SCR178

WHEREAS, to safeguard the strength of the public employees' health benefits system, the Legislature passed Act 88, Session Laws of Hawaii 2001, which created the Hawaii Employer-Union Health Benefits Trust Fund; and

WHEREAS, the purpose of enacting Act 88, Session Laws of Hawaii 2001, was "to establish a single health benefits delivery system for State and county employees, retirees, and their dependents," to assure the solvency of the Hawaii Employer-Union Health Benefits Trust Fund, and to address the spiraling costs of health benefits for public employees and retirees; and

WHEREAS, Act 88, Session Laws of Hawaii 2001, codified in part as chapter 87A, Hawaii Revised Statutes, mandates the Hawaii Employer-Union Health Benefits Trust Fund Board of Trustees to carry out several specific purposes and states that "health and other benefit costs shall be provided at a cost that is affordable to both public employers and the public employees"; and

WHEREAS, since the effective date of Act 88, Session Laws of Hawaii 2001, the Hawaii Employer-Union Health Benefits Trust Fund has succeeded in providing health benefits to public employees and retirees through a single delivery system and has met its mandate of keeping costs affordable for both employees and employers; and

WHEREAS, Act 245, Session Laws of Hawaii 2005, authorized exclusive representatives to establish and implement Voluntary Employees' Beneficiary Association Trusts for bargaining unit members; and

WHEREAS, effective March 1, 2006, the Hawaii State Teachers Association implemented its Voluntary Employees' Beneficiary Association Trust for members of bargaining unit 5 and no other exclusive representatives have implemented a Voluntary Employees' Beneficiary Association Trust as of March 12, 2007; and

WHEREAS, bargaining unit 5 members who retired on or after March 1, 2006, receive retiree health benefits through the Hawaii State Teachers Association's Voluntary Employees' Beneficiary Association Trust; and

WHEREAS, retirees covered by the Hawaii Employer-Union Health Benefits Trust Fund who were members of bargaining unit 5 immediately prior to their retirement and who retired prior to March 1, 2006, were offered a one-time option, pursuant to Act 245, Session Laws of Hawaii 2005, to leave the Hawaii Employer-Union Health Benefits Trust Fund and obtain health benefits through the Hawaii State Teachers Association's Voluntary Employees' Beneficiary Association Trust; and

WHEREAS, proponents of Voluntary Employees' Beneficiary Association Trusts claim that by having a smaller consumer pool and tailor-made benefit packages, health care costs can be better controlled; and

WHEREAS, by maintaining both the recently created Hawaii Employer-Union Health Benefits Trust Fund and Voluntary Employees' Beneficiary Association Trusts, duplication of administrative services may occur, creating additional costs for the State; and

WHEREAS, Act 245, Session Laws of Hawaii 2005, was established as a pilot test of the feasibility of whether it may be cost-effective for the State and beneficial to public employees to provide health benefits through union-sponsored Voluntary Employees' Beneficiary Association Trusts; and

WHEREAS, Act 245, Session Laws of Hawaii 2005, will expire on June 30, 2008, unless extended or made permanent by the Legislature; and

WHEREAS, in order for the Legislature to make a sound determination regarding whether or not to extend or make permanent Act 245, Session Laws of Hawaii 2005, the Legislature requires data, along with independent study and analysis of that data, regarding all aspects of the impact of Act 245 and the possible impact of additional Voluntary Employees' Beneficiary Association Trusts, if the Legislature extends or makes permanent Act 245; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2007, the House of Representatives concurring, that the Auditor is requested to conduct a comprehensive study on the results and impact of Act 245, Session Laws of Hawaii 2005, to determine its impact on:

(1) Hawaii State Teachers Association members and retirees;

(2) Members and retirees of other bargaining units who have remained with the Hawaii Employer-Union Health Benefits Trust Fund;

(3) Public employers;

(4) The operations and finances of the Hawaii Employer-Union Health Benefits Trust Fund;

(5) Public employees who would be ineligible to join a Voluntary Employees' Beneficiary Association Trust due to their lack of membership in a public sector union; and

(6) Any other persons or areas that may be identified by the Auditor; and

BE IT FURTHER RESOLVED that the Auditor is requested to conduct the study on both a historical and a prospective basis, including what would be the future financial viability of the Hawaii Employer-Union Health Benefits Trust Fund if Act 245, Session Laws of Hawaii 2005, were to become permanent and more unions were to establish Voluntary Employees' Beneficiary Association Trusts; and

BE IT FURTHER RESOLVED that the Auditor is requested to study the impact of Voluntary Employees' Beneficiary Association Trusts on compliance with Governmental Accounting Standards Board Statement Numbers 43 and 45 and the possibility of employers pre-funding retiree health benefit costs; and

BE IT FURTHER RESOLVED that the Auditor is requested to include in its report the ramifications of the coexistence of both a Voluntary Employees' Beneficiary Association Trust and the Hawaii Employer-Union Health Benefits Trust Fund and a determination of whether such coexistence is a feasible option; and

BE IT FURTHER RESOLVED that in conducting the study, the Auditor is requested to seek the views of the Administrator and the Board of Trustees of the Hawaii Employer-Union Health Benefits Trust Fund, the Department of Budget and Finance, other departments, the counties, the Hawaii State Teachers Association, the Administrator of the Voluntary Employees' Beneficiary Association Trust for the Hawaii State Teachers Association, other exclusive representatives, public employee retiree organizations, and other parties who may be knowledgeable about or impacted by Voluntary Employees' Beneficiary Association Trusts; and

BE IT FURTHER RESOLVED that the Auditor submit its report, findings, and recommendations to the Legislature no later than twenty days prior to the convening of the Regular Session of 2008; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Auditor, the Chair of the Board of Trustees of the Hawaii Employer-Union Health Benefits Trust Fund, the Administrator of the Hawaii Employer-Union Health Benefits Trust Fund, the Director of Finance, and the President of the Hawaii State Teachers Association.

	OFFERED BY:	_____________________________

Report Title:

VEBAs; Auditor; Study

THE SENATE	S.C.R. NO.	178
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII