Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Education, to which was referred S.B. No. 564 entitled:

begs leave to report as follows:

The purpose of this measure is to authorize the issuance of general obligation bonds to pay for a Qualified Zone Academy at the National Guard Facility on 22nd Avenue on Oahu.

Your Committee heard testimony in support of the measure from the Department of Education, and technical comments from the Department of Budget and Finance.

Your Committee finds that Qualified Zone Academy Bonds may be an innovative way to pay for capital improvement projects in Empowerment Zones, Enterprise Communities, and designated areas serving low and moderate income students. The Department of Education seeks to use these bonds to pay for the capital improvement of a technology enterprise in such a designated area, consistent with the State's commitment to ongoing high technology training.

Although these bonds are an attractive means of financing in that the issuer can leverage current cash on hand to a better than 2:1 ratio, they are notoriously complex, and may involve more issuer, investment banker, and lawyer time than is feasible for the typically small size of such transactions.

Your Committee has amended the measure for consistency with the technical recommendations of the Department of Budget and Finance, and to make technical, nonsubstantive changes for clarity.

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. 564, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 564, S.D. 1, and be referred to the Committee on Ways and Means.