Law ineffective at cutting
state costs, audit finds
State Auditor Marion Higa has said a 4-year-old law "intended to tame an unduly cumbersome civil service system" has been ineffective in using severance or retirement incentives to downsize or restructure the state bureaucracy.
The state has failed to properly implement, administer and monitor the separation incentives law, resulting in inconsistent programs and misuse, Higa said in a report released recently.
"The separation incentives law has done little to reduce the overall size and cost of government," Higa said.
The departments of Human Resources Development and Budget & Finance disagreed with Higa's basic findings and said they are making a good-faith effort to use the program.
Budget Director Georgina Kawamura noted that the law only authorized the executive branch to offer separation incentives as a management tool with no legal requirement that a statewide program be established.
The 2000 Legislature established the law after efforts in 1994 and 1995 to reduce the state work force during tight financial times proved ineffective because of the civil service laws.
It resulted in higher-paid senior civil servants whose jobs were eliminated, bumping less senior, lower-paid employees yet retaining their higher salaries.
It also saw "a kind of gamesmanship that led to talented employees in critical areas voluntarily separating from state service only to be rehired on temporary appointments," Higa said.
The 2000 law authorized separation incentives for employees in state positions being eliminated, patterned after the federal government's success carrying out staff reductions. It also called for Higa to study the state's effort and report the results 20 days before the start of the 2004 Legislature, which convened Jan. 21.
Under the law, if an employee agrees to leave a position being eliminated, he or she qualifies for a lump-sum cash bonus equal to 5 percent of his or her base salary for every year worked, up to 10 years and not exceeding 50 percent of the base salary.
Early-retirement incentives vary, based on age and length of employment.
To date, the relatively "insignificant" incentives have resulted in only 88 jobs eliminated and $2 million saved annually out of a 38,000-person work force and $2 billion in executive branch salaries, she said.
"Unless the administration or the Legislature directs or encourages more widespread use of the separation incentives program, low participation will persist and the program will remain underutilized," Higa said.
She recommended guidelines for the programs, forfeiture of benefits for any employee returning to state employment and monitoring work force restructuring to make sure the jobs and their funding are eliminated.
As an example of the problems, Higa cited a Hawaii Health Systems Corp. employee who took the special incentive retirement benefit on Sept. 30, 2002, and then on Jan. 13, 2003, took a part-time job at the University of Hawaii, earning $4,500 through May 31.
Meanwhile, that employee collected about $7,000 in the special retirement benefit covering the period from Jan. 13, 2003, until Sept. 30.
That money has since been recovered from the employee, according to Higa's report.
