HB2271 CD1

PART I

SECTION 1. This Act is recommended by the governor for immediate passage in accordance with section 9 of article VII of the Constitution of the State of Hawaii.

PART II

SECTION 2. The legislature finds that the appropriation of moneys for collective bargaining cost items associated with labor grievances is necessary to support the fair and timely resolution of employment disputes, maintain labor stability, and ensure the continued effective operation of government services. The legislature further finds that funding of these cost items is in the public interest and necessary to carry out the State's obligations under applicable collective bargaining agreements. The legislature additionally finds that the State may be subject to potential liabilities arising from labor grievances and that, in certain circumstances, it is prudent to appropriate funds in anticipation of the resolution of such grievances. The legislature also finds that such appropriations must not be construed as establishing liability, resolving disputes, or infringing upon the authority of the executive branch to negotiate, settle, or otherwise resolve labor grievances.

Further, the legislature finds that the university of Hawaii and certain departments, have used their existing fiscal year 2025-2026 budget to pay collective bargaining cost items related to temporary hazard pay in fiscal year 2025-2026. This action caused a reduction in funds available for departmental operations for the balance of fiscal year 2025-2026.

To address the anticipated departmental funding shortfalls due to the temporary hazard pay payouts, a short-term general fund loan will be deposited into a department of budget and finance trust account. The departments must reclassify the collective bargaining cost items related to temporary hazard pay expenditures from their fiscal year 2025-2026 operating general fund appropriations to the trust account, thereby freeing the appropriations in those operating budget accounts. Upon enactment of this Act and the transfer of appropriated funds to the departments, the departments must reverse the reclassifications so that the expenditures are restored to their original operating budget accounts, making the trust account whole.

Accordingly, the purpose of this Act is to:

(1) Make emergency appropriations for collective bargaining cost items for the members of bargaining units (1) and (10) and their excluded counterparts to resolve issues related to temporary hazard pay for fiscal year 2025-2026;

(2) Authorize the use of the general fund appropriations made in this Act to restore the temporary reclassifications for temporary hazard pay payouts to the appropriate departments to provide for the repayment of the general fund loan; and

(3) Specify that emergency appropriations made under Act 29, Session Laws of Hawaii 2025, do not lapse until June 30, 2027.

PART III

SECTION 3. There are appropriated or authorized from the sources of funding indicated below to collective bargaining statewide (BUF 102) the following sums or so much thereof as may be necessary for fiscal year 2025-2026 to fund collective bargaining cost items associated with grievances filed under agreements negotiated with the exclusive representative of collective bargaining units (1) and (10), and for their excluded counterparts:

FY 2025-2026

General funds $66,795,019

Interdepartmental transfers $306,532

Revolving funds $203,736

The sums appropriated shall be allotted by the director of finance to the appropriate state departments for expenditure by the appropriate state departments for the purposes of this section; provided that:

(1) The appropriate state department may encumber funds appropriated pursuant to this section for the purpose of satisfying a potential obligation arising from the labor grievance; provided that any such encumbrance shall not constitute an obligation or expenditure of funds; and

(2) The department may record an obligation in accordance with applicable accounting and fiscal procedures, subject to allotment and release by the director of finance.

SECTION 4. There are appropriated or authorized from the sources of funding indicated below to collective bargaining statewide (BUF 102) the following sums or so much thereof as may be necessary for fiscal year 2025-2026 to fund collective bargaining cost items associated with grievances filed under agreements negotiated with the exclusive representative of collective bargaining units (1) and (10), and for their excluded counterparts, including anticipated settlement agreements, arbitration awards or orders, or court orders for the department of education related to temporary hazard pay:

FY 2025-2026

General funds $28,468,723

Revolving funds $1,299

The sums appropriated shall be expended by the department of education for the purposes of this section; provided that:

(1) No funds shall be expended unless and until a legally binding obligation to pay has been incurred by the State, as evidenced by a fully executed settlement agreement, duly authorized by the State, arbitration award or order, or court order. Any settlement agreement described in this paragraph shall be approved in a form prescribed by the department of the attorney general, and shall be executed in accordance with applicable laws;

(2) The director of finance shall allot and release funds appropriated under this section only upon written notification by the department of education that the conditions set forth in paragraph (1) have been satisfied;

(3) Nothing in this section shall be construed to supersede or impair the authority of the executive branch, including the authority to negotiate, settle, or otherwise resolve labor grievances, or to determine whether and on what terms to enter into any settlement agreement; and

(4) The department of education may encumber funds appropriated pursuant to this section for the purpose of satisfying a potential obligation arising from the labor grievance; provided that:

(A) Any such encumbrance shall not constitute an obligation or expenditure of funds; and

(B) Upon the occurrence of the condition under paragraph (1), the department of education may record an obligation in accordance with applicable accounting and fiscal procedures, subject to allotment and release by the director of finance.

PART IV

SECTION 5. Funds appropriated or authorized by section 3 shall be allotted by the director of finance to the appropriate state departments for expenditure in fiscal year 2025-2026 for the purposes of this Act, including the repayment of general fund loans by the general fund appropriations made in this Act, which shall be deemed to be an authorized expenditure under the general fund appropriations made in this Act.

SECTION 6. Neither this Act nor the appropriations made in this Act shall be construed as an admission of liability in any arbitration, administrative proceeding, or court, nor as a legislative determination of the merits of any grievance or related litigation, nor as authority for the legislature to resolve, settle, or adjudicate any grievance or related litigation.

PART V

SECTION 7. Act 29, Session Laws of Hawaii 2025, is amended by amending section 11 to read as follows:

"SECTION 11. Funds appropriated or authorized by this Act that are not expended or encumbered by June 30, 2026, shall not lapse as of that date[.]; provided that any such unexpended or unencumbered funds shall remain available for expenditure until June 30, 2027."

PART VI

SECTION 8. Salary increases and cost adjustments provided in this Act for any officer or employee whose compensation is paid, in whole or in part, from federal, special, or other funds shall be paid wholly or proportionately, as the case may be, from the respective funds; provided that if the respective funds are unable to support such payments, appropriations from other means of financing may be used with the approval of the governor.

SECTION 9. Notwithstanding any provision of this Act, with the approval of the governor, the director of finance may transfer unrequired balances from the appropriated funds as may be available between sections 3 and 4 of this Act as necessary.

SECTION 10. Funds appropriated or authorized by this Act that are not expended or encumbered by June 30, 2026, shall not lapse as of that date; provided that any such unexpended or unencumbered funds shall remain available for expenditure until June 30, 2027.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval.

HOUSE OF REPRESENTATIVES	H.B. NO.	2271
THIRTY-THIRD LEGISLATURE, 2026		H.D. 2
STATE OF HAWAII		S.D. 1
		C.D. 1