STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE
Kailua Intermediate School, Cafeteria
145 South Kainalu Drive
Kailua, Hawaii 96734
Tuesday, October 4, 2016
Grant Chun, Chairperson
Kenneth Uemura, Vice Chairperson
Brian De Lima, Esq.
Bruce Voss, Esq.
Patricia Bergin, ex officio
Margaret Cox, ex officio
Hubert Minn, ex officio
Kathryn Matayoshi, Superintendent
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services
Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services
Barbara Krieg, Assistant Superintendent, Office of Human Resources
Tammi Chun, Assistant Superintendent, Office of Strategy, Innovation, and Performance
Stacey Aldrich, State Librarian
Keith Fujio, Special Assistant to the State Librarian
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 3:01 p.m.
II. Public Testimony on Committee Agenda Items
Committee Chairperson Chun called for public testimony. There was no testimony at this time.
Written testimony was received and provided to the Board members. The following is a listing of the people who submitted written testimony before the testimony deadline.
|Karen Lee||Hawaii P-20||III. B. Committee Action on Department of Education’s proposed operating biennium budget for the 2017-2019 Fiscal Biennium||Support|
|Susan Rocco||Special Education Advisory Council ||III. B. Committee Action on Department of Education’s proposed operating biennium budget for the 2017-2019 Fiscal Biennium||Comment|
III. Recommendation for Action
A. Committee Action on Hawaii State Public Library System’s proposed biennium budget for 2017-2019 Fiscal Biennium
Committee Member Bruce Voss entered at 3:04 p.m.
Stacy Aldrich, State Librarian, stated that the budget proposal is not much different from the previous year and briefly reviewed it. The report showed requests for general funds, collections, and positions, as well as capital improvement funds for ongoing projects. The report also listed positions important to the system, such as program staff for the new Nanakuli library opening in 2017. Aldrich also mentioned requests for repair and maintenance for three buildings and additional vans to transport items, including materials and digital support.
Committee Member Brian De Lima entered at 3:07 p.m.
Committee Member Lance Mizumoto asked about the thought process behind the conditions and ratings in the repair and maintenance backlog list attached to the report.
Keith Fujio, Special Assistant to the Librarian, stated that an annual inspection listing is attached to the report. The list was created by the Department of Accounting and General Services (“DAGS”) after visiting each library and shows priorities and general estimates. Aldrich added that the list is used as a guideline, depending on the money appropriated, and stated that situations can cause a difference in prioritization.
Committee Member Mizumoto asked how Aldrich came up with the $10 million request for health and safety capital improvement projects. Aldrich stated that the funding request is based on the capacity to complete projects. Aldrich referenced the facilities report and stated that there had been such a minimum amount of money appropriated that the library system is barely fixing problems. The new approach is to complete one building at a time.
Committee Member Mizumoto asked how the budget was determined based on the strategic plan. Aldrich stated that the budget covers the bare minimum needed to provide services.
Committee Vice Chairperson Kenneth Uemura asked for the capital improvement and repair and maintenance numbers and asked if the budget was based on what the library system can likely get or what is actually needed. Aldrich replied that the list from DAGS is used to determine the capital improvement and repair and maintenance budget. In the past, the library system asked for the amounts shown on the list but is now discussing with DAGS and voicing the community’s needs. The total request is over $152 million altogether.
Committee Vice Chairperson Uemura asked why Americans with Disabilities Act compliance is not at the top of the list. Aldrich explained that a study is in progress, and once finished, the library system will prioritize those projects accordingly. Committee Vice Chairperson Uemura asked how the library system identified priorities. Aldrich stated that the library system had asked DAGS the same question. DAGS has a standard estimate, but the library system is attempting to develop a different relationship to take part in prioritizing. The numbers presented are estimates, not actuals.
Committee Vice Chairperson Uemura gave brief examples of figures that seemed misaligned and asked why there are no increases from Fiscal Year 2018 to Fiscal Year 2019. Aldrich stated that the budget is for two years, so the library system has to ask for the same amount in each year but can request amendments in the second year.
Committee Vice Chairperson Uemura asked why the library system did not go in the first time with an estimate of what it will need for both years. Fujio responded that the 2018-2019 fiscal year should be the same based on the operating budget, and changes are made in the supplemental budget. Committee Vice Chairperson Uemura gave an example of an issue with the library vans backlog. Fujio stated that the vans should be replaced more often than they are currently. The library system looked at leasing but mileage did not make it a viable option. The current budget request assumes that the library system will receive the vehicles.
Committee Member Voss stated that the heart of the library is its collection and asked why only $500,000 is being requested for it. Aldrich stated that the collection has been supported by special fines and fees. The amount of money the library is bringing in each year is going down, and more people are streaming content. Aldrich stated that the request is an attempt to balance special funds and state funds. The request includes $250,000 for e-books and other specific collections. Committee Member Voss stated that the collection should be updated to attract young people and expressed concern that there is not enough money in the request.
Committee Vice Chairperson Uemura asked if the money is sufficient. Aldrich stated that in analyzing the collection available, the library system could be doing more. A lot of money would be needed to move materials, and Aldrich stated that the request could be bumped to $1 million. Aldrich stated that it is possible to consider new models.
Committee Member De Lima stated that the vans should be moved to the first year of the biennium budget if they are needed. Committee Member De Lima stated that the supplemental budget is for unforeseen issues, not items that were previously known. It would be up to the Legislature to look at the budget and decide what will be supplemented later. Committee Member De Lima stated that Aldrich is on the right path.
Committee Member Mizumoto suggested taking a more strategic perspective on the budget by asking for what is needed instead of what the library system believes it can get. Aldrich stated that when making the next budget, the library system will have more data to make informed decisions.
ACTION: Motion to recommend the adoption of the Hawaii State Public Library System’s proposed biennium budget for the 2017-2019 Fiscal Biennium, as described in State Librarian Stacey Aldrich’s memorandum dated October 4, 2016 (De Lima/Voss). The motion carried unanimously with all members present voting aye.
B. Committee Action on Department of Education’s proposed operating biennium budget for the 2017-2019 Fiscal Biennium
Committee Vice Chairperson Uemura mentioned that at the prior meeting, there had been a request for transparency and asked for the changes incorporated.
Ex Officio Committee Member Margaret Cox entered at 3:38 p.m.
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services, stated that in August, the Department of Education (“Department”) received instructions to accelerate the budget timeline and is now coming to the Committee for approval. Kunz stated that instructions from the State directed the Department to approach the budget with caution and make sustainable requests with education as one of the top priorities. Kunz stated that the budget ceiling was set by the Department of Budget and Finance (“B&F”), nonrecurring items had been removed from the budget, and there is $33.8 million for collective bargaining. Kunz reminded the Committee that fringe rates for non-generally funded employees had risen to 60% with no additional federal help. Kunz stated that the budget is due after the Committee meeting.
Kunz stated that adjustments from September 20, 2016 are reflected in the report. Kunz reviewed the changes with the Committee. The Department is still being conservative with oil prices, decreased heat abatement funding, adding funding for future ready learning and coordinated supports and training, and removed hard-to-staff teacher bonuses as requested. Kunz stated that B&F allowed the Department to realign a base budget of $14.8 million for both years. Kunz shared a transparent way to prioritize items. Kunz stated that the Department is not asking for new money but reprioritizing it. The report shows specific item requests, and a breakdown of the items by EDN is attached. Kunz stated that after including the additional requests there is still a gap between the consumer price index and budget. Kunz added that there is a true-up of budget ceilings based on anticipated receipts. Kunz stated that the budget is reflected by all means of finance, and it is important to reflect reality. Kunz briefly reviewed the budget process and stated that future meetings will continue to track the process.
Committee Vice Chairperson Uemura asked Kunz to explain what “trade-offs and transfers” refer to under the “adjustments to fund requests” section of the presentation. Kunz stated that B&F provided the ceilings and specific amounts. Kunz explained that it also determines the base budget. Kunz stated that the Department had to realign the base budget and calculate where to put items. Kunz further explained that it is not a change in the ceiling but a change to where the funding is programmed.
Committee Vice Chairperson Uemura asked what would happen if the budget was not approved. Kunz stated that the Department tried to include items of the highest priority along the lines of school support, collective bargaining, and so on. Committee Vice Chairperson Uemura asked if all funds were reprioritized. Kunz stated that a few pieces remained within the same characters in EDNs.
Committee Member De Lima asked if the attachment showing the general fund budget requests reflects the adjustments. Kunz confirmed that it does. Committee Member De Lima referenced the future ready learning item and stated that he did not envision the funding being used in that way. Committee Member De Lima stated that the concept is that since the pilot was successful, money would be provided to schools recognizing that the Weighted Student Formula is insufficient. Committee Member De Lima stated that maybe the item should be kicked back to schools for discussion.
Superintendent Kathryn Matayoshi stated that the money is for professional development for interaction with technology and utilizing it. Committee Member De Lima stated that he did not understand how the money in isolation makes sense to the overall plan. Committee Member De Lima stated that if the community believed in the previous supplemental request for $12 million, it should not have been dropped just because the Legislature did not embrace it.
Matayoshi stated that it became a matter for the principals to decide on. Committee Member De Lima stated that there needs to be an understanding that the $1 million will compliment schools that make those decisions.
Ex Officio Committee Member Patricia Bergin entered at 3:55 p.m.
Committee Member De Lima asked why EDN 150 was deleted. Kunz stated that it was deleted and prioritized into the budget ceiling, but the positions needed for training are still necessary.
Committee Member Voss asked whether the approximately 100 new funded positions outside of classrooms were necessary positions. Matayoshi clarified that 15 of these positions provide additional support through Title IX compliance, which has been an area of potential litigation. These positions would support schools and complex areas.
Committee Member Voss asked about the 9 new positions for data governance. Kunz clarified that many positions already exist. Tammi Chun, Assistant Superintendent, Office of Strategy, Innovation, and Performance stated that data governance is in her area and that these positions are necessary to address student privacy requirements. The positions are currently in the office, but are funded by non-recurring sources that are ending and that these positions support requests to provide research and data sharing agreements with the Department’s partners like Kamehameha Schools and the Office of Hawaiian Affairs. Committee Member Voss stated that he appreciates the need and hope that this supporting information is in the documents that will be provided to B&F and the Governor.
Committee Member Voss asked about five positions to support leadership development that budgeted more than $200,000 per position. Barbara Krieg, Assistant Superintendent, Office of Human Resources, stated that two of the five positions already exist and are temporarily funded. These funds would be used to build out and institutionalize the leadership institute, which has been a Department priority. This funding would make the positions permanent. Committee Member Voss stated that the presentation does not clarify that not all of the funds are for salaries and recommended that this be more fully explained so that legislators do not have an adverse reaction to this.
Committee Member Mizumoto asked about the number of permanent positions being requested, which are funded by non-recurring funds and the total number of full-time people in the Department in non-school positions. Kunz replied that there is a total of 19,315 permanent positions. The Department is asking for 179 positions, of which 45 are currently filled and 60 positions are special education teachers and educational assistants. Committee Member Mizumoto clarified that of the 179 positions, a little more than 100 are non-school positions.
Committee Member Mizumoto asked about the means of financing. Kunz provided an explanation of budget ceilings, special funds, federal funds, trust funds revolving funds, and interdepartmental transfers.
Committee Member De Lima stated that the Board and Department needs to make decisions about the positions that are funded with non-recurring funds and whether these positions should get permanent funding. He identified positions he considered important, like data governance, early education, homeless compliance, but stated that the positions needed to be prioritized so that there would be a fallback position.
Committee Chairperson Chun stated that funding positions with non-recurring fund has been done successfully in the past and that now we are indicating to the Legislature our commitment to these positions.
Committee Member Voss commented that there needs to be more information provided and there needs to be backup, assurances, and priorities. He expressed his concern that this budget will go to the Legislature, will be cut, and will not end up being in alignment with Department needs.
Committee Vice Chairperson Uemura stated that more information on the thought process in developing this budget is required.
Committee Member De Lima suggested approving the Department’s proposal with the understanding that the Department would provide more information on the position request, priorities for funding and if any adjustments were made B&F could be advised accordingly. Committee Member Mizumoto stated that committee members need to come up with questions for the Department as soon as possible to give it enough time to generate answers.
ACTION: Motion to recommend the adoption of the Department of Education’s proposed operating biennium budget for the 2017-2019 Fiscal Biennium, as attached to the Department’s memorandum dated October 4, 2016, provided that the Finance and Infrastructure Committee will entertain further discussion and clarification on areas of the budget and the Board may request revisions to the budget as it deems appropriate or necessary (De Lima/Voss). The motion carried with Members De Lima, Mizumoto, and Voss voting aye and Member Uemura voting nay.
C. Committee Action on Department of Education’s proposed Capital Improvements Program biennium budget for the 2017-2019 Fiscal Biennium
Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services, explained that no information had changed since the Department’s last briefing to the Board, and no negative feedback had been received since then.
Committee Vice Chairperson Uemura asked for verification that there had been no feedback since the prior recommendations. Carlson confirmed that there had been no feedback and followed up on a question from the prior meeting, stating that the Department had a total of 5,500 projects with a staff of 55 people to distribute the workload.
Committee Vice Chairperson Uemura referenced financial reports and asked Carlson if the Department has enough personal to handle the projects put out to bid. Carlson stated he is confident that the staff can handle the workload.
Ex Officio Committee Member Minn entered at 4:55 p.m.
Committee Vice Chairperson Uemura referenced the $259 million request in the report and asked if the funding requests are statewide or more specific. Carlson explained that projects under the capacity level give the flexibility to use leftover funding elsewhere. A very small amount of funding had lapsed in the past.
Committee Vice Chairperson Uemura asked for clarification on the criteria of projects. Carlson stated that repair and maintenance projects are prioritized by schools’ wants and needs. There are priorities for capacity projects, such as Ewa and Kapolei schools, and the Department is doing what is possible with the appropriation.
Committee Vice Chairperson Uemura asked if there is a construction project schedule. Carlson stated that the schedule will be incorporated into the quarterly reports presented to the Committee. Committee Vice Chairperson Uemura asked to know in the future if any projects go over cost and how that will be accounted for.
ACTION: Motion to recommend adoption of the Department of Education’s proposed Capital Improvements Program biennium budget for the 2017-2019 Fiscal Biennium, as attached to the Department’s memorandum dated October 4, 2016 (De Lima/Voss). The motion carried unanimously with all members present voting aye.
Committee Chairperson Chun adjourned the meeting at 5:02 p.m.