STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE MEETING

MINUTES

Queen Liliuokalani Building
1390 Miller Street, Room 404
Honolulu, Hawaii 96813
Monday, August 10, 2023
*This meeting was a remote meeting under Section 92-3.7, Hawaii Revised Statutes. The meeting recording is available here.

PRESENT:
Ken Kuraya, Chairperson
Bill Arakaki
Kaimana Barcarse
Warren Haruki
Lauren Moriarty
Kahele Dukelow, ex officio

EXCUSED:
Makana McClellan

ALSO PRESENT:
Keith Hayashi, Superintendent, Department of Education
Brian Hallett, Assistant Superintendent, Office of Fiscal Services, Department of Education
Curt Otaguro, Deputy Superintendent of Operations, Department of Education
Alison Kunishige, Executive Director
Kenyon Tam, Board Analyst
Lady Garrett, Secretary


I. Call to Order

Committee Chairperson Ken Kuraya called the Finance and Infrastructure Committee (“Committee”) Meeting to order at 9:00 a.m. Committee Chairperson Kuraya and Committee Members Bill Arakaki, Kaimana Barcarse, and Warren Haruki were present. Committee Member Lauren Moriarty and Ex-officio Committee Member Kahele Dukelow participated remotely.


II. Approval of Meeting Minutes of June 15, 2023

Committee Chairperson Kuraya asked Committee members to review the Committee’s June 15, 2023, meeting minutes.

Committee Member Barcarse moved to approve the Committee’s June 15, 2023, meeting minutes. Committee Member Arakaki seconded.

Committee Chairperson Kuraya asked if there were any objections to the motion. No Committee member raised objections, and the motion carried through unanimous consent from all members present (Committee Members Arakaki, Barcarse, Haruki, and Moriarty).

ACTION: Motion to approve the Finance and Infrastructure Committee’s June 15, 2023, meeting minutes (Barcarse/Arakaki). The motion carried through unanimous consent from all members present.


III. Discussion Items

The Committee took agenda item III.A after agenda item III.B.

Committee Chairperson Kuraya called for public testimony on this agenda item.

Vanessa Ott, member of the public, recommended that the Department design an interactive database that provides expenditures and budget information that is easily accessible by the public.

Cheri Nakamura, HE‘E Coalition, expressed appreciation to the legislature and the federal government for the additional resources, noted concern for the upcoming fiscal year (“Fiscal Year”), and requested more information on the Department’s contingency plan if funds are not available.

Susan Pcola-Davis, member of the public, urged the Committee and the Department to meet in advance of the supplemental budget deadline, expressed concern for EDN 200 and EDN 300, and noted that the Department’s has $163 million in unfunded requests for Fiscal Year 2023-2024.

Committee members received written testimony before the meeting. (A listing of the people who submitted written testimony before the meeting is included at the end of these minutes.)

Committee Chairperson Kuraya called on Keith Hayashi, Superintendent, Department of Education (“Department”), and Brian Hallett, Assistant Superintendent, Office of Fiscal Services, Department of Education, to provide an update on the Department’s operating budget and carryover funds for Fiscal Year 2023-2024, supplemental operating budget for Fiscal Year 2024-2025, and ESSER resources.

Hallett stated that the Department would be fine for the first year of the 2023-2025 fiscal biennium (“FB”). He stated that the Department expects to receive annual instructions from the Department of Budget and Finance (“B&F”) with a 10% restriction for EDN 200 and EDN 300, and intends to manage the budget with the hope that the restriction is lifted.

Hallett shared that the Department is facing the challenge of considerable budgetary uncertainty due to inconsistency in the year to year funding and significant unmet needs. He expressed concern that the legislature in the second fiscal year of the FB did not include the supplemental budget of $163.5 million approved by the Board. Hallett requested support from the Board to engage with the legislature and noted that there would be more information.

Hallett stated that the carryover amount went down compared to last year, which indicates that the Department spent what was available and more. He explained that schools carryover funds to manage uncertainty. Hallett shared that there is about $200 million left from the over $600 million appropriation in ESSER funds and that the Department is on track to fully expend the funds with an internal deadline set for June 30, 2023 to meet the September 30 deadline. He recommended that the Committee review the ESSER report, available online, which includes a more detailed summary of spending.

Hallett stated that the Committee on Weights would provide their recommendation for the weighted student formula (“WSF”) to the Board. He noted that WSF is equivalent to 50% of the entire budget.

Committee Chairperson Kuraya requested that the Committee direct questions to Hallett outside of the Committee meeting.

The Committee took agenda item III.B before agenda item III.A.

The meeting recessed at 9:06 a.m. and reconvened at 9:11 a.m.

Committee Chairperson Kuraya called for public testimony on this agenda item.

Cheri Nakamura, HE‘E Coalition, testified in support of the Department for making progress on addressing deferred maintenance projects and expressed concern about the status of capital improvement projects (“CIP”) and the amount of unspent funds continues to grow. She offered the Department advocacy support from the HE‘E Coalition.

Susan Pcola-Davis, member of the public, referenced her written testimony chart relating to repair and maintenance (“R&M”) which reflects the percentages by fiscal year. She suggested that the Committee members review the facilities online portal, which provides information on funds, deferred maintenance projects, and jobs in progress.

Committee Chairperson Kuraya called on Hayashi and Curt Otaguro, Deputy Superintendent of Operations, Department of Education, to provide an update on the status of the Department’s CIP and R&M.

Hayashi expressed deep aloha (love) for the communities affected by the destructive wildfires in Maui especially in Lahaina and noted the same sentiment on behalf of the Department of Education (“Department”). He acknowledged Rebecca Winkie, Complex Area Superintendent (“CAS”), Hana-Lahainaluna-Lanai-Molokai and Desiree Sides, CAS, Baldwin-Kekaulike-Kulanihakoi-Maui who are working to provide support for school teams. Hayashi explained that the situation remains fluid and that the four public schools located in the Lahaina area were closed on Tuesday morning due to safety. He noted that other schools served as temporary shelter sites and were assisting with emergency response efforts.

Hayashi reported that there were 36 fatalities from the wildfire. He stated that the Lahaina area remains closed and that the Department has not been able to get to its campuses. Hayashi stated that aerial photographs and video show that King Kamehameha III Elementary School, located on Front Street in Lahaina, sustained extensive structural damage. He shared that the Department would be working with emergency response officials to gain access to the area to assess the structural damages and that Assistant Superintendent Randall Tanaka of the Office of Facilities and Operations is on Maui with a delegation of state officials.

Hayashi emphasized that the Department is fully committed to do what is necessary for students, teachers, and all other employees. He shared that an internal executive team would coordinate resources and contingency plans. Hayashi recognized the need for mental health services and shared that a resource list compiled by the Office of Talent Management was circulated to all staff. He stated that the Department would like to resume school to provide a sense of normalcy, but that most Maui schools would remain closed to give school teams time to assess damage and their capacity to reopen. He announced that all school updates would be on the Department’s website and shared via social media platforms.

Committee Member Barcarse expressed aloha (love) for Maui and asked the Department to keep the Board informed to help support the ʻohana (family).

Committee Member Haruki expressed aloha (love) for Maui and noted that the effort to focus on staff is critical. He offered support to convene an emergency Board meeting if the Department deems it necessary.

Committee Member Arakaki expressed aloha (love) for Maui and expressed support. He also noted that it is beneficial to continue to provide information.

Board Member Dukelow, Ex-officio, expressed sadness for Maui including the loss of an entire structure at an elementary school. She shared that all students would be dispersed across Maui and the Department needs to expedite enrollment procedures to make the process easier for students and families. Hayashi replied that the Department would put a process in place to ensure that the enrollment process for displaced families would be as seamless and easy as possible for everyone involved.

Committee Member Moriarty expressed aloha (love) for Maui and appreciation for those who are working to help address this tragedy.

Committee Chairperson Kuraya expressed aloha (love) for Maui and asked Hayashi to share any relevant information and pledged support for ongoing efforts.

Otaguro reported on the Department’s CIP projects and expressed appreciation for the testimony received. He stated that the Department started a project four months ago to plan a path forward for CIP. Otaguro stated that the Department had 734 projects in the last fiscal year worth $864 million, with 262 projects completed but there are still active CIP and the Department continues to be busy in this area.

Otaguro stated that in terms of deferred maintenance there are 593 active projects totaling $100.2 million. Otaguro stated that completing work orders is a responsibility the Department shares with the Department with the Department of Accounting and General Services (“DAGS”) on the neighbor islands. He explained that the Department received approximately 26,000 work order requests on Oahu; it completed 25,800 of these requests. Otaguro shared as times pending work orders turn into larger problems if lower priority items not addressed in a timely manner.

Otaguro expressed appreciation that the Department was able to get an additional CIP and R&M funding. He stated that in fiscal year 2022 the Department had an additional $125 million to expend because of ESSER maintenance of effort requirements and that the Department has almost complete spent those funds. Otaguro noted that the Department received another $130 million in line item projects and the Department completed approximately $8 million worth of these projects. He clarified that funds are labeled as potentially lapsing because there needs to be a plan to encumber funding or the Department may not issue the contract. Otaguro shared that the Department’s practice is not to lapse funds, but some of the encumbered projects may not have the details necessary to do a design scope. He noted that change orders and permitting can add to the timeline and can result in cost escalations. Otaguro stated that during the past legislative session, the legislature elected not to award project completion funds for the Department to rely on in instances when the projects run out of funds. He stated that new rules and disciplines are in place to have the scope of the project match the budget. Otaguro outlined that the categories tracked include waiting for approvals, permitting, recommendations on whether the Department should proceed, and project canceled.

Committee Member Haruki referenced page 2 totals in CIP appropriations of $1.4 billion obligated $82.8 million, but only spent $20.7 million. He stated that $20.7 million of $1.4 billion is only 1.5% and that the Department also mentioned spending $250 million but he would like to know where these amounts are detailed in the materials. Otaguro replied that the report includes the active aspect and not what has been completed so the obligations are in encumbrances and contracts.

Committee Member Haruki emphasized that in his opinion it is staggering that the Department expended only $20.7 million out of $1.4 billion. Otaguro clarified that of the $402 million provided to the Department, the funds are still going through B&F.

Committee Member Haruki stated that the Department was appropriated $285 million in R&M funds, but expended $66 million and asked where the $125 million in completed projects is located. Otaguro replied that the report does not reflect that information because that information is off the books.

Committee Member Haruki stated that the project slush fund went away, but it seems like money is available. Otaguro replied that the Department does not have a slush fund, but because funds were allocated as line item projects the money is marked for specific purposes.

Committee Member Haruki suggested that due to the Maui emergency the Department should pursue bonding capacity. Otaguro acknowledged that the state would be exploring available options.

Committee Member Haruki stated that Board Member Moriarty requested metrics in terms of completion and asked the Department to find a transparent method of reporting to show progress. Otaguro stated that there are three categories of appropriation expenditures, the total amount, obligations that are encumbered, and expenditures.

Committee Member Haruki asked for clarification on why the Department keeps asking for more CIP and R&M appropriations when it is not spending all of the amounts appropriated. Otaguro replied that the Department needs to re-evaluate its process because the Department submits its request and then receives additional funds from the legislature in the form of line item projects, but it is not clear that the Department has the capacity to do all of the projects.

Committee Member Haruki suggested refining the process to help make these projects happen more quickly. Otaguro expressed agreement and stated that the Auxiliary Services Branch uses job order contracting and that the Facilities Development Branch has an opportunity to reorganize teams by island.

Committee Member Barcarse asked for either the percentage or dollar amount of how many projects are line items. Otaguro replied that a majority of projects are by line items by school and that there is a lump sum amount in R&M, but that the categories are not specific.

Committee Member Barcarse asked for clarification on the nature of the majority of the funds. Otaguro replied that of about 300 projects the majority of the projects are line items. He also stated that funds for the School Facilities Authority’s projects are specific and applied differently.

Committee Member Barcarse recommended showing the Committee the requested funds and their timeline so that the Board can assist with advocacy.

Committee Member Moriarty asked Otaguro to describe what the Department accomplished this summer while no students on campus and to detail the project targets. She also asked whether the Department was able to determine why progress was made, what prevented it from doing more, and what types of student impacts resulted. Otaguro shared various projects, including a music recording studio at Washington Middle School and addressing plumbing issues at Hilo Intermediate. He stated that the Department would provide a list of projects completed this summer.

Committee Member Moriarty asked if the Department was satisfied with the progress made. Otaguro replied that the Department is fine with the progress made, but that the Department has needed to divert a lot of attention elsewhere because of the current emergency.

Committee Member Moriarty asked Otaguro to provide information on any progress the Department has made in relation to Board Strategic Plan Desired Outcomes 3.1.1 (“All school facilities meet Title IX and ADA requirements”) and 3.1.2. (“All systems to address school facility needs are responsive and able to meet all needs effectively, efficiently, and quickly”). Otaguro stated that the Department would provide this information.

Committee Chairperson Kuraya asked the Committee to direct their questions to Hayashi and Otaguro outside of the meeting. He noted that the responses from the Department would be shared the Committee.


Committee Chairperson Kuraya called for public testimony on this agenda item.

Cheri Nakamura, HE‘E Coalition, testified that the Department has done a good job to look at partnerships with the counties for student transportation. She stated that student transportation is federally required for special education services and that the Department needs to prioritize struggling students.

Susan Pcola-Davis, member of the public, testified that the Department notified families about student transportation right before the first week of school so families had to scramble and stated that the solutions the Department provided for Pearl City High School parents are not working.

Committee Chairperson Kuraya called on Hayashi and Otaguro to provide a presentation on the Department’s student transportation for the 2023-2024 school year.

Otaguro expressed appreciation for the comments from testifiers and expressed apologies for the late messaging relating to student transportation. He explained that due to unexpected conditions at the end of the last school year, the Department was notified that bus contractors lost 20 drivers on Oahu alone and that the Department should anticipate further reductions to the driver workforce. Otaguro stated that student transportation staffing issues is a national trend, the Department continues to look for creative ways to provide student transportation. He explained that the Department reached out to the United States Department of Education to waive the “S” designation requirement and requested Governor Josh Green to lift the restriction by using an emergency proclamation. He emphasized that partnerships with the County have been positive and that the Department would do what is fiscally responsible to help recruit drivers. Otaguro stated that the Department has considered offering drive differentials to attract bus drivers and that addressing the driver shortage would be a work in progress.

Committee Chairperson Kuraya asked the Committee to direct questions to Otaguro.


IV. Adjournment

Committee Chairperson Kuraya adjourned the meeting at 10:35 a.m.

List of the people who submitted written testimony before the meeting


NAME
Organization
Agenda Item
David Miyashiro
HawaiiKidsCAN, Executive Director
III.A. Presentation on Department Fiscal Update: operating budget and carryover funds for Fiscal Year 2023-24, supplemental operating budget for Fiscal Year 2024-2025, and ESSER resources
Cheri Nakamura
HEʻE Coalition, Director
III.A. Presentation on Department Fiscal Update: operating budget and carryover funds for Fiscal Year 2023-24, supplemental operating budget for Fiscal Year 2024-2025, and ESSER resources; III.B. Update on status of Department’s capital improvement projects and repair and maintenance; III.C. Presentation on Department student transportation for 2023-2024 school year
Alice Luck
Kauai Planning and Action Alliance, President and CEO
III.A. Presentation on Department Fiscal Update: operating budget and carryover funds for Fiscal Year 2023-24, supplemental operating budget for Fiscal Year 2024-2025, and ESSER resources
Susan Pcola-DavisIII.A. Presentation on Department Fiscal Update: operating budget and carryover funds for Fiscal Year 2023-24, supplemental operating budget for Fiscal Year 2024-2025, and ESSER resources; III.B. Update on status of Department’s capital improvement projects and repair and maintenance