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THE SENATE                           S.C.R. NO.            S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                    SENATE  CONCURRENT
                        RESOLUTION

  REQUESTING THE AUDITOR TO UPDATE ITS 1992 SUMMARY OF SPECIAL
    AND REVOLVING FUNDS AND TO CONDUCT A FINANCIAL AND
    MANAGEMENT AUDIT OF THE UNIVERSITY OF HAWAII.



 1        WHEREAS, the state Auditor analyzed each one of 166
 2   special and revolving funds between 1991 and 1992 in response
 3   to Act 240, Session Laws of Hawaii 1990, and issued a summary
 4   report in 1992; and
 5   
 6        WHEREAS, that summary report found:
 7   
 8        (1)  Many funds with growing cash balances;
 9   
10        (2)  An increasing effort by agencies to establish and use
11             special and revolving funds; and
12   
13        (3)  A failure of many funds to meet the criteria for
14             establishment as special and revolving funds;
15   
16   and
17   
18        WHEREAS, the report also found that the use of special and
19   revolving funds had distorted the State's financial condition
20   by making revenues and expenditures appear to be less than they
21   were; and
22   
23        WHEREAS, many special and revolving funds simply divert
24   money from the general fund even when they may be established
25   with general funds as "seed" money; and
26   
27        WHEREAS, the special and revolving funds escape the same
28   legislative scrutiny given to the general fund, making such
29   funds attractive to executive and judicial agencies and special
30   interest groups; and
31   
32        WHEREAS, despite the Auditor's report, "Loss of Budgetary
33   Control", the Legislature continues to create more special and
34   revolving funds than it has disbanded since 1992; and
35   

 
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                                  S.C.R. NO.            S.D. 1
                                                        
                                                        

 
 1        WHEREAS, the Legislature should consider both the
 2   Auditor's recommendation that the Auditor consider establishing
 3   sunset dates for all special and revolving funds and any other
 4   alternatives that may have become available since 1992; and
 5   
 6        WHEREAS, with respect to the University of Hawaii, the
 7   Manoa, West Oahu, and Hilo campuses, as well as the University
 8   of Hawaii Community Colleges systems, received over $270.4
 9   million dollars in annual appropriations for fiscal year 1999;
10   and
11   
12        WHEREAS, the University of Hawaii has requested autonomy
13   in its operations and budget functions to promote greater
14   efficiencies and excellence in our statewide institutions of
15   higher education; and
16   
17        WHEREAS, the Legislature, in exercising its fiscal
18   oversight responsibilities, requires assurances that the
19   University of Hawaii has addressed the fiscal and management
20   issues previously identified prior to granting such autonomy;
21   and
22   
23        WHEREAS, the Auditor last conducted a financial audit of
24   the University of Hawaii in 1988 and conducted other audits of
25   the University that were limited in scope and subject matter;
26   and
27   
28        WHEREAS, the Auditor's findings and recommendations in
29   Report No. 88-7, for example, in the areas of financial
30   accounting and internal control practices and procedures should
31   be reviewed and assessed to determine whether any identified
32   weaknesses have been addressed; and
33   
34        WHEREAS, a comprehensive financial and management audit of
35   the University of Hawaii would provide a current and sound
36   basis for granting autonomy to the University; now, therefore,
37   
38        BE IT RESOLVED by the Senate of the Twentieth Legislature
39   of the State of Hawaii, Regular Session of 2000, the House of
40   Representatives concurring, that the Auditor is requested to
41   conduct a financial and management audit of the University of
42   Hawaii; and
43   

 
 
 
 
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                                  S.C.R. NO.            S.D. 1
                                                        
                                                        

 
 1        BE IT FURTHER RESOLVED that the audit is requested to
 2   include an assessment of current accounting and internal
 3   control practices and procedures for fund transfers,
 4   decentralized authorized spending, personnel practices,
 5   procurement practices, litigation costs, and others as deemed
 6   to be significant; and
 7   
 8        BE IT FURTHER RESOLVED that the Auditor, in the
 9   performance of the audit, is requested to comply with the U.S.
10   Office of Management and Budget Circular A-133; provided that
11   the reimbursements for the federally allowable costs expended
12   for the audit be deposited in the state treasury; and
13   
14        BE IT FURTHER RESOLVED that the University of Hawaii is
15   requested to cooperate with the Auditor for the purposes of
16   this audit; and
17   
18        BE IT FURTHER RESOLVED that the Auditor is requested to
19   conduct the audit after July 1, 2002, and report any findings
20   and recommendations to the Legislature no later than twenty
21   days prior to the convening of the Regular Session of 2003; and
22   
23        BE IT FURTHER RESOLVED that with respect to special and
24   revolving funds, that the Auditor is also requested to update
25   its 1992 summary report on special and revolving funds; and
26   
27        BE IT FURTHER RESOLVED that the update is requested to
28   include:
29   
30        (1)  For each new special and revolving fund created since
31             July 1, 1990, an analysis of its conformance with the
32             criteria used by the Auditor in complying with Act
33             240, Session Laws of Hawaii 1990;
34   
35        (2)  For all special and revolving funds existing as of
36             July 1, 1999, their cash balances as of June 30,
37             2000;
38   
39        (3)  A list of all special and revolving funds terminated
40             since July 1, 1990; and
41   
42        (4)  A discussion and analysis of alternatives available
43             to the Legislature in strengthening its oversight
44             over non-general fund moneys, including any
45             successful approaches in other states;
46   

 
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                                  S.C.R. NO.            S.D. 1
                                                        
                                                        

 
 1   and
 2   
 3        BE IT FURTHER RESOLVED that the Auditor is requested to
 4   submit the updated report to the Legislature no later than
 5   twenty days prior to the convening of the Regular Session of
 6   2001; and
 7   
 8        BE IT FURTHER RESOLVED that certified copies of this
 9   Concurrent Resolution be transmitted to the Auditor, the
10   Director of Finance, the President of the University of Hawaii,
11   and the chairperson of the Board of Regents of the University
12   of Hawaii.