STAND. COM. REP. NO. 2789

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 2753

       S.D. 1

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

 

Sir:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 2753, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO THE HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to authorize the Board of the Employer-Union Health Benefits Trust Fund (trust fund) to create a trust fund for employer contributions that will prefund post-employment health and other benefit plan costs for retirees and their beneficiaries.

 

     Written comments in support of this measure were submitted by the Department of Budget and Finance, Hawaii State Teachers Association, Hawaii Employer-Union Health Benefits Trust Fund, City and County of Honolulu, and Kauai County Council.

 

     Your Committee finds that this measure will enable the establishment of a separate irrevocable trust for the other post-employment benefits that include various non-pension benefits, such as health care, that are made available to retirees.  While there is no obligation to pre-fund other post-employment benefits, the Government Accounting Standards Board's requirement of this separate irrevocable trust will allow a public employer to use a higher discount rate in calculating its unfunded liability, which reduces the other post-employment benefits liability reported in its financial statements.

 

Your Committee also finds that other post-employment benefits funds held by the trust fund are currently being shown in employer financial reports as donations and not as other post-employment benefit contributions.  The trust fund was made aware of this in their June 30, 2010, financial report which was issued in April 2011.

 

Your Committee further finds that this measure is necessary to ensure that prefunded contributions that are made by the public employers are used for its intended purpose and that public employers who make these contributions receive the proper credit for the other post-employment benefit contributions on their financial statements.

 

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2753, S.D. 1, and recommends that it pass Third Reading.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

 

		____________________________ DAVID Y. IGE, Chair