Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Education, to which was referred S.B. No. 352 entitled:

begs leave to report as follows:

The purpose of this measure is to establish a budget and financial management system that is aligned along the school complex organizational structure, earmark a percent of general fund revenues for public education, and establish a joint education finance task force to determine adequate levels of funding for the public school system.

Testimony in support of this measure was submitted by the Hawaii Business Roundtable. Testimony in support of the intent of the measure was submitted by the Department of Education (Department) and the Hawaii Government Employees Association Local 152. Testimony in opposition to this measure was submitted by the Department of Budget and Finance. The Hawaii State Teachers Association submitted comments.

Your Committee finds that this measure is part of a package of measures that reflects discussions held during the 2002 interim involving various stakeholders and constituencies within the public education community. Your Committee further finds that with regard to the financing of the public school system, there are ongoing questions related to the amount of funding that is necessary to provide adequate resources for public school students to meet their goals as articulated by the Hawaii content and performance standards and the federal No Child Left Behind Act. Your Committee believes that a related question of equity of funding, especially within the existing budgetary and financial system, is also a critical issue that needs exploration. Finally, while your Committee acknowledges the efforts of the Department to streamline its organizational structure through complex-based management, it is imperative that the budgeting and financial management system similarly be realigned to reflect allocation of resources along the complex-based structure.

Your Committee has amended this measure by changing the effective date to upon approval, except for Sections 1 and 2 which shall take effect on July 1, 2005.

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. 352, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 352, S.D. 1, and be referred to the Committee on Ways and Means.