HOUSE OF REPRESENTATIVES H.B. NO. 2240 THIRTY-FIRST LEGISLATURE, 2022 H.D. 1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO OTHER POST-EMPLOYMENT BENEFITS. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
HOUSE OF REPRESENTATIVES H.B. NO. 2240
THIRTY-FIRST LEGISLATURE, 2022 H.D. 1
STATE OF HAWAII
HOUSE OF REPRESENTATIVES
H.B. NO.
2240
THIRTY-FIRST LEGISLATURE, 2022
H.D. 1
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO OTHER POST-EMPLOYMENT BENEFITS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The director of finance is authorized to issue general obligation bonds in the sum of $ or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2022-2023 to pay or prepay the State's other post-employment benefits liability; provided that: (1) The appropriation made for this transaction as authorized by this section shall not lapse at the end of the fiscal year for which the appropriation is made; (2) All moneys from the appropriation unencumbered as of June 30, 2024, shall lapse as of that date; (3) The general obligation bonds authorized by this section shall be issued in the sole discretion of the director of finance; provided that: (A) To determine the annual required contribution, a preliminary annual required contribution shall be developed that treats the outstanding bond balance as part of the plan's unfunded actuarial accrued liability. The net cash contribution required to be contributed to the plan shall equal the preliminary annual required contribution minus the bond repayment for the respective year; (B) Entities shall only be permitted to issue general obligation bonds if the all-in true interest cost of the bonds is at least three hundred basis points less than the assumed rate of return of the system the proceeds will be contributed to; (C) General obligation bonds shall not be issued as a means for addressing budget shortfalls related to contributions required by law; and (D) General obligation bonds may only be issued as a means to produce long-term savings. SECTION 2. Section 87A-42, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows: "(f) For the purposes of this section, "annual required contribution" means a public employer's required contribution to the trust fund established in this section that is sufficient to cover: (1) The normal cost, which is the cost of other post-employment benefits attributable to the current year of service; and (2) An amortization payment, which is a catch-up payment for past service costs to fund the unfunded actuarial accrued liability over the next thirty years. If the State issues general obligation bonds to pay or prepay the State's unfunded actuarial accrued liability and contributes the proceeds to the trust fund, the outstanding balance of the general obligation bonds shall be considered part of the State's unfunded actuarial accrued liability for purposes of the determination of the preliminary annual required contribution. The annual required contribution would be the preliminary annual required contribution less the related general obligation bond repayment." SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 4. This Act shall take effect on December 25, 2040; provided that section 2 of this Act shall take effect on July 1, 2023.
SECTION 1. The director of finance is authorized to issue general obligation bonds in the sum of $ or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2022-2023 to pay or prepay the State's other post-employment benefits liability; provided that:
(1) The appropriation made for this transaction as authorized by this section shall not lapse at the end of the fiscal year for which the appropriation is made;
(2) All moneys from the appropriation unencumbered as of June 30, 2024, shall lapse as of that date;
(3) The general obligation bonds authorized by this section shall be issued in the sole discretion of the director of finance; provided that:
(A) To determine the annual required contribution, a preliminary annual required contribution shall be developed that treats the outstanding bond balance as part of the plan's unfunded actuarial accrued liability. The net cash contribution required to be contributed to the plan shall equal the preliminary annual required contribution minus the bond repayment for the respective year;
(B) Entities shall only be permitted to issue general obligation bonds if the all-in true interest cost of the bonds is at least three hundred basis points less than the assumed rate of return of the system the proceeds will be contributed to;
(C) General obligation bonds shall not be issued as a means for addressing budget shortfalls related to contributions required by law; and
(D) General obligation bonds may only be issued as a means to produce long-term savings.
SECTION 2. Section 87A-42, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:
"(f) For the purposes of this section, "annual required contribution" means a public employer's required contribution to the trust fund established in this section that is sufficient to cover:
(1) The normal cost, which is the cost of other post-employment benefits attributable to the current year of service; and
(2) An amortization payment, which is a catch-up payment for past service costs to fund the unfunded actuarial accrued liability over the next thirty years. If the State issues general obligation bonds to pay or prepay the State's unfunded actuarial accrued liability and contributes the proceeds to the trust fund, the outstanding balance of the general obligation bonds shall be considered part of the State's unfunded actuarial accrued liability for purposes of the determination of the preliminary annual required contribution. The annual required contribution would be the preliminary annual required contribution less the related general obligation bond repayment."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on December 25, 2040; provided that section 2 of this Act shall take effect on July 1, 2023.
Report Title: GO Bonds; Other Post-employment Benefits Liability Description: Authorizes general obligation bonds for the payment or prepayment of other post-employment benefits liability. Beginning 07/01/2023, requires that other post-employment benefits bond debt be considered in the calculation of the annual required contribution. Effective 12/25/2040. (HD1) The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
Report Title:
GO Bonds; Other Post-employment Benefits Liability
Description:
Authorizes general obligation bonds for the payment or prepayment of other post-employment benefits liability. Beginning 07/01/2023, requires that other post-employment benefits bond debt be considered in the calculation of the annual required contribution. Effective 12/25/2040. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.