A plan to reimburse Honolulu Police Department officers for the cost of purchasing uniforms, extra firearms and other on-the-job policing equipment is under scrutiny.
Based on a proposed third-party contract via California-based CP Plus Inc., the so-called accountable reimbursement plan would see HPD establish a pretax spending account that officers could contribute to from their paycheck each pay period.
The withheld pay would be placed in a spending account and, upon making qualified purchases, HPD officers could then be reimbursed for the cost to pay for job-related expenses. Such costs are currently not reimbursed at HPD.
But the city administration has rejected the idea, saying the information provided by CP Plus is too vague and that implementing the program could pose financial risk to the city and its employees.
Still, Council members Matt Weyer and Andria Tupola tout the program.
And according to their co-sponsored Resolution 197 introduced in July, such a plan could “attract and retain employees” to HPD, which currently has over 400 staff vacancies.
“If the CP Plus Program or a similar accountable reimbursement plan is implemented, items such as union dues, continuing education, and the administration fee for enrolling in the program could be considered qualifying purchases,” the resolution states.
The resolution notes that the State of Hawaii Organization of Police Officers, or SHOPO, has supported this program for the past five years.
“Essentially, Resolution 197 is a pretax program similar to the pretax health care program currently available to county workers,” Weyer said Tuesday during the Council’s Committee on Budget meeting. “The main difference between this fund and the pretax health fund is that a pretax fund for HPD does not need to be expended by the end of the year. And instead, any remaining moneys in the fund would roll over to next year.”
Meanwhile, city Budget and Fiscal Services Director Andy Kawano objected.
He noted that CP Plus “would provide third-party administrative services in this accountable reimbursement plan for participating HPD officers, SHOPO members, and have the city, through BFS (and) its payroll section, deduct from the participant’s paycheck on a pretax basis … from the participant’s expended account.”
He added, “When a participant incurs unreimbursed business-related expenses, he/she will submit the receipts to CP Plus, and CP Plus, in turn, will reimburse the participant from the participant’s spending account.”
Kawano said, however, the plan offered by CP Plus was ambiguous.
“For over a year, BFS, the Department of Human Resources, HPD and the Department of the Corporation Counsel have reviewed proposals and have had multiple meetings with representatives of CP Plus and SHOPO,” he said. “Despite repeated requests for a demonstration of the product, CP Plus has not been able to show the city how the application works.”
He said “based on months of review and analysis, BFS, HPD, DHR and COR agree that the city should not participate in the program based on current information received and note the following questions and concerns.”
And as he understood it, Kawano said the city, not CP Plus, would run this program.
“In the description provided, CP Plus indicates that the city—BFS and HPD payroll teams—would be administering the plan from the standpoint of having to include withholding plan deductions, set up a spending account for each employee and then process reimbursements to the employees,” he added.
“These proposed tasks will require that BFS and HPD payroll conduct additional accounting, tracking, monitoring and reconciling every payroll cycle, ” he said. “Unlike the city’s existing flexible spending plan … to pay for eligible health care and dependent child care expenses, all of which must be paid out during the plan year or lose it … in comparison, based on information provided, the CP Plus spending account arrangement does not appear to have a forfeiture, use-it-or-lose-it requirement.”
He said this could result in “unused and excess amounts” and might require that the city “make appropriate state and federal withholdings.” And he said the city and its employees could incur “penalties and interest costs” for not making “appropriate withholdings.”
He said CP Plus did not provide information on whether it would “defend or indemnify ”—compensate for harm or loss—the city or HPD “for any adverse tax consequences that may be incurred.”
Moreover, Kawano stressed that many HPD officers already receive similar compensations under existing SHOPO collective bargaining agreements, including an annual $1, 000 firearm maintenance allowance.
Peter Luke, appearing as a CP Plus representative, said the city did not provide accurate information about the reimbursement program.
“We are talking about the police officers’ own money; we’re talking about trying to have them keep more money in their own pockets,” Luke said at the meeting. “With all due respect to Mr. Kawano, I think there are a lot of points that have been missed.”
Jonathan Frye, an HPD detective and SHOPO’s Honolulu chapter chair, said his union supports the “tax-savings work expense program.”
“SHOPO has already entered into a contract with CP Plus, the plan administrator for the program, ” he said. “It is a program that not only supports our officers financially, but also acknowledges the out-of-pocket expenses that often occur in the line of duty.”
However, “this implementation of the program is contingent on the integration into the city payroll system,” Frye said.
But Council Vice Chair Esther Kia ‘aina also objected to this plan.
“I have a lot of concerns just looking at it, ” she added. “Its applicability to one department versus others, and the creation of a system … because it’s kind of complicated.”
John Waihee, the state’s former governor, testified on behalf of the program and its vendor.
“I actually worked with CP Plus with the state to answer most of the concerns that were brought up by the budget department this morning,” he said, adding that the program was “adopted during the pandemic as a way to reduce costs for the employer and increase take-home pay.”
He noted CP Plus’ service is done “individual by individual.”
“The second thing is that the total amount of reimbursement is cleared by the employer, so we don’t just accept automatically that these are the things that need to be reimbursed,” he said.
Waihee added that the system is in various state agencies, including the state Department of Accounting and General Services.
Ultimately, the five-member budget panel voted—with Kia ‘aina dissenting—to advance Resolution 197 to the full Council for review.
Tupola, who has previously stated in written conflict-of-interest disclosures that her husband is employed as an HPD officer, was not present for that meeting item.
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