DRAFT

STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE MEETING

MINUTES

Queen Liliuokalani Building
1390 Miller Street, Room 404
Honolulu, Hawaii 96813
Thursday, January 11, 2024

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

EXCUSED:
Kaimana Barcarse
Makana McClellan

ALSO PRESENT:
Keith Hayashi, Superintendent, Department of Education
Curt Otaguro, Deputy Superintendent of Operations, Department of Education
Brian Hallett, Assistant Superintendent, Office of Fiscal Services, Department of Education
Capsun Poe, Board Executive Director
Wimmie Wong Lui, Board Analyst
Lady Garrett, Secretary


I. Call to Order

Committee Chairperson Ken Kuraya called the Finance and Infrastructure Committee (“Committee”) Meeting to order at 9:01 a.m.

II. Approval of Meeting Minutes of October 4, 2023, and December 7, 2023 Committee Chairperson Kuraya announced that the approval of the Committee meeting minutes of October 4, 2023, and December 7, 2023 will be deferred.


III. Discussion Items
Committee Chairperson Kuraya called on Curt Otaguro, Deputy Superintendent of Operations, Department of Education, to provide a review of the status of Department capital improvement projects (CIP).

Otaguro stated that the House Finance Committee held a legislative hearing and the Department emphasized the importance of establishing a proactive program with respect to fire alarm systems in schools. He stated that regarding the CIP, about 40% of the request was from federal funds. Otaguro summarized the CIP projects, lapsing funds, phases of different projects, and challenges relating to the permitting process.

Otaguro apologized to the Board for the release of information from the Department of Budget & Finance (B&F) relating to the CIP listing. He noted that the Department needs to work on communication with the legislature and schools to make it easier for everyone to understand the CIP priority listing. Otaguro expressed appreciation for the working relationship with each county so that projects can proceed. He also shared that the Department has communicated informally with the Senate and needs to work with them, in addition to the House, to proceed with what is being recommended.

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

Cheri Nakamura, HE’E Coalition, testified that the focus is on the lapsing funds which may alleviate pressure for the moment, but this will lock the funds into a schedule and will need project completion funds. She expressed appreciation for implementing processes and requested that the Board use the rule of making sure projects are bid ready before proceeding.

Susan Pcola-Davis, member of the public, testified that facilities have had tools to be successful and the facilities portal should be made public and not require a login.

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.)

Hayashi stated that during the House Finance Committee hearing the Department shared the operating and CIP budget. He emphasized the importance of facilities and how it relates to the overall state budget. Hayashi noted that the Department does not want to have any negative impacts on the state and will work with B&F to communicate to the Board. Hayashi apologized to the Board and expressed commitment to engage more actively to keep the Board abreast in a timely manner relating to the budget.

Committee Chairperson Kuraya shared the following comments regarding the memorandum which was short in length for a significant amount of funding. He stated that the memorandum did not address comments raised by the Committee in August and asked why the Department is asking for more funding before expending what has been allocated. Committee Chairperson Kuraya requested that information include details listing a percentage or dollar amounts of how many are line items including identifying areas that the Board can assist with for advocacy. He asked for an update on what was accomplished during the summer when no students were on campus and noted that the information does not address systemic issues relating to how this happened, and what is the short and long term solution. Committee Chairperson Kuraya noted that the information on early CIP lapsing projects of $400 million does not convey the overall budget process which will lapse on June 30, 2024. He emphasized that the Board needs to address these issues in order to support what the Department needs and recognized that his comments may be perceived as harsh but the Board needs this information to move ahead.

Hayashi expressed understanding and acknowledged that the Department hears the message loud and clear and the Department recognizes that various issues need to be addressed. He assured the Board that the Department will revisit these issues and will update the Board and have this information ready for the Committee by the next meeting.

Committee Member Moriarty expressed appreciation for the work and strongly supports the comments from Committee Chairperson Kuraya. She commented that the current CIP for the current biennium and long term processes can achieve the desired outcomes detailed in strategic plan priority III. Committee Member Moriarty acknowledged the comments from Hayashi on responding but noted that the legislature wants answers this week and the Board has a responsibility to approve the budget. She noted that changing what was approved by the Board requires approval before being presented. Committee Member Moriarty also emphasized that in order to adequately support and achieve goals the Board needs more information.

Committee Member Moriarty asked if the Board would have an opportunity to review and approve the criteria to determine the list and the amount that is provided by the Department before the Department goes back to the legislature so that the Board is able to support the Department. She asked how does the Department fix the processes including which processes are being looked at, how does the Department define success, and what priorities are being looked at including an official deadline for when this information will be provided.

Committee Member Haruki stated that in October the Board approved the supplemental budget and since that time there has been no formal communication with respect to all the changes outlined in the memorandum today, but there has been a lot of exchange with the legislature.

Otaguro confirmed that the Department submitted the original memorandum to the Board and then the Governor.

Committee Member Haruki emphasized the magnitude of the lapsing funds as compared to what the Board approved.

Otaguro noted that the Board was apprised of the reduction, but it was not formally brought to the Finance and Infrastructure Committee.

Committee Member Haruki noted that the memorandum outlines the chronology but none of the proposed changes has been shared with the Board. Otaguro confirmed.

Committee Member Haruki stated that the Board is not involved in the back and forth with the legislature. Otaguro stated that his understanding is that from the time it is submitted to the Governor.

Committee Member Haruki stated that the Department participates in the process but the Board is not involved. Otaguro expressed understanding, but was unsure of the Board’s role once the Governor recommended a finalized budget.

Committee Member Haruki noted that Representative Nishimoto asked you if the Board was aware and the response was yes. Hayashi clarified that the Department will ensure to inform the Committee on budget decisions being made as the Department moves forward. He stated that as decisions are made this will be shared with the Board.

Committee Member Haruki stated that the process needs to be from the Department to the Board and then the legislature. He noted that another deadline is upcoming soon and he would like understanding on what process will be used. Committee Member Haruki stated that the Governor is relying on what was returned from the Department and the Board needs to understand the process.

Hayashi stated that the House Finance Committee was clear on expectations to work with B&F and to make final decisions. Processes are in place to look at encumbering the funds and continuing that process till December 2024. He recognized the deadlines and the ability to make decisions for the state budget moving forward.

Committee Member Haruki asked how confident the Department is that items that are not too lapsed can be done by this calendar year at the appropriate line allocation. He expressed concern that the hearing was not good and there are issues of trust and confidence in the Department’s ability to get things done. Committee Member Haruki asked what process will be used to ensure that the Department can deliver if it chooses not to lapse the funds.


Otaguro stated that the Department is continuing to refine the list with the project managers. Hayashi stated that the Department will provide information to the Ad Hoc Committee concerning the 2024 legislative session.

Committee Member Haruki stated that the Board’s role is governance and not to receive information after the fact. He emphasized that the Board needs assurance that the Department can be confident that items will not lapse. Committee Member Haruki reminded the Department that it did not get project completion funds and projects are dealing with inflation issues, labor costs, and supply chain factors that need to be addressed before informing the legislature that the projects can be completed.

Otaguro stated that there is $49 million in project completion funds in the Governor’s supplemental budget submission.

Committee Member Haruki noted that by the time the Department provides an update the funds will be encumbered. Otaguro stated that the Department has a mechanism in place to request an exception and the project completion funds will not be needed.

Committee Member Haruki noted that Hayashi acknowledged the role of the Board but he is not sure Otaguro acknowledged the Board’s role. Otaguro acknowledged the Board and the role it plays in the process.

Hayashi stated that the Department will do better with communication and recognized that the Department needs the support from the Board.

Committee Member Haruki stated that there are two tragedies, the first being that $400 million will lapse and then if funds are not used by the end of this year then it will be another tragedy.

Otaguro noted that after the Maui disaster fiscal issues were heightened and clarified the terms for lapsing. The Department had initially planned to lapse and ask the legislature to re-appropriate, but the Maui disaster changed the situation and funds are now subject to lapsing and being given up or letting the legislature determine what will be re-allocated.

Committee Member Haruki stated that the Department previously told the Board that R&M only covers certain schools that are rated “poor”, but all schools need to be fixed.

Committee Chairperson Kuraya noted that the Board wants to help but it is hard when the information is not provided. He requested that once the decision is made on the lapse amount that the Department share that information with the Board.

Committee Member Haruki stated that given the deadlines there are Ad Hoc Committees and this information needs to be provided through the available vehicles.
Hayashi expressed understanding of Committee Member Haruki’s request.

Committee Member Arakaki suggested that a representative from the Board can attend the meetings with B&F. He offered his assistance to meet with legislators to support the Department’s efforts.

Committee Chairperson Kuraya requested a comprehensive report of facilities responsibilities answering the following: (1) what are the CIP responsibilities; (2) how did the situation happen; (3) what are short term solutions; (4) what are long term solutions.

Committee Chairperson Kuraya also requested an analysis report that provides details in different formats; (1) details on the phases of construction, contracts and design; (2) details on encumbrances, expended, spent; and (3) detailed by schools so the general public can understand.
Committee Chairperson Kuraya called on Hayashi and Otaguro to provide an update on the status of schools’ fire alarm systems.

Otaguro explained that since the memorandum was submitted two schools faced significant problems and are currently in process of getting a fire watch system in place. He stated that the fire systems are in the emergency action plan and after the Maui disaster, the Department is reviewing certain situations and surrounding areas in a more comprehensive manner.

Otaguro stated that fire alarm systems are paid out of health and safety funding. The Department normally spends about one third of R&M funds on fire alarm systems. He summarized that fire alarms are a high priority for the Department and will include reassignments of dedicated staff in OFO since certain expertise will be necessary for compliance and enforcement.

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

Osa Tui, Hawaii State Teachers Association, expressed appreciation for the comments on the previous agenda item. He expressed disappointment with the $10 million not being included in the budget for fire alarms and emphasized that waiting for 12-18 months for proper permitting is not acceptable. Tui asked why the previous memorandum mentioned 15 schools but the current memorandum lists 13 schools. He also requested increased inspections, suppression systems, fully and a functional extinguisher in every classroom.

Susan Pcola-Davis, member of the public, expressed concern with the additional schools added to the fire safety watch and emphasized that Otaguro did not explain what a fire watch means for schools.

Committee Chairperson Kuraya stated that during the last meeting there were five projects scheduled to have construction and asked for a status update. Otaguro confirmed that the projects were completed. Committee Chairperson Kuraya requested that the memo state the schools by name and completion, report changes taking place and highlight new schools.

Committee Member Haruki requested an additional column including information on when the fire alarm system failed, when it was fixed, and the total amount of time elapsed. He noted that it is hard to keep track of the information but it is important to understand how long it takes, including how things can be standardized. Committee Member Haruki expressed concern that $10 million was not included in the Governor’s budget but this is a high priority and will impact schools. He also requested a report on the House working committee summary with the 11 suggestions including alternate routes.

Committee Member Arakaki stated that as a former administrator when fire systems go down the employees need to manually check for fire watch plans. Otaguro explained that the fire department is aware of issues when school fire alarms are inoperable and the Department will share information with the Committee.

Committee Member Haruki noted that target dates should also be listed.

Hayashi stated that the Department will incorporate what is being requested into the next memorandum.


IV. Adjournment

Committee Chairperson Kuraya adjourned the meeting at 10:52 a.m.

List of the people who submitted written testimony before the meeting


NAME
Organization
Agenda Item
Cheri NakamuraHE’E CoalitionIII.A. Review of status of Department CIP
George Kupihea
Susan Pcola-DavisIII.A. Review of status of Department CIP; III.B. Update on status of schools’ fire alarm systems
Ashley HenionIII.B. Update on status of schools’ fire alarm systems