HB2460

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HOUSE OF REPRESENTATIVES	H.B. NO.	2460
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The tragic terrorist attacks in New York City and Washington D.C. has resulted in grim economic effects in the country and in Hawaii. On November 14, 2001, the Council of Revenues amended its previous projections by reducing the fiscal year 2001-2002 projection from 4.1 percent to -.7 percent and the fiscal year 2002-2003 projection from 5.2 percent to 5.1 percent. These reductions and out-year projections result in a general fund reduction of approximately $1,186.8 million over the planning period.

The contrary situation of reduced revenues and increased funding requirements require an in-depth review of both resources and costs. The magnitude of the State's economic downturn requires that all areas, including non-discretionary expenditures, be reviewed.

The contractual relationship of the State and counties and the Employees' Retirement System (ERS) is protected under section 2 of article XVI of the State Constitution. Chapter 88, Hawaii Revised Statutes, provides the requirements for employer contributions to the ERS.

This bill extends the payment period to liquidate the unfunded accrued liability from fifteen years to twenty-nine years beginning plan year 2001. This bill will reduce the employers' annual payments by amortizing the liability over a longer time frame.

SECTION 2. Section 88-122, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Commencing with the 1995 fiscal year and each subsequent fiscal year, the actuary shall determine the total unfunded accrued liability using the entry age normal cost funding method separately for each of the two groups of employees in subsection (a). The accrued liability contribution for each of the two groups of employees shall be the annual payment required to liquidate the unfunded accrued liability over a period of [twenty-one years beginning July 1, 1995.] twenty-nine years beginning July 1, 2000. Any increase or decrease in the total unfunded accrued liability resulting from legislative changes in the benefit provisions of the employees' retirement system shall be liquidated over a period of time to be determined by the actuary."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval, provided that section 2 shall take effect retroactive to July 1, 2000.

INTRODUCED BY:	_____________________________