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<br /> Harry Kim M?y,4~ ~y <br /> s¢?,~`~~"'•Ki~ Michae[R. Ben, SPHR <br /> Director a/Persortru( <br /> r <br /> Rodney T. Kaufo <br /> ~ Deputy Direcm. of Personnel <br /> County of Hawaii <br /> Departtr~ent of Civif Service <br /> AuPuni Center • 101 Pauahi Sweet, Suite No. 2 ~ Hifo, Hawni `i ~ 96720-4224 - (808) 961-8361 • Fax (808) 961-8617 <br /> TDD (808) 961-8619 • e-maU~. whdcs@interPac.net ~ Jo65lnfonmtion: Job Hotline (808) 961-8618 - e-maU:johs@w.hnwaii.hi.us <br /> May 21, 2003 <br /> The Honorable James Arakaki, Chairman <br /> And Members, <br /> Hawaii County Council <br /> 25 Aupuni Street <br /> Hilo, Hawaii 96720 <br /> Dear Chairman Arakaki and Members of the Hawaii County Council: <br /> Re: Bill 59 Establishing an Operating Budget for the County of Hawaii for <br /> the fiscal year July 1, 2003 to June 30, 2004 <br /> In fiscal year 1990-1991, the department of civil service implemented a flexible <br /> spending program (FSP) for our County employees. Our FSP allows employees to <br /> pay their portion of health fund premiums, and contribute to an unreimbursible <br /> medical expense and/or a dependent care expense account on a pre-tax <br /> basis. In other words, Employees pay taxes on their salaries after their salaries are <br /> reduced by their health fund premium amount and any contributions made into <br /> the unreimbursible medical expense and/or dependent care accounts. <br /> Likewise, the County pays its share of FICA taxes based on employees' salaries <br /> after the salaries are reduced by these premium amounts and contributions to <br /> the two accounts. As a result, the County has realized substantial savings in the <br /> amount of FICA taxes it has had to pay. In the past five fiscal years alone the <br /> County has saved approximately $753,933 in FICA payment because of our FSP, <br /> and for the current plan year, the County will have saved approximately <br /> $200,000 savings in its FICA payment. <br /> A requirement of the Internal Revenue Service for FSPs is a "use it or loose it" <br /> feature. Employees who contribute to the unreimbursible medical expense <br /> and/or dependent care expense accounts must spend all of the money they <br /> have contributed to these accounts. Any money that is not used at the end of <br /> the plan year is forfeited to the County. <br /> Prior to July 1, 1996, our third party administrator (TPA) was responsible for <br /> "banking" the monies contributed by our employees, and would, at the end o~fj/~ Q <br /> Comm. No. ' - I • <br /> Ref. To~~~r~° <br /> Ref. Date,________ <br /> <br />