So What Will We Do Next for Maui Hospital Workers?
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So What Will We Do Next for Maui Hospital Workers?

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By Tom Yamachika, President

Many of us are familiar with the saga of the state-run hospitals in Maui County, including Maui Memorial Medical Center, Kula Hospital & Clinic, and Lanai Community Hospital.  Their operations have been losing vast quantities of money over an extended period of time, including more than $43 million in 2014.  Our lawmakers, with the support of the Maui mayor and county council, decided in 2015 that enough was enough.  Act 103 of 2015 allowed Maui Memorial’s operations to be privatized.

Kaiser Permanente was selected to run the facilities, and it signed an agreement to do so on Jan. 14, 2016.

The government employees’ union, of course, did not take this lying down.  It sued in federal court to stop the transition.  The U.S. District Court in Honolulu, however, ruled that the union had “no chance of success on the merits.”  It further ruled that the State was “merely complying with the reduction-in-force provisions contained in the Union’s collective bargaining agreements.”  The union didn’t stop with that decision, however, and it persuaded the U.S. Court of Appeals for the Ninth Circuit to block implementation of the law through September 30th, giving the court time to weigh in before then.

At the same time, the union was busy lobbying the Legislature for special consideration.  The Legislature responded by passing SB 2077, which authorizes employees of the three facilities who are facing position abolishment, reduction in force, or workforce restructuring to get either severance benefits up to half of the employee’s annual salary, or a special increased retirement benefit.  This bill is now on the Governor’s desk for consideration.

A veto may be possible because the Department of Budget and Finance “strongly opposes” the bill.  Why?  Several reasons were cited in the Department’s testimony:

  • It costs a lot of money (the Star-Advertiser reports that its estimated cost is $40 million or more).
  • The State has done reductions-in-force before and hasn’t offered those employees special retirement benefits or severance. Giving those benefits this time creates a precedent, and not a good one.
  • Enhancing any retirement benefit when the Employees’ Retirement System is already underfunded by billions of dollars is not good policy. In fact, HRS section 88-99, enacted in 2011, imposes a moratorium on benefit enhancements until the unfunded liabilities are eliminated.

What is it about this situation that is so special?  When our national economy turned sour in 2008, many of us in the private sector had to suffer pay cuts, reductions in paid hours, or outright layoffs.  Did we give out public money to those affected?  Just the opposite!  In 2009 our lawmakers passed multiple tax increases (income tax, tobacco tax, and transient accommodations tax, for example) to help keep the government afloat while the rest of us struggled to make ends meet.

We understand that the unions are looking out for their membership as they are supposed to do.  This, however, is not supposed to stop our elected leaders from taking into account the broader picture, meaning the needs of the general population.  Maui Memorial’s acting chief medical officer testified in 2015: “I do appreciate that some government employees will be negatively impacted under a public private partnership.  However, I also know some will be negatively impacted by service reductions.  We must put the patients before ourselves.  All patients of all ages will be negatively impacted by service cuts, so please support [privatization].”  These are points worth considering.

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4 Responses

  1. Tom Yamachika
    |

    Received this comment via email.

    My name is Kirk Yagi, my wife has worked at the hospital for over 27 years. I read your viewpoint in the Maui News and felt I needed to clarify a few things.

    1. Star Bulletin estimates SB2077 will cost the state $40 million or more. Won’t the state save $43 million in losses because they no longer need to help subsidize the hospital? The $40 million is probably for the severance incentive which is the one time payment employees may choose to exercise instead of taking the job of a less senior state employee. Reduction in force (RIT) is an unlikely occurrence due to the fact the only other jobs available for RIT are off island.

    2. The “increased retirement benefit” you mentioned is misleading. There is no increase in retirement benefit. If an employee qualifies for the retirement incentive, he or she may retire with their current years of service without penalty. These are only employees with over 25 years of service. No increase whatsoever. In fact, these employees will be retiring with less than what they would have been collecting if allowed to retire with their full retirement so there’s actually a decrease in their pension. Without SB2077 employees with that many years of service will lose their standing as state employees and the retirement they worked so hard for. In my wife’s case, with only 5 years till she is eligible to retire according to her collective bargaining agreement.

    3. Apparently you didn’t know or care to mention the state workers pay cut back in 2008. You wrote they didn’t feel the “pinch” like the rest of “us”. Hard to believe such an oversight would occur by someone like yourself so I assume you omitted it on purpose

    Privatization had to happen. The state was loosing too much money but if you could see how hard the employees at the hospital work you’d have a different viewpoint for sure. My wife has been a loyal employee never leaving even with the possible privatization hanging over her. Her goal in life was to reach 55 years of age and retire. The state took this away, possibly illegally judging by what happened in appeals court for the UPW. SB2077 deals with the negative impacts they face if left with nothing but privatization.

    Long time employees deserve more. It may happen in the private industry however if the same contract existed in the private industry between employee and employer, a lawsuit would be soon to follow. Thank you for your time.

    Sincerely,
    Kirk Yagi

  2. […] Previous commentary on this bill:  So What Will We Do Next for Maui Hospital Workers? […]

  3. […] and efforts were made at the Legislature to give those employees a special severance package.  We have written about this before.  The Governor vetoed the bill providing the severance benefits, SB 2077, and the Legislature […]

  4. […] As we have written before, our state-run hospitals in Maui County, including Maui Memorial Medical Center, Kula Hospital & Clinic, and Lanai Community Hospital, have been losing vast quantities of money over an extended period.  Act 103 of 2015 allowed Maui Memorial’s operations to be privatized.  The government employees’ union sued to block the transition, and simultaneously efforts were made at the Legislature to give those employees a special severance package.  The Governor vetoed the bill providing the severance benefits, SB 2077, citing concerns that the bill would disqualify the whole of our Employees’ Retirement System from tax-exempt status.  The Legislature overrode the veto, making the bill law immediately.  (Act 1, 2nd Special Session 2016.)  To prevent disaster, the ERS sued in First Circuit Court to block implementation of the law until it could obtain a letter ruling from the IRS to see if its concerns were well-founded, and the court granted a preliminary injunction to this effect in September 2016. […]

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