Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Fiscal Services, presented the Department’s budget. Kunz stated that the budget goes through several steps: First the Governor sent his budget to the legislature in late January, then it went to the House Finance committee, and finally it goes to the Senate Ways and Means committee. Kunz reported that the Legislature’s conference period started today. Kunz presented on each of the attachments provided with the meeting material.
Kunz went over Attachment A, General Fund – Base Operating Budget started with the current fiscal year appropriation, which was then adjusted for non-recurring items, then added collective bargaining get a new fiscal biennium base operating budget. This is the starting point for the biennium budget request.
Kunz then went over Attachment B, General Fund – Operating Budget Summary by Program ID (EDN) outlined the Department’s request, then added Governor’s decisions and the House and Senate drafts bills to arrive at the new budget totals.
Committee Chairperson De Lima asked about the $70 million showing for FY 2016-17 in the Requests (B) section. Kunz stated that this is a proposal to move $63 million in utilities from EDN400 into EDN100. Budget personnel, through the Committee on Weights, are in the field educating principals on the current Weighted Student Formula (“WSF”) and other programs, including utilities, to get feedback. Committee Chairperson De Lima and Committee Chairperson Horner discussed school utilities, possible savings, and using these savings in other areas.
Kunz continued with Attachment C, General Fund – Operating Budget Summary by Lens shows the budget requests and approvals through the different lenses that were used when the budget was developed.
Committee Chairperson De Lima and Kunz discussed Goal 1, Governor’s Decisions. Committee Chairperson De Lima asked if the $9 million is the weighted student formula. Kunz stated that $7 million of the $9 million is the weighted student formula. Kunz clarified that the $33 million reported in Fiscal Year 2016-17 is incorrect and is overstated by $20 million. This will be corrected.
Member Amy Asselbaye joined the meeting at 11:40 a.m.
Kunz went over Attachment D, General Fund – Operating Budget Adjustment Requests, which gets into specifics around detailed requests of tradeoffs and transfers that were proposed by the Department and which are aligned to the Department and Board’s strategic objectives. Both the House and Senate have agreed with all of these.
Kunz also went over Attachment E, which outlines the items agreed to by the House and Senate. Those items that the House and Senate disagree on will go to Conference Committee for decision-making. The Department has assumed that items that have a funding level of $0 will not be resurrected during the legislature’s conference period.
Committee Vice Chairperson Horner asked about the cut in funding for Teach for America. Kunz responded that the request was for $670,000 to maintain 80-100 teachers. There are enough funds for the next fiscal year for about 60 teachers. Without the appropriation for the following fiscal year, the Department only has $200,000 and Teach for America has informed the Department that it cannot maintain a program at this level. Committee Vice Chairperson Horner asked if the teachers would be laid off. Kunz stated that an alternative method would be found to identify and hire teachers in hard to fill areas. Committee Vice Chairperson Horner stated that it is incumbent upon the Board to make a case to the Executive and Legislative branches as to why this is important and it is assumed that there is data to back this up. Kunz acknowledged that there is data available.
Member Amy Asselbaye asked about Achieve 3000 funding, because the schools will have to fund this program themselves from weighted student formula funds if the Department does not receive any funding for this program. Kunz stated that the Department is working with the vendor to try to obtain favorable pricing and that there are currently 50 schools interested in continuing this program. Committee Member Asselbaye observed that if that if the Department moves forward, it would still be a state contract, but schools will have to come up with the funds from a different source.
Member Asselbaye asked about the funding for Principal Engagement and whether these funds are basically assisting some of the outreach the Superintendent and Deputy Superintendent have been doing with principals. Kunz confirmed that these funds are for the Principal Roundtable and the Secondary Principal Forum. These are priorities for the Department to continue. One of the top things on the Department’s list is to find alternative funding.
Member Asselbaye inquired about Future Ready Learning, and that at a recent principals meeting, the lack of funding was raised. Kunz stated that the Department is trying to figure out how to continue with some level of professional development so that the mind shift of moving to technology-based learning can continue, however, without additional funding the schools would have to determine how to purchase devices.
Committee Chairperson De Lima stated that there needs to be a discussion concerning the ramifications of the programs that are not going to be funded and that this discussion also needs to occur in the Student Achievement Committee as to what the impact will be to student achievement.
Committee Vice Chairperson Horner stated that he agreed with Committee Chairperson De Lima and he is supportive of the legislature’s move to give principals more authority to use funds as needed in their schools. If this is the direction the legislature and Department want to go in, rather than line item cutting, there should be a conversation about allocation and where the funds are to be spent.
Kunz continued with Attachment F, Non-General Fund – Operating Budget Adjustment Requests, which reflects the general fund requests by EDN number and noted that there are two line items that the House and Senate disagreed on.
Kunz went over Attachment G, which is the overall legislative committee report issued by the House Finance Committee, which provides an explanation of what the legislature is doing from a statewide perspective and the report specific to Education
Kunz continued with Attachment H, which contain the Operating Budget Provisos. The provisos were marked to show whether they are part of the House or Senate draft. These provisos also have to go through Conference Committees.
Kunz also went through Attachment I, CIP Budget Summary, which is the CIP for general obligation bond funds. It shows the Department requests by the CIPs. If any of these projects get approved, the Department will determine whether they will fall under capacity or program support.
Kunz completed the presentation by stating that in about a week and a half, the Department would know the final operating and CIP budgets.
Committee Chairperson De Lima, referring to attachment H, asked about the Medicaid reimbursement for qualifying transportation. Kunz responded that the Department is currently receiving Medicaid reimbursements but transportation services and qualified skilled nursing services are being pursued for additional claims for reimbursement. Kunz went on to state that it may be 6-8 months before the Department receives reimbursements for skilled nursing because system programming is necessary. Committee Chairperson De Lima stated that this needs to be agendized to a future meeting so that the personnel responsible for pulling this together can give a presentation of what work has been done and what work still needs to be done so that this will be ready for the next legislative session.
Member Asselbaye asked about the amounts that can be expected for the Medicaid reimbursements and the transportation services. Kunz responded that the information was not at hand but would be added as part of the future presentation that has been requested. Kunz stated that because of system limitations and priorities, it has been a slower process than what the Department desired.
Committee Vice Chairperson Horner stated that the data hasn’t been received from the parents and without the data, the Department cannot get the reimbursement. Kunz replied that currently there is an opt-in process that is a federal requirement and what the Department plans to do this year is actually track and have the principals help collect additional data. Part of the issue is that only about 25% of parents opt-in.
Committee Chairperson De Lima stated that there is a lot of special education money here as well. The problem of parents not opting in needs to be addressed and parents need to be educated that opting in benefits all students. Member Asselbaye stated that in regards to special education and school-based behavioral health, nurses in the schools have no certification or credentials which is a federal requirement to receive reimbursement; the infrastructure needs to be built so the Department can receive the reimbursement. Kunz stated that the Department is taking strides to move forward.
Committee Vice Chairperson Horner asked about CIP and pointed out several items where amounts seemed out of line. Kunz replied that the amounts listed are not from the Department but have been added by the Legislators. After these go through Conference Committee, the detailed breakout will be available with priorities listed and the corresponding condition funding.
Committee Chairperson De Lima stated his concerns with the proviso regarding the Contract Performance Management Program for student transportation. The Department needs to stay ahead of this and get this to a consultant in order to get the data necessary to respond to this request. The Legislature needs to understand that the Board is not only committed to tackling this problem but are also continuing to make progress. There will continue to be challenges so it needs to be transparent and the Legislators need to be provided with all information they are seeking. This needs to continue to be on the agenda.
He went on to state that Food Service is not mentioned in the provisos and that there needs to be a third-party review, similar to what was done with student transportation. The public has benefitted from this best practice.
Committee Chair De Lima observed that the job Kunz and her staff has done shows a level of professionalism and quality of work which really speaks to the confidence the Legislature is having in the numbers they are seeing. The progress made each year will hopefully allow the Department to have its requests, which the Board supports, fully funded. Kunz stated that she also wanted to thank the Legislators and their staff.
Committee Member Chun left the meeting at 12:20 p.m.
B. Presentation on Federal Impact Aid
Kunz stated that this presentation is a result of a specific request for information regarding federal Impact Aid. The Department receives about $45 million in federal Impact Aid funding a year, give or take $7 million or so. This money is received because the Department applies for it using data collected primarily via the federal survey cards that are distributed to schools each September. The purpose of the Impact Aid program is to offset the decreased tax base that results from taxes not be generated by people working and living on federal property.
Committee Member Chun rejoined the meeting at 12:22 p.m.
Kunz described the two types of payments: 95% comes through basic support payments (parents in the U.S. military who live on federal property or a student who has a parent who works on federal property) and the remaining 5% of the Impact Aid money is for federally connected students with disabilities.
The survey is taken via the Federal Survey card on a single day in September. The Department then submits an initial application and an amended application later the next year. The Department receives funds the next following March. Currently only four districts on Oahu qualify for funding. Every dollar the Department receives helps fund all students across all complexes.
There is a data collection challenge because the survey card has been substantially expanded and there are challenges with collecting the information.
Kunz described the return rate of cards: 26,000 returned and considered federally connected, 40,000 not returned, and 112,000 either not federally connected or cards are incomplete. Between September, when cards are returned, until the amended application is due, Department goes through the incomplete cards and goes back to schools or makes phone calls to verify the information to get the cards moved to a completed status.
Kunz noted the different types of students and how they account for different weights, including students who live on federal land, those that live off federal land but whose parents are in active duty, those that live in federal low-rent housing, and those that live on Indian lands. All of these weights are important.
Committee Vice Chairperson Horner noted that a case could be made for native Hawaiians living on homestead land could fall into the “students who live on Indian lands” category and that it might be worth an effort to have a conversation with the Governor about this. Kunz responded that this would be relayed.
Member Budd left the meeting at 12:34 p.m.
Kunz went on to report on the complex formula used to distribute Impact Aid funds, which is like the per-pupil funding formula Hawaii uses to distribute WSF. The total annual Impact Aid basic support payment is $45 million and based on the average cost to educate a student in Hawaii public schools, the reimbursement is approximately $2,000 or 15% of the average cost.
Member Budd rejoined the meeting at 12:37 p.m.
Kunz stated that because the survey card is more complex than in the past, the return rate is substantially lower.
Kunz also stated that federal Impact Aid monies can be used for anything that is allowable by state law. Most of the money is currently being used to offset substitute teacher costs. The disability payment must be used for extra costs of educating those students. These funds are being used to offset special education teacher costs and substitute teacher costs as well.
Kunz also described the National Association of Federally Impacted School (“NAFIS”) as a positive organization and one that Hawaii has been working with for many years. It is important that Hawaii continue this work so that the special fixes will continue to be received. If these were removed, it would mean $20 million less in federal Impact Aid funding.
Kunz recognized the team that helps with federal Impact Aid. Cherise Imai, Military Liaison and director and Hawaii state chairperson of the NAFIS board; Ken Kuraya, Budget Execution Administrator; and the Federal Survey Card group within the Office of Technology Services. Without their work, the level of reimbursements received would not be possible. Kunz thanked everyone for their hard work.
Committee Chairperson De Lima asked about the $10 million reduction in the federal Impact Aid ceiling in the budget. Kunz stated that the Department is working to get ceilings more in line with receipts. Committee Chairperson De Lima asked what happens if more funds are received over and above the ceiling. Kunz replied that the Department would need the Legislature to increase the ceiling. Committee Chairperson De Lima stated that he thought because of this, the ceiling should be left at the higher amount.
Committee Chairperson De Lima spoke to the data collection challenges and that solutions are not being presented. There needs to be a greater understanding of the solutions being worked on and requested that Kunz give an update in two months.
Committee Vice Chairperson Horner stated that this is important information for the Board and asked that Kunz inform the three incoming Board members.