DRAFT


STATE OF HAWAII
BOARD OF EDUCATION
FINANCE AND INFRASTRUCTURE COMMITTEE MEETING

MINUTES

Queen Liliuokalani Building
1390 Miller Street, Room 404
Honolulu, Hawaii 96813
Monday, October 4, 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
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
Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations, Department of Education
Mallory Fujitani, Special Assistant to the State Librarian, Hawaii State Public Library System
Capsun Poe, Board Executive Director
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.

II. Approval of Meeting Minutes of September 7, 2023

Committee Chairperson Kuraya asked Committee members to review the Committee’s September 7, 2023, meeting minutes.

Committee Member Arakaki moved to approve the Committee’s September 7, 2023, meeting minutes. Committee Member Moriarty 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 September 7, 2023, meeting minutes (Arakaki/Moriarty). The motion carried through unanimous consent from all members present.


III. Recommendation for Action
Committee Chairperson Kuraya called on Brian Hallett, Assistant Superintendent, Office of Fiscal Services, Department of Education, to provide the Department of Education's (Department) supplemental operating budget request for fiscal year 2025 (FY 25).

Hallett requested support for the Department’s recommendation on the supplemental budget for FY25. He explained that this is the second year of the fiscal biennium (FB) and noted that from previous discussions the Department communicated regarding the magnitude of the funding gap as being $163.5 million. Hallett stated that due to the continuation of inflationary pressure the updated amount is $174.6 million to address the balance of the Board approved item and an additional $23.5 million for 12 new items.

Hallett stated that the Department’s budget is declining and collective bargaining agreements include increased costs which contribute to the major known fiscal challenges that should not be a shock in light of the attention placed on the issue by the legislature coming out of last session. He described the fiscal challenges as due to the general fund fiscal cliff because the FY 24-25 legislative appropriation is $30 million less next year. Hallett expressed appreciation that for this year, Governor Green provided the Department with $55 million out of the $200 million discretionary monies provided by the legislature. He emphasized that the Department is requesting sustained funding and noted that the ESSER program is coming to an end in September of 2024, higher salary costs for negotiated ratified pay increases, funding gaps for inflationary pressure for several large non-payroll items, such as $21 million for food service, $15 million for utilities, and $18 million for student transportation.

Hallett summarized the general fund requests by category and explained that there are six items which totals $42.6 million. He explained that funding for utility costs and workers compensation was only provided for the first year of the FB, items 7-40 total $61.2 million due of inflationary pressure, items 41-45 was not funded by legislature, $21 million for food service, and items in both fiscal years not funded by the legislature or by the Governor’s $55 million discretionary funds. Hallett emphasized that the Department intends to seek additional funds whether to tap into ESSER funds or consider if additional pandemic relief funds become available. He stated that of these funds $21 million is for summer school, $18 million for student transportation costs, items 52 through 63 totaled $23.5 million. Hallett also explained that there are 12 line items that were not part of the Board approved biennium request totaling $18.4 million for pay adjustments for schools’ vice principals and education assistants.

Hallett stated that attachment A provides details on all of line items grouped by categories; attachment B relates to a proposed proviso’s to reinstate a protocol fund for the superintendent to facilitate purchases of things such as leis or token gifts, and to allow any unspent balance of general fund repair and maintenance appropriations that were made back in FY 2022, to revert back to the Department for safety and security; and attachment C provides a link with more detail about all of the 65 line items that make up the request.

Hallett emphasized that the Department will continue to compile, synthesize, and communicate additional information and expressed commitment for transparency.

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

Cheri Nakamura, HE’E Coalition, testified in support of the Department’s supplemental budget request and expressed strong support for the specific line item for small and rural schools.

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 Member Arakaki moved to approve the recommendations of the Department’s supplemental operating budget request for fiscal year 2024-2025, as outlined in Attachment A, for consideration by Governor Josh Green through the Department of Budget & Finance as described in Hayashi’s memorandum dated October 4, 2023. Committee Member Moriarty seconded.

Committee Member Arakaki expressed appreciation for the detailed report on the supplemental budget request. He asked if the request happens every year or is this new due to inflation and conditions. Hallett confirmed that this happens every year and depends on current conditions.

Committee Member Haruki stated that FY22-23 shows a similar number and it would be helpful to show the sources, cliffs, and changes then the request. He noted that the Board has not seen the total aggregated budget. He noted that the Department needs to prepare a better rationale for the legislators to provide support. Committee Member Haruki stated that $21 million for summer school is compelling and it needs to be portrayed in a simple way so that we can have understanding and funding.

Committee Member Haruki stated that regarding the $225,000 protocol fund can the Department handle this internally to avoid creating a budget proviso for these types’ costs. He emphasized support to proceed but noted concerns on how the information can be made clearer.

Committee Member Moriarty echoed comments from Committee Member Haruki and commended the Department for the presentation. She expressed appreciation for table 5 outlining the examples of requests for each strategic priority. Committee Member Moriarty encouraged the Department to continue to provide information relating to strategic priorities and expressed support for safety and security for the schools. She noted that data visualization will help make it easy for people to do what makes sense.

Committee Member Moriarty stated that regarding summer learning hubs of $21 million, comments were shared that this was helpful but there is nothing in the justification to support the request. She noted that it is important to include recommendations against and concerns and feedback on too much money going to high level employees. Committee Member Moriarty asked how can the Board make sure the strategic direction and impact matches.

Hallett stated that regarding $21m for summer school, principals have provided feedback on the impacts for summer school. He stated that arguments of too much administration needs to be balanced with effectiveness. Hallett stated that budget structure can continue to be reviewed and we continue to ask for the same monies year after year

Committee Member Arakaki stated that the system is complicated with all the categories so Table 2 lists the EDNs and Attachment A includes all the items listed for each EDN. He noted that for school based funding and categories and for many it is complicated and suggested that we look into this information later.

Committee Member Haruki stated that the portrayal will help the additional requirements placed on the Department with instructional knowledge and if we show these items and the changes you can see what purely education is and what are the add-ons. He noted that we need to display this information.

Committee Member Moriarty asked Committee Chairperson Kuraya to share his perspective.

Committee Chairperson Kuraya suggested allowing the budget section to provide training for Board members to gain an understanding on what is involved in the budgeting process.

Committee Chairperson Kuraya called for a roll call vote on the motion. The motion carried unanimously with all members present voting aye (Committee Members Arakaki, Haruki, Kuraya and Moriarty).

ACTION: Motion to approve the recommendations of the Department’s supplemental operating budget request for fiscal year 2024-2025, as outlined in Attachment A, for consideration by Governor Josh Green through the Department of Budget & Finance as described in Hayashi’s memorandum dated October 4, 2023. The motion carried unanimously with all members present voting aye.
Committee Chairperson Kuraya called on Curt Otaguro, Deputy Superintendent of Operations, and Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations, to provide the Department’s supplemental operating budget request for fiscal year 2025 (FY 25) for CIP funding.

Otaguro summarized the Department’s supplemental CIP budget request for FY25 which totals $273 million for line item or lump sum projects to give more latitude to apply funding based on categories. He stated that 9% of requests for next year are within a new category for wildfire recovery efforts, specific for Lāhainā and Maui. Otaguro noted that while the Department has indications that the federal government FEMA will provide reimbursements, in some cases it may be very limited. He explained that the Department submitted a $405 million request which includes the replacement of a school, setting up a temporary school, and mental health programs.

Otaguro stated that another category relates to repair and maintenance (R&M) projects which are handled via work orders. He explained that on the neighbor islands, the Department partners with the Department of Accounting and General Services (DAGS) to handle these requests. Otaguro explained that the third category is unique to the Department and is referred to as project completion funds totaling $72 million. He shared that based on preliminary discussions with the House Finance Committee, there is a desire to reduce the Department’s dependency on consultants for a longer term plan.

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

Cheri Nakamura, HE’E Coalition, testified that HE’E Coalition has provided comments in the past relating to the facilities situation and expressed hopefulness to work with the Department on new processes to be more efficient and effective.

Committee Member Arakaki moved to approve the recommendations of the Department’s fiscal year 2024-2025 CIP supplemental budget request in the amount of $273 million, as outlined in Hayashi’s memorandum dated October 4, 2023. Committee Member Moriarty seconded.

Committee Member Moriarty expressed appreciation for the honest presentation and evaluation. She stated that she looks forward to helping to visualize better how the items in the budget relate either to mandates or to strategic priorities without going into detail at this time. Committee Member Moriarty stated that one of the priorities in our strategic plan was to bring all schools up to Title IX and ADA compliance and noted that a line item is included and asked what is needed to accomplish this.

Otaguro referenced ongoing projects relating to water replacement systems, structural replacement, and safety projects. He noted that some projects are anticipated while some are not therefore the Department is faced with the dilemma of deciding what is more important.

Otaguro shared that from a maintenance aspect, the perfect world is that there will be sufficient maintenance to go on a cycle basis; however the projects can be preempted periodically and the Department needs to reevaluate procedures and processes.

Committee Member Moriarty expressed support for the supplemental budget request but noted that the Department needs to address how to fix these issues.

Tanaka replied that due to unforeseen issues combined with everyone needing money, to be able to prioritize and adjust is so critical.

Committee Member Haruki stated that the wildfires category is just a placeholder at this moment and expressed concerns with R&M because the backlog has been there and building for years. He stated that Lāhainā might have put a small pause in it, but did not create the backlog. Committee Member Haruki emphasized that just by driving around campuses, you can visually see it is horrible and students, faculty, and the community deserve better.

Committee Member Haruki stated that the current method is broken and has more internal resources but using the same plan is really the definition of insanity. He stated that the Board needs to figure out how to change this, and develop a comprehensive plan. Committee Member Haruki expressed concern about not considering any external consulting because the internal factory is not producing the desired results.

Committee Member Arakaki expressed appreciation for the report and shared that he attended the grand opening of the Kauaʻi High School gym which was fantastic. He shared that the entire process included three principals and expressed appreciation for the support from Senate President Ron Kouchi. Committee Member Arakaki echoed Committee Member Haruki’s comments and asked how the process can be improved to work on those projects, and to consider developing categories relating to disasters.

Committee Chairperson Kuraya suggested that the Board provide any additional questions to Otaguro or Tanaka for informational purposes.

Committee Chairperson Kuraya called for a roll call vote on the motion. The motion carried unanimously with all members present voting aye (Committee Members Arakaki, Haruki, Kuraya and Moriarty).

ACTION: Motion to approve the Department’s recommendation for fiscal year 2024-2025 CIP supplemental budget request in the amount of $273 million, as outlined in Hayashi’s memorandum dated October 4, 2023, as outlined in Hayashi’s memorandum dated October 4, 2023. The motion carried unanimously with all members present voting aye.

Committee Chairperson Kuraya called on Mallory Fujitani, Special Assistant to the State Librarian, Hawaii State Public Library System (HSPLS), to provide the HSPLS supplemental operating budget and capital improvement project request for FY25.

Fujitani outlined the HSPLS supplemental operating budget and CIP request FY25. She explained that for the operating budget HSPLS is requesting additional funding for the security guard contract since last year the legislature provided a non-recurring $550,000 in additional funding for the security guards at our locations. Fujitani stated that for this year, we also are asking for an additional $50,000 to allow for additional staff training, active shooter, and self-defense training for our library branch staff and support offices.

Fujitani noted that HSPLS is seeking funding for some temporary locations to accommodate temporarily shutting down libraries for construction projects in areas like Princeville, Kāneʻohe, and Lāhainā. She stated that the last operating item is to start some seed funding of $200,000 to replace the Lāhainā collection, during the wildfires the library lost approximately 425,000 in the pre-existing, pre-fire collections. Fujitani noted that HSPLS has received requests to donate funds but is holding off until a temporary location is identified.

Fujitani stated that for CIP, HSPLS is seeking additional funding for the new Waikoloa library. We received 13 million in last year's budget. And this year, we're going to be asking for the final 10 million. That's the end of our request. Happy to answer any questions.

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

Cheri Nakamura, HE’E Coalition, testified in support of the proposed HSPLS operating and CIP budget request for FY25. She echoed comments from State Librarian Stacey Aldrich that libraries can be a great equalizer.

Committee Member Arakaki moved to approve the recommendations of the Hawaii State Public Library System supplemental operating budget and capital improvement project requests for fiscal year 2025, as outlined in State Librarian Stacey Aldrich’s memorandum dated October 4, 2023. Committee Member Moriarty seconded.

Committee Member Moriarty expressed support for the request as submitted by HSPLS and expressed appreciation for the clear descriptions. She expressed support for permanent funding to support the requests with respect to the security guards, and the improving security at the libraries. Committee Member Moriarty cautioned that the additional funding for security guards did not pass the legislature during the previous submission and asked if HSPLS expects any opposition.

Fujitani replied that the legislature did not support the request for 2025; however HSPLS was in the midst of changing over our security contract because the five year period was complete. She clarified that because HSPLS did not have the exact dollar amount at the time but the request reflects the total for FY25.

Committee Member Arakaki asked for clarification about the repairs to the temporary service locations in Princeville, Kāneʻohe and Lāhainā. Fujitani replied that Princeville is going through a major renovation so the goal is to set up a portable temporarily on the edge of the parking lot.

Committee Member Arakaki expressed appreciation for the clarification and shared that whenever there's a lot of rain and flooding occurring in Hanalei, the library staff let's schools use the parking lot area during evacuations because the bridge will be closed.

Fujitani shared that the Princeville Library is the last government building on the north side of Kauaʻi, other than the schools so this location plays an important role in getting people access to resources.

Committee Chairperson Kuraya called for a roll call vote on the motion. The motion carried unanimously with all members present voting aye (Committee Members Arakaki, Haruki, Kuraya and Moriarty).

ACTION: Motion to approve the recommendations of the Hawaii State Public Library System supplemental operating budget and capital improvement project requests for fiscal year 2025, as outlined in State Librarian Stacey Aldrich’s memorandum dated October 4, 2023. The motion carried unanimously with all members present voting aye.


IV. Adjournment

Committee Chairperson Kuraya adjourned the meeting at 10:31 a.m.

List of the people who submitted written testimony before the meeting


NAME
Organization
Agenda Item
Cheri NakamuraHE’E CoalitionCommittee Action on Department’s Supplemental Operating Budget Request for FY 25; Committee Action on Department’s CIP Budget Request for FY25; and Committee Action on Recommendations Concerning the HSPLS Supplemental Operating Budget and CIP Request for FY25