STAND. COM. REP. NO. 899-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2219
                                     S.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Education, to which was referred S.B. No.
2219, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO PUBLIC SCHOOL FACILITIES,"

begs leave to report as follows:

     The purpose of this bill is to exempt Department of
Education (DOE) public school facility acquisitions from chapter
37D, Hawaii Revised Statutes (HRS).  In addition, it requires the
DOE to enter into a lease agreement for Kihei charter public high
school.

     The South Maui Learning Ohana and an individual testified in
support of this bill.  The Department of Budget and Finance, DOE,
and the Attorney General testified in opposition to this bill.

     Your Committee finds that this bill may affect the state's
credit worthiness because the bill proposes to exempt DOE
transactions from established fiscal and legal oversight.  By
acting outside of the established procedure in chapter 37D, HRS,
any DOE transaction may be classified as a debt, possibly
affecting the state's bond rating and ability to raise capital in
the municipal bond market.

     Moreover, your Committee finds that the alternative
recommended by the Attorney General may merit a closer look.  The
alternative is exemplified by Act 31, Session Laws of Hawaii
1999, that amended chapter 37D, HRS, to allow the University of

 
 
 
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Hawaii some flexibility in a similar situation dealing with
dollar amounts not exceeding $3,000,000.

     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 S.B. No.
2219, S.D. 1, and recommends that it pass Second Reading and be
referred to the Committee on Finance.

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



                                   ______________________________
                                   KEN ITO, Chair