Speaker Say: Reflections on the Session

Thank you for the opportunity to submit this commentary about the Regular Session of 2011.

My discussion focuses on the difficult decisions made by the Legislature to balance the state budget. I attempt to explain and defend the actions of the Legislature, particularly the House of Representatives.

Comprehensive Public Employees' Retirement System Reform

Before proceeding with the main substance, I would like to offer my prediction of what will ultimately be deemed the most important measure passed by the 2011 Legislature. This measure received relatively little publicity or media coverage during the session. Consequently, my emphasis on it may be surprising, a departure from conventional commentaries that trumpet more tangible, publicly appealing, and media friendly accomplishments. Yet, this measure in my estimation represents a significant pivot point in the future of Hawaii.

House Bill No. 1038 comprehensively reforms the public employees' retirement system benefit, contribution, and service provisions for public employees hired after June 30, 2012. HB 1038 has immediate beneficial impacts, resulting in cost savings to public employers of $54 million in fiscal year 2011-12 and $92 million in fiscal year 2012-13. More importantly, HB 1038 is intended to limit future increases of public employer contributions for the system and prevent such contributions from assuming greater and greater portions of the State's and counties' operating budgets. Because of the bill, Hawaii should be able to avoid public employee pension crises such as those currently experienced by California and other states. Future taxpayers will gain the most benefit from HB 1038, a far reaching piece of legislation.

The most credit for passage of HB 1038 should go to the Employees' Retirement System Board of Trustees and Executive Director, who initiated the measure, and Governor Abercrombie who fully supported it.

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