STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE

MINUTES

Queen Liliuokalani Building
1390 Miller Street, Room 404
Honolulu, Hawaii 96813
Thursday, November 15, 2018

PRESENT:
Kenneth Uemura, Committee Chairperson
Brian De Lima, Esq.
Nolan Kawano
Kili Namau‘u
Catherine Payne
Dwight Takeno

EXCUSED:
Bruce Voss, Esq., Committee Vice Chairperson

ALSO PRESENT:
Christina Kishimoto, Superintendent
Camille Masutomi, Chief of Staff to the Superintendent
Amy Kunz, Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services
Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services
Heidi Armstrong, Interim Assistant Superintendent, Office of Student Support Services
Kenneth Masden, Public Works Manager, Planning Section, Facilities Development Branch, Office of School Facilities and Support Services
Catherine Fukada, State Resource Office Teacher, School Process and Analysis Section, Office of Information Technology Services
Alison Kunishige, Executive Director
Regina Pascua, Board Private Secretary
Irina Dana, Secretary


I. Call to Order

The Finance and Infrastructure Committee (“Committee”) was called to order by Committee Chairperson Kenneth Uemura at 11:08 a.m.


II. *Public testimony on Finance and Infrastructure Committee (“Committee”) agenda items

Committee Chairperson Uemura called for public testimony. There was no public testimony at this time.

Written testimony was also received and provided to the Committee Members. The following is a listing of the people that submitted written testimony before the testimony deadline.

Name
Organization
Agenda Item
Position
Amanda KellyFor Our KeikiIV.C. Update on expansion of Medicaid reimbursement system and funding Comment
III. Approval of Meeting Minutes of October 18, 2018

ACTION: Motion to approve the Finance and Infrastructure Committee Meeting minutes of October 18, 2018 (De Lima/Takeno). The motion carried unanimously with all members present voting aye.


IV. Discussion Items

Kenneth Masden, Public Works Manager, Planning Section, Facilities Development Branch, Office of School Facilities and Support Services, stated that since the last Committee meeting, the Department of Education (“Department”) met with the Hawaii Housing Finance and Development Corporation (“HHFDC”) twice to discuss the Act 155 development model for teacher housing projects. The primary issues that the Department discussed at these meetings included the financial model, the location, and the number and types of units. Masden noted that these issues are specific to how and where the Department will build first. Masden stated that other issues that the Department has been discussing includes facility types, including mixed use versus dedicated teacher housing. The Department is also discussing military housing protocols for priority placement and management. The Department is trying to understand the mechanics of how it would lease or rent property and whether the Department would contract private management or self manage. He noted that these issues and determinations would change the financial structure.

Masden highlighted that the Department is reviewing issues as broadly as it can to understand problems as best as it can. He highlighted that the Department contacted the Department’s teacher recruitment specialist to determine areas with the greatest retention issues. The Department also reinitiated consultant work to finish a demographic study to ensure that it understands where there will be need for schools and where land will be available for teacher housing. The Department also reinitiated work with its consultant to do preliminary site due diligence. Masden stated that the Department extended its consultant contract to include teacher housing development and Act 210, which covers City and County of Honolulu (“City”) land transfer to the Department. He detailed that the Governor signed Act 210 in July 2018, and further detailed that it requires the transfer of select public school lands currently owned by the City to the Department. Masden noted that the Department is currently working with the City Department of Land Management to work out the process and details of how the City would transfer these lands to the Department. Masden stated that the Department also contacted firms, which submitted information for earlier request for information (“RFI”), to continue discussions about sites of interests. He highlighted that the Department is scheduled to meet with these firms next week. Masden stated that the Department would be able to discern how to move forward with selected sites as it gets more information from its due diligence.

Committee Member Catherine Payne asked if the Department has a specific timeline of the process and asked if the Department has any idea of when it will be able to take clear actions. Masden asked if Committee Member Payne is referring to Act 155 or teacher housing. Committee Member Payne stated that Act 155 and teacher housing are connected. Masden detailed that in terms of site selection, the Department is simultaneously doing a market study to determine which properties have the greatest value. He stated that this might take four to six months. He detailed that initial community outreach will take the Department two to three weeks. Masden explained that the second phase of its timeline would include an environmental assessment, which may take a couple of years before the Department is able to sign any agreements.

Committee Member Payne asked if the Department thinks that it will be a couple of years before it signs any agreements and if the Department will begin construction after. Masden confirmed that construction would take place after the Department finishes the process, which may take two years.

Committee Member Nolan Kawano commented on teacher retention as one issue in relation to Act 155. He asked if the Committee needed to expand the number of sites that it asked the Department to review. Committee Member Kawano noted that for teacher housing, the Department is reviewing areas where there is a greater need for teacher retention. He asked if the five sites that the Committee approved fit these criteria. He stated that the Committee might need to expand its list of selected sites to address issues related to low retention areas.

Dann Carlson, Assistant Superintendent, Office of School Facilities and Support Services, stated that teacher housing is an additional burden to the Department in executing Act 155, as it is another component to include. Carlson stated that from a developer standpoint, the subsidized teacher housing situation is not as attractive. Carlson detailed that areas in need of teacher housing are hard-to-recruit or retain areas. Carlson stated that the Department could come back to the Committee for approval if it can formulate ideas and creative ways in which it can use land in these areas. He detailed that the process focuses on Honolulu in particular because the land value is the greatest and most attractive for a developer. If the Department found options to use current land in remote areas to build teacher housing, the capital required could come out of the Department’s capital improvement program (“CIP”) request. Carlson stated that if the Committee deems that this is where it wants to direct CIP funding, the Department would comply.

Committee Member Brian De Lima commented on how it does not matter where the Department builds on Oahu due to Oahu’s size and close proximity of all urban areas. Committee Member De Lima stated that land is more expensive in the urban core, but the Department identified earlier that it is not using land in the urban core. He asked if it is possible for the Department to sell land in the urban core since it is more expensive to develop and use the profit to buy land near the rail in Kapolei and build a teacher condominium in Kapolei. He commented that the Department could do the same on the other islands. Carlson explained that the Department could not currently sell land.

Committee Member De Lima asked if the Department could lease land. Carlson confirmed that Act 155 provides the Department with an option to lease land. He noted that the Department has entertained the idea of whether the developing community would be interested in land outside of West Oahu. Committee Member De Lima asked if developers showed interest. Carlson stated that developers did not provide the Department with a firm answer. He stated that the Department could continue to follow up. Carlson explained that the business model is difficult to profit off, and developers sometimes show interest based off profit.

Committee Member De Lima stated that developers who build apartment buildings for low-income housing receive tax credits. He asked if tax credits exist for teacher subsidized housing and commented on economic scales. Carlson stated that he would need to research this. Committee Member De Lima commented on tax credits for teacher housing. Masden detailed that the Department is working with HHFDC, which deals with affordable housing. He explained starting teacher salaries and detailed that the issue is whether housing units would be standalone and run by the Department or privately managed, which is a problem that the Department is trying to solve. Masden further detailed Act 210 and highlighted that the Department has had early discussions regarding land swaps and resituating parcels. He stated that the Department is cognizant of looking beyond the three pilot projects for Act 155. It is trying to complete the pilot projects based on statute, but Act 210 provides the Department with opportunities to review long-term plans and look across the state for pieces of property for teacher housing components.

Committee Member De Lima stated that the Department is focusing on complicated realities. He stated that the Department needs to be able to complete this project. Masden confirmed that the Department is moving forward.

Christina Kishimoto, Superintendent, detailed that this project is a complicated undertaking. She stated that the Department needs clear guidance regarding whether the Committee wants to separate some projects from the Department to move to the Legislature and Governor. Kishimoto explained that first and second year teachers may be fine with group housing, but eventually they want to buy houses or land, which is beyond the Department and Committee’s scope. Kishimoto stated that the Department needs clarity and guidance regarding what it needs to bring to the Legislature and Governor’s attention and needs to determine what it needs help with from the Legislature, such as tax credits, teacher housing, or working with developers. Kishimoto expressed concern that the Committee’s discussions are broad and stated that the Department needs to know which components to address. She stated that Act 155 gives the Department the opportunity to raise funds through commercialization, which does not necessarily have to address teacher housing. She noted that teacher housing would not produce funds for the Department. Kishimoto expressed further concern that the range and scope of discussions makes it difficult for the Department to determine where to focus its efforts. She stated that the Department does not have autonomy over some of the Committee’s suggestions. Kishimoto asked for clear direction so that the Department can focus its efforts and determine what it needs to ask from the Legislature. She stated that the Department is holding the burden of issues that are beyond its scope.

Committee Chairperson Uemura stated that Act 155 has been on the books for many years and reaccelerated within the last couple of years. He stated that it is simple what Act 155 allows the Department to do, which is generate additional funds. These funds relate to building new 21st century schools, renovating schools, and repair and maintenance projects. Committee Chairperson Uemura stated that the Committee provided the Department with direction six to eight months ago and directed the Department to proceed by following Act 155. He stated that the Department presented the Committee with five to seven sites and recommended these sites for development. He noted that the Department did not discuss teacher housing. Committee Chairperson Uemura agreed that teacher housing is an add-on. He detailed that if there is a condominium on-site, the Department can review whether it could use some units for teacher housing, but it will not be a teacher housing condominium because developers would not be able to justify investment.

Committee Chairperson Uemura explained that the purpose of an RFI is to identify properties in which developers are interested and noted that the Committee approved certain properties. He stated that the Department is detailing what it will take to complete Act 155, but the Committee has been requesting a timeline for months. Committee Chairperson Uemura stated that the bottom line is that it will take the Department two years to get to the point to where it is signing a contract. He detailed that, in earlier discussions, the Committee and Department noted that it did not have funding in its budget to pursue some of these projects nor did it have the expertise. This is why it determined that it needs to have developers inform the Department on how developers can utilize and speed up projects. Committee Chairperson Uemura stated that at the last Committee meeting, the Department informed the Committee that there were two parties interested in two different parcels, and the Department would be meeting with them the following week.

Committee Chairperson Uemura asked how the Department is speeding up the process if it is hiring the same consultant for work on Young Street and wasting funds. He stated that the Department is hiring a consultant for demographic studies and due diligence, but the Committee already directed the Department to review specific sites, engage developers, and then negotiate. If the Department goes through multiple reviews, it will never complete Act 155 projects. Committee Chairperson Uemura emphasized the importance of the Department taking advantage of Act 155 and having a project in place but stated that the Department is indicating that it will take two years for this to occur. Committee Chairperson Uemura stated that the Department needs to complete the next steps it presented, but they are not what the Committee asked the Department to do. He stated that the Department is not following the Committee’s directions.

Carlson stated that the Department will receive input from its RFI meeting and explained that the Department needs to complete its process. He explained that since a developer submitted an RFI, the Department has to put out an RFP. Carlson detailed that there are procurement requirements that the Department needs to follow in drawing up an RFP that requires due diligence. He stated that the Department can review whether it can streamline the process but emphasized that there are certain requirements. Carlson detailed that there are procurement issues to consider if the Department reaches the negotiation step with a single developer. Committee Chairperson Uemura asked if there are exceptions to procurement laws and whether any state agencies have used an exception. Carlson stated that the Department would need to research this. Committee Chairperson Uemura asked the Department to research this because he believes there may be exceptions that agencies have used.

Masden detailed that the Department is working with HHFDC and following its model since the Department does not have capacity and HHFDC does. Masden detailed that the Department received good information in response to its RFI and would engage in discussions, but some of the submittals may be different from what the Committee expects. For example, one of the proposals includes the Department sharing risk. Masden stated that the Department is moving forward as quickly as it can. He explained that it hired the same consultant because it needed expertise. Masden detailed that the Department is working with the Land Use Research Foundation, the Department of Land and Natural Resources, and HHFDC, and the Department has the right team with knowledge of how the process works. Masden explained that certain areas stalled during the process and highlighted that these missteps served as a learning opportunity. He detailed costs associated with the process. Masden detailed that Act 210 resulted out of yearly reports the Department submitted to the Legislature and the fact that the Department could not move forward with Act 155. He stated that different areas are coming to fruition, and the Department can effectively move forward.

Committee Chairperson Uemura commented on fee transfers and asked if the Department is focusing on the five to seven fees that the Committee approved. Carlson confirmed that it is. He stated that the statute has many properties on Oahu, but the Department is focusing its attention on sites that it is looking to develop.

Committee Chairperson Uemura asked what the Committee could expect from the Department at its next update. Carlson stated that the Department would provide a better timeline regarding its RFP and would review its process. He stated that the Department will work through the different phases in regards to developing an RFP with HHFDC and can meet with HHFDC to discuss if it could move through the RFP process more quickly.

Committee Chairperson Uemura stated that the Department has good answers but has not made progress. He stated that the Committee could not keep accepting answers without seeing progress. He stated that the Department needs to move forward and complete its pilot project. Committee Chairperson Uemura stated that the Committee has been discussing Act 155 with the Department for two years. He emphasized the importance of the Department moving forward and stated that the Committee does not want to hear about delays or excuses.

Amy Kunz, Assistant Superintendent and Chief Financial Officer, Office of Fiscal Services, reviewed the Department’s fiscal reports as of September 30, 2018. She stated that the general fund budget comparison report shows that expenditures are 5% above Fiscal Year (“FY”) 2018 actuals and with minimal variance as compared to one quarter of the FY 2019 allocation. She stated that the Department will closely monitor expenditure levels during the fiscal year, and it recognizes that the beginning of the year expenses usually lag but will accelerate as the Department moves into the second quarter. Kunz stated that the large variance in EDN 400 as compared to the FY 2019 allocation is because student transportation encumbers contracts for the year. Kunz further reviewed comparisons to prior year-to-date expenditures and encumbrances and reasons for variances. Kunz noted that the Department’s report includes an estimated payroll due to the Department’s payroll system being down. She explained that the Department had not yet posted the payroll data from September 20, 2018, so it did not fully close September and included estimates for payroll. Kunz stated that the Department does not plan to do redo its report, but it would update and correct the data when it reports for the December timeframe.

Kunz reviewed the school food service report and noted that expenditures are in line with expectations at this time of year. She stated that the Department has nothing substantial to note regarding this report. Kunz noted that due to issues with payroll that she explained previously, expenditures are slightly understated. Similarly, the Department did not include payroll in its expenditure component for the student transportation report. She stated that the Department encumbered full amounts of known contracts for student transportation, which is normal for this time of year. She explained that these are the reasons why expenditures appear large on the encumbrance side.

Kunz reviewed the utilities report and noted that increases in gas, water, and sewer charges continue to drive utilities expenditures. However, alternative energy payments and generation are also increasing. She stated that the overall cost per kilowatt-hour has increased about three cents, offset by reduced consumption and energy efficiency measures that the Department has in place. Kunz highlighted that the Department continues to leverage alternative energy.

Kunz reviewed impact aid receipts and noted that, as is normal, the Department has not yet received a large payment this year. She stated that the Department expects the payment in the March timeframe. Kunz stated that it finalized impact aid receipts for FY 2016 at $47.7 million at 92.33% of the learning opportunity threshold (“LOT”). She stated that because the U.S. Department of Education is focusing on quicker distribution of funds, the FY 2017 payments are 92.33% of LOT, and the Department anticipates that this year is closed. Kunz stated that the Department’s report in December would show impact aid payments related to cards submitted last fiscal year. She noted that the Department received a small payment this current year, with the expectation that the bulk of the funds will come after the first part of the calendar year. Kunz stated that Congress has included increases in its appropriation the last two years.

Kunz reviewed the executive summary of CIP projects and outlined several significant projects and financial activity. She stated that this report contains nothing surprising as the Department moves into the first quarter of the new fiscal year.

Heidi Armstrong, Interim Assistant Superintendent, Office of Student Support Services, stated that for services to be eligible for school-based Medicaid reimbursement, they must meet four criteria. First, the individualized education program (“IEP”) must document the service. Second, the student must be Medicaid eligible. Armstrong explained that in order to qualify for Medicaid, the family must meet income limits based on the federal poverty guidelines and family size, which determines Medicaid eligibility. Third, a parental consent form must be on file. Finally, a licensed provider must deliver the Medicaid reimbursable service.

Armstrong noted that the Department needed parental consent each time it billed for a reimbursable service prior to 2013. After 2013, parental consent is only required once. She stated that the Department is making an effort to inform parents on what giving consent means. In past years, the Department informed parents through mail, but it learned that less informed parents hesitate to sign the parental consent form. Armstrong highlighted that as a result, the Department is making the initial contact with parents face to face to explain what giving consent means. She emphasized that the Department wants to ensure that parents are comfortable with signing the form. Armstrong highlighted that the Department is engaging in a collaborative effort with nonprofits and advocacy groups to enlist help in talking with parents and discussing consent. Armstrong noted that the Department is legally required to provide notice annually to parents and legal guardians as outlined in a brochure entitled Hawaii State Department of Education’s School-Based Medicaid Claiming Program Overview and Annual Notification Form. Armstrong highlighted that the Department has this brochure and is distributing it.

Armstrong reviewed updates in relation to Medicaid reimbursements. She detailed that in August 2018, the Department worked on building infrastructure and revised, reviewed, and approved essential documents. These documents included a Superintendent’s letter to parents and guardians dated August 7, 2018; the Department’s school-based Medicaid claiming program cover and annual notification form; the Department’s school-based Medicaid claiming authorization form, including a parental consent form, which was updated in July 2018; and a parent “frequently asked questions” sheet. She stated that all of these documents are available on the Department’s website. While the Department is providing information to parents face to face, parents can also access information online.

Armstrong stated that in August 2018, the Department also met with all district educational specialists (“DES”) to present the process of meeting with parents and legal guardians of all students receiving special education services, explain the Medicaid claiming program, and distribute all necessary forms. She stated that the Department recognized that it had consents that parents had submitted, but the Department was unable to bill because they were either passive consents or the form was incorrect. She stated that the Department gathered the names of all of the students and distributed a list of 2,000 students to all DESs. She highlighted that schools are making an effort to call families to update forms.

Armstrong stated that in October 2018, the Department permitted the entire field to fully implement the parental consent process and move forward. Between August 2018 and October 2018, the Department needed to create written internal guidance so that the field was clear on what it needed to do in order to start the process. She stated that the Department wanted all components in place so that it did not need to backtrack. Armstrong highlighted that in October 2018, a delegation of 17 individuals from Hawaii attended the National Alliance for Medicaid in Education Conference in Baltimore, Maryland. These individuals brought back a wealth of information, including good news and roadblocks. Armstrong noted that from the conference, the Department learned that one roadblock is that every provider has to have its own national provider identifier number. In the past, the Department was able to use one number for all providers, but this is no longer allowable. She stated that the Department needs to give providers an 18-page application form to complete. Another requirement for providers is that they need to register with Medicaid, which includes a $500 fee. Armstrong noted that the Department has met with MedQuest and is working collaboratively to waive the fee for providers and provide assistance for the 18-page application. She noted that the final pages of the application can be prepopulated, which will limit the number of pages that providers need to fill out. The Department is also working on how to bring providers together to fill out forms.

Armstrong reviewed the Department’s historical Medicaid reimbursement data. She detailed questions from Committee Members regarding whether expenditures are not reimbursable due to criteria. She stated that the Department’s report includes actual reimbursements. Armstrong stated that the Department stopped billing in April 2018 because consent forms were not compliant. She reiterated that the Department is making an effort to encourage parents to sign correct forms, but it has not begun to bill yet because it is working on having infrastructure in place. Armstrong stated that the Department hopes to have its infrastructure in place by the end of the year and can retroactively bill for services from the date that parents signed the form.

Armstrong reviewed current Medicaid reimbursement data and highlighted that the federal government reimbursed $199,837 to the Department between July 2017 and February 2018. She noted that the Department received $0 in reimbursements in August 2017. Armstrong explained that the Department sends claims to the University of Massachusetts (“UMass”), which is the Department’s third-party provider. She further explained that there was an issue with the Department’s file for August 2017 during transmittal. Armstrong stated that the Department is working with UMass to reengage that file and provide the information.

Armstrong reviewed the Department’s next steps. She stated that the Department is working internally to create a document to provide updated parental consents to UMass. Once the Department submits a claim, UMass lets the Department know whether its components are in place and whether a service is billable. Armstrong stated that the Department is also working with UMass to begin processing Medicaid reimbursement claims once UMass identifies approved parental consents. The Department will continue to send parental consent forms to UMass on a bi-monthly basis. The Department is also updating student records with Medicaid identification numbers for billing only so that the Department can identify when a student has a consent form on file without violating the student’s rights.

Armstrong stated that the Department is working with MedQuest to obtain national provider identifier numbers for covered healthcare providers and to update the state plan. She explained that the state plan determines which services the Department is able to receive reimbursements for and highlighted that the Department wants to expand its array of services. Once the Department finishes work with MedQuest on the state plan, approval may take three to six months. She explained that the Department does want to add a service, wait for six months, and then add another service and begin the process again. It plans to request updates to the state plan all at once so that it can finish this work in an efficient and timely manner. Armstrong stated that next steps also include the Department working with DESs to ensure that all parents and legal guardians have an opportunity to review the Medicaid claiming program, including receiving all pertinent forms and obtaining a signed parental consent. The Department plans to restart the process of billing Medicaid for reimbursable services by the end of this year.

Committee Member De Lima asked for more information regarding UMass. Catherine Fukada, State Resource Office Teacher, School Process and Analysis Section, Office of Information Technology Services, explained that UMass is part of the medical center that processes billing. She further explained that UMass is a third-party biller for many states throughout the country.

Committee Member De Lima asked if UMass is the Department’s consultant that processes paperwork. Fukada explained that UMass is part of a system and processes Medicaid. She detailed that the Department has to translate services to medical terms. UMass does this based on the data that the Department sends. Committee Member De Lima asked if UMass processes requests for other districts. He asked if the Department is using UMass to increase its percentage of reimbursements. Fukada confirmed that it is. She highlighted that UMass has perfected billing and is helping and guiding the Department.

Committee Member Kawano commented on the Department’s reimbursements by current service categories and asked why the Department is not receiving 100% reimbursement in each category. Armstrong explained that the Department’s data shows what the federal government has reimbursed. Fukada detailed that the federal government does not reimburse the Department the full amount. Armstrong explained that the amount changes year to year. She detailed that in 2007, the federal reimbursement percentage was 57.55. This year, the percentage was 57.4, so if the Department submits claims, it will receive reimbursements in that amount. Committee Member Kawano asked what UMass receives from the reimbursement. Armstrong explained that UMass receives a percentage. Committee Member Kawano asked for the percentage that UMass received from reimbursements. Armstrong stated that she could provide this information but noted that she believes it is in the single digits. She highlighted that since it stopped billing in April, UMass has continued to help the Department every month.

Committee Member Takeno commented that reimbursements significantly decreased in 2014 and in the following years. He asked if this was due to the issue regarding parental consent forms. Armstrong confirmed that this is why reimbursements decreased. She explained that it was not allowable for the Department to bill passive consents after 2013, as it needed actual approvals. Committee Member Takeno commented that reimbursements have been decreasing each year since 2013. He asked if the Department is not providing certain types of services at the same level that it provided in 2013. Fukada explained that the decreases in reimbursements year to year are due to parental consents. She further explained that a decrease in reimbursements in 2015 was due to the Department losing staff. During this period, the Department did not have a Medicaid director and did not address consent forms. She explained that the Department continued to bill and follow the process but did not add new consent forms.

Committee Member Takeno commented that the Department could bill retroactively. He asked if it is a possibility for the Department to bill retroactively for these years. Armstrong explained that the Department could bill retroactively for two years from the time it receives a consent form. Committee Member Takeno asked if the Department could bill retroactively if it received a consent form after it had already provided services. Armstrong confirmed that it could.

Committee Member De Lima asked for the percentage of eligible students for which the Department has consents. Armstrong explained that the Department sent out correct consent forms this school year, but the number of consent forms it has received to date are low. She highlighted that the Department planned to collect consent forms and inform parents though face-to-face conversations at new IEP meetings or annual IEP meetings. Once the Department moves forward on this process, it will have a faster rate of return. She highlighted that parents may trust the information more once partner agencies engage in discussion with parents. Armstrong stated that parents have returned 291 consent forms to date.

Committee Member De Lima stated that the Department has 18,000 students who are receiving special education services and should have 15,000 or 16,000 consent forms. Armstrong explained that the target number of consent forms is dependent on the number of students with reimbursable services and Medicaid eligibility. Fukada stated that the Department is attending all special education meetings to get consent forms upfront. Committee Member De Lima stated that students who are 18 and receiving special education services are automatically eligible for Medicaid because they are not dependent on their parent’s income at 18. Students who are younger than 18 may or may not be eligible. Armstrong confirmed that this is correct. Committee Member De Lima stated that 55% of students or 7,500 families are economically disadvantaged and should be eligible. He noted that the Department is not receiving as many consent forms as it appears it should be receiving. Armstrong agreed with Committee Member De Lima and stated that the Department needs to work on getting more consent forms. Committee Member De Lima stated that the Department could receive many more forms if it were to send a letter to parents explaining eligibility and the necessity of forms. Committee Member De Lima stated that he would have returned the form if he received a letter and noted that he does not recall his child’s school ever asking him to sign a consent form.

Committee Member Kili Namau‘u asked if the Department is automatically asking parents for consent forms. Armstrong confirmed that it is because it does not know whether a child receives Medicaid or not. Committee Member Namau‘u stated that she hopes that the Department is able to significantly increased the number of returned consent forms six months from now. She asked if the Department had to wait until parents returned consent forms to bill. Armstrong confirmed that the Department needed to wait until it receives consent in order to bill.

Committee Member Takeno asked what the potential increase in reimbursement rates would be if the Department were to increase its parental consents. He stated that the Department is not receiving the amount of money it should be receiving through the reimbursement process because it does not have forms. He asked if there was a direct correlation between consents and increasing rates and asked what the Department could expect in increases. Armstrong stated that she is unsure. She detailed that the Department is currently billing for speech-language therapy, school behavioral health, and other services. She noted the number of students that currently receive occupational therapy services and stated that the Department needs signed consent for those who are Medicaid eligible. Committee Member Takeno asked if reimbursement rates would significantly increase because of signed consents. Armstrong confirmed that the Department would see significant increases. Committee Member Takeno stated that he would like to see updates regarding reimbursement increases as a result of the Department’s endeavors in increasing consent forms. Fukada stated that the Department could provide Committee Member Takeno with this information. Armstrong detailed reimbursable services, administrative costs, and services that could be reimbursable and stated that the Department is moving toward having an efficient system in place.

Committee Member Payne asked if the Department would be unable to request reimbursements until providers have national provider identifier numbers. Armstrong confirmed that this is correct. She detailed that the Department may need to refund reimbursements and explained that other states are wondering what will happen as well. She detailed that there is a date that providers need to have identifier numbers by and if providers do not have this number, states may need to refund reimbursements. Committee Member Payne asked if there is a grace period. Armstrong explained that the Department is still waiting for more information. Committee Member Payne asked if the Department would be aware of this requirement if it had not attended the conference in Baltimore. Armstrong stated that the information was made available at the conference and detailed that a letter of some sort was sent to states in 2010. Fukada explained that information is posted but is not sent out. She further explained that departments needed to seek out information. Fukada detailed that a letter was sent in 2010, but there was no action throughout the country until 2016. She emphasized that other states are also determining how to handle this situation.

Committee Member Kawano stated that the Department is not receiving a significant amount in reimbursements and asked how many individuals within the Department are fully dedicated to this process. Armstrong described the Department’s team and highlighted that the Department is establishing a Medicaid branch that will have administrators and other positions. Committee Member Kawano stated that the Department is collecting $500,000 per year and asked if it was spending more than it was collecting. He asked if the Department is losing money through this process. Kishimoto explained that the Department’s Medicaid reimbursement system is not fully in place the way that it should be. She stated that there is impatience due to low reimbursement rates, but the Department is dedicated to ensuring that it takes the right steps. She detailed that the Department needs to finish building its system and hire experts. Kishimoto stated that educators are engaged in Medicaid work. She noted that the Department has not yet hired individuals with the appropriate skillset. She stated that the Department needs billers and other individuals with experience outside of education, and it is currently identifying other skillsets it needs. Once the Department’s system is in place, it will not lose money. Kishimoto stated that the Department’s goal is to receive maximum reimbursement rates by putting infrastructure in place and building a system. She noted that the Department needs to provide services regardless of reimbursement rates.

Committee Member Kawano stated that the Department needs to provide services, but it does not make sense for the Department to spend more money in efforts to receive reimbursements than the amount it actually receives. Kishimoto stated that the right system and infrastructure would add value. Committee Member Kawano asked what the Department’s breakeven is on reimbursements. He stated that he is not asking how much the Department should receive in reimbursements but rather what its breakeven point is relative to the amount of effort and money it is spending. Armstrong stated that the Department can review and calculate its breakeven point. Kishimoto agreed that the Department needed to do calculations. Committee Member Kawano stated that it does not make sense for the Department to spend more than it receives. Kishimoto stated that it makes sense financially if the Department does things the right way. Committee Member Kawano stated that there is no reason for the Department to hire individuals if it will be losing money.

Committee Member De Lima emphasized the importance of the right infrastructure. He stated that Committee Member Kawano’s analysis relates to the Department’s historical practices. However, processes and infrastructures are important. Committee Member De Lima stated that 250 parents generated a reimbursement amount of $590,000. He stated that 55% of students are economically disadvantaged and 10% of students amounts to 18,000 students. If 50% of that figure qualify for Medicaid and receive services, then the Department can receive reimbursements for over 7,000 households. Committee Member De Lima stated that based on the reimbursement amount generated by 250 families, the rate would significantly increase if the Department receives consent forms from all families who meet the criteria.

Committee Member De Lima stated that the Department needs to move forward on getting consent forms. Committee Member De Lima detailed his experience and his child’s experience with the IEP process and detailed issues in his child receiving services due to inconsistent third-party providers and a lack of providers and specialists. Committee Member De Lima stated that he would have not hesitated in signing a form if the Department informed him that it would allow the Department to seek reimbursement for services and possibly additional positions to provide consistent services to his child. Committee Member De Lima stated that he was never approached about a consent form, and his child’s school did not inform him that his child was eligible for Medicaid at 18. He stated that there is a breakdown when it comes to providing information to parents. Committee Member De Lima described his experience attending IEP meetings and emphasized that parents are anxious during IEP meetings. He stated that he does not agree with the Department approaching parents during IEP meetings and should send letters out informing them of how consent forms can be helpful for the Department to receive reimbursements so that it can provide more services to students receiving special education services. He stated that parents focus on what their child will receive in the classroom during IEP meetings. He reiterated that it is the wrong place to approach parents to sign consents and stated that this is why parents may be reluctant to sign consent forms.


V. Recommendation for Action

Carlson stated that the Department is seeking approval of its revised proposed draft amendments to Hawaii Administrative Rules (“HAR”) Chapter 8-27, entitled “Transportation of Students” (“Chapter 27”). He stated that the Department needs Committee approval to enable it to proceed with public hearings on the matter. Carlson detailed that the Committee approved the Department’s proposed amendments to Chapter 27 on November 21, 2017. At that time, the Department had proposed two major amendments in addition to housekeeping changes.

Carlson stated that the first amendment was to change the existing free fare eligibility criterion from families who meet income poverty guidelines for free school lunch to families who have been certified eligible to participate in the Supplemental Nutrition Assistance Program (“SNAP”). The Department made this change to address the situation created when it expanded the federal Community Eligibility Provision (“CEP”) program, which provides free meals to all students of schools in qualifying low-income areas. At schools where the Department implemented CEP, all students inadvertently became eligible for free bus fare regardless of whether or not their families met the income poverty guidelines under the free lunch program. The Department proposed this rule amendment due to concerns about the financial impacts of the CEP implementation on the bus program.

Carlson stated that the second amendment the Department proposed was to make bus fare free for children of active military duty service members. The reason for this proposed change was that the majority of military families who enroll at Hawaii public schools expect to receive free school bus service because most other school districts in the nation do not require students to pay a fare.

Carlson stated that subsequent to Board approval, the Department reconsidered both of these amendments. The Department felt that universally amending the free lunch eligibility criterion might have been too sweeping in nature. Without available data comparing families who are currently receiving free lunch versus those who are signed up for SNAP, the rule change may inadvertently create hardship on families who are eligible for both but have not signed up for SNAP at non-CEP schools. Therefore, the Department decided to revise the proposed rules so that the free lunch criterion would remain the same for non-CEP schools and only CEP schools would be subject to SNAP eligibility instead of free lunch.

Carlson stated that at the November 21, 2017 Committee meeting, a Committee Member questioned whether the Department is discriminating against non-military families by providing free bus fare for military families. Following this meeting, the Department engaged in discussions with military liaisons. The Department received feedback that the military community feels it is important for them to blend in with the local community and not receive special treatment. Based on this feedback, the Department revised the proposed rule amendments by deleting the proposed eligibility criterion that would have provided free bus fare for children of active military duty service members.

ACTION: Motion to recommend the Board approve for public hearing draft amendments to Hawaii Administrative Rules, Chapter 8-27, Transportation of Students, as described in the Department’s memorandum dated November 15, 2018 (De Lima/Kawano). The motion carried unanimously with all members present voting aye.

Camille Masutomi, Chief of Staff to the Superintendent, stated that the Department is seeking approval of its proposed amendments to HAR Chapter 8-5, entitled “Public Access to Information” (“Chapter 5”). Committee approval is necessary to enable the Department to proceed with public hearings on this matter. Masutomi stated that the amendments to Chapter 5 would change the copying fee from a subjective amount of a “reasonable cost” to a specific amount of “$0.25 per page” for all requests. She stated that this does not change how much the Department charges for copies, as the Department has been charging $0.25 since 2008. Masutomi stated that defining the amount clarifies what all schools and offices may charge and eliminates inconsistencies. Masutomi detailed that the Department previously provided guidance through memoranda, but an administrative rules change would provide better guidance. She stated that some members of the public might believe that, as taxpayers, they should not have to pay additional amounts for copies of Department records, but while the Department receives taxpayer funds to fulfill its core function of providing access to a quality public education, the Department incurs additional costs in providing copies of Department records. These costs are not currently included in the Department’s budget. Masutomi stated that the Department recommends adoption of the recommendation to allow the Department to recapture some of the costs associated with producing copies of Department records.

Committee Chairperson Uemura asked if the Department determined whether $0.25 is reasonable or whether it is an arbitrary amount. Masutomi stated that other agencies charge $0.25. She stated that the minimum that the Department can charge is $0.05, but $0.25 captures the majority of the cost. It does not capture the costs of color copies, but the majority of copies are in black and white. Committee Chairperson Uemura asked if the Department determine what it costs to copy one piece of paper and whether it costs $0.25. Masutomi stated that the amount to copy one piece of paper fluctuates, but $0.25 is a reasonable amount that the Department can collect.

The Committee went into executive session prior to taking action on this agenda item.

ACTION: Motion to recommend the Board approve for public hearing draft amendments to Hawaii Administrative Rules, Chapter 8-5, Public Access to Information, as described in the Department’s memorandum dated November 15, 2018 (De Lima/Takeno). The motion carried unanimously with all members present voting aye.


VI. Executive Session
This portion of the meeting was closed under Section 92-4 and Section 92-5(a)(4), Hawaii Revised Statutes.

ACTION: Motion to move into executive session to consult with the Board’s attorney on agenda item VI.B., Committee Action on approving for public hearing draft amendments to Hawaii Administrative Rules, Chapter 8-5, Public Access to Information (Takeno/De Lima). The motion carried unanimously with all members present voting aye.

The meeting recessed at 12:24 p.m. and reconvened at 12:35 p.m.

The Committee did not deliberate or take action on agenda item VI.A., Committee Action on approving for public hearing draft amendments to Hawaii Administrative Rules, Chapter 8-27, Transportation of Students in executive session.

The Committee took action on agenda item V.B., Committee Action on approving for public hearing draft amendments to Hawaii Administrative Rules, Chapter 8-5, Public Access to Information after executive session.

Committee Chairperson Uemura called for public testimony. There was no public testimony at this time.


VII. Adjournment

Committee Chairperson Uemura adjourned the meeting at 12:35 p.m.