STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE
Aina Haina Public Library, Meeting Room
5246 Kalanianaole Highway
Honolulu, Hawaii 96821
Tuesday, May 17, 2016
Grant Chun, Chairperson
Brian De Lima, Vice Chairperson
Margaret Cox, ex officio
Patricia Halagao, ex officio
Jim Williams, ex officio
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Fiscal Services
Dann Carlson, Assistant Superintendent, School Facilities and Support Services
Kenneth Masden, Public Works Manager, School Facilities and Support Services
Alison Kunishige, Board Executive Director
Kenyon Tam, Board Analyst
I. Call to Order
The Finance and Infrastructure Committee (“Committee”) meeting was called to order by Committee Chairperson Grant Chun at 12:02 p.m.
II. Public Testimony on Finance and Infrastructure Committee Agenda Items
Committee Chairperson Chun called for public testimony. The following people provided oral testimony.
|Charles Mizumoto||House of Representatives||IV. D. Need and potential locations for a high school in East Kapolei|
Written testimony was received and provided to the Committee. The following is a listing of the people that submitted written testimony before the testimony deadline.
|Tyler Dos Santos-Tam||Hawaii Construction Alliance ||IV. D. Need and potential locations for a high school in East Kapolei|
|State Representative Matthew S. Lopresti||House of Representatives ||IV. D. Need and potential locations for a high school in East Kapolei|
Charles Mizumoto testified on behalf of State Representative Matthew LoPresti and asked the Committee to review the Representative’s written testimony.
III. Approval of Meeting Minutes of April 19, 2016
ACTION: Motion to approve the Finance and Infrastructure minutes of April 19, 2016 (Horner/Mizumoto). The motion carried unanimously with all members present voting aye.
IV. Discussion Items
A. Update on Department of Education fiscal reports as of March 31, 2016 (Comparison to budget, school food service, student transportation, utilities, Impact Aid receipts, and CIP)
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services, stated that the Department of Education (“Department”) provided the Committee with a standard quarterly report. The first document shows general funds as of March 31, 2016. The report compares three quarters of fiscal year 2015 and 2016. Assessment provisions need to be paid, and the Department plans to do so in the fourth quarter.
Committee Vice Chairperson Brian De Lima mentioned EDN 150 and asked if the Department has dealt with the special education funds. Kunz stated that she had been working with Suzanne Mulcahy, Assistant Superintendent, Office of Curriculum, Instruction and Student Support, to disseminate money to schools for support. Committee Vice Chairperson De Lima asked for a follow-up report.
Committee Member Amy Asselbaye entered at 12:06 p.m.
Committee Vice Chairperson De Lima asked for elaboration on EDN 400. Kunz stated that the majority is food service, transportation, and maintenance. Kunz stated that the Department has most likely encumbered the funds required for the annual contracts but only three-quarter of the allocation appeared on the report. Committee Vice Chairperson De Lima stated that the Department should follow-up with the Committee Chairperson.
Committee Member Lance Mizumoto asked for the rationale behind providing an explanation of variances over 10% while not providing an explanation for variances under 10%. Kunz replied that the Department is looking for larger items, and 10% is a number that she had individually decided on. Committee Member Mizumoto asked for elaboration on EDN 200 payments. Kunz replied that assessment bills need to be paid. The allocation had happened but the payment has not yet been made. Assessment payments would be a portion of the testing budget. The school transformation funding is to help focus on priority schools, and there is an additional portion of funds for National Board Certified Teachers.
Committee Member Horner asked for a projection on bus expenditures. Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services, replied that there is a 2% escalation projected in most contracts over the next two years. Kunz stated that the Department expects to be on budget at around $65 million. There is about $15 million left to pay for the quarter.
Committee Member Horner asked if the data showing a $10 million reduction of the transportation budget and food service increase of $4.5 million from 2012-2016 is correct. Kunz confirmed the data is correct. Committee Member Horner stated that the expenditures look flat. Kunz stated that when the Department puts allotments in school food service, it takes on characteristics of federal funds. The Department attempts to assign staff to different areas to avoid moving expenditures around. Committee Member Horner mentioned that the bus expenditure had been out of control before, and asked if the Department improved the situation. Carlson stated that contracting for Kauai and Maui still needs to be done. There is a possibility of a slight increase with the new contracts, but the Department is now on track with its bus expenditures.
Committee Member Mizumoto asked what would happen to the cash reserves in School Food Services of $13.7 million. Kunz explained that three-quarters of the funding would be used for food service. The Department still has the months of April and May to account for, along with the cost of summer payroll and kitchen duties. Kunz stated that the funds are monitored, and the Department still has two months of collection for special fund revenues, along with more reimbursements. Kunz stated that the Department will know the operating cash balance by the June 30, 2016 report.
Kunz presented the relatively new utilities report. Kunz explained that the document provides information on the appropriation of funding with restricted and encumbered amounts and is broken down by utility and vendor. It also shows a breakdown of costs by month, and Kunz explained that the usage numbers are higher due to the hot weather in the beginning of the school year. The report shows a breakdown of cost per kilowatt hour, which is low due to low oil prices. The low expenditures allow the Department to manage the current restriction imposed, but it will continue to be monitored.
Committee Member Horner mentioned the kilowatt usage is due to additional air conditioning in schools. Kunz stated that the usage had gone up due to the timing of incoming bills and payment deadlines. Committee Member Horner stated that the Committee needs to understand the how additional air conditioning will affect costs. Committee Member Horner asked for the delta numbers, and Kunz stated that she could provide that information at a later time. Kunz added that the kilowatt usage is also driven by other factors, such as increased use of technology in the classrooms.
Committee Member Horner asked if the Department has considered retrofitting. Carlson stated that there are a few examples, such as LED lighting, to decrease usage by 20-25% and split air conditioning units for schools with less electrical capacity.
Kunz reviewed the Impact Aid report and stated that the Department has received the bulk payment for fiscal year 2016 and two, smaller prior year payments. Kunz has no concerns, but the Department will continue to monitor the area.
Ex Officio Committee Member Jim Williams asked how the charter schools’ share of the Impact Aid funds is distributed. Kunz stated that the funding comes through the Department, and charter schools are given an amount based on student enrollment. Ex Officio Committee Member Williams asked where the funds are sent for distribution to the charter schools. Kunz replied that Impact Aid funds are sent to the State Public Charter School Commission for distribution.
Committee Vice Chairperson De Lima stated that the appropriation ceiling is $55 million and asked if Impact Aid funds are earmarked to meet substitute teacher requirements. Kunz replied that the 2015 fiscal year receipts were used for required expenditures in fiscal year 2016. Committee Vice Chairperson De Lima suggested adjusting the appropriation ceiling for the following year. Kunz replied that there has been a request for an $8 million reduction in the budget. Committee Vice Chairperson De Lima acknowledged that the ceiling has been reduced but suggested a further decrease to $40 million with the concern that more funding is being used than received. Kunz stated that the Department could not spend more than the ceiling.
Kunz briefly reviewed the facilities report.
B. Update on the Department of Education’s heat abatement program: progress since April 19, 2016
Carlson stated that extensive progress has been made since the previous update. Carlson shared that Senate Bill 3126 passed and was signed into law on May 5, 2016, and projects have been put out for bid. Of the $100 million of general funds allocated for heat abatement, the Department currently has $45 million, to be followed by the remaining $55 million in the future. Carlson stated that phase one and two of the Department’s execution plan had been completed before the Department was provided funding. The Department is now in phase three, the design phase, and working with current funding. The Department is going through a series of rounds to provide the easier solution to as many schools as possible. The Department bids would provide the first 33 schools with photovoltaic air conditioning to avoid an increase in electrical usage. Projects for Campbell High and Ilima Intermediate are out for bid. Campbell High currently has 45 classrooms that are in need of air conditioning. Carlson stated that the Department is making progress but does not want to flood the market with bids all at one time. The Department will provide 130 classrooms with air conditioning first. After 960 classrooms have been covered, the Department will determine which schools to tackle next. Carlson stated that the two step bidding process is currently taking place. Carlson explained that the process allows the Department to pre-qualify contractors and limit the amount of bids to deal with. There was speculation that the Department was not spreading the word, so the Department extended the window for application for contractors to pre-qualify. Because construction will take place during the school year, the Department would like to work with companies that have good safety records and have been in business for at least five years. The pre-qualifying window had closed with 19 companies qualified. However, the Department is considering reopening the window to allow more contractors on board. The Department has been working on phases five through seven concurrently and will reach 1,000 cooled classrooms around the month of January or February. Carlson stated that the $100 million is for 1,000 cooled classrooms, but also will include additional heat abatement and energy efficiencies. The Department anticipates many more classrooms need cooling. Carlson stated that the main priority is to provide as many classrooms with air conditioning as possible. There is an additional legislative bill approved with many reporting requirements that use efficiency to avoid an increase in net usage.
Following up on information that had been requested at a previous meeting regarding Campbell High School and the surrounding complex area. Carlson clarified that Campbell High School has 149 classrooms, with 105 still needing to be cooled in some way. The entire complex area has 573 classrooms, of which 342 already have air conditioning. Carlson stated that the summer season would heat up again, so the Department had been discussing how to operate in the most effective way. An option to consider would be cycling students to cooled facilities on campuses during the later, hotter hours of the day.
Committee Member Asselbaye asked for clarification on the maintenance and upkeep of air conditioning. Asselbaye stated that there had been an assessment of the Waianae Complex where there had been incidents of extended leave taken due to asthmatic problems. The lack of screens on units and neglect to properly maintain them caused dust issues. Committee Member Asselbaye stated that she would like to share results from the study and data from the school level to avoid solving one issue and creating another. Carlson stated that the Department had asked for $1 million for maintenance but received nothing. Carlson shared similar frustrations and stated that he would like to see the data.
Committee Member Mizumoto referred to the fiscal reports that the Committee reviewed earlier and asked where the $45 million could be found. Carlson replied that the funding is not yet in the report and would be included in the fourth quarter report. Committee Member Mizumoto asked why $55 million of the funds had not yet been released. Carlson stated that the full $100 million was requested to be released and there has been dialogue but there is no indication from Budget and Finance (“B&F”) on the release full release beyond the initial $45 million.
Committee Member Asselbaye stated that the Legislature approved $100 million for the initiative. Carlson stated that the Department requested a full release, but B&F decided to release $45 million without giving the timing for release of the other $55 million. Committee Member Asselbaye stated that the bill is not only for air conditioning but other energy efficient measures as well.
Committee Member Mizumoto expressed concern that the lack of funds would deter the Department from securing deals with the companies mentioned. Carlson stated that there has been a capacity issue, and the Department is emphasizing air conditioning efforts first.
Ex Officio Committee Member Williams asked when the Department would need to receive the $55 million in order for it to make a meaningful impact. Carlson stated that the Department is attempting to do as much as it can with the $45 million. Ex Officio Committee Member Williams stated that the need for a cool learning environment is greater than 1,000 classrooms. Ex Officio Committee Member Williams stated that $100 million had been approved, and he does not understand why the full amount of funding is not released to the Department.
C. Update on the Department of Education’s supplemental budget request for 2016-2017 Fiscal Year: Conference Committee decisions
Kunz reviewed the memo that provides a recap of the supplemental budget request process. Kunz stated that the Board of Education (“Board”) approved the budget in October 2015, and then it was seen by the Governor in December 2015. Highlights of what the Legislature approved include increases in funds for the Weighted Student Formula, utilities, and school bus contracts. Additionally, utilities and school bus contracts were added as recurring funds for the future. Kunz mentioned that Impact Aid would return to the table for ceiling adjustments. Kunz noted a budget proviso that establishes a pilot project that gives $500,000 on a debit card for 1,000 teachers, each receiving $500 to expend. Kunz stated that the Department would determine a policy and procedure to ensure the funds are expended in a fiscally sound manner. If the process is successful, it could be expanded to include more teachers, based on availability of funding. Kunz explained that there are additional budget provisos linked to education but would review them in a follow-up report. Lastly, Kunz reviewed the capital improvement project budget and available appropriations for 2017. The Department of Defense would provide 80% of funding for renovations to Solomon Elementary, with a Department match of 20%. The Department asked for $35 million for a new classroom building at Campbell High School and was appropriated $12 million. The $100 million appropriated for cooling classrooms is a separate bill and is not reflected in the memo.
Committee Vice Chairperson De Lima mentioned last legislative session when the Governor supported the Department in requesting funding for schools. Committee Vice Chairperson De Lima stated that it is unfortunate that the Legislature did not appropriate funding for English learners and that schools should be empowered by providing funding for student programs. Committee Vice Chairperson De Lima stated that for the next biennium budget period, there needs to be a community effort in requesting additional funding for the Weighted Student Formula. Students will continue to struggle until schools are provided funding to assist them. Committee Vice Chairperson De Lima stated that priority schools need funding to address student achievement, and the special education program is in crisis. Committee Vice Chairperson De Lima mentioned that it is positive to see the number of budget provisos reduced and suggested transferring funds to shortfall areas.
Committee Member Mizumoto asked for elaboration on the $30 million in the lump sum area. Kunz stated that it is part of the Governor’s budget request but was removed from the conference draft because the funding came through in a separate bill. Committee Member Mizumoto asked how the shortage of appropriation for Campbell High School would translate in expansion. Carlson stated that with the $12 million, the Department will begin building to capacity with anticipation that it will receive the remainder of the funding next year.
Ex Officio Committee Member Williams asked Carlson if the shortage would delay the Department’s progress for a year. Carlson responded that it is possible. Ex Officio Committee Member Williams referenced a comment from the Superintendent stating a new high school in Kapolei as a priority and asked why it is not seen in the memorandum. Kunz replied that the Department plans to follow up with the community for feedback to inform the Committee on Weights and justify the need moving forward.
Ex Officio Committee Member Patricia Halagao shared her disappointment about the Weighted Student Formula and lack of funds for English learners. Ex Officio Committee Member Halagao stated that resources are necessary to close the achievement gap, and the community needs to come together to request funds.
Committee Member Mizumoto asked Kunz how the Board could help. Kunz replied that she would follow up with the Board as the Department starts the biennium process.
Committee Vice Chairperson De Lima stated that community needs to understand how the Department will spend funding for intervention.
D. Update on the Department of Education’s status on need and potential locations for a high school in east Kapolei
Carlson reported that the Department has been advocating for the need of an East Kapolei high school.
Committee Vice Chairperson De Lima left the room at 1:16 p.m.
Carlson stated that the Department is happy to receive $12 of the $35 million requested for a multi-wing classroom on the Campbell High School campus and will begin attempting to execute. There is also a plan to complete a middle school in the area, near the Croc Center. The Department will continue to build out Ewa Makai Middle, creating a two-story structure. Carlson reported that the Department has been told there was a reduction in geographic exceptions in the area. A large number of mutigenerational families are adding to the population, which was not originally anticipated by planners. The Department was allocated $1 million for East Kapolei in 2013, which was encumbered for research purposes. Carlson estimated around 500 additional students in the next five years and a total of 3,300 students within the next 20 years when the residential area would be completed. To address short and long term goals, the Department is interested in four different possible sites.
Carlson explained the first possibility is a privately owned site on Fort Weaver Road in Ewa Gentry. However, the landowner is not interested in releasing the land. The second site possibility is federally owned. The site is near the airport. Carlson stated that the site would require a land transfer, and there is concern over soil remediation. The third option is a site owned by the State near the University of Hawaii West Oahu (“UHWO”). However, the university plans to extend to the area, and there are already plans for a 12-acre elementary school within the site. Carlson stated that the Superintendent recently reopened the conversation about a high school with UHWO. The last and most promising site is State-owned by the Department of Land and Natural Resources. The site has a stream and large ravine that would cause issues topographically and would cost upwards of $20 million in site improvements.
Carlson shared the Department’s short term plan is to add classrooms to current schools until a new school can be built, continue to go to the Legislature to request funding, and wait for requested funding to build a new Kapolei high school. Carlson stated that future growth in the Kapolei area is inevitable. D. R. Horton, a development company, proposed development of a school on a 43 acre site in Hoopili, provided there would be land available in the near future. The infrastructure would be difficult to plan, but the sewer system would be developed by D. R. Horton on the makai side of the structure. The Department has been considering the expansion of Kapolei and Campbell high schools to address short term issues. Carlson mentioned the idea of a “mega high school,” with the capacity to hold up to 3,300 students. If the Department is to build on the Department of Land and Natural Resources site, eventually there would be two high schools within a mile of each other. Therefore, the Department is leaning in the direction of expanding existing high schools for the time being in hopes that the Hoopili site will be available in the future. Carlson stated that it is challenging to plan long term without the knowledge of a future budget.
Committee Vice Chairperson De Lima returned at 1:25 p.m.
Committee Member Mizumoto asked if the Department would be able to keep up with planning given the velocity of student enrollment in the area. Kenneth Masden, Public Works Manager, Facilities and Maintenance Branch, replied that the project has not been scoped, but 15 to 20 classrooms are anticipated to be built at Campbell High to increase capacity until the Hoopili site becomes available.
Ex Officio Committee Member Margaret Cox opposed the idea of a “mega high school” of 3,000 students and stated that it is not in the best interest of the students.
Committee Member Horner stated that working with UHWO seems to be the best idea. Committee Member Horner encouraged the idea of adding a charter school. Carlson stated that the Department has been examining those types of options. Committee Member Horner asked Carlson to provide a presentation to the Board for strategic conversations with the Governor in the future. Committee Member Horner asked why the land by the Croc Center would be used for a middle school and not a high school. Carlson replied that the Department is considering using the campus to house high schoolers in the interim. Masden added that the east Kapolei middle school is currently being designed. The Department has met with the Complex Area Superintendents and principals who have been pushing for a middle school. Masden stated he anticipates 1,600 students for Hoopili but stated that there should be a master plan for a larger high school. Committee Member Horner mentioned that with the upcoming rail, the population would be flat and suggested using the transportation method to have students attend schools with smaller populations to lessen the pressure on schools at capacity. Masden stated that there has been discussion with D. R. Horton about partnering to build on the Hoopili site sometime within the next eight years.
Committee Chairperson Chun left the room at 1:34 p.m.
Ex Officio Committee Member Williams stated that the problem is growth in Ewa Beach, not Kapolei, and that the high school would be built in the wrong area. Ex Officio Committee Member Williams added that the ideal spot would be closer to Ewa Makai Middle School because Ewa needs to be taken care of and suggested trading land to acquire space in the area. Ex Officio Committee Member Williams agreed with Ex Officio Committee Member Cox and stated research supports that school size affects student achievement, and therefore “mega high schools” are not the best option for education.
Ex Officio Committee Member Cox stated that middle level education is very important due to students’ emotional state at that time and disagreed with adding high school students to a middle school. Ex Officio Committee Member Cox stated that the size of middle schools needs to be examined, not expanded.
Committee Vice Chairperson De Lima agreed with Ex Officio Committee Members Williams and Cox and shared his experience graduating from a school with 2,300 in three grades. Committee Vice Chairperson De Lima stated that a large high school could affect students’ high school experiences, such as students not being able to participate in sports because teams are small in size. Committee Vice Chairperson De Lima stated that the Department should plan long term in the best interest of students and the community. Committee Vice Chairperson De Lima stated money is an issue to be dealt with separately and told the Department to reanalyze the situation.
V. Recommendation for Action
A. Committee Action on the following Board of Education (“Board”) policies:
Committee Chairperson Chun presented the memo including the recommendations from the Board’s Policy Audit Permitted Interaction Group (“Policy Audit Group”) and Department on the above policies.
|New Policy #||Policies|
|400.2||Policies and Policy-Setting|
|2050||400.3||Implementation of Board of Education Policy|
|1200-1.7||400.6||Involvement of School Advisory Councils, Library Advisory Commission and Hawaii State Student Council|
Ex Officio Member Halagao agreed with the Department’s recommendation to extend the time to present an implementation plan from 45 to 90 days and the ability for Committee Chairpersons to grant extensions.
ACTION: Motion to recommend the Board approve 400.2, 400.3, and 400.6 as recommended by the Policy Audit Group and Department and described in the submittal dated May 17, 2016 (Mizumoto/Horner). The motion carried unanimously with all members present voting aye.
Committee Vice Chairperson De Lima adjourned the meeting at 1:45 p.m.