Keith Hayashi, Interim Superintendent, Department of Education
Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations, Department of Education
Alison Kunishige, Executive Director
Kenyon Tam, Board Analyst
Regina Pascua, Executive Secretary
Lady Garrett, Secretary
Committee Chairperson Voss announced that Committee Vice Chairperson Lynn Fallin and Committee Members Bill Arakaki, Kili Namau‘u, and Catherine Payne, as well as Ex Officio Committee Members Kaimana Barcarse and Kenneth Uemura, were participating in the meeting. Committee members did not have others present with them at their nonpublic locations to announce.
II. Approval of Meeting Minutes of October 21, 2021 Finance and Infrastructure Committee Meeting, December 16, 2021 Student Achievement and Finance and Infrastructure Joint Committee meeting
Committee Chairperson Voss called for public testimony on this agenda item. No one provided oral testimony at this time.
Committee Chairperson Voss asked Committee members to review the minutes of the Committee’s October 21, 2021 meeting and the Committee’s December 16, 2021 joint meeting with the Student Achievement Committee.
Committee Member Payne moved to approve the Committee’s meeting minutes of October 21, 2021 and the meeting minutes of the December 16, 2021 joint meeting with the Finance and Infrastructure Committee. 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 October 21, 2021 and the Student Achievement Committee and Finance and Infrastructure Committee joint meeting minutes of December 16, 2021 (Payne/Fallin). The motion carried through unanimous consent from all members present.
III. Discussion Items
Cheri Nakamura, HE’E Coalition, expressed concern about the state of the Department of Education’s (“Department”) facilities and the grossly miscalculated backlog from 2018. She expressed support for the creation of Board Policy 301-10 and the Facilities Asset Management (“FAM”) process that allow for the prioritization of resources; however, it would be helpful to know what can be extended or expanded for larger projects to help the overall backlog.
Susan Pcola-Davis, member of the public, expressed appreciation to the staff for gathering the data and requested that the Department provide information on the current backlog including the statewide priority listing.
Committee Chairperson Voss called on Keith Hayashi, Interim Superintendent, and Randall Tanaka, Assistant Superintendent, Office of Facilities and Operations, to present the Department’s update on the status of resource allocation in accordance with the capital improvement program prioritization criteria pursuant to Board Policy 301-10 Board Policy, entitled “Equitable Allocation of Facilities Resources.”
Tanaka outlined the progress that the Department has made and expressed appreciation for the team that worked on recalibrating how the Department handles its facilities allocations. He explained that industry dynamics have changed and the Department continues to have deteriorating facilities with limited funding.
Tanaka emphasized that the Department needs to become a data drive organization and with the Hawaii Facility Inspection Tool known as (“HI-FIT”) and FAM program to prioritize the work ahead to spend the money efficiently and timely. He noted that according to data from the past 6 years, without the FAM program the Department would spend approximately $37 million per year; however, in the past 18 months the Department spent $95 million with the efficiency rate going from 46% to 71%. Tanaka stated that the Department is continuing to recalibrate and is focusing on Board Policy 301-10 to get Title I facilities aligned to the expectations of parents and students.
Committee Chairperson Voss explained that he placed this item on the agenda item because historically the Department has had serious with its facilities, which has disproportionately hurt some schools and students. He stated that the Board adopted Board Policy 301-10 to create a process, which includes reporting to begin to remedy problems.
Committee Chairperson Voss noted that he requested, but the Department did not provide, information relating to resource allocations for the 2021-2022 and 2022-2023 fiscal years including the following: (1) total funds appropriated by the legislature; (2) amount of funds spent in compliance with Board Policy 301-10; (3) amount of funds encumbered (listed by project); (4) amount of funds under contract (listed by project); (5) projected completion dates for all projects with funds encumbered or under contract; and (6) report on the amount of unencumbered funds lapsing at the end of the 2022, 2023, and 2024 fiscal years.
Committee Vice Chairperson Fallin expressed appreciation that the Department has moved forward with FAM and continues to reach out to others to build on best practices and standards. She stated that given Committee Chairperson Voss’ request for information she would like to understand why the information he requested is unavailable.
Tanaka replied that due to staffing, the Department experienced a delay in gathering the information, but that he is able to provide the information at this time. Committee Chairperson Voss confirmed that if the Department has any additional information available it provide it at this time.
Tanaka stated that the Department looks at funds appropriated on a six-year cycle, not the two-year biennium budget cycle. He explained that the funds appropriated from fiscal year 2018-2022 total $2.186 billion and funds spent in compliance with Board Policy 301-10 includes previous years with very little added because of adding back funds from the beginning of the policy. He stated that some of the older projects did not meet Board Policy 301-10’s criteria, but going forward the Department is applying the policy to new projects.
Tanaka stated that of the total budget received, 80% is subject to line item requests from legislators which leaves the Department with 20% of the budget for lump sum in deferred maintenance projects. He shared that during discussions with legislative partners the Department is able to share about the needs and issues related to compliance with Board Policy 301-10.
Tanaka stated that the Department has encumbered $465 million and the Department provides that information on its dashboard and will share it with the Committee. He also stated that the amount of funds under contract totals $465 million and that he will provide a listing of those projects to the Committee.
Tanaka explained that project completion dates are always a moving target due to bid protests and challenges, challenges with permits, and supply delays of materials to the contractors.
Tanaka explained that $557 million in unencumbered funds will lapse at the end of fiscal year 2022-2023 (June 30, 2022), but he noted that between now and the close out date there are projects planned. He stated that the Department’s expectation is to lapse $37 million and reauthorize $55 million so that the commitment of projects will total nearly $800 million. Tanaka stated that the lapsing funds represent 4.2% of the total allocation. He stated that the lapse of these funds were caused by a number of reasons, including the Department of Budget & Finance rejecting the appropriation, schools declining the work, construction being completed, funding lapsed for Act 88 Session Laws of Hawaii 2021, the General Appropriations Act of 2021, legislators retracted funds, and project cancellations. He stated that from a reauthorization standpoint, $55 million is specifically related to the six requests for information from Committee Chairperson Voss. Tanaka stated that the Department would provide this information to the Committee and continue to follow up.
Committee Chairperson Voss expressed appreciation for the information and noted that it would have been helpful for the Committee to have this information prior to the meeting.
Board Member Uemura, ex officio stated that the Board approved Board Policy 301-10 in July 2019 with implementation starting in December 2020 and that the Board and Department have discussed prioritizing capital improvement projects in accordance with the policy. He stated that regarding the projects approved for the fiscal biennium 2021-2023 the expectation is for the priority criteria.
Board Member Uemura, ex officio expressed surprise that 80% of the budget items require legislative approval. He asked for clarification as to whether the legislature approved $168 million in deferred maintenance projects in fiscal year 2021-2022. Tanaka confirmed that the legislature approved $168 million.
Board Member Uemura, ex officio asked if $806 million is the correct amount, which the legislature approved. Tanaka confirmed that $806 million is the correct amount the legislature approved.
Board Member Uemura, ex officio stated that he would like to see the Department focus their reporting on the funds approved and allocated for the 2021-2023 fiscal biennium. Tanaka replied that the Department has a dynamic list and will provide this information to the Committee.
Board Member Uemura, ex officio asked if he could assume that 20% of the projects comply with Board Policy 301-10. Tanaka replied that some of the 80% can be drawn into Board Policy 301-10 but not all will apply.
Board Member Uemura, ex officio , asked that the Department provide details on the amount of funds that the Department is spending in compliance with the Board approved criteria and the current status of such projects. He stated that he would like to see the remaining projects listed by school, description, project costs, expected costs of completion, and projects approved but not started due to lack of capacity.
Board Member Uemura, ex officio recommended that the Department provide an in- depth presentation on the HI-FIT and FAM programs and report progress periodically on a schedule determined by Committee Chairperson Voss.
Committee Chairperson Voss confirmed that he will consider Board Member Uemura’s suggestion and would like continued public attention on the issue.
Board Member Uemura, ex officio stated that he would like to see how the Department integrates the Board’s priorities into FAM and HI-FIT. Tanaka replied that FAM gives the prioritization and HI-FIT incorporates broader input to ensure principals provide feedback.
Board Member Uemura, ex officio asked how the Committee would ensure that HI-FIT and FAM are aligned with Board Policy 301-10. Tanaka replied that the Department has a scoring metric.
Board Member Uemura, ex officio, asked that the Department review the criteria of Board Policy 301-10 and detail any changes, updates, or new information and share this with the Committee.
Committee Vice Chairperson Fallin stated she is interested in the alignment of systems and strategies going forward, including some of the challenges. She also asked if the Department could advise the Committee as to whether it recommends any changes to Board Policy 301-10.
Committee Member Arakaki stated that the information is important for everyone to see because it clarifies questions and allows for understanding. He noted that equity for school facilities is very important and projects require major comprehensive moving targets.
Committee Chairperson Voss expressed concern with the amount of funds scheduled to lapse at the end of this fiscal year. He stated that he anticipates that the Department projects lapsing $557 million, that $37 million for various purposes would actually lapse, and that the Department would be seeking legislature to reauthorize $55 million, therefore this information indicates that in the next four months the Department needs to contract more than $450 million. Committee Chairperson Voss asked what the Tanaka is doing to ensure that the Department contracts projects in an appropriate and cost effective manner.
Tanaka replied that when he came to the Department in 2019, the Department was going to lapse approximately $500 million. He explained that due to the timing of the allocations on June 30, 2019, by the end of the fiscal year, the Department encumbered all but $12 million. Tanaka explained that the Department is in the same position now. He stated that much of the $557 million is committed or in process of being committed by June 30, 2022 because the team has extended the cycles and meets weekly to go over the amounts that need to be committed.
Tanaka stated that the Department has given itself an internal deadline of April 30, 2022 to commit the funds and noted that the team is nervous but believes that it will achieve its goal. Committee Chairperson Voss expressed concern about the timelines and noted that he would like Tanaka to provide the information requested by Board Member Uemura.
Committee Chairperson Voss echoed comments from Board members and testifiers about the HI-FIT and FAM initiatives embracing industry best practices and trying something new. He stated that the FAM initiative is primarily for deferred maintenance projects, but that he would like to know what the Department can do to scale up new construction projects and what kinds of resources the Department needs.
Tanaka stated that new projects will be the School Facilities Authority’s (“SFA”) responsibility, but currently the Department is still doing the majority of this work while the SFA sets up. He shared that he continues to work with Ed Sniffen, the current SFA executive director, and provides status updates from the Department.
Committee Chairperson Voss stated that FAM is a good program and he expressed understanding of the challenges. He asked how the Department could scale up FAM, specifically the kinds of resources and personnel necessary.
Tanaka replied that the Department needs more staff because at this time the office has 100 vacancies with 70% in the development, maintenance, and food services branches. He shared that the Department is constantly recruiting and approached the University of Hawaii’s School of Engineering, which allowed the Department to recruit directly. Tanaka also stated that the Department uses consulting services, but that the Department needs to pay a premium for these types of services, which may not be in the Department’s best interest over the long term. He stated that the Department has broadened Job Order Contracting (“JOC”) program areas to focus on roofing, general contractors, plumbing and other trades.
Tanaka stated that the Department’s next steps would be to address small contractors (under the bonding requirement of $50,000) and then implement a larger program similar to JOC, known as Multiple Award Task Order Contracting (“MATOC”). He noted that the Department has challenges with permits, but it is working with the counties.
Committee Chairperson Voss stated that everyone uses the term alarming but with over $800 million in projects encumbered and under contract while facing staffing shortages, he would like to know if the Department could reallocate funds to enhance compensation for vacant project management positions. Tanaka replied that the Department can offer shortage differentials or overtime and is working to develop talent within, but that will take time.
Committee Chairperson Voss asked Tanaka to describe the efforts he is making to communicate with legislators regarding line item priorities. Tanaka replied that he regularly communicates about the challenges and emphasized that the legislature needs to rebalance between line item requests and lump sums.
IV. 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.
Linda Elento, member of the public, testified on the update to Board Policy 301-10. She stated that schools need to be cleaned up and expressed appreciation for the Board’s advocacy for charter schools.
Committee members received written testimony before the meeting. The following is a listing of the people who submitted written testimony before the meeting.
|Cheri Nakamura||HE’E Coalition||III. A. Update on Board Policy 301-10, Equitable Allocation of Facilities Resources: status of resource allocation in accordance with the capital improvement program prioritization criteria|
|Susan Pcola-Davis||III. A. Update on Board Policy 301-10, Equitable Allocation of Facilities Resources: status of resource allocation in accordance with the capital improvement program prioritization criteria|
Committee Chairperson Voss adjourned the meeting at 12:04 p.m.