STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE
Aiea High School
98-1276 Ulune Street, Library
Aiea, Hawaii 96701
Tuesday, July 19, 2016
Grant Chun, Esq. Chairperson
Kenneth Uemura, Vice Chairperson
Brian De Lima, Esq.
Bruce Voss, Esq.
Patricia Bergin, ex officio
Hubert Minn, ex officio
Jim Williams, ex officio
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services
Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services
Greg Tanaka, Engineer, Office of 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 2:30 p.m.
II. Public Testimony on Committee Agenda Items
Committee Chairperson Chun called for public testimony. There was no public testimony at this time.
III. Approval of Meeting Minutes of June 21, 2016
ACTION: Motion to approve the General Business Meeting minutes of June 21, 2016 (Uemura/De Lima). The motion carried unanimously with all members present voting aye.
IV. Discussion Items
A. Update on Department of Education’s heat abatement program: progress since June 21, 2016
Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services, reported that there is a clause in the heat abatement project contracts requiring the Department of Education (“Department”) to pay a minimum prevailing wage; however, contractors were inflating wage rates. The Department has been in dialogue with contractors and reviewing specifications and federally mandated materials. The Department had $180 million worth of projects out for bid in addition to heat abatement projects in the month of June. Carlson shared portions of an article written by the General Contractors’ Association. The article stated that the heat abatement bids reflect the requirements of recent state legislation, Acts 47 and 176, which require a range of energy efficient measures in addition to air conditioning, and that many of Hawaii’s schools are over 50 years old and were not built to be air tight. Carlson stated that the Department has listened to many good ideas regarding heat abatement and planned to incorporate them. Carlson explained that there was a period where no bids were open, which provided an opportunity to educate all pre-qualified contractors; therefore, the Department scheduled a pre-bid meeting that will take place on July 28, 2016 for prequalified contractors. The Department is combining bids and creating specification packages to make projects more attractive to contractors. Carlson stated that the Department has been tasked with cooling classrooms without increasing electrical usage. The Department has already seen a drastic reduction in the cost to cool classrooms as the bids progress. The Department will continue to treat the situation as a high priority.
Committee Vice Chairperson Kenneth Uemura asked what the pre-bid meeting will accomplish and when the bids will be returned. Carlson stated that the meeting is for clarification purposes, and the Department will allow three to four weeks for contractors to create bids. Committee Vice Chairperson Uemura asked if there is a threshold for the bids to be acceptable. Carlson stated that an estimator will determine whether the bids are reasonable. While all projects are different, the average cost estimate per classroom is between $50,000 and $60,000, which would leave a balance of about $70 million to address the efficiency aspects required by law.
Committee Member Bruce Voss asked when the Department anticipated projects to begin and when some classrooms will have air conditioning. Carlson stated that the initial work will begin in the August-September timeframe but will be done in phases to avoid flooding the market with too many projects at once. Committee Member Voss asked how quickly a typical classroom will be completed. Carlson replied that once some of the initial steps are completed, the actual work on a classroom could be completed fairly quickly.
Committee Member Lance Mizumoto asked for a contingency plan with the school year approaching. Carlson explained that the Department sent guidelines to schools, which included recommendations to cycle students and faculty through air conditioned spaces, such as libraries, to avoid early release from school. The Department has made progress on its heat abatement efforts with roof reflective coatings on portables and other passive cooling measures and distributing portable air conditioning units. The Department will also work with the community to collect donated supplies, such as air conditioning units, and volunteered labor. Committee Member Mizumoto asked if there are any particular communities of concern. Carlson stated that an issue of concern is if Hawaii gets stuck in a tropical storm cycle again where trade winds die off and cause uncomfortable temperatures and high humidity. However, the Department is tracking temperatures and anticipates them to be significantly cooler than the previous year.
B. Update on the Department of Education’s sustainable/energy efficiency master plan, “Ka Hei”
Carlson introduced Perry Arrasmith, a recent Aiea High School graduate. Arrasmith shared his senior project where he learned about sustainability efforts and energy efficiency and applied this knowledge to help improve energy efficiency and safety at his school. Arrasmith’s focused on where lighting wastes energy. Arrasmith explained installing LED lights is a solution to increase energy efficiency and save money by requiring less maintenance and electricity while providing heightened security. Arrasmith stated that LED lights last four to five times longer than the standard lifespan of 20,000 to 25,000 hours for HID lights. LED lights are also brighter and deliver a higher lumens output than other options while using a lower wattage and less energy. LED lights stay bright over a longer period of time to offer overall heightened security. The new lights were installed in a centralized area by the cafeteria where students are often dropped off and picked up.
Carlson introduced Brandon Hayashi, Strategic Alliances Manager, OpTerra Energy Services. Hayashi stated that a few years ago it was found that utility rates would continue to increase, and the Department was at risk of paying up to $100,000 a year in utility costs. The Ka Hei program is a five-year endeavor created to reduce energy costs. Hayashi shared the four pillars of Ka Hei: renewable, efficiency, micro-grids, and education. The program has conducted 130 lighting audits, touching every major island. Up to 74 schools received photovoltaic systems, 34 schools received LED lighting combined with the cooling classrooms initiative, and five schools are undergoing micro-grid studies. Ka Hei is conducting a cooling model search to dramatically reduce utility charges by installing LED lights in football stadiums. Hayashi explained the Honowai cooling efforts, sharing methods to cool schools including a variety of passive measures beyond the classroom. Methods include refrigeration control systems, ventilation, ceiling fans, electrical upgrades, roofing insulation, and much more. Hayashi shared data showing the impacts of actions taken, which include 24 classrooms with high-efficiency air conditioning, 100,000 kWh in energy savings per year, and a 51% reduction in overall energy usage from lighting. Ka Hei looks at aspects beyond savings by teaching educators to engage students in initiatives. Hayashi explained that there has been extensive photovoltaic progress, including 81 Hawaiian Electric Company-approved systems in 74 schools and 155 upgraded roofs. Nine of these systems have been turned on and are operational. Hayashi also presented on upcoming challenges. In October 2017, the photovoltaic program will end and investment tax credits cannot be estimated going forward. These tax credits are used to get investors in these programs. Hayashi stated that internal leadership will discuss next steps. In the beginning of the program, the priority was to install as many photovoltaic systems as possible, but now priorities will be shifted toward micro-grids.
C. Update on the Department of Education’s “Jacob’s study” (a facility inventory, assessment, and capacity study)
Carlson stated that the Jacob’s Study was awarded in 2013 to assess facilities and introduced Greg Tanaka, Engineer, Office of School Facilities and Support Services, to share more information. Tanaka stated that this 21st century system will allow the Department to assess data collected and make strategic choices. The Jacob’s Study data inventoried all facilities and provided a condition assessment considering school enrollment and benchmark facilities. The information will help the Department to make informed capital improvement decisions by analyzing information such as overcrowding, if a school was multi-track, or how staff is spaced out. Additionally, the data allow the Department to monitor the need for facility upgrades, giving all students equal opportunities. The Jacob’s Study went through three phases:
- Phase One – Assessment Preparation: The Department collected as-built plans for 251 schools to determine the size of spaces, who is utilizing them, and how many children are in each space. Electronic assessment packets were compiled.
- Phase Two – Field-Assessments: The Department developed facilities drawings and physically verified the measurements to see if buildings had been modified over time. New as-built plans were created and uploaded on AutoCAD for buildings with missing data. The Department’s goal was to have a campus map scaled with all facilities in the correct orientation.
- Phase Three – Data Analysis: The Department prepared AutoCAD drawings for a geographic information system database. The Jacob’s Study provided all site and floor plans showing how each space is used and the square footage. The database will be used to compare facilities to determine deficiencies and inform data-driven decisions.
Tanaka shared an overview of statewide facility data. There are 20.7 million net square feet of space being utilized in 261 schools, consisting of 4,410 buildings total. Of the square footage, 7.4% belong to portables. The average school in Hawaii is 61 years old, and the average building is 44 years old. However, there are 53 buildings that are over 100 years old. Tanaka stated that 45% of the State’s elementary schools are old or beyond expected life, and there are many old buildings being utilized by the Department. Sharing building inventory data by district, Tanaka stated Honolulu District has the oldest buildings and Leeward District the newest. To meet the current standards, the Department will need to start work in the Honolulu District where the majority of old buildings are. Tanaka stated that the standards for building schools has been the same for the last eight years, but the Department is looking at future enrollment and comparing it to current enrollment to anticipate deficiencies. Tanaka gave examples of how the Jacob’s Study data will be useful for future capital improvement projects. The target completion of the data project is September of 2016, and the data will aid in prioritizing among the various projects and determining the capital improvement budget.
Ex Officio Committee Member Hubert Minn asked if facilities are built as learning environments. Tanaka responded that Hookele Elementary was built specifically for that purpose, and new facilities could be built as learning environments. However, it is difficult to retrofit older schools for 21st century learning. Ex Officio Committee Member Minn stated that as there is more project-based learning, classrooms should correspondingly adapt.
Committee Member Voss stated that the ages of buildings in the Honolulu District are disturbing and asked how the data will inform future decisions. Carlson stated that the Department has plans for Farrington High, and the Jacob’s Study data will help to make informed decisions moving forward. Committee Member Voss asked if the older buildings are a priority for the near future. Carlson confirmed they are but added that decisions are dictated by how funding is appropriated. The Department speaks with principals and attempts to spread out funding in an equitable way.
Committee Vice Chairperson Uemura asked how the Department will use the data with the budget due in October and asked what it will cost. Carlson explained that the Department asked the Legislature for a $5 million appropriation a few years prior and had spent $4 million of it. Because the data is in the geographic information system or GIS format, multiple types of information can be seen on a map to have much better control and communication throughout the Department. Committee Vice Chairperson Uemura asked if the data will be used as a proactive tool to maintain schools with the knowledge of facility conditions and capacities. Tanaka stated that on the maintenance side, there comes a point when a building is too old to repair. Seeing the cost of repairs will help the Department determine if a building should be upgraded or replaced. Carlson added that the data give more granularities for the Legislature to see why certain appropriations are requested. Committee Member Uemura mentioned that the data are based off of 2006-2008 specifications and asked when the standards will be updated. Carlson replied that the Department is looking at an update but has not officially started the process. Committee Vice Chairperson Uemura asked if the data are merely for inventory because it cannot be used for relevant analysis. Carlson stated that the Department is analyzing the issue and will be using the data for strategic decisions. Committee Vice Chairperson Uemura stated that the data are not valuable unless used in a proper way.
Committee Member Mizumoto asked how the data will be communicated to the Legislature with a focus on the long term versus the short term. Carlson stated for its capital improvement budget, the Department requested $450 million but received $350 million. There will be a six-year plan for the biennium budget request. Committee Member Mizumoto stated that there needs to be a sustainable long-range plan aligning with the strategic plan. Carlson stated that the Department is making an effort with budget updates and will provide more granularities on the capital improvement budget. Carlson clarified that the Department will also educate the Legislature on popular enrollment trends for upcoming budget requests.
Committee Member Voss stated that public backing is important for a large budget request. Committee Member Voss stated that the Legislature needs to see the need for funding over time. Carlson stated that the Hawaii State Teachers Association offered tremendous support, and the Department will be returning with plans to present to the Legislature.
V. Recommendation for Action
A. Committee Action on restrictions by the Executive Branch on the Department of Education’s 2016-2017 Fiscal Year budget appropriation
Amy Kunz, Senior Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services, provided a recommendation memo to the Committee describing a restriction of $5.8 million. The Department received a notification from the Executive Branch on June 24, 2016, and has been working to approach the budget without impacting the Weighted Student Formula, special education, or Complex Area budgets. Kunz stated that the Department wants to ensure schools are supported. Restrictions include program IDs from EDNs 200 and 300. The ending cash balance for the State of Hawaii is $890 million, acknowledging a 1.7% tax collection. Kunz stated that collective bargaining negotiations are underway, and the State will have to address funding requirements for retirement and pension plans. Kunz reminded the Committee that the Department had previously pushed out all funding to programs with the acknowledgement that it may have to retract a portion of funds due to budget restrictions.
Committee Member Mizumoto stated that a restriction across the board is efficient but a surgical approach may be more effective. Kunz replied that there is a 4.19% cut across the board, but the Department took a surgical approach by allowing flexibility within the Assistant Superintendents’ offices.
Committee Member Mizumoto asked for clarification on federal reimbursements. Kunz explained that Compact of Free Association funds were reimbursed to the Department for education migrants from Micronesia. There was no impact on students.
Committee Vice Chairperson Uemura asked for information on the allocation adjustment. Kunz stated that the $1,080,184 allocation adjustment was put in place the same way last year and is a specific amount funding the Office of Strategy, Innovation and Performance. Committee Vice Chairperson Uemura expressed concern with the idea of cuts across the board and stated he preferred a bottom-up approach to keep programs needed within the Department. Committee Vice Chairperson Uemura asked if there is an annual contingency. Kunz stated that the Department had received annual restrictions for at least the last five years and monies are put aside and monitored. The Department budget involved an ever-changing prioritization, and funding is aligned with the strategic plan priorities.
Committee Member Voss shared the same concern for across the board restrictions and stated that some programs cannot be cut, such as a program for homeless children. Committee Member Voss asked how the Department will restore funds if the contingency is lifted. Kunz agreed with the concern and stated that if monies are returned, they would be pushed back out to restricted programs.
Committee Member Mizumoto clarified that food service and transportation are excluded, similar to last year’s restrictions. Committee Member Mizumoto asked if full-time equivalency attribution is necessary for positions that have been vacant for an extended amount of time. Kunz replied that vacancies are reviewed and evaluated, but some positions are harder to fill than others. The Budget Section is working closely with the Office of Human Resources to produce high-quality staff in schools. There is at least a $25 million vacancy savings built into the budget.
Committee Vice Chairperson Uemura asked if it is possible to take a more surgical approach, versus restricting funds across the Board. Kunz stated that it is possible, but that she did not think that the time that would need to be invested in a surgical approach would result in a corresponding benefit. Committee Vice Chairperson Uemura asked if positions would be cut. Kunz replied that there will be a strategic delay in filling positions and utilizing savings from positions with long-term vacancies. Committee Vice Chairperson Uemura suggested identifying positions that will not be filled as a better approach for restrictions.
Superintendent Kathryn Matayoshi explained that there was always a lag in the budget process because there is no overlap. Each unit will look ahead at vacant positions and utilize savings during the lag. There is a 3-5% vacancy savings rate to give flexibility. Kunz stated that ultimately the Assistant Superintendents will manage their vacancies for a more surgical approach.
Committee Member Mizumoto asked for the deadline to submit information. Kunz stated that the Department had already submitted preliminary documents with an acknowledgement that there is a possibility for change with Board of Education action. Kunz stated that the Department hopes to restrict monies as soon as possible to allow programs to adjust for the year. Committee Member Mizumoto suggested Kunz return at a later time to provide more specifics.
Committee Vice Chairperson Uemura stated he understands the practical realities but feels uncomfortable with the restriction practice and will approve the recommendations with reservation. Committee Member Mizumoto agreed and suggested a more proactive approach in the future.
ACTION: Motion to recommend the Board approve the restrictions by the Executive Branch on the Department of Education’s 2016-2017 Fiscal Year budget appropriation (Mizumoto/Uemura). The motion carried unanimously with all members present voting aye.
Committee Chairperson Chun adjourned the meeting at 4:02 p.m.