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House changes Senate bill on liabilities

March 16, 2013
By ANITA HOFSCHNEIDER , The Associated Press

HONOLULU - The Hawaii House Labor Committee passed a bill Friday that strays from the Senate's approach to managing state funds needed to cover employee and retiree benefits in the future.

The committee replaced the contents of a Senate bill with two House bills involving the unfunded liabilities.

The bill approved Friday creates a task force to study the issue and a captive insurance company to manage the benefits.

The Senate voted last week to establish a separate trust fund for employee benefits and give each government agency its own account.

Hawaii Finance Director Kalbert Young told The Associated Press after Friday's hearing that he doesn't see a captive insurance company, which helps organizations manage risk, as a real solution to the problem.

"I don't think the state can escape funding its unfunded liabilities," Young said. "Although a captive insurance program may be a way to address future growth in the liability, we would have to still do some research on how to address current liabilities."

He has previously testified to the House Finance Committee that he is not sure whether placing the management of state funds under a captive insurance company will save the state any money.

But Young also testified Friday that he's not sure whether the Senate's idea to establish a new trust fund is something the state can afford.

Young says he plans to talk to lawmakers about re-adding some of the components of the Senate bill later in the legislative process.

He says he's particularly intrigued by the Senate's suggestion of a funding schedule to pay down the liability in six years, a provision the representatives removed.

Lawmakers in both chambers have said there is a critical need to resolve the multibillion-dollar cost of employee and retiree benefits and they are working to find the best solution.

The House Committee on Finance will hear the proposal next.

This week, the House passed a budget proposal dedicating at least $100 million a year to unfunded liabilities over the next two years.

But Gov. Neil Abercrombie has said the state would need to commit at least $500 million a year for 30 years in order to pay down the costs.



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