SB2646 SSCR2283

 

STAND. COM. REP. NO. 2283

Honolulu, Hawaii

, 2006

RE: S.B. No. 2646

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 2646 entitled:

"A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM,"

begs leave to report as follows:

The purpose of this measure is to establish a mechanism for reserving and appropriating twenty percent of the State's excess revenues to the employees' retirement system to pay down the unfunded liability of the system.

This measure also appropriates funds to the ERS to reduce the system's unfunded liability.

Testimony in support of this measure was submitted by the Hawaii State Teachers Association. Comments on this measure were submitted by the Department of Budget and Finance and the ERS.

Your Committee finds that the ERS' funded ratio has declined from ninety-five percent in 2000 to sixty-nine percent in 2005. This decrease is largely attributed not only to the financial market downturn in the wake of the events of September 11, 2001, but also the Legislature's diversion of the ERS' excess investment earnings in the past to address state and county budgetary needs. Your Committee further finds that approximately $3,900,000,000 is needed to fully fund the ERS, a necessary and attainable goal with the proper planning. This measure will appropriate funds to the ERS to begin to address the ERS' unfunded liability as well as create a mechanism by which excess state revenues, in economically prosperous times, will be used to decrease the ERS' unfunded liability. Your Committee believes that the reduction and eventual elimination of the ERS' unfunded liability is an important objective that should be addressed before the problem increases further.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2646 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor,

		____________________________ BRIAN KANNO, Chair