STAND. COM. REP. NO. 2993

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 1873
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Education and Technology, to which was
referred H.B. No. 1873, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO EDUCATION,"

begs leave to report as follows:

     The purpose of this measure is to provide the Department of
Education (DOE) with the authority and incentive to pursue
additional resources to improve Hawaii's public schools by:

     (1)  Exempting the DOE's federal and trust funds from the
          requirements of the state budgetary allotment system;
          and

     (2)  Prohibiting general fund offsets in the event that
          federal or trust fund receipts are greater than
          appropriations.

     Testimony in support of the measure was received from the
Department of Education, Hawaii State Teachers Association, The
Hawaii Business Roundtable, The Chamber of Commerce of Hawaii,
and Hawaii Association of Realtors.  Testimony in opposition to
the measure was received from the Department of Budget and
Finance.

     Your Committee substantially amended this measure by
replacing its entire contents with S.B. No. 2835, S.D. 1, and
S.B. No. 2474, S.D. 1, which do the following:

 
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     (1)  Allow the DOE to retain federal impact aid, federal
          department of defense funds, and federal indirect
          overhead reimbursements it receives, instead of
          depositing them into the general fund;

     (2)  Allow the DOE to retain a certain amount of indirect
          overhead reimbursements and require the DOE to prepare
          an annual report for the legislature, as prescribed by
          the Director of Finance, on the amount of indirect
          overhead moneys retained and expended;

     (3)  Establish a grants research and application revolving
          fund for depositing and expending the indirect overhead
          reimbursements and require the DOE to prepare for the
          legislature an annual report on the status of this
          fund, including a list of grant applications and awards
          received;

     (4)  Allow the Superintendent of Education to approve trust
          fund expenditures up to available revenues;

     (5)  Appropriate funds from the federal grants research and
          revolving fund for the DOE to carry out the purposes of
          the measure, including the creation and hiring of
          necessary staff;

     (6)  Require the Governor, if the funds retained in item (1)
          exceed the authorized appropriation in the General
          Appropriations Act or the Supplemental Appropriations
          Act, to allow the DOE to:

          (A)  Increase the federal fund expenditure ceiling for
               EDN 100, school based-budgeting; and

          (B)  Retain the full amount of the general fund offset
               created by increased impact aid receipts to
               further carry out the purposes of EDN 100;

     (7)  Require the DOE to submit to the legislature a report
          on the exact amount and specific nature of federal
          impact aid and federal department of defense funds
          received; and

     (8)  Clarify that the intent of the measure is not to
          jeopardize the receipt of any federal aid or impair the
          obligation of the State to holders of any bonds issued
          by the State.


 
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     As affirmed by the record of votes of the members of your
Committee on Education and Technology that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 1873, H.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as
H.B. No. 1873, H.D. 2, S.D. 1, and be referred to the Committee
on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Education and
                                   Technology,



                                   ______________________________
                                   DAVID Y. IGE, Chair

 
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