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Senate and House take different paths to funding state retirement benefits

By Associated Press

POSTED:
LAST UPDATED: 02:23 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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Publicbraddah wrote:
As long as the private sector doesn't have to "contribute" to this fund, I'm fine with it. Public sector does not contribute to my retirement.
on March 15,2013 | 12:58PM
hanabatadayz wrote:
everyone contributes to everyone's retirement in one form or another
on March 15,2013 | 07:56PM
AhiPoke wrote:
"..the state would need to commit at least $500 million a year for 30 years in order to pay down state retiree benefits." - Hello, we can't afford this. Why can't this legislature realize that and start working on alternatives. Private industry has all but eliminated defined benefit programs for more than ten years. Why are government employees so special that they deserve benefits that all other workers don't get?
on March 15,2013 | 01:30PM
MKN wrote:
@AhiPoke: It's because previous and current government employees paid into the system and it would have been fully paid for if the state government didn't "borrow" funds from it to balance the state budget in years past and made bad investments in the stockmarket when they didn't need to.
on March 15,2013 | 03:48PM
MKN wrote:
@AhiPoke: If you need a history of Hawaii's Employee Retirement System, here's a link to an excellent rundown of how it was abused by the State Government over the past two decades:

History of the State Employee Retirement System
on March 15,2013 | 03:54PM
Bumby wrote:
Change the rules of how the formulas work to save the system and not have more money to help fund a fat pension. Where does this money come from to shore up the retirement system? Is it from taxes? Hey all you government workers if they do not change the formulas this is what you do to get the most income during retirement. 1) If you are retiring in 3 years seek the highest payest position you can. 2) Work as much overtime you can for the last 3 years of your career. 3) All retirees make your lawmakers aware that there should not be any changes made on those already retired like a few states have done to help with the future funding liability.
on March 15,2013 | 01:31PM
Maneki_Neko wrote:
We need to take care of the existing unfunded liabilities before we can spend more money on all the Governors' pet projects like paid babysitting, Troll Towers, free laptops, raises for government union workers and added staff and new agencies like PLDC-LITE
on March 15,2013 | 02:20PM
yskeulb wrote:
Let's just create a state retirement system for everyone in Hawaii. If we are going to be unfunded, might as well include everybody, let's all be broke together.
on March 15,2013 | 03:03PM
IAmSane wrote:
Yes, and let's give it a fancy name like "Social Security."
on March 15,2013 | 08:55PM
hokumakakilo wrote:
The ERS WAS fully funded until it was raided by prior governors (Cayetano and prior) and legislators to balance the state budget. Lingle passed legislation banning this practice during her term, but the damage was already done. Workers contribute to the fund instead of FICA. Don't blame the workers, blame the politicians who raided the fund. They should repay the fund what was raided, PLUS the lost income the investments would have earned. That will fully fund the ERS again.
on March 15,2013 | 05:56PM
solo3808 wrote:
The state used the money to pay its debt now its time to restore the money by the state. You take you must return. Squid water and cayetano did this
on March 15,2013 | 06:19PM
HD36 wrote:
The social security approach: Call it a "Trust Fund" in name only; and put a I Owe You bonds inside. Any private company doing the same thing as the government however, would be convicted of Fraud.
on March 15,2013 | 08:04PM
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