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HomeMy WebLinkAboutCOM 0140.019 2002-2004 Harry Kim M?y,4~ ~y s¢?,~`~~"'•Ki~ Michae[R. Ben, SPHR Director a/Persortru( r Rodney T. Kaufo ~ Deputy Direcm. of Personnel County of Hawaii Departtr~ent of Civif Service AuPuni Center • 101 Pauahi Sweet, Suite No. 2 ~ Hifo, Hawni `i ~ 96720-4224 - (808) 961-8361 • Fax (808) 961-8617 TDD (808) 961-8619 • e-maU~. whdcs@interPac.net ~ Jo65lnfonmtion: Job Hotline (808) 961-8618 - e-maU:johs@w.hnwaii.hi.us May 21, 2003 The Honorable James Arakaki, Chairman And Members, Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 Dear Chairman Arakaki and Members of the Hawaii County Council: Re: Bill 59 Establishing an Operating Budget for the County of Hawaii for the fiscal year July 1, 2003 to June 30, 2004 In fiscal year 1990-1991, the department of civil service implemented a flexible spending program (FSP) for our County employees. Our FSP allows employees to pay their portion of health fund premiums, and contribute to an unreimbursible medical expense and/or a dependent care expense account on a pre-tax basis. In other words, Employees pay taxes on their salaries after their salaries are reduced by their health fund premium amount and any contributions made into the unreimbursible medical expense and/or dependent care accounts. Likewise, the County pays its share of FICA taxes based on employees' salaries after the salaries are reduced by these premium amounts and contributions to the two accounts. As a result, the County has realized substantial savings in the amount of FICA taxes it has had to pay. In the past five fiscal years alone the County has saved approximately $753,933 in FICA payment because of our FSP, and for the current plan year, the County will have saved approximately $200,000 savings in its FICA payment. A requirement of the Internal Revenue Service for FSPs is a "use it or loose it" feature. Employees who contribute to the unreimbursible medical expense and/or dependent care expense accounts must spend all of the money they have contributed to these accounts. Any money that is not used at the end of the plan year is forfeited to the County. Prior to July 1, 1996, our third party administrator (TPA) was responsible for "banking" the monies contributed by our employees, and would, at the end o~fj/~ Q Comm. No. ' - I • Ref. To~~~r~° Ref. Date,________ The Honorable James Arakaki, Chairman And Members, Hawaii County Council May 21, 2003 Page 2 of 3 the plan year, turn over the forfeited amounts to the County. The amount forfeited up until that point in time was approximately $80,000. These monies went back into the general fund. Employees who forfeited monies literally paid monies back to the County. Beginning July 1, 1996, the County opened its own FSP bank account from which the FSP is administered. Our TPA is allowed to use this account to administer the FSP. At the end of the FY, there is no forfeiture check given to the County as all forfeited funds are already in the County's FSP bank account. It is these forfeited amounts with which we are proposing a scholarship program to assist employees in furthering their education or in attending specific classes or workshops that would increase their skills, knowledge, and abilities. In these instances, the scholarships would cover tuition fees and costs of books and supplies. In addition, we wish to use these funds to help finance employees seeking to earn their GED or high school diploma through relieving fiscal "restraints" for not being able to obtain their GED, or for actually delivering the necessary instruction to our employees. For example, if an employee has never pursued night school because the employee could not afford a baby sitter, we may pay the baby sitting costs. Or if we find that we need to have special classes for our employees, we would use these funds to help pay for any expense associated with these special classes. ' Having a scholarship program for our own employees is a resourceful way of improving the skills, knowledge and abilities of our employees without cost to the County. Since the funding comes from employee participants in our FSP, and not from the County general or special funds, we are in a win-win situation. Employees who forfeit monies in essence help other employees and themselves to further their education. The County reaps the benefit of having abetter- educated workforce. Just as fuel tax revenues go toward highway matters, tipping fees go toward solid waste matters, sewer fees go toward the Sewer Fund, golf course revenues go back to the golf course, so too should revenues generated from our employees' pockets go back to the employees in some useful way. Financial assistance to our employees who demonstrate the desire and drive to improve themselves is an excellent way to accomplish this. The Honorable James Arakaki, Chairman And Members, Hawaii County Council May 21, 2003 Page 3 of 3 I ask that you adopt the proposed budget incorporating the new account 5151.30 Employee Scholarships, with the $100,000 appropriation. Thank you. Sincerely, ~C Lac-C- ~ ~ J Michael R. Ben, SPHR Director of Personnel