STAND. COM. REP. NO. 2462
                                   Page 1


                                   STAND. COM. REP. NO. 2462

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2106
                                        S.D. 1




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

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2106 entitled:

     "A BILL FOR AN ACT RELATING TO FEDERAL FUNDING,"

begs leave to report as follows:

     The purpose of this bill is to prohibit the Governor and the
Director of Finance from restricting any state agency's ability
to expend federal grant moneys if the granting federal agency has
already approved the expenditure of funds as provided in the
state agency's grant application.

     Your Committee finds that state agencies should be
encouraged to seek out federal grant moneys and trusted to expend
these moneys in a fiscally responsible manner.  Policies and
practices that allow the Governor or the Director of Finance to
restrict a state agency's ability to expend federal grant moneys,
even when the granting federal agency has already approved the
expenditure of funds as provided in the state agency's grant
application, will inhibit resourcefulness and innovation in
government.

     Your Committee has amended this bill by:

     (1)  Extending the prohibition contained in this bill to the
          Comptroller;

     (2)  Adding a provision requiring the Governor to:

          (A)  Allow the state agency to increase the federal
               fund expenditure ceiling by the amount that the
               federal grant moneys received by the agency
               exceeds the authorized appropriation in the
               General Appropriations Act or the Supplemental
               Appropriations Act; and

          (B)  Allow the state agency to retain the full amount
               of the general fund offset created by the federal
               grant moneys to further carry out the purposes of
               the specific programs for which the grant moneys
               were awarded; and

     (3)  Making technical nonsubstantive changes for purposes of
          clarity and consistency.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2106, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 2106, S.D. 1, and
be placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair
a                                                      SB2106 SD1