STAND. COM. REP. NO. 345________

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 853
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Education, to which was referred H.B. No.
853 entitled: 

     "A BILL FOR AN ACT RELATING TO SCHOOL-BASED BUDGETING,"

begs leave to report as follows:

     The purpose of this bill is to provide guidelines to ensure
the implementation of school-based budgeting beginning with the
2001-2003 fiscal biennium.

     In particular, this bill requires the Governor to submit the
Department of Education budget on a school-by-school basis,
except for the district and state office programs, and
establishes an education contingency fund to provide for
unanticipated changes in school budgets as a result of personnel
movements among schools.  The bill further allows the department
to transfer general fund appropriations among schools, and
requires a quarterly report to the Legislature regarding the
transfers.

     Your Committee received testimony in support of the intent
of this measure from the Superintendent of Education, although
the Superintendent noted a number of concerns raised by the bill
as to the goals to be achieved through school-by-school
budgeting.  Similarly, your Committee received testimony in
support of the intent of this measure from the state Director of
Finance.  However, the Director stated that the Department of

 
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Budget and Finance did not support the bill for the reasons noted
in the Governor's 1998 veto message.  Finally, testimony in
opposition to the measure was received from the Hawaii State
Teachers Association, which had reservations and questions
regarding the scope and implementation of the bill.

     While your Committee notes the concerns raised regarding the
implementation of school-by-school budgeting, your Committee
nevertheless finds that school-by-school budgeting will help to
ensure both greater flexibility for Hawaii's schools in making
budget decisions and greater financial accountability for
education programs in the State.

     Upon further consideration, your Committee finds that the
definition of "school-by-school budgeting" in the new section
added to chapter 302A, Hawaii Revised Statutes, is nearly
identical in practice to the definition of "school-based budget
flexibility" as defined in section 302A-101 and as used in
section 302A-1302, Hawaii Revised Statutes.  Also in practical
terms, "school-by-school budgeting" appears to already be
required for EDN 100 by section 302A-1302 under the name of
"school-based budget flexibility", which was intended to have
begun with the 1995-1997 fiscal biennium, although it was never
implemented, as noted in section 1 of the bill.  Adding a new
section to chapter 302A that provides for substantially the same
requirements as existing law -- with two different implementation
dates -- essentially provides for duplicative legislation and may
be somewhat confusing.

     Your Committee has accordingly amended this bill by:

     (1)  Adding two new sections that repeal section 302A-1302
          and the definition of "school-based budget flexibility"
          in section 302A-101, Hawaii Revised Statutes;

     (2)  Renumbering the remaining sections; and

     (3)  Making a grammatical correction in section 3 of the
          bill.

     As affirmed by the record of votes of the members of your
Committee on Education that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
853, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as H.B. No. 853, H.D. 1, and
be referred to the Committee on Finance.


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



                                   ______________________________
                                   KEN ITO, Chair

 
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