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Senate and House take different paths to funding state retirement benefits

By Associated Press

LAST UPDATED: 2:23 p.m. HST, Mar 15, 2013

The Hawaii House labor committee passed a bill 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 today 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 has pointed out problems with both approaches.  

He told members of 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. 

Captive insurance companies help organizations manage risk.

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

Lawmakers in both chambers have said there is a critical need to resolve the multi-billion 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.

Earlier 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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