DRAFT

STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE MEETING

MINUTES

Thursday, June 2, 2022
1390 Miller Street, Room 404
Honolulu, Hawaii 96813

*This meeting was a remote meeting under Section 92-3.7, Hawaii Revised Statutes.

PRESENT:
Bruce Voss, Chairperson
Lynn Fallin, Vice Chairperson
Bill Arakaki
Kili Namauʻu
Catherine Payne
Kaimana Barcarse, Ex Officio
Lauren Moriarty, Ex Officio

EXCUSED:
None

ALSO PRESENT:
Brian Hallett, Assistant Superintendent, Office of Fiscal Services, Department of Education
Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations, Department of Education
Alison Kunishige, Executive Director
Kenyon Tam, Board Analyst
Lady Garrett, Secretary


I. Call to Order

Committee Chairperson Bruce Voss called the Finance and Infrastructure Committee (“Committee”) meeting to order at 11:02 a.m.

Committee Chairperson Voss announced that Committee Member Bill Arakaki was participating in the meeting remotely. Committee Chairperson Voss, Committee Vice Chairperson Lynn Fallin, Committee Members Kili Namau‘u and Catherine Payne, and Ex Officio Committee Members Kaimana Barcarse and Lauren Moriarty participated from the public location.


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

Committee Chairperson Voss called for public testimony.

Cheri Nakamura, HE‘E Coalition, testified on agenda item IV.A., the use of ESSER funds based on the Board of Education (“Board”) guidance section 3.a, adopted on October 21, 2021. She expressed support for spending federal funds to fill budget shortfalls and requested that the Department of Education (“Department”) provide more detailed information on shortfalls before Board approval.

Susan Pcola-Davis, member of the public, testified on agenda item IV.A., the use of ESSER funds based on the Board guidance section 3.a, adopted on October 21, 2021. She stated that the Department does not want to restrict general funds for fiscal year (“Fiscal Year”) 2022-2023 but the request includes other shortages and reminded Board members that they had previously requested information on actual expenditures.

Cheri Nakamura, HE‘E Coalition, testified on agenda item V.A., presentation on how the Department uses Facilities Asset Management (“FAM”) and the Hawaii Facilities Inspection Tool (“HI-FIT”) to implement Board Policy 301-10. She stated that the link to the dashboard but does not provide concrete examples, asked the Department to explain how the system works and provide information on when and how the Department will expand the program.

Susan Pcola-Davis, member of the public, testified on agenda item V.A., presentation on how the Department uses FAM and the HI-FIT to implement Board Policy 301-10. She noted that the largest category in FAM and HI-FIT the repair and maintenance backlog, asked what is the Department’s plan if the legislature does not provide funding, and noted that because of recent school shootings, the Department should check for broken door knobs in schools.


III. Approval of Meeting Minutes of March 3, 2022

Committee Chairperson Voss asked Committee members to review the minutes of the Committee’s March 3, 2022 meeting.

Committee Member Namau‘u moved to approve the Committee’s meeting minutes of March 3, 2022. Committee Vice Chairperson Fallin seconded.

Committee Chairperson Voss 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 Vice Chairperson Fallin, Committee Members Arakaki, Namauʻu, and Payne).

ACTION: Motion to approve the Finance and Infrastructure Committee meeting minutes of March 3, 2022 (Namau‘u/Fallin). The motion carried through unanimous consent from all members present.


IV. Recommendation for Action

Committee Chairperson Voss called on Brian Hallett, Assistant Superintendent, Office of Fiscal Services, to present the Department’s recommendation on the use of ESSER II and ESSER ARP funds for Department budget shortfalls.

Hallett stated that the Department’s is making this request because of deep budget cuts. He stated that the Department would use ESSER funds to fund salaries of teachers, educational assistants, the Board support office, and assistant superintendents. He stated that the Department cannot exceed the salary budget and will not be in a position to carryover funds for schools.

Hallett stated that because the legislature imposed a $100.2 million lump sum reduction in 2020 the Department used ESSER funds to avoid disruption. Hallett explained that in September 2021, the Department determined that it would not be able to sustain itself if spending at the current rate and that it would use federal funds until it could make a better assessment of actual needs.

Hallett stated that the legislature restored the $100.2 million reduction for the 2022-2023 Fiscal Year. He noted that because of this restoration, the Department would not need to rebalance its budget.

Committee Member Payne moved to approve the use of up to $76 million of ESSER II and ESSER ARP funds for the forecasted shortfall amount shortfalls for the 2021-2022 Fiscal Year described in Hayashi’s memorandum dated June 2, 2022. Committee Vice Chairperson Fallin seconded.

Committee Vice Chairperson Fallin stated that in September 2021 the Department identified a $74.5 million shortfall, but now is anticipating a $76 million shortfall. She asked for clarification on the current shortfall amount. Hallett replied that as of the end of April 2022, based on projected spending, the Department would be $74.1 million short. He noted that the Department uses a methodology to project shortfalls, that that it is imperfect.

Committee Vice Chairperson Fallin emphasized that the Department needs to make sure that $76 million is enough and if this is not enough, the Department needs to update the Board if it takes funds from other areas.

Hallett stated that the Department is confident that $76 million would be enough and noted that as the Department balances its budget, it will transfer funds between general and federal funds. He explained that the carryover report would provide more information on the balances at the end of the year and how the Department would use those funds.

Committee Vice Chairperson Fallin asked if the Department anticipates the carryover amount to be less than 5%.

Hallett stated that statute authorizes carryover funds and schools anticipate spending these funds to help with predictable spending.

Committee Vice Chairperson Fallin stated that the carryover policy is good, but that the Board needs to understand the big picture and to ensure the Department spends every dollar on student needs. Hallett clarified that schools plan for the use of carryover funds and that the Department does not reflect carryover funds as excess funds in the budget.

Ex Officio Committee Member Lauren Moriarty asked why the Department is proposing the use of the ESSER II funds, which do not expire until Fiscal Year 2023. Hallett replied that the Department would be proposing another recommendation later at the special meeting.

Ex Officio Committee Member Moriarty stated that she would like to use expiring funds to cover shortfalls and asked how expenditures on new administrative positions fit into the broader context of the overall financial plan aimed at recovering student learning.

Hallett explained that the Board approved the restoration of the $100.2 million was by previous action and noted that ESSER funding is to provide fiscal stability and respond to the health and safety concerns brought on by the COVID-19 pandemic. He stated that the Department avoided imposing budget cuts by making adjustments.

Ex Officio Committee Member Moriarty stated that she has other points less on the financial portion but more on the broader plans.

Committee Member Arakaki stated that schools use carryover funds for planned purposes and that they are necessary.

Hallett explained that previously the Department returned carryover funds to schools, but schools could only use these funds for six months. He stated that carryover funds help with start-up costs, curriculum material packages, or large expenses spread out over a two-year period. Hallett stated that the Department allows schools to use carryover funds to purchase positions if they need to spend down the money.

Committee Member Arakaki stated that as the Department moves forward and ESSER funding goes away, he would like to understand how the Department would support the additional positions going forward. Hallett explained that if the complex areas see value from these positions, the Department could shift resources or seek additional funds from the legislature. He emphasized that the Department understands the need to help kids catch up and address social emotional needs with these additional funds.

Committee Chairperson Voss asked for confirmation that if the Board does not approve the recommendation, the Department would need to use some or all of the funds that should be returned to schools by July 1. Hallett confirmed that was correct.

Committee Chairperson Voss asked if there was a statutory requirement. Hallett confirmed that was correct.

Committee Chairperson Voss noted that members of the public have expressed confusion and misunderstanding regarding universal indoor masking in schools and ESSER funds but stated that the federal government does not tie the use of ESSER funds to any masking requirements.

Hallett confirmed that the federal government does not tie ESSER funds to mask mandates, nor is it included in any guidance from the Department, and that it is clear that the Department needs to educate the public. Committee Chairperson Voss expressed appreciation for the clarification regarding mask mandates and ESSER funding.

Committee Chairperson Voss called for a roll call vote on the motion. The motion carried unanimously with all members present voting aye (Committee Vice Chairperson Fallin, Committee Members Arakaki, Namauʻu, and Payne).

ACTION: Motion to approve the use of up to $76 million of ESSER II and ESSER ARP funds in the amounts for the forecasted shortfall for Fiscal Year 2021-2022 described in Hayashi’s memorandum dated June 2, 2022 (Payne/Fallin). The motion carried unanimously with all members present voting aye.


V. Discussion Items

Committee Chairperson Voss called on Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations (“OFO”), to present the how Department uses FAM and HI-FIT to implement Board Policy 301-10 (“BP 301-10”), entitled “Equitable Allocation of Facilities Resources.”

Tanaka outlined that the FAM and HI-FIT tools are the action portion of facility repairs and that OFO has deployed the job order contracting (“JOC”) system, which allows the Department to contract with several pre-qualified vendors to perform common repair jobs in a timely manner through a competitive bidding process. He explained that in 2005, when the work previously done by the Department of Accounting and General Services (“DAGS”) shifted to the Department, the Department adopted the design build framework. Tanaka stated that during the first year the Department focused on roofing with six contractors and faced challenges relating to the complexity of the work, lack of construction materials and supplies, and staffing capacity for contractor management.

Tanaka stated that JOC has been successful and the Department expects that it will be able to move more projects forward. He emphasized that BP 301-10 focuses on facilities equity, but the Department needs to balance this with legislative line item requests.

Ex Officio Committee Member Barcarse asked how many contractors the Department needs and the hiring timeline. He also asked Takana to detail the steps the Department is taking to clear the backlog and explain how long it would take to clear the backlog once everything is in place.

Tanaka replied that the Department refers to the backlog as deferred maintenance because the Department will never clear the backlog. He stated that it is challenging because facilities and electrical infrastructure is aging and due to the COVID-19 pandemic, schools have added air purifiers and charging stations, which require more electricity. Tanaka explained that there have been times when there is not enough power for half of a school, but that the key is identifying major priorities.

Tanaka stated that the Department has not restacked projects unless there was a natural disaster that renders a school unusable. He stated that the Department has not identified a specific number of contractors because the work is dependent on specialized services and the Department selects contractors for different purposes. Tanaka stated that the Department looks for contractors with flexibility and mobility who can get into schools when school is not in session.

Ex officio Committee Member Barcarse asked Tanaka to provide a timeline so the public can have confidence that the Department is making progress. Tanaka replied that the Department is looking to bring on 75 to 100 contractors, given the magnitude of the work. Ex Officio Committee Member Barcarse encouraged those who may be listening that may be able to provide contractor services to look at ways to their organizations can help schools.

Committee Member Payne requested an update on OFO vacancies. She also requested more information on the Department employees who oversee the contractors to get an understanding of the staffing needs in these areas.

Tanaka replied that the legislature gave the Department a project and OFO has been working with the Office of Talent Management and Camille Masutomi, Chief of Staff, on various ways for the skilled labor in the Department to move up into higher positions. He shared that many of the employees in the skilled labor positions retired and that there is a shortage of construction inspectors, who monitor the work and manage budgets.

Committee Member Arakaki asked if the Department is just using FAM and HI-FIT for R&M or if it is using it for capital improvement projects as well. Tanaka replied that it depends on the magnitude of the work and some of the projects will be under the jurisdiction of the newly created school facilities authority.

Committee Member Arakaki stated that there are Department employees who help make repairs at schools and asked if the complex areas work with the DAGS on any training to provide support for complex areas.

Tanaka explained that it has been harder on the neighbor islands than on Oahu and that the Oahu team not manage the Hana, Lanai, and Molokai projects. He stated that it has been easier to get work done by sending the Oahu employees to those areas. Tanaka also stated that supply management is another issue because there is low inventory for neighbor islands and the Department has been working to share space on base yards to provide basic needs.

Committee Member Arakaki stated that the Niihau school needs help and expressed appreciation for supporting these school communities. He stated that given recent events and the school shooting in Texas, school safety is extremely important and asked if there has been a safety review of campuses. Committee Member Arakaki stated that the Department should consider training and looking at door locks or fencing around school campuses to ensure student safety.

Tanaka stated that safety is the Department’s number one priority and is in process of contracting with a provider for night security at some school campuses to help deal with issues with homeless in schools at night. He stated that chain link fences do not work, so the Department needs to take vulnerability assessments to the next level. Tanaka emphasized that Hawaii has been fortunate but school safety is a continued focus.

Committee Member Payne asked if the R&M category includes girl’s athletic facilities or if this fall under the newly created school facilities agency. She noted that there is an urgency to address these issues.

Tanaka expressed frustration that the Department has struggled to provide equitable facilities for each gender because if athletes are sharing locker rooms that is not equitable. He also noted that there have been a number of things done to address the girls’ locker room situation at Campbell High School.

Committee Member Payne stated that she hears that the Department needs to act immediately to address the girls’ locker room situation, but the Department has not provided a timeline.

Tanaka stated that the Department is aware of the pain points and how to address these issues. He explained that the legislature provided a tool for the Department so that when a contractor’s bid protest fails, the Department can impose a 1% fine that it applies to the cost of the project. Tanaka stated that the Department is monitoring what is contributing to the stalling of projects.

Committee Member Namauʻu stated that DAGS is an issue on the neighbor islands, especially Maui. Tanaka emphasized that the Department needs to step in more since the neighbor islands are also dealing with the same issues as Oahu in relation to the scarcity of supplies and contractors.

Committee Member Namauʻu stated that Hana has to deal with teacher housing issues and asked whether things have improved. Tanaka replied that the teacher housing facility in Hana is not acceptable and that on Lanai the Department has asked that the state allocate 10 units in new developments for teacher housing.

Committee Member Namauʻu asked when the Department expected the new developments to be completed. Tanaka replied that the Department expects to complete these developments by the end of this year.

Committee Member Namauʻu asked if the housing will be allocated for teachers because the Department previously could not ask for positions since there was nowhere for teachers to live. Tanaka replied that the Department is working to address these issues.

Committee Member Namauʻu asked for an update on the new high school in Kihei. Tanaka replied that the Department is working with the Land Use Commission and Department of Transportation (“DOT”) who has provided data on the roundabout and the underpass. He also stated that in the short term, the Department would place crossing guards at the intersection because the school will be opening for occupancy in January.

Committee Member Namauʻu asked if the DOT has any intention of using federal funds to construct the underpass. Tanaka replied that he cannot speak for DOT, but the issue is more complicated since Maui County will determine what the community wants.

Ex Officio Committee Member Moriarty stated that the Department is addressing two issues, repairing schools to acceptable standards and the focus on roofing. She asked how the Department establishes priorities.

Tanaka replied that the Department reviews the critical parts that hinder the ability for schools to operate when establishing the priorities for projects. He stated that the Department refers projects to the JOC process the Department can complete the projects quickly and materials are available. Tanaka also stated that for the older projects, health and safety is usually a concern.

Ex Officio Committee Member Moriarty stated that the legislature has provided generous appropriations and asked if the Department has considered the impacts of wages and inflation in addition to the ability to make progress to reduce the backlog. Tanaka replied that more money and establishing priorities is the only way to get things accomplished.

Ex Officio Committee Member Moriarty stated that this limits how fast the Department can make progress if supplies and contractors cannot execute the jobs quickly. Tanaka confirmed that these issues limit the progress.

Ex Officio Committee Member Moriarty asked if there have been opportunities to collaborate with the military on repainting classrooms or in other opportunities as the Department’s budget get tighter.

Tanaka shared that at Kaiser High School volunteers will paint the school, but that the Department needs to consider safety matters. He encouraged the schools to work with Hawaii 3Rs, similar to what Waipahu High School did for its health academy. Tanaka stated that the Department has worked with the military on providing personal protective equipment and Hawaii Emergency Management Agency to address the bus driver shortages but specialized licensing is required.

Ex Officio Committee Member Moriarty stated that she would like the Department to not only save money but also form relationships between communities and schools.

Tanaka shared that during the Red Hill water crisis the military stepped up to assist the Department to help the affected families.

Ex Officio Committee Member Moriarty stated that the data on capital improvement projects shows that lots of money will be expiring on June 30, 2022. She asked if the Department could use this money to address some of these issues.

Tanaka explained that this year was unique with $850 million in carryover funds from previous years and the Department locked in a $766 million appropriation for contracts, which leaves a balance of approximately $37 million, but the funds will not lapse because the work is ongoing. He explained that the Department would ask for an appropriation of $57 million, but that the Department needs to make more improvements.

Ex Officio Committee Member Moriarty expressed appreciation for the data provided by Tanaka and noted that the Department needs to update its website.

Committee Vice Chairperson Fallin expressed support for the systematic approaches and establishing quantifiable objectives. She asked for clarification on the $145 million per year, whether this is related to the actual backlog based on the definition, and how industry standards can help to reduce this amount.

Tanaka stated that backlog is not the right term because the projects are deferred maintenance projects (“DMP”), which include larger scale projects. He noted that the Department should have a 20-year maintenance plan for each school.

Committee Vice Chairperson Fallin expressed concern with the Department saying that it will only need $145 million per year because due to various conditions the amount may be inadequate.

Ex Officio Committee Member Barcarse left the meeting at 12:31 p.m.


Tanaka stated that it comes down to scale and personnel. He stated that the Department has looked at software used by the University of Hawaii where contractors are obligated to update the system since the data is only as good as what the contractors input. Tanaka emphasized that schools are in bad shape and the Department needs to do more to protect schools near shorelines because of ongoing climate change.

Ex Officio Committee Member Barcarse returned at 12:36 p.m.


Committee Chairperson Voss stated that the Board needs to quantify the challenges and asked what Tanaka estimates is the current amount necessary to address DMP.

Tanaka explained that the total is approximately $2 billion based on staffing and the Department is in the process of designing a model looking at square footage on the work the Department completed.

Committee Chairperson Voss stated that of the $2 billion, how much would the Department use on priority areas.

Tanaka stated that regarding equity relating to health and safety conditions, the Department is stacking this information because during the past year the Department has not made significant changes.

Committee Chairperson Voss encouraged the Department to develop calculations because the Board will be developing a strategic plan and the Department needs to identify the real backlog amount so that the Board can establish metrics.

Committee Member Namauʻu stated that regarding the strategic plan, a 20-year maintenance schedule should be incorporated into the strategic plan since there are two issues being looked at such as DMPs and ongoing maintenance plans for every school. She emphasized that the Department needs a long-term approach to take care of school facilities.

Tanaka stated that schools have kitchens, which require repairs and that he has been advocating for centralized kitchens.


VI. Late Public Testimony on Board Agenda Items

Committee Chairperson Voss called for public testimony from any individuals who did not have an opportunity to testify on earlier agenda items.

Cynthia Bartlett, Moms for Liberty Honolulu County, testified on agenda item IV.A., the use of ESSER funds based on the Board guidance section 3.a, adopted on October 21, 2021. She stated that federal funding includes an amount for social emotional learning (“SEL”) and noted that it is hard to understand what services will be included because the needs of students have changed and she encouraged the Board to review the theories of education tied into SEL.

Committee members received written testimony before the meeting. The following is a listing of the people who submitted written testimony before the meeting.


Name
Organization
Agenda Item
Susan Pcola-DavisIV.A. Committee Action on the use of federal funds in the second round of the ESSER II and in the third round of ESSER ARP for Department budget shortfalls in accordance with Board ESSER II and ESSER ARP Fund Guidance, Section 3.a, adopted on October 21, 2021; & V.A. Presentation on how the Department uses FAM and the HI-FIT to implement Board Policy 301-10, Equitable Allocation of Facilities Resources
Cheri NakamuraHE’E CoalitionIV.A. Committee Action on the use of federal funds in the second round of the ESSER II and in the third round of ESSER ARP for Department budget shortfalls in accordance with Board ESSER II and ESSER ARP Fund Guidance, Section 3.a, adopted on October 21, 2021; & V.A. Presentation on how the Department uses FAM and the HI-FIT to implement Board Policy 301-10, Equitable Allocation of Facilities Resources


VII. Adjournment

Committee Chairperson Voss adjourned the meeting at 12:45 p.m.