State Auditor Facing a Whack Job?
 
The House Speaker’s office recently released an unflattering report on the State Auditor. It faulted the Auditor’s Office for appointing executives without proper experience and said the move contributed to “delays and untimely reports,” and other actions that were “not in complete compliance” with the provisions of the Hawai’i Constitution governing that office. 

The House Speaker created the three-person working group that produced the report in a January 14, 2021, memo saying, “As you know, limited resources make it problematic for the State Auditor to address all outstanding issues and matters. Therefore, the findings of this group will assist the State Auditor in prioritizing its work and the scope of its work.”

But the findings of the working group didn’t seem to address prioritization and scope of work. Part of the report recounted interviews of disgruntled former employees, however, and apparently was calculated to give the impression that the current state auditor was personally argumentative and combative, was creating a toxic work environment, and was responsible for a sky-high personnel turnover rate.  Another part of the report gives the impression that the Auditor was less interested in finding out the truth and complying with generally accepted government accounting standards than he was interested in sensationalism, using his reports to create public spectacles.

Another part of the report spends lots of time reviewing the Auditor’s recent actions involving the Office of Hawaiian Affairs (OHA).  After some recent and less than rosy revelations about OHA’s internal workings, the Legislature’s 2019 budget made $3 million of state funding contingent upon the State Auditor completing a “financial and management audit” of OHA. When the Auditor’s staff began field work, they requested access to minutes of trustee meetings containing the details of legal advice sought and received by the trustees in those meetings. OHA said that these parts of the minutes were protected by attorney-client privilege. The Auditor replied by saying he couldn’t finish his report without them and stopped work. That put the brakes on the $3 million, and understandably generated some hard feelings. The report then slams the Auditor for not being impartial, for violating various auditing standards, and failing to comply with the law calling for the report.   (Some of these criticisms are very much debatable.)

The conclusion and recommendation section of the report then fault the Auditor for being non-productive for various reasons including those outlined above, and recommended that the Legislature should require the State Auditor to have at least five years of governmental audit experience (which the incumbent apparently lacks), that the same should be required of the office’s executive level managers and leaders, that the Legislature should take steps to “preclude the State Auditor from diverting from the specific issue and concerns of the Legislature,” that the Legislature should require the Auditor to terminate its litigation with OHA, and more.

It’s hard to see how these findings and recommendations lead to better prioritization and scope of work.  Rather, the report looks more like a “whack job” — a collection of facts and arguments to justify someone’s dismissal or discharge from their position.  Apparently, the Auditor did something to get under the Speaker’s skin, and it’s time to exact retribution.  Our state constitution provides that the Auditor may be fired for cause by a two-thirds vote of the members of the House and Senate in joint session.  Are these findings enough?  Will they be sufficient to persuade the Senate to go along?

Over the years, I haven’t agreed with everything the Auditor has said and done.  Far from it.  But at least his office’s work has led to the discovery and exposure of many facts that the public needed to know and had a right to know.  It’s understandable that those exposures would lead some to press legislative leadership to deliver a whack job.  We would hope that cooler heads ultimately prevail, and that any decision on the State Auditor is made after due consideration of his service to the people of Hawaii.

Bride of Frankenbill!
 
We wrote last week about House Bill 58, a “Frankenbill” made from bits and pieces of other bills.  By putting those pieces into a bill that is still alive at the Legislature, those pieces are given new life.

It turns out that our lawmakers are not stopping at just one Frankenbill.  Let’s look at House Bill 468.
This bill is called “Relating to the Hawaii Employer-Union Health Benefits Trust Fund.”  In its present form (House Draft 1), it would take away Medicare Part B reimbursement for employee spouses for employees hired on or after July 1, 2021.  At least one of the public worker unions testified against it.  So, although it passed the House, the bill languished in the Senate.

At the same time, an Administration bill from the Department of Budget and Finance, Senate Bill 1087 / House Bill 933, would have suspended existing laws calling for annual required contributions to the Employer-Union Trust Fund for fiscal years 2024 and 2025.  House Bill 933 received no hearing in the House and died relatively early in the session.  The Senate bill sailed through the Senate and crossed over to the House, where it received no hearing and died.

Now, the Senate has published a proposed Senate Draft 1 of House Bill 468 that looks a whole lot like Senate Bill 1087 without any of the material that House Bill 468 used to have.  By the time this article goes to press, the Senate Committees on Labor, Culture and the Arts and Ways and Means would have heard the bill and made the switcheroo.

Some of you may have heard the term “gut and replace.”  That term is used to describe how a bill’s contents are entirely replaced with material bearing little if any resemblance to what the bill used to say.  It is one form of Frankenbill, and that is indeed what we have here.

Why is this bill so critical?  Imagine what would happen if you had a mortgage and then stopped making payments on it for a couple of years.  When you finally got around to making payments again, the debt would still be there and the interest would have racked up.  Paying off the mortgage would probably take quite a bit longer than the two years that were deferred.  If, for example, you had a $500,000 mortgage at a 30-year fixed rate of 4%, you would be making principal and interest payments of $2,387.  If you stopped making payments after year 5 and took a break for 2 years, your balance due would grow from $451,000 to $487,000, after which you would need 340 more monthly payments at the same amount, or 28-1/3 years, to pay off the loan. That would mean you would have to make 3 years and 3 months of extra monthly payments.

What is EUTF?  The State of Hawaii has promised to provide health benefits to its long-time employees for the rest of their lives.  EUTF is a fund set up to fulfill that promise.  According to the most recent actuarial report from EUTF’s website, the present value of the benefits the State has promised to its eligible retirees exceeds the expected value of the plan’s assets by $11.5 billion.  The $11.5 billion is like a debt that the State and its taxpayers must pay. 
The Medicare Part B benefits, which House Bill 468 addressed before being turned into Bride of Frankenbill, accounted for $3.23 billion out of the $15.4 billion in actuarial accrued liability.

Lawmakers, we ask again – what can we afford to do, or not do?

Happy Spring!
 
Join us on ZOOM 9:00AM - 11:00AM Thursday April 15, 2021 to learn more about Respirators, Masks and Fit Testing for your office, business, restaurant, classroom and outdoor surroundings from our Lahaina-Based Safety Expert Dr. Dennis Terpin.
 
Students, Government Officials, Healthcare Providers, Private and Public Schools, the Hospitality Industry and Construction & Trades should understand designating a Respiratory Program Administrator to maintain SOP's for the safety of employees, customers and guests.
 
Please share with others who may have an interest as our community, state, nation and world eventually opens to wider commerce and travel.
 
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