UPDATED 7/9/2016: The Hawaii Legislature may convene a special session next week. The goal: Save a bill intended to help public employees at three Maui hospitals. Those employees risk losing their jobs in the privatization of those hospitals.

Gov. David Ige identified Senate Bill 2077 as one of nine measures he may veto by the Tuesday deadline.

That bill calls for providing $40 million to hospital employees, with the option of receiving either severance benefits or a special retirement benefit in lieu of exercising any reduction-in-force rights.

It also would add hundreds of millions of dollars to the state’s unfunded liability for pensions and benefits.

Maui Memorial Medical Center is one of three state-controlled hospitals expected to be privatized.
Maui Memorial Medical Center is one of three state-controlled hospitals expected to be privatized. Chad Blair/Civil Beat

If signed into law, it would apply to 1,400 unionized workers at the Hawaii Health Systems Corporation‘s Maui Region hospitals: Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital.

Supporters of SB 2077 say it is intended to help workers who face excessive economic hardship due to the privatization of the hospitals and hand-over to Kaiser Permanente.

But Ige said last month that he’s concerned the measure is “too generous,” that it could impact the transition of the hospitals from public to private and that it could set a bad precedent. 

The bill, however, is a high priority for House Speaker Joe Souki of Maui and top unions.

Lawmakers have been told to be on standby for a possible session Tuesday to consider a floor amendment to the bill. A vote could then come Thursday.

Civil Beat spoke to several members of the state House and Senate who were granted anonymity so they could speak of the possible special session. (Civil Beat’s anonymous source policy calls for only granting anonymity when editors believe there’s no alternative and the public benefit outweighs the potential downsides.)

While details are still being worked out, the idea is to amend SB 2077 in a way that might help resolve a lawsuit between the United Public Workers and the state. The UPW, which represents some of the hospital workers, wants to stop the privatization.

Governor David Ige announces veto list on deadline1. 27 june 2016
Gov. David Ige announced his intent-to-veto list June 27. Cory Lum/Civil Beat

In February, a U.S. District Court judge in Honolulu ruled in favor of the state, but the UPW appealed to the 9th U.S. Circuit Court of Appeals.

In June, the higher court authorized the Kaiser transition to continue.

As recently as June 30, settlement negotiations between the state and the union were described by Hawaii Attorney General Doug Chin as “productive conversations regarding a possible resolution.”

The parties have asked the 9th Circuit to require a further joint status report July 15 — next Friday.

‘Sweetheart Deal?’

SB 2077 passed both chambers unanimously, but some critics have called it a “sweetheart deal.”

Not so, said Randy Perreira, executive director of the Hawaii Government Employees Association, the largest union in the state and a strong supporter of the legislation.

In a guest editorial for the Honolulu Star-Advertiser, on Friday, he argued that the state is “is intent on breaching its bargaining unit contracts.”

“With SB 2077, the union sought to make sure the state remedied breaking the legally bound agreements,” he said.

Perreira said the formula for the payouts comes from civil-service reform legislation passed in 2000.

Update: As for unfunded liabilities, Perreira said Saturday:

The $212 million increase to the unfunded liability is due to taking out approximately 1,500 hundred contributors to the Employees’ Retirement System and not replacing them. The projected cost to the unfunded liability to allow the approximately 180 employees eligible for “early” retirement under 2077 was quoted at $12.4 million — which would be recovered over a period of time via increased contributions by all employers  including the counties.

In addition to the $12 million, the Employer-Union Health Benefits Trust Fund says that allowing early retirement will increase the unfunded liability for the medical plan by $18 million — undoubtedly to accommodate the fact that we will be paying their medical benefits over a longer period of retirement. That cost will also be recovered via employer and employee contributions — however, in a medical plan facing a $14 billion shortfall over time, $18 million is a needle in a haystack.

It does not appear that lawmakers will consider overriding vetoes or amending other measures next week.

They include House Bill 1850 — the so-called Airbnb bill — that would allow vacation-rental companies to collect taxes on behalf of the state. Ige has warned of “unintended consequences” of HB 1850.

 A call to the governor’s office Friday for comment on the possible special session was not immediately returned.

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