)  The compensation of officers or employees whose
 3           salaries presently are limited or fixed by legislative
 4           enactment shall not be adjusted under this chapter, but
 5           shall continue to be adjusted by the appointing
 6           authority within limits established by law or by
 7           legislative enactment.
 8      (5)  The compensation of officers or employees, who are not
 9           covered under the same compensation plans as officers
10           and employees within collective bargaining units and
11           whose salaries presently are authorized to be fixed by
12           the appointing authority, need not be adjusted under
13           this chapter.  The appointing authority may continue to
14           make specific adjustments in the salaries of individual
15           officers or employees from available funds
16           appropriated.
17      (6)  Adjustments to the amounts of contributions by the
18           State and respective counties to the Hawaii public
19           employees health fund on behalf of officers or
20           employees who are not covered by adjustments made under
21           this chapter shall be made by legislative enactment.
22      (7)  No excluded officer or employee shall be permitted to
23           increase one's average final compensation as defined in

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                                     S.B. NO.           S.D. 1

 1           section 88-21 by the assignment of overtime which is
 2           intended for the purpose of increasing one's retirement
 3           benefits."
 4      SECTION 4.  The department of human resources development
 5 shall analyze other public and private sector pension and
 6 compensation systems and shall develop alternative legislative
 7 models that address whether overtime should be calculated in
 8 determining one's retirement benefits and shall submit its
 9 recommendations to the legislature.
10      SECTION 5.  The amendments made to sections 89-9 and 89C-2,
11 Hawaii Revised Statutes, by this Act, shall only apply to public
12 employees first hired into public service on or after January 1,
13 2001.
14      SECTION 6.  Statutory material to be repealed is bracketed.
15 New statutory material is underscored.
16      SECTION 7.  This Act shall take effect on July 1, 2010.